Innovative, green and efficient, modular and prefabricated homes can lead to greater quality control, but don’t ignore the costs.
While some may steer clear of modular or prefabricated (prefab) homes due to the perception that they are “makeshift” or impersonal, modular homes offer several benefits to homeowners such as affordability, improved construction time and efficiency.
As the housing industry is labour-intensive and the cost of labour is going up, Australians are leveraging the innovation and technology of modular and prefab homes.
It appears that modular homes are not just an architect’s dream: The Australian prefab housing sector is forecast to grow by 5% per annum until 2023, compared to the overall industry, which is expected to see just 2.3% annual growth.
Although modular homes offer homeowners the ability to create bespoke designs that reinforce their environmental conscience, Australians should be mindful of the high transportation and holding costs of pre-engineered modular dwellings.
What are modular or prefab homes?
Modular or prefab homes usually refer to structural and architectural components that have been manufactured off site in a factory setting. Modular homes consist of several sections that are referred to as modules. The separate modules are then transported to their new location where they are assembled by a professional tradesman.
For locations with difficult access, the installation of the modules can be achieved by a crane or hydraulic lift.
Modular homes vs:
The main difference between a conventional home and a modular home is that the modular home is built off-site in a factory environment as opposed to on-site for a traditional build.
Also referred to as “manufactured homes”, mobile homes are never a permanent structure as they are prefabricated on a steel frame to be transported on their wheels. The wheels are never removed and are masked with skirting once the home is positioned.
Pros and cons of modular and prefab homes
- Improved construction time. Prefab homes significantly lower the required construction time as they can be completed within just a few months. Another important consideration is that the automated construction of a prefab home has greater time certainty as it won’t be affected by weather conditions or site delays. Not only is an improved construction time convenient, it also helps reduce carrying costs associated with a longer construction process.
- Customised design. Benefit from the flexibility of modular homes by customising them to suit your location and lifestyle needs. For instance, prefab homes can include materials and designs that are suited to your specific location, such as the energy rating of the area.
- Less ongoing costs. Modular homes normally require less ongoing or future maintenance costs as they are often resistant to structural defects, such as wear and tear.
- Reduced waste. Automated factory production of building elements allows for waste to be minimised so you can benefit from an environmentally sustainable design.
- Quality control. A factory environment can guarantee quality of workmanship as homes are built in controlled settings with adequate processes and safety procedures. In a factory, there is also sufficient lighting.
- Transportation cost. When transporting the modular home to the site, it can be transported by a hydraulic lift. However, if the site has difficult access or is on a steep gradient, you may need to get a crane to position the home. Depending on the complexity of the job, this transportation can cost $10,000-$25,000.
- Renting cost. You need to factor in the cost of renting the factory space while the modules are constructed and tested. However, given that the build is efficient, this cost can be minimised.
What finance is available for modular homes?
It can be difficult to find finance to construct a prefab home as options are limited. This is because most lenders won’t lend to you for a property that isn’t permanently fixed to the site.
However, the upside is that it may be possible to organise the project so that modules are gradually delivered and fixed to the site, which would allow you to finance them.
Tips for accessing finance for a modular build
- Approach lenders early. Approach your lender or mortgage broker early and explain the process of building your modular home. You may want to show them the floor plan, project specifications and timeframe so they can see that a modular home is just like any other newly built property.
- Compare different lenders. While some lenders may be hesitant to lend you funds for a modular build, there are some lenders that will allow you to release funds prior to the modular home being positioned on site. It’s worth doing your homework and enquiring with several lenders to see what their stance is on modular and prefabricated homes.
- Find flexible finance terms from the builder. Some builders will build your modular home with a progress payment plan as long as your loan has been approved by the bank.
- Offer equity or guarantor. If possible, offer any existing equity that you have as collateral for the loan as this can make it easier to access funds for the loan. Another solution is to ask a relative to act as guarantor for the loan.
Modular homes are eligible for the first homebuyer grant. However, keep in mind that most lenders only lend money for modular homes if you have equity equal to the loan amount.
Speak to a mortgage broker about your modular or prefab home
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What is the design and construction process for modular homes?
While the construction method for a modular home will vary depending on the modular building company, prefab homes are generally built using the following process:
- Design process. During the preliminary design process, you will speak with the company consultant to create a design that meets your personal and location requirements. A representative from the company will review and finalise the drawings and specifications for the build to ensure that it meets industry and council regulations.
- Build and delivery. Once the construction phase starts, the company will assemble the mould and wall frames in accordance with pre-engineered settings. The structural framework and approved insulation will be installed, including windows, doors, flooring and cabinetry. Plumbing and electrical work will also be installed and tested.
- Transportation. The home is loaded onto a truck and delivered to the site, where the building units are offloaded using hydraulic lifts and put into place.
Frequently asked questions about modular and prefab homes
What designs are available to me?
Most companies have a range of pre-designed modular homes and floor plans that you can choose from, or you can create a home to suit your individual needs. Either way, you will work closely with a designer, architect and builder to ensure that the final build matches your lifestyle needs.
To help you reach a decision about the design and layout of your modular home, many companies have modular display homes that you can visit and inspect to experience the quality of the company’s modular homes.
Can I assemble a modular home myself?
While it is recommended that you let a building professional take care of the execution and assembly of your home, owner-occupiers can assemble the modules themselves if they wish.
Are modular homes future-proof?
Most modular homes feature sustainable designs with high-quality and durable finishes.
How long does the construction process take?
This will largely depend on the company. Generally, modular homes can be designed and implemented within just three months from the date that your building permit is issued.
What heating and cooling options do I have?
This will depend on the provider, but there are a variety of heating and cooling options available with modular homes. For heating, you can generally choose from gas fires and hydronic heating, while ceiling fans and air conditioning are common cooling solutions.
Can I select the finishes for my modular home?
Yes. Most companies will allow you to create a bespoke design with your choice of fixtures and finishes. Generally, external cladding, floor coverings, paint, fixtures and appliances can be selected to meet your individual taste.
What is the normal size of modules?
As most modules are customised for each build, there is no standard size. Generally a module is around 2.5 m to 5m wide and 2 to 10m long. Modules within these dimensions allow the company to minimise transportation and logistic costs.
Can I relocate my modular home?
While most modular homes are installed permanently to the site, you may be able to transport your modular home in some cases if you decide to relocate. You should discuss this with your building company.
Are modular homes environmentally friendly?
Modular homes typically consist of environmentally sustainable materials. As construction time is minimal and takes place in a factory, this minimises waste and noise pollution.
Will my modular home require a crane for installation?
Some projects situated on sloping sites with difficult access may require a crane for installation. Simple crane lifts may cost between $5,000 and $10,000, and more complex lifts may cost as much as $20,000. This is one of the major drawbacks to modular homes.
Are modular homes eligible for the first homebuyer grant?
Yes. Most modular homes are eligible for the first homebuyer grant. However, keep in mind that most lenders only lend money for modular homes if you have equity equal to the amount being borrowed.
Image sources (in order of appearance)
- Cool prefabricated shipping container by Paul Bartlett, licensed under Creative Commons Attribution-NoDerivs 2.0 Generic (image cropped)
- Steve and Sarah's house, Perth, Western Australia, 22 Oct. 2010 by Phillip Capper, licensed under Creative Commons Attribution 2.0 Generic (image cropped)
- Images 3 and 4: ShutterStock