How the cost-of-living is affecting tradespeople?

We often talk about how the cost-of-living is impacting homeowners, especially when it comes to heating homes. But what kind of impact is the cost-of-living on tradespeople? Over the last three years, there has been a bit of a ‘boom’ of opportunities for tradespeople with the pandemic being a big driver of this. 

Why? We all spent more time in our home, which meant more time to contemplate new home improvement projects. Whether that was a bathroom renovation or a brand-new home office to accommodate the future trend of hybrid working. 

According to the Rated People Home Improvement Trends Report 2023, ‘81% of UK tradespeople put their prices up in 2022, and in 2023, 86% of tradespeople will need to increase their prices to stay in business.’ We look at what’s causing this, how it will impact the number of projects available to tradespeople and where other opportunities may lie ahead.

What’s causing tradespeople to put up their prices?

The feedback that tradespeople gave as part of Rated People’s tradespeople survey highlighted the following reasons for prices increasing:

• Rising cost of materials
• Increasing operational costs
• Staffing costs going up
• General staff / skills shortages 

Building materials

Post the pandemic, there was a huge increase in home improvement projects which created a high demand for building materials. Combine this with challenges around supply chains, political instability and some questionable economic policies by the UK Government, you end up with almost the ‘perfect storm’. And don’t forget, the UK had the highest inflation rate in 40 years. 

Manufacturers who are producing energy-intensive products like bricks and plasterboard also took a significant hit due to the rising cost of energy which meant that the cost of producing the goods skyrocketed. However, since the price peak in July last year (2022), there is a sign that the rate in which prices are going up starting to slow down.

Operational costs

It’s not just the rising cost of energy that’s effecting rising prices. Things such as insurances and, as we all know, fuel have all increased in cost which adds further challenges to the day to day running of a trades business. 

Staff costs

The increase in living costs has put pressure on staff to earn more which has meant that demand for higher wages is not uncommon. If unable to secure the wage that they want, staff are looking elsewhere. So, to keep them, wages need to go up. 

Staff / skills shortages

There’s no denying it, there is a labour shortage in the UK. 

Brexit was a contributing factor but the pandemic has compounded it further. During the pandemic the number of contractors decreased as well as people working in the industry caused by redundancies or people simply leaving the construction industry altogether. This has caused organisations to compete heavily for talent in a limited pool and those left can demand higher wages for their skills.

When Rated People surveyed their tradespeople 66% expected to delay or cancel work due to staff shortages.

The impact of the cost-of-living on tradespeople

As we continue to digest the findings from the Rated People Home Improvement Trends Report 2023,  92% of tradespeople believe that costs will rise further and that doesn’t bode well for homeowners as 90% of tradespeople will need to pass these cost rises across to their customers. However if tradespeople can make any home improvement work more affordable for homeowners, then 24% of them said that they would reduce their prices accordingly. Other interesting findings pulled from the report include:

• 71% expecting work to drop out because of rising costs
• 81% feel they could go out of business unless they put their prices up
• 77% think homeowner demand will reduce in 2023 because of the cost-of-living

For homeowners, the rising cost of renovation work is unsurprisingly having a negative impact on the number of projects available. In fact 44% of homeowners can’t afford to do any home improvement work in 2023 because of the cost-of-living and 51% will do less home improvements for the same reason. The types of home improvement jobs that will be affected include fitting new carpets, painting and decorating as well as renovating bathrooms.

For tradespeople specialising in essential home maintenance such as boiler servicing and electrical repairs, there is more concern as ‘60% of homeowners have put off essential home maintenance jobs this year.’ 

Worryingly, and from a heating efficiency perspective, 20% of homeowners stated they’ll be unable to fix poorly insulated areas within their home. Running any heating system within a poorly insulated home will always cost more and with the price of energy at a high point, it will cost much more to maintain a desired level of comfort.

The opportunities for tradespeople

During and post the pandemic there has been a growing trend in tradespeople developing their skillset to become more multi-skilled so that they can specialise in more than one area by gaining additional qualifications. This means that rather than sub-contracting parts of the project out, the tradesperson can do everything themselves. For example, for a bathroom renovation the tiling may have previously been subbed out but now the installation of the bathroom suite and the tiling can be done by a single person. This can lead to tradespeople being able to be more competitive on quoting the work to be done.

However, if any electrical work is required and connection to the mains needs to be completed, for example, connecting electric underfloor heating, then the tradesperson must be Part P registered.

One of the other ways tradespeople are looking to boost opportunities is by investing in marketing to attract more business. In fact, according to Rated People’s report, 29% will do it. Not just this either. Many tradespeople are looking to expand their geographical reach, offer additional services and build upon their online presence. 
 
2023 will be a challenge but as the construction industry has shown many times before, the people working within it are resilient and will successfully come through the other side.

What next?

Download the Rated People Home Improvements Trend Report 2023.

If you do have any questions, please contact our team who are always on hand with helpful advice that can save you both time and money.