Loft conversions

[Elektra1]

I’ve moved to a house where I need to convert the loft to get a decent sized third bedroom. I planned for this in the purchase and have kept back budget to do it. I’ve had a quote from a local loft company who have good reviews. Perhaps unsurprisingly, the quote has come in a lot higher than expected. The payment schedule is set in 10% tranches, with each tranche being payable on commencement of that phase of work. Payment dates are “of the essence” and interest is payable on overdue payments, but delivery dates are “estimates only”. So to my mind, I can be penalised for not paying on time but the builder has no penalty for not finishing on time (eg if they take on too many other jobs) and also, there is no incentive for them to do things to a required standard because they get paid on commencement, not on building control sign-off.

I’m a lawyer and would never advise a client to contract on these terms. I raised it with the company and said I expected to pay for materials up front but would also expect to share the risk with them through a more fair payment schedule which is linked to acceptance of each phase of work, or building control sign-off. They initially referred to all their satisfied customers and offered to put me in touch with one for reassurance, but now want a call to discuss “whether we are the right company for you”.

I’ve also spoken to a new neighbour who had their loft done by this company and although they were happy with the end result, they said the company took on too many jobs.

Another company I sent an enquiry to hasn’t even responded 2 weeks later, so perhaps demand for loft conversions around here is very high.

I suppose I just want to know if these sorts of payment terms are normal for this type of project, as I’ve never done such a significant building project before and don’t want to be stung.

I have only ever done payment on completion of phases of work, usually with something like "to customer satisfaction as per plan" or as you said " to building control sign off" sometimes with materials purchased up front, sometimes not. Where I had paid for materials, they were delivered to me and not to the contractor. I'd not agree to that contract especially not with a contractor I had never used, regardless of their reputation. last time I had anything major done was around 10 years ago. I'd also want a "time is of the essence" contract if it involved any degree of serious disruption.

I'd also say that if companies aren't reponding its a sign that they are busy and that demand for their work is high.

Thanks @godmum56that makes sense. I’ll see if I can talk them round but otherwise guess I’ll have to find a different builder

@Elektra1 Of course not! Just get a builder in! Plus use an architect for the drawings. You need the stairs, access and fire proof regulations to be met. Why would you pay up front like this?

Why would you bother to talk them round? They want your money for cash flow? I’m assuming you don’t run a law business !

Rather aggressive last line. I’m a partner in my firm yes. I have never done such a large building project in my personal life so wondered if this was common practice for domestic projects. Certainly it is not the form of standard JCT contracts. As I said: I would never advise a client to contract on these terms

DH is a contractor and has done a number of loft conversions. Yes, the payment schedule sounds unusual. DH would usually take a deposit upfront to cover materials and scaffolding, if needed, and then the client will be invoiced the remainder on completion of the works or on completion of phases agreed in the quote depending on the size of the overall project.

It sounds to me like they have had issues with clients paying before and have developed this payment schedule to try and prevent any issues arising again. However, it isn’t the norm and I wouldn’t be comfortable with their contract either.

I do think you may need to take your “lawyer head” off a little when dealing with builders though. Smaller companies will not have had their T&C’s drafted or looked over by a solicitor and most likely will have cribbed a template they have found online. You may scare a number of decent builders off if you pick apart their contract in the same manner as you would do at work.

@Elektra1 Sorry - but anyone who was running a “just in time” business would smell a rat here. Why would you pay up front like this - and surcharges? They don’t finish the work on time so do you get compensation? It’s obviously one sided and not a contract that would be signed in our house. You don’t get fees up front do you? DH as a professional consulting engineer didn’t either. It’s not what you should do.

So I’d look for another builder and anyone who is competent to design a loft conversion. Look at the planning portal for guidance. Your main concerns are building regs: stairs, width and height above, ceiling height, joists, insulation, escape route to be fire protected etc.

Thanks @Nosleepforthismum, makes sense, especially your last paragraph, which is what I had in mind when thinking perhaps things are a bit different in a non-commercial setting (though of course, any builder is in fact acting as a business and therefore commercial, even if trading as a sole trader (though this one isn’t a sole trader)). I do think it’s a cash flow issue and I’m not willing to deal on these terms so if they won’t change it after we speak again, I definitely won’t be going with them. I have another builder coming round later in the week to quote for it and I’ve used him previously for something much smaller (fitting a kitchen). On that occasion he said: this will cost you X and take 3 weeks. He didn’t ask for any money up front, completed the job in 3 weeks, did a load of other bits around the house while he was there, and after the job was finished he invoiced for exactly the sum he’d quoted. So I trust him and would rather go with someone I know and trust. Some friends had suggested that “one of those loft companies” would be better because they do lofts day in day out and so could do it quicker and better. I’m not sure that’s the case.

Also some of the things in this company’s quote seem so inflated that it makes me wonder what else has huge margin on it. Obviously any business needs to make a profit, no issue with that, but for example this one has quoted £9500 to replace the combi boiler with a Megaflo. A plumber friend tells me you can get a really good Megaflo for £2k-£3k and probably about £1.5k-£2k to fit it, so they’re quoting a nearly 100% uplift on that.

@TizerorFizzyou’re right I think. As lawyers we do sometimes ask for money upfront - usually where the client is an individual we haven’t worked for before or a corporate entity with questionable credit rating or based abroad where enforcement might be harder. However even then, it’s “monies on account of costs” so we hold it in client account and then once the work is done, we tell client we’re going to invoice and ask for agreement to apply the monies on account against the invoice. Regulatory requirements make it that way, and obviously builders are not regulated.

I don’t work in construction law but the area I do work in has many parallels with construction contracts so I’m familiar with the structure of phases of work with payment obligations pegged to acceptance of milestones/deliverables and if these people aren’t willing to allocate risk on that basis then despite their good reviews I think they will not be the ones for me.

@Elektra1 Yes. You agree milestones. You pay in stages and might agree materials up front, but not an onerous contract like this. Ok they don’t know you but DH never got money up front. Yes, solicitors are regulated - builders are not. Try and have a look around. A good architect/technician will know builders. You don’t have to have a one stop shop. Any architect/technician could do a loft conversation.