Homeowners across the North of England are putting off £2.5 billion of building work every year because they cannot find a builder they trust, the Federation of Master Builders (FMB) has said ahead of the Budget.
It is the regional share of £11.2 billion of work being delayed across the UK each year, according to research by the FMB and the HomeOwners Alliance, which found one in five homeowners have put off work in the last five years because they could not find a trusted or quality builder.
Most of that work is not cosmetic. More than a quarter of homeowners having work done were upgrading electrics, plumbing or heating to keep their homes safe. The Chancellor has the chance to introduce funding to scope a mandatory licensing for domestic building companies, setting minimum competency standards which would create a level playing field for all businesses and deliver industry certainty.
It is one of six measures the FMB has called for in this Budget, faster planning for smaller developers, development finance that small house builders can actually access, a long term retrofit market, and support for young people not in education, employment or training (NEET) into construction.
Rob Clark, director of RC Building trading as MakeSpace, in Blackpool & the Fylde, said:
“Take an ordinary family who have saved for years or remortgaged to extend their home. At the standard rate, a £50,000 extension carries £10,000 of VAT. That is £10,000 going straight to the Treasury instead of on materials, labour or improving their home.
“We are effectively taxing people for the privilege of maintaining and improving the homes they already own. When a family cannot afford that extra 20 per cent, they postpone the work, cut corners or turn to someone who isn’t qualified or insured. We are making it more expensive to do building work properly.”
Allan Proctor, an FMB West Yorkshire member in Leeds, has seen it happen. He said:
“I recently lost two jobs because of the VAT. Both clients went with builders who offered to work for cash. The VAT on the labour was around £15,000, so the client did save a lot. Sadly, reputable and honest builders like me suffer when clients vote with their pockets, due to the cost of living crisis they are experiencing, without fully understanding the consequences to the overall economy.”
Aidan Cropper, an FMB Board member in Nottingham, East Midlands, said a lower rate would change the picture:
“Cutting VAT to 10 per cent, ideally 0%, for our sector would cut out a lot of clients self-managing to save on VAT, whilst bringing down the overall cost of building to get things moving again.”
Even higher-value projects are stalling. Martin Boardman, an FMB member in Lancashire, said a customer has put a garage, garden room and glasshouse his firm designed on hold, fearing the work would push their home into the new high-value property charge. He said:
“It was due to go into planning and be built in spring 2027. Even the wealthy don’t want to spend – the backside has fallen out of the extension and renovation market.”
Rob says the skills system is also putting small firms off training. He said:
“I took on an apprentce and the experience has left me reluctant to do it again. The employer carries the financial risk and does much of the training, while chasing modest funding through hoop after hoop. We are constantly told there is a skills shortage, but where is the incentive for a small building company to take someone on?
“We are not asking the Government to manufacture work for us. We are asking it to stop putting barriers in the way of the work people already want and need doing.”
Carolyn Frank, FMB Hub Director for the North, said:
“There are too many barriers to growth for smaller building firms to deliver for homeowners. Our members need to feel the Treasury is backing building by closing in on the cash-in-hand rogues, incentivising builders doing home improvements and retrofit through a VAT reduction, and getting skills funding into the hands of business, not just training providers.
Two and a half billion pounds of work a year is sitting on hold across the North because homeowners cannot find someone they trust to do it. That is money out of family budgets, and it is work lost to the honest local builders who do the job properly. This Government has promised to deliver for every part of the country. Mandatory licensing for domestic building companies would set a minimum standard of competence, cost the Treasury very little and give homeowners here the confidence to get building."
