A neat oblong box with a simple pitched roof and jolly red garb, it looks like a giant Monopoly hotel has been airlifted on to a side street in Wimbledon. But this dinky dwelling could be the answer to the housing crisis, according to its makers, providing a first step for those in desperate need of accommodation.

“The aim was to provide a truly affordable move-on scheme for our residents, which didn’t require a grant to build,” says Andy Redfearn of the YMCA, who has worked with architects Rogers Stirk Harbour and Partners (RSH+P) for the last three years to develop a factory-made housing unit that can be built for up to 40% less than the cost of traditional construction. “The real issue is what happens when people leave our hostels,” he says. “The only option is often poor quality shared accommodation managed by private landlords, who require large deposits and rent in advance.”

The Y:Cube aims to provide an alternative, in the form of a self-contained one-bed flat, with its own bathroom, living room and kitchen, all housed in a compact 26 sq m unit, built off-site for just £30,000 and craned into place.

“It’s about a different attitude to construction, rather than revolutionary design,” says Ivan Harbour, the partner in charge of RSH+P’s Homeshell project, which has focused on the development of prefabricated housing for the last seven years. “The beauty is that it’s a high-tech, low-tech approach.”

The units come complete with double bedroom, en suite bathroom and a separate kitchen/living room. Photograph: Miguel Santa Clara/Rogers Stirk Harbour + Partners Photograph: Miguel Santa Clara/Rogers Stirk Harbour + Partners

Employing a timber-framed system called Insulshell, developed by Sheffield Insulations Group and Coxbench (which was also used for the London Olympic velodrome), the units are manufactured in one piece in a factory in Derbyshire. Built from precision-cut glue-laminated timber sections assembled by hand – “fixed with just two kinds of screw,” the designers tell me proudly – they are packed with insulation, forming a structural frame that can be stacked up to eight storeys high.

The precision construction means a degree of air-tightness that brings the units to level six of the code for sustainable homes: a three-week test showed each home can be lit and heated to 20°C all day and all night for £7 per week. The system also allows for units to be joined, windows cut into corners and partition walls freely arranged within, bringing more flexibility than the usual container-home – and built with a lifespan of 60 years.

The YMCA plans to test the system at scale on a site in Mitcham, where it is about to submit an application for a scheme of 36 units, stacked into a three-storey horse-shoe block around a shared garden, where residents can grow vegetables. “It will take eight weeks to build in the factory and just one week to install on site,” says Redfearn, adding that, with each flat rented out for £140 per week (65% of market rent), the project will pay for itself in 15 years. Capital costs are to be provided by “social investors,” he says – to whom he can guarantee a 5% return.

“With this speed of construction and implementation, it could be the perfect solution for brownfield infill plots and even sites where development is stalled, or where construction won’t begin for several years, such as HS2 land,” he says. “The beauty is that the units can be moved off site as quickly as they are installed, as we operate on short-term leases – we expect people to stay for between three to five years, giving them time to skill up and save for a deposit.”

So what do future residents make of it?

“It certainly catches your eye,” says Kieran Kurup, 22, who recently moved into rented accommodation after 18 months at the YMCA hostel, as we walk up to the eye-searing red facade. “It’s amazing inside, so much bigger than you expect, and it’s fitted out like a show home from some Earls Court convention. Having your own front door, and your own bathroom and kitchen, is going to be a great morale booster for people used to the hostel lifestyle.”

The units come complete with double beds, en suite bathrooms and a separate kitchen/living room, while floor-to-ceiling heights are a generous 2.5m, and will be taller in the top-floor flats with the apex roofs. The Mitcham scheme will see units connected by timber decks, providing outdoor social space, along with a communal room for shared equipment like vacuum cleaners and washing machines. Classed as semi-permanent accommodation – the same as student housing and care homes – the units don’t have to meet London housing design guide space standards (they fall 11 sq m short) although the flats are at least three times the size of an average hostel room. “It’s a credible compromise,” says Redfearn.

It is a compromise that seems justified to produce affordable stepping-stone homes which seem more generous than many “studio apartments” being touted on the private market. But could the Y-Cube have lessons for volume housebuilding beyond the move-on sector?

“We’re already working on it,” says Harbour, announcing that their designs for a 36-unit scheme of private flats for the Leather Gardens estate in Newham received planning permission only this week. The first of the local authority’s four pilot projects planned over the next two years, the homes will be let and managed by the council, with the money raised used to fund larger projects.

Home-office? … The plan for the Leather Gardens estate in Newham will see 36 2-bed units clad in grey and red panelling. Image: Rogers Stirk Harbour + Partners Photograph: Rogers Stirk Harbour + Partners

“Newham wants to raise the bar for the private sector rental market, so it’s taking it into its own hands,” says Harbour. “The next step is to find a bigger scheme. If we can get the demand right – something like 150-plus units per year – the aim would be to have a factory in the borough itself, employing local people at the heart of the community. That’s proper design and build, as it should be. It’s how they built the cathedrals.”

It is a bold ambition, but one that hasn’t had an easy ride in the past. RSH+P’s first foray into factory-made housing, at Oxley Woods in Milton Keynes in 2008, was abandoned before the plan was completed, with the developer complaining of excessive cost and ditching Rogers’ prefabs for a more traditional scheme in a folksy pastiche style. The 120 units that were completed to RSH+P’s designs went on to win numerous awards, and are dearly loved by their evangelical residents, even if the streets of bright boxy blocks are pejoratively known locally as Legoland. So why didn’t it work out as planned?

“Commercial house-builders work on the basis that the longer you can drag out the process, the more money you can make,” says Harbour. “At Oxley Woods, it became clear that the fast production process we were offering was not what was needed. Instead it was like turning a tap on and off, with three houses trickling out every now and then. But off-site production requires a degree of certainty and volume.”

Legoland … The award-winning Oxley Woods scheme in Milton Keynes is loved by its residents, but Rogers' designs have been ditched for the later phase. Photograph: Katsuhisa Kida/Rogers Stirk Harbour + Partners Photograph: Katsuhisa Kida/Rogers Stirk Harbour + Partners

It might also require something of a shift in what people expect their houses to look like. Or perhaps a shift on the part of the architects to make their buildings a little more home-like. Because, for all the clever construction, high-speed fabrication, model environmental performance and indisputable value, it’s hard to escape the fact that everything that has come out of RSH+P’s Homeshell initiative to date looks a bit like something from an out-of-town business park.

Whether it’s the clunky massing that comes with the stacking of prefab boxes, or the cheap-looking laminate cladding that give the air of paper-thin walls (belying the 350mm-deep construction), or the dubious colour schemes punctuated by shallow oblong windows, it’s hard to shake off that image of living in an 80s office block, or a converted data centre. Still, some solace can be taken from the point listed under the “Adaptability” heading in the Homeshell brochure: “Can be clad to suit any vernacular.” I’ll have one that looks like a house then please.