Builder payment schedule - is this fair?

GoingOn30

Hi there

We're looking to get some building works done to our home and have found a local builder who comes with good reviews and a reasonable price for what we want done - their estimate is £20.5k plus VAT
They've sent through a draft contract and a payment schedule as follows: 

              Deposit                                                                 £  1,000.00  Plus Vat

              2 week prior to work commencement                  £  4,000.00  Plus Vat

              Day of commencement                                             £  3,000.00 Plus Vat

              Interim payments     x3                                            £  3,000.00  Plus Vat

              Final Invoice                                                                £  3,500.00  Plus Vat

Is it usual for a builder to expect over a third of the cost to be paid before work has even started? I'm happy to pay a deposit to secure our slot in the diary and understand there would be some monies needed to pay for materials up front but this seems very steep to me in terms of costs up front. 

But this is my first experience of using builders services so interested to hear from others what their experiences have been, thanks!

             

comeandgo

I’ve never had to pay upfront for any work and would not do so.  

GoingOn30

Thanks @comeandgo, another friend has told me they paid 25% up front so it seems this schedule isn't completely bonkers. We really like the builder and they have availability that suits us, so ideally I'd be looking to negotiate on his proposed schedule....but just want to see what others have been asked to pay to get a sense of what's reasonable 

tacpot12

I would look to pay him the interim and final payments via an ESCROW arrangement.

£4000 two weeks prior to starting seems too soon for me. The invoices for the materials he is buying for you job won't be payable for 30 days, so paying for most or all the materials needed for the job a week after starting seems fair, as he will need to order some stuff two weeks before, and he needs to be sure he will have the money in the bank to pay the invoices. So I would offer to pay £7,000 one week after it has all been delivered to your house.   

GoingOn30

Thanks @tacpot12 I hope he will be open to this idea. 
Interested to hear any other experiences of people who were asked to make payments up front and how much?

And one other question if anyone can help.....is the builder himself going to be liable for paying the VAT even before any work has been done? Is there any justification for him asking for these amounts + VAT in advance of any work being done?

brewthebear

Buy your own material at least that way your in charge I did that when building a house builder was not fazed at all If anything saved them the extra hassle

Doozergirl

brewthebear said:

Buy your own material at least that way your in charge I did that when building a house builder was not fazed at all If anything saved them the extra hassle

That confuses contract responsibility.  The builder is only providing labour and not responsible for defective or broken materials.   Becomes an issue if and when something breaks.  

Doozergirl

GoingOn30 said:

Thanks @tacpot12 I hope he will be open to this idea. 
Interested to hear any other experiences of people who were asked to make payments up front and how much?

And one other question if anyone can help.....is the builder himself going to be liable for paying the VAT even before any work has been done? Is there any justification for him asking for these amounts + VAT in advance of any work being done?

VAT is always payable on invoices.  You don't save it up for later. 

We only ever charge up front for bespoke products and special orders where we also have to pay up front as well.  

Stage payments should follow the work carried out on site to date, not arbitrary payments because the builder is too lazy to do the maths for you. 

There's no need to be paying 40% of a job before anyone has even picked up a tool at all if there is nothing bespoke.  

What is the job?  It will make a difference.  

EssexExile

The last time I had builders in it was nothing up front and three stage payments of £15,000 at set points, the last one when we were happy everything was sorted. That seems a lot of money to pay before he's even started.

alleycat`

I've done two major projects with builders.

First thing is to make sure the costs are set in stone (subject to you not going off piste in regards to changing specs, etc). Second is to have a bit of contingency money for time and "what if"/"o i never thought i could do x" moments.

Anyway how it works out:-

The first was not VAT registered so we did it where he'd open accounts to purchase various "bits" and we'd pay directly as delivered, etc.

We both ran "books" to make sure we tallied / agreed on what was paid / when.

He and his 2 workers were then paid every 2 weeks (to a set agreed amount - basically i was paying wages).

Last wages were paid upon completion (which was agreed at the start).

Project ran about 6% over due to what if's but ran pretty much to time.

The Second was done on a schedule similar to that supplied by yourself but there was no upfront payment.

The first outlay wasn't until materials started to arrive on site.

Final invoice was changed such that it split into two parts due to some "snagging" issues (mostly due to Covid and they had an upcoming job).

The project ran pretty close to budget - about 2.5% over but it ran late (mostly due to Covid).

My view is that it probably depends on the job as to what's fair.

The outlay/comittment on digging footings v's buying a 10K bespoke to size kitchen is a different animal in the builders overall exposure.

GoingOn30

Thanks @Doozergirl

The job is removal of an internal wall and putting in a beam. Putting in a bifold patio door (so perhaps this is made to order?), putting in a downstairs loo, refelting and tiling of a single storey roof, and putting in 3 velux windows into said roof. 

Am very happy to pay for the work as the project progresses but I feel I have been asked to pay too much up front here.