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12 Aug 2021

Builder’s total price higher than the original estimate? – Ask Anna Question of the Week

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Dear Anna

We are halfway through building our extension and my builder has told us the total price will be higher than the original estimate because the cost of materials has gone up so much. Is this true?

Yes, unfortunately, the UK – like other countries – is experiencing an unprecedented shortage of building materials and dramatic price rises for those that can still be obtained. This is caused by a combination of factors including the coronavirus pandemic, shortage of raw materials, higher demand than usual for home improvements (possibly as a result of many more people working at home), transport and shipping delays.

The products most affected are those used in housebuilding and domestic repair maintenance and improvement (RMI), including roofing products, bagged cement, timber, insulation, landscaping products, blocks, sealants/PVA, PIR* Insulation, kitchen units, and plastic products including drainage and windows.

Overall, reported prices for products and materials have increased by 10-15%. Some products have increased by even more – timber has seen increases of 20-50% and over 100% for OSB* and other sheet materials. As a result, some builders merchants are actually destocking certain products that are now no longer economic.

There are also labour shortages among materials suppliers and drivers, merchants and tradespeople, with many people required to self-isolate after coming into contact with someone who tested positive for Covid-19 and because of Brexit.

If you only have an estimate for your work, then your builder is entitled to ask you to cover these increases. If you are supplying materials yourself, you will have to cover the increases. With a proper legal contract in place, there is no facility for any flexibility on material costs, but this has led to fears that some builders may see their business fail because of these unsustainable contracts – some will try and walk away or renegotiate. These are now being investigated and there may, in the future, be a change in contractual positions.

Unfortunately, this situation is unlikely to get better soon. Indeed, many homeowners are choosing to delay their projects until 2022 or beyond in the hope that prices will return nearer to normal, and supplies will improve.

*PIR - a type of rigid insulation board.

*OSB (Oriented Strand Board) – board used in roofing or timber framed buildings - formed by adding adhesives and compressing layers of wood strands in specific orientations.

 

Last week, we introduced Anna behind Ask Anna. Read about her here.

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