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Our latest guest is Jon Johnson, Founder of the National Federation for Affordable Building, and CEO of Reach Homes.
The NFAB aims to bring SMEs together to build affordable and sustainable homes in a bid to tackle the housing crisis, inspire a new generation of eco-building professionals, and set new standards for the industry. At Reach Homes, Jon’s business is offering affordable eco-homes made from 60% recycled materials and starting at just £35,000.
We’ve given a brief outline, but we are sure there’s so much more to find out.
Hi Jon, great to have you here! Can you tell us about the journey that led you to your position in the building world?
It’s not the usual route as you can imagine! 5 years ago I was fresh out of the police service with no idea what I wanted to do and no money to do it.
I started my first business, Strip the Willow, in 2013, and soon discovered what social enterprise was all about. After a rapid rise to local success with our low-cost joinery, events, crafts and cafe we seemed to be set for a steady, even if solidly non-profit, future.
Then I got thinking about moving house and looking at non-traditional methods of building, we came up with a container-based home which incorporated a full range of green tech. Costing it up I realised that we had a potential solution to the affordable housing crisis. I applied for a grant from UnLtd, was lucky to have Dr Paul Chatterton (LILAC, Leeds) on the panel, and soon we were working on creating a proof-of-concept prototype which has smashed all our expectations and is 18 months zero fuel bills.
That led on to a country-wide effort to raise interest and funding to scale the business, a search which has met with enthusiastic verbal support. Combined with a vast number of contacts in the burgeoning offsite sector in construction, as well as fertile conditions nationally, I have spent the last 2 years searching for a route to market and made lots of friends on the way as I’ve clambered up the food chain. I’m still amazed when people who have forgotten more about offsite than I’ll ever know listen and agree with me! But just wait until we get our pilot project live - then we’ll see some waves.
Eco-homes for £35,000, that’s a pretty impressive offering. How have you made this possible, and what more can you tell me about Reach Homes?
REACH is a non-profit company - possibly the only non-profit private builder in the country. Not having to make money for shareholders and pay obscene bonuses to Management, along with our use of recycled materials and brownfield sites all helps to keep our prices accessible. We are determined to change the profiteering model currently employed by the traditional big builders, where land banking pushes up the price of sites, and homes are then built out slowly to keep purchase prices artificially high and maximise profits.
We will work with Councils, Housing Associations, and other landowners to encourage them to ring fence public land to be made available to developers like REACH to build the homes people need. Led by the communities that need them and based around shared community space, we’ll work with prospective owners and tenants to create stunning spaces shaped by the people who live there. We want to train up young people to work on homes that they can then afford to live in as part of that community, setting them up with a trade, self-respect and a future.
Our homes are powered by renewable energy, which means ultra-low bills, abolishing fuel poverty, and allowing even those on low incomes to have more choices over how they spend that money and not being forced to choose between heating and eating. Tenants will be able to pay their rent and thus are less likely to get into arrears or be evicted. This means a more stable community where people can get to know and support each other, sharing facilities like laundries, kitchens and leisure space and having access to living and working spaces, and meetings rooms where clinics, activities and drop-in sessions can be held.
The sites will be landscaped with shared gardens growing an abundance of flowers, fruit and vegetables tended by the residents or maintained as part of a shared maintenance contract run by the Company.
These developments will be the best homes we can make at the lowest price we can make them for, always. Not being driven by profit allows us to make this possible and, according to our financial projections, once we are operating at a sufficient scale we will produce a surplus of 10-15% which will be applied to projects tackling homelessness, retrofitting and re-offending schemes. With an anticipated 6000 units per year within 10 years that figure could exceed £30m per year. I can do a lot of good with that kind of money.
Using 60% recycled material is great. What about the other 40%? What are you using and how are you trying to change these figures? What are the material challenges?
There are certain bits where we can’t use recycled material, such as the glass, but we are looking at ways of producing our own triple glazing from a recycled source - and like the steel in the containers, glass is infinitely recyclable. We’re working on a lightweight steel integrated solar roof that will use new solar panels, and some of the bathroom fittings will be new but we hope to keep the recycled % as high as possible. We will be re-using some of the 100m tonnes of building materials that currently get landfilled every year, creating jobs in the process for people who are currently challenged in accessing the world of work. So we are recycling people as well as materials and land.
Currently the majority of building processes use wholly new materials so whatever we achieve will be a bonus and will help us meet our ambition to mainstream the UN Sustainable Development Goals across construction.
One of the main challenges, as this is a departure from the norm in building, is getting our components passed by Building Control but we have had very positive feedback from them and from planners so far and, as with any new way of doing things there has to be a pioneer who overcomes the objections of the status quo. We know from our market research that the public and the market is ready for a really disruptive product providing a real-world affordable solution which is actually creating a niche of its own in a market where everything is about how big a profit you can make from the client. We intend to set a marker for the industry, both traditional and the emerging offsite sector, to aim towards cost savings, social impact and social responsibility. There is no point in the government succeeding in building 300,000 new homes a year if they are not the homes that people need or can afford and that will still be adding to climate change problems for the next 100 years.
We saw that you’ve won some prestigious awards. Can you tell us what you’ve won and how the recognition has helped?
We’re up to 8 awards now - from our first Blue Patch Award for sustainable innovation in March 2017 to a Highly Commended at the National Sustainable Homes Awards last November. We were also Best Overall Business at the Sheffield Business Awards in December 2017 despite not actually having sold anything at that point.
We have had a very disappointing response from local and national media, and while we have been featured in quite a few smaller publications we have still to attract the large-scale engagement which will help us raise the significant amount of money we will need to finance the next phase of the project ourselves. We are working on that in several ways, and we hope our first contract will help - that is to build a meeting room for a national financial organisation in West Yorkshire.
Once we get our pilot project on the ground and prospective clients can come and see the finished product, I am confident that the many organisations we have spoken to over the last 2 years will be wanting to sign up as customers rather than spectators. Then we’ll be flying.
We’ve seen some pictures of your eco-homes, they’re made from shipping containers, right? We'd love to live in one! What has the feedback been like from visitors?
Awesome! Every visitor we’ve had to look round has gone away converted to the concept. Often people have preconceptions about containers, which we are only too happy to dispel. I’m sitting writing this reply with frost on the ground outside and no heating on, it’s cosy and if it gets any cooler I’ll put a few candles on which will warm me up for the rest of the night. I’m sure you’ll agree the idea of a home with 90% lower fuel bills is going to be a winner to most folks.
We’ve had so many people from far and wide as well as locals dying to know when we’ll get building; all I can say is - as soon as possible.
We are working with both Sheffield Universities to assess the performance of the homes once built, as while there are several container developments around the country there have been virtually no authoritative academic studies into them as living spaces. We will use this research to inform our future developments and continue our mission to build the best houses we can.
‘Affordable’, this seems quite subjective to me. I see politicians use it too. Is it an industry term, and what does it really mean?
It’s one of the problems at the moment - the negative connotations associated with labels like ‘affordable’ and ‘social’ housing stigmatise both developments and tenants. With the Government’s definition set at £250,000 (£450,000 in London) it’s clear that the property market isn’t meeting the needs of the majority. At 10x the average wage, so many people will never be able to own - or in many cases even rent - a decent home. Homes have to be affordable to all people, whether it be affordable rent, shared ownership or outright purchase.
My vision is to extend this type of affordability to a far wider range than can currently dream of owning their own place. The peculiarities of property ownership in the UK and the market conditions that have been allowed to evolve are exclusionary - a Resolution Foundation report recently noted that 34% of people would never be able to own their own home and that percentage is rising as fast as the average age of a 1st time buyer - now 38. This means that the Bank of Mum and Dad is an increasingly overstretched 3rd biggest lender in the country and this is putting the disposable assets of the older generation increasingly into bricks and mortar, further reducing people’s life chances and social mobility.
Imagine the following situations:
Jimmy is 16 and has few qualifications as he is dyslexic and hated school. He’s good with his hands but sees no future for himself. He joins REACH Academy as an apprentice in sustainable building, works on a 1-bed unit which he moves into in a nearby development. Able to pay the rent and acquire a share in the equity he is proud of his home and looks after it, settling in and working as a volunteer on the estate maintenance team to keep it looking nice.
Alex and Cody are expecting their first baby so can’t keep living with Cody’s parents. They have a tiny amount saved but not enough for a private rental. They put £500 down on a 1-bed REACH Home and help to design the exterior panelling and choose the internal layout. As baby Austin grows up they have managed to save through paying tiny fuel bills and can afford to add on an extra bedroom unit by the time he is 18 months. REACH make and install it in just 2 weeks and everyone sleeps happier. When his sister arrives a year later the bedroom is partitioned and then a playroom is added a year later, again bolted on within 3 weeks.
Vera and David are in their early 70’s. They live in a 5 bed house with a large garden that they bought for £35,000 back in the day. It is now worth £650,000 and is getting far too much for them but they are still very active and want to travel and see more of their children and grandkids. They sell up, buy a 3-bed REACH home on a co-housing scheme for £90,000, give £200,000 each to their son and daughter (cleverly avoiding a shedload of inheritance tax) and set out to enjoy the rest of their windfall. The old house and garden are recycled into yet another REACH co-housing scheme and are appreciated by 38 people who love living so close to town. Both sets of occupants enjoy freedom to take as much part as they like in the project, enjoying rebates on their very reasonable maintenance charge for helping out in the garden and growing food for communal meals, babysitting or passing on skills and knowledge to the youngsters in the meeting room when the District nurse, midwife or choir aren’t using it. If they want to get shopping they book one of the electric pool cars powered from the shared solar array and nip to the nearby Junk Food Supermarket.
Wilf isn’t quite so fortunate - he’s 82 and has been in a private rented house for 24 years since his divorce, but now the landlord wants him out and has upped his rent. His health isn’t great but he can’t stand the idea of a care home. There’s a ground-floor flat free in Vera & Dave’s old house so he moves in there and has people around him to keep him company, on site care which meets his needs and he loves the view over the pond and takes up bee-keeping, which he’s always fancied. He’ll live an extra 5 good years.
That’s REACH Homes idea of affordable living, because we can’t afford not to.
The National Federation for Affordable Building is another of your projects. How are you using this as a platform to inspire change?
NFAB is aimed at SMEs in the offsite market. From a number of conversations with some extremely committed people it was obvious that there were major barriers. Looking round the sector with a pair of fresh eyes it quickly became apparent that, while MPBA and BuildOffsite were doing good things for their members, there was a need for another body that took things to a different level.
There was no imperative for sustainability in offsite and even within the membership of existing trade bodies there was a distinct lack of coherence and cooperation. This is a sector that promises to transform the way we do housing in the UK over the next 20 years and needs to take on the massive vested interests of the traditional building industry. It seemed obvious to me that the need to work together to fill the immense void available in the 140,000+ homes - especially social housing properties - that are required to meet the need identified in numerous reports should be catalysed quickly so that the many companies offering exciting new styles and types of home could be aligned to meet the need of the market.
Getting over things like standards, training up a skilled workforce, building sustainably and lobbying for land were things that could only be achieved by working with a concerted and clear message that was quickly understood and adopted by commissioners and agencies, funders and Government. That is what NFAB is about, and we have a growing consensus which just needs funding properly. When it gets going it will even be able to leverage sustainability into the mainstream builders’ world and mean that construction will no longer account for 30% of carbon emissions. It will help to make the industry attractive to young people again, the Minecraft generation who are great at CAD, BIM and robotics but who wouldn’t go near a building site - women, disabled, BME workers will enjoy all the benefits of making energy-efficient buildings to exacting quality standards in warm, safe environments, bringing housebuilding out of the Victorian era and making it efficient and effective again.
All this can be driven by a Dunkirk-style solution to building where Homes England and MCHLG actively encourage SMEs to partner with big builders to foster innovation, ensure that affordable housing is not a dirty word and viability assessments can finally be deleted from the literature.
There’s a huge push in the construction industry to reduce embedded carbon, wastefulness in production, and on-site wastage. This can’t happen overnight, but where do you see the low-hanging fruit?
Every house we build must be as close to self-sufficient for energy as possible. That means moving away from the fear of loss of profits which led to the scrapping of the Code for Sustainable Homes in 2015. That can be driven very quickly by using the new BRE standards and Home Performance Labelling (similar to what you see on your fridge - who buys a D-rated appliance?).
100m tons of building waste goes in landfill every year - REACH will recycle 60% of its components from waste streams, and offsite manufacture in general saves colossal amounts of materials by using BIM and CAD to order only what is necessary and assemble it in clean dry controlled environments where stuff doesn’t get stolen. This saves cost being passed on to the customer and helps to cut the carbon footprint of the industry in general.
Fabric-first design can be beautiful as well as efficient, and streamlining the unnecessary layers of the process by vertically integrating business also cuts out waste and cost. Taking a project from vision to turnkey in house means better communication, scheduling, control and customer focus. Ideal’s new factory in Liverpool is a great example of this - all parts of the process integrated on site.
You’re a man with a well-regarded opinion on the housing industry. What are the biggest problems right now from your perspective?
There are four major issues that bother me.
Land supply is clearly the main one, and the way it is skewed towards those who perpetuate the current system for private gain and have created this crisis. They are a money-laundering cartel and need to be brought to heel. It’s difficult to control private sales but I believe public land should be ring-fenced and a large % disposed of in a very controlled way to ensure that affordable % are adhered to. To enable this the Gov’t needs to help LGA and Councils re-train and restaff their planning Departments with enthusiastic young people who want to change things. Processes need to be put in place to guard against corruption and strong enforcement powers are required to ensure that what is planned - in a very community-led way - gets built. The key blocker to this is...
Greed. When the boss of just one large building firm can take home a £75m bonus in one year it is clear that the priorities of the industry are wrong - and will not change without concerted action. Money talks, and in an industry where big money has the only voice, what it is saying is ‘screw the 600 people who froze to death on the streets in 2018, screw the millions who can’t get a decent home, we’re all right Jack’. That sort of attitude is rife throughout society these days and it is everything that is wrong with society. It creates and reinforces division, envy and inequality and it is not necessary. I’m not religious but there is one truism for me from the Bible - “the love of money is the root of all evil”.
Lack of will - because of the inequalities of power and influence created by the immense wealth to be had in property it is very difficult, particularly through austerity, to counter the steamroller effect of mega-money in housing. A change of Government is certainly necessary, as is the way we think about how housing need is assessed, planned and met. And the offsite companies all need to work together.
Acceptance of modular is still very sketchy, and while commissioners are getting on board and are increasingly aware of the offer, they still don’t understand how it can save time, effort and headaches in getting social housing built. There is no need to specify every component in a tender brief - just go online, look at the product from the various manufacturers, check the previous feedback and the BOPAS guarantee and order! Just like buying anything else online really. And there needn’t be massive time delays - you order 10 homes at £100,000 and get them delivered where and when you want them, at exceptional quality and energy efficiency, for £100,000 each. No delays for weather, no delays for trades, just a guaranteed product. Every time. Superior in every way. A type approval system is needed here too, so that a home built in a factory in Glasgow can meet the requirements of a Housing Association in Banbury. No reason why this shouldn’t happen as it removes massive inefficiency from the system.
Once this is all sorted the money flows, mortgage product, insurances etc will attach to offsite the same way it does to other new forms of building. Many commercial buildings, student flats etc are already built this way but because it is new to housing it is still not fully integrated into the public consciousness. I am well aware that container housing is so popular because it has appeared on +TV and has thus been ‘validated’. Thankfully.
Where would you like to see Reach Homes and NFAB in five years’ time?
I want to see REACH as a household name; the premier builder of affordable eco-homes, with 14 factories around the country producing 7000 beautiful homes a year. The £50m profit we’ll be generating will be used to tackle homelessness, retrofitting and re-offending and we’ll have set the standard for use of renewables in all new buildings.
NFAB will be a major organisation representing every offsite company, facilitating speedy, efficient, locally-driven solutions, and holding the big agencies’ feet to the fire over getting things done efficiently, effectively and driven by the communities where the homes are needed, not by the whims and deep pockets of the big builders or the overseas investor market. We’ll be standing up for customers at all levels because at the end of the day the one thing that unites us all is the need for a decent place to live where we feel safe. Like a cave but better.
What advice would you give to other sustainability entrepreneurs who want to start a business or project of their own?
Four things.
Firstly, you must do it! We have to do all we can to bring sustainability to every aspect of our lives. One planet, no Plan B. The Sustainable Development Goals are a great baseline to use.
Secondly, get sound financial advice and support from a trusted source, keep records and make sure your figures add up so when you need funding it’s all there ready to go.
Thirdly, learning the hard way teaches you what’s important.
Lastly, believe in your idea. Tell as many people as possible, keep it realistic and speak to as many experts as you can. Positive affirmation is great, learn from the constructive criticisms.
When your story convinces you each time you tell it, you’re on the right track!
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