Builder's Contract- I'm I being ripped off?

[motorbird83]

Hi EDF-- I am about to start on a gut refurb and extension of a house we've bought. The total building contract is 127k and the builder is asking for a 25k deposit. This seems excessive to me. He has great recommendations, including from my architect but I am concerned about how much he is asking for upfront before works have started. Is this normal for a big contract?

[red devil]

No, and you're putting yourself at risk. What does the contract say? Most will state that the builder is paid monthly after work is carried out and approved by a suitably qualified person e.g. the architect/project manager.

Alhough it's a lot of money to you, this isn't a big contract in the building game, and the problem you have is that most builders doing work of this nature and size tend to have small set-ups, low overheads (hence cheaper quotes), and they simply haven't got the cashflow to do a month's worth of work without getting some payment in advance. In order to limit the risk you could make payments on a weekly basis, and get things agreed first, i.e. a list of what the money is for, and get the receipts once bought. Any materials should be kept on site, not with the builder, so you at least can return them and get some money back if the builder 'disappears'. Do you have a comprehensive breakdown of all the works, so you can keep tabs on how the overall spend is going? To be frank, if you've got an architect they should be advising you, that's what you're paying them for...

[motorbird83]

I do have an architect and he is one of the builders she recommended to me. He also did her house. That's why I am looking for some independent advice. I did get 3 quotes and his was in line with market and I met other references. However, I have no idea how his person financial circumstance might have changed since he last worked for either my architect or his reference.

What you've said is very helpful red devil. I understand builders don't want to get burned by an insolvent client but asking for 20% of the entire costs up front seemed odd to me.

[red devil]

I'll send you a PM later mb83...