paying builder upfront !!

sam1970

I am starting a house renovation project worth over £100,000. I chose my builder who seems a decent guy and had good references. The issue now is that he is keen on being paid upfront to cover his costs. Although the payment will be in stages, the payments will always be in advance of work. How to tackle this issue? I do not think he is on a mission to rip me off but I do not want to take an un necessary risk. The payments will be by bank transfer to an account in his company name.

Aylesbury_Duck

What an appropriate signature.

Do some more research. Entering into a £100k+ project on the basis of someone seeming a decent guy and having good references is taking a big risk.

theGrinch

You already know it smells fishy. Do it at your own risk

Kiran

What does the contract say?

parking_question_chap

If there are bespoke items at an early stage it makes sense, in case you pull out he needs to cover himself. But I would have thought at an early stage it would just be excavation etc.

Have you actually been out to see the references and verified them? I sure would on a £100k project.

sam1970

Thanks for the replies. Yes I have been to see his work on a friend's house. There is nothing bespoke but he is not happy to buy material on his account. I offered to pay for the material directly but he declined. There is no contract, just a written quote showing the payment stages and amount of work to be done at each stage.

Doozergirl

No.

Everything up front is a clear sign of money problems and simply means that he does not have the credit facility, not that he doesn't want it on account.

Not all builders can carry the cost of a big project, but if labour is paid in arrears and payments are staged at 14 day intervals based on the percentage of each part of the project completed, filled out in a simple spreadsheet, then he only ever needs to carry two weeks of material costs.

If he insists on some upfront payment, then just a small deposit at the start (say 5% if that) would cover this through the entire project. I'd suggest taking that back over the course of the project so that you end uo getting that back and turning it into a 5% retention.

I'm not entirely convinced that even that is a great idea when the suggestion of paying everything completely in advance is so very out of the ordinary. If he is that bad with money then you might find that your 'up front' payment is actually covering the completion of another project and that his next customer's up front payment is expected to complete your project. Guess what happens when there is no next project lined up or the next customer is as savvy as you need to be?

VAT payments are only paid to HMRC every three months and traders have five weeks after quarter end to pay, so there should always actually be something in the bank account.

He may be a perfectly good builder, but that doesn't make him a good business person.

System

Don't do it, doesn't matter if he's recommended - large sums of money up front and not wanting you to buy materials directly say this is someone who isn't good at managing money.
Use a formal building contract, 100k project is somewhere to limit your risk, if the builder doesn't want a contract then again, another reason to wonder...

Sicard

Bank transfer is one of the riskiest ways to make payments.

cddc

We had this with a builder who we knew was good at his job but an utterly hopeless businessman. We agreed to pay him weekly as we went and that worked out well.

As Doozergirl says, you do not want to get to the stage where he is relying on a big deposit from his next customer to get your job finished.

sam1970

thank you for the replies. I feel happier with weekly pay but how do you plan it? how much to pay every week especially we dont know exactly how many weeks he will need to complete the job (16-20 weeks)