We wrote about the impact of Covid-19 on house building prices last October, and it appears that things have yet to return to normal.
Changes to the cost and availability of building materials have a widespread impact. From new homes, to extensions and renovations, any interruption has can cause issues. The cost of works can increase and the time taken to complete new builds, updates or restoration can take longer where materials cannot be obtained as quickly as usual.
The combined impact of COVID and Brexit has been blamed for slowing supply, and the recent Suez Canal closure has caused further issues. It has been reported that material costs have increased by up to 100% (soft wood), 80% for hard wood and steel (the latter due to the rising price of iron ore), up to 60% for plastics, 40% for copper, 25% for aluminium and even paint by around a third.
Roof tiles are also reported to be in short supply, as are tiles, plaster and cement.
These shortages are exaggerated by lengthier production and delivery times. As an example, rolled steel joists which quite literally provide the foundation for a large number of construction projects have gone from a six week lead time to almost five months and other widely used materials are suffering similar delays.
Much of the shortage has been attributed to a rapid recovery within the construction sector as work returned from a slump of more than 45% during the initial UK lockdown in 2020.
The recovery has been driven by homeowners who, confident of job security now that lockdown measures beginning to ease, are investing money into their properties. This has been further bolstered by funds saved during 2020 due to a lack of holidays, going out to socialise and eating at restaurants.
These savings have been estimated at up to £180bn, so there is clearly a high demand for building materials. In many ways, this is welcome news for the sector as it starts to recover from the impact of both COVID and Brexit.
It therefore remains imperative that your rebuilding sum insured reflects current costs and equally that your policy provides sufficient cover for alternative accommodation in the event of major repair works, which might take an extended period to complete.
Common issues faced by homeowners may include:
- Value being reached without expert advice, resulting in insufficient cover
- Post-COVID value being higher, reinforcing the importance of having a revised survey undertaken
Lockton offers the following suggestions to help address these issues:
- Conducting a new survey, ensuring that the sum insured is adequate so that continued policy protection remains in place
- Factoring in the cost of any changes to your home and the factors outlined within this article in any new survey
- Ensuring that your insurance policies provide extended rebuilding and reinstatement cover so long as the property has been professionally surveyed and its rebuilding cost expertly appraised
All of these measures continue to take the onus away from the homeowner to attempt to calculate their own rebuilding cost, which will rarely be accurate.
If you are concerned that your current policy does not provide you with sufficient protection, please get in touch with our team. We will be happy to undertake a review of your existing arrangements without obligation.