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An Exploration of the Potential for Using Modular Housing Solutions to
Address the UK’s Housing Shortage
Joseph Kwame Ofori-Kuragu, joseph.ofori@aru.ac.uk
Anglia Ruskin University, UK
Reece Hill, reece.hill@sdc.co.uk
SDC Builders Ltd, UK
Abstract
The UK construction industry is affected by a shortage of affordable housing exacerbated by a
shortage of skilled labour. This paper explores opportunities to use modular homes to address the
UK’s housing shortage. In developing this paper, a questionnaire-based survey was undertaken
following a detailed review of relevant literature. The survey of industry professionals involved 70
structured questionnaires sent online. A lack of affordable new homes is identified in this paper as
one of the most pressing issues within the sector. Again, a lack of investment in apprenticeships is
identified to have led to skilled trades shortages in the industry. The survey reported in this paper
found that modular homes would provide homes quicker and cheaper. Other benefits of modular
housing are the use of eco-friendlier materials, waste reduction and reduced CO2 emissions from
construction processes and from reduced transportation. Reduced maintenance requirements also
reduced life-cycle costs in modular homes however traditional housing was seen as having longer
lifespans. Due to restrictions in place at the time relating to the COVID 19 pandemic, detailed
confirmatory interviews could not be conducted. Further research could investigate the costs to
contractors of establishing their own manufacturing facilities. Opportunities to improve awareness of
the benefits of modular homes can also be explored in future work. Future research could also
explore the potential of increased integration of Value Engineering and Building Information
Modelling (BIM) into modular house building and to evaluate the potential benefits they provide.
Keywords
Modular, Housing, offsite-construction, skills shortage, construction
1.0 Introduction
The construction industry contributes to nearly £117 billion pounds to the UK’s economy, 6% of the
total revenue with the industry responsible for providing 2.4 million jobs in the UK making up 6.6%
of all jobs (Rhodes 2019). Due to the ever-growing population across the UK and the rest of the
world, there has been an increasing argument for the countries housing shortage and the
unavailability of homes needed at an affordable price for first time buyers and young families. These
current challenges are creating pressure on house builders to change the way in how builders develop
(Zandari & Hashemi 2017).
In 2014, UK house prices were valued at the second highest in the world when measured at a price
per square meter (Hilber 2015). According to Marshall Recruitment (2019), the “price-to-income”
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multiplied by salary in the greater London area was around 8.5 times the average salary.
Furthermore, in the rest of the UK, property prices have increased as much as 5 times the average
income for a property. The UK house price growth over the past 40 years has increased faster than
any other Organisation for Economic Co-operation and Development country (OECD) and has
outgrown earnings. This has consequently produced a housing affordability crisis. As well as the
increase in house prices throughout the UK, housing unit sizes in the UK are a considerable amount
smaller than in comparison with other European countries (Hilber 2015), with UK homes around
38% smaller than Germany and 40% smaller than in Netherlands (Statistics Sweden 2005). The
number of homes needed in England are up to 345,000 per year (Wilson & Barton 2020). Back in
2018/2019, the total number of homes in England increased by around 241,000 homes providing a
9% increase than the previous year, although still lower than the estimated quantity needed. The
current skills shortage in the sector is believed to be holding back efforts to resolve the housing crisis
and the number of homes that are built. With around 87% of construction companies looking to
expand production, around 100,000 vacancies, one in four (24%) of housebuilders explain that
finding skilled trades are becoming the largest challenge (Owen, 2015). Furthermore, the UK
workforce isn’t getting any younger with the Office for National Statistics (ONS) revealing that 20%
of construction workers are over fifty with 15% being over sixty (Marshall Recruitment 2019).
In this context, modular housing has been explored as a solution, with the government and the
construction industry suggesting that, modular homes could be the answer to resolving both the skills
shortage and housing shortage which the UK faces. It is expected that Modular homes will provide
cheaper housing options, whilst removing the need for large numbers of skilled workers due to units
being constructed in quality-controlled factories off-site. This paper explores the opportunities to use
modular construction solutions to address the housing deficit and the opportunities this will bring.
2.0 Literature Review
2.1 Modular Homes
Lopez & Froese (2016) define modular housing as “housing that is partially built in a plant, shipped
to a development site, and placed on a foundation, where the roof structure and exterior finishes are
completed”. This involves using pre-manufactured components constructed in a factory, consisting
of lightweight, load-bearing composite panels that are used to form the walls, ceilings and roofs of a
structure (Glenn Low 1987). Modular homes are cost effective when compared to conventional
homes due to being built in a factory environment that provides ideal production conditions
compared to site construction (Lindal 1982). Modular construction has established a strong market in
residential buildings due to the speed benefits, quality and cost savings that are achieved (Lawson
2010). This system of construction uses an inside out approach completing the interior surface,
electrical, plumbing, mechanical fixings before completing the exterior. This differs from the
traditional on-site assembly sequence constructing from the outside in (Ferver 1980).
Off-site construction, manufactured construction, off-site manufacturing and modern methods of
construction are all generic terms used interchangeably in extant literature to describe modular
construction (Goulding et al. 2012). The underlying idea involved in all these concepts is that some
activities relating to construction projects are moved away from the construction site into controlled
factory environments within manufacturing establishments (Jaillon & Poon 2010). These are
described in some literature as a panacea to the many problems associated with cost, time and quality
associated with traditional construction processes (Goulding et al. 2013).
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Lynn (2017) opines that pre-manufactured homes provide a financial economical solution to the
housing crisis. This is because of the reduction in labour costs and materials. The ready-built factory
units reduce the need for the skilled trades and the materials wastage is heavily reduced due to
machines producing the sufficient amount of material needed.
Ofori-Kuragu and Osei Kyei (2021) projected that the future of construction lies in the development
of production-based systems which take the bulk of construction activity away from site into factory-
based environments. Design for Manufacture and Assembly (DfMA) and offsite construction present
an opportunity to achieve this using prefabricated and pre-manufactured component in factory
environments. These present many benefits including reduced costs, reduced time and higher quality
of completed projects. These premanufacturing techniques can be adapted to modular housing to
deliver the identified benefits.
2.2 UK’s housing affordability crisis
The UK is currently in a housing crisis and despite the rapid increase in housebuilding, the UK house
prices have grown by 160% since 1996 (Dmitracova 2019). Ferguson (2016) though states that the
average house price has increased significantly more risen to an extraordinary 281% across the UK
with statistics showing that London figures have increased a further 501% (Nationwide house price
index). The reason behind the increase in property value is down to the lack of available homes
therefore increasing the demand (Hall 2020). Hall (2020) goes on to explain that:
“When there is a high demand for a good or service, its price rises. If there is a large supply of a
good or service but not enough demand for it, the price falls”.
In 2014, UK house prices were the second highest in the world, only topped by Monaco with house
price growth increasing faster than any other OECD country (Hilber 2015). Since the late 1990’s, the
mortgage rates have tumbled with interest rates being fixed on a five-year-fixed-rate term. One of the
many issues causing the housing crisis is the average earnings to house cost ratio. Currently, the UK
house now costs almost eight times the average salary with banks and building societies typically
lending people a maximum of four and a half times individuals income (Chu 2018). Because of this,
the home ownership has slumped to 63% due to the soaring house prices relative to earnings
(Independent 2018).
Figure 1 2017 House prices to earnings (Marshall Recruitment, 2019)
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2.3 UK’s Current skills shortage
Lloyds Banking Group believes that skills shortage and planning systems are preventing solutions
for the housing crisis. A severe shortage of skilled workers in the housebuilding industry are
hindering efforts to tackle the UK’s housing crisis (Flockhart 2016). It has been reported that the
current UK construction workforce is too small to meet with the UK Governments housing demands.
In 2017 the government had pledged to develop 300,000 new homes a year by 2020. A massive
concern to this is that RICS have confirmed that a shortfall in skilled construction workers in the UK
is currently at its highest point since 2007 (RICS 2019). According to the (CIOB) the industry must
employ over 150,000 new workers by 2021 in order to keep up with the demands from the
Government. Light (2017) disagrees by suggesting that Britain actually need a considerable amount
more estimating that around 400,000 people each year must be recruited providing an equivalent
statistic of one person every 77 seconds.
Approximately 87% of construction companies plan to increase their companies yet while all these
vacancies are becoming available, 24% of housebuilders have confirmed that finding the candidates
with the appropriate skills are becoming “the biggest challenge” (Owen 2015). It is evident that the
lack of skilled trades is causing huge disruptions to the housing shortage and that moving forwards,
the Government must invest into training schemes and apprenticeships to offset the reduced number
of skilled professionals in the industry.
2.4 Affordability of Modular housing
In recent years due to the industry unsuccessfully supplying enough homes to keep up with the
increase in population, a growing interest in the modular construction industry from both investors
and developers have been the main topic (Lopez & Froese 2016). Modular homes are offering
several benefits over traditional. Some of the advantages are a reduction in construction time due to
the units being constructed in a factory, high quality as the factories are quality controlled and
cheaper costs providing financial saving for suppliers and buyers reducing property prices.
Modular construction has long been developed and used in the construction industry within
residential as a means of a quicker production supply and a quicker turn around (Velamati 2012).
Mass production could allow new homes and apartments to be radically cheaper due to the design
behind modular construction (Barnett 2018). Some experts believe factory-built properties could
resolve the housing crisis due to mass production opportunities and better quality control provided by
factory conditions.
2.5 Modular Construction impacts on skills shortage and productivity
Modular housing can address the skills shortage and tackle the domestic sector (Sean et al. 2015).
The UK have an ageing workforce with 12% of construction workers under the age of 24. With the
lack of skilled workers in the industry and the lack of skilled trades coming through the
apprenticeship scheme, the means for modular housing will help solve the UK’s skills shortage. The
Government in 2015 expressed concerns about the lack of training stating that, “structure of industry
training is not sufficient to deliver the skilled workforce required to build enough adequate housing”
(Wilson & Barton 2020).
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Modular construction will reduce the need for large amounts of skilled trades and will provide a
lower skill demand due to houses being factory built. Traditional methods of construction will
demand a high number of onsite skills that the industry lack although by transferring to modular
methods of construction, 90% of activities will be completed prior to site delivery. Off-site
manufacturing can attract and develop non-skilled resources throughout the industry without relying
on limited skilled resources (KPMG 2016). In addition, modular construction will address the skills
shortage and allow the government and developers to continue developing the despite the increase in
the skills shortage. Off-site construction will speed up the delivery of new homes and will allow
projects to be delivered on time or earlier by around 50% (Construction news 2016). There is
evidence to suggest that schedules can be saved by almost 60% when comparing to traditional
methods of construction.
Banks et al. (2018) presents a 40-storey mixed-use development in central London, UK which
successfully employed the principles of DfMA across all engineering disciplines for the project. In
this project, the delivery team developed effective off-site construction solutions across the entire
project including the superstructure, facades, bathrooms and mechanical and electrical services.
These were all designed, coordinated and facilitated using DfMA through advanced digital
engineering and building information modelling techniques. According to Banks et al. (2018), the
project was delivered with reduced programme and cost with an improved safety record, higher
quality and reliability in a more sustainable way through reduced vehicle movements and a greater
efficiency in the management of site logistics.
2.6 Limitations of Modular Construction
Modular homes are designed, manufactured and preassembled off-site before being transported to its
final location (Warszawski1999). Although modular construction comes with many benefits there are
also limitations and disadvantages. Taylor (2010) explains that modular homes are limited when
creating the floor plan because of transportation from the factory to site. Modular homes have a
width of no more than 14 to 16 feet although can be 60 to 70 feet in length (Warszawski 1999).
Taylor (2010) goes on to suggest that it’s not feasible to deliver the modular homes very far due to
the road size restrictions. Due to delivery playing a key role into transporting the modular home to its
final location, contractors must consider transport limitations. These limitations can be time delays,
permits needed due to oversize vehicles, and dimensional limitations.
Golawski (2018) points out that there are no design limitations preventing modular methods although
KPMG (2016) argues against this by suggesting that modular methods will only provide a limited
number of materials and layouts because of factory mass production. Gassett (2015) agrees by
confirming that modular homes lack customisation, and that design is limited. Project planning is
another key factor producing yet another limitation. Sites in Japan, USA and Sweden have come
across problems where clients would like to apply a variation in the scope of works and unlike
traditional, modular construction has proven to be much more difficult when alterations are need
(Kamali & Hewage 2016). Kamali & Hewage (2016) argue that modular homes provide a high initial
cost and that although this method of construction is cheaper, a considerable amount of capital is
initially needed when purchasing these products. This is because modular homes completed in a
factory and transported to their final destinations demand an upfront cost before purchase.
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3.0 Research Methodology
This paper is based on a detailed review, critique and analysis of contemporary literature on the
subject. This literature review was based on industry reports, academic journals and scholarly reports
that provided the secondary data (Naoum 2013) and also a basis for the development of the survey
instrument. Following the review, a questionnaire-based survey was used to collate views of industry
stakeholders in relation to modular construction. The survey helped to collect views of respondents
on the issues arising from the review. It helped to better understand their perspectives on how the UK
could move towards an increased use of modular approaches in housing and its potential to resolve
the UK’s housing crisis. Owing to the prevailing restrictions on movement at the time of the survey,
questionnaires were administered online using a survey tool called Sogosurvey. This online platform
allowed the dissemination of questionnaires to respondents and their collation once completed. The
results were presented using tables and charts developed with Microsoft Excel.
4.0 Findings and Discussion
The review of literature for this paper shows a rising housing deficit in the UK despite increased
housebuilding (Dmitracova 2019). Whilst many factors may be responsible for this, the high and
rising building costs, as acknowledged by Ferguson (2016); Hilber (2015), is a significant
contributor to low home-ownership rates resulting in a rising housing deficit. Addressing home
ownership costs will this bring the housing deficit. Evidence from the review confirmed that the
many acknowledged benefits of modular construction would enhance the application of modular
approaches in housing developments. Amongst the many benefits included speed of construction,
reduced costs, quality of construction and reduced life-cycle costs ((Lawson 2010) which can be
applied to modular housing. Other benefits of premanufactured housing development include the
affordability of homes (Barnett 2018), quick production and short turnaround times (Velamati 2012).
Despite the proven benefits, there are limitations associated with their use such as higher initial costs
(Kamali and Hewage 2016), industry aversion to and negative perceptions associated with the
technology (Gassett 2015), constraints arising from transporting large modular units (Warszawski
1999) among other factors.
The field survey results provide some insights into the low uptake of modular approaches. A total of
70 questionnaires were sent out with 56 responses providing an 80% feedback response. All the data
was collected and analysed using simple statistical analysis. Respondents in the survey consisted of
7% Architects, 21% Surveyors, 7% Designers, 9% Project Managers, 5% Company Directors, 2%
Planners, 5% Estimators, 13% Site Managers, 7% Contract Managers, 20% Contractors and 4%
Clerk of Works. The results show that the most common sector represented by respondents to the
survey were individuals that worked within commercial establishments in the construction industry
with a percentage of 46%. The data received also indicated that the majority worked for main
contractors with a figure showing of 54%.
Of the respondents, 5% had a master’s degree, with a further 9% achieving a professional
qualification. 37% achieved a bachelor’s degree, 21% gained an HND/HNC, 7% achieving A-levels
and 19% completing a City and Guilds. Generally, therefore, the respondents comprised of a high
proportion of professional level industry stakeholders with a good level of professional and technical
knowledge of construction. The results also showed that 45% “strongly agreed” or “agreed” with
modular construction having a good potential to become an alternative to conventional building
methods with 30% disagreeing whilst 25% were unsure. This generally is in line with trends from
literature which show a potential for modular building to become the mainstream approach to
construction as argued in Ofori-Kuragu and Osei-Kyei 2021. However, the results also show that
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whilst a majority see the many benefits of modular housing solutions, the proportion of stakeholders
in the industry who are yet to be convinced of these benefits is still significant. This can be explained
by the limitations identified from literature as inhibiting the uptake of modular approaches and
provides the possible reasoning for the trends in results.
On the potential benefits of modular solutions in the housing sector, 29% of respondents suggested
that the overall speed of constructing the homes would increase providing better production levels. A
further 25% believed that the materials used in modular homes are more eco-friendly, with another
20% opining that waste reduction levels would be significantly reduced as pods and other
premanufactured modular home units are built in controlled environments. 16% explained that
transportation emissions would be reduced due to majority of materials used being from one factory.
The remaining 10% of respondents highlighted the thermal insulation benefits that modular would
bring to the industry. There is an overall acknowledgement of the benefits in line with literature such
as Lawson (2010). However, the small relative percentages of those endorsing the identified benefits
further reinforce the current levels of hesitancy in relation to the uptake of offsite techniques in the
reviewed literature such as Kamali and Hewage (2016); Gassett (2015) and KPMG (2016). This
demonstrates that additional sensitisation and education for industry stakeholders on the potential
benefits of modular techniques would help increase levels of awareness and encourage the uptake of
these approaches. On the prospects of modular housing becoming the mainstream method of
construction in the housing sector in the future, 50% of respondents agreed with the prospect with
18% disagreeing as shown in figure 2. This shows that whilst a larger overall percentage of
respondents see the potential imminent increase in the adoption of in modular solutions in housing,
this is not necessarily backed up by an awareness of potential or proven benefits. The knowledge gap
relative to the potential benefits of modular housing appears to be the major reason for the low levels
of responses to questions on benefits and uptake.
Figure 2 Potential of Modular Housing as Main Approach to Housing Development
The overall outcomes of the review in this paper and the survey of industry professionals shows the
potential of modular approaches to deliver quality housing faster and cheaper amongst other benefits.
This has a potential to address the high housing deficit in the UK by producing more affordable
homes. The survey shows a general appreciation of these benefits associated with modular home
construction however the results show low levels of appreciation of these benefits. The high start-up
costs associated with modular home production is also an issue that needs addressing.
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5.0 Conclusions and Further Research
This study revealed that one of the main issues within the UK housing sector is the lack of adequate
new and affordable developments. The housing crisis affects an estimated 8.4 million people in
England alone. Due to a lack of sustained investment in apprenticeships over the last 20 years,
contractors face acute skills trades shortages. These factors, amongst others, contribute to the current
housing deficit in the UK. This paper explored the potential of modular housing to address this.
The paper identified benefits of modular housing to include speed of construction, eco-friendlier
materials, waste reduction and reduced CO2 emissions from construction processes and from
reduced transportation. The study also identified modular homes as having the potential to provide
cheaper housing options. Reduced maintenance requirements also reduced life-cycle costs however
traditional housing was seen as having a longer lifespan. Despite the acknowledged benefits and the
opportunities presented by modular housing solutions, the numbers of respondents whose responses
demonstrate an awareness of the potential and the benefits of modular solutions in housing are
relatively low. This points to a low level of awareness of the potential benefits that modular solutions
offer and a weak understanding of the associated benefits. Industry-wide educational efforts in this
regard will be beneficial.
Further work could explore innovative ways to enhance awareness within the industry of modular
housing and the opportunities the approach brings. Further research could also investigate the costs
associated with contractors establishing their own manufacturing facilities as a means to reducing the
time and costs for offsite manufacture of construction components. Research could also explore the
potential of increased integration of Value Engineering and Building Information Modelling (BIM)
into modular house building and the evaluate the potential benefits.
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