One

third of small building firms report that soaring material prices are squeezing their margins and almost a quarter have found it necessary to pass these increases onto consumers, according to the latest research by the Federation of Master Builders (FMB).

Since the depreciation of sterling following the EU referendum in June 2016 construction SMEs have reported price increases in various materials with timber at top spot, followed by insulation, bricks, blocks, windows; plasterboard/slate (joint sixth), boilers and radiators and porcelain products.

“Material price increases have left builders under severe pressure,” said FMB chief executive Brian Berry. “This research shows that following the fall in the exchange rate, timber is the material that the majority of builders say has increased most in price but the problem doesn’t end there; everything from insulation to windows to bricks and blocks are soaring in price. A third of builders report that these price increases are eating into their already razor-thin margins and this on top of increased wages and salaries stemming from long-term construction skills shortages.

“Furthermore, 1 in 10 say that they’ve actually made losses on projects due to material price increases; this is most likely to happen when a particular product or material jumps up in price mid-project when then builder has already quoted for the work. Perhaps unwisely, some builders are absorbing these extra costs as opposed to re-quoting for the project.

“Material price spikes aren’t just a problem for builders, they’re a problem for the home owner, with almost one quarter of builders saying that they have had to pass on price increases to their clients. This means that building projects now cost significantly more than they did this time last year. With stagnant wages and price inflation across the economy, consumers are feeling the pinch and it might be that they decide not to commission that loft conversion or extension after all.

“Worse still, 85% of builders believe that home owners will be tempted to hire rogue traders who are quoting a lower price than a professional building firm such as those that belong to the FMB. If that’s the case, material price rises could lead to a flurry of botched jobs and distressed consumers. We’re calling on home owners to hold their nerve; they’re better off commissioning a more modest project from a professional builder than a high spec project from a cowboy. Don’t take the risk.”