THE DOS AND DON’TS OF HOW AND WHEN TO PAY YOUR BUILDERS
When and how to pay your builder is a tricky subject for many. Our expert builder Andy Stevens stresses the importance that good paperwork and preparation play in this process
I’ve written many articles for this magazine, but this topic is one close to my heart. Paying builders and trades on time is a huge issue for us. It may surprise you, but everyone I know in the building trade has suffered with not being paid on time or even at all. There are many reasons for this, and I’ll go through them to help explain so this situation never arises for you when employing tradespeople.
Paperwork and preparation are key and will help prevent problematic situations. Get this right and the job should run smoothly. There are no official rulings about payment terms or anything around this often-sticky area. For that reason alone, even on a small job, I recommend drawing up a contract.
PUT ACONTRACT IN PLACE
In the contract, there should be clear and concise payment terms, including a payment schedule. On larger jobs this payment schedule will most likely be linked to a schedule of works. Below is a list of the paper work you should expect on medium to large jobs:
●Two contracts, signed by both parties with each side keeping one
●Clear and concise payment schedule including deposits, extra works etc
●Schedule of works document
●Agreed quotation for said works
●Warranty document.
If your builder doesn’t have a contract or you aren’t happy with the one they offer, I suggest going to a local solicitor and having one drawn up that is equally fair and representative to both parties. You must both be happy with the wording of the contract as you may need to refer to it should anything go wrong or the relationship with the builder breaks down. I can guarantee that the main reason relationships break down is due to money, so ensure your contracts are watertight for both sides.
PAYMENT TERMS
There are generally two types of payment terms for reasonable-size builds and renovations —weekly draws and stage payments.
This is a topic that raises most questions when I hold my talks at The Homebuilding and Renovating shows. Which one works best? My opinion is the opposite to most, as I prefer weekly draws for a number of reasons. I ask for a 20% deposit on all jobs to clear in my account no later than a week before we start. Depending on the job size, site setup can cost a lot of money as you need skips, hoardings, building inspector fees, site cabins, plant hire, materials etc.
The reason I prefer the weekly draws as a payment method is because if we’ve spent two months building up the brickwork and we have two courses to go to the plate
