Nearly two-thirds of builders have had to pass skip price increases on to clients and a fifth have had to pass on diesel price rises, making project costs more expensive , according to new research by the Federation of Master Builders (FMB).
The research found that three quarters of builders reported skip price rises in the last year, with the average cost of an 8 yard skip increasing by £24, meaning an additional cost of £360 for the average extension.
Yet, not all builders are passing on these costs to client, as three quarters said that skip price rises have squeezed their margins.
The reported hike in diesel prices has also started to effect small and medium-sized (SME) construction firms as nearly half of construction SMEs have reduced margins on projects and 17% have been forced to raise client’s prices.
Meanwhile, the fuel price rises mean one in ten builders have had to turn down jobs they would have normally accepted as they are too far away or they have taken steps to reduce vehicle use.
Commenting on the research, Brian Berry, Chief Executive of the FMB, said: “The increase in the price of skips and diesel is bad news for builders and home owners alike. Not only has it made home improvement projects more expensive for home owners, but the impact of the rising price of skips could also cause a rise in fly-tipping.
“The increase in the price of skips and diesel have come at a bad time for the UK’s builders. The cost of doing business is rising more generally for construction firms. Wages and salaries are all rocketing because of the ever-worsening skills shortages in construction. What’s more, material prices have been rising because of the depreciation of sterling following the EU referendum.
“Looking ahead, material prices are expected to cause an even bigger headache. We are advising builders to price jobs and draft contracts with this plethora of price rises in mind to avoid a further squeeze on already razor thin margins.”