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?

Don't do it!

We had a kitchen done a couple of years ago - it started at £35k and ended up costing £10k more - (TBF it was moving kitchen to the back of the house, putting in downstairs loo and remodelling). The company came with loads of great references which I checked but they wanted a HUGE deposit upfront - we refused and kept a 15% retention - it turned out that they were using the deposits to fund other people's projects and they went bankrupt fairly shortly after our work was (thankfully) finished, leaving several others in the lurch - having paid but without finished kitchens, and no recourse to the money because they had gone pop.

I would ask for a schedule of works - we ended up paying in phases and not paying until each bit was done. I wouldn't hand over £22k - if he's a good tradesman he will have payment terms with his suppliers and as long as you pay him within the 10 days or whatever he demands, he can meet their demands.

Sorry if thus has been said, but ask him to take a small deposit eg 100£ on credit card then 22k by bank transfer. You are protect on the whole amount then.

Is it possible to take out insurance for the work being carried out?

Anyone any idea?

EXAMPLE of Project insurance

How about something like this.

Don't do it.
Instead pay on completion for each part and up front for materials. He will probably get his materials on credit so he may be using your cash to pay for another job a bit like a pyramid scheme.
Walk away. Imagine losing that money

Thanks for posting that Fools, though it says loss of deposit and loss due to liquidation of up to 10% of the insured value of the works which isn't very much at all and probably not worth paying for if I'm understanding that right!

Tatty. I didn't read it like that but, I haven't a clue about these things . It's probably worth calling them isn't it?

If he project manages so well, why can't he just give you dates when he will need to order specific items and you can pay out for those at the correct time all on credit card? At least that way you'll see a few items arriving and being installed, so you'd have less to lose if it went tits up. And you can phone the cabinet makers in Germany to make sure everything is ok there (if that's the biggest expense). I really think it sounds dodgy, I think you'll just have to suck up the 3% card surcharge, which isn't much compared to the total.

I believe I would be covered under Section 75 as it's the £22k I'd want to be covered for, not the whole £33k

Please don't even consider this; after asking a lot of pertinent questions the credit card company would see straight through it

Agree with PPs that he's clearly got a cashflow issue, and by the sound of it there's been a lot of talk about his risk and not enough about yours. You said yourself trust is a two way thing and also that his suggestion is unusual ... and very few of the possible reasons for that are good

This is a major spend and he should be pleased to get the job rather than trying to chisel you. For me it would be a much smaller deposit and staged payments, or simply go elsewhere

I m sorry, I cant tell you how this story ended. But a friend of the family paid a similar sum cash up front before the work was done. The builder died of a sudden heart attack before work commenced. I know they had huge problems and lots of sleepless nights sorting the mess out!

I don't think he 'obviously has a cash flow problem'. The German kitchen company at well want 100% prepayment - I don't know but it might account for most of the £22k - its reasonable for the builder to want this in advance. I would.

Since when do you source an American fridge from a German company and pay for it long before you want it delivered? The OP specified it was more than one supplier the goods were being sourced from, they are clearly not all bespoke items and they are definitely not all going to be needed to be delivered on day one. A massive chunk of the £22k is going to be on materials that do not yet need to be paid for. The more reasonable quote wanted a "mere" £9,000 to cover the cost of the bespoke cabinets, not £22,000.

Okay. So I'm going to go and see him tomorrow. I'm not sure exactly how the conversation will go at this point, I will prepare some notes tonight so I don't go blank. But here are the issues I want to iron out.

1. Do you actually need £22k deposit. Surely you don't need all that up front - I'd be more comfortable with about 30% in line with many of your competitors, who I spent quite a bit of time phoning this afternoon to ask what they would require if I were to give them a similar job.

1. Even if you adjust your deposit amount to around 30%, I'm still not comfortable giving that amount of cash. Therefore I need you to take a credit card so I am covered under section 75 of the consumer credit act. And I really don't feel that I should be covering any credit card charges, on principle, because its all about your level of risk with little regard to my level of risk.

1. We need to get the total invoice value down to under £30,000 so that I am covered under the consumer credit act. I don't mind how we do this, but the most sensible way would be for me to pay for one or two of the most expensive appliances direct with either your supplier, or for me to source it, or even better you use my credit card so the agreement is still with you and I get the extra protection re sale of goods act, which you keep going on about when you want me to get you to supply the appliances. And if not, I'd rather take on the risk of an appliance failing and having to deal directly with the retailer, in which case I am still covered, than take a risk because my contract with you is more than £30k.

In terms of the deposit, I will cross examine him on lead times for each thing he is supplying and how long it takes. If he can't answer, gets defensive or generally stinks of fish, I will walk away. However, he doesn't have form for this. If he says, look the cabinets are 6 weeks, this appliance comes from Germany and is on backorder, etc etc and can justify why he needs more sooner, I can live with that IF I am covered under consumer credit. If he comes out of that discussion with plausible reasons why things will run smoother if he has a good chunk of the cost of materials 4-6 weeks before the job starts, then I can go with that.

If that all goes well, after working out which materials I will take out and supply myself to get the total invoice value including labour to under £30k, and adjusting the deposit amount down to whatever we can agree on including the cost of what I supply being omitted, and receiving an amended invoice for the new job (I have a couple of other changes so we will have to have an amended invoice anyway), am am then willing to give him a £2k deposit on a credit card, followed by a cash payment at the end of March (job starting late April/Early May) for whatever it has to be and I am covered.

If that all sounds like a faff, it's not really, it's a half hour conversation and he will either agree or he won't. I suspect he will . And whilst it would be easy for an outsider to think "oh god, don't bother, just go elsewhere" there are actually few places willing or able to do all this work using all their own staff to the standard I know he does, for that price. I'd be back to square one in a process that takes fucking forever (I first got the ball rolling with quotes for this job last October and I'm only just getting to the point where I'm about to close a deal, hopefully, and I really want this stupid job done by the summer!). So hopefully we can bang out an agreement tomorrow and I can sign and pay a deposit on Monday.

I will update you and let you know how the discussion goes!

Feel free to chip in with questions you think I should ask him

And thank you so much to everyone who has replied to this thread. I have a way of overthinking big house jobs and getting quite obsessed and probably quite a bore (I try not to mention it to people in real life, who cares about my stupid kitchen anyway ffs!) and it's quite touching how people actually seem to care about the financial wellbeing/consumer rights of a fellow mumsnetter. Thank you!

I hope negotiations go well and you end up with a fab kitchen.

£3K appliances - I would try oven, hob, fridge and dishwasher. Will that get you to £3k?

Try and avoid paying directly for things where fitting makes a difference like windows, extractor fan, taps etc.

I think the points you've planned to raise sound excellent, Tatty - in particular I like the way it puts you back in the driving seat, with your own risk properly acknowledged

The only small caveat is that I wouldn't necessarily mention his competitors' terms straight off. A genuine contractor will certainly work with you on this, but if he tries to push you, that might be the time to mention your other options. After all, I imagine he's perfectly well aware of what other builders in your area expect ...

Good ideas about the appliances, GloGirl - also about avoiding buying the things which need a lot of fitting

I'm wondering about floor and wall tiles, too ... admittedly they also need fitting, but after all a tile is more or less a tile. They're pretty high cost, though, which might help towards the £3K?

Appliances is the way to go. Even if I get say the Range oven and the Fridge Freezer from John Lewis, who give a 5 year warranty on the items I want, and pay a little more than I would with him, it will achieve my aim and I will feel a lot more comfortable, assuming other queries are answered and justified.

I can't say how much mulling this over with you lot has helped! Now having wine to switch my stupid brain off, because I do tend to stew on these things. First world problem I know, so I should really get over it.

I haven't RTWT so apologies if someone else had already suggested this but...

If he wants protection rather than the cash can you get your solicitor and his solicitor to agree that one of them holds the deposit in their client account until the work has been completed? You could agree that in the case of a dispute a chartered surveyor decides if it is complete.

Your plan sounds good but seriously you should be paying the credit card charges

I could, Ligteningirl. Or I might just go with his competitor who is happy to pay the credit card charge. Haven't decided yet.

Quick update - we are all sorted! I'm giving him a much smaller deposit, followed by a further payment when he starts on site (which is around the time he'll be having to start ordering the rest of the stuff) and then the rest on completion. Didn't have to argue with him at all - no problems there. And he didn't look stressed or disappointed at not getting more sooner - so I'm confident he doesn't "need" it for something else not related to my project!

He's taking a credit card.

He's taking the appliances off the invoice and is going to put them separately, to get the invoice under £30k and we may or may not get him to supply these (I think we probably will) but by that stage, he will have started on site so my fears about risk will have gone by then anyway. But in the unlikely event that I need my consumer credit act cover, I'm at the right amount. My main fear was something happening after deposit but before the job started.

So it's all good and I'm really looking forward to getting my kitchen! And I feel much less stressed about the whole thing and feel I can actually look forward to it. Yay!

Glad you managed to come to an arrangement you were happier with. Enjoy the new kitchen.

Delighted it's all worked out, Tatty ... bit hard to understand why he asked for so much in the first place if he's happy with what you suggested, but at least it's sorted