MMC: Why It’s Time to Set the Standard

As the Government’s own 2025 deadline approaches for new build homes to be ‘zero carbon ready’, and with mandates for 25% of new homes to be built using Modern Methods of Construction (MMC), Ian Atkinson, partner at law firm Womble Bond Dickinson, discusses the now-urgent journey to secure industry-wide MMC standards.

The Government is determined to make the shift to MMC happen: to steer the construction industry, by hook or by crook, towards more flexible, more sustainable and more consistent construction methods. “Modernise or Die” as Mark Farmer bluntly stated back in 2016.

While the construction industry isn’t widely known for readily adopting change, in this case there is plenty of enthusiasm for MMC.  The efficiencies of modern processes bring immediate speed and cost advantages to both clients and contractors whilst the labour shortages commentators have been warning of for years become a real industry concern in our post-Brexit, “pingdemic” world.

However, there remain concerns about its adoption and whether the sector can meet the deadlines the Government has set. Chief among them is the lack of standards to which MMC must be graded and assessed.

It’s something of a Catch-22: standards can’t be set until sufficient work has been done to establish what is and isn’t achievable. But because standards haven’t been set, there remains a barrier to investing in greater volumes of MMC work. The onus (and risk) has so far fallen on pioneering independents, as well as on the public/social housing sector, to lead the way while the volume/private builders watch with interest.

What do we need to see?

The BSI is currently looking at offsite construction, saying “well defined standards can help to maximise the benefits of offsite construction, and BSI is working with the industry to identify the necessary measures to ensure the correct standards are in place” – and it is working on a number of standards, like BS 5606 Accuracy and tolerance in design and construction and on prefabricated buildings.

However, these and other standards will take some time to be finalised, and it may be that in the meantime we need some best practice industry guidance – even perhaps a voluntary standard – or at least more collaborative working and risk sharing between MMC providers and the industry to fill the gap.

MMC Warranties and Insurances

One of the core tenets of MMC is that defects will be ironed out at the factory stage and never reach the site, but even so, we need consistent, industry-wide warranties that will protect the eventual buyers from the costs of possible defects.  Indeed, most lenders and mortgage providers will insist upon them.

Warranty providers currently use different standards for their assessment of homes, making it difficult to know what these homes have been tested for.

An industry wide standard warranty would go a long way to providing reassurance to those buying these properties that there is no greater risk in purchasing a house with MMC elements than purchasing one built using only traditional methods of construction.

Progress is being made here, with a number of leading industry bodies, including the National House Building Council (NHBC), having recently signed a Memorandum of Understanding agreeing to work towards a shared standard for assessing homes built using MMC, but this needs to move forward as quickly as possible.

It’s possible that even if there were a greater (perceived) risk in buying an MMC property, this becomes more palatable to buyers if there is a standard, affordable insurance available. But insurers are naturally risk adverse, and in all likelihood they would need to see MMC coming through faster and in greater volumes to “normalise” it from their perspective, so that they can understand the risks involved and then create appropriate insurance products.

Mortgages and lending for MMC-built properties

There is no industry standard between lenders as to whether (and if so on what terms) they are prepared to offer a mortgage on a home built using “non-traditional” MMC/off-site construction methods. While perceptions of MMC homes are improving, many lenders still have concerns over long-term build quality.

Most residential lenders will lend only if properties have the benefit of one of a prescribed list of warranties, or latent defects cover.

Through a combination of bringing MMC within longstanding accreditations / certifications, and the adoption of some of the newer forms of cover by the lenders, real progress will be made.

For example, the NHBC now offers an ‘NHBC Accepts’ accreditation, applied to a small number of already-available products and systems, which shows that a product or system has been rigorously assessed and that the NHBC considers that it meets its robust standards.

For now though, any owner or potential owner of a home built using MMC is likely to be faced with less freedom of choice of lenders, and additional conditions (including potentially less favourable terms) as compared with those available for traditionally built homes.

MMC is still on course to be the “future of construction”, but it is up to the Government, the construction industry, and the funders, to accelerate the outputs of their collaboration to bring that future forward.

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