Paying deposit before builder starts working??

Asker

Hey guys I'm quite a novice and this might be totally normal practise so I'm just asking...

I've agreed a price with a builder to do a single storey extension for me. He is a nice enough guy tbh and his company is on checkatrade etc... We're about to go ahead but he says he will work in arrears, except for to start with will need a smallish deposit for materials.

Is it normal practice to ask for this?

I got another quote where the builder asked for the same thing.

Is it ok for him to ask for a deposit first?

misgrace

Yes, usually they ask for X amount upfront, then get paid set amounts in different stages of the work,, but you hold the balance back till you are satisfied with the work, and all the snags are completed.

Please get written receipts everytime you hand over money, they might ask you for some cash somewhere along the line, thats quite normal, but get them to sign something, just incase.

Asker

Oh ok thanks misgrace!

My mother havin had building work one 10 years ago is saying it's abnormal but maybe that's just the builder she had and perhaps times were different then.

He's asking for

20% upfront
30% after brickwork done
30% after roof done
20% on completion

It's for a single storey rear extension including room and bathroom including decoration.

Does this all seem ok?

jennytiger

20% seems fair

Remember he could order some matierals and book his time in to do your job and you could cancel

Leaving him out of pocket with no work booked in

Cknocker

20% upfront, I would say no chance!

It is not normal practice to pay for building work upfront, the argument of paying for materials is a non starter, any decent builder will be buying materials on account, on at least 14 days terms but more likely to be 28 days.

The intervals you pay at is between you and the builder, it could be weekly or monthly, 0r anything else, but if you were operating under a contract you would only be paying for work done and value of mateerials "ON SITE".

If you pay 20% upfront and the guy goes bust, then what?

Johnhowell

We have just had some building work done and signed a Minor Works contract from JCT. NO deposit, every 4 weeks he puts in an invoice for work done in the period minus 5% retention.

Once the works are complete - the final invoice includes the works carried out in the last period and half on the retention. Then 2.5% of total price is retained for 6 months.

If the work is lots of money (thousands) then get a contract signed. If the builder does not want a contract then walk away and find one that does. It is for your protection and his.

Have you got an Architect to do drawings, spec and quantites or like us write out a full Schedule of Works - that details exactly what you want the builder to do in each and every room. Brickwork to match existing, tiles to match, windows doors to match existing? Will he do the decorating or only up to plastering? Agreed colour scheme if decorating. Planning Permission granted and Building Control been consulted?

Agree in writing any changes to the Schedule, get a price change in writing. This will change to fixed sum of the works.

Good luck,
John

dander

I'm also about to have a single storey extension built. I've paid 10% deposit and I'm paying the rest in 4 stages - I can't remember offhand what the exact stages are but they're not dissimilar to what you're builder's suggesting.

We both signed a contract and a receipt to say I'd paid the 10%, so I feel pretty comfortable about that.

iamcornholio

Some small builders can not afford to lay out for lots of materials on several jobs. Bigger builders may have the resources.

There is a risk from the builders point of view, so if you help him out wih cash flow, you normally get rewarded with a cheaper quote.

If you are worried, offer to make cheques out to the merchant for materials, or pay COD on delivery for the initial deliveries (concrete, bricks blocks) to help him get started

But watch out for % stage payments as with some jobs .... lets say at 50% of the build, it may only have cost 30% of the job cost - so don't pay too much too soon.

In the example above, 80% of the price would be paid when the roof is done, but there is still lots of work to be done - including potentiall expensive bathrooms or kitchens

Try and trust the builder and pay on time, but don't pay too much too soon

Cknocker

I'd agree with that, there is no problem in helping a builder with payments for materials if needed and I'd certainly agree with the comments on stage payments.

leveller2911

Cknocker wrote: »

20% upfront, I would say no chance!

It is not normal practice to pay for building work upfront, the argument of paying for materials is a non starter, any decent builder will be buying materials on account, on at least 14 days terms but more likely to be 28 days.

The intervals you pay at is between you and the builder, it could be weekly or monthly, 0r anything else, but if you were operating under a contract you would only be paying for work done and value of mateerials "ON SITE".

If you pay 20% upfront and the guy goes bust, then what?

Sorry but I don't agree.
I have been self employed for 22yrs so I can speak from experience.
I make and fit joinery and don't generally ask for a deposit ,however lots of builders I know do ask for % deposit.For one thing the builder has put time by to do the work and as such the customer is less likely to mess the builder about with start dates or even cancel the work.
You could turn the argument on its head and say if the customer won't pay a percentage for materials up front then maybe they have no intention of paying when the work is complete.I know from 1st hand experience of someone not paying the builder once work was completed,they actually went out and brought a new car with the money.

Lastly if the builder gets materials money up front and the customers doesn't pay for the full work when completed at least the builder can pay for the materials and saying all builders have accounts of 14-28 days is a red herring, the fact is the materials will have to be paid for at some point. 20% is reasonable in my opinion.

Its all very well saying "what happends if the builder goes bust after paying them a deposit, what happends to the builder if he finishes the job and the customers gone bust?, works both ways.

Cknocker

Don't agree, I have worked bothboth contractor side as a site/project manager and client side as a pqs/project manager - and I work with small 1 man bands as well as large companies.

On contractor side i would never expect it and on client side wold never entertain it, every business at the end of the day should have some working capital.

The fact the materials are paid for at a later date is not a red herring, how can a builder be desperate for money to pay for materials that are not due to be paid for, or is the money to pay for materials from his last job? If so thats a worry in itself.

Find me a standard construction contract that allows for a deposit up front, JCT,NEC and ICE forms certainly don't.