Contractors working for Taylor Wimpey have been told they will be paid 5 per cent less than previously agreed as the housebuilder tries to cut costs.

A letter to contractors working for the Bryant Homes division of the business states: “We need to take urgent action to manage down our cost base. We are reviewing our overheads, house designs and build processes to drive out inefficiencies, but also need subcontractors to play their part. We are therefore introducing a 5 per cent reduction in price on all outstanding works on existing orders as well as all future orders placed after January 2, 2008, and will be looking for an equivalent reduction in future tenders.”

A subcontractor told Construction News that the housebuilder, which has sent the letters from its South East operation, was using bullying tactics to reduce its costs. The subcontractor said: “I don’t remember getting a letter when the market was booming saying: ‘Here, we’re doing so well we’re going to increase your rates.’ This is just bullying tactics. They’re still selling houses and it’s nothing like a recession – it’s a slowdown, at best.”

The letter to contractors also signalled that Bryant Homes could take longer to pay its bills. The company aims to settle invoices within a month. It said: “We do not, at this stage, propose to change credit terms but will have to review this if we are not able to reduce the overall costs.”

A Taylor Wimpey spokesman said: “Taylor Wimpey is committed to reducing costs and we expect our trade partners to work with us to do so. This is particularly critical in the current market environment.”

The credit crunch’s impact on the housing market was highlighted last week when the Bank of England said that mortgage approvals in November had fallen to a three-year low, to 83,000. They fell from 89,000 in October, and November marked the fifth consecutive monthly fall.

The tough action against contractors by Taylor Wimpey comes as Persimmon, its rival, said yesterday that uncertain market conditions had triggered a 14 per cent fall in forward sales at the start of this year.

Persimmon said its fall in forward sales – to £603 million compared with £701 million at the same time last year – had been caused by poorer confidence in the last three months of last year. It said that declining interest rates should help to revive activity.

Persimmon said: “We believe the underlying fundamentals for our industry remain intact and supportive.”

Persimmon also said it would crack down on its cash management. “It is too early in the new year to predict exactly how the market will develop over the next few months. However, we are confident that our focus on cash management through these more challenging times will ensure that when the market improves we are well set to take advantage,” it said.

Sale completions fell 5 per cent to 15,905 in 2007, but prices were not dented, with the average cost rising to £189,558 from £188,129 a year earlier.

Meanwhile, a Singapore government fund has built a 3 per cent stake in British Land, a sign that investors could be returning to the struggling UK commercial property market.

Fresh from bailing out UBS with a £5.7 billion cash injection, the Government of Singapore Investment Corporation yesterday became the fourth-largest shareholder in British Land with a stake worth £134 million.

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