Vistry stands by request for subbies to cut prices

Housebuilder Vistry is standing by a letter sent by one of its offices to subcontractors telling them to cut rates or risk losing work.

According to media reports the letter, which came from Vistry’s Yorkshire office, told subcontractors they should reduce prices “to reflect the current market conditions”, or face seeing their work reviewed and potentially re-tendered.

The news comes just days after Barratt was accused of the same thing, with the housebuilder’s Manchester office asking subbies for a 15% reduction in rates.

However, while Barratt immediately disowned the practice, stating that the letter had been sent in error and that subcontractors were not being expected to cut prices, a spokesperson for Vistry said that individual business units were free to “revisit local arrangements” where necessary to ensure the firm could deal with the “unprecedented economic challenge” posed by the covid crisis.

Vistry was formed at the end of last year from the merger of Bovis Homes with Galliford Try’s private housing and partnerships housing business, and earlier this month said it had performed “better than expected” during lockdown. However, it announced that it was instigating £9m of further cost cutting measures beyond the £35m already announced, which were set to see staff levels cut by 8% and regional offices slimmed from 17 to 13.

When it published financial results in February, the group said it was “making good progress” on “renegotiating our supply contracts for the Group” following the merger.

In response to the emergence of the letter, a Vistry spokesperson said: “This letter does not reflect a group-wide policy, although all of our business unit teams are looking at their individual businesses to ensure that we come out of this unprecedented economic challenge in the strongest possible shape, and so help safeguard as many jobs as possible through the supply chain.

“In this instance the business unit is looking to revisit existing local arrangements that were made before the pandemic took hold – with the aim and hope that any agreed changes are only made on a temporary basis.”

Vistry sold 3,809 homes while trading as Bovis Homes before the merger in the year to December, turning over £1bn in revenue and recording pre-tax profit of £188m.

Rudi Klein, chief executive of the Specialist Engineering Contractors Group, described the behaviour as “diabolical”. He said: “Subcontractors will have little in the way of cash reserves becuase of this crisis and this kind of behaviour could just tip some of them over the edge.

“It cuts completely across what the government is saying in terms of how companies need to behave during this crisis.”