Section 75 - advice needed for house build

rl290

Hello MoneySavingExperts!

I am currently deep in a very fortunate and very stressful project to self build a new family home. Before you ask, the answers to all of your grand design bingo questions are "yes". My wife is pregnant. The build has been delayed until after baby is due. We have fallen out with one contractor. The budget is out of control. The project is otherwise progressing well 

I am here to humbly check whether my plan to benefit from Section 75 protection is correct. I have read everything I can about the topic, including in these forums, but I am just looking for reassurance before a big purchase. 

• We are about to place an order for our external windows and doors.

• There are a lot of very big windows at a good spec, so the cost is eye watering. For the sake of simplicity, let's say there are 15 windows at £3k each = £45k.

• The company we are paying and will be contracting with is a UK Limited. I will be contracting and paying directly. The company is well referenced and has done several high profile projects. (Though not relevant for this question, I think, I note that the actual manufacturing and main company operations are in eastern Europe. A very respectable operation, which my architect is visiting, but this is why I am being extra cautious.)

• I have agreed with the supplier that I can make some / all of the payment via a credit card, so that I have the reassurance of Section 75 protection and chargeback. They are confident it won't be needed, and their willingness to set up a credit card payment service just for me demonstrates they are serious.

• Section 75 only covers for items up to £30,000. While I believe my order should be seen as 15 separate items at £3k each, I do not want to leave the argument open that this is "one package" that exceeds the limit.

• So, I will ask the supplier to split the contract into two completely separate agreements of £21k for 7 windows and £24k for 8 windows.

• Next, I will use two different credit cards, one for each contract. E.g. a barclaycard for Contract A and a virgin money card for Contract B. The intention is to avoid a situation where I use one card for everything, and the credit card company then argue that Contract A and Contract B are for one single "item" (a package of windows) which has been split up, thus exceeding the Section 75 £30k limit.

• Finally, I plan to make the first instalment payment by credit card for each contract. This is intended to lock-in Section 75 protection for the whole contract. The future payments may be made by credit card or bank transfer. (I believe credit card is preferable, as it enables chargeback on the full amount also?).

Thank you for your patience in reading to here, and I am extraordinarily grateful for any thoughts or feedback.

I note that the issue is one that pops up for self builders and renovators a lot. There is a great forum called Buildhub for people going through building projects... but there is very little information about Section 75 there. In fact, the answers to most posts just quote moneysavingexpert! So, once I have got some advice here I will post it onto the Self Build Forum, to help share the knowledge. And knowledge is power.

Thank you,
R

DullGreyGuy

Re your final bullet... card is preferable due to chargeback, can be debit card, credit card or charge card.

Ultimately it's an argument if it's really 1 "item" costing £45k and therefore outside the limit or if it's really individual items. There is at least 1 Financial Ombudsman case where people have tried splitting the cost of a new kitchen in similar ways and unfortunately for you 1) the customer didnt do a good job of explaining/rationalising it and 2) the ombudsman in that case accepted Design and Supply were two separate services they didnt accept that splitting Supply into two made it different services. I dont remember the case well enough but think they split the payment and invoices but not necessarily the contracts. 

If you think Section 75 is rarely spoken of then S75a really is going to be hens' teeth times. If the window supplier were to have the facility to provide credit (think the Black Horse or Barclays credit when you go to a furniture/sofa shop) then S75a would apply to that which has a limit of £60,260 and so your order would be within its scope. 

S75a is almost as strong as S75 but does require you to have attempted to deal with the supplier before switching to the creditor. 

born_again

I personally think you are going to struggle, as they will look at this as a whole project. Such as a house build.

You really need to speak to your card provider/s on this for their take. Do tell the whole story on what you are doing, as if they find out, then any claim will be out of the window (no pun intended)

https://www.financial-ombudsman.org.uk/consumers/complaints-can-help/credit-borrowing-money/goods-services-bought-credit

Grumpy_chap

I think this is one contract for £45k and the issues around splitting the paperwork / payment across two cards won't achieve the objective that the OP desires.

It may well be 15 windows at £3k each (average) but, one assumes, that price already includes some volume benefit from the supply and install contractor.  If the OP were to instruct just one window, then the cost would be greater than £3k.  It is only by instructing the whole project that the average price comes down to the price point it is.

rl290 said:

Hello MoneySavingExperts!

I am currently deep in a very fortunate and very stressful project to self build a new family home. Before you ask, the answers to all of your grand design bingo questions are "yes". My wife is pregnant. The build has been delayed until after baby is due. We have fallen out with one contractor. The budget is out of control. The project is otherwise progressing well 

I am here to humbly check whether my plan to benefit from Section 75 protection is correct. I have read everything I can about the topic, including in these forums, but I am just looking for reassurance before a big purchase. 

• We are about to place an order for our external windows and doors.

• There are a lot of very big windows at a good spec, so the cost is eye watering. For the sake of simplicity, let's say there are 15 windows at £3k each = £45k.

• The company we are paying and will be contracting with is a UK Limited. I will be contracting and paying directly. The company is well referenced and has done several high profile projects. (Though not relevant for this question, I think, I note that the actual manufacturing and main company operations are in eastern Europe. A very respectable operation, which my architect is visiting, but this is why I am being extra cautious.)

• I have agreed with the supplier that I can make some / all of the payment via a credit card, so that I have the reassurance of Section 75 protection and chargeback. They are confident it won't be needed, and their willingness to set up a credit card payment service just for me demonstrates they are serious.

• Section 75 only covers for items up to £30,000. While I believe my order should be seen as 15 separate items at £3k each, I do not want to leave the argument open that this is "one package" that exceeds the limit.

• So, I will ask the supplier to split the contract into two completely separate agreements of £21k for 7 windows and £24k for 8 windows.

• Next, I will use two different credit cards, one for each contract. E.g. a barclaycard for Contract A and a virgin money card for Contract B. The intention is to avoid a situation where I use one card for everything, and the credit card company then argue that Contract A and Contract B are for one single "item" (a package of windows) which has been split up, thus exceeding the Section 75 £30k limit.

• Finally, I plan to make the first instalment payment by credit card for each contract. This is intended to lock-in Section 75 protection for the whole contract. The future payments may be made by credit card or bank transfer. (I believe credit card is preferable, as it enables chargeback on the full amount also?).

Thank you for your patience in reading to here, and I am extraordinarily grateful for any thoughts or feedback.

I note that the issue is one that pops up for self builders and renovators a lot. There is a great forum called Buildhub for people going through building projects... but there is very little information about Section 75 there. In fact, the answers to most posts just quote moneysavingexpert! So, once I have got some advice here I will post it onto the Self Build Forum, to help share the knowledge. And knowledge is power.

Thank you,
R

km1500

it isone contract - you know it and the cc company (s) will know it !

one chance is to wait between ordering the two lots of Windows so for example a six-month gap

rl290

Hi KM1500,

How will the cc company "know it"? Do CC companies share details on their Section 75 claims with one another, across companies and relating to different individuals? They will simply be presented with a contract, in my name, for goods I have paid for, within the S75 limits. My wife's card co will receive a different set of documents, in her name and for a different date and items. I am genuinely confused about how they "will know it"?

As for what I think, I am genuinely not certain, which is why I am here. Credit card companies sometimes seem keen to separate items in Section 75 cases (to bring each item down below £100, and dismiss the claim) - I am applying the same logic here, but clearly it is murky. In buildhub, many people say they have done this to protect their money. But it is (thankfully!) rare that anyone needs to invoke Section 75. So actual cases on this are lacking.

Good idea about leaving a big gap between contracts. Unfortunately, 6 months won't work with my plans, but something more modest may work.

I now feel confident that:

- Chargeback will be an (imperfect) option (obviously it can and does fail, but it is open to try). Thanks DullGreyGuy for the additional details.

- Section 75 is clearly murky. Born_again's idea to be open and chat to the credit card companies is an excellent one, which I will do and document. (And I will report back next week)

- Thankfully the supplier is well referenced, seems to be very solvent, and has been operating for a long time. So, hopefully we never find out whether Section 75 is applicable or not.

Now for the next problem: seems like a bunch of payment providers break the chain and may invalidate Section 75 claims in any case.. lot's written on this. Urghhhhhhh...!
https://www.moneysavingexpert.com/news/2017/04/revealed-section-75-credit-card-protection-may-fail-due-to-payment-processing-loophole---shoppers-beware/


Thanks again all, appreciate it!
R

the_lunatic_is_in_my_head

The regs seem to state
(b)so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000] [F4, or]

So how is buying 13 windows any different to buying 13 pairs of trousers if the windows are itemised on the invoice? 

My understanding was if the trousers were £10 each S75 wouldn't apply? 

Okell

the_lunatic_is_in_my_head said:

The regs seem to state

(b)so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000] [F4, or]

So how is buying 13 windows any different to buying 13 pairs of trousers if the windows are itemised on the invoice? 

My understanding was if the trousers were £10 each S75 wouldn't apply? 

Yes.  The wording seems quite clear that it applies to individual "items" and not to any "overall contract value".

I've certainly seen instances on here dealing with what was obviously a single transaction exceeding £100 in total, but because the invoice was broken down into items costing less than £100 each, the OP has been told that s75 would not apply.

Which view is correct I'm not 100% certain, but the credit provider can't say "heads I win, tails you lose".

timjim

the_lunatic_is_in_my_head said:

The regs seem to state

(b)so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000] [F4, or]

So how is buying 13 windows any different to buying 13 pairs of trousers if the windows are itemised on the invoice? 

My understanding was if the trousers were £10 each S75 wouldn't apply? 

Surely the cash price must exceed £100 not "not exceeding"

Okell

timjim said:

the_lunatic_is_in_my_head said:

The regs seem to state

(b)so far as the claim relates to any single item to which the supplier has attached a cash price not exceeding [F2£100] or more than [F3£30,000] [F4, or]

So how is buying 13 windows any different to buying 13 pairs of trousers if the windows are itemised on the invoice? 

My understanding was if the trousers were £10 each S75 wouldn't apply? 

Surely the cash price must exceed £100 not "not exceeding"

No.  The wording quoted - "a cash price not exceeding £100" - is where s75(1) does not apply, not where it does.

(You need to read the whole wording of s 75(3)    Consumer Credit Act 1974 (legislation.gov.uk)

DullGreyGuy

rl290 said:

How will the cc company "know it"? Do CC companies share details on their Section 75 claims with one another, across companies and relating to different individuals? They will simply be presented with a contract, in my name, for goods I have paid for, within the S75 limits. My wife's card co will receive a different set of documents, in her name and for a different date and items. I am genuinely confused about how they "will know it"?

You are asking the bank to put their hand in their own pocket and pay you over £20k... they are going to ask questions.  They're going to ask about the overall project and its costs, maybe have a look at the plans. It seems fairly simple for them to work out the project doesn't have just 7 windows and so will start asking questions about the supply of the other windows. Even our little starter home had 9 windows