What Are the Impacts of the Rising Costs of Building Materials?

Do you intend to start a housing construction project shortly? As this project is certainly a large one, it is quite normal to have some concerns or questions about the current increase in the cost of building materials.

What will be its impact on the cost of your future property and what about the contracts already signed? Read on to find out!

The impact of rising construction material costs

Although you have already submitted an article on the subject, the situation surrounding the rising cost of building materials is once again a concern that is mobilizing many construction contractors. Indeed, it seems that the pressure on the construction industry is currently particularly strong.

Moreover, the lack of skilled labour does nothing to improve the situation. As a result, the ACQ recently submitted several requests to the Quebec government to prevent this already difficult environment from escalating.

To paint an evocative picture of the situation, it is important to note that the main materials affected are:

1. lumber;

2. truss;

3. plywood;

4. doors and windows;

5. roof farms;

6. plumbing items;

7. wood engineering products.

To a lesser extent, steel, concrete, aluminum, asphalt shingle and gypsum panels are also affected by the current price increase.

Of course, you are aware that a construction contractor must be able to generate a reasonable profit margin in a construction project. As a future owner, it is perfectly normal to question the concrete impact of this increase on the cost of this large-scale project.

Building a new home: Can costs be changed?

In the case of new construction, the preliminary contract stipulates that a contractor can increase the amount set for the cost of the work. However, note that this practice is supervised and must meet several criteria to be applicable.

First of all, be aware that the price increase must be unpredictable and that the adjustment of the cost of the work can only be made before the signing of the notarized sales contract. Besides, the manufacturer must provide supporting documentation to testify to the validity of its application to the buyer.

While the increase in the sale price of a property may be caused by an unpredictable fluctuation in the cost of materials or by a change in the working conditions of employees working in this sector, it may also be justified by an increase in the fees charged by the Residential Construction Guarantee. In the latter case, too, the contractor will be able to increase the amount initially determined for the sale of the property.

Once the supporting documents are provided, you will have 15 days to sign a document approving the change in the sale price. Finally, the new sale price will be set and considered to be approved by both parties.

Apart from the context surrounding the construction of a new home, it should be noted that a contractor may increase the asking price for a project if a clause in the contract allows it to be completed. Contracts provided to APCHQ members usually contain a mention in this regard to protect contractors from this type of situation.

For information, it is estimated that the current rise in the cost of materials will increase the budget required for the construction of a new home by about 10%.

What if there's no clause?

For contracts without a specific clause, then one must turn to the Civil Code of Quebec. The latter provides for what can be done in such a combination of circumstances depending on the type of contract signed. So here's what applies to:

• An estimated contract: possible change if the increase is unpredictable when the contract is signed;

• A contract-based enterprise agreement: no applicable changes;

• Preliminary contract (a promise to sell): no changes allowed;

• A cost-effective contract: possible change.