Our new Government is focusing on the where, but we shouldn’t forget the how.
Movers on Downing Street. (James Manning/PA) (PA Wire)
House building has been a perennial thorn for successive UK governments. Now, with Labour’s rose in full bloom, there is a tentative optimism that this could change. If they succeed in driving through their proposals for more effective land-use and fast-track planning they will surely prime the housebuilding pipeline, however there is a risk that issues downstream stall hard-earned progress.
At Vector Homes we work to accelerate and decarbonise affordable house building. Over the last few years we’ve explored many aspects of the sector value chain; materials, planning, designing, sensing, building, financing, etc. This approach might appear scattershot, but is very much intentional. In our assessment the problems worth solving occur at the intersection of these many processes.
A recent paper out of The University of Wolverhampton by Daniel et al. sheds light on the complex web of factors constraining UK housing production (1). In particular it highlights the challenges stemming from fragmentation within the construction process. Multiple trades and professionals often operate in sequential isolation, leading to coordination difficulties and costly delays.
Modern methods of construction offer promising solutions. Prefabrication and standardisation can streamline processes, reduce waste, and enhance efficiency. However, the difficulty in scaling a sales pipeline with the capital investment and operational expenditure involved in making ‘house factories’ has caught too many disruptive volumetric/modular house builders out (2).
As such incumbent large developers continue to capture the market. SMEs only developed 10% of homes in 2020, down from 39% in 1988 (3). Daniel et al. point to our almost sole reliance on larger developers as a key constraint on growth and innovation. Recent articles (4) calling out significant defects in new build construction, are lagging indicators of an unhealthy market. The importance of small to medium house builders has been highlighted by the Government in the past, in particular as they tend to build in their own communities so are more aware and considerate of local needs and effective at stimulating local economies (5). The same report finds that access to finance, materials supply, and planning process complexities are key blockers to SME growth.
Large developers leverage their size to more easily access finance, they build out teams with complementary planning, design and sales functions, and deliver standardised house designs to reduce overheads. This asymmetry makes it very difficult for SMEs to compete on price or speed.
Vector Homes is levelling the playing field.
By offloading the sales, design, planning, and supply chain complexity from SME developers, we can enable them to do what they do best; build housing. Our use of standardised low-carbon building systems (6), and integrated project delivery tooling enables us to extract value where the current sector compounds inefficiencies, while simultaneously cutting carbon from the construction process. This results in a consistent flow of more reliable and profitable projects for SME house builders, at prices and delivery times that compete with bids from large developers.
We’re getting underway with our pilot projects and are confident that our approach will pay off. While planning reforms currently dominate the headlines, the focus on planning failures has overshadowed the critical inefficiencies in the construction process. A comprehensive rethink and infusion of innovation are needed; otherwise, our ambitious house building targets risk being built on shaky foundations.
(1) Daniel, E.I., Oshodi, O., Dabara, D. and Dimka, N. (2024), "Towards closing the housing gap in the UK: exploration of the influencing factors and the way forward", Construction Innovation, Vol. 24 No. 4, pp. 965-985. https://doi.org/10.1108/CI-06-2022-0148
(2) Modular builder Ilke Homes enters liquidation with £319m in unpaid debts, Building Design (2023)
(3) Meeting the UK’s housing demand, House of Lords - Built Environment Committee (2022)
(5) Future of small and medium-sized house builders, House of Commons Library (2023)