AIBU to think a £22k cash deposit is large and rather risky?

[TattyDevine]

Firstly apologies for talking about financial stuff on here, but it's difficult to do the thread without these details and I need the collective wisdom for this one.

I'm having my kitchen renovated. It's quite a big job which involves taking a couple of walls down and new flooring throughout as well as plenty of cabinets, worktops, appliances etc.

I've had several quotes, and to do it to the spec we want, it's a £33k job including everything including decorating etc.

One of the quotes I had wanted a £1k deposit to secure the commencement date proposed, a further £9k about a month before and then the rest on completion. Presumably to cover the cost of the cabinets, which are coming from Germany, some of them bespoke, and painted to your specifications etc. Obviously this protects the business from being stuck with cabinets they can't return if you change your mind or something like that - fair enough. More relevantly, they take cash, bank transfer, or credit card. Being aware that if you make a payment on a credit card for goods that don't come to be, you are covered under the consumer credit act. So no major risk to the consumer if for instance the company were to go into receivership or liquidation before your job was to start.

But the one I want to use total cost is also £33k, but wants a £22k deposit (which covers the cost of all materials) and then the rest on completion. He wants the deposit in cash.

I really want to use this guy, he's done 3 of my bathrooms in the past, I really like him, trust him and his staff being in my home and all that, the quality of his work is great, it runs like clockwork and he project manages every aspect from start to finish. His quote, whilst the same price as the other quotes I have, also includes enough extras to make it really enticing.

But £22k up front is a risk whichever way you look at it. And I would question why he should need the whole amount of materials up front...doesn't he have credit terms with suppliers on appliances at least? I get that some of it is bespoke and coming from Germany and could be a risk to him.

Does anyone have any opinions on this? Would you do it/risk it? Have you done it? Have you had a job like this done but not had to pay such a big deposit, do you have a business that does jobs like this and also ask for this deposit, in fact any views or opinions on this would be welcome.

At this point it's making me feel I should go with the other company with a £10k deposit on a credit card with no risk but I actually really want to use this guy... AIBU?

But you were paying along the way presumably for materials wickedaterwitch - all he really wants is the money up front for materials, so that the money is there when he needs to order them, at absolutely no cost to himself and no risk to himself (i.e so we can't ring him up the day before he is due to start and say, sorry, we don't want the kitchen after all, and he's stuck with our bespoke cabinets and no money).

I suppose stage payments staggers it a bit, and it's possible he would have agreed to something like that I suppose if I needed to negotiate.

I'm going to have to part with this cash if I want this work done. I have the money, so I don't really mind when (within reason) as long as I am covered if he goes bust in the meantime.

You have the money, but do you really want to have forked out so much in a lump sum and then end up with a gutted kitchen and months of trying to get your money back so that you can afford to pay someone else to finish it? If some of the work is done but it's not finished and it's all a bit murky what has and has not been paid for, I don't think it will be that simple for you to get your money back. If you think you have such a fantastic relationship with this trustworthy man who runs such a solvent business, then maybe he should trust you a bit more and not expect you to pay so much upfront!!

33k for a kitchen ?

< shakes head >

It's too risky IMO. You are unprotected. I know someone who paid £1k upfront for a garage conversion to a sole trader who then died suddenly. The widow claimed to know nothing about it when she was approached (after a reasonable timeframe, obv).

No way. If he's financially robust, he'll have working capital in his business and credit with suppliers. Maybe 20% but not 60+%.

Be prepared to walk away or lose the cash...

No way I'd pay that in one go. That's 66%. Does he have other people work for him? What happens if he has a heart attack or car crash?

I'm not concerned that he'll start the job and not finish it roundaboutthetown. He doesn't have form for that, and it's more likely to happen if I use someone I don't know and trust than if I use him.

I can't think of any reason why someone would start and not finish...he want's to get his remaining 11k, so if he's gone that far, why wouldn't he...

My only concern really is something which can happen to any smaller business in this climate, and if my money is protected in the event of that happening between giving the deposit and the work starting, then the worst case scenario is I have to make a claim under the consumer credit act to get my money back before I start all over again. It would be a frustrating, but I would not lose money.

In terms of it being £33k, my dear Anyfucker , it's a big and slightly complicated job, with the walls coming down, flooring throughout, and really lots of cabinets and islands and whatnot. So it would be bonkers for a charming little L shape or galley kitchen I agree.

I wouldn't. The builder who did our loft previously did two on our street, no problems, good quality work.
Unfortunately when he started ours, he and his partner were warring over the funds of the company and the partner eventually ran off with most of it, which was the last we saw of the builder.

Luckily we hadn't yet paid the second installment so only lost a couple grand and lots of stress and hassle - we hired the guys who worked for the builder, directly, but it took longer and I gave birth in a house with no roof...

25% max up front.

ThroughThickAndThin01 yes he has a whole team of workers.

This is part of the appeal of using him...I don't have to get a separate person in for electrics, floor, building, plastering, etc etc. He's a one-stop shop and you tend to get fewer delays when everyone doing the job is staff, because the boss manages the scope of works and puts the right people in the right place at the right time. So common if you are trying to project manage it yourself to get 2 days delay here because the plasterer can't get in till next Tuesday now because his dog died and now the electrician can't do his thing till the plaster dried but he can't get in for 3 days after that because you missed your slot and so on so forth...nightmares.

We had building work done recently - cost 11,000 and they asked for nothing until it was complete and we were happy and deducted an amount over something that had gone wrong.
Friends were having a new kitchen and some minor building work associated with it. Builder asked for whole 15,500 up front to buy materials. Then went bust before the work started and they lost the lot. He hadn't even bought the kitchen.

This is why I was reluctant LuluJakey1 without protection. But the credit card protection changes things. I'm covered.

I've realised, since discovering how to do this and be covered for the risk, that it was the risk element that was bothering me more than the actual amount. Of course if the amount lost was more, it would be worse - but say the deposit was 25%, so £8k, that is still WAY too much to lose, and I wouldn't want to do that without protection either.

Like I say the other company I was considering using wanted £10k deposit - I wouldn't be happy losing that either. I wouldn't be happy losing a grand! I get pissed off when I drop 20p down a gutter! . But because they took cards, it didn't phase me. The company who wanted £10k were doing a lot less in terms of materials, because I was having to outsource other elements of the project.

It is still a lot, but he has been burned in the past. I do in many ways understand why it is easier for him and feels safer and better for him to spend only the money of the person receiving the goods and not his own, or using his own credit or whatever. Of course there will be some bunce in that £22k that is his profit margin.

I did have a discussion about it with him this afternoon though, and he told me that he has lost potential customers who have said they don't want to pay any deposit, or only small deposits. I suppose that is his choice but he probably should re think his policy on this. It doesn't matter so much with a 5k bathroom but most people would baulk at spending so much up front without protection.

In terms of it being £22k instead of say £8k, it makes no major difference to me if the work is carried out or if I'm protected if it is not. Either way, by the following month to 6 weeks, I will be £33k poorer once the job is completed. The money is set aside, it will be gone soon, so really it is the risk that bothers me. Like I say, I don't want to risk £8k any more than I want to risk £22k.

Oh, I just looked on Which LINK HERE and I don't think you will be covered because the contract is over £30,000

Section 75 protection is particularly useful if the builder or decorator goes out of business before finishing the job, because you'll be able to claim the cost of finishing the work from the card or credit company.
The contract must be for more than £100 and not more than £30,000 in order to get this protection.

Maybe you could pay for some items directly and reduce the contract price.

Anyway, probably best to check the facts with someone who knows the full facts.

Another thing to do is to make sure you tell your insurers. (I'm sure you've already though of it but just in case you haven't )

Section 75 will not cover this transaction! The maximum limit is £30k and it specifically states the product or service purchased must be below £30k not that the amount paid is below £30k.

Your product is costing £33k, it will fall outside of their remit even if only £22k has been paid so far as it goes by the total cost not the amount paid (in the same way claims go by the total cost not just the amount paid via credit card).

I would be very very wary of this situation!

As above, believe that if the contract is over 30,000 you might not be covered - check with your credit card company...

It's not standard practice. He's wanting a huge deposit but unwilling to pay £600 for using a card (which I'm sure he can deduct as a business expense.). That is insane.

Ahem.

Yes there is that financial limit if you pay by credit card under s75.
You could own the materials - that just involves an agreement with the builder - that on payment of his first instalment you own them or something like that so that if he goes bust in the mean time they are your property. If you don't agree that then the materials are his property until he has installed them - I do not know if he has written terms and conditions or not but if he does read them. You could do what I did which is have a reasonably large sum held back until the whole job is finished but does not then remove the risk that the deposit/materials cost is covered. Do negotiate though - they will expect it - they make a first offer and then it is for you to counter offer - we don't like doing that in the UK as customers but we should do it more often.

I don't know exactly what s75 says about the £30k but it is possible as Fools says if you buy the parts yourself that is not part of the transaction. Eg I had someone come yesterday to do some works and I bought a part and his charge was not including that. I have someone else coming next week and he is going to buy the part and included it in the bill. I would say that first example the cost of the part I chose to buy and then asked him to come and install was not the whole transaction and not part of the cost for s75 and next week's job where he buys the parts would be.

For any tradesman requiring a deposit the most you should give him is 10% of the entire cost. Too many people have been scammed by tradesmen recommended to them. or that have done smaller previous jobs for their customers. They then end up with incomplete work, requests for more money or bodgy jobs.

I've had lots of work done.
Never ever heard of deposits that large
Don't do it!

I think that the 30 grand limit means that you should really push back on one large materials section, say. "I'm not going to haggle about the total cost, but I want to pay directly for the actual kitchen units so I have direct comeback to the manufacturer if they're faulty."

Say the units are five grand. You pay for them directly, leaving 28 grand due to the builder, which you pay as 1,030 credit card deposit and 27,000 cash.

I wouldn't pay that much up front. On all the jobs we've had done - kitchen, 2 x bathrooms, garden and loft.

We've paid most suppliers direct and the paid the builders each month with a decent chunk at the end.

I would part with more than 5-10% up front. Who knows what his companies state of affair is.

It sounds to me like he's having trouble getting credit from his suppliers and has a cash flow problem to pay his staff. Ask him outright. Tell him you really want to use him but if it was anyone else you didn't know from Adam asking you this, you'd laugh him out of town and start to have serious concerns about the company. It's not standard procedure or professional. See what his reaction is.

We did this to a plumber recently who wanted more upfront than was reasonable. We said we'd pay upfront for materials and we'd pay his supplier directly if necessary to cover ourselves, but not a penny for labour upfront. Why on earth would you pay for something that doesn't exist and hasn't been done yet?

He did back down and agree to this. I think sometimes they just try it on a bit.

I must be cynical as I was thinking has he been buttering you up with good work so you trust him and now things are tricky he is going to take advantage.

I would be really careful !

It is an unreasonable deposit amount and that would make me question it.

You could set up a blocked bank account and only sign off on it, when he submits an invoice to pay, he doesn't have to carry any cash risk if you do that. He may be having cash flow problems and could be using your money to finish off other projects, a bit of a builders ponzi scheme. Happened to my brother and he lost a lot of money with an unfinished project.

If you are going to go the Credit card route, check the fine print thoroughly.