Prefabs used to be cheap and cheerful. But in the quest for compact, smartly-designed accommodation in our city centres, the latest version of off-the-shelf living comes with a sizable price tag.

The 72 flats in Regents Park House in Leeds city centre are so-called “micro apartments”, providing 250sq ft of living space — the equivalent of about 16ft x 16ft. They do not involve traditional materials or a building site but consist of metal, timber and glass sections assembled into complete flats in a factory. The flats are transported and winched into place on top of a two-storey office block.

This sort of building technique — known as off-site manufacturing (OSM) — has been used for homes built for housing associations and councils, but Regents Park House is believed to be the first private-sector example. The flats are a modern version of the prefab homes that sprung up to alleviate Britain’s housing shortage after the second world war.

The micro apartments, however, sell for a cool £80,000 each. This is £320 per square foot, making them among the most expensive new homes in Leeds, according to the property consultancy Knight Frank, which analysed 23 developments across the city centre, where demand for property is high.

“The point of OSM is that properties are easy to construct and cost less. The problem is that a developer needs to protect himself,” says John Goodwin of Carter Jonas, which worked on the project as planning consultants. “If he sells them at rock-bottom prices, a speculator could come in and resell them at the normal market price for flats and nobody is better off except the speculator.”

Robert Kidd of Regent Street Estates, the developer behind the flats, is not revealing the exact build price of the development but says it is a one-off and involves disproportionately high costs. But he says similar flats could eventually cost £70 to £100 per square foot to construct if mainstream housebuilders place large orders and create economies of scale.

“Look at McDonald’s restaurants, which are built in the same way. They have high-specification units involving expensive features such as disabled toilets and stainless-steel kitchens yet they cost only £70 per square foot to manufacture,” says Kidd.

Prefab flats are quick to construct, saving costs on building sites, and Kidd says his units will be complete in August, taking 18 weeks since work started to the day the final one will be hoisted into place. “It would be at least double that time using traditional methods,” he claims.

The estate agency FPDSavills has investigated comparative costs and says that prefabricated manufacturing of one-off buildings is between 7% and 10% more expensive than traditional methods at the moment, and will continue to be until widespread use of the technique lowers overheads.

This absence of a cost advantage to buyers will be a blow to the government. Kate Barker, an economist asked by the Treasury to find ways of overcoming today’s housing shortage, says housebuilders should consider more OSM.

Several of Britain’s largest housebuilders have conducted experiments with OSM techniques but few have adopted them for volume production. Barratt Homes is taking the lead by opening a large factory in Northamptonshire this summer for the manufacture of steel-framed homes.

In the meantime, niche developers are using a halfway house form of OSM. Metropolitan Living, a housing association with a property-development arm that sells new homes on the open market, is selling flats in south London that have had their kitchens and bathrooms plumbed in and finished in a factory in Ireland.

The units — which come complete with walls, floors, ceilings and appliances — are then sealed and shipped over before being bolted into the properties, which are otherwise built using conventional methods.

The development, Lingham Court on the Clapham-Stockwell border, includes one-bedroom flats at £180,000 and two-bedroom flats from £250,000, equivalent to £328 per square foot. This is marginally less expensive than other new flats coming to the market nearby.

As yet, however, the case for the affordable prefab seems a little short on substance.

Regents Park House, Steve Arksey at Hunters, 0113 218 2449; Lingham Court, Knight Frank, 020 7823 5906

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