Subcontractors may have their contracts retendered if they refuse to cut agreed contracts

Under siege housebuilder Persimmon is demanding subcontractors cut their prices on agreed contracts by 15% or face having their contracts retendered.

The latest demand is the second time this year Persimmon has looked to subcontractors to reduce prices on contracts.

Persimmon declined to discuss the issue of price cuts or retendering contracts but said: "Given the current challenging conditions we are closely monitoring cash flows."

Other leading housebuilders, including Barratt and Bovis Homes have insisted on discounts from suppliers this year following the impact of the global credit crunch on housing sales.

Subcontractors insist they are unable to reduce what they say are already discounted prices because they are struggling with rising fuel and energy prices.