UK construction and property
- Bounce back loans | A freedom of information request by Construction News has revealed that 46,323 companies have defaulted on repayments of their Covid loans. The combined total of defaults and arrears amounts to 25% of loans issued. Critics of the scheme suggest that it prolonged the life of unviable firms.
- Contract terms | Build UK has issued a list of six types of clauses that it recommends are eradicated from contracts in order to give better visibility and allocation of risk. The suggestion is supported by the Construction Leadership Council. It includes fit-for-purpose design, unquantifiable risks, specified-peril-clause, blanket indemnity for breach of contract, and uncapped subcontractor liabilities. The full document can be found here.
- HS2 spend | Data from HS2 shows that the North West has received only 4% of subcontractor spend. Greater London has received almost 23%.
- Housebuilding rates | Persimmon has confirmed that its rate of building is 30% lower in the first quarter of this year because of a slump in demand and construction inflation outstripping growth in sales prices.
- Lending to commercial property in the UK held up at the end of 2022 despite interest rate increases according to Bayes UK Commercial Real Estate Lending Report. Commentators added that many sought to refinance existing loans to negotiate the best deals as rates crept higher. The report also reveals that £7.3bn of loans were in some form of financial distress.
- Headquarter size | Due to new hybrid ways of working, The John Lewis Partnership has announced plans to more than halve the size of its headquarters in its search for a new office.
- Output | The Construction Products Association has downgraded its expectations for construction output growth. It now predicts that output will fall 6.4% this year, and see 1.1% growth next year. It had previously expected a fall of 4.7% this year. It expects falls in private new housing and repair and maintenance to be the main drivers. (For comparison, when this publication tracks construction output, it normally only references new work, not repair and maintenance). Before the mini-Budget in 2022, it forecast a growth rate of -0.4% in 2023 in all new work.
- Build-to-rent | The British Property Federation and Savills have reported that the rate of growth in the sector has slowed, showing 9% growth in the first quarter of 2023, compared to the long-term average of 28%.