Building Contract Guide For Homeowners
Choosing a building contract for a house extension is simple with our guide for homeowners. We put the pros and cons in plain English, and will show you how (and why) to choose a building contract.
Do I Need A Contract With My Builder For A House Extension?
Yes! Having a building contract for the work is essential. It is the only way to know for sure what work the builder is required to do, and what you will pay for it.
It is never a good idea to appoint a builder just with a handshake, no matter how much you feel you trust them.
Agreements that are based on a just verbal discussion and a handshake can lead very quickly to claims of misunderstanding, extra costs, loss of trust, and even the complete breakdown of a project.
Is A Building Contract For A House Extension A Legal Requirement?
No, having a building contract in place for a house extension is not a legal requirement. But just as travel insurance or home insurance are not legal requirements but are essential to cover your risk, a building contract should always be used to safeguard your interests.
Circumstances can easily change and having a building contract is the only thing that can protect you. After all, you have tens or even hundreds of thousands of pounds on the line here. Not to mention the upheaval to your home.
You probably wouldn’t book a holiday or buy a car without a contract that detailed what you would get. You would probably even sign some sort of contract to join a gym. Contracts are a perfectly normal and sensible way to make an agreement, and should always be used to build a house extension.
Why Building Contracts Are Good For House Extensions
There are 3 big things that tend to go wrong with house extension projects when there is no contract. They happen time and time again, and most people know someone that they have happened to.
Firstly there are claims of misunderstanding over the amount of work, where the client thinks certain things were included, but the builder says that they weren’t. This leads to the second thing that goes wrong, as the builder claims more money for extra work which leads to a break down in trust. And then the third thing that goes wrong is that the builder disappears to another job, leaving the work unfinished for a long time.
We will go on to explain more detail of different types of contract and how to choose the right one for you. But whatever contract you choose the key points that make building contracts good for house extensions are:
- The work to be done will be clear, so there are no misunderstandings
- Payment amounts for the work will be clear, so there is no loss of trust or extra costs
- The timescale for the work will be clear, so that you know when it will start and finish
Are Contracts Good For Builders Too?
Yes. A building contract should be seen as a good thing for both you and your builder. There is no builder who would not benefit from having the work, cost and time clearly set out before starting work. The only reason for a builder to refuse to sign a contract is if they do not necessarily intend to do what it says.
So this brings us on to our first tip. In fact it’s more than a tip, it’s a hard and fast rule that you should never break.
Rule: If your builder will not sign a contract then walk away. No matter how well you get on or trust them. No exceptions.
What Does A Building Contract Do?
In simple terms a building contract records what work the contractor has agreed to do, and what you will pay them for doing it.
If that was all your building contract achieved it would still be much better than not having one. But a good building contract can (and should) do much more than this, including:
- Set a start date for the work on site (so you can make firm plans)
- Require the contractor to be on site at all times (so that they will not disappear to another job)
- Fix the dates that valuations will be made for payments (usually every 4 weeks)
- Fix the amount of retention that you will hold back on all payments until completion (usually 5%)
- Require the work to meet defined quality standards (so the builder knows what they need to achieve)
- Set out who will inspect and issue instructions and certificates for the work (usually your architect)
- Fix details of warranty periods and guarantees that you will get (so you avoid possible future costs)
- Set a completion date for the work (very important)
- Set amounts to be deducted from the contractor if they miss the completion date (liquidated damages)
- Fix the length of any rectification period in case any defects come up (usually 6 or 12 months)
Tip: Use these points as a checklist for your building contract, and when discussing your requirements with your architect or builder.
What Contract Should I Use?
Any building contract is better than none at all. Even a simple clearly written list of the work to be done, and what will be paid when, beats just a handshake. But most house extension projects are a bit more complex than this and benefit from a well written building contract.
There are lots of very good pre-written contracts on the market that are suitable for building a house extension. Usually for around £25 you will be able to download and fill in a building contract ready for you and your builder to sign.
Choosing A Building Contract For A House Extension
But which of the available contracts are best? And how do you know which one to go for? It is quite a big field with a lot of choice, but if you have not used a building contract before then it can be tough to spot the differences between them and choose the best one.
Our advice is to not necessarily accept contracts proposed by a contractor which can sometimes be weighted in their favour, and to avoid any obscure choices and stick to one of the main building contract providers, either the JCT or the RIBA. These are the most suitable types of contract for house extensions and are well respected for their clarity and fairness.
JCT Building Contracts
The JCT (Joint Contracts Tribunal) produce some of the most popular building contracts for house extensions. The contracts are updated every few years so make sure that you get the most current version.
- Minor Works JCT MW(D) (good for most simple house extensions under £200k)
- Intermediate Contract JCT IC(D) (good for most complex house extensions over £200k)
- Standard Contract JCT SBC(Q) (good for large projects but unnecessary for most house extensions)
RIBA Building Contracts
The RIBA Building Contracts are newer than the JCT versions, and they are slightly more simple as they only publish 2 contract types, with only 1 choice suitable for most house extension projects.
- RIBA Domestic Building Contract (good for most house extensions)
- RIBA Concise Building Contract (good for big projects but unnecessary for most house extensions)
Other Building Contracts
There are a few other contracts that you might hear about. These include the JCT Homeowners Contract, but we find that this lacks some of the advantages and clarity of the JCT Minor Works. And the FMB (Federation of Master Builders) Contract, but we find that this is weighted to the builder. So we do not usually suggest either of those.
Best Contract For A Small House Extension
If your house extension project is relatively small then a simple contract like the JCT Minor Works or RIBA Domestic should be great. They are flexible enough for most projects and tick all of the points in our lists above, without unnecessary complication that you find in bigger contracts. This is good because the simplicity will help to keep the building costs down.
Tip: Use the JCT Minor Works or RIBA Domestic Contract if your house extension is simple and under £200k.
Best Contract For A Large House Extension
For larger house extension projects we usually suggest the JCT Intermediate Contract. It has all the benefits of the smaller Minor Works form, but adds some of the features that contractors will want on bigger projects (and so will help to keep their tenders competitive) such as advance payments on some high ticket items, and more detail over sub-contractors.
Tip: Use the JCT Intermediate Building Contract if your house extension is more complex or is over £200k.