A 2021 survey showed that more than half (54%) of British homeowners have received sub-standard work and then had to pay someone else to rectify it. Most of the clients I know who have done some residential works with local ‘builders’ have had some dispute during or after the works.

The more successful of these disputes usually involved a settlement deal where either the client or the contractor or both have compromised in one aspect or another. This compromise could be either financial or the agreement of a reduced scope of works or quality.

Having settled a couple of significant disputes between clients and contractors, it is often hard to pinpoint where the ultimate fault lies. It is the client's responsibility to define the scope of works and the details of the agreement usually in the form of a building contract. But some contractors fail to guide clients towards robust arrangements, especially telling when they are the more experienced party.

Here are some red flags to help you avoid falling into a dispute during your building works.

1. Not needing a contract

Beware of tradespeople who suggest it’s ok to proceed without a signed contract. For minor works such as the installation of a bathroom or the retrofitting of electrical works, it can be tempting to not have a robust residential contract in place like JCT or RIBA.

You might think it is the contractors' responsibility to provide the documents, but it is yours, the client (usually with the help of a designer) to define the scope and parameters of the project. Most responsible contractors usually want to protect themselves contractually so will provide this information easily for you.

I always insist that my clients have agreements in place for their protection as without putting something firm to paper, it’s all too easy to be caught out with the no-contract red flag.

What is a contract?

A contract is a set of agreements in place that can be used in a legal context should a dispute arise. It should help to protect both parties.

What are the types of contracts?

The two main residential project general contract frameworks are RIBA or JCT.

What standard elements should be included in a building contract?

As the most common disputes are a lack of sticking to a budget, a timeline or scope of works. A contract must have a framework in place that clearly states:

the agreed sum
the project duration
a detailed scope of works which are derived from the project drawings
project costs including a bill of quantities
penalties for these target being missed
definition of practical completion or snagging for when the project is handed over to the client
how resolution will be managed should a dispute arise.

Checklist of other useful building project documents

This is not an exhaustive list of documents as what’s required will depend on scope:

temporary works design
drainage and waterproofing specifications
construction method statements,
building control and HSE notices
schedule of finishing materials which may pertain to specialist aspects such as glazing and flooring. These will be important to show that you met the planning and building requirements and necessary to obtain guarantees and warranties.

2. Accepting cash payments

We have all considered this at some point; however, leaving the moral and ethical arguments aside. While it is not illegal to make cash payments to a contractor, it is illegal to have workarounds to enable a contractor to avoid paying tax especially they are VAT registered with HMRC. This is a major red flag.

Another related red flag to consider are those builders that say they want cash because the job they are pricing would take their company turnover over the VAT threshold. It still leaves you in the same legal and moral quagmire and is tax evasion and a criminal offence. If faced with this, you can offer to pay for materials and other trades directly to keep their payments lower and see if they are happy with that. In most cases, they won't be.

The main issue here is not the cash payments themselves but the lack of a paper trail. If you can get receipts which capture these payments, then that is perfectly fine and is good practice. It also must be clearly stated in the contract documents whether the VAT element is included. That way you won't fall into a trap with the contractor trying to put another 20% on the job after you have started it.

Why having a proof of payment is important?

Payment trails offer a way of accountability for the project and should a dispute arise later on; provide the necessary protection when submitting claims against shoddy work.

Trading standards and liability insurers won't want to take on a case if services are too informal and there are no clear contracts and evidence of payments in place. That is why contracts remain number one on my list with official proof of payments being used as a way to justify works done in accordance with a specification, and as such, it would probably void your agreements or any guarantees that you might get from the contractor on completion of the job.

3. No project portfolio or willing references

Now, it is perfectly reasonable for a contractor to not have a website, online portfolio or a testimonial page. Many good builders are terrible at promoting themselves. But if they are reluctant to take you to a recent job they have completed or provide client references that they’re happy for you to contact for a reference, this is my third major red flag.

Websites, review sites and Facebook groups are a good way to gauge a builder’s portfolio of jobs and mean you can see how others have found working with them. When previous references are given, it is always a good idea to go and have a look at the level of detail and have a chat with the owners of the property. Different clients are pedantic with varying aspects of the job, so a rounded perspective always helps.

Reference questions to ask when appointing a building

I would recommend the following questions for references:

How was your overall experience with the builder?
Were there any issues that caused the works to go over budget or the agreed programme? If they were, was the builder open and honest about them?
Did his team leave the site messy and dirty during the works? Think health and safety here; it is the duty of the client to make sure these boxes are ticked.
Was there a foreman or was the contractor himself on site regularly or did he leave some men on site with instructions?
Did you have to chase him to find out what was happening on site or did you get regular updates?
Did they chase for additional payments or stick to the original payment plan?
How were the requests for additional work dealt with and were they fair in your opinion?
Were there any issues with getting post-completion certificates, guarantees and notices?
How involved were you in the works? This is important as some clients are happy to go away and leave it all while others are there every week.

You want to probe references into revealing what was great about the contractor and what was not.
But bear in mind that all feedback is subjective, and you may get two very different references for the same contractor.
Most contractors I know, especially the better ones, prefer to have a watertight set of agreements in place, with a set of defined payment milestones and just let the contractor get on with the job.

If you would like to hear more about how DASH can help you to create your own well-designed sustainable home, please get in touch with Jonathan and Mario. hello@studiodash.co.uk

Looking for a builder? Watch out for these 3 red flags to avoid