Property finance specialist MSP Capital says the market remains but there are intensifying pressures in obtaining construction materials, plant and labour
Housing developers have been warned to expect higher costs and longer building schedules because of supply chain delays related to Covid and Brexit.
Property finance specialist MSP Capital says the market remains but there are intensifying pressures in obtaining construction materials, plant and labour.
Lee Merrifield, underwriting and credit manager at the Poole-based business, said: We’re still seeing lots of positive activity in the selling of finished stock, with the housing market remaining buoyant and achieving strong values.
However, the dual impact of Covid and Brexit has already been leading to prolonged supply chain pressures and project delays.
Now we have the added prospect of rising inflation, higher energy costs, the Ukraine crisis and potential sanctions on Russia as well. This combination of factors will only add to the pressures facing the construction industry, he said.
The upshot is that developers at risk of disruption on their projects may need to consider fresh cost assessments and potential refinancing so they can avoid or mitigate any exposure to contractual liability.
For projects already under way, there will obviously be issues when your current finance is nearing the end of its term and your build is behind schedule. The original loan term may not be sufficient to finish the building works and also sell on the finished units, he said.
He said specialist bridging loans, such as his company’s Development Exit Finance, could help by refinancing the original loans to give extra months.
The Construction Leadership Council warned last year of demand far outstripping the supply of essential materials such as cement, electrical components, paints, sealants, coatings and adhesives, so putting prices up substantially.
At the same time, the Office for National Statistics projected a seven to eight per cent in the overall costs of construction materials across the building industry.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.