Paying your builder, when did you?

[sweetkitty]

We're about to start an extension, just starting getting quotes. One builder we really liked (who quoted us for another extension we ended up not starting long story) wants a third upfront, alarm bells ringing time.

This is what I thought; a third payable when foundations laid

Third payable when wind and watertight

Third payable when complete minus 10% payable when final building cert issued

Does that sound like the norm? The other builder has done work for a friend and she was delighted with it said he worked so hard. But I'm not prepared to give him such a load of cash upfront.

Build is a two storey side extension and a rear sunroom. Upstairs a new bedroom plus doubling the size of existing boxroom, downstairs another bedroom and utility room plus sunroom/playroom 40-50k

Any help or advice would be great TIA?

Could you offer him a smaller amount upfront? Enough to cover bricks, etc?

Nope doesn't sound right at all. DH is a builder and I've just asked him and he rolled his eyes!

The amounts paid are usually dependant on how long the build is and yours sounds quite a size. So - you need to sit down with him and plan in advance on the key stages - and thirds sound like quite large chunks. If the foundations aren't right for example - is he going to demand more money from you to put them right? If so - you've started to pay more out before you've have that bit completed.

Obviously he'll need some money upfront - but not a third! Most of his stuff will be coming off trade accounts (you must chack that this is the case - if not - then worry!) Break down the costs with him in the stages - and these often fall around the times you need to have a buidling inspector come round and approve the work. Make sure you're there (or someone you trust) when they come round.

I would say that you need much more clarification on the timings / stages from him and work the money around these because these are the times that you all stand back, assess and agree that all parties are happy with the work. This then prevents work being done on top of any problems and money getting out of control.

All this must be written into a contract. A good builder will have a good contract because both of you need to know where you stand.

We're coming to the end of a build & we have NEVER paid a penny up front & wouldn't even consider it!

DO NOT part with a single penny before you see the work.

Our builder did some work, only then we paid for what he did.

Now we have the plasterer/tiler/window man finishing their bits & they're all cash in hand & they won't take a penny from us as they haven't finished! We want to pay them so we can get rid of the cash then I can spend what is left on my furniture!

Totally agree with the others, with my builder we didn't have a contract, he converted our double garage into a playroom and a store at the back.

He had done both single storey and two storey extensions for 4 of my friends and I had chewed his ear off on his tea breaks about converting my garage and I hadn't even bought the house

He did it that he started work on the Monday, then I paid him £3k every Friday depending on how much he had laid out. That way I got to see the work and paid him for it.

He had trade accounts so had credit with them.

I also second being there when the building control officer comes out, mine came out 3 times, once at the start, mid way and at the end to sign off on it. He was impressed as my builder had done extra stuff above and beyond building regs.

Have you used an architect to design your extension? If so then ask them about contracts and payments etc.

If not - this is a useful little home owners contract - version HO/B would be suitable.

Can't see why he needs cash upfront - he will have trade accounts so it's mostly labour costs in the first few weeks and I can't see why he would need so much. In our case the builder charges 20% VAT which we pay upfront but he submits quarterly so he does effectively have some cash in lieu. One builder we were going to engage asked for money up front. He got shirty when we told him that we were not keen - we saw a side of him that I wasn't as pleasant!

We have just finished a build and my advice would be to get costs detailed, yes I know everyone says this BUT I really wish we had. We paid our builder weekly - a proportion of the total build each week. That part was fine but towards the end he became difficult over what was in scope and I wished we had a water tight contract or a detailed scope of what was included. He was suggests he needed extra money for some details that were on the plans so we did resolve it but it was stressy.

Not wanting to be the pessimist but it's worth while making the assumption that you will have a financial dispute and then work backwards to ensure everything is documented.
We found that when the builder started to run out of work elsewhere he was keen to charge us for work already in scope.
My friend had used the same builder and she didn't have an issue but she also had a water tight contract.

Wonders on to agree with most of other posters
Third after footings
Third when weather proof
Third after completion
You may want to include financial penalties for over run on schedule, to ensure they don't up and leave for two weeks
Also discuss exactly what is included, and any risks
Eg extra underpinning not included in quote
Reinforced roofing beams not included in quoted etc...
Goodluck
Also if there's any equity in house now, could you sell for a profit and get a bigger house without the risks of an extension

Don't expect the increase in value of house match what you've spent!

Agree with others do NOT pay upfront - if he demurs, find another builder with a trade account. Always be in the position of owing him money, or you will be a lower priority than his other jobs. Also, I agree you must document everything as if you were going to court - just keep everything business-like.

My dh has a building company and he always submitted invoices at various stages of a job as agreed with the client. However in the last year or so he is so fed up with people not paying at agreed stages that he now asks for a % before starting a job. Sorry but I get so pissed off with people criticising builders and not realising that clients can often be shit too and find it hard to part with money even when a contract has been drawn up and signed. It costs a lot to take a bad payer to court as well. Why not ask why he wants money up front - maybe he has been shafted as well

Trading standards say to be very wary of builders asking for up front payment. It is not professional and suggests a lack of financial stability.

A more common arrangement is 2 weeks in arrears but for that you need a detailed pricing schedule and be able to assess what percentage complete each item is at. Then deduct 5-10% retention to be held until practical completion. The builder then submits the account and you have 2 weeks to pay.

If that sounds too complicated a staged payment sounds ok but i wouldnt pay out more than 50% for just wind & watertight. Although it sort of depends whether finishes and decs are included and whether inc kitchen and bathrooms etc. Maybe simple rooms without finishes would mean you had spent 66% by roof on.

Anyway say no to upfront and suggest your preferred payment plan. If he says no then steer clear. Good luck.

I've had loads of work done on my house and the only builder who wanted paying 1/3 up front 'to buy materials' was the cowboy who did a crappy job, never bothered to finish it, hid loads of rubbish in the pipes and disappeared when I threatened small claims court. When I've mentioned this to other builders they have always said never pay anything upfront and a decent builder wouldn't ask.

If you're borrowing money check what requirements your lender has, particularly if it's your mortgage lender. Some won't give you the full amount in one go, but have you draw it down as needed based on valuations of the work to date certified by a Surveyor (RICS member) or Architect (RIBA+ARB member). Some will demand that you give them a copy of the contract showing the price breakdown and valuation schedule.

2 storey extension plus total renovation/structural alterations - 6 figure contract value. No deposit upfront. Invoiced monthly post assessment of work to date. Minor works building contract with nominal % retention payable 6 mths post completion. (Nowhere near 10%!) I cannot stress the importance of selecting an established builder who will be worth the slight cost premium - your architect should be able to give you a list of reputable builders. Do your homework and check them out. My expensive architect has proved to be worth his fee wrt to contacts with the planning dept, structural engineer, building control and introduction to a fantastic (scarily efficent) builder. BTW, try to spec as much as possible pre-quotation and aim to fix as much as your costs as possible. An experienced builder will tell you whether your provisional figures are realistic or not (our architect helped us with those and then our builder adjusted them slightly before we even selected them). HTH

Thanks for all your advice even more confused now

Spoke to this one builder yesterday and he said he would take me to see an extension he's doing just now and he's done one for friends plus we don't need to give him anything upfront.

This is our second go at an extension, the first time the architect gave us a rough price but once we started getting quotes it was 75k+ so we decided that was too much plus the stress of building work and 4 DC.

That architect died so we now have a new architect and a smaller extension. When we looked at moving for anywhere we liked it was 100K for basically another bedroom and a garage so we decided to build the other bedroom and the garage here instead.

Most of the finances we have may have to borrow 10K, am not looking for it to make money, the main reason is for extra space for the DCs.

For any work we've had done, we've always paid in installments with the final one at the end when the work is completed. Also did this with a reputable loft conversion company too. You do need to be very careful but it doesn't always mean there is something underhand going on.

It's stressing me out so much already and nothing's even been started.

Ah so you have an architect - they really should give you some help here.

I would never leave a client adrift like that even if I had only been contracted to prepare basic planning / building regs drawings.

As I mentoned 'upthread' I would strongly recommend you use a recognised form of contract - the JCT Home Owner Contract is designed specifically for your situation and is quite easy to use.

Most reputable builders are familiar with the JCT family of contracts - if yours is not then I would ask more searching questions about his general competence.