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Building works versus the cost of living crisis

View profile for Liam Waine
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Building works versus the cost of living crisis

It is reported that the UK economy is now in a recession and likely to be so until at least 2024. Inflation is rising at its fastest rate for 30 years. This is all influencing the cost of fuel/energy. Add into the mix the covid 19 pandemic, Brexit and the Ukraine conflict and it is not hard to understand why there has been a significant shortage in supply chains of building materials for building projects. A combination of all these issues have also seen an increase in the costs of building materials since the start of 2021.

Factored into this is the fact that there has been a reduction in the number of skilled labour in the construction sector and builders are having to increase their prices to keep their head above water and remain solvent.

Many homeowners would have had their building projects put on hold due to the covid 19 pandemic. However, as building projects have largely come back on track it is not hard to see the risks that builders will try to increase their prices from original quotations, which they provided at the outset to help them deal and indeed survive the cost-of-living crisis.

If you are concerned with your own home building project and are finding that you are in dispute with your builder over the increase in costs of the project it is important to consider the following:

Did the builder provide a quotation or estimate?

An estimate is a non-binding assessment of how much it will be to complete a project. This means that the actual final costs of a project can be more than what was originally estimated.

On the other hand a quotation should set out all the specification of works and materials involved in the project and is an agreed fixed price.

If you are in a dispute with your builder over the costs of the works, it is important that you consider what was originally agreed and whether the price was in the form of an estimate or quotation.

What are the terms of the contract?

If you have entered into a formal written contract with the builder, it will be important to consider the terms and conditions to see what the parties have agreed when it comes to the price of the works and materials. In general most building contracts will be a fixed price contract with no provision for price increases. However, it will be important to ascertain whether there are any fluctuation provisions within the contract that allow the contract sum to be adjusted to take into account any changes to the price of materials etc.

How to resolve building disputes over the price of works?

Firstly, it will be important to consider what was agreed and whether your own contract can be construed as a fixed price contract. 

As with all disputes it is generally prudent to see if you can reach a resolution with your builder so that the project can be completed without any delay or disruption. You will need to understand how much is required to complete the project with the builder as against the disruption, delay, and the costs of having to proceed via formal legal proceedings. Every case will have different aspects to consider including how far the project has until completion.

If you are contemplating building works then it is safe to say that any project will no doubt be delayed from when you seek the initial quotation/estimate from the builder to when the actual works start. Such delays can be several months. Accordingly, it may well be in your interests to try and negotiate a fixed price contract/quotation with this in mind given that it is likely that the cost of materials and equipment could increase by the time works begin.

Building disputes are often complex and can be very expensive to proceed through litigation. It is therefore important that if you have a dispute that you take independent legal advice at the earliest opportunity to consider all of your options and ensure your position is best protected.

At Stephensons we have a team of dispute resolution experts who can help to resolve builder disputes. Call us on  0161 696 6178 to find out how our team can assist you.