Two thirds of builders report material price hikes, says FMB
With the cost of timber rising by 20 per cent since Brexit, two thirds of builders have seen an increase in material prices due to the falling value of the pound and this in turn is hitting the pockets of homeowners, new research reveals.
The Federation of Master Builders (FMB) say project price hikes are inevitable due to the depreciation of sterling because around a quarter of materials used by the UK construction industry are imported.
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.”
Consumer choice may also be reduced as homeowners face having to compromise on aspects of projects because materials have become too expensive, with builders having to quickly reevaluate the price of jobs, says McMonagle.
“What this means is that home owners could start to see the cost of their building projects increase.
"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.”