National Housing Federation

Housing associations across England are increasingly adopting modern methods of construction in their approach to building new homes. We want the social housing sector to lead this step change to delivering better homes at a faster rate.

What are modern methods of construction?

The construction sector is evolving away from the traditional bricks-and-mortar approach to consider more innovative, forward-thinking ways to build new homes – modern methods of construction (MMC) is a term that conveys this new approach.

MMC uses off-site manufacturing to build high-quality homes with less waste and at a faster rate, helping to tackle the nation’s housing shortage.

Find out more about MMC

Why MMC is vital for economic and social recovery

Building new homes of high quality has never been more important. Employing MMC techniques in housebuilding programmes can help to alleviate the shortfall of homes and meet the ambition of enabling access to a decent home for everyone.

Amid a skills shortage in the traditional construction sector, MMC utilises a largely different workforce, encouraging the sustainability of the sector. Clean factory based working conditions have also attracted a new demographic and diversified the workforce.

MMC is also closely linked to the sustainability agenda due to significantly reduced waste, site disruption and improved insulation and performance associated with building in controlled factory settings.

Find out more about MMC

Building Better

Building Better is a National Housing Federation-backed alliance of 30 housing associations and local authorities.

One of the initiatives that came out of the NHF’s Futures programme, Building Better is aggregating demand from members so they can procure high quality, sustainable offsite homes, at the right price, confident in the fact that these homes will meet their customers’ needs.

Drawing on previous experience and sharing common ambitions, the two procurement routes outlined below have been developed by the sector, for the sector.

Find out more about Building Better

Category 1 framework for MMC

In 2021, Building Better and Procurement for Housing launched the first Modern Methods of Construction procurement framework.

The Category 1 framework provides members with a fully compliant route to market for three volumetric manufacturers, with price certainty baked in. This means members can be confident that robust market assessments have been undertaken, with no additional tender processes required at call off.

All the homes built through Building Better use a fabric first approach to meet net zero carbon standards, have a 60 year minimum design life accreditation and allow for flexible contractual arrangements. Only partners who can provide the highest quality, safe, and sustainable homes with the ability to customise finish have been appointed.

Category 2 dynamic purchasing system for MMC

Building Better launched its MMC Category 2 dynamic purchasing system (DPS) in May 2022. A number of manufacturers have been selected to provide 2D panelised systems, assembled on site and because it’s a DPS, not a fixed framework, Category 2 manufacturers can join at any point until 2026.

The DPS will run in parallel with Building Better’s first MMC framework and provides members with greater customisation and flexibility, including the ability to deliver MMC on sites that are harder to access and schemes with planning already granted.

Modern methods of construction – building the social housing sector’s awareness and confidence

The pointed roof of a house being constructed

Modern methods of construction (MMC) can help housing associations build more and better homes – but collaboration is key

Top tips to make modern methods of construction work. Modern methods of construction (MMC) are a hot topic in housing, and something for housing associations of all sizes to consider when undertaking development projects and looking to build more homes.

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MMC are an innovation we need to embrace. John Newbury gives a boards' perspective on adopting modern methods of construction in development projects.

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National Network for Equality, Diversity and Inclusion Professionals, 22 January 2025. Online

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Leaseholder and Tenant Service Charges Conference 2024. London

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National Asset Management Network. Online

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National Supported and Older Persons’ Housing Network . Online

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The new Chancellor, Jeremy Hunt, announced that the off payroll working (IR35) rules introduced from April 2021 (6 April 2017 for the public sector) are to continue unchanged in a reversal of the proposed repeal announced by the previous Chancellor, Kwasi Kwarteng. On the basis that the rules won’t change, now is a good time to check the level of your compliance with IR35 obligations. Particularly as the HMRC ‘light touch’ approach to penalties for inaccuracies that were not deliberate ended on 5 April 2022, and HMRC is stepping up its compliance activity. Recap on IR35 obligations Under the rules introduced from 6 April 2021, medium or large-sized organisations in the private and third sectors (excluding those that are “wholly overseas”) have the responsibility for deciding whether arrangements with third party intermediaries such as Personal Service Companies (PSC) do in fact represent a disguised employment. Where an arrangement is deemed to be ‘inside IR35’ on the basis that it is a disguised employment, then the fee payer is responsible for operating PAYE/NIC on payments, including employer NIC, and where applicable the apprenticeship levy. The client using the services of the worker operating via an intermediary such as a PSC is also required to meet other obligations. For example, once the client has applied reasonable care and has determined whether the off payroll working rules apply to an engagement, it is required to communicate that decision in the form of a Status Determination Statement (SDS). It is also necessary for the client using the services to offer a status disagreement process to deal with any disputes regarding the SDS and respond within 45 days. Where the client is defined as a small business by the Companies Act 2006, responsibility for assessing the arrangements, and applying IR35 where necessary, will remain with the workers intermediary such as the PSC. Common issues and misunderstandings on off payroll working within the social housing sector Now that the IR35 intermediaries rules have been in place for over 18 months, our tax advisers, RSM, are seeing some recurring issues and misunderstandings within the sector around the rules, including: Obligations with regard to PSC versus obligations with regard to self-employed individuals Whilst employment status tests for workers providing services to a client via their own intermediary such as a PSC are the same as status tests for self-employed workers who are not operating via a PSC, the obligations that you have in relation to each differ and we often see confusion around this. As above, obligations, and risk, in relation to the use of PSCs by a medium or large client apply from 6 April 2021 only, whereas your obligation to determine whether a self-employed worker is genuinely self-employed for tax purposes have been in place for many years under separate rules. Where you are using the services of a PSC, then you are required to confirm your status assessment in a formal SDS and offer a status disagreement process. A formal SDS does not need to be issued when a self-employed individual is working for you, although ou must still assess whether or not they are genuinely self-employed, and you should keep a record of this. If the status of a self-employed worker who is not operating via a PSC is assessed and it is determined that they have the features of employment, then they must be treated as an actual employee for both PAYE/NIC and employment rights purposes. Where a PSC worker is determined as ‘inside IR35’ then they are treated as a ‘deemed employee’ for PAYE/NIC purposes only and do not automatically have employee status for rights such as pension auto-enrolment. Employment status and the Construction Industry Scheme (CIS) Many housing associations engage with off payroll sub-contractors who are paid via the CIS. It is important to emphasise that obligations in relation to assessing employment status and IR35 must be undertaken for sub-contractors as they are for any off-payroll worker. It is only once you have determined that the off-payroll worker is outside IR35/genuinely self employed that you can make payments to them under the CIS. In this respect it is often overlooked that each monthly CIS contractor return requires a declaration to be completed confirming that the employment status of each individual included on the CIS return has been considered and it has been confirmed that they are not in fact an employee or deemed employee. Obligations where workers are sourced via a recruitment agency Much like many other organisations, housing associations often source temporary workers via third parties such as recruitment agencies. In this situation payments are made to the recruitment agency, but it is important to obtain confirmation from the agency on a worker-by-worker basis as to whether or not the worker is subject to PAYE/NIC by the agency. If the recruitment agency is contracting with a worker operating via an intermediary such as a PSC and onwardly providing them, then the housing association as the client (i.e the end user of the worker’s services) has IR35 obligations, unless it is a small business as defined by the Companies Act 2006. Importantly, the housing association must consider the status of the worker and issue a SDS to both the agency that it contracted with and the worker. Failure to meet this obligation can result in the housing association becoming liable for any PAYE/NIC due. Due diligence on the labour supply chain is also important because, outside of IR35, there can be other tax and/or reputational risks if the worker is engaged by a party in the labour supply chain who is not correctly operating PAYE. For example, where the worker is working for a client in the UK, but is engaged by a party in the labour supply chain based outside of the UK who is not operating In summary, for now at least, the off payroll working rules are here to stay and HMRC are stepping up their compliance activity following the end of the ‘light touch’ year for penalties. All housing associations should periodically review their compliance in the high-profile area of employment status. Our tax advisors RSM work with many housing associations and other organisations with regard to their obligations under the off payroll working rules and would be pleased to help with any queries. For an initial discussion please get in touch with David Williams-Richardson. The Chancellor announced that the off payroll working rules introduced from April 2021 are to continue. Now is a good time to check the level of your compliance with IR35 obligations.

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How to support a Partial Exemption Special Method application to HMRC. Discussions between the NHF and HMRC has highlighted some ways in which a housing association can support HMRC in reviewing a PESM application.

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What does the Autumn Statement mean for housing associations? Last week, the Chancellor, Jeremy Hunt, shared his Autumn Statement. We have summarised the key announcements relevant to housing associations.

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Who to speak to

Trina Chakravarti, Director of Building Better

07908 670 176

Trina.Chakravarti@buildingbetter.org.uk

@TrinaChakr

Building Better

What are modern methods of construction?

Why MMC is vital for economic and social recovery

Building Better

Category 1 framework for MMC

Category 2 dynamic purchasing system for MMC

Modern methods of construction – building the social housing sector’s awareness and confidence

Modern methods of construction (MMC) can help housing associations build more and better homes – but collaboration is key

Who to speak to

Trina Chakravarti, Director of Building Better

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