A century-old sustainable housing idea is struggling

The idea of using pre-assembled components in housebuilding is far from new.

Modern tech-enabled versions of modular housing promise a faster, more sustainable solution to housing crises, according to experts. But the sector has seen better adoption in some countries compared to others where it has failed to scale — such as the U.K.

Prefabrication has existed in many forms, from the defenses used by William the Conqueror in his invasion of England in 1066 to Sears’ mail-order homes in the U.S. in the early 1900s.

Fast forward a century and entire modules can be built in factories to then be combined to create houses in just weeks. Speed is just one advantage that modular homes offer compared with traditional construction, a factor which is key in countries such as the U.K. which continues to face shortages of affordable housing.

The fact that modular housing is also made in a controlled factory environment means less waste is generated, while also resulting in more energy-efficient homes. Andrew Shepherd, managing director at British modular developer TopHat Communities, told CNBC that the firm’s factory had sent “zero waste to landfill” in the last three years.

Building entire sections in one place also means fewer delivery trips to sites, Shepherd explained. A 2022 report from industry group Make UK Modular highlighted that 80% fewer vehicle movements were needed to development sites with modular building.

Another study by academics at the University of Cambridge and Edinburgh Napier University, published in 2022, found that modular home construction can result in 45% less embodied carbon. This refers to the emissions generated in the construction process, including the making and transportation of materials.

Despite these benefits, the sector has seen a number of setbacks in recent years and it remains relatively nascent in the U.K. and U.S.

In January, it was reported that U.K. firm Modulous had entered into liquidation after failing to find a buyer. In the U.K. last year, Ilke Homes collapsed, while Legal & General moved to wind down its modular housing factory. One of the most high-profile failures in the sector was SoftBank-backed Katerra in the U.S., which filed for bankruptcy in 2021.

Jonatan Pinkse, professor of sustainable business at King’s College London, highlighted that part of the challenge for modular construction firms is that they first have to spend money on building a factory in which to construct modules and then need to have the projects in the pipeline to pay for this investment.

He suggested that this presented more difficulty when coupled with the headwinds that also affected the wider construction sector, including higher energy costs and interest rates, as well as a cost-of-living crisis in many nations prompting…