Would you deal with a builder without Homebond?

Dummy · 20-10-2005 03:51PM #1

Hi there,

Work is to start next week on our new house - at last !!!

But then our builder called around last night to tell us that his Homebond policy expires on Monday and that he will not be renewing it. It delays his work according to him.

What would you do? Take a chance or not risk it?

I have seen other work that he has done and spoke to people he has done work for and nobody has had any issue with hime or his work. In fact I heard nothing but praise.

OK I am in territory that I am not familiar with and would be grateful for any advice.

Thanks.

beller b · 20-10-2005 04:53PM

NO!!

starman100 · 20-10-2005 06:16PM

We got our house built by a builder without Homebond but he did organise another structual bond through a broker, can't remember the name but offers the same protection as Homebond - bank wouldnt give us the mortgage without sort of guarantee. Our builder is a good guy and knows what he is talking about.

I have heard that Homebond may not necessarily be the best option for builders, lot of red tape, that sort of thing. Overhyped apparently.

So I would say proceed, especially if he has got a decent reputation, but do insist on some sort of structural guarantee from him, 10 year should be standard. Ask him to get some quotes from a broker, shouldn't break the bank but it is HIS responsibility.

lomb · 20-10-2005 07:06PM

might want to hire an engineer to supervise vital steps and have a nose around with the builders permission. all sounds dodge to me tbh. why is he pulling out now after the tender has been agreed? ask him to knock a few grand off so u can hire an engineer if he insists.
an engineer is better than homebond anyway...

rooferPete · 20-10-2005 10:06PM

Hi,

My first thoughts would be no especially when he had homebond cover in place at tender stage.

Reading on further you have done your homework and the previous clients are very happy with both the work and the contractor, I don't know the statistics but personal experience has taught me that some of the biggest sharks with the shapest teeth have homebond cover.

Personally I believe the policy is not worth the paper it's written on, I see it being used as the biggest "get out clause" by some of the fastest guns in the cowboy building sector.

There is an alternative policy available that is accepted by the lenders and from what I have heard it actually stands for some real insurance cover.

The work should be inspected by a qualified Engineer or Architect as the works progress regardless of the cover in place as most lenders will want a certificate to allow interim payments to be drawn down.

I think if I was in your shoes I would ask the contractor to take out Premier (?) cover on the contract at his expense, the Architect / Engineer should be employed by you regardless of the insurance provider / contractor as this will avoid conflict of interest.

This is not an easy decision for you to make but I'm fairly sure it was not an easy choice for the contractor to make either.

.

lomb · 21-10-2005 08:07AM

thing is its costing him less now than if he was in homebond. so he should as pete say provide an alternative cover or in my opinion id probably rather have 2 grand off, as id b wanting to hire an engineer just supervising vital stages to make sure the place isnt going to collapse tomorrow.
i dont think homebond is much use, the only thing they cover after reading all the exclusions is basically subsidence and thats rather unusual in a newish house.

Macy · 21-10-2005 01:06PM

It sounds dodgy because he's not renewing. Maybe check that he's genuinely not renewing not being refused?

Having said that, our builder didn't have homebond (our house was one of the ones he needed to complete to get it - which he has now). However, that was factored into the price as far as I was concerned, so as other's have said you should look for money back or maybe extra's (bigger shed or more work outside?)

Wouldn't you need an engineer to do the stage payments anyway? They have to say the work is completed to a satisfactory standard, well ours is anyway. Could be our solicitor insisting on it though.

btw Our mortgage supplier didn't require homebond - just that the builder be registered with the Timber Frame Manufacturers Association. But even then, I don't think it was that big factor - afterall you could be building direct labour...

prospect · 21-10-2005 04:07PM

Hire a good engineer to supervise all stages. (your mortgage providor will probably require this seeing as the builder no longer has homebond!).

Deduct the price of the engineer from the builders quote. If he argues, say the quote was accepted based on the fact he had homebond at the time.

Watch carefully that he doesn't try to sneak back in this costs during the build. Wether this is done by charging you extras, or by cost cutting.

My tuppence.

rooferPete · 21-10-2005 04:45PM

Hi,

Just to clarify on what Macy posted :

I have seen builders who shouldn't be allowed a television licence let alone insurance however there are very few who would be refused Homebond cover for a few reasons ;

The house will be built regardless, it may be direct labour or a non registered contractor so homebond may as well take the premium.

The cover is so limited that the policy amounts to money for old rope.

The claims system is very interesting, even if a policy holder builds 100 houses this year without foundations the total amount of the claims are added up and divided between the 100 claimants in ten years within the limits of this years policy each not as each claim is discovered.

XYZ Builders Ltd changes to zyx builders ltd next year and the new company takes out the policy because they have never had any claims against them even if the directors are the very same people.

(Disclaimer XYZ Builders ltd and ZYX Builders Ltd are for example only and not aimed at any company actually trading, past or present)

I have yet to see a contractor refused renewal of Homebond but as "Dummy" will be handing over a lot of money, trust and goodwill to the contractor I do believe he / she is entitled to an explanation before the work starts.

.

Hagar · 21-10-2005 04:55PM

It's difficult enough dealing with bonded builders.
Why would anyone want to make life more difficult by dealing with un-bonded ones?

Dummy · 25-10-2005 05:10PM

Thank you all very much for the feedback & advice.

We went back to the builder and explained our fears. No come-back etc.

So, he has dropped the price of the build to accomodate us taking our own engineer on-site to check the work. I have checked prices of engineers (talking to friends who have built recently and also talking to engineer friends) and the builder has more than compensated the engineers costs.

The bank is happy. My wife and I are happy. Now let's get this house up !!

Once again thank you to everyone for the advice. As I said, this really was unchartered waters for us.

Would you deal with a builder without Homebond?

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