08 Jul 2018

Could Swan’s approach be a model for better customised housing in the UK?

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Could Swan’s approach be a model for better customised housing in the UK?

Igloo’s London team visited our friends at Swan Housing recently, to look at their Custom Build site at Beechwood Village, Basildon and their factory close by,  writes Chris Brown, Executive Chairman of Igloo Regeneration.

Swan has done something extraordinary, brave and hugely successful, and its awareness of what is needed for success makes some of the other recent new entrants to factory-built housing look amateur by contrast.

Some of the key things Swan realised were the importance of matching the scale of their ambition to their pipeline, and of having the right skills to realise the project.

In Paul Williamson they have recruited the perfect person, not just to deliver factory-built modular housing but also to transform the entire industry. Coming from a lean manufacturing rather than a construction background, Paul completely understands the journey they have embarked on and the road they have to travel.

And this will be a long journey. From a starting point of using a relatively new (to the UK) material, cross laminated timber, to create modules in the factory rather than on site, their journey will see incremental efficiency improvements as they move from traditional techniques, for say wiring through clip on modules to robotisation.

All this would be impressive if Swan were just building social housing, but this is for Custom Build housing so each one will be different.

Here they have excelled themselves again by building a brilliantly user-friendly, configurator tool that allows the customer to make their customisation choices online, or in the sales suite. The system features live price updates and visualisation, culminating in an order sent straight to the factory. This is up there with what happens in Japan.

Word of Mouth

Like the rest of the market, Swam is are experiencing customer unfamiliarity with Custom Build, but the high customer flows it is seeing suggests that the process of word-of-mouth is happening, and the market is learning about the opportunity.

And Swan has made some pragmatic choices in other areas. In purist Government defined terms this isn’t Custom Build. Swan are financing the build, and taking the risk of customer default themselves, which hits the risk adjusted returns but overcomes the costs to the customer of living in your existing home while paying for your new Custom Build home.

This is particularly relevant for the CIL exemption definition, which this approach doesn’t meet. Government might want to take a close look at this particular aspect of the currently ineffectual policy framework, to encourage Custom Build. In rightly seeking to avoid giving CIL exemption to speculative housebuilders, policy makers have designed a system that most Custom Build enablers have decided is unworkable.

The Swan way is broadly the same approach taken by Urban Splash and PfP’s designyourhome.com. When building terraces, for example, it means the Custom Build developer (not enablers in this model) will build out any unsold plots speculatively, as these homes have party walls, unlike the Dutch version. For the most part, from the outside, they don’t look like Custom Build. It will be interesting to see whether the sales rate is significantly ahead of pure speculative housebuilding and whether customer satisfaction is higher with the completed bespoke homes.

We eagerly await the Autumn Budget

These are issues that the latest analysis from the Letwin Review addresses. Letwin says that ‘in discussions both in the UK and in the Netherlands, it has become clear to me that there is a particular and separate market also for custom-build and self-build homes. The resistance to including such homes on large sites at present is considerable in some quarters; but both those who welcome (and provide) these more customised types of housing and those who resist them, appear to agree that they suit a different clientele, who would not be attracted to the more uniform homes constructed on so many of our large sites at present. This, too, suggests the existence of separate markets.’

As Letwin moves on to consider his recommendation for fixing large site, slow build out problems in high demand areas, we can confidently expect Custom Build to form part of the solution. The question will be whether the speculative housebuilders, seeing the writing on the wall, decide to move into Custom Build in a big way. I would bet on that as an outcome – but we will need to watch this space and Letwin’s review will report at the Autumn Budget.

As Government thinks carefully, as it needs to, about how to radically restructure its policy framework to expand the Custom Build sector, it will be hungry for the evidence both from the early Custom Build schemes, although it will be a challenge to draw robust conclusions from these limited experiments, and from Letwin.

In my last contribution to these pages, I would like to mention the prospect of changes around the Social Value Act and the potential for these to boost community-led housing, through the sale of public land. These were duly trailed by Chancellor of the Duchy of Lancaster, David Lidington, in a speech to the Reform think tank recently.

There is some doubt about whether this was simply throwing a protective cloak of respectability over a decision to continue a public procurement system, severely damaged by the failures of the Haringey Development Vehicle, and of Carillon. So, for now, it is a case of watch this space to see whether the policy-making machine garbles this in translation.

Hopefully the machine is also keeping a close eye on what is happening in Scotland, where communities are being given the right to compulsorily purchase land for development. That might fail Letwin’s test of not destabilizing the speculative housebuilders’ output, but it could add an interesting route to unlock smaller or stalled sites.

So there is lots for policy makers, and Custom Build developers and enablers, to think about over the next few months.

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