Are prefab homes too depressing? Matt Cardy/Getty Images

March 4, 2024   7 mins

“Lovely, isn’t it?” I’m standing in the kitchen with a resident of Lockleaze, Bristol, as we survey the construction site just a few yards from the end of her garden. She is, of course, being sarcastic. “I’m just so depressed,” she says more sincerely, her sentiment echoed by the dull clanking of a drill in the distance. From an upstairs window we see an expanse of diggers, mud, and houses in various states of completion, building works that have disrupted this neighbourhood for almost three years — even as other developments in the area have started and finished. And when they are finally done, the new homes will be so close to hers that she worries about privacy and safety. “They’ll see right into my garden. Someone could just hop over the fence.”

Her immediate neighbour has already moved to escape the new estate. In the next house along there is an old man who grew up in this part of northern Bristol, and who remembers when the land now under development, a half-kilometre strip of green space called Bonnington Walk, was graced by roe deer, horses and vegetable allotments. My interviewee would settle for some sparrows. “I used to have all kinds of birds here,” she says. “Now I just get magpies and pigeons.”

There is an enormous irony in this fiasco. Bonnington Walk was meant to be a showcase for a faster, greener and cheaper way of building homes, known as modular construction or “modern methods of construction”. A more familiar term would be prefab. The houses and apartments are factory-built in sections, and then transported to site for assembly. For its champions, modular construction holds the key to addressing Britain’s housing crisis. The government has been promoting prefab as a means to achieve its ever-elusive target of 300,000 new homes annually, and has supported the industry with hundreds of millions of pounds in funding over the last five years.

The nightmare at Bonnington Walk suggests these hopes are still a long way from being realised. In 2021, the masterplan for 185 prefabs won a prize at the Housing Design Awards. The following autumn, the CEO of the Legal & General Modular Homes, the manufacturer behind the project, visited the site to announce “a housebuilding revolution”. Bristol Mayor Marvin Rees hailed the development as evidence that the city could “build affordable housing” while also tackling “the climate emergency”. And yet, last summer, prospective buyers were told that the newly assembled houses would be dismantled again due to faulty foundations. An indignant local man described how a convoy of low-loaders had come to remove the ill-fated homes. “Can you imagine how much that cost? Must be millions!” His take on the whole affair was scathing: “totally incompetent.”

To make matters worse, Legal & General announced last spring that it would be winding down its prefab venture, citing a lack of demand. It has reported losses of ÂŁ235 million since 2016. And this is not an isolated case: two further modular housebuilders, Ilke Homes and Urban Splash, went into administration last year. Both had received millions of pounds of taxpayer support, some of which the government has promised to claw back. Legal & General says it will still deliver the homes at Bonnington Walk, but the woman living next to the site told me an entire row of the prefabs had yet to reappear. Strangely, the building going up just beyond her garden fence was made of old-fashioned concrete bricks.

Do these failures simply reflect teething problems in the prefab industry, or are they indicative of a flawed concept? Some modular homes are being completed in the UK, delivered by firms such as the Wee House Company and Boklok, a Swedish partnership between Ikea and modular specialist Skanska. Another manufacturer, TopHat, will this year open Europe’s biggest prefab factory in Corby, Northamptonshire, with investment from Aviva and Goldman Sachs. But so far, the houses are arriving at a drip — a few hundred here, a few hundred there. There is no sign of the glorious future envisioned by prefab boosters: an abundance of affordable housing, built by robots on production lines, customised for the preferences of every consumer, and ready for move-in a week after ordering.

“There is no sign of the glorious future envisioned by prefab boosters”

It’s true that housebuilding is a woefully backward trade. Thanks to factory production, other commodities have seen big improvements in quality, cost and manufacturing efficiency over the past century; just compare a new Tesla with Henry Ford’s Model-T. By contrast, few people think Britain’s new houses are better than its older ones. Visionaries point to the impressive prefabs on offer from German firms such as WeberHaus and HufHaus — stylish, modern, bespoke homes that can be assembled in a matter of days. They contend that factory construction allows for superior quality control and energy efficiency. And they cite the examples of Japan, where prefabs built by companies such as Toyota account for 10-15% of homes completed each year, and Sweden, where up to 85% of new houses make some use of factory construction.

But these comparisons are misleading. The truly elegant prefabs that show the technology at its most advanced are tailor-made luxury products carrying big price tags, not templates to be rolled out at high volume and low cost. Japan’s modular industry has secured a niche thanks to the unusual attitudes to housing in that country: since homes rapidly lose their resale value, they are only designed to last around 25 years, and moving often involves demolishing an existing house and building a new one. Meanwhile, Sweden benefits from enormous timber resources, given that 70% of the country is forest.

The problem in a place like Britain is that prefabs need to be purchased in really large numbers before substantial gains are realised. When factories have order books running into the hundreds of thousands, as carmakers do, the cost of machinery can be spread out, consumers get greater choice, and products can improve rapidly through investment in research and automation. But all these houses need to be assembled somewhere, and so we’re back to the bottlenecks that impede building of all kinds: a restrictive planning system and local opposition to development. At Bonnington Walk, the fact that the houses were prefab did not prevent 124 local residents from writing letters to oppose the development, complaining about the loss of green space and intrusive new power lines. Some of them still believe the land was unfit for building due to shallow groundwater, pointing to large pools and mounds of wet mud on the construction site.

Progress on modular construction has certainly been hampered by the Government’s grossly inept strategy, as detailed by a damning select committee investigation in January. Housing associations have received £5.2 billion in public funding, with the requirement that 25% of the resulting homes be modular. But no figures have been published to show how much of this money has actually been spent on prefab, and thanks to vague definitions, what counts as prefab could actually be traditional construction. The Government has also failed to provide the design specifications needed to lower planning and insurance costs. A £10 million task force on modular housing, set up in 2021, has not met once. The committee concluded that, apart from “undirected and nonstrategic investment of public money”, it had “limited confidence that a coherent plan to encourage the use of [modular construction] is in place”.

Perversely then, the Government is subsidising housing associations to build prefab, but has not created the conditions where prefab can actually become cheaper than traditional homes. This is why some advocates, such as the Southbank University professor James Woudhuysen, insist modular housing can only work as part of a far more ambitious effort at modernisation. In a 2003 book, he claimed that the archaic state of housebuilding is symptomatic of a “culture of fear” pervading contemporary society, which has become too risk-avoidant to pursue genuine innovation. He told me the prefab revolution will only take off when politicians are willing to throw their full weight behind it: “We need design competitions, Type Approvals of winning designs, and large expanses of land deregulated
 so that manufacturers of homes are guaranteed enough sales to bring prices right down. Annual output of thousands, even tens of thousands, will not suffice.”

“That’ll keep you warm and dry — what more do you need?”

Of course such a project would require popular support, which raises another difficult question for the future of modular homes: do British people actually want to live in them? Factory-built housing still has awkward associations in the public mind, recalling the austere bungalows that housed servicemen after the Second World War, or the systems-built concrete tower blocks of the Sixties. Moreover, since the Industrial Revolution, Brits have generally not wanted their homes to emulate the ephemeral world of mass production and technology, but to provide a counterweight to it. More than any other product, houses are valued for embodying a sense of stability and permanence.

Of course, prefab is never going to supplant the Cotswolds cottage and Georgian townhouse as expressions of middle-class aspiration, but perhaps it does not need to. Visiting another development in Bristol, I found that Britain’s dire housing situation is making people receptive to new ideas. Along the Airport Road in the south of the city, the Swedish partnership BoKlok has completed 173 “flatpack” homes over the last two years, using wooden frames clad in artificial brick. One construction worker who watched them being assembled was impressed. “That’ll keep you warm and dry — what more do you need?” he said, pointing at a house resembling a scaled-up Monopoly piece. “I’d have one of those.” He thought it was time for a different approach, especially given the low standards of conventional new builds, which he contrasted with the solidity of the council house where he’d grown up in the north of England. “We had pride then,” he said of homes built in the Fifties and Sixties. “We’d just won the war, we’d achieved something, and we had a bit of pride.” As for today, he told me he had “spent the last five years building houses I can’t afford”, including million-pound properties that were falling apart a year after completion.

I heard a similarly positive view from a Boklok resident. Two years after moving in, he was satisfied with his home’s insulation, energy efficiency and below market-average price. All of this suggests there will be demand for prefab if it can simply establish a reputation for reliability and value for money. That means avoiding more disasters like the one at Bonnington Walk, which may, in fairness, reflect the unfamiliarity of the new methods. It also means ensuring that modular homes are built to last, since I struggle to see Britain adopting a Japanese view of housing as a disposable commodity. But even that is largely dependent on cost. If prices come down enough, we could see a split in housing cultures, between bricks-and-mortar traditionalists and modernists who embrace the latest prefab model as they would a new Apple gadget.

For the time being, there remains a strong case for the next government to try prefab on a bigger scale. The housebuilding industry badly needs a shakeup: just this week, the Competition and Markets Authority announced it is opening a probe into eight major housebuilders, looking at concerns that they are sharing information which may affect house prices. It also demanded a “significant intervention” on the poor quality of homes. Can we reach Woudhuysen’s threshold of 100,000 per year? It would be an experiment, yes, but with housing we no longer have the luxury of too much caution.

Wessie du Toit writes about culture, design and ideas. His Substack is The Pathos of Things.