Every year, everyone seems to agree that we need to build more homes. But while the number was growing up until the end of last year (we shall see what impact COVID has had), we're still a way from the government's target of 300,000 a year. And even at current levels (around 240,000 built or converted last year), house prices continue to soar. The average house price is now over 10 times the average household income.So how do we build more homes? More importantly, how do we build more homes in the places people want them? Homes that fulfil people's changing needs? And whose construction and use has a minimal, or even positive impact on the environment?I think the answer might come from some of the most successful businesses of the last few years. Businesses that build scale through networks of small operations, like Uber and AirBnB. These businesses have their ethical issues, and their operational issues too. But the principle of scaling small things is a powerful one.This is an essay. It's not something anyone has paid me to research. And hence I'm not going to get everything right here. But hear me out. I'd love to hear your feedback. This is my recipe for a disruptive housebuilder.

Three principles

My disruptive housebuilder would operate on three simple principles:

1. Make it easier to build than buy
2. Make it cheaper to build than rent
3. Give people security and sustainability

How would you do this?

Deeply digital

Imagine aggregating all of the small plots of land around the UK into a single, liquid marketplace. Imagine wrapping around them a layer of digital services for surveying and planning, creating a low friction pipeline for acquiring and developing sites. LandInsight has already done most of the work here, with its award-winning platform (I was one of the judges a few years ago when it won the PlaceTech Prize for Innovation). Take its API and build from there.Now people can search for parcels of land near them and begin to progress them. A truly liquid market for land with some of the complexity of planning and utilisation removed will attract more people wanting to sell their land, increasing the size of the market.This somewhat glosses over the complexities of the planning space. But many, small scale projects should be much easier to progress than large scale projects that attract a lot of attention. Especially if you standardise some of the homes.

Open Source Design

I'm not talking about ticky-tacky boxes on a hillside here. I think the starting point for this housebuilder should be WikiHouse, an open, modular system of house design with a relatively low carbon footprint and a huge degree of flexibility. Imagine being able to design your house in an app like the IKEA kitchen configurator. Once you have picked your plot, the system pulls in 3D scans of the area and allows you to overlay the footprint and a 3D render of your house, with a range of design options and interior fittings from its catalogue. Or you can choose a bare shell with utilities and fit it out yourself.The great thing about WikiHouse is that it is largely manufactured off-site in small, local workshops. You don't need to own these as the developer, just have access to a network of them and monitor standards. Over time this will get easier as individual housebuilders start to contribute reviews.Once the design is approved, customer can select a local manufacturer to produce their panels and frame. You will also need local contractors to assemble the home. But the nature of WikiHouse means it requires a lot less skilled labour - an issue already and one that will grow as we go through Brexit. You could either plug into an existing network of contractors, like RatedPeople. Or build one up. And as the business grows, you are likely to develop a class of freelance contractor that specialises in assembly.

Funding

This all sounds well and good. But it's not that radical. Mostly just plugging together existing networks with some nice front end design. What makes this housebuilder really disruptive is the funding. Imagine if you could take great gobs of investment, from pension funds, venture capital, or even government, and use it to do home financing differently. After all, based on the business described above, you wouldn't need to spend that much actually building anything. You're leveraging existing assets. And there is a lot of cash around at the moment, seeking reliable returns. Where better to invest than in property? Even with the population set to start declining in the second half of the century, it doesn't look like demand for quality homes will shrink any time soon.Use that funding to make deposits small. Not much bigger than you might put down on a rental. But base it on smarter credit checks that overcome some of the weaknesses inherent in current systems - like the ones that would deny me a mortgage because I'm self-employed even though I haven't missed a payment in 15 years. Though there are arguably issues with privacy, banks in China have been making heavy use of alternative data sources. Not just "have you paid your credit card bill in the past" but who you are based on social media and more. This has allowed them to process loans automatically, and incredibly quickly, with very low rates of non-repayment.Offer people a truly flexible mortgage. Shared ownership options from 10% up to 100%. Make it variable over time. When times are good, increase your payments to buy more of the equity. When they're bad, trade equity for a payment holiday or switch seamlessly to interest only. The aim is to keep people covering the cost of the financing, but also to keep them in their home as long as it is viable.Make it easy for groups to buy together and trade equity between them. With our extended adolescence, it should be much less work for groups of friends to club together to build than it is right now. And the scale of their expenditure on rents should make mortgages eminently viable, were it not for the barrier of the big deposit.

Options for Everyone

Combining a tailored approach to construction, low-friction operations, distributed manufacturing and the utilisation of small plots, it should be possible to open up home ownership to a much larger group of people. People with the cashflow to fund it but who are priced out by the lack of supply and the scale of the up front investment. This should be an ideal investment opportunity for those seeking long term returns. And there is an enormous market to address, with people hungry for alternatives.