Let’s talk about the money, money…

Over the years we’ve heard many a horror story where people have been left high and dry by their builders.  Or in many cases, not in the dry at all. Rather they’ve been left without a tin roof, their home open to all the elements, with builders that have gone AWOL, or insisting on a further down payment to move to the next stage of the build.  Customers that have paid big bucks up front but not seen progression on their build relative to the monies forked out.  Others in the final stages of their build, where the snagging never seems to happen as the builders are all paid up and have other priorities now.

So what’s the solution so that the payment schedule works in both the builder’s and the customer’s interest?    The customer should absolutely see progress each step of the way, weekly, with visible evidence of where their hard-earned money is going.   Likewise, a builder needs to receive payment to cover materials and labour along the way, and not end up out of pocket.

The payment schedule we tend to follow allows for both.  Other builders may follow different payment plans, but this is the solution Mac has found works well for him as a builder, and customers likewise find reasonable.

  • 10% deposit to secure your slot. Not all builders request a deposit. Personally, this gives us the guarantee that the customer is not going to pull out at the last minute and means we can secure the start date for the customer. It also covers the initial materials and machinery we will need to pre-book and have delivered to site for doing the foundations.
  • 15% to be paid once engineered out of the ground to DPC, covering all footings, engineering and oversite
  • 25% to be paid at wall plate level with all block work, brick work and wall insulation complete
  • 20% once the roof is complete (house should now be fully protected from the elements!)
  • 10% after first fix electrics and plumbing
  • 10% when dry lining/plasterboard is finished
  • 5% when second fix electrics and plumbing are complete

N.B. Any snagging should have been completed by this point too, so I would not recommend making this payment unless all agreed snagging is complete as well. 

  • Remaining 5% only to be paid once your electrical certificate has been registered with building control and they have issued your building certificate.

Of course the above is based on a 2nd fix finish, with the customer making their own arrangements for internal decorating, fitting kitchens/bathrooms etc…

What’s included in your quote?

With a build it’s really important that the customer reads all the detail in their quote to be sure what is and isn’t included so there are no misunderstandings with the builder. The customer understandably may not know the difference between a shell build, or what 1st or 2nd fix actually mean. Therefore, it’s important to read the fine print and what will be included. For example, if the quote doesn’t include skirting, architrave and hanging of doors, this will be up to the customer to sort themselves afterwards. So be really clear on what finish you expect. Ask your builder to really spell out exactly what will be left for you to finish yourself once they’ve done their bit, so your expectations are clearly managed.

Change in requirements

Let’s face it, we change our minds sometimes. We may want a different skirting board, we may not like the colour of paint we chose, we may want to move some of the electric points or we may not like the flooring we’ve chosen…. Not everything is easy to visualise, so until we see the work done we can’t say for sure if we like it. I for one understand this. After putting up the wall paper in our lounge, I decided that, nice as it looked on the roll and sample, it didn’t achieve the required effect in that particular room. So, we took it down and changed it.

Most builders appreciate this and understand at times customers may want to change something and most will do their best to accommodate. This is fine provided there is understanding on the customer’s side that it’s not the builder’s fault if the customer doesn’t like what they themselves have chosen. It should also be understood that making changes has an additional associated cost – both for materials and labour – and this will also most likely impact timeframes too. As long as there is mutual understanding of this, and agreement between builder/customer on the additional costs and timeline variances, then most builders should be happy to accommodate changes (albeit a little frustrated if they’ve just completed something and have to rip it out again!!!).

However, in some cases depending on the change required and the stage of the build, this may not be easily possible. For example,  if you are wanting to move the location of a plumbed item (toilet, radiator, sink etc…) but the piping has already been put in to accommodate the intended location, this is then not a simple task.   Likewise, if the builder has allowed a certain time frame for your job, and has then committed to another customer from a certain point in time, adding a lot to the builder’s workload with extras or amends may not work given his time constraints and commitments elsewhere.

I would highly recommend visiting showrooms and other houses to see in reality the different products you are choosing, rather than visualising through brochures or websites. 

There is nothing more satisfying for us than seeing a customer delighted with their build. We’d personally rather work with the customer to make changes where required so they get exactly what they want and love the finished product, even if what they want changed slightly along the way!  However, we can manage variations to the timeline in most cases, given our access to a large team of reliable sub-contractors we use regularly, and move between our various projects.  However, a small building company, or one-to-two man band, may not have this luxury.

Speed of decisions

It is therefore highly recommended that the customer is frequently on site checking the progress

 through the build to ensure they like everything being done. If something needs changing, it is much easier to manage this along the way rather than rectify items at the end, particularly as for some changes it may be too late or costly by then.

The builder needs the customer to make speedy decisions, and builders love decisive customers! Customers should do their research early so they are ready for the builder to move forward with their chosen products. 

The builder will specifically request that customers are on site at particular stages of the build to discuss any preferences and agree snagging. It is important that the customer allows time for this promptly, else timelines may be impacted if the builder cannot progress or finish due to pending feedback and decisions from customers, or awaiting products that have a 6 week lead on delivery for example.

Additional Work

Often as the build progresses the customer asks for additional things to be done or added – this is quite normal, be it additional electrical points, hanging of doors, tiling, decorating etc… that weren’t part of the original quote and payment schedule. If additional work is added that needs to be slotted in to the various stages of the build or added on after, bear in mind this will likely push back the overall timelines. New timeframes, costings and payments schedules for the additional work should be communicated by the builder to manage expectations. However, additional work commissioned should not impact the payment schedule already agreed with the builder for the initial quoted work. For example, once you have your building certificate and everything on the original quote is finished including snagging, the builder should receive payment in full for that part of the work. Any additional work should have its own corresponding costs, payment schedule and timelines agreed.

A last but very important piece of advice on paying your builder – the pros and cons of cash payments….

In reality there are very few pros for paying your builder in cash, other than the obvious VAT saving.  However, is it really worth it? 

Consider the cons:

  • Any cash work is not covered by your home & buildings insurance
  • Any cash work is not covered under the builder’s warranty
  • You have no legal come back if you are not happy with those aspects of the build:
    • there is no proof that the builder has done those works for you
    • any legal action you take would backfire, as highlights that you’ve dodged paying tax and the courts would come after you…
    • Consider what happens if your builder splits and you’ve handed over a wad of cash….?!?! We’ve unfortunately heard so many horror stories about this.

For sure, NEVER hand over cash for your initial deposit!!!

Top Tip – watch out for fraudsters!

We have seen a lot of fraud through emails being hacked and fraudulent invoices being sent, thankfully not personally, but it’s very much happening out there.  Always do a trial £1 (or 1p!) payment to your builder and suppliers the first time you pay them, and get confirmation by phone or face to face that it’s been received to ensure you have their correct bank details for all future payments. 

If you have willingly made a bank transfer to a selected account, you have very little comeback with the bank to get your monies back.  We’ve heard of people losing thousands of pounds, and a builder wouldn’t take responsibility or cover your losses here.  Phoney invoicing through hacked email accounts is sadly a frequent occurrence across many industries now and is particularly rife in the building trade.  Protect yourself and your monies by doing a trial run with a nominal amount and getting verbal confirmation of receipt.

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