Builder Selection

Your house is your home. It’s a place that’s truly yours where you can feel at peace, but maybe there’s room for improvements. You might have spent countless hours picturing your dream home, drawing inspiration for a brand new conservatory to chill in, office to work from or that kitchen extension that will finally make your house perfect. When it comes to going ahead with constructional changes on your property, you want to make sure it’s done right, after all, this is your dream house we’re talking about. Now that you have saved up your hard-earned cash, it’s finally time to breath life into your new project, but don’t let the excitement sweep you off your feet too quickly. There is still a lot that you will need to think about and consider before going ahead with construction, like who exactly is going to build this thing? Unless you’re an experienced builder, you’re going to need to hire some help to make your dreams come true.

When it comes to hiring a contractor, there are some significant things to keep in mind. While you may be scared of dealing with cowboy builders who will turn your dream into an unexpected nightmare, the issues are more complex than just good or bad contractors. It’s up to you to make sure that you are informed about the project, and can make sensible decisions to avoid running into any nasty surprises down the line. At the end of the day, you remain responsible for how the project turns out. 

You’re placing a lot of trust into your chosen contractor as not only will you be paying them thousands of pounds, but they will be required to come into your home to get the work done. It’s important that you have a good relationship with your contractor to ensure that your project runs smoothly. A good relationship doesn’t mean that you have to be pals, but respect and communication are essential. By communicating issues early on, confusion and misunderstandings are minimised. Be clear with your contractor on what exactly you expect from the project, but remember that changes can happen. Unanticipated factors will likely come into play and these can alter the outcome of your project.

Before handing over your precious money to the first contractor you find, you need to make sure you have chosen the best fit for you. Make sure to get bids from several contractors to get a clear idea of appropriate pricing while ensuring that you’re not overpaying. By shopping around, you get a much better idea of the range of services different contractors have to offer. 

With so much to think about and consider when hiring a contractor, it can get a little overwhelming. Luckily for those of you planning some work on your homes, we have compiled a handy checklist making sure that you as a homeowner are fully informed to make decisions, understand the risks and know how to behave appropriately when working with contractors.

  1. 1 Insurance

    Insurance

    Checking that your builder has the correct insurance is vitally important for two main reasons.

    Firstly you need to know that if they damage your home, or injure you or a loved one, that you’ll get the right amount of compensation.

    Secondly when they purchase the insurance cover the insurance company will do a certain amount of checking and due diligence before issuing the policy, from which you should take a small amount of comfort (but you cannot rely on these checks).

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    You should always ask to see a copy of the builders insurance certificate, and take a copy for your own personal records (either electronic or take a picture on your phone).  There is absolutely no reason why they should not give this to you, so don’t accept any excuse however genuine or technical it sounds.  Any mention of ‘confidentiality’, ‘legally I can’t’, ‘GDPR’ or ‘the insurer won’t let me’ is nonsense.

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    Once you have a copy of the insurance you should check that it is appropriate for the work you are paying them to do.  There are two elements to this:

    Firstly do they have the correct type of insurance?

    Public Liability Insurance – this covers them if they physically damage your home or contents, or cause injury to you or someone else while working on your property.  Every builder should have this.

    Professional Indemnity Insurance – this covers them for negligence, particularly around advice they are giving you.  Many builders will not have this, but if you are paying them for advice and services (rather than just physical work) then they should.

    Product Liability Insurance – this covers them if a product they manufacture causes injury or damage to your home.  It is unlikely that this type of cover would be needed in most residential building work projects, but is worth considering if you project is particularly unique.

    Secondly do they have the correct insurance coverage for the work they are doing?

    Here you need to check that the work they are doing for you is within the definition of what’s covered.  For example they may have cover for carpentry and kitchen fitting, but not including structural work.  This would therefore not be appropriate for a company that were doing, say, a loft conversion.

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    If you are concerned that the insurance certificate is fake, or that it has been cancelled (either by the builder or the insurer), or you just want to be 100%, you can do two things:

    Firstly there should be contact details on the insurance certificate (either email address or phone numbers).  You can make contact with the insurer and they will confirm that what is on the certificate is still valid.  If you have any concerns about what is covered you can ask them, for example ‘would this builder be covered for converting my loft?’.  You can also ask them if something is excluded under the insurance, for example ‘my house is Grade II listed, is the builder covered to work on it?’.

    Secondly you can verify the contact details for the insurer on the regulators website (Financial Conduct Authority).  Insures and insurance brokers are regulated companies, and should appear on the search.  The email address of the contact details should match the website that comes up in the search, but if in doubt (or if the builders certificate has no contact details) you can make contact via the details that come up on the search.

    www.register.fca.org.uk

    Additional Insurance

    Once you have checked the insurance that the builder has for themselves, there may be insurance policies that they can offering you in relation to their work.

    Note that you cannot purchase these types of insurance, your builder must already be part of an approved scheme to offer them.  You should also be aware that there seem to be, in my experience, very few companies that are able to offer these for standard residential work.

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    Deposit Insurance

    Some companies will have signed-up to a deposit insurance scheme that will cover your deposit should the company cease to trade due to liquidation, receivership, or go into administration.  This cover is usually for 90 days from when you paid the deposit.

    You can check the validity of this insurance the same way you would check the builders own insurance.

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    Insurance Backed Guarantee

    Some companies will also have signed-up to be able to offer you an insurance backed guarantee (usually 10 years) that will cover you for work on any defects should the company cease to trade due to liquidation, receivership, or because it goes into administration.  This cover will not respond if the company is still actively trading.

    You can check the validity of this insurance the same way you would check the builders own insurance.

  2. 2 Companies House

    Companies House

    It’s important to do your homework on any building company that you are employing.  Although there is no single check for ‘good or bad’, there are many things you can learn about a company that should inform your selection, and that you can take into account when dealing with them to protect yourself and your project.

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    Companies House Search

    www.beta.companieshouse.gov.uk

    Companies House is the official Government registry of companies in the UK, it’s free to search and there is a lot of useful information available.

    You should always search a company that you are thinking of dealing with to check that it exists and that the details you have match those on the registry.

    The Company Status should be Active.  There are a number of other statuses but you should only use a company that is active.  You can also check that the company address matches the contact details you’ve been given – although it’s perfectly normal for people to use a serviced office address so that there home address is shown.

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    Additional Companies House Checks

    Once you have checked that the company exists there are a number of other things you should consider when selecting and engaging with a builder:

    Incorporation:  How long has the company been trading?  As a general rule the longer a company has been trading the safer they are likely to be to deal with.

    Accounts Due:  Are the company up-to-date with submitting their accounts and other regulatory filings.  If they are behind this could be sign that the company has stopped trading (it takes a while between stopping trading and having the company status change from Active) or could be they something they are trying to hide.

    Persons with Significant Control:  Who owns the company?  For small building companies this is likely to be an individual or a group of people.  For larger companies there may not be anyone with significant control (i.e. there are lots of people that each own a small proportion of the company).  Both are perfectly normal, the only thing that might be of concern is if the person with significant control is another company, and maybe that company is also controlled by another company.  If ownership isn’t clear then this could be a red flag for a scam.

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    Financial Checks

    Most companies are required to file some form of accounting statements with Companies House.  These can be quite intimidating to read if you don’t work in finance, but the main things to look out for are:

    Cash at Bank and in hand:  You would expect good well run building company to have a positive bank balance, and from a safety perspective you should consider it relative to the size of your project.  A builder with £5,000 in the bank taking on a £200,000 project is a very different risk to a builder with £30,000 in the bank taking on a £50,000 project.

    Creditors:  This is the amount that the builder owes to other people or companies.

    Net Current Assets:  This is the cash the builder has at the bank less the money they owe other people.  This should be a positive number (negative figures are shown in brackets in financial statements).  Handing over money, or starting a project, with a builder that has negative net current assets could be risky, and you should carefully consider how and when you pay them.

    Companies House – Director Checks

    As well as having information about companies the Companies House register also hold some information about company directors.

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    Director Checks

    When you have found the company that you are considering on Companies House you can go to the People section and see the company directors.

    You should be able to click on the persons name and it will show you all the companies (past and present) that they have been a director of (if not you can enter a persons name in the main search box).

    There are a number of things to look out for:

    Firstly if the person has been a director of companies that are no longer active this could be a red flag, particularly if the nature of those companies was the same (i.e. all construction related).  If this is the case you can go into the records for those companies and see why they are no longer trading.

    Secondly are the directors currently directors of a number of different active companies.  Although this could be legitimate (perhaps they have a company for building work a different one for making furniture) you should investigate to make sure they aren’t running a number of similar companies as this could be a red flag.

    Note:  Companies House are not perfect at tracking people and don’t always identify the same person correctly (i.e. when I search my own name 2 distinct people show up).  There has been an announcement recently (September 2020) that they are going to improve this and enhance their process for identifying directors.  This is great news for consumers as it will make it much more difficult for dangerous builders to close a company and immediately start another one.

  3. 3 Trust Online

    TrustOnline

    TrustOnline gives you the ability to search the official statutory register of judgements, court orders and fines for the UK.  It is the only publicly available source of this information.

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    Trust Online

    www.trustonline.org.uk/

    Unfortunately this service isn’t free, but it’s currently only £10 per search, and you can search for records held for the company or any of the individuals you’re dealing with (whether they are a company director or not).

    Any records that show up on these searches should be seen as red flags, particularly any County Court Judgements (CCJ’s) as this means that the company either ignored the court proceedings and didn’t show up to court, and/or didn’t pay the amount to the claimant that the court ordered them to pay.

  4. 4 Health and Safety Executive

    Health and Safety Executive

    The Health and Safety Executive is the government agency responsible for the encouragement, regulation and enforcement of workplace health, safety and welfare.  Their remit covers building companies that are working on residential properties.

    As part of their role in enforcement they maintain a register of offences, which can be searched for free by members of the public.

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    The link below allows you to search for both companies and individuals to see if they have been successfully prosecuted by the Health and Safety Executive.

    www.resources.hse.gov.uk

    There are many different types of prosecution in the database, including criminal prosecutions.  Obviously any record on the register should raise concerns.

     

  5. 5 Builder Aggregators

    Aggregators

    There are a number of different aggregators that have been developed over the past few years, offering a useful service to homeowners.  It should be remember however that the trades professionals are their clients, and as such the advice they offer is not always impartial nor is it necessarily consumer focused.

    Some links to the more popular ones are below:

    www.checkatrade.com

    www.ratedpeople.com

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    References

    It is always worth checking the references that are provided through these website, and don’t be affraid to contact previous homeowners that your builder

  6. 6 Third Part Review Sites

  7. 7 Reasonableness of Quote

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