Mortgage lenders troubled about the longevity and popularity of factory-built homes
Leading lenders have warned housing associations to be cautious before rushing to embrace the benefits of modular or prefabricated housing.

Andrew Heywood, senior policy adviser at the Council of Mortgage Lenders, said that lenders would be wise to pay close attention to issues such as repairs and the "frequently short life of prefabricated housing units".

He said: "One has to be careful, particularly given the history of problems. In principle, prefabricated housing is not a problem, but lender experience of non-traditional construction has not been positive."

The warnings came as leading modular housing manufacturer Yorkon said that it had seen a "massive increase in interest" from cost-conscious RSLs that were keen to get new homes built more quickly.

Keith Blanshard, general manager of Yorkon, said: "Enquiry levels are increasing and are particularly strong from housing associations in and around London."

Clive Barnett, head of housing finance at Royal Bank of Scotland, warned that housing associations should be wary of perceived benefits such as shorter construction times.

"It boils down to common sense," he said. "If it's something new, you say 'It's alright, but …' and it's the but that you try to put a price on. The question is – will people's perceptions [of modular homes] be good or bad? If the homes are not traditional brick and mortar, will this be a problem in terms of the valuation?"

Barnett also pointed out that lenders might seek warranties from prefabrication firms guaranteeing their work before lending any money against them. Yorkon already has 10 year insurance on the homes it provides.

Malcolm Kitchener, chief social housing manager at Nationwide, was also concerned by the growing popularity of prefabs. He said: "If demountable means temporary then we do have an issue in terms of its security value. However, the prefabs that Peabody have at Murray Grove are fine."