The average modular house has a cost of around 100k, yet the final amount tends to rise above this value. The price of manufacturing a modular home remains untouched throughout the process as it takes place in a factory-like environment. However, in most cases, to complete the process of building a modular house, further costs should be considered and added to the initial value.
To get a real modular home cost estimation, we should consider the following:
- Manufacturing and construction pricing
- Design and Customisation fees
- Project management
- Land preparation costs
- Delivery and installation expenses
- Building permits and Taxes
- Additional Costs to consider
The price of each one of these aspects varies from project to project and should be analysed independently. Still, all modular homes follow a similar procedure and therefore a similar cost breakdown. Understanding the different elements affecting the modular house building cost is essential to finding a house that fits our budget.
The cost of modular vs traditional construction
Building a house is generally cheaper using modular construction than traditional building methods. Modular homes are built following a process that is quite different from what we are accustomed to. While traditional homes are built entirely on-site, right on the property, most of the modular construction takes place off-site in a highly industrialised environment.
The uniqueness of the modular technique reduces the construction timeline, the need for manual labour, and the transportation demands. These advantages cut down the overall cost of the modular home-building process.
Breaking Down the Costs of Modular Home Construction
Modular home manufacturers tend to display the base price of their predesigned models openly. While showcasing this value is very helpful, it can be confusing to those who are not familiarised with modern prefabricated techniques such as modular construction.
Manufacturing pricing
Most of the modular home construction takes place off-site and is referred to as manufacturing as it follows a highly industrialised process. Manufacturing costs are directly related to the house construction and include all the off-site labour and materials used.
Since modular manufacturers tend to pre-design their models, they can easily calculate the manufacturing cost and advertise it as the starting cost. Therefore, in most cases, the base prices shown by the manufacturers refer to this stage alone.
Design and Customization fees
Customers are encouraged to customise and upgrade their modular home design in order to turn it into their dream home. The amount of customisation offered varies from company to company, as some only allow the personalization of minor details, while others offer bespoke designs. Customizations usually have an impact on the total cost of building.
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Project management
Building a modular home requires coordinating the manufacturing works with the on-site construction as generally, the different stages of the building process are provided by independent professionals.
A project manager oversees the entire project and coordinates every stage to guarantee the success of the construction, as well as adjusting the costs and terms. In most cases, the cost of the project management isn’t included in the manufacturer’s initial cost and an extra 2,5% to 6% should be added to the final price.
Land Preparation costs
Modular homes are prefabricated off-site as three-dimensional volumes called modules. Still, these prefabricated modules have to be assembled on foundations to complete the house construction. Therefore, while the house is being manufactured, the land has to be prepared. The necessary preparation works vary from project to project but usually include flattening the land and building the foundations.
The costs of these works depend on aspects, such as location, topography, size, design requirements and soil composition. Most manufacturers offer a land survey to offer an accurate and realistic land preparation cost. To give you an idea of its extent, Passion Smart Design Houses estimates that building the foundations for a modular home has an average cost of 10,000€ to 15,000€.
Additionally, to complete land preparation, the property should be connected to the main services: electricity, water, sewage, gas, and telecommunications. While most plots are already serviced, some aren’t and an additional cost has to be considered. Servicing a plot in Europe and the UK has a cost of about 6,000€ to 35,000€.
Delivery and installation expenses
Given the nature of the modular building process, the prefabricated modules have to be delivered to the property and installed on-site. Most manufacturers will take care of these logistics, though the cost is rarely included in the initial price as it depends on the distance travelled, number of modules and property conditions.
Norge Hus calculates that the cost of transporting the modules from the factory to the plot ranges from 4,200€ to 10,200€. This same company mentions that the average cost of assembling the modules is about 7,200€ to 28,500€.
Building Permits and Taxes
When building a modular house in Europe or the UK, building permits are required in most cases. The cost of these varies depending on the location of the property where the house will be built, as well as the characteristics of the construction itself. In the UK, for example, obtaining a building permit costs £334 per dwelling house [1]. Taxes also shouldn’t be dismissed as they usually can highly alter the final cost. These are rarely included in the advertised price and their value is subject to the country where the house will be built. For example, the VAT to purchase a house in Spain is 10%, but in the Czech Republic, the VAT is 15% [2].
Additional Costs to Consider
There are some additional costs that you might need to consider, as they have a long-term economic impact. For example, the necessary maintenance works, insurance quotas, or the fees associated with financing options. Inquire information beforehand with your manufacturer as well as with your loan and insurance providers to get to know the different options you have and the cost they will represent. The manufacturer Nomad Container, for example, offers financing options to their clients and details that for an amount of 70,000€, the fees the client will have to pay will amount up to 430€ for the first 5 years.
Finding the modular home that fits your budget
When you start the process of looking for the right modular house model, you will need to filter the model search by defining your priorities, especially your budget. However, since the prices advertised by the manufacturers are only the starting cost, your budget shouldn’t equal this value.
Taking every additional cost into consideration is essential to finding the modular home that fits your budget. However, it wouldn’t be accurate to give you an exact value to add to the initial cost, as every project has different needs and every manufacturer’s base price package is unique.
Still, based on the budget references offered by manufacturers like Norge Hus and Passion Smart Design Houses, a good starting point could be adding an extra 25% to 80% to the starting price. This first calculation will help you get a first base price estimation, which can be very useful for filtering the model search and get a first selection of manufacturers. To get an accurate final cost you’ll have to get in touch with the manufacturer, who will analyse your unique situation and guide you on the best solutions for your budget.
Frequently Asked Questions
Are Modular Homes Cheaper?
Yes, given the advantages offered by the modular building process, in most cases modular homes are cheaper than traditional constructions.
Are Modular Homes worth the investment?
Definitely. Modular homes that are built to be installed on permanent foundations are constructed of high quality, just as traditionally built. Therefore, by building a modular home, you will pay to get a long-lasting good quality dwelling.
References:
[1]Department for Levelling Up, Housing and Communities and Ministry of Housing, Communities & Local Government (2021, August 20) Fees for planning application GOV.UK https://www.gov.uk/guidance/fees-for-planning-applications
[2]JUDr. Mojmír Ježek, Ph.D. Tax framework for real estate acquisition in the Czech Republic ECOVIS JEŽEK, ADVOKÁTNÍ KANCELÁŘ S.R.O. https://www.ecovislegal.cz/en/other-legal-areas/tax-framework-for-real-estate-acquisition-in-the-czech-republic/
