MORTGAGES AND LENDING
BEYOND BRICK AND BLOCK Last year the Building Society Association (BSA) came out firmly in supporting offsite construction as a positive way of providing well-designed, quality, affordable homes quickly. The recent Housing White Paper also brought into focus questions surrounding mortgageability and longterm value for banks and lenders for offsite manufactured homes. The amount of newbuild housing required to ease the UK’s residential crisis are well documented. But if the annual target of 250,000 homes a year is to be met, there needs to be a shift in the way that lenders make money available so that it can actually happen. The financial sector has become a more risk averse world in recent years and lenders always operate in a climate where unknown quantities are not overly welcome. At the moment offsite manufacture is one of those – still regarded as a mysterious construction sideline when approached for funding. We live in a world in motion where the technological advances of offsite manufacture have given rise to new materials, new techniques that reduce this element of uncertainty and risk. As the BSA says in its report ‘Laying the foundations for MMC: Expanding the role of Modern Methods of Construction, one potential solution to the UK housing crisis’: “One of the challenges is that as some of these construction methods are so new, there can be little or no historical data demonstrating how they will weather and the likely lifespan they will have. This is clearly a challenge when mortgage terms are 25 years plus and getting longer.”
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Housebuilding in the UK is reaching – if not already - an historical tipping point. We are decades behind other parts of Europe in the understanding and adoption of offsite manufacture to any meaningful degree. So the wider understanding of offsite by the lending fraternity is essential for it to really make a difference to increasing housing levels. “We have to explore radical solutions to solve the housing crisis,” says BSA Chairman Dick Jenkins. “To get there we rely on Government to lead the way and break the cycle in relation to new construction technologies. At present supply is so low that lenders can’t routinely lend on these properties because they don’t fully understand the risks and builders won’t build more of this type of home because mortgage lending is in limited supply as is home insurance. For the sake of consumers, these types of building technology must become as conventional and mainstream as brick and block has been for the past 100 years. If we do it could be a gamechanger.” The BSA Report, while using an outdated term in modern methods of construction (MMC) is excellent and outlines a pragmatic approach for lenders to get to grips with offsite methods without being blinkered to historical problems.
WWW.OFFSITEMAGAZINE.CO.UK | SPRING 2017
Outside of the offsite bubble, many operating within the built environment still need convincing. In some circles the term offsite construction still conjures up images of dreary, postWW2 temporary prefabrication and all the inherent problems of quality and longevity. The BSA report even goes as far to say that the term ‘prefab’ should not be used any longer, as the term is generally associated with the poor quality emergency housing of the past. The recent Housing White Paper (covered across this issue in some depth…) has also prompted several commentators to express reservations. As reported in trade paper Mortgage Introducer, Simon Read, Managing Director of Magellan Homeloans, was quoted saying: “The challenge is whether they’re going to be standing in 25 years and until you’ve gone through 25 years you just don’t know. Workmanship is an issue because it’s all well and good saying it’s created in a workshop and fitted onsite but if the person onsite doesn’t put the right amount of screws in, or insulate or put the cladding on right you end up with a house that rots on the inside and you don’t know it’s happened until it falls down.”