Turmoil for trapped flat owners as energy crisis makes contractors go bust

Adrienne Pettitt, 32, owns a flat in a building in Salford that has major cladding problems. Works were due to start in June 2021, but this was pushed back to January 2022. Then the contractor pulled out because it was unable to provide the labour and materials necessary to do the work. 

The project is now being costed by a new contractor, and works will not start before August. “People can’t afford it in the first place, and the longer we wait, the more the costs will go up. It feels like I’m going to be trapped in this flat forever,” said Ms Pettit.

Will Thomas, 29, who also owns a flat which is also in Salford, will have to pay an extra £2,000 because of delays to his building’s remediation because of contractor issues.

The works were due to complete in March this year, but the remediation has now been delayed by four months. “The contractors were unable to get hold of certain materials,” said Mr Thomas.

The delay means leaseholders in the building will have to pay for an extra year of building insurance. “When I moved into the flat in 2015, my portion of the insurance cost £360. For this year, I paid £2,600,” said Mr Thomas.

Noble Francis, of of the Construction Products Association, which represents manufacturers, said the energy price crisis meant building contractors were grappling with higher product and energy costs on site. This was happening at the same time that the supply chain crisis has brought delays and higher costs for imported materials. Meanwhile, in April, the construction sector will lose a major tax break, the “red diesel” exemption.

Russia’s invasion of Ukraine will make things even worse, he added. “It is only likely to lead to further uncertainty, volatility and increases in energy costs,” said Mr Francis. Gas prices in Britain jumped by a third in a single day in response.

Energy price rises disproportionately hit steel and aluminium production, where energy costs make up to a third of total costs, said Mr Francis. “This means that manufacturers will, inevitably, have to pass on some of the cost rises on to contractors doing cladding remediation work.”

Smaller contractors have been hit hardest. “The firms that have struggled the most with cost inflation have tended to be the small, specialist contractors that have won projects six to 12 months in advance on a fixed price basis,” said Mr Francis.

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