Hundreds of 26 sq m modular homes built to order at factory near Leeds to be rented out at lower cost than flatsharing

The first production run from a vast new factory outside Leeds began this week – with timber delivered at one end, and just a week later a fully furnished one-bed flat popping out the other.

Legal & General Homes is promising to build thousands of flats and houses a year at the revolutionary, and highly secretive, factory, and delivered around the country on the back of trucks. Is this the solution to the housing crisis – or a new age of soulless prefabs for rabbit hutch Britain?

In Richmond, south-west London, the future opened its doors on Wednesday, with the first of hundreds of housing units to be built by L&G, driven down the A1 and placed on site in just a couple of hours.

The housing association that has ordered the homes, RHP, buys them off-the-peg for at least 15% below the standard cost for onsite construction.

Facebook Twitter Pinterest Home petite home! The RHP’s prefabricated flat. Photograph: Andrew Holt

It is an extraordinary move by L&G, better known as a car and home insurer, which if successful will catapault it into the top league of Britain’s housebuilders, albeit using a Ford-style production line.

This is not an Ikea-style flat-pack approach – what arrives on site is a “turn-key” home complete with a kitchen, fitted carpet, curtains and bathroom, and even furniture if requested.

The eight production lines at the highly automated 550,000 sq ft factory will be able to build around 3,500 houses and flats a year – a one bedder in one week, a two-bedder in two weeks. The timber-framed homes are made in modules, bolted together on site, with external cladding the only other extra required.

Facebook Twitter Pinterest Small, perhaps, but it does boast some outdoor space. Photograph: Andrew Holt

“At full production, homes like this will be delivered repeatedly in a matter of weeks without the snagging issues faced by traditional methods,” saidNigel Wilson, the chief executive of L&G. “Just as the car industry was automated, so the UK’s traditional housebuilding sector now needs to step up. We need to build houses faster and more efficiently than ever before.”

For housing associations such as RHP, which took over 9,000 homes from the local council, the new L&G prefabs answer their most pressing need: accommodation for young, single, urban workers earning between £20,000 and £40,000 who do not qualify for conventional social housing but who are priced out of buying.

In Richmond, the average semi-detached home fetches more than £1m and Rightmove does not list a single one-bed flat to rent at less than £1,000 a month. RHP said the new L&G-built “modular” homes will be rented out at £600 to £700 a month.

For less than the price of most flatshares in the capital, tenants will receive a high-spec home complete with a luxury kitchen and lounge, separate bedroom and bathroom, underfloor heating and PV solar cells that promise to shave total energy bills to as little as £10 a year. There’s even a “smart door” that lets the tenant ping the entrance open remotely from their mobile at work should they need to let someone in.

The drawback? They are tiny. At just 26 sq metres (280 sq ft), the L&G/RHP homes squeeze living space down to levels never seen before in publicly sponsored housing.

New national space standards, introduced in 2011, demand that a one-bed flat for one person should be a minimum 37 sq m. The new modular homes will pitch housing associations desperate to build homes – and meet government targets for 200,000 new homes a year – against planners desperate to avoid a “race to the bottom” on home sizes.

At RHP, the development director, Robin Oliver, said: “It has been priced for a single person, and we wouldn’t expect a couple to live in the space. We’re not saying this is going to be the new norm – we see people renting it for six months to two years, then moving out as they have saved for a deposit. A lot of our own employees pay more than £600 a month for a room in a shared house. The most common question we are getting from them, is ‘how can I get one?’”.

Facebook Twitter Pinterest RHP’s new prefab home.

The housing association is able to raise money to buy the units from L&G at interest rates of 2-3% and place them on infill and brownfield sites in the capital. Even on rents of £600-£700 per month, they require almost no public subsidy. Neither L&G or RHP will reveal the cost price of the units, although RHP said the cost is 15% below the standard £2,600 to £3,000 per sq m build cost of conventional homes in the borough, which indicates that the 26m sq flats cost £60,000- £70,000 to buy.

But RHP admits the homes still don’t have full planning permission – and they could have a battle on his hands.

At the Greater London Authority, Jennifer Peters, in charge of the London Plan, is determined to maintain existing space standards. “They [space standards] have made a real difference to the quality of development in London. I’m confident that space standards are right and will continue to be right,” she said, adding that if standards are relaxed, there is a risk that land values simply rise to reflect the extra units a developer can squeeze into a space. However, she adds that there could be “some flexibility if it can be demonstrated that it has an exceptional design”.

Facebook Twitter Pinterest Much-needed storage space is found up high. Photograph: Andrew Holt

Britain already has some of the smallest homes in Europe, with the average new-build home around 76 sq m compared with 137 sq m in Denmark. Controversial office-to-residential conversions, outside normal planning rules, have produced some flats at just 14.9 sq m.

Will Wimshurst of Wimshurst Pelleriti, which designed the L&G home for RHP, said: “We’re not saying we’re against space standards. What we are saying is that there is a big problem in the middle of the market – companies just can’t hold on to workers in places such as London. These people are forced to leave, and they need a solution.”

Visitors to the new L&G homes expecting a shipping container with frills will be disappointed. The flats are higher than standard build, making an otherwise tight space feel more spacious, as well as allowing for more storage, with raised mezzanine beds giving extra space below.

Facebook Twitter Pinterest The bedroom. Photograph: Andrew Holt

The housing association deliberately avoided primary colours to get away from the Lego-like feel of some other prefab units.

The factory construction allows buyers such as RHP to ask L&G to finish it to any specification, much like a car buyer does. Want to add a microwave? Change the size of the cupboards? Have the bed raised higher? It’s like ordering metallic paint or a sunroof from Ford. “The amazing thing is that you can just feed the design into the computer, then it’s cut to size in the factory,” said an associate at Wimshurst Pelleriti.

Facebook Twitter Pinterest Legal & General’s prototype two-bed home, destined more for the suburbs than the city. Photograph: Handout

The two-bedder prototype unveiled by L&G this week, and designed for couples and small families rather than singles, is much larger at 82 sq m and will have no issues meeting current space standards. It has a more conventional look, designed for the suburbs rather than city centres.

For now, both the one and two bedders are prototypes, with RHP expecting the first tenants – subject to planning permission – through its doors in early 2018.