Want
to avoid falling out with your builder, or choosing the wrong person for
the job? A payment schedule for building works is key
Knowing when and how to pay your builder can be daunting. Is it in
your best interests to pay for some of the larger items in advance, for
instance?
Personally, I think that if your builder asks you for a large sum of money upfront to buy materials, you have chosen the wrong builder. With the exception of a small deposit, to secure a job within the builder’s work schedule, I believe no monies should be exchanged until a key milestone in the project has been achieved.
Setting up a payment schedule is a fair way to keep both parties appeased and to ensure you both know where you stand.
If your builder is working under a recognised building contract (i.e. a JCT Home Owner Contract) you’ll be protected. If you’re not covered by a contract, you should ensure you agree a payment schedule with your builder before work starts on site.
Professional builders are likely to have enough resources to get to the first scheduled payment, or alternatively, will procure materials on a credit account with builders’ merchants. If you’re asked for upfront monies, especially if it’s the whole amount or a substantial portion, be cautious.
I would suggest these rules be followed, where applicable, to drainage, ground floor slab, electrical first fix, structural steelwork and completion stages — all of these elements require a building inspection.
It is also good practice to retain 5% of the contract value, and release half of the retention at practical completion. To motivate your builder to return to fix any issues that may arise, make a list of any defects five months after practical completion, and send it to the builder. Give them a month to rectify the defects. If the builder fails to return, they are no longer entitled to the final retention payment.
There may, however, be instances where large deposits or payments are required for specialist items such as timber frame or made-to-measure items. To ensure there is a need for the payment, insist the builder provides a copy of the manufacturer’s terms and condition of sale.
My advice is simple: do not pay large amounts upfront, seek recommendations from previous customers, and if in doubt, find an alternative.
Personally, I think that if your builder asks you for a large sum of money upfront to buy materials, you have chosen the wrong builder. With the exception of a small deposit, to secure a job within the builder’s work schedule, I believe no monies should be exchanged until a key milestone in the project has been achieved.
Setting up a payment schedule is a fair way to keep both parties appeased and to ensure you both know where you stand.
If your builder is working under a recognised building contract (i.e. a JCT Home Owner Contract) you’ll be protected. If you’re not covered by a contract, you should ensure you agree a payment schedule with your builder before work starts on site.
Professional builders are likely to have enough resources to get to the first scheduled payment, or alternatively, will procure materials on a credit account with builders’ merchants. If you’re asked for upfront monies, especially if it’s the whole amount or a substantial portion, be cautious.
Creating a Payment Schedule with your Builder
On a typical extension or self build, the builder cannot continue past the foundation excavation until it has been passed by a building inspector prior to concreting. This can be used as a key milestone. In most extensions this is completed in a week. Only after the inspection is it safe, in my opinion, to make a payment.I would suggest these rules be followed, where applicable, to drainage, ground floor slab, electrical first fix, structural steelwork and completion stages — all of these elements require a building inspection.
It is also good practice to retain 5% of the contract value, and release half of the retention at practical completion. To motivate your builder to return to fix any issues that may arise, make a list of any defects five months after practical completion, and send it to the builder. Give them a month to rectify the defects. If the builder fails to return, they are no longer entitled to the final retention payment.
There may, however, be instances where large deposits or payments are required for specialist items such as timber frame or made-to-measure items. To ensure there is a need for the payment, insist the builder provides a copy of the manufacturer’s terms and condition of sale.
My advice is simple: do not pay large amounts upfront, seek recommendations from previous customers, and if in doubt, find an alternative.
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