‘Flat Pack’ Homes: ‘Off-The-Peg’ contracts warning

Purchasers of so-called ‘flat pack’ homes aimed at easing the country’s chronic housing shortage run the risk of buying units that could contain ‘unidentified defects’, warns specialist development lawyer Zoe Stollard.

Zoe says the UK’s standard JCT Design and Build building contract fails to provide sufficient rights for a modular housing employer to issue instructions requiring a contractor to open up for inspection.

“While ‘flat-pack’ homes, and modular housing generally, is a great idea, it doesn’t mean you should necessarily buy an ‘off the peg’ contract as well,” said Zoe, a construction team partner for law firm Clarke Willmott who have offices in Manchester.

“The Design and Build contract – like most other traditional building contracts – is designed for construction projects where the contractor carries out both the design and the construction work. However, off-site fabrication is a very different thing.

“It eliminates the employer’s ability to quality control at the factory during fabrication, and also the ability to check safe storage as incorrect storage solutions often contribute to defects later on.”

Potential faults could include external cladding that fails to meet UK-specific planning or health and safety requirements; and mechanical and electrical service connections to interface with the on-site elements on installation.

Last month Bristol City Council signed up to a partnership with BoKlok – a company jointly owned by Swedish retailer Ikea and construction firm Skanska – to approve the construction and delivery of 200 pre-fabricated modular homes.

And in June, BoKlok – who have already developed around 11,000 units in Sweden, Norway and Finland – agreed a deal to build 162 ‘flat-pack’ affordable homes in Worthing; the company’s first modular properties in the UK.

“One of the main advantages of modular builds is the materials are put together off-site,” added Zoe. “This significantly reduces the on-site construction period and decreases health and safety risks normally associated with construction sites.

“However, off-site fabrication is a very different thing and requires some careful consideration to make the project not only legally robust, but also insurable and bankable.

“Without bespoke legal amendments that clearly express a right to inspect the construction phase taking place off-site, clients run the risk of installing pre-fabricated units which may contain unidentified defects.

“Even where the factory is run by a group company of the developer, there are still practical issues at stake where the build is not taking place on site. The designs, tests and inspections all need to be more detailed to make it work.”

Zoe Stollard is a partner in Clarke Willmott’s construction team specialising in non-contentious advice to various stakeholders on a variety of public and private, domestic and international projects.