tag:www.buildersbox.co.uk,2008:/blogs/builders-legal-and-financial/96 2008-02-14T10:04:49Z Legal and financial information for local builders and SMEs in the UK construction industry. Movable Type Enterprise 1.53 tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.16798 2008-02-14T09:11:41Z 2008-02-14T10:04:49Z

Buying the right type of liability insurance is an absolute must for small builders. Premiums have been high for years with cowboy companies tarnishing everyone with a bad reputation. But well-run firms are starting to be rewarded with lower quotes...

Will Mann Buying the right type of liability insurance is an absolute must for small builders. Premiums have been high for years with cowboy companies tarnishing everyone with a bad reputation. But well-run firms are starting to be rewarded with lower quotes and competition is intense among insurers to win your business. Our guide will help you find the best product on the market.]]> Employers liability Employers’ liability insurance is required by law once you employ somebody to work for you. The current minimum level of cover required is £5m for injury or disease caused while working for you. Case study A typical example is as follows. An employee is preparing a wall to be painted using sanding equipment. You as an employer have no signs or have not informed the employee that he needs to wear safety or breathing equipment. The employee becomes ill from inhalation of a substance. You would be liable for a claim by this employee for negligence which could result in thousands of pounds being awarded. How premiums are calculated An insurance company or broker will weigh up the risks posed by your firm and calculate the premium accordingly. An established small builder with a good safety record will get cheaper quotes than a firm that has a poor accident history. If you are refused employers’ liability insurance it is illegal to trade without it and you can be fined £2,500 a day for operating without cover. Public liability Public liability cover is not a legal requirement but is highly recommended to protect you. Many customers will also be wary about taking you on without it. Public liability covers anyone outside of your employment if they are injured during work carried out by your firm. It also covers any accidental damage you do to a site or home during a job. Case study A typical example is as follows. You are working up a ladder when you drop a hammer which injures a passer-by. The recommended minimum cover level is £1 million and not taking out a policy could ruin you. Members of the public today will go straight to a ‘no win-no fee’ lawyer if they are injured by your work. The resulting court case could cost thousands and leave you with a huge compensation bill if you are not covered by public liability insurance. Top 5 products So which insurance policy should you take out? Here is our guide to the top products available and what they have to offer. Trade Direct: Tradesman’s Liability insurance Trade Direct offers Tradesman’s Liability Insurance for small builders who employ less than five people. The policy offers public liability cover from £1m to 5m with a £250 excess payable which means you pay the first £250 of any claim. Employers’ liability cover goes up to £10m and the policy can be extended to cover plant and personal accidents. Setting up cover is easy on the firm’s website which guides you through on a step-by-step basis. Most trades are covered but some hazardous works like demolition are excluded from the policy. Premiums start from as low as £57 but a small builder employing several people can expect an annual premium of around £600. All companies taking on a new liability policy are also offered a free years cover for tools and mobile phones worth up to £1,000. Policyholders also have access to a 24 hour advice line to help with any problems. Policies can be set up and paid for online by credit or debit card. Payments can also be made over 12 month installments. Federation of Master Builders Trade body the Federation of Master Builders offers its members specially tailored liability policies through a link up with insurance specialist AON. FMB Insurance Services has been going since 1998. The service offers some of the most competitive rates in the industry backed up by a dedicated broking and support team which is always on hand to deal with your queries. For a policy quote call 0845 602 1037 or visit their website. AON: Construction Direct AON also offers its Construction Direct range of products to the general industry which contains a policy designed for small builders with a turnover of less than £1m. It offers public liability cover from £1m to £5m and employers liability of £10m. Small builders with a good safety record can benefit from a 20 per cent no claims discount following three years without a claim. AXA: Contractor’s Choice Insurance giant AXA also has a policy aimed at small builders with a turnover of less than £1m. The firm’s Contractors Choice Insurance offers public liability cover as standard with many optional extras including employers’ liability. Small builders signing up benefit from a free 24 hour emergency and legal helpline plus a free tax helpline open from 9am to 5pm. Personal Accident Cover is automatically included free of charge for any principal, partner or director. Builders with premiums in excess of £5,000 can get a free risk management visit by one of AXA’s qualified health and safety surveyors. No claims discounts are also available of up to 10% for three years without a claim. Direct Line: Tradesman Insurance Direct Line Insurance offers cover to small builders through its Tradesman Insurance policy. Standard public liability cover is £1m with employers’ liability of £10m. Cover can be extended to cover tools and computer equipment worth up to £1,500. Direct Line employs a specialist legal advice team and offers 0% interest on monthly premium payments for the first year. Also recommended Tradesmancover.co.uk offers public and employers liability cover for 200 different building trades via its online only service. Public liability cover is available from as little as £2 per week and the website compares prices from leading insurance underwriters to provide the most competitive quote. Author: Grant Prior]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.20370 2008-02-08T09:51:21Z 2008-02-14T10:04:49Z

A small builder without a van is like Ant without Dec – they just don’t work on their own. Having the right insurance for your vehicle is vital to stay on the right side of the law and make...

James Evison A small builder without a van is like Ant without Dec – they just don’t work on their own. Having the right insurance for your vehicle is vital to stay on the right side of the law and make sure you don’t lose work if anything happens to your van. Here Builders Box talks you through the basics of commercial vehicle insurance and picks out our top five policy recommendations.]]> What cover do I need by law? Third party insurance cover is compulsory for any small builder driving a van. This type of policy covers damage caused to “third parties” like other vehicles, pedestrians or property following a crash. This is often extended with an extra premium to cover “Third party, fire and theft” when you are also covered if your van is stolen or set on fire. If I want to pay more, what else can I have covered? Extra cash buys you comprehensive cover where damage to your own van is also covered after a collision. Policies can also be extended to cover the theft of your tools and equipment from your vehicle. Some companies will also temporarily replace your van with a similar vehicle while it is off the road being repaired. Are there any hidden terms I should look out for? Always read the small print of a policy and check the cover limits – you should be looking for at least £5 million for third party liability cover. Policies will often restrict the age limits of drivers so make sure you don’t invalidate your insurance by letting someone drive who isn’t covered. Most policies charge an excess on claims – this is an amount you pay towards any claim. They are often around the £250 mark but beware policies that try and charge too high an excess. How much will it cost? Insurers rate small builders in a similar way to domestic drivers. The underwriter will calculate your premium on a number of factors including age, location, profession, vehicle type and claims history. Premiums are reduced the longer you go without a claim via a No Claims Bonus. Here are our top five places to look for commercial vehicle insurance: Express Insurance This online specialist compares quotes and prices with 22 leading van insurers. You fill in your details and Express sifts through all its partner firms to come up with the best quote. The firm is currently offering all small builders a guaranteed introductory no-claims bonus of 65% and also offers full breakdown cover for days when your van refuses to start. Direct Line The company covers all builders vans weighing less than 3.5 tonnes for all drivers over 21. Policies ordered online currently enjoy a 10 per cent discount. Special features include named drivers on the policy being able to build-up their own no-claims bonus. Any extra company vans insured through the firm also receive a 10 per cent premium discount. Tools carried in vans are not covered under this policy. AA The motoring giant works with ten leading insurers to offer policies tailored for sole traders. Small builders can benefit from a no-claims discount of up to 65 per cent and 90 days automatic cover if you work abroad in any EU countries. Policies also pay out £250 to replace locks if your van keys are lost or stolen. The basic policies can also be extended to cover legal expenses and emergency van replacement. Zurich The insurance giant offers a full range of commercial vehicle policies with no claims discounts of up to 62.5 per cent for anyone who hasn’t made a claim in the last five years. Personal possessions up to £100 are covered in the van but a separate policy will have to be taken out to cover tools and equipment. Zurich provide a replacement courtesy vehicle when your van is being repaired after an accident. Evan Insurance This fully-online insurance company is claiming some of the lowest quotes in the market. Policies also offered protected no-claims bonuses – so once you reach the maximum discount of 60 per cent you never lose it, even after an accident. You can cover up to four vans on one policy and all policies come with breakdown cover for anywhere in the UK. ]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.20391 2008-02-07T11:33:04Z 2008-02-14T10:04:49Z

Running your own small building business is tough enough at the best of times. But imagine what would happen if you had an accident and were unable to work for weeks on end? Your company could be in serious...

James Evison Running your own small building business is tough enough at the best of times. But imagine what would happen if you had an accident and were unable to work for weeks on end? Your company could be in serious trouble as the bills continue to mount up but you aren’t physically able to go out and graft.]]> How does it work? You pay a monthly premium and in return the insurer pays out agreed sums if you suffer an injury like a broken leg or dislocated shoulder. The payment is usually in the form of a one-off lump sum or a set amount per week up to a pre-agreed maximum time limit. Do I have to be injured at work? No – most policies cover any type of accident, wherever it happened, which prevent you from working. What about the rest of my bills when I’m off injured? A number of policies can be extended to cover things like mortgage payments and outstanding loans following an accident. How much does this all cost? Policies for the lowest amount of cover can start as low as £5 per month but a realistic level of cover will start at around £30 a month. Builders Box has scoured the market to look at the best schemes available to come up with our: Top 5 products: Etradesman insurance This web based firm is underwritten by Norwich Union and offers online quotes for its small builders’ personal accident policies. Cover is on offer for business owners as well as all employees under 75. The policy covers death, loss of sight, hearing, speech or limbs, permanent and temporary disablement. The cover is sold in units with 1 unit paying out £5,000 following death or loss of sight, hearing, speech or limbs. The policy pays out £50 per week per unit for temporary total disablement and £25 for temporary partial disablement. Policy holders can buy up to 10 units per person. B&CE The construction industry benefits company has a special accident insurance policy for self-employed builders. The RapidCash policy protects you against injuries that stop you working from a broken arm to a ligament strain. Premiums range from less than £3.50 a week up to £7 and the maximum payout is £300 a week for up to three months following an accident. All claims cash is tax free and you do not have to pass a medical to get cover. Trade Direct The specialist small builder insurer provides a full range of accident policies which can be extended to cover sickness. The policy pays out a weekly benefit should you be temporarily unable to work and a lump sum benefit for more permanent conditions. Weekly benefit is payable for up to two years for accident claims and for up to one year for sickness claims. Premiums start at £11.23 per month for accident cover and rise to £27.27 for the maximum benefit of a £50,000 lump sum or £500 a week. Norwich Union The insurance giant offers a range of personal accident policies for small builders. The scheme pays out a tax-free lump sum if you are permanently disabled by an accident. It covers you for permanent total disability, loss of sight or loss of a limb caused by an accidental injury. The policy starts at just £1.99 per month and is available to anyone aged between 18 and 80 who is a permanent resident of the UK. It also covers you worldwide for up to 12 weeks in any 52 week period. Anyone taking out a new policy receives the choice of a free gift detailed on the website. Policy payments can only be made by direct debit. Axa Tradesmen Insurance The firm offers personal accident cover as standard on its employers’ liability policy. It is designed for firms turning over less than £500,000 and employing less than 8 people. The cover applies to small building company owners and directors under 75 and pays out a maximum of £500 per week for up to 104 weeks following an accident leaving you unable to work. ]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.16799 2008-02-01T00:25:52Z 2008-02-14T10:04:49Z

The Corporate Manslaughter and Corporate Homicide Bill finally comes into force on 6 April 2008 after years of legal wrangling. Will it affect builders? You bet. Our Q&A tells you how the law works – and what the penalties are....

Will Mann The Corporate Manslaughter and Corporate Homicide Bill finally comes into force on 6 April 2008 after years of legal wrangling. Will it affect builders? You bet. Our Q&A tells you how the law works – and what the penalties are.]]> What is this new bill? It creates the new offence of corporate manslaughter if a company causes the death of an employee. What’s the difference between that and the existing law? Current manslaughter laws have to prove gross negligence of company bosses before an individual or firm can be prosecuted. That has proved very difficult meaning only a handful of cases have been successful. This all sounds like it’s about big companies. Have small builders got anything to be worried about? Yes. The new law applies to firms of all sizes so small builders are covered by it. Companies will be prosecuted whatever their size if management failures led to the death of workers on site. I’m the owner of a small building firm – could I go to jail? Not under these new laws. They don’t contain the power to jail company bosses and are solely concerned with taking action against companies. But you can still be put in prison for killing an employee under health and safety laws and the common law of gross negligence manslaughter. So what are the penalties under this new law? The heaviest deterrent is an unlimited fine following site deaths. Builders will also be ordered to put right their health and safety practices and offenders will be named and shamed with details of their fines and offences. So the court will have the power to bankrupt me? Yes – unlimited fines mean just that. What sort of proof will the authorities need for a prosecution? They must prove that the management failure amounted to a ‘gross breach’ of the duty of care owed to the victim. Deciding factors include whether the company failed to comply with any relevant health and safety legislation, and if it did, how serious that failure was, and how much of a risk of death it posed. The court will also look at whether firms took health and safety seriously or whether a blind eye was turned to dangerous practices. So who is considered a manager? Anyone who plays a significant role in the decision-making process about how the company's activities are managed and organised. What should I do now to make sure I stay out of trouble? Check your company is up to speed on health and safety and make sure you don’t cut corners when it comes to protecting yourself and your employees at work. Author: Grant Prior Related internet links: The full wording of the Corporate Manslaughter and Corporate Homicide Act]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.16802 2007-11-01T16:40:41Z 2008-02-14T10:04:49Z

Builders couldn't survive without migrant workers as an army of foreign trades people helps plug the skills gaps in the continuing construction boom. But you can get into trouble for employing workers who aren't legally entitled to work here. Here's...

Will Mann Builders couldn't survive without migrant workers as an army of foreign trades people helps plug the skills gaps in the continuing construction boom. But you can get into trouble for employing workers who aren't legally entitled to work here. Here's our guide to keeping on the right side of the law.]]> Surely I can employ anyone as long as they can do the job? I’m afraid not. And it’s an offence to employ anyone who hasn’t got permission to work in the UK with fines of up to £5,000 per employee. So which countries are there no restrictions on? There are more than 30 in all including many Eastern European states. The full list can be found here. I don’t fancy getting fined – so how do I make sure workers are legal? By checking documents of potential employees. Documents like UK passports or passports of European Economic Area countries are sufficient proof of the right to work on their own. Resident and work permit documents can also be used in conjunction with proof of holding a National Insurance number. You can view a full list of documents permitted here. Is it OK just to have a quick glance at them? No. You should keep photocopies of all documents and check carefully that all photographs match the people presenting them. You must also check that significant dates like birthdays aren’t obviously false if people appear too young or old. What if something looks dodgy? The Government has developed an online checklist which guides you through the process and will warn you about any potential problems. Can I get in trouble asking foreign people for their passports? Possibly. Treat everyone the same and ask for the same documents irrespective of their race to avoid falling foul of the Race Relations Act. What’s the Worker Registration Scheme? Builders from Poland, Lithuania, Estonia, Latvia, Slovenia, Slovakia, Hungary and the Czech Republic have to sign up with the scheme within one month of starting work for you. If they fail to register you could be liable to a £5,000 fine because they will be classed as illegal. Further restrictions apply to Romanians and Bulgarians who are only allowed to work on a self-employed basis unless they qualify for a work permit. What’s a work permit? If you want to employ someone from outside the exempt countries you can apply to the Borders and Immigration Agency direct for a work permit for them. Applications cost £190. An application form can be found here. Author: Grant Prior Related internet links: Home Office guide to recent changes in the law affecting migrant workers (PDF)]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.16279 2007-10-22T20:38:21Z 2008-02-14T10:04:49Z

Many builders try to become property developers on the side, but why are some successful and others fail? BuildersBox, in association with lenders Close Property Finance, starts the first in a series of Q&As covering the key points builders should...

Will Mann Many builders try to become property developers on the side, but why are some successful and others fail? BuildersBox, in association with lenders Close Property Finance, starts the first in a series of Q&As covering the key points builders should know before taking the plunge into property development.]]> Is there a future in property development? There are no cast iron guarantees of success in any business undertaking and property development is no different. That said, when you get it right the rewards can be very good. According to Close Property Finance, “The future in property development is bright. Demand for properties looks set to continue for the foreseeable future and good quality, well-appointed developments will always sell.” If I want to become a property developer, what are the initial requirements? You need to consider four things before moving from general contracting work to speculative development. 1. Have you the courage to back yourself in this new environment, which can be pretty unforgiving at times? 2. Do you have the ability to successfully undertake the work involved, employing specialist trades and professional advice where necessary? 3. Do you have a viable scheme in mind? 4. Do you have access to sufficient finance to make it all happen? What is the difference between contracting and developing? Life as a contractor can be far from easy but most days you can leave site and ‘switch off’ safe in the knowledge that at the end of the week you will get paid. That’s not the case with developing. If it goes wrong, your pocket will be hit first and hardest. But if goes well, you keep the profit. Can I continue to run my building firm alongside a new property company? Yes. Contracting can provide a useful income during development, and will keep income coming in if you can’t find a suitable project to undertake or if the market slows. However, you should never underestimate the amount of time it takes to manage a development from start to finish. Besides the actual construction, you also have to look after the finances, design and marketing – which do not come naturally to many builders. What kind of development should I start with? Your first project should not stretch you too far either financially or in terms of your available resources. Don’t choose the first thing that comes along. It is best to find a small project that has definite potential in a location that you know well, than a larger, riskier project. Scratching around for money, workforce or finance, specialist input or simply putting in more hours just creates unwanted headaches. What are the commonest mistakes would-be developers make? Three typical mistakes are as follows: 1. Over estimating resale values, leading to unrealistic profit expectations. 2. Under estimating build costs, a common mistake if the scheme is not researched properly. 3. Spending more to enhance a development (very tempting), but not getting a proportionately greater increase in final value. 4. Not programming trades and suppliers carefully enough, leading to delays in the programme. What is essential to success? There are two key points to remember: 1. You must have a realistic build cost budget and programme. 2. You must adhere to them. See also: Property development: how to approach a lender Property development: how to price and market a development Property development: common pitfalls and how to avoid them Related internet links: Find out how much prices are rising in your area Nationwide’s house price rise report Close Property Finance]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.16280 2007-10-21T20:47:49Z 2008-02-14T10:04:49Z

Any builder who wants to become a property developers will need to know how to approach banks and lenders. Our latest Q&A, in association with Close Property Finance, will tell you what investors in property look for, and how to...

Will Mann Any builder who wants to become a property developers will need to know how to approach banks and lenders. Our latest Q&A, in association with Close Property Finance, will tell you what investors in property look for, and how to get more favourable lending terms.]]> What do I need to consider prior to approaching a lender? Most lenders will want to see a business plan of some kind, with detailed facts and figures. Make sure your estimated build costs are realistic. You should also work out the likely selling price rather than the desired price. Make sure the amount of money you want to borrow includes enough for contingencies and general living costs. You should be clear about how you will conclude the project successfully, using appropriate sales and marketing advisers to sell the property. All lenders will look primarily at the viability of your development so your plan needs to show this clearly. What should I look for in a lender? There are four crucial points: 1. Check out the lender’s expertise in the sector – do they have a track record of lending to first time developers? 2. How quickly can they do the deal for you? Deals can be lost through a slow response. 3. How flexible the lender is prepared to be? Projects can come to a halt if interim funding is withheld because of unforeseen circumstances 4. Who will deal with you? Having one point of contact at the lender is often crucial when trying to get queries dealt with quickly. Cost is obviously important, but be wary of a cheap lender if they don’t measure up on any of the four points above. How much can I typically borrow? The sum borrowed can range from 60% of project costs up to 100% depending upon whom you approach for your finance. High street banks will usually offer up to 70% of costs in normal circumstances. Specialist banks will lend a higher proportion of costs. Private investors (also known as joint venture lenders) can stretch to 100% but they will want a share of any profit you make – sometimes 50%. Most development proposals have at least 30% of the total costs covered in the form of cash or supporting security. What kind of security will the lender want? Most lenders require a first charge, which is similar to putting down a deposit with a domestic mortgage lender. If you intend to undertake the development in a company name, a personal guarantee is usually required. For larger schemes it is not unusual for the lender to take a charge over any contracts or require collateral warranties from the professionals employed, so that they are safeguarded against any of your construction team not fulfilling their obligations. If my first development is successful will I get a better funding deal on the next one? Almost certainly. For the lender it is always about minimising risk. A ‘proven’ developer represents a less risky borrower so should be able to secure better borrowing terms and/or raise higher levels of funding for subsequent deals. Do lenders have a preference for different types of development (new build, conversions, etc)? Lenders will naturally shy away from developments they consider less marketable and more difficult to sell. For instance, there was a time when many banks refused to fund schemes involving flats above shops. These days lenders are more flexible, though the more specialist lenders will have a broader experience of different types of development, so may be more likely to fund unusual schemes. Do lenders have a preference in terms of location? Not these days. The current market is buoyant nationwide, so geography is less important than it once was. Good banks will have a network of valuers in all parts of the country and will lend regardless of area as long as the proposition put forward is a strong one. Do listed buildings affect a lender’s willingness to fund a development? Listed properties are more difficult to redevelop because of the additional red tape involved. Any sensible lender would probably take a long hard look at the borrower and ask whether he or she had any relevant experience or was taking the right advice. If the obstacles can be overcome, listed properties can produce very good returns. However, you may need to find a specialist lender. Will my lender adjust the interest rate in line with movements in the Base Rate? Almost certainly. For loans for property development the rate of interest that you pay will nearly always be aligned with the Bank of England Base Rate or LIBOR so, when rates go up, so will the interest payable on the loan. Equally, if they go down then your cost of borrowing will go down as well. However, unlike long term mortgages, movement in interest rates will not have a huge impact on the relatively short life of a development loan. How does the lender release funds? The initial advance for the purchase of the site is usually paid via the solicitors acting on the transaction. The funds for building works are generally released on a progressive basis against surveyor reports and the money is sent directly to the developer or contractor if preferred. Some lenders will help cash flow by providing a float up front with which to purchase materials and pay deposits on larger items of expenditure. Some lenders allow the borrower to take discretionary drawings for general living expenses. Do lenders require regular updates on progress? Any sensible bank wants to know how the money is being spent and that good progress is being made. Most lenders will appoint a surveyor to keep tabs on project progress, reporting to the bank on a monthly or six-weekly basis. The bad news is that the developer pays for the surveyor, although their input can be valuable to all parties. Is it possible to negotiate funding for a new development while still completing an existing project? Yes it is. In fact specialist lenders actively encourage developers to look for new schemes. It’s good for business continuity for both parties. Some lenders will offer to increase the loan secured against an existing scheme as it nears completion to assist with the acquisition of a new site. If I complete the sale of my development before the scheduled date, do I receive a rebate from my lender? No. But by selling your development before the term of your loan you are saving on interest payments and avoiding additional charges if the facility had gone beyond its term. What you will get from your lender should you finish ahead of schedule is an enhanced reputation. See also: Property development: what builders need to know Property development: how to price and market a development Property development: common pitfalls and how to avoid them Related internet links: Find out how much prices are rising in your area Nationwide’s house price rise report Close Property Finance]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.16282 2007-10-20T20:59:56Z 2008-02-14T10:04:49Z

If you’re a builder working on your first property development, there's plenty that can go wrong. Our Q&A, in association with Close Property Finance, tells you how to avoid problems on property developments, and how to troubleshoot them if they...

Will Mann If you’re a builder working on your first property development, there's plenty that can go wrong. Our Q&A, in association with Close Property Finance, tells you how to avoid problems on property developments, and how to troubleshoot them if they arise. ]]> Should I spend money on a ground condition survey before purchasing the site? One of the most crucial and risky stages for any development is ‘breaking ground’. If it transpires that the ground conditions warrant the need for piling or other remedial works, the building costs can increase dramatically. Even the most detailed site investigation can miss some problems in the ground, but most will establish at the outset whether or not there are likely to be any serious problems which can then be allowed for in the budget. If in doubt, it is well worth incurring the expense of ground condition and contamination surveys prior to exchanging contracts on the purchase. It could save you a fortune. Can I protect myself against any increases in development costs? Yes, you can. Some banks might be willing to offer a fixed rate of interest which will shelter you from any rate increases – though it will deny you the benefit of any falls. A fixed rate loan also means that you know how much the finance will cost you if you keep to your program. You should also try to agree prices with suppliers in advance, and demand fixed prices instead of paying day rates which unscrupulous contractors will take advantage of. Can I get extra interim funding from my lender if need be? Specialist lenders realise that building can be a very inexact science and that cost overruns can happen through no fault of the developer. Consequently, they tend to take a more flexible approach to additional funding requests – though there may be cost implications. Remember that the bank’s interest is totally aligned with the developer’s – both want to see the project finished as soon as possible with costs controlled and early sales achieved – so it pays for them to be helpful and constructive. If your lender is not supportive, find one that is! How can I minimise the risk from sub-contractors letting me down? The failure of sub-contractors or suppliers is a common problem. Ideally, use people you know or who have been recommended to you by trusted associates. Failing that, ask to see evidence of their work. You should also try to pay for services and materials after they have been supplied rather than in advance. Should I insure my site during development against theft or damage? Theft, vandalism or other damage to a development during the course of the works can prove time consuming and expensive, remembering that the longer you are on site the more it is costing you. Even with the tightest security, in some areas it is difficult to prevent these problems and insurance needs to be adequate to cover such losses. However, prevention is always better than cure so close management and sensible precautions on site make good sense. Planning regulations can sometimes seem a bit ‘over the top’. Is there any way of working round them? A frustration of all developers concerns the requirements of planning and building control. Sometimes their requirements can seem unreasonable but you have to try to work with them to avoid protracted discussions that will simply delay progress on site. Cutting corners by not adhering to the regulations is a risky strategy that can result in severe delays and additional costs and may result in the completed development being unsaleable. By clarifying any areas of concern at the outset and working constructively with the appropriate authorities, such problems can be avoided. See also: Property development: what builders need to know Property development: how to approach a lender Property development: how to price and market a development Related internet links: Find out how much prices are rising in your area Nationwide’s house price rise report Close Property Finance ]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.16281 2007-10-20T20:53:14Z 2008-02-14T10:04:49Z

All property developers will need to know how to price and market a development once it’s nearing completion. Our latest Q&A, in association with Close Property Finance, offers top tips for pricing and marketing, plus advice on maximising the value...

Will Mann All property developers will need to know how to price and market a development once it’s nearing completion. Our latest Q&A, in association with Close Property Finance, offers top tips for pricing and marketing, plus advice on maximising the value of your development. ]]> What factors should I take into account when pricing the finished development? That depends how quickly you want to achieve a sale. If you’re looking to realise your profit quickly then you’ll need to price the properties more cheaply. If you are in no hurry then you might add a premium to give you room to manoeuvre with potential buyers. Research the market using tools like houseprices.co.uk or the Nationwide house price report, and establish what properties are actually selling for not just what their asking prices are. Does funding typically cover marketing and professional costs? Most lenders will base the maximum amount that they will lend on set parameters. Some will take such ‘soft’ costs into account but others will not so you need to ask the question at the outset. Many developers underestimate how much the additional costs will be and this can cause problems with their cashflow. If the lender does not cover such costs, you must make sure that you can. Do you have to use professionals appointed by the lender? In most cases the bank will appoint its own valuers to advise on the current and anticipated end value of a development. They will also appoint a monitoring surveyor to assess the development costs and oversee the works, advising on interim payments as the scheme progresses. Their input is important and can often prove helpful to the developer so don’t begrudge the fact that their fees are coming out of your pocket. When arranging the finance you will normally use your own solicitor and will also have to pay the costs of the bank’s solicitor. How can a developer ‘add value’ to the development at minimal cost? There are three critical stages where you can add real value to a development without it costing the earth and compromising your possible profit: Firstly, at the outset make sure you maximise the planning ‘potential’. For instance, if not already approved, the planners might allow you to utilise the roof space adding value at minimal cost and such amendments can often be approved quickly. Secondly, remember that good design costs the same as bad design; an attractive and functional design will boost significantly the eventual value of the property while a poorly thought through design is likely hit the sale price. Thirdly, the external appearance of the finished property can really reassure would-be buyers, so make sure it is looking immaculate and that any garden or outdoor space is shown in its best light. What kind of building ‘guarantees’ do purchasers require and how much do they cost? In general a purchaser’s mortgage provider requires some kind of warranty as a condition of the loan so for new build schemes a developer must ensure that they provide one. The cost depends on the developer’s standing and the size and value of the property. A well established developer with a good track record will have to pay less than a novice developer. Popular schemes include: NHBC Buildmark Zurich Premier Premier Guarantee Are ‘pre-sales’ worthwhile and what can be done to achieve these? The advantages of pre-sales are: They provide peace of mind, and; In a falling market they might secure a higher selling price. However, there are disadvantages too: In a rising market, you may forgo extra profit if the market increases during the life of the development; A pre-purchaser may interfere with the works while you try to get on with the job; They can require aggressive marketing, including smart brochures and even a show home or suite, which can be very costly. See also: Property development: what builders need to know Property development: how to approach a lender Property development: common pitfalls and how to avoid them Related internet links: Find out how much prices are rising in your area Nationwide’s house price rise report Close Property Finance]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.11637 2007-10-10T13:05:07Z 2008-02-14T10:04:49Z

The new Construction Design and Management (CDM) Regulations came into force in April 2007. They aim to improve health & safety management on building sites. All builders, no matter how big or small, have to abide by the new...

Will Mann The new Construction Design and Management (CDM) Regulations came into force in April 2007. They aim to improve health & safety management on building sites. All builders, no matter how big or small, have to abide by the new regulations. The regulations are complicated, but our handy guide will answer your questions and help you avoid the pitfalls of the new CDM regulations. ]]> So what are the new regulations? The new CDM regulations will place more responsibilities with the client. The old role of Planning Supervisor has been dispensed with, and a new role of CDM Coordinator has been created. This person must be appointed by the client. What are the builder’s responsibilities? Contractors or builders will still be required to plan, manage and monitor the health and safety of all projects, and produce relevant documentation. In addition, contractors need to prove they are competent and in turn, employ only competent sub-contractors. Contractors will need to provide information to workers in the form of inductions, site rules, and draw their attention to health and safety risks identified by risk assessment. They will also be obliged to consult with their employees on health and safety issues. When is a construction project ‘notifiable’ to the HSE? The definition of ‘Notifiable Work’ has changed in the new CDM regulations to include all construction work except where the project is for a domestic client, when work is expected to: • Last more that 30 working days • Involve more than 500 person days (e.g. 50 persons working for over 10 days) Where the project is notifiable, builders now have increased responsibilities. One of the main requirements is the preparation, development and implementation of a construction phase health and safety plan. Are there any exceptions for small builders? There is a concession to employers with less than 5 employees in that they do not have to produce certain written assessments. Is there any training I can do to get me up to speed with the new regs? Health and safety courses run by the National Construction College cover the updated regulations. One of the best options is to sign up for Site Safety Plus, a group of courses that was put together in response to the changing legislation. It is a lifelong approach to health and safety built around and including the industry-respected ConstructionSkills Site Management Safety Training Scheme (SMSTS). What are the penalties for non-compliance with the CDM regulations? Failure to observe the requirements of the CDM regulations is a criminal offence. Related internet links: Health & Safety courses run by the National Construction College offer a refresher on the CDM regulations. HBXL’s Health & Safety Xpert software interprets the Approved Code of Practice for the new CDM regulations. Construction law firm Joyce Legal. Partner Raymond Joyce is author of ‘The CDM Regulations Explained’. Health & Safety Executive website on the new CDM Regulations. The CDM Regulations in full (government website). ]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.14309 2007-09-17T15:06:39Z 2008-02-14T10:04:49Z

Energy ratings are the latest Government gimmick to make people cut down the amount of fuel they use in their homes. So how do they affect the builders who build those homes? Our Q&A should answer all your questions....

Will Mann Energy ratings are the latest Government gimmick to make people cut down the amount of fuel they use in their homes. So how do they affect the builders who build those homes? Our Q&A should answer all your questions.]]> What are energy ratings? They are a way of comparing the amount of fuel that would be used in differently built homes assuming that the occupants live in them in the same way. The system looks at the energy efficiency of materials and designs used in construction. What has that got to do with me as a small builder? All new homes now have to come complete with an energy rating. Conversion work like turning a barn into a house means a rating also has to be supplied. How is energy efficiency measured? The main indicator the Government uses for energy efficiency is the SAP (Standard Assessment Procedure) 2005 calculation. The SAP rating scale is from 1 to 100, the higher the score the more efficient the property. What does this SAP thing measure? The SAP ratings take into account levels of thermal insulation, types and efficiency of the heating system and ventilation of the property. Who does the measuring? There are scores of independent testing companies competing to provide SAP services as well as providers of SAP software. The Building Research Establishment provides a list. When do I need to get a SAP rating? You need an initial SAP rating at the design stage of a new house or conversion project. Many planning authorities will refuse you permission to build without it. Once the job is completed you can apply for the second ‘as built’ rating. If the house passes then the SAP score is used to produce an energy rating which is displayed in the premises. I’ve also heard about Energy Performance Certificates. What are they? They are another rating system for older four-bedroom or bigger homes bought and sold in the UK and form an integral part of the controversial Home Information Packs. They measure energy efficiency and carbon emissions on an A to G scale in a similar way to the labels found on domestic appliance like fridges. Who are they for? They are aimed at home buyers and also provide information on average costs for heating, hot water and lighting as well as including cost cutting ideas. So they could be to my advantage? Yes. The reports prepared by qualified home inspectors advise homeowners on a range of energy efficiency measures which could provide work for you. They include anything from better loft insulation to installing solar panels which can cut carbon emissions and improve the energy rating of a home. See also: Part L - a Q&A for builders Related internet links: Government website on energy performance of buildings]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.13847 2007-09-07T09:08:29Z 2008-02-14T10:04:49Z

Part L of the Building Regulations is one of the Government's tools for making new and existing buildings more energy efficient and helping to cut down on carbon emissions. Part L is complicated and can mean a lot of form-filling,...

Will Mann Part L of the Building Regulations is one of the Government's tools for making new and existing buildings more energy efficient and helping to cut down on carbon emissions. Part L is complicated and can mean a lot of form-filling, but all builders will need to comply. Our handy guide will answer your questions and help you avoid the pitfalls of dealing with the demands of Part L. ]]> What building work is affected? New builds, refurbishments and extensions. If you work on any controlled element like a wall, roof, floor, window or door then Part L comes into play. What - just fixing a roof means I have to comply? Strictly speaking yes. You have to consider improving energy efficiency levels on anything changed in a building including hot water and lighting systems. How do I make sure I’m doing it right? A building notice or plans have to be sent to the local authority building control department. How much does that cost? Fees are on a sliding scale from around £100 for a simple extension to thousands for new housing developments. Local authorities set their own prices. Sounds like a red tape nightmare? Some sectors like window replacement and air conditioning have a self certification scheme for competent installers which cuts down on paperwork. You can find a full list here. I’ve heard plans need to include all sorts of calculations. Do I need to be Carol Vorderman to work them out? The terms seem daunting but are fairly simple. Energy efficiency is measured in U-values which measure the heat flow through materials - the higher the figure, the higher the heat loss. Minimum standards for products and a guide to calculations can be found here on the Building Research Establishment website. A whole raft of computer software is also available to help you with the numbers. An energy rating is required for new buildings or changes of use like barn or flat conversions. What is a building log book and how do I prepare one? Log books only come into play with new buildings and major refurbishments. They act as a guide for future owners and should contain details of energy efficiency measures and building services and how they are maintained and serviced. What happens if my client and I decide just to ignore these regulations? You will get in trouble I’m afraid. Local authorities are hot on people breaching the rules and will prosecute those they catch. Not notifying the authorities of work covered by the regs can lead to fines of up to £5,000. Author: Grant Prior Related internet links: The full Part L documents at Planning Portal. Advice on building control performance standards from the Association of Consultant Approved Inspectors.]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.12625 2007-08-07T13:40:32Z 2008-02-14T10:04:49Z

No-one likes paying tax. But complying with the Construction Industry Scheme is the only way you as a small builder can avoid a visit from HM Revenue & Customs and a hefty fine. Construction has its own tax regime governing...

Will Mann No-one likes paying tax. But complying with the Construction Industry Scheme is the only way you as a small builder can avoid a visit from HM Revenue & Customs and a hefty fine. Construction has its own tax regime governing how payments to subcontractors for building work are handled by companies. ]]> Moving from paper to electronic The new CIS scheme came into force on April 2007 in a bid to drag the process into the 21st century. Previously tax-status checks were carried out using an archaic system of cards, certificates and vouchers. Now virtually everything is electronic and you deal with the tax man by phone or online via the internet. First steps The vital first step is registering. Small building firms should sign-up as contractors on 0845 6070143 while all subcontractors including sole traders should contact 0845 366 7899. Your details will go into the Revenue’s database and officials will use that information to decide what tax rate everyone pays – a process known as verification. (link to second article?). Payments Payments you make to subcontractors then face a 20% standard tax deduction or the higher rate of 30% for anyone not registered with the Revenue. Some subcontractors can be paid gross if they have a turnover of more than £30,000 and are up to date with their tax records. Check HMRC factsheet CIS343 to see if you qualify. The Revenue is trying to cut down on paperwork but the new system still invloves a lot of form filling. Monthly returns have to be sent to HMRC online or by post with fines of up to £3,000 for giving dodgy information. Once you’re registered, you will need further detail on how to use CIS to deal with payments and what returns you need to send back regularly to the HMRC. Author: Grant Prior See also: New CIS - how do I verify sub-contractors? New CIS - how do I submit returns to the taxman? Related internet links: HMRC official guide to the new CIS HMRC quick guide to the new CIS (PDF) HMRC online FAQs HMRC advice on what types of construction work are within the new CIS (PDF)]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.12630 2007-08-07T13:27:07Z 2008-02-14T10:04:49Z

Builders must make returns to the Revenue every month detailing what payments and deductions have been made to all subcontractors. HMRC will also want a declaration confirming that you have checked everyone’s employment status and carried out the verification process...

Will Mann Builders must make returns to the Revenue every month detailing what payments and deductions have been made to all subcontractors. HMRC will also want a declaration confirming that you have checked everyone’s employment status and carried out the verification process properly. an approved list. These programs will help run your entire payroll operation and are compatible with the Revenue’s computers. You have to make returns within 14 days of the end of the tax month even if you haven’t made any payments to subcontractors. When no payments are made within a month, this is called a ‘nil return’ and still has to be recorded by the Revenue. To help you remember your returns the tax man has come up with a sliding scale of penalties for anyone missing deadlines. You will be hit with an automatic £100 penalty for filing late plus an extra £100 for every 50 subcontractors shown on your late return. And the fines won’t go away because the Revenue will levy the same punishment for every subsequent month the return is late. All tax deductions made from subcontractors also have to be paid over by the 22nd of the following tax month at the latest. Author: Grant Prior See also: New CIS - what small builders need to know New CIS - how do I verify sub-contractors? Related internet links: HMRC advice for contractors on the monthly return (PDF) List of software suppliers who have received HMRC recognition for new CIS]]> tag:www.buildersbox.co.uk,2007:/blogs/builders-legal-and-financial//96.12629 2007-08-07T12:54:21Z 2008-02-14T10:04:49Z

Before subcontractors are verified, builders have to check they are genuinely self employed and are not actually employees who should be payed under PAYE. There are lots of technical arguments around this issue but workers are usually self-employed if they...

Will Mann Before subcontractors are verified, builders have to check they are genuinely self employed and are not actually employees who should be payed under PAYE. There are lots of technical arguments around this issue but workers are usually self-employed if they are in business on their own and are responsible for the firm’s success or failure. online guide to help decide employment status is provided by HM Revenue & Customs. The guide is a series of simple questions which will help you make a decision in complicated cases. Once that’s sorted out you need to contact the Revenue to verify a subcontractor to see if they should be paid gross or be deducted at 20% or 30%. Finding out is easy on 0845 366 7899 or online at the HMRC website. You will need to provide the Revenue with the subcontractor’s name, National Insurance number and Unique Taxpayer Reference number. If the subcontractor can’t supply you with all these they will probably end up facing higher deductions, so it’s in their interests to come up with the information. The Revenue operator or online reply will tell you what deductions to make before giving you a verification reference number to confirm the advice. It is important to keep these numbers for your future records. You only need to go through the process once for each subcontractor and can then keep paying them using the agreed deduction. Now you know how much you should be paying subcontractors it is just a question of making regular tax returms and keeping accurate records. Author: Grant Prior See also: New CIS - what small builders need to know New CIS - how do I submit returns to the taxman? Related internet links: HMRC advice on contractors' obligations HMRC advice for contractors on verifying sub-contractors (PDF) HMRC advice for contractors - are your workers employed or self-employed? (PDF)]]>