Bovis Homes is imposing a 90-day payment schedule on subcontractors unless they agree to cut their prices, writes Michael Glackin.
The move comes as part of a new wave of payment cuts by housebuilders, following similar moves at the start of the year.
A subcontractor that works regularly for Bovis described the proposal as “bullying”. He said: “There’s been no consultation about it and it applies retrospectively. They’ve basically said this is what we’re doing and that’s it. We had no choice but to agree to a large discount.”
Meanwhile, Barratt and Redrow have both introduced 3% deductions on payments, while Bloor has told subcontractors to reduce their prices on all outstanding work by up to 12% or the contracts will be re-tendered.
In a letter to subcontractors last month, Bloor said: “The market has dramatically slowed over the last few weeks. We have no option but to advise you that Bloor needs a 10-12% reduction on all current tenders and quotations.
“This will be a global reduction on all current tenders and quotations. If we cannot agree the required percentage, we will have no option but to re-tender for the outstanding works.”
Housebuilders didn’t offer to increase my payments when
times were good
One subcontractor said: “Barratt starting imposing the 3% cut on payments earlier this year because they said they were struggling to sell homes. Then last month a letter arrived asking us to agree in writing to the cut.”
Another added: “It’s the manner in which all this is being done that hurts the most. We’re aware times are hard and we’ve all got rising costs and staff to pay, but housebuilders didn’t offer to increase my payments when times were good so why should my firm have to take cuts on agreed contracts now?”
A spokesperson for Barratt said: “We keep a tight rein on our cost base and we are trying to manage down costs. Reductions are agreed on a division by division basis.”
Bovis, Redrow and Bloor were all unavailable for comment.