The depreciation of the pound has caused 70% of UK builders to experience increases in material prices, new figures have revealed.
Research from the Federation of Master Builders (FMB) found that construction small and medium sized enterprises (SMEs) reported a 22% increase in Spanish slate and a 20% uptick in timber.
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% of smaller building firms have experienced increased costs as a result of the weakened currency, with additional increases of 10 to 15% expected as the New Year unfolds. Anecdotally, construction SMEs are already reporting an increase of 22% in Spanish slate and 20% 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.”
McMonagle concluded that homeowners could start to see the cost of their building projects increase. Consumer choice may be reduced as some homeowners 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,” she said. “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.”