Extension - Pay for materials directly

sujman

I am considering having an extension built this year.

As part of the arsenal of 'protection' against various eventuallities, I am considering paying for any and all materials that would be used on the project myself and on credit card.

My logic is that, if I pay only the builder (as you normally would do and some of the costs are materials related) and he goes "bust", then I could lose all the money and have not even the materials so that another builder could take over the project.

However, if I pay for the materials myself, then they are my goods. Furthermore, having paid on credit card, I should be due protection under Section 75.

Does this sound like a sensible idea? Indeed, should I be entitled to a discount from the builder as he is not having to fund the costs of the materials?

ormus

its certainly an idea to protect yourself. but be aware of possible problems.
materials must be on site when required.
you are not entitled to anything. the builder may quote you less than labour only, or they may not.
most builders merchants have a discount/account scheme, for high value buyers.

sujman

Thanks.

As a minimum, the way I expected it to work would be along the lines of -

Say I get quoted £50,000 all in. At the point the builder would normally go to his merchants to get supplies, I simply am there to pay for it. So in theory, I am using his discounts with the merchants.

Between what I pay to merchants and what I pay the builder, the total cost to me is still £50,000.

I am not looking to source my own materials, just use the builders own intended supplies but then step in at the time of purchase (if not the exact moment, then within a few days of the order being placed by the builder).

I guess "entitled to a discount" was the wrong phrase to use. It may be a negotiating point on price, it may not - I'll have to see at the time.

Hmmmm... the VAT shouldn't be an issue should it... either way I get passed on the full cost (incl VAT) of the matierals so paying direct shouldn't make a difference....

recyclingbox

on my recent extension build - i contracted a build who charges a daily rate for labour. he told me what materials he would need and when i then rang the builders merchant, paid by credit card (there's your protection) and arranged delivery to suit my builder. dead easy - and the builder wasn't making a profit on the materials as so many do.

It is also a satisfying way to work - you are in charge and you know what you are paying for. obviously requires some knowledge of the building stages and finding a contractor you can trust.

Oh, and make sure all excess materials are left on site. wouldn't want his next client to benefit.....

daveyjp

If the £50,000 is anywhere near the level of what you may be spending I suggest a contract between you and the builder.

No builder should ask for payment of materials up front as they all get 30-60 days credit from the supplier - they should be paid amounts based on the work done and a contract would detail this. For a bit extra cost employ a QS who will value the work done every month so that way you are only ever paying in arrears.

Stevie1

sujman wrote: »

Thanks.

As a minimum, the way I expected it to work would be along the lines of -

Say I get quoted £50,000 all in. At the point the builder would normally go to his merchants to get supplies, I simply am there to pay for it. So in theory, I am using his discounts with the merchants.

Between what I pay to merchants and what I pay the builder, the total cost to me is still £50,000.

I am not looking to source my own materials, just use the builders own intended supplies but then step in at the time of purchase (if not the exact moment, then within a few days of the order being placed by the builder).

I guess "entitled to a discount" was the wrong phrase to use. It may be a negotiating point on price, it may not - I'll have to see at the time.

Hmmmm... the VAT shouldn't be an issue should it... either way I get passed on the full cost (incl VAT) of the matierals so paying direct shouldn't make a difference....

Actually no, many builders add a mark up to the cost of the materials to them. It is very easy to find out and if you're a bit savvy you can save a lot of money by buying your own mateials. In fact, you can save even more money by getting sub contractors to do separate parts of the job, as we are. It is more than 50% cheaper than through a do-it-all builder and no more hassle.

sujman

daveyjp wrote: »

If the £50,000 is anywhere near the level of what you may be spending I suggest a contract between you and the builder.

£50k is what I am looking at as a minimum cost for what I want. A contract is certainy top of my list, there is a free one available on the FMB website and I did consider paying £200 odd (hopefully no much more) to get a Solicitor to cast their eye over it.

I am planning a two storey extension, approx 5m by 4m, with significant internal reworks (new kitchen, bathrooms, extra bedroom etc etc).

I like the idea being able to save money by sourcing and purchasing materials myself, as I do fancy myself as a "deal hunter".

If it can be found on the internet, I'll find it!!!

But considering the size and complexity of what I am planning, I was resigned to accepting the best way forward is got get it all done by one firm and not have the additional hassle of having to organise sub contractors myself (expecially since I dont have good contacts in that area).

The only way I guess I can save on materials is get the builders to list out what materials they need and the costs at the quote stage and then go out and buy cheaper where possible and get the difference knocked off the total owed.

vaio

Don’t see any reason why you can’t pay direct for materials but it sounds like a lot of hassle and I don’t really see any advantage as with a proper contract you would always be paying in arrears anyway (and less a retention, the old RIBA minor works had 10% with 5% released at practical completion and the final 5% after the 6 months defects liability).

Either agree stage payments or get a professional in to do monthly valuations.

Stevie1

sujman wrote: »

The only way I guess I can save on materials is get the builders to list out what materials they need and the costs at the quote stage and then go out and buy cheaper where possible and get the difference knocked off the total owed.

Get a quote as detailed as possible from builders, tell them you want a full price breakdown inc. materials etc. Some will just give you a rough breakdown, normally by work stage, others will send an excel spreadsheet which is handy. Also, get as many quotes as possible. We got 6 or 7 and the variations in price were staggering.

Read very carefully what is quoted for interiors if you are expecting the builders to do the work, normally the bear minimum with the cheapest basic products is used (e.g. 2 electricity points in a kitchen, cheap nasty bathroom suite, bog-standard kitchen etc.). Everything on top will be an extra at a £££