30 May, 2023
Modern Methods of Construction (MMC) are increasingly seen as revolutionising the construction industry, presenting both opportunities and challenges for landowner and property lawyers. In recent years, there have been notable developments in lease agreements that reflect the evolving landscape of MMC.
MMC offers the potential for modular and adaptable designs, enabling efficient reconfiguration and expansion of spaces. Advantages of MMC are seen as potentially faster construction of buildings, better quality, less waste, lower unit, and operational costs, amongst other things.
Where a large-scale housing development is planned then utilising these elements can significantly reduce the cost and time of completion of the build and increase profitability.
There are challenges with this type of construction project however and the issue of financing MMC projects has gained attention. In the past, particular post war modular homes have proved to be difficult to create good security over and as such certain lenders are reluctant to finance build or final completed dwelling. Financing arrangements for MMC projects often differ from traditional construction methods, as they may involve separate funding for the manufacturing and installation phases.
In terms of future lease agreements, it may be that as MMC techniques become more prevalent, leases will need to incorporate clauses that address the unique aspects of MMC, such as the rights and obligations of parties regarding off-site manufacturing, installation, and maintenance of any MMC components. These provisions would help ensure clarity and mitigate potential disputes related to the use of MMC in leased properties. Additionally with the emphasis on environmentally friendly construction practices, incorporation of provisions that address the environmental performance and sustainability standards of the building. This includes obligations for tenants to comply with green building certifications, energy efficiency targets, waste management practices, and other sustainability requirements.
Following the Grenfell disaster and the recent changes introduced by the Building Safety Act 2022 and the Fire Safety Order 2021 the issues of fire safety and building regulation compliance has again been brought to the forefront. MMC will need to prove their effectiveness in this regard to satisfy not only warranty providers but also insurers generally.
What is less well known at this stage will be how maintenance responsibilities and costs will shake down over the coming years. Whilst there are no obvious concerns, this method of build is still relatively new to the UK so we will only know for certain when these buildings have been occupied for a significant period.
In conclusion, MMC offers a new challenge to property lawyers and its success will depend on the sound, forward thinking and practical legal advice that both developers and landowners will require.
For more information contact Matthew Jones in our Construction & Infrastructure department via email or phone on 01254 222316. Alternatively send any question through to Forbes Solicitors via our online Contact Form.
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