Modular housing: key considerations

Tiffany Cloynes and Chris Hawrylak identify the issues for local authorities to consider when it comes to modular housing.

Developers are showing increasing interest in the use of modular housing to find innovative ways of delivering much needed housing. For local authorities, modular housing projects can provide an effective way of addressing the housing needs of their communities. A recent example of this is the decision by Cardiff Council to grant planning permission for a modular housing scheme which will build modular houses which will be let at council rent levels.

Modular houses are manufactured off site before being assembled and finished at the sites where they will be located. This method allows preparatory work to take place at those sites whilst the houses are being manufactured elsewhere, which can provide opportunities to reduce the time and costs that might otherwise be required. There are therefore good reasons for local authorities to explore opportunities to develop these projects in their areas.

If local authorities are going to become involved in developing modular housing, there will be some important issues to consider. These include:

  • The regulatory requirements that will need to be addressed when developing housing. Local authorities will need to take account of these when planning the time and other resources that will be needed for their modular housing  projects. They will need to consider how these could impact on their expectations from a project and their ability to deliver them. They will also need to consider the most effective ways of using their resources. For example, if a project team is using modular housing with the aim of building houses relatively quickly, the team will not want its project to be delayed by the time taken to obtain planning permission. However, the team will need to consider carefully how much time and resources to devote to the project before planning permission is obtained, as those resources could be wasted if planning permission cannot be obtained for the proposed development. However, if the team does not progress the project before receipt of planning permission, it may find that it needs to devote more resources than it had expected in order to move the project forward quickly once planning permission is obtained. Unless a project team is clear about the legal requirements from the outset and is satisfied that it can plan and implement appropriate arrangements to meet its objectives, it might find that it derives limited benefit from a modular housing project.
  • The need for agreements to be suitable for the particular characteristics of modular housing and to contain sufficiently robust provisions to protect the interests of local authorities. For example, local authorities will need to consider what would be effective by way of security for contract performance relating to modular housing. The bespoke nature of the products produced by suppliers of modular housing could mean that provision for a local authority to have access to funding which would allow it to appoint a replacement if a contractor is unable to meet its obligations will be of limited use if the local authority is unable to identify a suitable alternative. Unless a local authority is satisfied that a contract for the delivery of modular housing contains adequate provision to ensure that a project will progress and to protect the local authority’s interests, it would not be reasonable for the local authority to enter into the contract.
  • The design life of modular housing products and whether this is compatible with a local authority’s expectations as to the longevity of a project. The current industry standard is 65 years. If a local authority expects to use modular housing to meet long term housing needs, it will need to take account of the impact of the expected life of the products.
  • If a local authority will be spending money on a modular housing project, it needs to ensure that the financial management arrangements are appropriate. It will be helpful if a local authority can ensure that everyone involved in a project is clear about the financial arrangements from the outset. For example, a supplier will expect to receive some payment in advance of delivery of a modular housing product, possibly up to 80%, in order to fund its supply and construction costs but it will need to understand the obligations that a local authority has to provide for the proper administration of its financial affairs and the fiduciary duty it owes to those whom it serves.

Modular housing can provide local authorities with exciting opportunities to address housing needs but it is important for them to identify and address any relevant legal issues when pursuing those opportunities.

Tiffany Cloynes and Chris Hawrylak are partners at Geldards. Tiffany can be reached on 01332 378 302 or This email address is being protected from spambots. You need JavaScript enabled to view it., while Chris can be contacted on 01332 378 316 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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