Subbies rage over Bovis retentions

Bovis Homes is asking trade contractors to give-up their retentions as part of a three-pronged assault on cash-strapped subbies.

Suppliers are being offered the option of waiving their retentions, having payment periods extended to 90 days or knocking between 5% and 10% off their bills.

National Specialist Contractors Council chief executive Suzannah Nichol said: "It's like saying would you like me to gouge out your right eye, your left eye, or both."

Bovis told subcontractors in June it would extend its payment terms from 30 to 90 days, in response to the deteriorating housing market.

But CJ has learned that subcontractors have been offered the chance to stay on the 30-day payment terms if they agree to give the housebuilder a 5% or 10% discount on its orders.

It has since approached subcontractors to offer them the option of waiving retentions too, rather than wait three months for their money.

One subbie told CJ that he had reluctantly agreed to surrender a retention - but Bovis had still taken longer than 30 days to pay.

In a statement, Bovis said: "Our commercial managers in a number of our regions have had one-to-one discussions with our subcontracts to renegotiate our payment terms and conditions in light of current market conditions.

"In some cases a discount has been agreed, in others, longer payment terms accepted, while for some a waiving of their retention fee was the preferred option. In a minority of cases, where there has been a delay to a subcontractor's agreed new payment terms, this should only be viewed as an accounting blip, rather than a shift to a postponement of payment."

• Persimmon is adding to subcontractors' woes by demanding another 15% reduction in their rates.

The call is the largest cut from any major housebuilder.

A letter to the supply chain called for an answer by this week. Persimmon said it would reserve the right to retender works if suppliers' responses did not "meet this criteria".

Persimmon originally went to subcontractors asking them for a smaller reduction in April.

One subcontractor said: "The housebuilders like to think they know what our margins are, but they obviously don't because of the size of the reductions they are asking for."

A Persimmon spokesman said: "Given the well-documented, challenging conditions within the housing market, we are closely focused on managing cashflows and are in constant dialogue with our suppliers in order to find ways to reduce costs and optimise efficiency."

Subbies will have to swap their mortar buckets for begging bowls as housebuilders continue to squeeze them.