Prefab Homes: The Rise of Modular Homes in the UK

Prefab homes became popular in the post-war UK when many homes had been destroyed by bombing raids. The Government needed a way of creating accommodation for displayed citizens and those returning home from the war – and that’s where prefabricated homes came in. During the late 1940s and 1950s, these prefab homes were made from precast reinforced concrete, the parts made in a factory and then assembled on site. This was a quick and cheap way of creating housing and people loved these new houses with modern features like central heating, indoor bathrooms and fitted kitchens. They weren’t expected to last much more than 10 years, but many post-war prefab houses are still lived in today and could be a way of solving the current housing shortage in the UK.

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But what does a prefab home look like in 2025? How much do they cost? Is it possible to get a mortgage on a prefab house? Read on to find out more about modular or ‘prefab‘ housing and how it could change the UK housing market.

What Are Prefab Homes?
The UK Modular Construction Market
How Much Do Prefab Homes Cost?
Can You Get a Mortgage on a Prefab Home in the UK?
Do Prefab Homes Appreciate in Value?

What Are Prefab Homes?

A prefabricated house, also known as modular housing, is a house built in components, or modular parts offsite in a factory and then assembled on-site. In the past, they used mostly concrete walls and either metal or wooden frames and the houses were intended to be temporary and utilitarian. Now, prefab or modular homes are hi-tech, modern, fashionable and sustainable, with luxury prefab brands like the German Huf Haus and Baufritz creating award-winning modular homes. The principle remains the same from the original prefabs of the 1940s and 1950s to the stylish minimal designer prefab homes we have today, in that the houses are assembled and installed quickly and use fewer resources and materials than traditional house building techniques.

The UK Modular Construction Market

For a while, prefab housing was considered not very fashionable, inspiring images of grim concrete blocks and basic, small houses that all look the same. Nowadays, prefab housing has a new, more polished image, with designer prefab homes boasting large glass walls, bespoke, spacious open-plan layouts and eco-friendly materials and features. Homebuyers are catching on to this trend, and prefab homes are rising in popularity in the UK and even large houses can be built for around £50,000. Modern features can be built in easily such as underfloor heating, smart thermostats and lighting controls and other smart home technology. These sustainability features, reduced cost and relative speed of prefab houses mean they could become a serious competitor for traditionally built homes in 2025 and beyond. According to a report by McKinsey & Co, modular construction can offer a 50% increase in construction speed, a 20% reduction in costs, improved build quality and better energy performance.

How Much Do Prefab Homes Cost?

A prefabricated house will usually cost 10% – 20% less than a traditionally constructed house of the same size. Some designer prefab houses can cost a little more but that is the more high-end, luxury type of home than a standard residential dwelling. Depending on the size, materials used and other factors, a modular home can cost anywhere between £300 – £1500 per square metre, compared with a traditional home which costs between £1,500 – £3,000 per square metre to build.

Can You Get a Mortgage on a Prefab Home in the UK?

You can obtain a mortgage on a prefabricated home, although not all mortgage lenders are willing to lend against this type of property, so bear this in mind. New prefab homes use modern, durable materials, but they are often non-standard building materials and this can affect the mortgage approval process. Some mortgage lenders may ask for a larger deposit on a prefab home – this varies depending on the lender and the property itself, but be prepared to provide a deposit of at least 25%, giving you an LTV (loan-to-value ratio) of 75%.

As with most mortgages, a property survey will need to be done before the mortgage can be secured. You are much more likely to get a mortgage on a modern prefab house (built after the 1980s) than an older prefab property. It can also be more difficult to get insurance for an older prefab property.

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Can You Get a Mortgage on a Prefab Home in the UK?

Modern prefab homes may appreciate in value thanks to the use of high-tech materials and building methods, sustainable building materials and the possibility of easily adding modular extensions. Not all prefab houses are built equally – the high-end designer homes offered by the likes of Huf Haus that get featured on Grand Designs will no doubt appreciate in value more than a basic budget modular house. Popularity plays a part too – it could be that prefab housing will fall out of fashion in the future, or these types of homes will become trendy, sought-after properties. As with any property, regular maintenance is essential to make sure the property does not decrease in value. External factors like the local area and market trends can play a part in the value of a house too.

Regardless of whether you think prefab houses are a passing fad or here to stay, the UK does need more houses built, and prefabrication is a fast and relatively cheap way of doing this, so it’s likely we will see more and more prefab houses popping up. It could be sensible to avoid investing in this type of property before we see how well modern prefab houses stand up to the test of time, although if they do become more popular, you may regret not getting in on investing in prefab homes at the beginning. Ultimately, the choice to invest in this type of housing depends on your financial situation, risk appetite, and your interest in innovations in the UK housing market.

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