Is an oversupply of architects driving down fees?

Last month, Jason Boyle finally gave up on architecture. Two decades after starting his career at Sheppard Robson, he has dropped the word “architect” from his job title and has become an engineering assurance manager. In his new role, which needed no new qualifications, he works a maximum of 40 hours a week and never works overtime. His salary has gone up by £30,000.

Boyle claims he “just couldn’t make architecture pay”. His transition away from working for private practices was a long time coming. His salary in those jobs had peaked at about £45,000 before he moved into the nuclear industry around 10 years ago. There, working as an engineer but retaining the word “architect” in his title, his salary soared to nearly £80,000. Now, after jettisoning the latter, it is well above £100,000, not including bonuses.

“The nuclear sector is a different world. It really is. So I feel great sorrow for a lot of architects,” he told Building’s sister title Building Design, a few weeks after writing an opinion piece for the publication explaining his decision. Not all readers agreed with his assessment of the architecture profession, but most comments were sympathetic. “I made the move [out of architecture] a number of years ago and it was the best career decision I ever made,” wrote one reader. Another said they would advise any young person considering a career in architecture today to “think again”.

Architecture has been among the lowest-paid professions in the built environment for decades, made worse since mandatory fee scales were abolished in 1982. But a succession of crises over the past five years, from covid to the inflation caused partly by Liz Truss’ 2022 mini-Budget, has worsened pressures which have traditionally squeezed earnings. A combination of smaller workloads and rising costs for practices has created a sense of malaise in the profession which appears to have worsened over the past year.

The RIBA’s annual business benchmarking report, published last month, appeared to start on a positive note. RIBA chartered practices have seen a second successive year of “impressive growth”, it said, with revenues up by 13% over the past 12 months following a 17% increase in 2023. But it had also found a steep rise in expenditure, with payroll, which accounts for more than half of all practice costs, growing faster on average than revenue as a result of inflation pressures. As a result, profits earned by all RIBA chartered practices actually fell by 2% over the year.

At the same time, fees for many practices appear to have fallen. A survey published by Building asked consultancy firms across the built environment how their fees had changed over the previous 12 months. Of those that had seen their fees fall the furthest, eight of the hardest-hit 15 were architects. Other costs, including spiralling rates for professional indemnity insurance over the last three years and increasing prices for indispensable software licences, have contributed to the problem.

Worrying signs of a slowdown across the industry are also leading to increased competition between practices for a dwindling pipeline of work. The latest Deloitte London Office Crane Survey found new commercial construction starts dropped by 12% between April and September, while refurbishment projects plummeted by 57%.Total new construction orders across the UK slumped by 22% between July and September, according to ONS figures.

Many built environment experts have blamed uncertainty ahead of the Labour government’s first Budget, published earlier this month, which now risks exacerbating the problem with a series of tax rises including a £20bn hike on employer’s national insurance. 

Meanwhile, architects’ work has been complicated since the 2022 Building Safety Act, which introduced a series of new responsibilities. While few would contest the need for tightened building safety regulations, practices have borne the cost of the additional training required, more onerous requirements in planning applications and increased insurance costs. 

The forces are beginning to break the system. There comes a point at which we can’t legally trade, with all of the new regulation that’s coming at us. There’s a point at which we can’t do it for less fees.

Matthew Lloyd, Matthew Lloyd Architects

“Definitely, things have changed,” says Matthew Lloyd, founder of London practice Matthew Lloyd Architects. “I have spoken to other architects, and everyone’s saying roughly the same thing.” Lloyd’s sense is that a series of mounting pressures are “creeping towards architects”.

“It seems to me that the forces are beginning to break the system,” he says. “There comes a point at which we can’t legally trade, with all of the new regulation that’s coming at us. There’s a point at which we can’t do it for less fees. There’s a point at which our insurance is too hard to find… Everything is making it harder to practice.

“It’s now beginning to burst at the seams, whereas before, I think we could contain it.”

One practice that has had a tough time is Feilden Clegg Bradley Studios (FCBS). The firm, which won the Stirling Prize in 2008 for the Accordia housing scheme with Alison Brooks Architects and Maccreanor Lavington, had a headcount of about 220 five years ago. Now it has shrunk by almost a third, to 150, with the latest round of redundancies only three months ago.

Practice co-founder Keith Bradley admits the challenges currently facing the profession have “put a huge amount of pressure on practices like us” in recent years. Much of this has been due to a slowdown in the higher education sector, which accounted for around half of the firm’s work until two years ago but now constitutes just 20%. “We’ve had a drop in workload. We have made gradual redundancies over the last three years. We think we’ve stabilised now with a new business model, but that’s been really tough.”

FCBS has seen fees go down in relation to inflation during the period amid increased competition for a reduced amount of available work. This pressure on overheads has been exacerbated by an expansion in the roles and services that it is required to provide under the new building safety regulations, and numerous planning delays on major projects.

The firm is also having to grapple with the rising rental costs of its London office in Fitzrovia. “It’s been a perfect storm,” Bradley admits, summarising the studio’s woes as “increased costs, an inability to get higher fees to cover some of those issues, reduction in workload and complexities of delivery”, although he says the firm is now feeling optimistic after resizing.

There’s quite a lot of costs that have gone up, and the fees have not kept up with them. And when we’ve tried to increase our fees to cover that, we haven’t won the job

Wendy Mason, Rivington Street Studio

Another practice hit by rising office rent is Rivington Street Studio, which was formerly sited on the eponymous street in Shoreditch but recently moved to a cheaper office in Bow, east London, to save on costs. Wendy Mason, who founded the medium-sized practice in 1989, decided she no longer wanted to be shelling out for “massive” overheads in rent. “We just don’t want to do it,” she says. ”We want the money to be in the business, to pay decent salaries.” But while Mason says the firm now has relatively low overheads compared with other practices in London, it has also been dealing with the same issues of rising costs that have impacted the wider profession.

The cost of software has become “silly”, Mason says, due to requirements to pay expensive annual subscriptions, while the price of professional indemnity insurance, although it has levelled off over the past year, remains high. She says fees have “stagnated”, hovering around the same point during the last few years of high inflation that has driven its costs up by “a lot more”. But she has also seen growing levels of undercutting, both for projects and for places on frameworks. “There’s quite a lot of costs that have gone up, and the fees have not kept up with them. And when we’ve tried to increase our fees to cover that, we haven’t won the job.”

When practices are engaging in so-called “suicide bidding” in order to “buy” the client, working at rates which lose them money but keep revenue ticking over, it is no surprise that architects remain so poorly paid compared with other built environment professions. At the beginning of her career, Mason was chairing a meeting of an entire design team for a project and later found out she was the lowest-paid person in the room. “They had driven there, were living in big houses, and I was renting a flat in Hackney.

“I just thought ‘this is not good’. And it’s partly our fault, because we want to do fantastic buildings. We work longer hours. We try really hard, but it’s just crazy. It is just crazy. And I’ve done it for a long time, and I’m not going to stop – and I’ve just let it go.”

The increasing prevalence of undercutting is frequently raised by architects as a concern. One medium-sized practice recently lost its place on a framework, despite keeping its fee percentages at the same level as its previous bid for the deal. The firm was told by the framework operator that its fees were “high” and it had lost its place because it had been undercut by other bidders. “I was genuinely shocked by that,” says the firm’s director. “It was the reasoning… Because I’m very good at getting us on the frameworks, and I know how to price them, and that was, ‘wow, OK, that’s not what I was expecting to hear’.”

But while this director recognises that low pay in the profession is nothing new, they feel it is getting worse. They relate their experience dealing with a fire engineer working for the firm as a subconsultant on a project which was paid double the fees earned by the practice. One graduate at the consultancy was paid more than the director, who has worked in architecture for more than three decades. 

Fire engineers may be able to command higher fees partly because there are fewer of them compared with architects, but this does not necessarily explain higher rates for other disciplines. One factor could be the length of contracts for architecture practices, which still often carry the role of lead consultant. Smaller one-off costs for roles like engineers, which are often brought in for a few days at a time, could be easier to stomach for clients than committing to an hourly rate over the course of an entire project.

Architecture practices also differ from other professions in often deciding not to charge extra fees when clients ask for amendments to a design, preferring to suck up the extra time and expense when a project runs into problems in order to maintain the relationship with the client.

Nicholas Jewell, a lecturer at the Bartlett School of Architecture, believes the problem could be partly rooted in how architects are educated. A focus during the early years of architectural training on relatively abstract and philosophical aspects of design, including how architecture can solve societal problems, often neglects the less glamorous aspects of the profession. “There’s definitely a kind of dismissiveness about aspects of running a business,” Jewell says.

He learnt this lesson early in his career, during a negotiation with a client. “I was confronted by a very charming client who was very aggressive about fees. And when those sort of teeth are shown, it’s quite difficult for someone who’s quite sensitive to actually respond to that – or even to just hold their ground and be able to say ‘actually, no, my services are worth more than that’.”

A more structural factor could be an oversupply of architects working in the UK market. The number of architects in education has been rising steadily for the past 15 years, from around 15,600 in 2010 to 20,000 in 2022, according to the RIBA. There are currently 40,800 RIBA chartered architects in the workforce, working for around 6,000 private practices. This compares with around 30,000 registered architects in France, which has roughly the same population size as the UK.

“We are in the situation where there’s suddenly more architects than work,” says Jewell. In a culture where practices are forced to undercut rivals in order to “buy” work to help them survive until a bigger project comes along, it harms the entire profession, he believes. “That progressively erodes fees for everyone in the industry because clients get used to thinking, ‘well, I can ask 1% cheaper because I know someone will do it’. And everyone will be desperate after a period of time.”

I think there are probably too many practices. The profession is reliant on a very buoyant economy

Keith Bradley, Feilden Clegg Bradley Studios

This suits clients in both the private and public sectors during a time of heightened caution when it comes to investment. FCBS has failed to win several high-profile public sector competitions because of what Bradley describes as “eye-wateringly low” fee bids from rivals, despite scoring the highest on quality. “I think there are probably too many practices,” he says. “The profession is reliant on a very buoyant economy.”

Boyle agrees there is now a “massive oversupply” of architects who have come through the education system over the past few years. “There’s too many people on the Arb register for the amount of work that’s out there.

“We are now, finally, if you like, suffering from the fact that schools of architecture have so many students in them,” says Lloyd. “The number of architects available in the marketplace seems to me to be enormous, and there are lots and lots of new practices, all of which are hungry to work, and they’re all going to have a go at everything.”

The irony is that architecture is one of the UK’s creative industry success stories, worth £4bn according to the latest RIBA business benchmarking report. It is also a huge national export, with UK practices respected across the world for their design excellence and expertise in sustainability. Revenue from international work soared by 25% in 2024 alone, particularly in the EU, which shelled out £439m for UK architectural services during the year.

But more than 80% of this revenue was earned by larger practices, employing more than 100 staff. For small and medium-sized practices, which have consistently been the most pessimistic about future workloads in RIBA surveys, overseas expansion is much harder, partly because they are less likely to have the resources to set up a base abroad.

A broad economic recovery is one way out of a potential crunch which could be coming down the tracks over the next few years, but Bradley admits the sector would be “starting from a very low base now.

“Are things coming to a head? Possibly. But it’s all dependent on whether the initiatives of this government coming in are going to create the growth that’s needed.”

One positive reading of the situation is that the profession is poised to meet increased demand if the market turns. If the government delivers on its commitment to planning reform and meeting its target to build 1.5 million homes over the next five years, practices are well placed to reap the benefits. But without relief soon, the sector is likely to see more redundancies, fewer pay rises and even firms going to the wall.