Blog 012 - Prepare for the Big Push

The Chancellor announced temporary changes to the stamp duty policy in the UK as part of his new stimulus package. The move to remove stamp duty on main homes up to £500k and reduce it substantially on second and buy to let properties was made to stimulate the housing market. Welcome news to the many would be buyers and a much needed boost to the UK Housebuilders and Housebuilders who have been suffering stagnated sales for some time even pre-coronavirus.

The Housebuilders will, and some already have, take this opportunity to offload the slow moving properties on their existing developments. Units which they were either previously slow constructing or were hesitant to take out of the ground, some constructed to order. With the deadline for the stamp duty stimulus set as 31st March 2021, be prepared to see Housebuilders put their foot on the gas as they look to increase their sales but more importantly, complete the sales before the 31st March.

What does this look like for Specialist Contractors? Well, it means the sites that were previously steady or even slow, will now look to increase their output substantially. Housebuilders will look to bring new units into construction as well as complete existing units in a faster time frame. Housebuilders are already advertising special deals and providing guarantees on completions before 31st March 2021, the big push is coming.

Specialists need to take this warning and prepare. Below are a few simple steps to prepare to meet your clients needs and protect your business:

1. Materials will become scarce with any temporary surges in demand, contact all your suppliers now and confirm their maximum lead times, find out how much stock they have in the UK and where they are shipping from (you never know what level of lockdown lies around the corner!)

2. Start engaging with the labour force, see what additional labour is out there and begin onboarding just shortly before you think it will be critically required.

3. Reserve spaces for long lead tests and inspections. Some inspections and tests have to be carried out by third parties and there is only a finite number, don’t find yourself at the back of the queue. If you’re concerned about committing to costs which you may not require, why not find out the lead times and availability from the supplier / consultant and write to your client explaining the risk of availability and make a joint decision, they may choose to instruct you to make the booking. This could equally apply to specialist plant such as cranes.

4. Request a Programme from the Housebuilder. If they plan to increase output or shorten durations, this needs to be communicated very clearly, without this, steps 1-3 above will be nearly impossible and more of a guessing game.

5. Know your contract outputs. The Housebuilders are looking to take a big benefit from the stimulus package, Specialists should be too. If you are being asked to work faster than your contractual outputs or on more simultaneous work fronts, you will likely be entitled to additional money for either overtime or more Supervision, don’t leave it on the table.

6. Don’t compromise social distancing. As the site pushes its completions and drives the trades to increase outputs, there will inevitably come a time where people are scheduled to work on top of each other, do not compromise social distancing, at the end of the day, a COVID outbreak on site and a temporary closure or mass quarantine will set it back further than well thought out and effective sequencing.

7. Be aware of your cash. Increasing output, paying more labour or stockpiling high risk materials will deplete your cash, ensure that you are sufficiently funded for any push the Housebuilders may start. If you aren’t, you can either make arrangements with the bank for overdrafts or speak to the Housebuilder about vesting materials, retention releases or shorter payment terms to help you through their busy period.

There are many things to keep in mind, but the Housebuilders have been given an opportunity and they will take it, it should be a good thing for all of us. Take the time to prepare properly to ensure this doesn’t become a one way street that doesn’t benefit the Specialists or leverages risk against their businesses.

If you want to discuss more about planning, supply chain management or preparing to manage your cash flow, drop me an email.