There are many common builder scams to look out for when you are renovating a property. A few main things to look out for are large payments upfront, builders asking for cash rather than bank transfer and builders adding VAT when they are not VAT registered, and putting it in their pocket. I hope that you find this guide helpful on avoiding builder scams.
Because everyone is afraid of missing out on a good offer, this is another common renovation con. Contractors will make you an almost too-good-to-be-true offer and add to the pressure by suggesting that it’s a one-time deal that you’ll only get today. It’s also not uncommon to be pressured into signing a contract before giving it a thorough read, which can lead to you losing out on conditions you wouldn’t have agreed to otherwise.
Payment in Advance/Upfront
The standard upfront payment charged by reputable contractors is from 10% to 30%. Anything exceeding that should serve as a red flag to homeowners, especially if the contractor demands payment in full before the job begins. The contractor will conduct a hasty, low-quality job in the ‘best case’ situation. In the worst-case situation, they’ll ‘cash and dash,’ receiving the money but not providing the services.
Contractor has no license
Make certain that your contractor is properly licenced. If they don’t, it’s likely that their licence has been revoked, and they are no longer permitted to work on your property. If necessary, run a background check through the Better Business Bureau or the local licencing board. Which is an excellent website to verify credibility of builders and use the Corgi Gas Safe Register to check gas engineers are legit.
Although going over budget is typical, be aware of contractors who seek additional funds to complete the project by claiming unanticipated expenses. Contractors may complete a project and then claim that the costs were greater than anticipated, threatening to file a construction lien if you refuse to pay. A professional contractor should be able to appraise the project’s costs and present you with an accurate price, as well as manage their budget from beginning to end.
How to avoid Builder Scams
- Start with a job description. It could be anything from a few lines of text to architectural designs. Make sure to specify who is accountable for eliminating all trash and cleaning up after the work in your notes.
- Seek advice from family and friends, as well as your architect (if you used one).
- Obtain at least three quotations (the lender will require three if it’s for your mortgage). Ascertain that each builder has a copy of your work specification and has visited the site, as well as that their quotes cover the identical items (site clearance, material supply, etc.)
- Find out why one quote differs so much from the rest. There could be a good explanation for it but investigate it.
- Do they have a Trustmark registration? It’s a government initiative aimed at assisting consumers in finding trustworthy contractors.
- Inquire about various local references. Pay them a visit, inspect the job, and inquire about previous experiences with the builder.
- Payment should be discussed. Most jobs will require payment at various stages throughout the project. Determine the amount, due date, and scope of the payments.
- Check to see if the builder operates on a “labour only” basis, which means you provide the materials. This is totally legal, but it does imply that you’ll get two quotes: one for materials and one for labour.
- Examine their insurance coverage. It should be comprehensive public liability insurance that covers not only workmen’s injuries, but also those of householders and guests, as well as passers-by and property.
- Determine what guarantees the builder provides for larger projects. If it’s a new house, for example, an NHBC warranty should be included.
- Make sure the project has a timeline, as well as a completion date. However, be aware that external factors such as the weather may have an impact.
- Don’t be scared to allow your emotions to influence your decision. Don’t use a builder if you don’t like him for some reason. After all, he’ll be staying with you for a long time.
- Before any work begins, write a contract with the builder that covers all the important topics and includes a ‘retention,’ which means that the final payment will be made a month after completion, allowing you to discover any problems and providing the builder an incentive to remedy them.
If you enjoyed this article on builder scams you might also like to read about Renovating Property Guide.