Legal & General thinks a certificate of quality is the answer.
An ‘industry-wide guarantee’ would bring the whole of the mortgage market on board with prefabricated ‘modular’ homes constructed offsite, says Legal & General Surveying Services.
But a spokesman for Legal & General, which owns a modular housing factory capable of building 3,000 homes per year in Leeds, thinks a certificate of quality would get the big boys on board.
The spokesman said: “An industry-wide guarantee scheme would help bring everyone to the market but, of course, their appetites will differ according to the requirements of their own lending policies.
“There are many ways of doing this [reassuring mortgage lenders that homes constructed offsite are reliable enough to lend on].
“But not least is the need to establish an industry kite mark such as Build Offsite Property Assurance Scheme or the National House Building Council which offer independent assurance around the design life of the homes.”
In the meantime building societies have a key role to play, the spokesman adds.
“Societies have a golden opportunity as much of this housing will be for first-time buyers, or make up a significant contribution to affordable housing,” he said.
“Their local knowledge of community and new build sites and manual underwriting means they can provide products that really reflect what their community's needs.
“We are working with building societies to help them better understand the opportunities these types of properties will represent.”
In November the Building Societies Association championed the offsite construction method, while societies including West Yorkshire-based Ecology Building Society are in support.
L&G Surveying Services has been helping lenders understand risks and opportunities with a programme of visits to development sites that use modern methods of construction and by having speakers talk to property risk managers.
It also invited lenders to visit its housebuilding facility, which constructs the insides of buildings.
L&G says the government also supports offsite construction and hints that the Housing White Paper imminently due “may promise more”.
The spokesman added: “The government will be keen to use these homes to fulfil the need in our cities as well as new towns.
“We see offsite construction as part of the wider solution [to the housing crisis].
“These buildings are particularly well suited to delivering affordable homes – the very kind of property we need most.”
Critics of prefabricated homes commonly compare them to ones built after World War Two for people whose houses were bombed.
But L&G assures that what it constructs is very different, saying that even without these guarantees the properties are built to be mortgagable.
“Aside from industry-wide accepted assurances from organisations like BOPAS, these homes need to be mortgageable,” the spokesman said.
“Post-war, the key was to house people. Indeed the issue of mortgagability did not really arise until the 'Right to Buy' revolution in the early 80s.
“Now the materials used must come with quality assessment so the properties can be mortgaged from the outset.
“Also the quality of build and the features and specifications available are light years away from previous incarnations.
“In fact, new techniques are likely to be higher quality than traditional techniques because they are precision engineered.
“Much like the automotive industry, the technology and features available now are unrecognisable to the post-war period.”
