The Institution of Mechanical Engineers (IMechE) has said that modular off-site building could be the key to solving the UK's 'broken' housing market.

In its report, IMechE is calling on the government to provide more incentives for the off-site development of homes.

The organisation recommends the government reverse policies which discourage the construction of sustainable housing, stating more work should be done to 'diversify' UK house building.

The institution suggests the key is by opening up opportunities to self-builders, local authorities and housing associations.

Dr Tim Fox, Lead Author of the report and Fellow of IMechE, said: "The UK is in the middle of an acute housing crisis. Current annual construction levels are typically less than half of the estimated 250,000 new homes this country needs built every year through to at least the 2030s.

"The new Government needs to demonstrate real ambition, leadership and innovation, not make small piecemeal changes, if it is going to solve the UK’s housing crisis. Overhauling the way the UK constructs homes could be the quickest and most effective way of doing this.

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The report states: "Most volumetric construction in the UK has been in hotels, student accommodation, offices and hospitals, but family-sized modular dwellings are becoming more popular."

Overall, the key recommendations are:

• Government should support investment in the UK supply chain for off-site construction technologies. The off-site industry needs support for innovation and expansion and needs the people and facilities to compete against imports. Government should help develop the skills and infrastructure required to grow this sector.

• Building Regulations and planning policies should prioritise sustainability and affordability by setting challenging standards for energy and resource efficiency, through life-cycle assessment. Instead of ‘winding down’ the Code for Sustainable Homes, Government should be championing its further development, and fully integrating its principles into Building Regulations.

• Government should work to diversify the UK housing supply market, by opening up greater opportunities for self-builders, local authorities and housing associations.

By 2020, there should be at least as many houses built by these players as are constructed by the traditional commercial building companies, which is 125,000 a year in England. By 2030, self-builders alone should be achieving this level of completion. Government should recognise the step change in ambition required, needs far more commitment than the £30m for self-build schemes announced in 2011. There is an opportunity for New Garden Cities to lead the way.

Dr Tim Fox added: "Off-site construction technologies have advanced greatly in recent years and can offer shorter build times, better quality, better energy efficiency, less waste, and lower costs for buyers.

"People living in the UK deserve affordable quality homes and it is about time that consumers had more say on the quality, design and size of their homes. Self-build is one very effective route to achieving this."

(LM)