Recently, there has been much debate in the industry over the impact of Brexit, particularly around issues concerning shortage of labour, materials and funding. After the last recession, some 400,000 people left the construction industry never to return. Were the government to allow a sharp contraction in construction to take hold, even more labour would be lost with no ready means of replacing them.
However, the biggest issue facing tomorrow’s homebuyer, isn't where the labour or materials to construct a property comes from, but the impact on the quality of the home as a result.
Over the last 20 years or so, British housebuilding has benefited massively from low-cost, and more importantly, quality labour, from EU countries. The make-up of London sites in particular has changed over time to reflect a more cosmopolitan workforce, with better skills and a stronger work ethic, which has impacted positively on the quality of the final product.
Additional industry drivers such as energy efficiency, sustainability and capital cost have seen a huge growth in innovative building materials and Modern Methods of Construction (MMC), being sourced and imported from the EU. Aside from a UK buying public who still prefer bricks and mortar, the vast majority of these systems are well designed and built, and are an extremely effective alternative to traditional methods that have filled the gap left by the closure of traditional building material producers during the last recession.
Brian Kilroy, an appointed representative of Pii comments: “If, as a feared consequence of Brexit, the pool of EU migrant labour dries up and the flow of materials and building systems is effectively stopped through either prohibitive changes in trade or increased costs due to a weaker pound, then the impact on quality could be disastrous. New home building will continue – we're already 100,000 units a year down on target – but there will be a need to fast-track apprentices, therefore lowering the skills threshold for construction labour. Job creation aside, the increased cost of non-migratory/UK-based labour will inevitably force developers and builders to look elsewhere to maintain margins and keep shareholders happy.
This alternative focus can only be directed at materials, as land prices aren’t likely to fall anytime soon. It is likely that builders will look to either the UK for materials, which are expensive, or further afield to China and the Far East, where quality is highly negligible.
So how will the industry manage this very real potential drop in quality? The immediate answer for builders will be to look towards the New Home Warranty sector and providers characterised by the likes of the NHBC. These companies have a general responsibility to ensure that builders and developers adhere to building regulations and ‘good building practice’, but beyond this, the level and “quality” of risk management and value-added input to the developer during construction, varies enormously and in a price sensitive market the fear is that builders and developers will chose the cheapest option to simply ‘tick a box’ to ensure the new home is mortgageable.
That said, the average home buyer today is far more savvy and aware of both their rights and the level of quality expected in a new property. The British buying public is more vocal in making comment and is armed and engaged with social media to more willingly express negative opinion.
Also, mortgage providers lending against these homes provide both the flow of money into the housing sector and the mandate which allows insurers and warranty provider to operate. Aggrieved customers are not good for business and the last thing the industry needs is further tightening on mortgage availability or more onerous standards imposed by banks and building societies on the warranty/risk management process.
The outcome of Brexit is by no means certain and the industry won't fully understand the hand that they've been dealt for quite some time. However, the British house buying public should be concerned about the quality of a new home and this concern needs to be understood and addressed by builders and insurers alike.”
