The NHC Releases Second Universal Credit Impact Report

The Northern Housing Consortium has today released its ‘Impact of Universal Credit, Round 2’ report. The second in a series of four (read here), this report builds on the results of the first report published in July (read here). The research investigates how the implementation and continuing rollout of Universal Credit is affecting housing organisations in the north.

This new update collects trend data and draws comparisons between the full survey results with the returned data from North West housing provider respondents to ascertain whether working with the Universal Credit (UC) system for a longer time affects respondents’ experiences of the system. Some of the key findings from the Round 2 report are:

  • More than a third of the respondents said that tenants had terminated their own tenancy as a direct result of UC
  • Almost all organisations that debit tenants’ rent account in advance found UC payment in arrears caused them difficulties
  • 5% of organisations have introduced credit reference checks to prospective tenants as a result of UC implementation
  • 9% of respondents have experienced delays in processing UC claims

The NHC will continue to use its findings to engage with the Department for Work and Pensions (DWP) officials through the NHC’s roundtable programme to raise members’ concerns and experiences. The NHC will work with DWP to make the new system as smooth as possible for tenants, housing providers and DWP alike.

Future rounds of the survey will be announced in the NHC eZine but there is also a dedicated contact list for anyone interested in taking part in the project. To ensure you are able to participate in future rounds, please contact Barry Turnbull, Policy Services Officer at barry.turnbull@northern-consortium.org.uk.

Government Announces LHA Cap Freeze

The Government has announced an exemption from the Local Housing Allowance (LHA) cap for those tenants living in hostels and supported housing but is proceeding with the 1% rent cut.  In a written statement to Parliament, the Work and Pensions Secretary, Damian Green, said that he would defer the imposition of the LHA cap on supported housing until 2019-20 after which a new system would keep funding at current levels.

The announcement follows deep concern from the housing sector, charities and third sector organisations who warned that if the cap were to apply to those living in hostels and supported housing, it would see the schemes providing support to these vulnerable groups become financially nonviable and at risk of closure.  One of the chief concerns raised by those organisations working with the homeless and the mentally ill was that the LHA cap would mean widespread closure of many hostels and shelters which could force thousands of people on to the streets.

The NHC’s own research and member engagement on this matter has found that many registered providers in the North froze development of new supported schemes after the announcement of the cap last year with nearly all plans for future schemes left in doubt. The Ministerial Statement on LHA Cap freeze outlines the broad structure of a replacement model which would see Local Authorities receive funding to ‘top up’ LHA – however, many questions remain. Whilst the LA fund is ‘ring fenced’ it is not clear how long this ring fence will last – or indeed how porous it turns out to be. Equally, the impact on sheltered schemes is not yet clear. The government will shortly issue a consultation paper and the NHC will respond to this.  For more information on LHA issues please contact Policy and Public Affairs Officer, Callum Smith at callum.smith@northern-consortium.org.uk

Lower Quartile Affordability Ratios find North East most Affordable Region

In mid-July, the Government published affordability ratios by every local authority in the country up to 2015. The affordability ratios are calculated using ONS House Prices Statistics (based on Land Registry data) and earnings from the Annual Survey of Hours and Earnings. The earnings relate to the respondents’ place of work rather than place of residence. This means that affordability in commuter areas reflects the earning power of commuters. Ratios were published by lower quartile and median house prices and earnings. This article will explore lower quartile affordability ratios for local authorities in the North.

Since the introduction of the data in 1997, there has been a steady upward trend in the English lower quartile affordability ratio, rising by 3.45 point to 7.02 in 2015 (national and local authority level figures have been revised for 2013 to include revisions made to earnings and house price data) as Figure 1 shows.

Figure 1: LQ house price to LQ earnings (England)

affordability-chart

At the end of 2015, the average lower quartile affordability ratio for the whole of the North stood at 5.58; the most affordable region was the North East where there was a lower quartile affordability ratio of 4.87, followed by the North West (5.50), while Yorkshire and the Humber was least affordable with a ratio of 6.37.

It is no surprise, then that the most affordable sub-regions are in the North East. In Durham (3.63) and the Tees Valley (4.61) the North East has the two most affordable places in the North to buy a home. There are also affordable areas in South Yorkshire (5.00) and Merseyside (5.09).

The three most expensive sub-regions are dotted across the three northern regions. Residents of North Yorkshire (8.41), Cheshire (6.15) and Northumberland (5.98) require a larger slice of their income to be able to buy a home.

As Map 1 below shows, there are areas across the north with more affordable local authority areas – those with ratios of 4.5 or below but there is, along with Trafford, one large swathe of less affordable local authorities with ratios of over 8, stretching from southern Cumbria into North Yorkshire. The least affordable local authority in the north is Harrogate with a lower quartile ratio of 10.04, while South Lakeland (9.14) also has a ratio well above the northern average.

Map 1: Ratio of lower quartile house price to lower quartile earnings by Local Authority, 2015

affordability-map1

The current picture in the north is a result of year-on-year increases since the revisions in 2013. In those two years there was a 0.26 point increase on average across the three regions. Both the North West (0.31) and Yorkshire and the Humber (0.36) saw increases higher than the northern average while in the North East the increase was significantly lower than the average (0.12).

Indeed, both Durham (-0.13) and Tees Valley (-0.06) in the North East were the only sub-regions were there was a fall in affordability ratios and housing became more affordable. Conversely, Cumbria (0.61), North Yorkshire (0.54) and Northumberland (0.53) saw the greatest increases in affordability ratios.

Map 2 shows the change in affordability ratios by local authority. It shows, as in Map 1, south Cumbria features prominently. However, unlike Map 1, the authorities where affordability ratios have grown the most are pepper potted across the north. Again places like Eden and Harrogate feature with increases of 1.80 and 1.01 since 2013 respectively but also Barrow-in-Furness (1.07) and Scarborough (0.96) have seen significant increases over this period.

Map 2: Change in ratio of lower quartile house price to lower quartile earnings by Local Authority, 2013-2015

affordability-map2

By interrogating the source data for the affordability ratios, an explanation for the differing changes in the ratios may be gained. The relatively small change in the affordability ratio in the North East can be explained by both lower quartile house prices (6.2%) and lower quartile annual income (6.3%) increasing at a very similar level between the two years. In comparison, lower quartile house prices in both the North West (7.3%) and Yorkshire and the Humber (7.7%) increased significantly quicker than lower quartile earnings in these regions (2.9% and 2.5% respectively).

However, reasons for increasing affordability ratios may alter between geographies. Amongst the local authorities that are noticeable for the increase in their ratio include Barrow-in-Furness. Here, lower quartile earnings grew by 1.4% compared to an increase in lower quartile house prices of 8.7%. Elsewhere, while the 0.53 point increase in Northumberland can be partly explained by a 10.8% increase in house prices, this in coupled with a 4.3% fall in lower quartile earnings.

Contact: Barry Turnbull

barry.turnbull@northern-consortium.org.uk

Communities and Local Government Questions | Monday 18 July

In something of a baptism of fire, with some members of the CLG team having only been in place for 24 hours, the new ministerial team made their debut at CLG Questions on Monday 18th July. The NHC have prepared a summary of the session below and the full Hansard entry for the session can be found here.

 

Business Rate Retention

Responding to a question from Lucy Allan MP on the progress made to enable local authorities to retain 100% of business rates, Sajid Javid noted that “the full retention of business rates is a reform that councils have long campaigned for, and it will shape the role and purpose of local government for many decades to come.” When asked whether there were plans to top-slice business rate income from councils with higher levels of business rate income to subsidise those with lower levels, Javid said that “some redistribution will be necessary among authorities to ensure that no council loses out if they collect lower business rates but … that where that is done, they will keep the extra revenue”

In a follow up question, Andrew Gwynne MP noted that not every area had the ability to raise income from business rates or council tax and that, when he was looking at redistribution, would he ensure a fair settlement for areas such as Tameside. Javid noted that there was, at present, a consultation on fair funding to look into the issues raised by Mr Gwynne.

 

Adult Social Care

Grahame Morris, the Shadow CLG Secretary, asked if the Secretary of State was “aware of a recent report by the Association of Directors of Adult Social Services, which found that 93% of councils implemented the social care precept, but that raised only £380 million.” He added that “some £1.1 billion is needed to maintain social care at its current level. Social care is facing a perfect storm … so what action is the Minister going to take to address the chronic underfunding of our social care?”

Mr Javid responded that it was a “huge priority” for the Government to ensure that adult social care was adequately funded and refuted the notion that it was underfunded. He added that the social care precept will provide an additional £2 billion a year by the end of the Parliament adding that when local authorities were asked what they would need to fund adult social care they gave a figure of £2.9 billion and received £3.5 billion.

 

Brexit and Social Housing

Asked about the potential effect of the UK leaving the EU on the level of funding available for social housing, the Housing Minister, Gavin Barwell, noted that the Government had “committed £8 billion to deliver 400,000 much-needed affordable homes—the largest affordable housing programme for nearly 40 years” before noting “the result of the EU referendum does not change that commitment.”

Following up on her question, Kirsten Oswald MP noted that “the UK has had £43 billion of European Investment Bank loans over the past eight years, whereas non-EU countries such as Norway or Switzerland have had only £1 billion. Can the Minister provide any detail on his contingency plan for the funding of social housing and infrastructure projects when that EU finding inevitably dries up?”

The Minister acknowledged that “that obviously makes some contribution towards our delivery of affordable housing” but reiterated that “the Government have committed £8 billion. That will deliver starter homes, shared ownership homes and more affordable and intermediate rent housing”.

In a supplementary question, Kevin Hollinrake asked “does the Minister agree that as we have made the decision to leave the EU, now is the right time to consider more investment in social rented homes to meet local needs and local affordability?” to which the Minister responded “we need a mix of tenures—a mix of offers” adding that the question  “tempts me into decisions that will ultimately be for the Government and for the Chancellor at the next Budget, but he makes a powerful case for further investment in affordable housing.”

In his supplementary, Clive Betts MP asked “are the Government still committed to building a million homes in this Parliament? Given that leaving the EU could have a depressing effect on the private house building industry, will he reconsider the Government’s current policy of not providing one single penny towards the building of social housing in their budgets, and recognise that to deliver a million homes, we will have to build some social housing?”

In his response, Barwell said that yes, the Government remained committed to building a million new homes. He continued that “we are looking at a mixed programme, including investment in affordable and intermediate rent, as well as shared ownership and helping people to own their own homes. I point the hon. Gentleman to the research that shows that 86% of our constituents want to own their own home. One of the critical things that we should all be trying to do is help people enjoy the opportunity that nearly all of us as Members of Parliament enjoy.”

 

Brexit and House Building

In response to another Brexit themed question, this time on the effect of Brexit on house building, Gavin Barwell replied that the Department for Communities and Local Government are keeping markets under review, and that the Ministerial team would be meeting with the major house builders this week.

Responding to this, David Hanson highlighted that “uncertainty breeds uncertainty, and the problems faced before and after the referendum have resulted in the market value of many building companies falling by as much as 40% because of uncertainty about the future.” He Will he agree to report back early to this House on what steps we can take to secure confidence on new build in the housing market?” Replying, the Housing Minister said “I am certainly happy to undertake to do that. I have two points to make. First, the right hon. Gentleman will have seen the steps that the Bank of England has taken to reassure markets following the referendum. Secondly, I draw his attention to a statement by Peter Andrew, the deputy chairman of the Home Builders Federation, who said on 5 July ‘House builders remain confident in the underlying level of demand for housing and will continue to deliver the homes the country needs’”.

In his contribution, John Healey – a former Housing Minister and recently resigned Shadow Housing Minister – said that “on house building, new research from the House of Commons Library shows that, in the six years under last week’s Prime Minister, fewer new homes were built in this country than under any Prime Minister since the 1920s, including 14% fewer than under Gordon Brown, despite the downturn; 21% fewer than under Tony Blair; and 35% fewer than under Margaret Thatcher. The new Housing Minister and Secretary of State are not responsible for their predecessors’ mistakes, but they are responsible for what happens now, particularly in the light of the EU referendum. After six years of failure on housing under Conservative Ministers, what changes can we now expect to see?”

Mr Barwell responded that Mr Healey “was one of my predecessors, and under him new house building was at the lowest level since the 1920s. Obviously, we had to recover from that position. Net new dwellings last year were at the same level as the average over the whole period of the Labour Government. I point the right hon. Gentleman to one statistic: in the year to March 2016, 265,000 homes were given planning permission, which is the highest figure on record.”

 

Combined Authorities

In a question to the Minister, Emma Lewell-Buck highlighted that “over the next five years alone, the north-east was due to receive £726 million in EU funding, but the north-east devolution deal promises only £30 million a year for 30 years.” She added that “many devolution deals were already in a state of collapse before the EU referendum. With such high levels of uncertainty because of Brexit, is it not time he revisited all the devolution deals?”

The Secretary of State responded saying that “there is no need to reconsider any of the deals. These are good deals that have been reached by local leaders and central Government, and they will all, in turn, help to boost local growth. The hon. Lady mentions EU grants. As my hon. Friend the Minister for Housing and Planning has mentioned, it is important that we bring certainty, and that is what we will be working to do.”

 

Infrastructure Investment

Many Opposition MPs sought reassurances from the Ministerial team that any EU Regional Development funds earmarked for communities in the North were honoured in light of the decision to leave the European Union. Grahame Morris noted that “assurances on EU structural funds—£5.3 billion of funds for local government—is a key issue. With respect to the Minister may I point out … as an MP representing a northern constituency that only one of the top 15 infrastructure projects receiving the most public funding is in the north? What assurances can he give that leaving the EU will not widen the economic divide in our country, and what guarantees can he give that investment from the EU will be maintained up to and after Brexit for the UK?

Andrew Percy, the new Minister for the Northern Powerhouse, responded that “if he had seen the new Prime Minister speak outside No. 10 when she took office, he would know that she is clear that delivering economic development across the United Kingdom outside London is a key priority. That is exactly what we have done through our devolution process, the local growth fund initiative, £12 billion of funding, and commitments such as High Speed 2 that go way beyond anything promised by the hon. Gentleman’s Government on transport in the north of England.”

House-building in the North

There have been many articles in the housing press post-Brexit about how the decision to leave the European Union has or will impact on the housing market. By analysing the latest Department of Communities and Local Government house-building data, we try to show if builders’ confidence was affected by the prospect of Brexit. This article will compare house building in the first quarter of 2016 with the corresponding data of 2015.

Headlines

In total, between January and March of 2016, there were 8,590 dwelling starts and 7,300 completions across the three northern regions. This equates to almost a quarter of all starts and completions in England (24.2% and 23.2% respectively).

While dwelling start figures for England fell by 10.2% compared with the first quarter of 2015, starts increased in the north by 11.4%. Indeed, total England starts fell in every tenure, whereas there was an increase in northern private starts (12.3%) and housing association starts (6%).

Conversely, dwelling completions fell in every tenure in the north and by a total of 10.9%. This compares to an all England fall of 8.3%. However, there was a 2.2% increase in private building in England as well as a 69.2% increase in local authority building completions compared with a 50% fall in the north.

Regional Activity

 

North East

    Quarter 1 2015 Quarter 1 2016 Change
All tenures Starts 1,630 1,700 +4.3%
Completions 2,300 1,700 -26.1%
Housing association Starts 170 210 +23.5%
Completions 540 230 -57.4%

North West

    Quarter 1 2015 Quarter 1 2016 Change
All tenures Starts 3,170 4,340 +36.9%
Completions 3,560 3,100 -12.9%
Housing association Starts 270 350 +29.6%
Completions 840 460 -45.2%

Yorkshire & Humber

    Quarter 1 2015 Quarter 1 2016 Change
All tenures Starts 2,910 2,550 -12.4%
Completions 2,330 2,500 +7.3%
Housing association Starts 230 150 -34.8%
Completions 370 290 -21.6%

The tables above show Yorkshire and Humberside bucking the northern trend insomuch as there was an increase in all completions, whilst the North East and the North West showed an increase in starts and decrease in completions – both total and for housing associations.

Sub-regional Activity

There were large increases in starts in Cheshire (73.6%) and Greater Manchester (59.5%) – largely driven by increases in Halton and Bolton respectively. Meanwhile, there were large decreases in starts in Northumberland (-50%) and Humberside (-45.9%). There were decreases in all Humberside authorities with the exception of North East Lincolnshire.

Completed dwellings more than doubled in Cheshire (115%) on 2015 Q1 figures and increased by over two-fifths in Northumberland (42.9%). In the North East, County Durham (-42.9%) and Tees Valley (43.4%) saw the largest decrease in completions.

Contact:

Barry Turnbull

barry.turnbull@northern-consortium.org.uk

Universal Credit Research Update

The first round of surveys for the NHC’s Universal Credit research is now complete and data analysis and report writing is underway. The project is designed to collate intelligence around the on-going issues for participating organisations and their tenants/residents during roll out of Universal Credit.

The next project milestones will be:

  • Publication of Report 1 (May)
  • Round 2 survey distributed (June)
  • Focus Group 1 (mid June)
  • Publication of Report 2 (July)
  • Round 3 survey distributed (September)
  • Focus Group 2 (end of Sept/beginning of Oct)
  • Publication of Report 3 (October)
  • Round 4 survey distributed (December)
  • Potential Focus Group 3 (Beginning of Jan)
  • Publication of Final Report (January)

Evidence collected throughout this project will be used to engage with DWP officials to raise members’ concerns of procedural issues in the early stages of the new regime. It is important therefore, that as many members participate as possible so that we can take a robust evidence base to these discussions. Please watch for announcements in future editions of the NHC eZine of the next round of the survey and submit your evidence here.

If you would like more information on this research or if you would like to discuss how NHC can help you with your research needs, please contact Barry Turnbull, Policy Services Officer on 0191 566 1030 or at barry.turnbull@northern-consortium.org.uk

Regional Policy Network Round-up

The NHC as a membership body, facilitates three regional Policy Networks across the North East, North West and Yorkshire & Humberside. The North East Policy Network has been up and running for many years, and recently has grown and attracted interest from even more members across the north east.  The Yorkshire & Humber and North West Policy Networks are very new, and have met once to date with a second meeting for each scheduled in the next coming months.

The Policy Networks provide NHC members the opportunity to come together on a quarterly basis, at different member venues in each region to network and discuss policy developments and what they mean for each region, challenges and approaches to mitigate their impact on business, tenants and communities, and good practice.

Across the three networks there were shared concerns which included:

 

Universal Credit (UC) 

  • Huge concerns and challenges around inconsistency of messages from DWP/JCP
  • Organisations need to increase staff time and resources to manage the small number of current cases and time spent on each one. This will not be sustainable going forward as UC is fully implemented.
  • Concerns around the Full Digital Service and how this will be managed by each local JCP office. What about those who can’t access the service for various reasons? What support will be in place for them? Will this delay their claim/payment?
  • Relationship with local DWP Partnership Managers largely positive. However there are issues with the Service Centres – are the messages being communicated to the relevant colleagues there?

 

LHA Cap

  • Members are currently carrying out various impact analyses and modeling different scenarios.
  • Seen as a high business risk across the sector – high rise stock and supported housing poses the greatest risk to businesses.
  • Ways to mitigate the impact of the LHA cap include reviewing allocations and tenancy policies. What do these look like? The introduction of affordability checks and refusing tenants who are unable to afford it will cause problems.
  • The general view is that no-one really understands what the effect of the change will be and that the impact probably won’t be known until it actually happens. Often, tenants will only deal with financial changes when they actually hit, as was the case with the under occupation charge.

 

1% Rent Reduction 

  • Has had a huge impact on businesses. Many organsiations are experiencing staff cuts and restructures.
  • Many members are carrying out reviews of non-core and core services, looking at costs and benefits.
  • Developments are being stalled until a full review of business plans is carried out

 

Benefit Cap

  • Identifying tenants who will be impacted is a difficult process as the sector does not collect information on tenant income.
  • Some members are contacting those that were affected by the £26,000 cap and informing them of the up-to-date changes.
  • Some members are visiting households potentially impacted.

 

This is a summary of some of the discussions that have taken place to date across the networks, for further information on the regional policy networks, please visit http://www.northern-consortium.org.uk/services/policy/working-groups/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delivering New Homes – A Future Off-site?

This is the first in a series of briefings, produced by the Northern Housing Consortium, covering off-site manufacturing and modular housing and the role it might play in addressing the shortage of new homes in the UK.

The briefings will cover the many aspects of off-site construction including the financial case, accreditation, sustainability and energy efficiency. This first briefing will give an overview of off-site construction and take a look at its potential impact on social housing.

———————————————————————————————————————–

While the Government has outlined a number of housing related policies and initiatives aimed at increasing home ownership and addressing the affordability crisis, underlying it all is the severe shortage of new homes. For decades, housing supply has failed to keep pace with increased demand due to a longer life expectancy, immigration and a rise in single occupancy households. It is estimated that an increase of two or three times the current supply is needed to close the gap. Or put another way, around 250,000 new homes each year for the next 20 years and the Government has set an ambitious target of 1 million new homes started by 2020. To achieve this target, the Government is focusing on three key areas: building houses on scale and at speed, SMEs, and innovative technology.

Building new homes at the scale and speed needed to meet the nation’s needs is a challenge for a construction industry hit hard by the recent economic downturn.  The sector, which has seen massive consolidation over the last eight years, now has to contend with a significant reduction in skilled labour and a brick shortage. It is clear that tackling the housing shortage is going to require some innovative solutions and off-site manufacture (OSM) could be the key to accelerating the delivery of new homes.

So is off-site manufacture really innovative? Well, no. Pre-fabricated housing has been around for over a century and was used in large numbers in the mid-20th century to quickly replace housing stock destroyed in the Second World War. Since then, it has suffered something of an image problem and developers have tended to stick to more conventional onsite construction for residential developments. Innovation has of course, continued in off-site manufacturing and it has come a long way since the post-war prefabs of the 1950s. New OSM technologies have been used widely for hotels, offices and student accommodation.  Modular off-site construction is commonly used abroad and is the standard form of construction in many countries. Now, the depth of the current housing shortage has forced developers in the UK to take a fresh look at off-site manufacturing.

Politicians and the construction industry alike have expounded the virtues of OSM in recent years. Speaking in 2014, Brandon Lewis MP, Minister for Housing & Planning, insisted that not only would off-site construction methods improve the quality of homes, it would deliver them faster and he urged the sector to embrace modern construction methods. According to government figures, the offsite construction sector currently accounts for around 7% of total construction output in the UK and is worth more than £1.5bn to the economy.

If proof were needed that OSM is moving up the agenda, the institutional investment by Legal & General into large-scale off-site manufacture demonstrates its belief that the market is set to grow. Legal & General Homes are poised to open an off-site manufacturing plant using cross-laminated timber (CLT) in Leeds – the first in the UK. With a capacity of 3,000 units every year, it will also be the largest in the world to use CLT.

 

What OSM technologies are available?

Volumetric units – 3D modules fully assembled in a factory (the term “modular” is used to describe load-bearing units). The units can arrive onsite with electrics, plumbing, kitchens and bathrooms all fitted.  They can be decorated and even leave the factory with curtains hanging.

Cross-laminated timber – Used by some manufacturers, CLT has outstanding structural performance, zero deflection when moved to sites and requires no plastering.

Panellised systems – This system involves the on-site assembly of flat panel walls, and cassette floors and roofs. Systems range in complexity from simple timber or light steel frames (open), to more complex factory finished units incorporating insulation, lining, doors, windows and services distribution (closed panels). Panellised systems can be used for refurbishing existing properties using a ‘wrap-around’ process and Accord’s OSM business, LoCal Homes, has used this method in a real feat of engineering to refurbish individual flats as part of a block.  This could offer a solution for housing associations in northern regions where the quality of existing stock is often seen as a problem.

Hybrid – A ‘best of both worlds’ approach combining the benefits of modules for highly serviced areas like kitchens and bathrooms with the flexibility associated with panellised construction for other spaces.

 

CAD/CAM Design & Manufacture

Computer-aided design and computer-aided manufacturing software are used to produce highly accurate and precise structures from wood, steel or concrete. 3D modelling enables a fully completed building to be visualised before its construction. This allows for the complete traceability of components making it easy to identify parts for maintenance schedules.

Such precision means that modular units are able to be almost completely airtight. The window voids on Legal & General CLT modules are predicted be to within 0.1mm accuracy which means there is no need for foam or draft excluders. Working to such tight standards requires extra care at the design stage to ensure a high level of accuracy and close collaboration between project management, architects, site contractors and the off-site manufacturer is crucial.

The use of CAD/CAM has also enabled mass customisation which can be achieved at relatively low volumes, giving developers a greater degree of flexibility to meet specific needs.

 

Benefits

Speed – The obvious and perhaps most significant benefit to OSM is the shorter build time. The clean, controlled factory environment allows for a much faster build without the inevitable stoppages for bad weather. It also allows for site preparations and foundation work to be carried out simultaneously. From the point at which plans are submitted to the factory, a volumetric build can be ready occupation in around four months and it can take as little as 48 hours site time to be put in place.

Predictability – With a high percentage of the build in a controlled factory environment, overall build costs are largely stable and predictable.

Cost – The factory setting results in consistent build quality and better quality control with fewer defects.  Other cost savings can be made through reduced preliminaries and value engineering.

Quality – Volumetric production in particular offers significant benefits by transferring specialist trades for highly serviced areas such as bathrooms, in factory conditions.  The repetitive processes within the factory ensure every component is manufactured to the same exacting standards and quality control is built in as part of the process, leading to consistent, high quality finished products.

Labour – A reduced on-site labour requirement lessens the effect of labour and skills shortages in the construction industry.

Reduced waste – Off-site manufacture means that there is very little on-site waste to dispose of and it is far easier to re-use or recycle much of the waste generated within the factory. Premier Modular (part of Waco) for example, operates a Company Environmental Management System to recycle or re-use 90-95% of their waste materials. Composite panel cut-offs are broken down and reused, timber is wood chipped and plasterboard is processed to produce fertilizer or even cat litter.

Health & Safety – Health & Safety is much easier to control in a factory environment and with fewer people on-site, the risk of accidents is significantly reduced.

Theft – There is less need for easily removable materials to be kept onsite, therefore reducing the risk of theft.

Less disruption – Off-site manufacture drastically reduces vehicle movements, dust and noise on-site, meaning less disruption for local residents.

Energy efficiency – Off–site manufacture is significantly more efficient to build and is demonstrably more airtight, reducing energy bills for residents – usually built to Code of Sustainability 4, 5 or 6.

Flexibility – Volumetric modules are supported by the four exterior walls, allowing the internal space to be easily adapted in order to meet changing requirements.

 

How will this impact social housing?

As well as the pressure on housing associations to deliver more affordable new homes, the 1% rent reduction has increased the need for new and efficient ways of working.  One significant barrier to OSM has been the capital cost premium associated with the build.  Estimates vary between 5-20% depending on scale and complexity of the development and in a sector concerned with upfront costs, this can represent a significant hurdle.

However, OSM manufacturers argue that this additional upfront cost is nullified by the reduced lead times and early revenue streams from rental income and further reduced by low lifetime repair and maintenance costs. For rental properties therefore, where the association has a long term interest in the property, the Total Cost of Ownership (TCO) is reduced and justifies the OSM premium. It is also anticipated that in a growing market, costs will come down as economies of scale are achieved. This will be particularly important in parts of the north of England, where property values are lower.

This is not holding the north back though. A group of housing associations have joined forces to form the Modular Allianz.  The group are collaborating with Salford University with the objective of establishing whether modular or off-site manufacturing can work for the social housing sector. They want to develop a blueprint that can be replicated, improving quality, speed of delivery and lowering costs through economies of scale. Working collaboratively has thrown up many challenges in agreeing standard designs and specifications but between them they have put together a pipeline of 500 new homes and work is due to start on their first 160 homes in July this year. The Modular Allianz will continue to evaluate the value of OSM to the social housing sector and have attracted interest from housing associations across the north wishing to sign up to the project.

According to a survey conducted by Inside Housing published in March 2015, over the three years to 2018, 56.8% of 22,544 homes planned by 17 of the UK’s largest housing associations will be constructed using offsite methods, including timber frame and modular construction.

 

Case Study – New Charter: Boundary Close, Mossley

Boundary CloseBoundary Close2

New Charter set out to improve an existing site by replacing old post-war prefabs with new modular construction homes as a pilot scheme.  It put together a team involving the developer, Bowsall; principle contractor, Globe; architect, JDA; employers agent, Poole Dick; manufacturer, Factory Homes and New Charter as the client.

  • March 2013 – Existing tenants were rehoused and New Charter took possession of the site
  • Off-site construction of the units allowed for site preparation to take place simultaneously. Volumetric units were finished with half render/half brick slip.
  • November 2013 – site completed & tenants moved back into Boundary Close
  • Cost: £97k per unit (£25k per unit HCA funding)

Key lessons:

  • Too many people involved. A principle contractor and single point of contact would have been easier to manage;
  • Involve the manufacturer early in the planning stage;
  • A design responsibility matrix should be included between architect and manufacturer;
  • Monitoring and evaluation co-ordinators should be moved to one camp of responsibility;
  • Get it absolutely right in planning – there can be no fine-tuning onsite.

Key benefits:

  • New Charter say their tenants are extremely happy with their new homes;
  • Build quality was so high that there was very little need for touch-ups or fixing minor faults;
  • Tenants have noticed a significant reduction in their energy bills;
  • The homes have full accreditation and guarantees and will last as long as any timber built house;
  • Even with delays onsite (largely due to building control and service installations) the development was completed significantly quicker than a traditional onsite project.

 

Into the future?

Growing demand, a reduced skills base and the need for increased quality and efficiency have created a challenge that cannot be met without changing the way we see the construction of our built environment. Off-site manufacturing is recognised as part of the solution and the market for it, in all its forms, is growing.  But the industry is still fragmented and therefore the critical mass for OSM has not yet been achieved. This may be about to change. Institutional investors such as Legal & General Homes have judged the market conditions to be right for a dramatic growth in OSM.

Traditional on-site construction is slower and more dependent on factors outside of our control and OSM offers a greater degree of control and predictability. With more emphasis on the use of brownfield sites, which are often cramped, difficult to operate in and disturb local residents and businesses, OSM reduces the on-site traffic, noise, dust and inconvenience.

OSM has the potential to supply more houses, quickly and offer more diversity in the market.  Close working partnerships between the design team and the manufacturer can deliver a better quality, cost effective, energy efficient and sustainable home with lower lifetime maintenance costs.

A question remains as to whether OSM will benefit developers in the north as well as the south. OSM in the current market commands a capital cost premium which is easier to absorb when property values and rental incomes are higher.  In some parts of the north, it is likely that OSM will not be financially viable until economies of scale bring the unit cost down.

The challenge for off-site manufacturers is to overcome old stereotypes and prejudices. They need to convince the market that the technology has moved on. After all, we are all happy to accept technological advances in other sectors, such as the motor industry, and we all accept that our cars are built in clean, dry, automated factories with quality inspections at every step of process.  We probably wouldn’t want our cars built out in the rain, so why our houses?

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The NHC would like to hear more about your experiences with off-site manufacturing.  If you have a case study for us include in future briefings or are considering a pilot scheme, we would like to hear from you.  We are also setting up an OSM network for members keen to know more.  If you are interested in joining or would like to share your experiences with us please email Policy Services Manager, Justine McGrady on Justine.mcgrady@northern-consortium.org.uk

Guest Blog: Adactus Housing – Gamifying Resident Involvement

As part of the NHC’s work highlighting the best practice of our members, we are delighted to host a guest blog from Jon Jackson from the Digital Projects Team at Adactus Housing Group about innovative ways to ‘game’ resident involvement.


The Digital Projects Team was established at Adactus Housing Group in 2015 to deliver work defined by the ambitious Customer Care Strategy approved earlier that year. The team are working hard on projects such as setting up a new automated customer portal, automated telephone systems, and digital engagement with tenants through the Adactus500. The team have adopted a “working out loud” approach and have set up a blog to share their successes (and failures) to a wider audience.

If you haven’t read my last post, “how to “gamify” resident involvement“, make sure you take a look!

In my post, I talked about how we aim to increase customer engagement, through the Adactus500, and make use of their efforts to help improve our efficiency – specifically in terms of photo submissions.

Well, we’re delighted to now have the “levels” functionality up and running – thanks to @wilsoncooke – BUT – if you build it….they probably won’t come…..because nobody knows it’s there…..! Cue marketing!

Simple, right? Just email all our customers, and all our Adactus500 members, and tell them how great it is. Possibly, yes, but here we are launching #gamification, so it felt like we were missing a trick just doing the same old thing we always do. Not only that, but with a new online portal from 1st Touch on the horizon, we needed to test some #nudge theory to help with some channel shift when the time is right. It was time to test the water!

We decided to stick to emails. Letters have a better “conversion” rate, but they’re expensive and time consuming. We’ve got around 5300 email addresses for current customers, so taking out our Adactus500 members that left us with just under 4000 non-members to market to (we approached members separately).

Our options

We split the contact list into three, using Excel to randomise for us (not just for the integrity of the test, but we also had a feeling it might get competitive!). One email would be based purely on Gamification, one on Nudge theory and then finally a standard email as a control.

Gamification Email

Suzy opted for the Gamification email…..she pulled together a neat little leader board to include on the email. With a bit of redaction for data protection reasons, she then set it up so the email recipient would appear in the leaderboard at a mystery position. The theory being that it’s human nature to want to be at the top of a leader board, so maybe customers would be motivated to get involved.

Leaderboard2

Nudge email

I chose to put the Nudge email together – not without a sense of competitiveness…..

Part of the Nudge theory is about people wanting to adhere to the norm in their “group”. So, for example, you might receive a letter encouraging you to take action on tax returns or reducing your energy usage for example. A Nudge based letter wouldn’t just tell you about the benefits, it would also include some information about people in your area, in similar houses, or even age group etc, and how you compare to them. It makes the figures relate more directly to how the recipient might stand out from the crowd, rather than just being generic stats you can excuse yourself from. It’s a bit of a “keeping up with the Joneses” situation.

My choice was to base it all on voucher collection by Adactus500 members, specifically in the recipients area, so for example – “the average member in your part of Sefton has collected £43 worth of vouchers”:

Nudge wording1

Control

Finally, we had to pull together a standard email, just stating the facts and encouraging customers to join in. Actually, once we’d got into thinking of gamify themes and nudge speak, the hardest bit was trying to do a control email without any hint of either!

The results

We use Dotmailer for all our email campaigns. It’s easy to use, flexible in terms of design options, and it gives us useful stats in terms of how many of our emails have been opened, and click through rates. On top of this, we compared each list to see how many new members signed up to give us a conversion rate.

Gamification – Unique opens 29.89%, user click through 5.92%, conversion 1%

Nudge – Unique opens 31.08%, user click through 7.53%, conversion 2%

Control – Unique opens 35.02%, user click through 2.63%, conversion 1%

(compare this to Mailchimp’s email campaign averages for non profits: Unique opens 25.29%, Clicks 2.85%)

http://mailchimp.com/resources/research/email-marketing-benchmarks/

Importantly, I won with my Nudge based email. Perhaps more importantly, the overall impact of this campaign was very low. But it wasn’t about that, it was about comparison. Results clearly show that although similar numbers opened the email, the control option failed to encourage much interest as very few recipients clicked on the link. But interestingly, there was more interest in the nudge campaign than the gamification leaderboard.

We think this is simply because in terms of the leaderboard, recipients weren’t already involved, weren’t already part of the race, and therefore perhaps their potential position on this board is less important than it might have been for an existing members – I feel another test coming along!

Our new portal is taking shape, we’ll be blogging about this again soon, but suffice to say we have a few more ideas now in terms of “nudging” our customers towards alternative channels.

 

If you’d like to find out more, contact the team via Twitter:

Suzannah Robinson, Digital Projects Manager: @Suzy_Adactus

Jon Jackson, Digital Projects Officer: @Jon_Adactus

Queen’s Speech 2015

Outlook: It’s clear from yesterday’s Queen Speech that much of the Conservative Party manifesto was well-represented. Big ticket policies such as the extension of right to buy to housing associations, reducing the welfare cap, removing housing benefit eligibility from 18 to 21 year old job seekers and doubling the entitlement to free childcare were all there. Read more