Modern methods of construction (MMC): the BBA and LPS 2020 certification

While lenders have no intrinsic preference for any particular mode of construction, they do have one overriding requirement: that properties considered in relation to a mortgage must be capable of standing as security for a loan of up to 35 years.

In practice, this means that the property must be saleable and maintain, or increase, its value over the term of a mortgage loan. In relation to MMC, lenders have been concerned about the ability of some designs to meet this criterion in key respects:

• Durability: achieve a life span of at least 60 years.
  
• Whole life costs (WLC) at a level comparable to traditional construction - particularly relevant for lenders to social housing providers.
  
• Reparability: no undue repair costs, and ability to use a range of local repair services.
  
• Adaptability: the property should, without difficulty, support the usual range of adaptations/extensions such as a porch and conservatory.
  
• Insurability: buildings insurance should be available on normal terms.

Lender concern has been, in part, fuelled by the relatively poor track record of past generations on non-traditional construction. Lenders providing individual mortgages for home-ownership and lenders providing private finance for new-build in the social rented sector have similar concerns.

The British Board of Agrément (BBA)

The BBA has been active in the approval of building systems since 1966, when its predecessor, the Agrément Board, was set up by the then ministry of public building and works. Although now an independent body, the BBA works closely with government and the NHBC. 

The BBA's assessments of building systems or MMC, focus on the demands of UK building regulations and also pick up any non-statutory requirements, such as those of the NHBC. A range of performance factors are evaluated and the BBA's opinion is given in the finished Agrément Certificate. Durability is a key consideration and the target for building systems is 60 years.

Agrément Certificates for building systems include steel and timber framed, structural insulated panel systems, insulated concrete formwork and composite structures. The BBA is also active in the assessment of many of the new building products appearing on the market.

Further information, including downloadable Agrément Certificates, is available at www.bbacerts.co.uk

LPS 2020

The CML has been working with the Building Research Establishment (BRE) and a range of stakeholders to develop a certification standard that will attach to individual new dwellings and that will provide comfort that a property performs adequately in relation to a number of requirements including those set out above. The Association of British Insurers (ABI) is one of those stakeholders that have been closely involved since their concerns in relation to provision of buildings insurance complement those of the CML and its members. 

The development of the standard (LPS 2020) falls into four stages:

• Stages 1 and 2 (now complete) to develop a written system standard to apply to the design and manufacturing stage;
  
• Stage 3 to arrange for on site inspection of the construction process; and
  
• Stage 4 to register an individual dwelling as compliant with LPS 2020.

Following the completion of stages 1 and 2, the written system standard for LPS 2020 was launched on 24 April 2006 and a copy is attached below.

The recently launched written standard is helpful to lenders to the extent that it explicitly addresses the key issues set out above. However, it only applies to building systems and components at this stage in its development, and is, therefore, unlikely to be seen by lenders as either a necessary or sufficient criterion for the suitability of a property to stand as as security for a mortgage loan.

Work continues on stages 3 and 4 of the project and progress will be reported in due course.