What Are Modular Homes?

You have probably heard about modular homes before, but what are they? Are they different from prefab homes, and how do they perform as an investment property? In this blog we will look at the definition of modular homes, how they could change the UK housing market, and whether modular homes are a good investment.

Table of Contents

What are Modular Homes?
What is the Difference Between Prefab Homes and Modular Homes?
The Pros and Cons of Modular Homes
Are Modular Homes a Good Investment?

What are Modular Homes?

Whereas conventional houses are built entirely on-site using traditional building materials, a modular home is built in modules in an off-site factory and transported to the building site for assembly. The different modules fit together like building blocks for ease of construction. Modular homes are built using modern methods of construction, or MMC. Modular buildings can include houses, apartment blocks or other types of buildings, including commercial and office buildings.

Modular buildings are more popular in other countries such as Sweden and Japan, although interest is growing in the UK for MMC including modular homes. They could help solve the UK housing shortage as well as provide a cheap and fast construction method for essential public buildings like hospitals and schools. In fact, MMC helped to deliver 2 temporary hospital facilities in 12 days during the COVID-19 pandemic. A report by HTA Design champions modular homes, saying that they could create 50,000 jobs, reduce the carbon footprint of construction by 40% and help solve the UK’s housing shortage.

What is the Difference Between Prefab Homes and Modular Homes?

A building is considered prefabricated if any part of it is manufactured off-site. A modular building features modules, e.g. rooms that are completely fabricated off-site and then connected to other modules on-site. So all modular homes are prefabricated, but not all prefabricated homes are modular. Prefab is used as more of an umbrella term for houses that use any kind of off-site construction. Some people do use the two terms interchangeably, but for this article, we will refer to buildings that are at least 70% constructed off-site as modular homes.

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The Pros and Cons of Modular Homes

Modular homes, prefab homes and others that use a modern method of construction have their own unique benefits and drawbacks – see below for the main pros and cons of modular homes.

Pros of Modular Homes

Faster build times. Modular homes can be completed much faster than traditional builds, thanks to parallel processing, i.e. the modules can be built in the factory at the same time as foundations and other preparations are made at the construction site. Construction is also less affected by the weather as the majority of the building is made indoors.
Reduced costs. Modular homes can cost between £300 – £1,500 per square metre to build, compared to a traditional home that can cost between £1,500 and £3,000 per square metre. Labour costs are significantly decreased as a modular home can be constructed very quickly. As the modules for each building are mass-produced on a factory production line using automated processes, this also reduces the costs of labour and materials.
Increased sustainability. Modular construction generates up to 90% less material waste, thanks to precise measurements and standardised materials used in MMC. Modules can also be built with the latest energy-efficient materials such as high-quality insulation and heat recovery systems, making the property more sustainable to run.
Improved quality control. Advances in modern construction methods and a highly standardised manufacturing process mean there are fewer accidents and construction defects than with traditional builds.
Increased flexibility. Extra modules can be added to a modular home quickly and easily compared to traditional homes, and modules can be customised and repurposed to meet varying needs.

Cons of Modular Homes

Limitations on materials and structures. Modular homes may not offer the same level of customisation that you would benefit from with traditional homes. Most modular home companies offer a set number of designs that may offer internal customisation but it will be the same basic property, and once manufacturing has begun, it will be very difficult to change the design.
Maintenance and repair complications. Some modular homes may be more difficult to repair or maintain and could require specialist builders to make any repairs due to the methods and materials used.
Fewer mortgage options. Some mortgage lenders may not offer a mortgage on a modular property, perhaps due to a lack of experience and knowledge with this type of home. You may need to approach a specialist mortgage lender or accept a higher interest rate or deposit.
Zoning and regulation issues. Some local authorities may have restrictions on the placement of modular homes.
Fewer resale opportunities. Some buyers may be wary of buying a modular home, again due to a lack of knowledge and experience of this relatively rare construction process. This could improve in the future as modular homes become more common.

Are Modular Homes a Good Investment?

Modular homes can be a great investment, as they provide a lot of benefits such as being faster and cheaper to build than traditional homes, increased sustainability and efficiency. As long as you have secured a good deal on a mortgage, obtained planning permission and all required permits in advance, and are working with a reputable modular housing provider, a modular home could be a great investment.

The UK needs more housing and modular homes could be a great way of meeting this demand quickly and relatively cheaply, as they have done in other countries. Traditional housing costs are rising thanks to traditional builders ageing out of the profession and inflated costs of construction materials. Modular homes also meet the need for increased sustainability in the construction industry. As with any property investment though, take the time to do research into the local housing market, demand for properties in the area, and other factors that could affect your investment. Also, consider how investing in modular homes fits in with your short-term and long-term financial goals.

If you are interested in property investment, whether in traditional or modular homes, then you can learn from our team of experts at one of Assets For Life’s FREE property events – just click the link below to find out more or sign up today.