How best to pay the builder?

[chopc]

We are having some major building works done worth approx 132K for the build and an additional 50K -70k possibly for client supply items eg flooring, kitchen, windows, doors, bathroom

Our builder has done a schedule of payment which means he will have most of the money in the first month. I can understand some reasons eg steel costs a lot of money etc .

After the nightmare a fellow mumsnetter has had with her builders, what is the best mode of payment? I guess even if we pay by credit card, we are not covered if the work is not done.

I do know that as the work will be done in stages, unless it's actually done, no payment will be made.

Thanks in advance! Builder has had good reviews and recommendations and a good friend has used him on and off for over 15 years

For that much money, please please use a proper JCT contract. Payment is made only for work done. A decent builder has credit accounts and enough cash in the bank to cover materials up front. There is also provision for advance payment for expensive items but this specifies that when you pre pay, those materials belong to you, which protects you in case the builder goes bust.

How long is the build going to take?
I’ve always paid in stages for large jobs in arrears and I buy my own materials. If money is tight for the builder for wages for example you pay at the end of every week what the week cost in labour.
Materials are normally on account paid the following month except ready mix concrete which has to be paid for before it’s delivered.
If the builder has no credit at the builders merchant you can set your own account up for the builder to purchase your building materials on. Individual suppliers for example the steels just pay the supplier direct.
I’d be worried if the builder couldn’t get materials on account.

Sounds similar to our build. We've signed a contract. Paying a chunk up front then smaller £10k payments monthly, with a final amount when all finished
Good luck!

Yes, that other thread is awful, poor woman.

I’d start by researching the feck out if the builder. Search at companies house to see if he’s had past directorships and whether those companies have gone bust. I don’t think I’d use anyone who couldn’t provide evidence of membership of a professional guild and also insurance. I’d probably Siri get the contract drawn up by s solicitor for that amount of money.

also, not Siri

And yes, if a builder can’t get credit on a trade account purchase materials that would be a red flag. Pay for work completed. I don’t know about you, but I get paid in arrears - should be no different for builders.

Thanks for all the advise. He has all the necessary insurance - otherwise our buildings insurance wouldn't cover the build.

Yes he will only he paid for the work completed

What I was getting at was how best to pay him - credit card? Cheque? Bank transfer?

We had an extension done fairly recently. Not as much as yours op but still £50k. We paid £500 deposit and didn’t pay another penny until all of the ground works was done. Probably about £15k. The we paid another installmeng when contractors (electricians, plasterers etc) we’re coming in but that still left about £20k to pay when it was complete.

Invoice after works. Bank transfer once invoiced works are agreed as complete. Invoice number as reference on bank transfer.

I'd be tempted to agree a 5% retainer to be paid six months after completion, on a build at that cost.

Had a similar size extension done. Husband wrote the contract up. In essence, no money up front at all (all the decent builders were happy with that). Then divided into 2 week payments over the anticipated duration of the contract. 20% held back pending:

completion of the contact,
issue of the final certificate
Satisfaction of the client
14 day period after issue of the certificate to ensure all snags were visible and rectified.

The builder was excellent. The ones I spoke to who were on recommendation, non expected money up front. Architect also advised no money up front either and also the 20% holdback

I would pay by bank transfer but it might be worth letting your bank know in advance otherwise they might think it's fraud if large sums of money suddenly start being moved from your account.

I doubt your builder will want to be paid by credit card. Not many builders would as they would incur bank charges to have that facility.

Thanks for all your advise