The rise of modular construction – the key legal issues

Modular construction was on the rise before coronavirus. The pandemic has made it an even more attractive option. Its potential is wide ranging, from housing developments, to hospitals, schools, and laboratories. It could also be easily adapted for hotels and student accommodation.

What makes modular construction so attractive at the moment?

There are a number of things that make this modern method of construction attractive at the moment.

First, it is of course a form of off-site construction. This made it easier and quicker to construct (even before coronavirus). It was also usually cheaper. In many cases, for instance, scaffolding is not required on site, thereby reducing cost. In the coronavirus world it has not faced the same restrictions that many construction sites have had to deal with. Some such sites were closed for a period of time.

Modular construction has, on the whole, been able to carry on working throughout lockdown. Linked with this, social distancing (and to a certain extent other health and safety guidance as a result of coronavirus) is easier and quicker to comply with when constructing a modular building, than when working on a traditional construction site. This has meant that modular construction has not generally faced the same sort of coronavirus delays and disruption (and the costs associated with this) that some traditional building projects have faced.

Further, when dealing with projects such as hospitals and laboratories, modular can often achieve a level of cleanliness that is simply impossible on a traditional building site.

To add to this, many modern modular buildings visually look very good. It is not just that it can now be difficult to tell that a building is modular construction, it is the fact that the buildings are often really rather attractive in their own right.

Contractual position with modular construction

From a legal perspective there are several things to consider, in particular the interface between a traditional contractor who may be required to undertake groundworks and provide utility services to the site (and may also be required to connect the services to the modular building) and a modular construction contractor. Is the modular contractor to be employed direct by the Employer, or by the traditional contractor? In either event, it is important for all parties ensure that it is clear where each contractor’s responsibilities start and finish and make sure that there is no gap as to responsibility between the two. Perhaps a construction management form of contract is the way forward?

Some thought also needs to be given as to whether the Housing Grants Construction and Regeneration Act (as amended) (“the Act”) applies and if there is any doubt, whether the parties want to amend the contract to incorporate the payment terms and adjudication requirements of the Act. 

Modular construction projects payment provisions are often in the form of milestone payments.  The milestone requirements must be clearly stated, especially if the Act is to apply. Otherwise there can be confusion as to when payment falls due.


Modular construction is something that is becoming increasingly popular and is worthy of serious consideration in relation to any building project. All parties involved in any modular projects should ensure that they have considered and addressed all the legal angles.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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