Supplementary written evidence submitted by Keepmoat Homes [MMC 048]

PURPOSE OF SUPPLEMENTARY WRITTEN EVIDENCE

1. Keepmoat Homes welcomes the opportunity to provide supplementary written evidence to the Housing, Communities and Local Government Committee inquiry into Modern Methods of Construction following the verbal evidence given by Keepmoat Homes board member James Thomson on Monday 18 March 2019. 
2. This supplementary written evidence focuses on Keepmoat Homes’ relationship with specialist offsite manufacturer ilke Homes and the measures needed to achieve the desired capacity levels in specialist suppliers like ilke Homes.

ABOUT ILKE HOMES

1. ilke Homes is a British company specialising in one of the latest offsite manufacturing technologies: modular or volumetric construction. ilke Homes was first established in 2017 as a joint venture between Keepmoat Homes and Algeco Group, which is a modular construction specialist and, like ilke Homes and Keepmoat Homes, a portfolio company of TDR Capital. Its manufacturing base is at Flaxby, near Knaresborough in Yorkshire.
2. The ilke Homes volumetric construction system comprises factory assembled lightweight galvanised steel framed (LGSF) volumetric modules, capable of delivering a range of house types, including two and three storey terraces, semi-detached homes and apartments of up to six storeys. Many of ilke’s homes meet the NDSS (Nationally Described Space Standard), AD M4(2) and London Housing SPG requirements. All can be clad in a wide range of traditional and contemporary external finishes and assembled with varying roof pitches, to meet local planning requirements.
3. The homes are mortgageable and tenure blind, being fully adaptable to both private market and housing association requirements for all forms of sale and rent. Homes are fully-approved by the National House Building Council (NHBC) and Build Offsite Property Assurance Scheme (BOPAS), and standard mortgagability is achieved through 10-year structural warranties from NHBC Buildmark or Building Life Plans, accepted by all major lenders. We recently gained NHBC Accepted System status.
4. ilke Homes are precision-engineered offsite to ensure consistently high quality. We can install up to six homes per day on site, delivering homes in less than half the time of traditionally built houses. We work with our partners to supplement traditional build on existing developments, or to create a scheme built entirely offsite. We have set ourselves the goal of delivering 2,000 precision-engineered homes a year within two years to help tackle the UK’s chronic shortfall in affordable housing.
5. It is a demonstration of the potential kerb appeal of a volumetric home that ilke Homes won the Readers’ Choice Terrace of the Future Award at the Sunday Times British Homes Awards 2018. The Reader’s Choice Award tasked entrants with shaping the towns of the future by developing an innovative future-proofed terraced house design. ilke Homes’ winning submission, created in collaboration with HTA Design and housing association partner, Sovereign, was dubbed the Hundred House as it takes less than one hundred on-site hours to build and costs less than £100 a year to heat.

HOW COULD THE GOVERNMENT, HOMES ENGLAND AND LOCAL AUTHORITIES INCREASE THE DEMAND FOR MMC TO MEET ITS HOMEBUILDING TARGETS AND SUPPORT THE CONSTRUCTION INDUSTRY IN INCREASING THE USE OF MMC?

6. Categorisation of modern methods of construction

6.1.   Distinctions should be made between different technologies. We note the seven-part categorisation proposed by the Ministry of Housing, Communities and Local Government’s MMC working group, chaired by Mark Farmer, and suggest that any advantages in the planning or procurement systems would only be given to the working group’s first two categories, which can offer design certainty, investment in new technologies and significant acceleration housing supply:

• Pre-manufacturing – 3D primary structural systems: A systemised approach based on volumetric construction involving the production of 3D units in controlled factory conditions prior to a final installation.
• Pre-manufacturing – 2D primary structural systems: A systemised approach using flat panel units used for basic floor, wall and roof structures of varying materials which are produced in a factory environment and assembled at the final workface to produce a final 3D structure.

7. Procurement

7.1.   Modern methods of construction are effectively supported through frameworks that allow an assessment to be efficiently and expertly made on behalf of organisations that lack the time or technical expertise to research the market themselves.

7.2.   ilke Homes gained a place in 2018 on the Efficiency East Midlands’ (EEM) modular homes Dynamic Purchasing System (DPS). EEM is a not-for-profit procurement consortium that was set up eight years ago to generate efficiencies for its membership through collaboration, combined volumes, quality products and high-level construction services. EEM’s 127 member organisations are now able to use its supply chain compliantly without having to undertake their own tender processes.

7.3.   As the Government agency tasked with accelerating housing supply, Homes England has the role and authority to incentivise and manage the adoption of modern methods of construction that offer accelerated delivery. We set out below how Homes England might manage a framework for technologies approved for fast-track planning. Homes England can also support the adoption, viability and affordability of new construction technologies by:

• Requiring their use on appropriate schemes led or funded by Homes England.
• Making their use a requirement of a substantial portion of funding for new homes.
• Bring together a package of 1,000+ homes scheduled for construction within a two-year period and tender the package to the modular construction industry. Such a contract would create a pipeline for a manufacturer to reach critical mass, testing the benefits that can be achieved by offsite production of homes at a truly commercial scale.
• Providing funding – perhaps sourced from BEIS, rather than MHCLG – for the development or commercialisation of new technologies and the upskilling of the construction workforce. We estimate that research and development loan funding in the region of £50 million to £100 million is required for the development of new offsite construction methodologies. Private lenders are proving reluctant to invest in the industry at this scale. The intellectual property in the technology might form collateral for the loan.

7.4.   Volumetric construction has great potential for achieving a rapid supply of high quality social, commissioned by local authorities on their own land. Homes England can efficiently support local authorities in meeting their housing ambitions through establishment of a framework of approved providers of volumetric homes.

8. Planning

8.1.   Many modern methods of construction – and volumetric construction in particular – have poor compatibility with aspects of the current planning system. Volumetric construction loses its speed and efficiency when subjected to late design changes from local planning authorities. More certainty is needed at an early design stage of what is acceptable for local planning authorities. In return, volumetric construction can offer a high level of certainty that the homes as built will follow the designs set out in submitted plans.

8.2.   The use of permitted development rights for change of use to residential or for extensions to existing residential buildings offers a model for acceleration of housing supply across the UK. We propose that offsite manufactured homes benefit from fast-track planning where they:

• Fit within the first two high-tech categories of MMC set out by the MHCLG working group
• Have been accepted onto a national framework – most appropriately managed by Homes England as the agency tasked with accelerating housing supply
• Meet national design standards
• Meet locally-set design codes

8.3.   National planning policy might specify that a proportion of development within a local planning authority area be constructed using pre-manufactured technologies. It will then be for local policy makers to decide which allocated housing sites are most suitable for new technologies. 

9. Building control

9.1.   We note, anecdotally, some inconsistency in the assessment of offsite manufactured modules by local building control teams. While divergence in planning decisions might be justified on grounds of local context, the compatibility with national building regulations of a housing system manufactured offsite in a single factory ought to be more consistent.

April 2019