Builders hit by rising material costs amid falling pound
New research from the trade association has revealed that a 20 per cent rise in the price of timber and other building materials is leading to builders having to rapidly re-evaluate their price of their jobs.
Sarah McMonagle, director of external affairs at the FMB, said: “Thousands of smaller building firms are grappling with the rising cost of materials caused by the depreciation of sterling since the EU referendum. More than 70 per cent of smaller building firms have experienced increased costs as a result of the weakened currency, with additional increases of 10 to 15 per cent expected as the new year unfolds. Anecdotally, construction SMEs are already reporting an increase of 22 per cent in Spanish slate and 20 per cent increase in timber. A quarter of all materials used by the UK construction industry are imported – this is significant and underlines the vulnerability of the industry to sudden fluctuations in the strength of our currency. The combined pressure of higher material prices and the rising cost of skilled labour represents a serious challenge to builders.”
Ms McMonagle added: “What this means is that home owners could start to see the cost of their building projects increase. It also means that consumer choice may be reduced as some home owners face having to compromise on aspects of their project due to the fact that certain materials have become too expensive. There is also an added headache for the builder, as material price rises can come at short notice and if they are mid-project, the original costing is no longer accurate. This makes pricing jobs problematic and leads to construction SMEs having to cover themselves against sudden price swings. Some builders are attempting to mitigate this by introducing larger contingency funds when pricing for a job, or by stipulating in the contract that the overall contract price will change in the case of material price hikes, making client budgeting more tricky.”