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What does the future hold for the construction industry? - news article image

What does the future hold for the construction industry?

22 Aug 2017

2 minute read

In recent weeks we have seen two contrasting news stories on the future of the construction industry. The first of these – a recent piece in the Telegraph – suggests a buoyant future for the residential side of the industry as small housebuilders have bought 89% more land over the last 12 months compared to the previous year. In a similar vein, the number of sites bought by medium sized builders has increased by 22% over the same period. Birmingham, Manchester and Bristol have each been highlighted as hubs for these housebuilders as the demand for land in the cities readily increases. With an increase in demand, comes a likely increased confidence in the industry. With so much of the economy being directly correlated to housing market activity, this increased confidence would certainly be beneficial to the wider economy. 

Despite such reports highlighting the apparent successes, a second article in City Am suggested a slightly different future for the construction industry. Statistics within the article show that 26% of construction firms are said to be at risk of insolvency and commercial property firms would appear to be the most vulnerable. Such statistics suggest a disparity between the issues of those firms working in commercial property and the aforementioned retail firms who have the confidence of an increasing number of housebuilders. 

 For those construction firms – or alternatively, those firms with construction clients - who are at risk, we do recommend that you seek professional advice. From our experience in working with clients in the industry, the process can be particularly complicated. As Insolvency Practitioners we are in reality acting for the creditors but it should be the aim of all stakeholders to gain maximum value for the benefit of our clients often from half or partially completed projects. Dealing with incomplete projects in a formal insolvency brings with it additional complexities such as retention of title claims which could involve dealing with unused supplies and finding which supplier they must be returned too. Furthermore, there are the issues of self-employed workers with no employment rights but whose goodwill is needed to complete projects, suppliers holding the office holder to ransom if, for example, matching goods that cannot be sourced elsewhere are required as well as the plethora of health and safety issues. The key to avoiding this list of problems is planning. The earlier we are consulted the better the planning we can put in place, and the more value we can preserve for all parties.

What does the future hold for the construction industry? - news article image

Author:

Hayley Simmons

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