Prefabricated (prefab) houses were once everywhere in the UK, especially in the post-war years when there was a chronic housing shortage. While these served their purpose very well, they’ve unfortunately created some stereotypes about what prefab housing is and could be.
Modern prefab techniques are considerably better and may offer an excellent opportunity for a developer to create an affordable, well-built home. However, are they really a great investment opportunity, or is it a false economy that will deter buyers?
This guide explores modern prefab construction techniques and how they could be the perfect approach for your next project.
What are Prefab Houses?
Prefabricated houses (known as prefabs) are homes built in sections or modules off-site and then assembled onto permanent foundations.
They generally come in a few different types:
Modular Prefab Homes
These are pre-built in large, 3D modules that are transported to the site and put in place. Typically, they’re entire rooms that can be added to the design as needed. While they’re harder to transport, they tend to be much easier to construct once they’re in place.
It’s estimated that modular prefab homes could be up to 50% quicker and use half the materials compared to traditional construction methods.
Panel Modular Homes
The interior and exterior walls come as separate panels, which are constructed on-site. These allow the designer lots more freedom to create a unique building, and are easier to transport, but are slower to construct compared to modular homes.
Panel modular homes are roughly halfway between traditionally-built properties and modular buildings.
Kit Prefab Homes
These come as an entire kit with instructions. Everything is pre-cut and ready to assemble for simplicity. However, they offer very little flexibility and may not be suitable for use as a modern family home. You can liken these to flatpack furniture, but on a much larger scale.
Post-War Prefabs
This type is often what people think of as prefab homes from the 1940’s, when there was a sudden need for affordable, quality homes that could be built quickly. There were several designs, and they were considered fairly luxurious at the time with features such as indoor toilets, central heating and modern appliances.
Many of these ‘temporary’ homes lasted well beyond their expected 10-year lifespan, and some are still even in use today. However, issues with asbestos and lower-grade materials meant that many could become damp and rotten over time.
The Pros and Cons of Prefab Houses
As with anything, there are trade-offs when deciding whether to go down the prefab route or build a traditional development. Let’s take a look.
Why are prefab homes worth considering?
Modern prefab homes come with a wide range of benefits for both developers and buyers. These include:
- Lower Construction Costs: Prefab houses are often significantly cheaper and quicker to build. For example, a prefab house should cost around £1,750 per sq metre, compared to £2,000 – £3,000 with traditional methods.If you’re working with a limited budget, choosing a prefab house may also allow you to make your project a reality or build more for the same investment. These lower costs can help increase profitability or let you price the finished property lower than others in the area to attract possible buyers.
- Faster Construction Time: Prefab homes are also quicker to build, meaning you can get your development project on the market sooner. This is especially valuable if you want to take advantage of favourable market conditions or are otherwise time-limited.
- Excellent Efficiency & Quality: Modern prefabricated homes are often built using cutting-edge methods and high-quality materials, making them highly energy-efficient and durable. In a world where homeowners are conscious of their energy bills, this can be a significant benefit to a buyer.
- Low Waste: Traditional building methods often produce a lot of waste that ends up in landfills. However, as prefab houses are built in factories and at scale, waste can be reduced and recycled.
What are the drawbacks of prefab homes?
While prefab homes have plenty of benefits, there are also some drawbacks that buyers and developers should consider, such as:
- High Initial Investment: Traditional building methods allow for cash-flow management, meaning developers may not need all of the financing at once and can draw down payments as needed.However, prefab homes often need to be paid for up front in a lump sum. Many providers will offer finance options, but these will need to be paid off before you can sell or move tenants in.
- Preparation of the Site: Your chosen site will need to be ready for construction of the prefab pieces, meaning that the foundations, access and utilities all need to be in place beforehand. This will add additional expense alongside the purchase of the home itself.
- Access: Your site will need to have suitable access to deliver the large prefabricated parts of the build. Modular prefab homes in particular can be very large, requiring the use of specialist, oversized delivery experts. This can cause problems regardless of whether you’re delivering them down narrow country lanes or busy urban streets. In some cases, you may even need to crane the pieces in, which adds further cost.
- Reduced Flexibility: By their very nature, prefab homes don’t allow as much scope for customisation and unique design elements. You may also need builders who specialise in working with prefab homes.
- Lending & Mortgages: Because prefab homes are often still considered Non-Standard Construction, many high-street lenders may not offer mortgages on them, potentially reducing your pool of buyers.Unfortunately, the perception that prefabs are less durable and prone to problems persists, making them harder to insure and more susceptible to depreciation. In turn, mortgage lenders often avoid them.
Developing Prefab Homes
Modern prefab houses can still be an attractive choice for a property developer, as they offer a great combination of quality, affordability and speed. Similarly, many buyers value the energy efficiency they can provide, especially if you include tech like solar panels or heat pumps.
However, it may take time for the perception of prefab homes to completely change. As a result, some buyers and lenders may still avoid them, making it harder to sell your completed project.
Whether it’s the right choice for you depends on your circumstances, but we’re always eager to work with property developers to provide financing options, as well as share our expertise to help make your project a success.
Contact us today to find out more.
