Extension - Pre-payment for Materials

meggles

We would like to start work in a few weeks - it's a single story extension & extensive decking coming in around £80K.

We are about to sign a contract with our preferred builder, and he has requested materials pre-paid before work commences and then labour billed fortnightly.

The material bill is £50K.

It seems like a VERY high prepayment before any work has commenced.

Is this commonplace? I realize some of the materials (specifically the decking we've chosen) are on a 3 - 6 weeks lead time, and so I expected 'staged' payments. Ie 10 - 20% materials before starting and then labour & materials billed fortnightly.

What are other people's thoughts on this?

phill99

That would send out major alarm bells to me. If things are on a long lead time, then these will need to be ordered ahead. But £50k is a ridiculous amount to request. I would expect a staged payment for materials.

I think you need to do some serious due diligence on your builder.

Check at companies house for filed accounts. Also check for any CCJs, whether Directors have been declared bankruot in the past etc.

Furts

£80k is a lot for an extension to start with.

Let us play with figures. The builder will be VAT Registered so the work represents £66666 to him. This includes profit say of £10000-£15000. So say the work is costing around £55000, Half this between labour and materials. Hence, the total materials come in at £27500. This will be spread throughout the contract period. This material will be on account to be paid up to two months from delivery. The decking may be on a led time but this does not mean you have to pay for it until it arrives on site.

So all in all the scenario sounds extremely dodgy to me.

brightontraveller

Are they building it out of gold ?
Find another builder that % of advance screams nothing but trouble from the start,
Be prepared to pay in advance inline with agreed works schedule be it weekly, fortnightly, monthly etc any thing else tell them jog on ? Some clients do set up accounts with suppliers themselves if that’s your route keep on top of authorisations , spends etc and expect penalties if materials aren’t on site when needed…

Doozergirl

Oh no, no, no. Furts' breakdown is a really good one - it just demonstrates that the builder is a liar.

Apart from the fact that there is now way the materials come to £50,000. If anyone had £50,000 of building materials delivered in one swoop, you wouldn't be able to move for materials!

I'm quite pragmatic about these things but that screams cowboy to me. This builder is in financial trouble at best or an out and out crook at worst.

meggles

Thanks everyone! Yes, everything up to this point has gone well. The builder has good recommendations (one person we know personally), we've visited him on one of his sites (and it was clean, tidy, well ordered), and we've checked him out on Companies' House. How do I check out if he's had any ccj?

Never before was it mentioned that we'd be pre-paying for materials....

I feel that I need to give him a ring today to discuss, think through his logic. But I think the 'trust' we had has immediately eroded, not a good start.

My 'gut' is that he is having cash-flow problems and is looking to us to 'float' him for the next few months. As a wife of a tradesman myself, I feel sorry for his predicament, but I cannot nor will I put myself in the position to float him.

We've had several quotes - and all have come in around the same mark... Let me start another thread regarding the breakdowns to get input on price itself.

andrewf75

as others have said, this is an absolute no no. 80k for an extension is entirely possible, but materials would not be anything like 50k!
I wouldn't bother doing any further checks. Find another builder.

Stevie_Palimo

Yes as above posters have said steer clear, Also any decent builder will have a credit account so they can factor in some costs ie:- foundations require the concrete pour may be billed at time of purchase due to non builders yard supply, This and labour alone will not be very much money.


I'd personally look for a builder and find a compromise of paying it all in stages ie:-


£80.000 of work with foundations being dug and put in, A few thousand at the most, Wall height half way up again offer another payment and keep paying it as long as you are happy with both the quality and time taken to do the work.


Good builders who are worth the money will be happy to accommodate on this but it is about sorting this out from day one prior to anything being started.

meggles

Thanks guys... I've posted details in 'is this quote fair',

https://forums.moneysavingexpert.com/discussion/5322018

meggles

Builder just came round.

I told him that I felt £50K was quite high for materials & that I felt uncomfortable paying this amount upfront.

He said that he will pop through the material breakdown, and that the steels & specific grade of concrete are the expensive bit.

He said that he will break down the materials into 3 'lumps', the first being:

Sub-structure
Blockwork up to DPC
Oversite
Stone/blockwork up to Wall Plate

He would expect pre-payment for these before work starts. I asked if he would have credit at builders merchants, and he said he prefers not to have credit outstanding....

I'm a bit more comfortable now, but still not great...

Thoughts?

Doozergirl

meggles wrote: »

Builder just came round.

I told him that I felt £50K was quite high for materials & that I felt uncomfortable paying this amount upfront.

He said that he will pop through the material breakdown, and that the steels & specific grade of concrete are the expensive bit.

He said that he will break down the materials into 3 'lumps', the first being:

Sub-structure
Blockwork up to DPC
Oversite
Stone/blockwork up to Wall Plate

He would expect pre-payment for these before work starts. I asked if he would have credit at builders merchants, and he said he prefers not to have credit outstanding....

I'm a bit more comfortable now, but still not great...

Thoughts?

You know what we think!! You should not be using this builder. I don't like having credit building up either but my team cannot function without being able to call the builders merchant and get stuff delivered quickly so i have what I need. I also charge my customers in arrears so a level of credit keeps cashflow easy. NOT asking clients to pay for something they don't have.

He has money problems. Fact.

Steel is £140 odd a metre plus VAT on an average RSJ. I have recently ordered steels for a loft conversion on a house which is literally a mansion. I spent less than £2000.

Concrete in bags is as cheap as dirt, literally. Labour to mix it costs - but he's not asking for labour upfront. Buy concrete pumped (which is what I do as I don't save anything much by mixing on site) is about £100 a cubic metre plus VAT. On a 10x10 metre house build, poured footings would cost, hmm, £1500 plus VAT based on 600x600mm footings. Floor slab, another £1500, if that. For a house.

You have to dig the footings before you pour. The steels don't come for ages and are made in a few days.

Sorry, no. Do not hire him! You have people here in the trade who are telling you point blank to walk away from him.

I don't care if you pay him weekly. Nobody orders £50k in materials. No one. He is a liar.

Who is he working for now? Speak to them. Is their build finished?

He may have had a thriving business and happy customers but nothing is constant something is badly wrong right now.

I can't wait to see the breakdown. You need the full £80k broken down into chunks of money which are paid based on what is completed...

That means either
a) payment as and when an agreed item is finished.
b) payments on a regular basis but charged against the prices given and a percentage of what is completed. This is how an architect would oversee and sign off.