Paying deposit before builder starts working??

A question about : Paying deposit before builder starts working??

Hey guys I'm quite a novice and this might be totally normal practise so I'm just asking...

I've agreed a price with a builder to do a single storey extension for me. He is a nice enough guy tbh and his company is on checkatrade etc... We're about to go ahead but he says he will work in arrears, except for to start with will need a smallish deposit for materials.

Is it normal practice to ask for this?

I got another quote where the builder asked for the same thing.

Is it ok for him to ask for a deposit first?

Best answers:

• Yes, usually they ask for X amount upfront, then get paid set amounts in different stages of the work,, but you hold the balance back till you are satisfied with the work, and all the snags are completed.
  Please get written receipts everytime you hand over money, they might ask you for some cash somewhere along the line, thats quite normal, but get them to sign something, just incase.
• Oh ok thanks misgrace!
  My mother havin had building work one 10 years ago is saying it's abnormal but maybe that's just the builder she had and perhaps times were different then.
  He's asking for
  20% upfront
  30% after brickwork done
  30% after roof done
  20% on completion
  It's for a single storey rear extension including room and bathroom including decoration.
  Does this all seem ok?
• 20% seems fair
  Remember he could order some matierals and book his time in to do your job and you could cancel
  Leaving him out of pocket with no work booked in
• 20% upfront, I would say no chance!
  It is not normal practice to pay for building work upfront, the argument of paying for materials is a non starter, any decent builder will be buying materials on account, on at least 14 days terms but more likely to be 28 days.
  The intervals you pay at is between you and the builder, it could be weekly or monthly, 0r anything else, but if you were operating under a contract you would only be paying for work done and value of mateerials "ON SITE".
  If you pay 20% upfront and the guy goes bust, then what?
• We have just had some building work done and signed a Minor Works contract from JCT. NO deposit, every 4 weeks he puts in an invoice for work done in the period minus 5% retention.
  Once the works are complete - the final invoice includes the works carried out in the last period and half on the retention. Then 2.5% of total price is retained for 6 months.
  If the work is lots of money (thousands) then get a contract signed. If the builder does not want a contract then walk away and find one that does. It is for your protection and his.
  Have you got an Architect to do drawings, spec and quantites or like us write out a full Schedule of Works - that details exactly what you want the builder to do in each and every room. Brickwork to match existing, tiles to match, windows doors to match existing? Will he do the decorating or only up to plastering? Agreed colour scheme if decorating. Planning Permission granted and Building Control been consulted?
  Agree in writing any changes to the Schedule, get a price change in writing. This will change to fixed sum of the works.
  Good luck,
  John
• I'm also about to have a single storey extension built. I've paid 10% deposit and I'm paying the rest in 4 stages - I can't remember offhand what the exact stages are but they're not dissimilar to what you're builder's suggesting.
  We both signed a contract and a receipt to say I'd paid the 10%, so I feel pretty comfortable about that.
• Some small builders can not afford to lay out for lots of materials on several jobs. Bigger builders may have the resources.
  There is a risk from the builders point of view, so if you help him out wih cash flow, you normally get rewarded with a cheaper quote.
  If you are worried, offer to make cheques out to the merchant for materials, or pay COD on delivery for the initial deliveries (concrete, bricks blocks) to help him get started
  But watch out for % stage payments as with some jobs .... lets say at 50% of the build, it may only have cost 30% of the job cost - so don't pay too much too soon.
  In the example above, 80% of the price would be paid when the roof is done, but there is still lots of work to be done - including potentiall expensive bathrooms or kitchens
  Try and trust the builder and pay on time, but don't pay too much too soon
• I'd agree with that, there is no problem in helping a builder with payments for materials if needed and I'd certainly agree with the comments on stage payments.
• Don't agree, I have worked bothboth contractor side as a site/project manager and client side as a pqs/project manager - and I work with small 1 man bands as well as large companies.
  On contractor side i would never expect it and on client side wold never entertain it, every business at the end of the day should have some working capital.
  The fact the materials are paid for at a later date is not a red herring, how can a builder be desperate for money to pay for materials that are not due to be paid for, or is the money to pay for materials from his last job? If so thats a worry in itself.
  Find me a standard construction contract that allows for a deposit up front, JCT,NEC and ICE forms certainly don't.
• I've never had a contractor ask for money upfront, and I've never had a problem getting contractors paid.
  As well as working for a company I carry out freelance project management work for members of the public, large ticket items such as roof trusses I get the client to pay direct, general materials the individual contractors pay for, they are then paid for at intervals agreed, I have found no contractor to date that expects a deposit.
  If you're a contractor, I'm afraid thats the nature of the beast, if you don't like the terms of construction contracts, don't call yourself a building coontractor!
  As a contract administrator when working under a contract, there is no way on this earth I am going to certificate overpayment for work not done, as at the end of the day I would be liable!
  Also I ak not getting confused, when I say I have no problem paying for materials for the contractor, at that point the contractor is effectively working labour only, therfore provides no warranty on the materials I have supplied.
  Bottom line is this, if you want a deposit for work you will not be working for me, if you're happy with that, then so am I. I have a lot of damn good contractors that are happy to work for me. And generally the works are done a lot cheaper than a general builder taking the job on.
  If as a contractor you want to minimise the risk then agree to shorter payment terms again I have no problem with that.
• As a project/site manager, while I do not have to pay for materials, I am accountable for my actions and believe me if I was paying out tens of thousands of pounds for work not complete I would not have a job very long.
• I'm sure trading standards advise never to pay any money upfront, you say the builder is a member of checkatrade, we too are a member of checkatrade and marshalls approved, otherhalf is a paver, can't remember which one it is but when we signed with them the contract states to never ask for money upfront. Its very easy for builders to get merchant accounts at many places, each issuing a very large credit limit, if the builder doesn't have this then i expect they have money problems and this is why they will not have credit accounts. Anything we put on account anytime in July, will need to be paid by the end of August. If the work is going to take several weeks then an interim payment is acceptable, get the company to invoice you and get a receipt, always pay by cheque. Don't let them say i will put one in the post. Builders wanting cash are most likely on the fiddle or having cash flow problems. I hate to be paid cash as i'm the one that has to bank it. Only pay for what work has been completed, regardless of what materials they have purchased, theres no need for them to buy materials so far in advance, most places deliver within 1/2 days.
  Many times my partner has had to go and put right or finish work, where the builders have taken money and never finished the job. My parents also had the builders from hell, who kept asking for money every week, never finished the job and the things they did were illegal, cost lots to put right, and turns out the builder was a thug, so they couldn't even pursue him due to fear of him.
  Also don't believe everything you read on the checkatrade website, its easy for companies to fill out the feedback cards themselves, we are told to stay with the client when they fill out their card and post it yourself to make sure it gets done, i think this kinda puts the client under pressure to write something nice. We only pay around Ј500 a year for the checkatrade membership and can ask for any negative comments to be removed, if you get too many negatives then they may cross you off, but how many is too many and at the end of the day they want companies to advertise.
  Also ask for recent references, phone them and go and see their work, get the address too to make sure it exists. We always give 6.
• any decent builder would not want or require 20/30% up front. but stage payments are very usual. 30/30/30/ plus 10%.
  some small builders may require/state say 10% up front, which i think is fairly reasonable.
  but i would only pay on the start date. there has to be some trust both ways.
  if you havent checked out your builder first, then you shouldnt really employing him anyways.
• I paid 30% deposit prior to works for my loft conversion
  Just make sure you check out the references beforehand
• I know this is an old post but I have stumbled across it.
  We are a building company and I will share our payment terms. We are always upfront with our terms before the job has started all prices quoted are EX VAT
  1. If the job is under Ј1000 we don't ask for any money up front however once the job is complete we expect to be paid Via Cash or Faster Payments. Either way we don't leave until payment has been made.
  2. If the job is between Ј1000-5000 we always ask for payment on the first day we turn up with materials. For example fascia, soffits and guttering job cost Ј3000, we would ask for Ј1200 which would cover the materials but only once we are on site with the gear. Payment on completion is normally 1-3 days.
  3. Ј10000 and over is contracted and payments consist of 4-7 stages depending on the size and length of the project. We don't work with percentages for the stage and practical completion payments because it is far too risky for both parties. Instead an invoice is raised at said stage and the amount has already been quantified at the contract sign meeting.
  Below is an example of 16 week project cost 70K.
  Deposit 15%
  Stage 1 (Payment at slab level)
  Stage 2 (Payment at floor joist level)
  Stage 3 (Payment at roof level)
  Stage 4 (Payment on completed roof structure and coverings)
  Stage 5 (Payment on completed first fix joinery & windows, first fix plumbing & electrics)
  Stage 6 (Payment on completion of plastering, second fix joinery & windows, plumbing & electrics)
  Practical Completion (Payment on completion of all decoration and snags)
  Retention 5% (defects liability period 3 months 100k)
  There is nothing wrong with asking for money upfront as long as it's for a genuine reason. A lot of builders are struggling because the market at the moment is very poor and slow moving so the help the good ones out.
  As for all the unfortunate people who have ripped off next time do your homework and find out more about your builder. Limited companies can be found at Companies House to confirm details are correct then check, don't rely on just Companies House. If your builders not on it then they are either a sole trader or partnership, there is no way of confirming there location unless you know where they live.
  We don't advertise anywhere apart from our website, referrals are best but again bloody check!!!!
  You're only as good as your last job!!!!
  As for other peeps who posted on here saying builders are supposed to have some form capital or have credit accounts with suppliers SO WHAT! In the first week of an extension is the most costly stage….we spent Ј8000 on the first day on the 70K job above.
  Anyway I could go on forever
  Keep Britain Building!