The majority of smaller builders in the UK are being affected by currency changes caused by the decision to leave the European Union, new research shows.
After the result of the referendum on the EU the pound lost out against other currencies including the euro and the US dollar and this is affecting builders as a significant amount of material is imported from the Eurozone.
As a result some 70% of British builders have seen an increase in material prices due to the depreciation of the pound, says the research from the Federation of Master Builders (FMB).
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.”
The research also found that additional increases of 10 to 15% expected in 2017 and anecdotally smaller builders are already reporting an increase of 22% for Spanish slate and a 20% increase in timber.
The FMB pointed out that around a quarter of all materials used by the UK construction industry are imported and this underlines the vulnerability of the industry to sudden fluctuations in the strength of the pound.
“The combined pressure of higher material prices and the rising cost of skilled labour represents a serious challenge to builders. What this means is that home owners could start to see the cost of their building projects increase,” McMonagle explained.
“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,” she pointed out.
She said that 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,’ she added.
She also explained that while some builders are attempting to mitigate the cost 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, it does make client budgeting trickier.