As self-build grows in popularity, mutuals are best placed to lend to the MMC sector – once it has been officially defined
Recent research forecasts a steady rise in the self-build housing market of 7–10 per cent a year by 2020. But with lenders unclear about what they are willing to lend on and what borrowers can build, building societies can grasp the opportunity to become the main provider of mortgages for the burgeoning modern methods of construction sector, reclaiming their heartland in the new-build homes market.
However, with the UK in the midst of a housing crisis, there is an urgent requirement for the definition of MMC to be standardised across the industry so that the sector can be funded and underwritten.
One of the more popular aspects of MMC is offsite construction, which involves the manufacture and pre-assembly of large sections of a building ‘offsite’ in a factory.
There are numerous types of offsite construction, from permanent modular buildings to bathroom pods. And there are many benefits over onsite construction. Ask yourself this question: would you prefer your brand-new car to be assembled in a rainy field or in a state-of-the-art factory? The answer is obvious so why do some lenders consider that building a house onsite is better than fabricating the main structure offsite, where it can be erected more quickly and efficiently with better quality control, less waste and fewer emissions, all in a controlled factory environment?
Building societies were founded on a central pool of funds that was used to finance the building of new houses for members. MMC can enable building societies to seize back ownership of the new-build sector from large, spec-build PLC builders. Self-build, custom-build and community-build homes are all small niche sectors that are growing, and mutuals are often better placed than mainstream banks to lend in these sectors.
Based on technological advances, environmental pressures, carbon emission reduction targets and the trend towards offsite construction for new-builds, building societies should be encouraged to create a working party to agree an industry-wide classification of the new MMC standard of construction, as well as warranty assurance schemes.
Such a classification would allow them to unlock the full potential of this emerging market by enabling people to build homes that meet 21st century standards, while also improving supply to the crisis-hit housing sector.
Ian Fergusson is chief surveyor at Sesame Bankhall Valuation Services