Innovative Housing Programme, year two: lessons learnt (summary)

Established in 2017, the Welsh Government's Innovative Housing Programme (IHP) was commissioned to support innovation within housing development across Wales. The programme targets critical elements of the housing supply chain, including construction techniques, delivery pathways, and housing models.

This research focuses on the second year of the IHP (2018 to 2019). Its goals for the second year were to:

• increase the supply of affordable housing in Wales
• support the seven goals enshrined in the Well-being of Future Generations (Wales) Act 2015 (WFGA)
• address the cost and value of new homes and develop housing that meets current and future housing needs
• support innovators through the use of alternative approaches and demonstrate the benefits of such approaches to encourage uptake
• harness opportunities to deliver jobs and skills training and to develop local industry
• publicly disseminate key findings and maximise learning

The research specifically focused on identifying planning barriers, construction challenges, workforce issues, and the benefits experienced by these development schemes.

To conduct this research, a mixed-methods approach aligned with the HM Treasury Magenta Book: Central Government Guidance on Evaluation (2020) was developed. The study employed both qualitative and quantitative research methods, including analysis of scheme monitoring data, secondary data sets, and interviews. Monitoring data for 13 schemes in the second year of the IHP was available for quantitative analysis, and 33 interviews were conducted with developers, constructors and other development stakeholders.

Planning

Local authority planners were generally receptive to the innovative approaches proposed during the second year of the IHP. Six developers reported that gaining support from planners for these innovative schemes had, in their opinion, become comparable to gaining planner support for traditional-type developments. Planners were perceived as viewing innovative approaches - ranging from modular constructions to energy-efficient technologies - as essential for modernising housing. However, specific regulatory challenges remained, particularly in rural areas where stringent planning restrictions limited the scope of developments or where innovative designs did not align well with existing guidelines. Some developers also highlighted a mismatch between innovative designs and planning regulations, which created uncertainties and practical difficulties in the approval process.

Community objections to schemes proved to be a source of delays and complications in obtaining planning permission for several schemes. These objections were often typical of those surrounding social housing developments, with residents raising concerns about parking or potential anti-social behaviour. Early and transparent engagement with local communities was highlighted as a key learning, especially when projects involved sensitive or potentially controversial elements. Improved communication, including regular community meetings and transparent updates, helped to address and ease concerns, fostering community acceptance.

Mirroring findings from the IHP Year One Lessons Learned report, developers thought that the appearance of innovative designs led to resistance in some cases, particularly within traditional settings. Concerns from planning authorities and communities were primarily focused on aesthetics rather than the utility or environmental benefits of the projects. Modifications to designs, informed by early engagement with the community, helped to harmonise developments with existing architectural styles. Some developers chose to maintain traditional aesthetics while integrating innovative technology to improve acceptance. This approach demonstrated the importance of considering local aesthetics in building design to reduce resistance and ensure community support.

Development strategies

Developers identified the economic challenges associated with the development of innovative housing projects. Schemes encountered substantial financial challenges, primarily due to the increased costs of employing innovative construction methods compared to traditional builds, with innovative projects often necessitating a higher upfront investment. These costs are higher due to the increased investments needed for prefabricated components, logistics, and specialised machinery, which typically exceed those for traditional construction methods. Developers and constructor partners recognised that the financial burden of innovative developments was substantial and that external funding was a crucial element of their feasibility. Developers also reported that the innovative nature of builds heightened the risk of unexpected costs, as the supply chain and appropriately skilled workforce were seen to be more difficult to source or less available.

The integration of community and resident feedback into the design of innovative housing projects was a key takeaway with regard to ensuring long-term development success. The process of integrating community feedback into housing designs proved to be dynamic and iterative, with developers recognising that this engagement was essential for not only gaining planning approval but also ensuring that the communities embraced the completed projects. Regular interactions with the community kept them informed and involved. 

The role of human factors in the design and operation of innovative housing projects was highlighted as a key finding. The impact of occupancy on internal temperature was a particularly illustrative example. Preliminary data analysis revealed that houses with more occupants tend to have warmer internal climates. The influence of individual tenant behaviours on the performance of buildings emerged as an important factor. Instances of poor tenant buy-in highlight the need for education strategies that instruct residents on the functions and benefits of novel technologies. Developers noted the critical nature of this educational need.

Workforce

Developers frequently highlight the scarcity of skilled labour capable of installing and maintaining the technologies integral to MMC and innovative approaches. Developers and non-specialist constructors (those not specialising in a particular build type) frequently cite these shortages as barriers to project execution. To address this, training efforts aiming to meet immediate project needs and provide broader social benefits by enhancing local employment prospects and elevating skill levels through apprenticeships were initiated by some schemes.

Some developers noted that the integration of private sector developers marked an evolution in the approach to constructing innovative housing. Many of these firms often brought with them a ready-made team skilled in the development of chosen construction techniques. Partnerships were also considered to have fostered a learning environment where all parties could adapt to new procurement processes and roles.

Addressing some of the workforce-related issues, many respondents recognised the potential benefits of having a designated individual to coordinate and train teams. These findings highlight the critical importance of structured workforce management and collaboration in innovative housing projects.

Construction

During the second year of the Innovative Housing Programme, developers and contractors faced concerns related to the supply chain. These challenges were particularly pronounced when using materials often not readily available within the UK.

Contractors and developers often found the technologies used in IHP Year 2 to be complex and labour-intensive to install and maintain, with respondents outlining that coordinating different systems within projects, which often required precise synchronisation and integration, was difficult. However, most respondents were confident of the homes' ability to meet or exceed quality standards.

The evaluation of IHP Year Two identified valuable lessons and outcomes across the developments funded. Schemes successfully demonstrated the benefits of MMC, energy-efficient technologies, and innovative community-focused designs. However, persistent barriers, including supply chain limitations, regulatory challenges, financial considerations, and workforce skill shortages, underscored the complexities of scaling innovation in the housing sector.

Economic challenges were evident, with developers relying heavily on external funding to address the increased costs associated with innovative methods. Community engagement proved to be crucial, as projects incorporating early and transparent communication were more likely to secure resident and local authority support. Lessons from tenant behaviour and the impact of human factors on building performance further highlighted the importance of aligning innovative aspirations with practical and social realities.

During year two strides were made in integrating advanced technologies into housing projects, with developers confident in their potential to reduce fuel poverty and meet sustainability goals. Nonetheless, the high cost of implementing such technologies, coupled with maintenance and system integration challenges, revealed the need for a balanced approach to innovation that considers long-term viability and scalability.

Report authors: Howson, A.S.; Burrows, E.; Hopwood, D. (2024)

Views expressed in this report are those of the researchers and not necessarily those of the Welsh Government.

For further information please contact:
Meghan Duffin
Housing research team
Knowledge and Analytical Services
Welsh Government
Cardiff
CF10 3NQ
Email: HousingResearchTeam@gov.wales

Social research number: 11/2025
Digital ISBN 978-1-83715-215-5

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