How should you pay your builder?

Quote:
You should always write a detailed spec of the works need to be done then ask for written quote before start of the job.

If works changed in the middle of the works, you should renegotiate and receive a new quote.

Invoice:
You must always ask for Invoice when the work is finished.

The Invoice may or may not include the VAT (20% or so...) depending on whether the builder is VAT registered (their annual turnover exceeds a certain amount e.g. £65k).

Some builders don't give invoice and insist on receiving cash so that you and them don't pay any tax. While, that's being financially attractive but that's illegal and has penalties of imprisonment and conviction if caught so not worth the risk. Also if you don't receive invoice, you won't be able to claim the costs back when selling the property or reducing it from the rental income.

Payment:
It can be made via Cash or Bank Transfer. Preferably Bank Transfer since it's traceable in case HMRC investigates but Cash will also be fine as long as you have an Invoice and a Receipt from the builder.

Ask for a receipt for each payment for your own records.

Filing:
You should keep all the invoices, payment histories and receipts for many years; 6 or 10? in case HMRC investigates.

My Cowboy Builder - Walks Away!

My Cowboy builder walks away!

He realized he can't deceive me too much and I don't buy his empty false claims and promises.

Glad I didn't overpay him; payments only on a result achieved not on promises.

Why some people promise something without really thinking or meaning to fulfill the promise?

What Should You Write in Your Contract with Builder?

Sign a Written Agreement

You must always sign a written contract with your builder no matter how much you know your builder, how much you love your builder and no matter how much good things you've heard about your builder.

No matter how good looking or pleasant he looks or sounds. No matter how great his references are.

No matter if you have already worked with that builder before in another job.

Why?

1. Everything, including price and scope, you verbally agree with the builder will be denied or misunderstood so you will end up with less/bad work done with higher charge if you don't write it.
2. There should be a good reference to the source of truth on what is agreed both for you and the builder - people do make mistakes

So never ever rely on the morale or good-will, etc; those don't make sense in practice and there are always disputes and arguments.

Check who the builder is

1. Name
2. Company name
3. Website/Email/Telephone
4. Qualifications
5. Legal rights to work (Visa/Passport)

Sign Multiple Agreements

It's highly likely that the scope of work may change during the work, added or removed.

Get those in writing separately with the same format.

Get Builder to Sign Every Page

Builder must sign every page of your contract agreement, never rely on the last page only.

The reason is they will deny reading the spec but if they have to sign it it's highly likely that they don't have a solid ground to deny.

Include Price Details

Price must clearly be stated. You must clearly specify who pays what.

• Materials - what materials
• VAT included or excluded
• Installation

So if builder says my quote is £1000 to do that work, always ask does that include VAT, installation, materials, fitting, cleaning, etc and get that in writing.

Include Pictures

Take pictures of the areas of the work and include them in your spec and agreement.

Don't worry about the agreement becomes very long.

Pictures must be there as a point of reference

Don't Rush to Start

Plan your written contract for a month and detail as much as possible before starting the work

Do not rush to start the project

Take your time to detail as much as you can

Never just verbally agree that builder does an extra work, write them down in details and get hi to sign it.

Remember everything you agree verbally will be denied and disputed including scope of work and its price.

Wait for all pages to be signed.

Wait for all paperworks to go through

Damages:
Make it clear that any damages must be paid by builder.

Cleaning:

Always include cleaning in your template. builder must fully clean during the work and after the work.

Detail Scope of Work

1. What needs to be done - detail as much as possible

Always pay VAT if builder is VAT registered.

Never accept not to pay VAT if builder is VAT registered. Don't think about saving that 20%.

Not only it's illegal but also you lose any chance you have in court and legal grounds.

Always pay via Bank Transfer

Never pay cash. Pay via Bank Transfer as point of reference.

Payment Plans:

Payments should not be based on time but based on a work delivered and stage completed.

Set realistic weekly goals and only if those goals met, then pay.

Always keep the builder at least one week behind the payment.

Leave 25% to the end

Always keep 25% of payments at the end of the project because they may leave you in the middle of the job and it will cost you more to arrange with another builder.

Deposit

Do not pay any deposit, if they need materials - tell them that you buy the materials.

There is always a high chance that they demand for deposit, take the money and walk away.

Always be prepared that the builder walks away

All builders have a habit of walking away from the jobs they've agreed to, that must be your assumption.

Why?

1. They may rethink the scope of work and think it's not worth much to them
2. They may fall sick/ill or have other emergencies
3. They may be tempted to accept another job higher paid somewhere else

Therefore, define stage based goals for him that at any time he leaves the job, you can still manage it with another builder.

Don't let them to damage everything.

Get them to focus on one goal and finish it to delivery then to next.

Threats

If you receive any physical threats, it must be recorded in writing and by email and also sent to police.

Bully/Intimidation/Demands of Payment

Builders have their own worries:

1. They may think you don't pay them
2. They may think you add extra works
3. They may think what they agreed to is not worth to them, they made mistakes to agree the scope and price

Threat of Walking Away and Demands of Early Payments

Some builders would love to make you dependent on them that you pay them more than agreed and earlier than agreed. They would love to see you begging them to come back and finish their works and you pay them more. They would love to see your pains and cries.

Unfortunately, this is the truth - there are good builders out there but you can't afford to assume that so always hope for the best and prepare for the worst.

Don't give them that chance.

Always be prepared for them to walk away.

And let them walk away if they are not happy.

Deadline:

Set a realistic deadline plus 10% contingency for the spec.

Set Penalty

Bad behavior must be stated and priced penalty set for them

1. Not turning up to work
2. Delaying the project unreasonably
3. Leaving to another job

Termination:

If builder doesn't turn up to work fore than 7 days

If builder doesn't have have good progress in the reasonable opinion of you.

If builder damages the property.

If builder causes harassment.

Changes to the Spec:

You may want to give some of part of the work to someone else if performance or quality not satisfactory.

That should be allowed and reserved within the contract.

Morning or Evening Daily Reports (5 minutes):

Builder must give you daily reports on the progress made and his plan tomorrow or next week.

• What builder has done yesterday?
• What builder will do today?
• Any obstacles or blockers need resolving?

Basically, you'd need a good Contract Agreement Template

My Cowboy Builder - Empty Promises on Deadline

My Cowboy builder promised to finish the jobs last week which failed.

Then promised to finish this week which failed.

Now he's promised to finish in 2 weeks time which will probably fail again as he doesn't turn up to work much.

What's your reaction when someone makes empty promises? frustration at start. then thinking to turn this to an opportunity.

Options to Speed the Works up?

1)
Set a bonus and penalty both for meeting the deadline.
In my case it didn't help since my cowboy builder has interest in prolonging the works and working on multiple projects at a time.

2)
Find a trustworthy handyman/builder and send there to assist the builder with the works then deduct his daily fees from the builder's fees.

This sounds like to be a better solution than bonus/penalty. The outside man would be your spy/agent on the job and will scare the builder to do more works otherwise will lose work to the other guy.

The challenge is that they'd have to cooperate.

My Cowboy Builder - How He Cheated on Plastering

I needed a plasterer and my builder said I'll do one wall as a sample free of charge and if you like it I'll do the whole house with a good price.

The sample was amazing, great quality, smooth finish, brilliant; I was impressed and said yeah let's go ahead.

After few days I realized the quality has degraded and the surfaces are becoming more bumpy and rubbish.

Basically what he had done was to do the initial sample with a good plasterer then some of the remaining walls with another junior plasterer and paying him peanuts to save money!

I complained and said you're cheating and I didn't agree with such rubbish quality and only the quality of the initial sample so I won't pay you for this. Do not bring your junior plasterer again because it'll cost you more as you'll have to redo it.

... after some time and naggings, he agreed.

My Cowboy Builder!

A builder came to do our house refurbishment. I found them from Rated People.

I would purposely avoid naming their nationality or the trade name. Because not naming them may help you be more careful with everyone not just that nationality and trade.

I wrote the spec as detailed as I could and got him to sign it with the agreed price of around £10k labor to build an ensuite, new bathroom, new kitchen, disposal, flooring, skirting boards, safety certificates, etc.

Very quick start in the first week destroying everything, removing cabinets, old bathroom, very impressed!

Second week, worked very well.

Third week, turned up only over the weekend and maybe 2 hours a day!

4th week, didn't turn up much. He seems to have gotten another project.

5th week, slow progress. I complained about slow progress and set £500 bonus if he finishes on the 8th week and set a penalty of £150 per day for late finishes after the 8th week. It didn't motivate him...he seems to have other higher paid projects and doesn't keep his promises!

6th week, slow progress again but also demanded more money. I've paid him almost £7.5k so far but 60% of the job done only!

Problems with the builder:

• He started very good in the first 2 weeks then slowed down.
• Not honest and keep making empty promises on when the job is going to finish.
• Agrees with something then denies. For example, he agreed to paint our external wall then said no I won't do it.
• Not punctual.
• He promised to finish the job this week. Lied, only 60% of job is done.
• He said 90% of job is done. He lied, only 60% of job is done according to the spec.
• He said if I had worked for Aldi I would have earned much more than what you're paying me! I said I'm paying you £10k labour for God's sake! Basically he's trying to see whether he can get more money out of us!
• He said I won't do building works again, not profitable! Again trying to see whether he can get more money out of us!
• He's late on every promise and keeps lying on deadlines.
• He had promised he would paint outside the house including in the price. Today said, no I wont' do it.
• He had promised he would pay for the cost of the glass replacement in the porch. Today said, no I won't do it.
• He damaged our grippers, underlays, lost lights and lamps and broke our manhole lid costing me around £500. He said he will fix all these when damaged. Today he implied he won't fix those.
• He did some extra work for me and said it's free when he did them. After a week, he started nagging that I did those extra bits for nothing, he said he made a mistake and he shouldn't have done that basically manipulating and trying to get more money... I said OK I'm fair I increase your wage by around £400 for the extra works you have done...
• He started asking about my salary! I said salary of each person is personal, why do you ask! What was his intention? To see how much more he can get out of us! evil! 
• He started nagging everyday that you're paying me peanuts and demanded more money. I told him that we had an agreement and nothing changed. He said I don't care about our agreement, I want more money or I walk away.

Range of tricks he used trying to get more money and earlier:

• to be continued

His personality:

• Cheating
• Lying
• Betraying
• Promising to finish the job early. Just lying to get the payments earlier.
• Unreliable on time management.
• Deceitful & manipulative; trying to get more money than was originally agreed with every trick possible.
• Denying agreed works

What are my options?

• Intimidating him; not in my personality yet! I have so much self-control and hardly ever get angry and he can walk away anyhow. But intimidation is a skill that I'd need to learn - not to use against anyone but to defend against those who use it!
• Manipulating him; not in my personality yet! I'm too honest and frank but something that probably works with such people. A skill to be learnt but to be used solely against those who are manipulative themselves!
• Sacking him! Risking him to criminally damage the property. Oh yes, Police is often useless in the UK to prevent any criminal activity and can't recover any damage whatsoever when done. Legal system in the UK is stupidly expensive that you must forget about any money any individual owes you. Money paid is a money gone! Also cost of finding a new builder who doesn't know what works are done and with what quality.
• Paying him a bit extra. It feels awful to give in to his manipulations and tricks but they know you're in a weak position when it's the middle of the work.
• Setting bonus for early finish and penalty for late finish. I did that but didn't work, not motivated. He probably has other higher paid works and doesn't care about what he promises or agrees to.

My decision:

Not sure yet but I know that the only power we have over such builders is money; not morale, promises, written agreements, etc.

My Tips:

• Never trust any words or promises. Write down spec and get signed written agreements. At start and in the middle at least 2 times because things can change.
• Be fair. If genuinely more works added, you must pay them extra.
• Be prepared that most builders can and will walk away at any time they feel they can't or they don't want to deliver what they promised so control the payment on result only not by time. I made a mistake to tell them I pay you on a weekly basis for a certain part of the project that took about 6 weeks whereas I should have set stages of completion for payments.
• Assume every promise made is a lie unless proven and observed that it was not then you will control the payments more wisely.
• Go on site every day and check every stage of the works if you can and ask questions.