Out of recessions come game-changing offerings, says Andrew Shepherd, Managing Director, at tech-driven modular manufacturer TopHat.
Rishi Sunak took up his new role as prime minister with a monstrous in-tray. Rocketing inflation, and the consequential interest rate rises to tame it, along with the cost-of-living crisis and its implications, including for housing affordability, will be jostling for attention from the new administration along with other domestic and international challenges. And there is no doubt that these factors are, and will for some time, have a profound effect on the economy, not least construction and housebuilding.
It is a daunting moment, but in the face of hardship, innovation can sometimes flourish. Despite a strong initial recovery from COVID-19, construction firms, and more specifically housebuilders, continue to grapple with major supply chain issues. A shortage of materials such as timber, plaster and steel have seen prices rise by 24.1% year-on-year according to government figures. Such price rises have and will continue to make certain projects unviable, especially for the ones being carried out by smaller firms who often lack the scale to hedge.
These problems are compounded by the fact that, according to industry figures, five million tonnes of construction waste still find its way to landfill every year, meaning, as an industry, we are not using what we have efficiently. Real estate has done relatively well from 10 years of loose monetary policy and lowish taxes. But this year marked the end of a decade of cheap debt. This has huge implications across the built environment as many projects rely on some sort of leveraging to fund schemes. Interest rate increases heightens the sensitivity of ‘time’ when considering capitalised interest, meaning speed becomes more important than ever.
The same can be said for investors looking to access revenue streams at the earliest possible time. By manufacturing offsite, TopHat can typically cut construction programmes in half thanks to high levels of repeatability and most of the build stage taking place in a factory[1]controlled environment. This makes the corporate case for offsite, but what role does the sector play in helping consumers face the ever-growing macro headwinds face on? Targeted government support will go some way in shielding UK households from the worst of the energy crisis, but when it comes to an abrupt end in six months, up to 11 million households could be plunged into fuel poverty. That’s according to the End Fuel Poverty Coalition who has described the outlook as “frankly terrifying.”
Throw into the mixer rising mortgage repayments and the picture looks even more bleak. Britain’s ageing housing stock – one of the oldest in Europe – has left residents heavily exposed to rapid rises in wholesale gas prices. With over 20 million homes across the UK requiring some sort of retrofitting to make them compliant to new energy standards due to be introduced in 2030, it’s important that the homes we deliver today do not continue to kick the net zero can down the road. Due to the high levels of insulation, and sustainable technologies like air source heat pumps (ASHP) and solar panels, TopHat homes are fully future-proofed and have the potential to be zero carbon homes.
These technologies are already gas-free, instead running on electricity, so as the grid moves towards decarbonisation, TopHat’s homes become lower carbon over time. This future-proofing means the average energy consumption of a TopHat home is 30% lower than a traditionally built home across its lifetime. Moreover, the infrastructure of a TopHat home means it has the potential to be fully sustainable, producing its own electricity, and therefore not requiring power from elsewhere, resulting in zero bills in the long-term. Offsite’s meteoric rise will not be slowed down by the impending recession, in fact it will act as a catalyst for growth as institutional investors, developers, housing associations and councils yearn for cost, time and quality efficiencies.
For more information visit: www.tophat.io
