With a massive shortage of general builders in certain parts of the UK it is not surprising that people with the skills and knowhow are branching out from other lines of work to try their hand as builders. Here we will outline some of the key trading, commercial and legal issues that a builder will face as they set up on their own.
General builders tend to carry out property repairs, renovations and refurbishments, on either private homes or commercial properties. Other general builders choose to specialise in loft conversions, kitchen or bathroom renovations. Furthermore, builders may be contracted to perform general construction work, such as work for local authorities, housing associations, architects, and larger building firms, including the renovation of flood-damaged properties.
Materials and equipment
Any new builder will need to budget for and obtain a comprehensive range of tools and equipment when they start up. As well as sourcing construction materials, for the work they are to carry out, such as bricks, mortar, plaster, insulation, plasterboard and timber. Typically, a general builders’ merchant is used to purchase tools, equipment and materials.
Many builders’ merchants will require new customers to set up a trade account and some require a minimum spend on order levels.
Suppliers usually carry out a credit checks on new customers as they apply for a trade account. References, reviewing any published accounts and checking the CCJ registers are examples of the types of checks made. However, it is likely that for the first few months of trading many suppliers will only deal with trade customers who pay in full at the time of purchase rather than extending them a line of credit. This would need to be budgeted for by any prospective new builder, or you may need to ask your customer for payment of materials before the work starts.
Builders’ labour costs typically include costs of needing sub-contractors plus the costs of wages for anyone employed directly by the builder. Depending on the type of subcontractor required the day rates usually range from around £100 to £200. Builders using subcontractors must register on the Construction Industry Scheme (CIS) with HMRC. For further details see CIS HMRC
Wage rates and holiday entitlements for construction industry employees are set through agreements negotiated by the Building and Allied Trades Joint Industrial Council (BATJIC). Usually taking effect at the end of June the set rates are dependent on qualifications and skill level. For example, the 2022/23 BATJIC wage rate agreement requires employees who hold an S/NVQ Level 3 qualification to be paid £14.04 per hour. Go to www.fmb.org.uk/resource/batjic-wages-and-holidays.html for more in-depth details.
Pricing and quotations
Most customers would expect a builder to provide written estimates or quotations before agreeing to begin work. To comply with the Federation of Master Builders (FMB) Code of Conduct, members must deliver customers with a written quotation before entering into a contract to carry out building work. Details of deposits or staggered payments must be included. These payments should be fair and proportionate and incorporated into the written contract between the builder and customer.
Included in this estimate or quotation must be labour and material costs, along with demolition and waste removal costs, if applicable.
Builders will generally either quote an overall price for a building project or charge an hourly or daily labour rate with additional charges for materials according to whether they are engaged by a homeowner or a commercial customer or on a sub-contract basis, for example by a larger building firm.
Some builders choose to charge a price per square metre for extensions and new houses. Prices generally range from £1,000 to £3,500 per square metre depending on whether the extension is single-storey or double-storey. Go to www.whatprice.co.uk/building/price.html for examples of building and repair prices currently charged in the UK.
Information on the rules of measurement which apply when calculating building costs are available at www.jctltd.co.uk/new-rules-measurement or www.diydoctor.org.uk/projects/pricing-building-work.htm.
Guidance about how to estimate building project costs can also be viewed at http://checkyourprice.co.uk/building-installation-cost/.
Spon’s ‘Architects’ and Builders’ Price Book’ is a reference guide for builders and other tradespeople explaining how to estimate and calculate material prices and labour costs. The 2022 edition costs £140 as a hardback or as an e-book. Go to www.routledge.com/Spons-Price-Books/book-series/SE0395 to purchase Spon’s ‘Price Book’ titles.
As best practice, all customers should be provided with an invoice on completion of the work. Terms may include payment of invoices required within 14 or 30 days of receipt. Usually by cash, cheque or BACS.
Further details including those of Consumer contracts, Ts and Cs of business, VAT and Independent quality assessment schemes can be found in our industry reports available with most business registrations on our website.
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