How are labour shortages affecting the property sector?

If you’ve tried to get a contractor out to do any work on your property lately, you might well have had some issues with availability. That’s because there is currently an industry-wide shortage of skilled labour, fuelled by a number of different factors.

How significant are the current labour shortages?

It's estimated that there were around 200,000 fewer construction workers in the UK at the end of 2020 than there were in 2017. London has been particularly hard-hit, with a drop of around 16% during that period.

Across the industry there seem to be more jobs available but fewer people applying. According to some recruitment sources, available roles in the construction industry have spiked by about 50% during the past few months, but applications are down 10% on last year.

Industry bodies such as the Federation of Master Builders and the Finishes and Interiors Sector trade body have reported that their members are having difficulty sourcing skilled tradesmen. Some trades such as bricklayers and carpenters appear to be in particularly short supply.

What’s causing the shortages?

Many people are blaming Brexit for the shortages. Stereotypes of the ‘Polish plumber’ aside, it's a fact that a large number of construction workers in recent years have hailed from the EU, and the Office for National Statistics (ONS) has reported a 42% drop in EU construction labour over the past four years. Since 1 January of this year, it has become even more difficult for EU construction workers to get into the UK, and this looks to have had knock-on effects for the industry. 

Some are also suggesting that the extension of the furlough scheme until September may have encouraged contractors to enjoy the easy life rather than going back to work, though there doesn't appear to be any widely published research to support this.

Apart from a reduced supply of workers, the other thing causing labour shortages is booming demand. Several major infrastructure projects have eaten up vast numbers of construction workers, while Covid-related housing trends like the ‘race for space’, the boom in second home ownership and an increased amount of disposable income due to lockdowns have seen thousands of garage conversions, garden office builds and holiday cottage renovations. Set this alongside ambitious targets for new-build homes and you can see why construction firms are struggling to keep pace.

In fact, it’s not just labour that is in short supply – there have also been shortages of building materials such as copper, steel, timber and slate.

What effects are the labour shortages likely to have?

The upshot is that waiting lists for many jobs are getting very long. Property owners are often finding themselves having to phone around several contractors to find some availability, and they may have to wait weeks even for relatively urgent repairs. This is particularly tricky for landlords, who have a contractual duty to keep their properties in good repair. The delays can also mean that by the time a maintenance issue is attended to, greater damage has occurred and more work is needed to fix it.

On bigger builds and projects, some construction firms have found themselves unable to deliver on time because they simply can't get the workers, and of course, with increased demand come increased costs. Some employers have claimed that wage expectations for certain trades have jumped as much as 20-40% since last year.

Despite all this, predictions for the sector remain strong. In its summer forecast, the Construction Products Association reckoned on sustained growth into 2022, particularly in housing and infrastructure projects. Massive builds like HS2 and Hinkley Point C power station will keep the big boys busy, while most smaller builders are reporting themselves completely booked up for the next six months on housing builds and improvements. 

As wait times lengthen and costs rise, there's another issue looming on the horizon, in that a significant proportion of the UK-born construction workforce is ageing. It's estimated that around half a million will retire in the next 10-15 years, and industry bodies are concerned that they won't be able to fill these often highly skilled roles through apprenticeships alone. They've asked the Home Office to consider a more nuanced approach to construction immigration from Europe, but for the time being, the government is holding firm.

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