Research, Document

Year three of the Innovative Housing Programme: lessons learnt (summary)

This report outlines the findings of research with contractors and developers involved with year three (2019 to 2020) of the Innovative Housing Programme.

First published: 28 January 2026

Last updated: 28 January 2026

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Background and context

The Innovative Housing Programme, first launched in 2017, was a grant-funding programme to support the housing sector to ‘test and learn’ from innovations in housing construction and delivery. In total, there have been four iterations of the programme: Year One (calendar year 2017 to 2018), Year Two (calendar year 2018 to 2019), Year Three (calendar year 2019 to 2020), and Year Four (calendar year 2020 to 2021). In Year Three of the Innovative Housing Programme (calendar year 2019 to 2020), the scope was amended from previous years to facilitate a higher level of innovation than was supported in the first two years of the programme. The stated objectives were to:

increase the supply of affordable housing
align the design and delivery of affordable housing with the seven goals of the Well-being of Future Generations (Wales) Act, 2015
address cost and value in new homes and develop housing that meets specific current and future housing needs
provide support for those willing to innovate through the use of alternative approaches
demonstrate benefits associated with alternative approaches, with a view to encouraging wider uptake
harness opportunities to deliver jobs, skills training, and develop the local industry
publicly disseminate key findings and maximise learning
help to tackle poverty by providing homes that are more energy efficient and cheaper to run
support wider regeneration and economic development

As with previous iterations of the Innovative Housing Programme, the Year Three Innovative Housing Programme was opened to both social landlords and the private sector. Eight developments across Wales received funding in Year Three of the Innovative Housing Programme.

Research aims and methodology

In December 2024, the Welsh Government commissioned Alma Economics to undertake research into key lessons from Year Three of the Innovative Housing Programme. This research followed similar Welsh Government-commissioned evaluations of Year One ^[^{footnote 1}^] and Year Two ^[^{footnote 2}^] of the Innovative Housing Programme. This research primarily aimed to understand the construction lessons learnt from the schemes supported by the third year of the Innovative Housing Programme, and explored related topics, such as a comparison of findings across previous years of the Innovative Housing Programme and a comparison of developers’ views of innovative developments against more traditional housing developments.

The methodology followed was a combination of qualitative interviews, focus groups, and desk-based research on the programme. To begin with, scoping discussions were conducted with key stakeholders, such as Welsh Government officials who were involved in the design and implementation of the Innovative Housing Programme, as well as the current Chair of the Design Commission for Wales. This was followed by a desk-based review of relevant policy documentation, monitoring data, and evaluation reports of Year One and Year Two of the Innovative Housing Programme.

The fieldwork was conducted in three phases. In the first phase, a total of 14 interviews were conducted with developers and contractors across all 8 projects that received funding through Year Three of the Innovative Housing Programme. In the second phase, a focus group was conducted with repeat Innovative Housing Programme participants, i.e., developers who received programme grant funding for more than one year of the Innovative Housing Programme. The focus group was attended by 3 participants and enabled the collection of insights on lessons across multiple years of the Innovative Housing Programme, allowing us to identify and validate cross-cutting findings. In the third and final phase, 2 interviews were conducted with developers who did not participate in Year Three of the Innovative Housing Programme, to explore barriers that may have prevented them from participating and insights on how these barriers could be overcome.

There were some limitations of the fieldwork. Whilst interviews were conducted with Registered Social Landlords who did not participate in Year Three of the Innovative Housing Programme, only 2 Registered Social Landlords were engaged, thereby impacting the comprehensiveness of findings from the third phase of fieldwork. Further, there was no engagement with some authorities involved in some of the successful projects in Year Three of the Innovative Housing Programme, such as the Local Highways Authority, whose involvement was discussed by some participants during the fieldwork.

Main findings

Findings from the construction process

This research found that strong relationships between developers and contractors were seen by participants to be critical for the construction process. The hiring of experienced project managers for innovative developments and working with data collection mechanisms were primarily highlighted as steps taken to strengthen relationships.

Participants also reported progress in bridging the construction skills deficit, showing an improvement in the context of the workforce challenges identified in previous years. While some participating projects in Year Three of the Innovative Housing Programme were impacted by a shortage of workers with net-zero construction skills, participants raising this issue highlighted positive developments undertaken to address the shortage, such as businesses investing in net-zero skills development and training.

A majority of projects using Modern Methods of Construction reported faster construction timelines. Whilst Modern Methods of Construction were acknowledged by participants to carry a cost premium, participants felt that these methods were becoming increasingly cost-effective and faster to install on-site. This is in line with findings on costs of innovative methods as compared to traditional construction, which participants reported to be higher, driven in part by bespoke suppliers who were needed for some materials. While these findings on costs are largely consistent with findings from previous iterations of the Innovative Housing Programme, participants expressed optimism around the stabilisation of costs following the development of technologies over time and economies of scale.

Similarly, access to innovative technologies and methods was reported to have caused little to no delays to participating projects in Year Three of the Innovative Housing Programme. Where delays were faced, these were primarily attributed by participants to the coronavirus (COVID-19) pandemic, with a few projects experiencing delays in accessing batteries and heat pumps. When compared with the previous iterations of the Innovative Housing Programme, these findings suggest improvements within the sector in adapting to mitigate supply chain challenges. Aside from the supply chain impacts noted above, this research also explored the overall impact of COVID-19 on Year Three of the Innovative Housing Programme and found that while all schemes were impacted by COVID-19 to some extent, it was seen by participants to have severely impacted only a few participating schemes.

The need for early engagement with relevant authorities was highlighted as critical in persuading relevant local authorities and stakeholders of the viability of an innovation. Some developers highlighted the need for this by citing examples of challenges faced in gaining approvals for roads from their Local Highways Authority.

Trialling and experimenting in innovative methods, especially those related to new renewable energy technologies or ambitious building standards, such as Passivhaus, was seen as important for developers and contractors to gain confidence in new, innovative approaches before delivering at scale. On a related note, this research also found that construction sites from Year Three of the Innovative Housing Programme served as real-time learning for the sector on innovative methods and approaches.

This research also explored how innovative construction methods compared to more traditional housebuilding methods and technologies. Whilst findings on cost and access to materials have been discussed above, participants overall reported that the use of Modern Methods of Construction yielded faster construction timelines and reduced waste. Local perceptions around innovative methods, such as Modern Methods of Construction and timber-frame developments, were also seen to have been more positive than for more traditional developments. These positive perceptions were attributable to faster construction timelines and a reduction in dust and noise for developments with these innovations.

Approximately half of the participants noted that innovative methods and approaches are being mainstreamed into regular developments, with some participants reporting that innovations achieved through Year Three of the Innovative Housing Programme have become a “new normal” for them.

Findings from the planning process

The planning process in Year Three of the Innovative Housing Programme was found to be no different to normal, with a majority of participants noting that any challenges or delays faced were typical of the Welsh housing system and were not specific to Year Three of the Innovative Housing Programme. Where challenges were found, these were isolated to a few participating projects that reported challenges receiving approvals from other authorities, such as the Local Highways Authority, after having already received planning approvals.

Findings from the application process

Overall, participating developers reported that the application process for Year Three of the Innovative Housing Programme was straightforward, with bidding experiences reportedly getting easier over time. Barriers faced by Registered Social Landlords who did not participate in Year Three of the Innovative Housing Programme included lengthy relative outcome timelines and limited clarity of feedback. That said, whilst reporting these issues, these interviewees reported that the Innovative Housing Programme’s flexibility around costs was useful and noted that this is missing from other grant funding schemes.

Conclusion

The evaluation into Year Three of the Innovative Housing Programme outlined key findings relating to the construction process, application process, and planning process. Whilst these have been expanded above, they all signal progress made within the Welsh housing sector in relation to the use of innovative approaches and methodologies over the years. This progress is mainly highlighted by the key findings from this research: the higher costs typically associated with innovative methods and approaches were found to have stabilised, delays and challenges relating to access to supply chain were seen to have only severely impacted a few developments, and progress was found to have been made in bridging the net-zero construction skills deficit. Progress was also evident in the application process, which was reported as becoming more straightforward over time, though some non-participating Registered Social Developers highlighted areas for improvement. Similarly, while the planning process did outline some challenges, these were limited to a few participants. This research also underscored the importance of other factors as central to the innovative construction process, such as relationships between developers and contractors and early engagement with key stakeholders – thereby highlighting useful lessons for the sector to take forward.