Could Modular Housing Help Break The UK’s Temporary Accommodation Cycle?

The UK’s housing shortage is frequently discussed in terms of homes not yet built. Less attention is given to the households already waiting.

Across England, more than 134,000 households currently live in temporary accommodation, including around 176,000 children. At the same time, local authorities are spending approximately £2.8 billion each year meeting the cost of temporary accommodation.

Temporary accommodation remains an essential safety net for households facing homelessness. Yet the scale of current expenditure highlights a growing challenge for councils across the country and raises wider questions about how housing need is being addressed.

Government policy has increasingly focused on homelessness prevention, recognising that preventing homelessness is often better for households and less costly than responding once a crisis has occurred. At the same time, the housing industry continues to explore how homes can be delivered more quickly, efficiently and at greater scale.

Recent proposals from Places for People have prompted discussion about whether modular housing could help reduce reliance on hotels and other forms of temporary accommodation by providing faster access to good-quality homes. Its work with Bristol City Council suggests that modern methods of construction have a role to play in addressing immediate housing need as well as longer-term housing supply challenges.

A System Focused on Managing Crisis

Few local authorities would choose to spend ever-increasing sums on temporary accommodation, but the reality is that many have little alternative.

When homelessness duties arise, councils need accommodation immediately. That often means relying upon hotels, B&Bs and other forms of short-term accommodation which can be secured quickly.

As temporary accommodation costs rise, local authority budgets are increasingly consumed by meeting immediate obligations, leaving fewer resources available to support longer-term housing solutions. The result is a system that can become heavily focused on managing homelessness rather than resolving it.

The Prevention Debate

The Government is increasingly encouraging local authorities to focus on homelessness prevention.

Recent reforms to the Homelessness Prevention Grant have sought to ensure more funding is directed towards prevention activity rather than temporary accommodation expenditure.

The policy direction is clear. For 2025/26, 49% of each authority’s Homelessness Prevention Grant allocation must be spent on prevention, relief and staffing activities rather than temporary accommodation costs.

Even if every authority achieved better prevention outcomes tomorrow, there would still be households requiring accommodation. Prevention may reduce demand, but it does not eliminate the need for accommodation. The question therefore becomes not whether accommodation is needed, but how it is provided.

Can Modular Housing Reduce Temporary Accommodation Reliance?

Drawing on its modular housing work with Bristol City Council, Places for People has suggested that some of the funding currently absorbed by temporary accommodation could instead support the delivery of purpose-built modular homes.

How Modular Housing Could Support Local Authorities

Modular homes can be manufactured off-site, delivered quickly and installed on land that might otherwise remain unused. That could be particularly relevant where local authorities own small brownfield sites that may not be suitable for larger-scale housing schemes or prompt regeneration.

Places for People argues that this approach could reduce dependence on emergency accommodation whilst providing residents with better-quality housing. Its Bristol scheme has already delivered modular homes for people at risk of homelessness, with further homes nearing completion.

Examples of Modular Housing Projects

Comparable examples remain relatively limited, particularly where schemes are being delivered at both scale and pace. West Northamptonshire Council, for example, is bringing forward 108 relocatable modular homes across two council-owned sites, against the backdrop of around 780 households in temporary accommodation in June 2025. Funding was announced in July 2025 and, by June 2026, the council was working with its partners on the design and delivery of the homes.

Modular housing is not a silver bullet. It will not solve the UK’s housing shortage, eliminate homelessness or remove the need for traditional housebuilding. However, it is difficult to ignore the broader point.

If billions of pounds are being spent each year on temporary solutions, could a greater proportion be directed towards creating housing assets with a longer-term legacy?

A Different Conversation About Modular

Modular housing is often discussed in the context of productivity, labour shortages, sustainability and construction efficiency. All of those conversations remain important.

However, instead of asking whether modular housing can replace traditional housebuilding, perhaps the more useful question is whether it can complement it.

The UK’s housing shortage will not be solved by modular homes alone. Equally, traditional housing delivery has not prevented temporary accommodation costs from reaching record levels.

Temporary accommodation is one area where speed of delivery can have immediate social and financial consequences. If suitable homes can be delivered more quickly, local authorities may be able to reduce their reliance on expensive emergency accommodation whilst improving outcomes for residents.

The Real Challenge Is Delivery

The biggest obstacle is unlikely to be technology. The modular sector has been discussing speed, quality and efficiency for years. The harder challenge is delivery.

This is where partnerships become critical. Local authorities may control suitable sites. Housing associations bring management expertise. Developers understand planning and delivery. Investors provide capital. Modular manufacturers contribute specialist construction capability.

Bringing those interests together is not straightforward. But if modular housing is to play a larger role in addressing temporary accommodation pressures, successful partnerships may prove more important than construction methodology.

That should sound familiar to many development professionals. Increasingly, some of the industry’s most complex challenges sit at the intersection of housing, health, regeneration and public policy. Solving them often requires collaboration between organisations with very different priorities and objectives.

The Role of Modular Homes in Solving Housing Need

The temporary accommodation crisis is often viewed through the lens of homelessness. Increasingly, however, it can also be understood as a housing delivery challenge.

Can Modular Housing Help Reduce Temporary Accommodation Costs?

Councils are spending billions every year accommodating households who need somewhere permanent to live. At the same time, the housebuilding industry continues to search for ways to accelerate delivery, improve productivity and increase housing supply.

The Future Role of Modular Housing

Modular housing will not solve the housing crisis. Nor will it remove the need for large-scale housebuilding, affordable housing delivery or planning reform. But if it can help local authorities move even a proportion of households from temporary accommodation into stable homes more quickly, it may deserve a more prominent place in the debate than it currently receives.

There is perhaps a wider lesson here. In our recent article on housing for an ageing population, we explored whether the homes being delivered reflect how people actually live. The temporary accommodation crisis raises a similar issue. The challenge is not simply one of housing numbers; it is also about ensuring the right housing solutions are available when and where they are needed.

As pressure on local authority finances continues to grow, the more interesting question may no longer be whether modular housing works. It may be whether local authorities, housing providers, developers and investors can create the partnerships needed to deploy it at a scale capable of making a meaningful difference.

Considering a modular housing development?

Our real estate team regularly advises developers and housing providers on site acquisition, planning agreements and delivery structures for residential schemes.

Whether you are exploring a modular housing project, a regeneration opportunity or a partnership with a local authority or registered provider, our lawyers can help you navigate the legal and commercial issues involved. #enquiry-formContact our team to discuss your project.

FAQs

What is modular housing?

Modular housing is a form of modern methods of construction (MMC) where homes are manufactured off-site in factory conditions before being transported and assembled on location.

Can modular homes help reduce reliance on temporary accommodation?

Modular homes can often be delivered more quickly than traditional housing, which may help local authorities provide accommodation faster and reduce dependence on hotels, B&Bs and other emergency housing solutions.

Do modular housing developments require planning permission?

In most cases, modular housing developments require planning permission and must comply with the same planning and regulatory requirements as traditionally constructed homes.

What are the benefits of modular housing for local authorities?

Potential benefits include faster delivery, the ability to utilise smaller brownfield sites, improved housing quality and reduced pressure on temporary accommodation budgets.

Can modular housing help address homelessness?

Modular housing is not a complete solution to homelessness, but it may form part of a wider strategy to increase housing supply and provide suitable accommodation for households at risk of homelessness.

What legal considerations are involved in modular housing projects?

Modular housing schemes may involve planning, land acquisition, procurement, development agreements, funding arrangements, construction contracts and ongoing management considerations.

Are modular homes a long-term housing solution?

Modern modular homes can be designed as permanent homes and built to the same regulatory standards as traditionally constructed residential properties.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.