25 May, 2021

If achieved, the government’s ambitious target to cut emissions by 78% by 2035 (which my colleague Miles Gibson has written about here) will transform the built environment, especially the homes that we live in.

The residential sector emits approximately 15% of all UK CO2 emissions and 19 million homes do not meet the government’s target energy efficiency rating of ‘C’ which was set in 2017 through the Clean Growth Strategy. Given that less than 1% of properties are rated ‘A’, the highest energy efficiency rating, there is a lot of work to be done. Could modular construction be the answer?

Modular housing (namely, housing manufactured off-site in ‘modules’ in a factory) is built in a controlled environment using precision-engineering techniques. They result in much higher quality homes. The tight-fitting modules improve insulation and reduce draughts, improving the energy efficiency of the home. Research by Arup suggests that off-site construction requires up to 67% less energy than an equivalent traditionally built development, and often includes renewable energy systems like geothermal and solar panels.

Manufacturers can also precisely estimate the materials needed for each home, reducing waste, and some now use recyclable material from adjacent projects. Building Green cites a 50% reduction in material waste compared to conventional construction. The modules are easily disassembled and relocated, so the demand for energy and raw materials to create a new building is reduced. What’s more, timber is typically used which, due to lower levels of embodied carbon, is thought to be more sustainable than masonry materials – provided it’s sourced sustainably.

Once the module is complete, it is transported to the site for assembly. Fewer lorry deliveries and staff travelling to the site reduces carbon emissions, as well as reducing general disruption, noise and air pollution locally.

Modular housing has been gaining traction in the UK, with schemes of a few hundred homes per site being typical, and it is already being used by some big names in the market. For example, Greystar’s Greenford Quay scheme promises over 2000 rented homes using modular methods and Oaktree Capital’s recent purchase of what will be, at 135m high, the world’s tallest modular apartment block in Croydon.

The government has recently been advised to back a target of 75,000 modular homes annually by 2030 which has the potential to reduce the construction sector’s carbon emissions by 40%. For that target to be achieved, we would need to build six times more modular homes each and every year than has been built in total in the UK to date (there are currently only around 15,000 modular homes in the UK). It would also mean that modular homes would represent over a quarter of all housebuilding output, compared with negligible levels at the moment.

Is this in any way achievable? It’s hard to say, but there are some positive signs which haven’t been seen in the UK before. In particular, the rapid growth of the UK’s institutional multifamily housing market (which we report on here) provides a way of channeling more capital to modular homes. The UK Government has also invested £230m into the sector recently. But perhaps it’s the new emphasis on tackling climate change which will prove to be modular’s ace card.