Extension starting soon but builder a little cagey about volatile prices

DesperateDan

Hi folks we have gone through an absolute circus to get mortgage approval and the whole thing ended up taking at least 6 months longer than it should.

At first we went to a few builders and decided to go with a guy a few friends know, even though he had the highest quote I think the piece of mind was more important. We needed costings for the bank and didn't want to under-estimate as banks are clear they won't be handing out any more cash. He ended up wanting us to basically price everything we could - doors, windows, stairs, bathroom, slates, plumbing, electrics (the non-builder stuff really). So we did that as accurately as we could, bank are actually giving us as much as they can - 2k less what we asked for so 285k in total for a 140sqm dormer extension including 14 sash windows, garage, small bathroom, solid wood hall floor, oak stair case etc. It seemed like a very high price at the time especially when 3 bedrooms in the new extension already have a structure, breeze blocks + slated roof on good foundations - we are connecting the house to an existing shed and that shed will be bedrooms.

Anyway fast forward 6-8 months and he now reckons since the Ukrainian war the prices of materials is off the charts and changing every week and is telling us he's really only going to be happy buying the materials at his VAT rate and charging us for that then adding his labor - I think he literally mentioned day rates. He's going to chat to us this weekend, what sort of questions should I be finding out here? I'm quite sure he's not a cowboy but I am wondering what he's doing for other people, anyone commencing a build is surely in the exact same position. It sounds like he's not wanting to guarantee a roof will go on this thing but the banks are tied to giving us the mortgage in 5 stages with inspections at each stage.

Aside from this I'm sure all of our quotes are now wrong so the his original costings + ours are now making no sense whatsoever. Any thoughts or insight appreciated thanks.

billy_beckham

Press the pause button, explosion imminent.. My 2 cents..

DesperateDan

I wish we could, it's been dragging on so long now we've run out of places to put the baby so we're kinda forced to start asap

delly

I've no insight into the building world, but Prime Time did an episode on this at the start of the month and they interviewed a lot of contractors, as well as people who are being affected by it. I recall that some said prices were changing day by day, so I can understand such a reaction, although it doesn't help you in your situation.

screamer

i know a quantity surveyor who told me prices they get are now valid for 3 days max. Price volatility is huge in the market and no one knows where it will end. I’m sorry to also say it but with the planned ban on Russian oil and such demand and supply issues I would not draw down a mortgage to build right now. I well remember last time things over heated and banks just pulled the plug on people building and they could not reach the stages to draw down any further money and were left in an awful situation. I’d be looking at buying a sofa bed and making some of the rooms double up in functionality for the moment. Way too expensive and uncertain to be building.

briangriffin

https://www.boards.ie/discussion/2058243778/extension-starting-soon-but-builder-a-little-cagey-about-volatile-prices

I don't envy you, is the existing house being retrofit with insulation as far as I'm aware it has to be, which would be additional insulation costs, has he given you a breakdown of what he is doing for you and a costing of it?

I'm finished a self build and all depends on where you are in the country and the spec of the build 140 square metres is around 1500 square foot so ar €285,0000 that's 190 per square foot. Is that fully furnished? Im not familiar with renovations but 190 would sound expensive. Has he given you a costing on different trades plumber's carpenters etc? If I was you I'd make him aware of the budget and have 10% contingency minimum at that and ask him can it be done and honestly if it can't you may have to delay or resize. Its a horrible time and not much help especially when you have young children and no space where you are. Just beware there are very honest builders out there but there are also very dishonest ones, you need to make sure you have the former check references ring former clients ask him who his subcontractors are by name and find out about their work.

mickdw

Normally I would say the builder is an absolute chancer with a story Ike that but in the times we are in, it is not possibe to price works at all. materials are inflating so much that nobody can tell where it will end. Even doubling a sensible quote might not offer safety for the builder.

What small builders are doing locally is only pricing aspects of jobs as they go - for safety.

So pricing for foundation complete. Then later pricing blockwork. Roof separately etc.

Doesn't help your situation but you cannot blame them. Even the biggest contractors in the state are not pricing works at the minute.

As someone involved in the industry, I think you would be mad to start that work right now.

The sh1t is going to hit the fan big-time. People simply cannot afford the prices. The inflation within construction cannot continue. It will go bang.

I've a number of client new builds not no commencing as prices are just gone out of control.

You say you need space but if you can struggle on for a while, it would be the sensible thing to do.

285k on an extension is alot of money. Bank could pull the plug too on your drawdowns if collapse came mid build.

The finished build must be worth enough to cover borrowings. If prices collapse, they can look to revalue and refuse drawdowns. It happened in 2008.

3DataModem

Prices are changing daily. All builders are getting hammered for costs, and the existing business model (quote for the job, include a bit of margin for materials as well as labour and hope to keep hold of it) is causing massive problems.

The only choice for the honest builders with quotes out there is to eat the cost and work at a loss, or negotiate with the clients as yours seems to be doing. Pricing per phase is one answer, but it ties your hands.

There's no easy answer, especially for 300k extensions. You might be better off renting for a year and holding off on the extension. And by better off, I mean financially.

PowerToWait

https://www.boards.ie/discussion/comment/118996725#Comment_118996725

if it was me I’d reduce the size. Your extension is very close to my new build (1850 sq feet). Reducing by 10% in size could save you 30 grand.

Last year it was 130-150 per sq foot for builder’s finish but now it’s more like 160-185. Concrete alone has gone up twice and going up again tomorrow 1st may, will have increased by 20 odd percent compared to last year.

Insulation has gone up 3 times in the last few months! Is about 50% more expensive than last year. Slabs, skim, bead all up. Aluminium for sills and fascia up silly money. Windows, doors, wiring, tiles, the whole thing. It is costing 20% more than 12 months ago. Not to mention trying to get decent tradesmen.

Everything is up and rising, I’m about 80% there on a self build myself but couldn’t do it now, and the house is only 1850 square foot. I really don’t see how people do 3000 sq feet, or why for that matter.

DesperateDan

Thanks folks for the input, I've talked it over with the OH showing her the thread and she is adamant we're starting it so that is what's happening...

If it was solely up to me I would hold off for 1 year. Her main concern is room and things just getting worse than they are now so what's the point in hanging around kind of thing. It has been compounded by delay after delay with a 6 month old baby plus solicitors, QSs, and banks all taking much longer than they should have (e.g. PTSB took 6 weeks to send off and deny us the mortgage, AIB approved it in 3 days). Some serious discussion over this has been had 😂

It is reassuring to know that he's basically right to be jumpy about it and sounds like he's doing the right thing to let us know that prices are just silly now. We had this discussion with him nearly 1 year ago and he said it was crazy times with covid, and now it's much worse! I think that final drawdown stage is main concern now, we will have to start jettisoning as we need to towards the end (who really needs skirting boards), and I can see the bank being unhappy about that so I'm not sure how exactly that will go

BryanF

Get a bill of quantities done - get advice from a Qs - they should advise you on the following. But What I would ‘try’ to do as follows,

Agree a labour price for whole job. Rent (temporary) lockable (storage) shipping container and put on site. arrange with builder to buy all the materials that is possible up front. Receipts etc can help to ensure fair release of payment to builder, with QS support etc. Materials should be on site, before payments made.

Then use bill of quantities to track remaining material changes - this is your principle cost risk (closely followed by builders ability to retain/ fix prices with subbies). The principle subbies would also need to get materials bought/ stored on site / and fair payment terms.

agree a project start and end date. Drill into construction schedule with builder and qs. Agree weekly updates for builder and qs on prices and labour shortage impacts.

it’s easy to write this stuff, it’s another story getting everyone to take the time and effort to carry it through - they need to be paid for this effort also..

fits

very risky to have materials on an unattended site. I think your builder’s approach sounds fair and I’d go with that and reduce the spec if needed

mickdw

Stock pilling materials in advance is causing further supply issues.

Lots of people went panic buying roof timber and insulation prior to starting builds when they heard of price increases and this really destroyed availability.

DesperateDan

Well what we did not realize is that the stage payments for the mortgage are made after the work is certified. Just been informed of that and it seems obvious now - the bank cover themselves and expect the builder to upfront the cost of each stage.

Will go back to the builder with this info who seemed to not know this either which we think is a little strange, but we know he works on larger projects - housing estates / ESB works etc. so sounds like a self-build like ours is not his usual job. He did mention a few times that he wants money upfront for materials etc. so I suspect he won't be happy but our hands are completely tied by the bank.

We have about 10k in savings which we can spend to kickstart the first phase but I'd rather not when he should be able to buy materials on a credit line so it should make no difference in the end?

mickdw

Absolutely. Work is certified by your supervising Engineer / Architect and stage payment issued.

Any builder will be aware of this and the payment stages should be clearly set out in advance.

To be fair to builder' his credit line will be near zero at the minute so what he will be able to run with will be very limited.

The banks operate in same way with self builds where for example the home builder needs money to actually get the materials on site so you really need to have savings to equate to at least one stage of build imo.

macvin

https://www.boards.ie/discussion/comment/118995819#Comment_118995819

Unemployment rate under 5% and dropping fast. Full employment (seen as 4%) expected very soon.

Strong employment worldwide too.

No credit bubble.

Some share prices are a bit high, but simply nothing to suggest any damaging recession.

Op needs to have a frank discussion and look at where there are savings to be had. Ask builder for his opinion too.

Materials are up circa 15% but that's average.

mfceiling

https://www.boards.ie/discussion/comment/119021635#Comment_119021635

Up 15% on average. You mean this month?

Concrete, timber and steel have gone through the roof (more than doubled in some cases). Insulation going up almost month on month. Screws, fixings and almost everything else construction related is absolutely flying up.

Way more than 15% on average.

Alkers

Drop the garage and anything else non-essential for now

fits

Yeah you need to have savings to cover expenses up to first stage payment.

shesty

We are both in construction and we moved house before Christmas - this one needs a lot of work so we have had a few trades in and out a lot over the last few weeks.Prices are way up.Ridiculously so.We have had a few conversations where they hold off giving us a price for a couple of weeks as a rise is due.

The bank payment is totally normal.What the builder is suggesting is very good but he is right to be cagey on prices because he is forewarning you of potential disagreements down the line - probably arising from you not fully realising what is going on in the industry.

285k is a very expensive extension.That said, we did quite a lot of work on our previous house 3 years ago and my advice would be to have extremely detailed drawings, a bill of quantities, and request the builder send you an invoice every week to two weeks.That way he has a cash inflow and you can keep track.Towards the end, ask him to look at what is still owed and see will he take any in cash.

You can always press pause but who knows when this will end and life has to go on so...best of luck with it all.

mickdw

https://www.boards.ie/discussion/comment/119021635#Comment_119021635

Sounds alot like the economists in 2007 talking about healthy economy and a soft landing being worst case scenario.

A big percentage of employment is in unsecure construction jobs which will disappear overnight.

No credit bubble. I wouldn't be so sure. We are talking about a 285k extension here in this very thread and we know prices are currently out of control. Looks alot like dangerous bubble to me.

fits

It depends on the extension. In our case the extension is the house

DesperateDan

Thank you folks. He's meeting again with his QS next week and the two of them are essentially going to see exactly what costs for at least the first 2 or 3 stages will look like. I floated the idea of "do you have a credit line with XYZ" that you could use etc., and the response was "I can open up an account for you if you'd like"! Which would be a dumb way of doing it because we would be charged full VAT, so it would be cheaper to take out another loan just to cover the first stage and do it through his account.

I now think he won't take on the job or he will tell me they need 10s of thousands before starting which we can't do. Another sticking point is that he's said a couple times about wanting labour costs upfront which is fairly silly if we have assurances in writing that if he can get each stage approved the money will come through. Seems concerned about the the stages not being approved for weeks on end which I don't think is the case. Again if I didn't know this guy through friends and neighbours I wouldn't be very quick to accept that.

Sort of ridiculous that the bank have agreed to the mortgage when they can see we only have 10k in savings if it's now common to expect us to have the costs for the first stage upfront, but I think it was agreed before it all kicked off with Russia so maybe that's had a more dramatic effect and we wouldn't even get approved if we were to apply today.

Will see soon but the only option now for him starting is basically if he asks for very little upfront - 10 or 15k max, but he's been dragging his feet so much now it's sapping the enthusiasm out of it for the both of us we're wondering what other builders would behave like now.

I will also say 285k was hopefully a sizable overestimate, including things that shouldn't be included like a herringbone hall floor and silly bathroom furniture.

billy_beckham

https://www.boards.ie/discussion/comment/119021635#Comment_119021635

Inflation rampant and no sign of it stopping. ECB interest rate rises coming, war in Europe, 15% rise in materials is grossly inaccurate.

I disagree that there won't be a downturn.. Costs can't keep rising without some kind of negative impact.

lawred2

https://www.boards.ie/discussion/comment/119020067#Comment_119020067

holy moly... only 10k savings for a 300k build project?

personally I think we're entering into a perfect storm - I'd be very cagey about taking on that level of debt for an extension.

We've been looking at a house move for a while now - got very close to pressing the go button and getting our own house on the market.. Just can't bring myself to do so as much as I'd like the upgrade.

billy_beckham

https://www.boards.ie/discussion/comment/119027271#Comment_119027271

Any update on what way you are going to go Dan?

DesperateDan

https://www.boards.ie/discussion/comment/119027813#Comment_119027813

We have €0 except the mortgage, OH just happens to have 10k in savings 😬 This is a remortgage of the house which was half paid for, and at the time should have been an overestimate so we'll see!

https://www.boards.ie/discussion/comment/119069507#Comment_119069507

Well the builder dragged it out for another week and decided he didn't need to talk to his QS after all, he's agreed to take the job and said he's hoping to start the first week in June. Seems he must have had another job on that was worth ignoring multiple phone calls.

He reiterated that he would need to disappear until each stage payment came through but seemed to come to his senses and realize that it's perfectly normal for him to upfront the cost of the first stage. We agreed all we can do is build and see how far we get. He wants to meet with the architect before building but I am not really 100% sure why so we will see if we can get away with a phone call on that one.

Seems concerned that when it comes to signing off on a stage that something might not be "up to scratch" and we could be waiting weeks to resolve that. Kind of an attitude like "these boys are paid to make problems so that's sometimes what they do". While on the face of it that sounds like he's not going to be capable of building things up to whatever standards are being stuck to here I'm fairly sure he does know what he's doing and we won't have any major problems like that. How wrong can the foundations go 😂

Now we are trying to get the architect to quickly put in the commencement notice for us with the council and he is also hard to get a hold of. I am going to have to overcome my fear of breaching the social etiquette of "hassling" these people and start calling multiple times a day until they pick up the phone!

mickdw

How wrong can foundations go - very wrong if not detailed fully and supervised.

Be sure to have detailed drawing from your Engineer re foundation. Whether it is raft of strip foundation, it needs to be to spec in terms of structural strength and also dimensionally correct not to mention radon and dpc detailing.

And don't believe builder when he says 'this is the way we always do it'. If it's not as per drawing, it needs to stop.

Same for each stage as your progress.

I now get blocklayers to sign a copy of construction details on self builds I'm involved with before they start as they do tend to be a law onto themselves. This is where the build is direct labour and no main contractor.

PowerToWait

https://www.boards.ie/discussion/comment/119103608#Comment_119103608

Architect and builder should be in regular communication and architect should check the build at agreed stages. He is certifying for the mortgage so is obligated to do this, but in my experience it doesn’t always happen. There are a multitude of things which can go unnoticed and unchecked which can lead to issues.

Simply trusting that the builder can do things well enough isn’t really that great. They very often suit themselves, easy route.

Foundations are kind of a big deal tbf. Need to be designed and signed off on.