6 tips for not getting cheated by your renovation firm

It's incredible that in a country that prides itself on its strict laws and lack of corruption, certain industries (like renovation and electronics) are dominated by crooks who run their thieving "businesses" for years with no repercussions.

The renovation industry is notorious for being so dodgy that it's pretty much assumed your contractor will try to rip you off-it's just a question of how much. These folks lost a whopping $63,000 to a dodgy renovation company.

The most common scams usually involve the hapless customer paying a large sum of money upfront, in the form of a deposit and sometimes extra fees for materials.

The contractor then proceeds to do really crappy work or-can you believe it?-run away! This is no sophisticated scam, the guys just take the money and run. Even pickpockets have more complicated ways to rob people.

The renovation industry is unregulated, which means you or I could set up a renovation firm tomorrow with zero knowledge of how to hold a hammer, and then subcontract the work to some random uncles we met at the kopitiam an hour ago.

Here are some tips to protect yourself from getting scammed.

Never pay a big deposit upfront

No matter how "low" the quoted price, never ever pay a big deposit upfront.

Any deposit worth more than 30 per cent of the total price is excessive, while the industry standard is about 25 per cent.

Beware of companies at renovation or interior design fairs and never pay a deposit at the road show itself, as there are scammers there, too.

HDB renovation: The Dos and Don’ts

  • No loads greater than 150 kilograms per metre square of floor area is allowed, to ensure that structural integrity isn’t compromised. So you may want to check how much that freestanding bathtub, for example, weighs.
  • This may be obvious, but you can’t hack or remove structural entities like columns, beams, reinforced concrete walls (the load bearing walls), as well as floor slabs and staircases in a maisonette. It’s best to differentiate which is which and determine what you can’t touch first.
  • Void areas, such as the double-volume staircase area within maisonettes, have to remain as they are — no absorbing them as part of your floor area to get a bigger space.
  • The maximum you are allowed to raise your floor level using concrete is 5 centimetres. This includes the thickness of the finishing (e.g tiles) as well. If you want to have platforms, make sure the frame is constructed using other materials like timber joists.
  • This includes applying paint to anywhere outside your flat, like the window ledges, common corridor walls and ceilings. Take note as well that you’re not supposed to install external grilles on the air-con ledge or use the space as something else.
  • Some renovation works require a permit. Such works include hacking and demolition of internal non-structural walls, enlargement of bathrooms, replacement of floor and wall finishes, changing of floor level, repositioning of internal door entrances, and installation of water feature or pond.
  • Verify with the HDB if you need one, otherwise you may be required to reinstate the changes.
  • When you get the permit, the approved work has to be finished within three months for new blocks, and one month for existing blocks.
  • For new flats, you cannot immediately hack away the floor or wall finishes provided by the HDB in your bathroom. You can only do it three years after the completion date of the block to ensure that the waterproofing membrane laid on the cement screed prevents water leakage.
  • Nevertheless, you can lay new finishes over using adhesives — consider the new slim tiles available in the market for this.
  • When renovating your bathroom, prepacked waterproofing screed and waterproofing membrane has to be applied before laying new floor finishes. After which, conduct a water test with your contractor, as the HDB places heavy emphasis on waterproofing.
  • Even though you engage a HDB-registered contractor, as the homeowner, you are responsible for your own renovation and anything that goes wrong. HDB expects you to ensure that the work carried out is according to the requirements, so never fail to check with your contractor.

You should also never fork out the cash for a deposit, no matter how low the sum, without having gone through and signed all the necessary paperwork.

If no contract has been signed, you basically have zero protection, so good luck trying to get your money back when the ID firm suddenly tells you that the tiles cost 5 times the price you were previously quoted.

Never pay a single cent without reading and signing all the necessary paperwork.

It never fails to amaze me how people fork out hundreds or even thousands of dollars in cash at renovation fairs without even knowing the terms of their agreement with the renovation company. And no, a receipt for your deposit is worth nothing.

You need to examine and sign a contract with the ID or reno firm before paying.

Some things to look out for before signing include the following:

- Payment terms and progress of works: Payment after the initial deposit is usually made according to stages of completion of the works. So you might have to pay a certain percentage for purchase of materials, and then the final percentage upon completion of the works. Make sure the payment schedule is spelled out.

- Cost of materials and renovations: Some ID firms are notorious for jacking up the price of their materials once you've paid a deposit, so if possible you want to get proof in black and white of the prices they're offering you for the services and finishings you want. Note however that they will usually reserve the right to change the price of the finishings.

- What is excluded from the package: While the lump sum quoted by the company might seem low, you want to find out what extras are not included and will have to be paid for in addition to your package. This might include lights, electrical work and air conditioning.

- Termination clause: It's a must to find out how to terminate a contract before entering into it in the first place. Lots of people have wanted to drop their ID firms after realising they were taking months to commence work or being unresponsive. Check if there are any penalties (you'll almost definitely lose the deposit).

Be wary if the company quotes you a very low price

If you pay peanuts, you get monkeys. This is very true in the renovation industry.

Scammers' most recognisable tactic is quoting low prices and then asking for a big deposit in exchange, since you'll be "saving" so much in the long run.

One hallmark of renovation scams is the "special package" that's valid only at whatever roadshow the company happens to be at.

These guys will try to persuade you to pay a deposit at the fair in order to "secure" a good price, and then take eons to respond to your requests, hike up their prices or do shoddy work.

Visit the company's office and ongoing sites

In case you haven't already realised, it's a bad idea to sign up for packages at renovation fairs. Some of these so-called companies are actually one man shows being run in the bedroom of some guy's HDB flat.

You will most definitely be presented with glossy catalogues full of beautiful 3D renderings, but as anyone who's used Tinder should know, pictures lie.

Visit the company's office (this might even be someone's home) and request to drop by some of their ongoing sites before making a decision. Many scammers don't even have a proper office with evidence of design work going on, and if they earn all their money by running away from their customers, they probably don't have any decent sites, either.

4 tips on how to budget your renovation costs

When work has commenced, make frequent site visits

The contractors are going to be spending a lot of time alone in your home. For all you know they could be throwing wild parties or doing drugs in there.

Even if the ID is your best friend, the actual works are usually subcontracted, so make sure you drop by and supervise the workmen as often as you can. There have even been complaints of contractors stealing stuff from homes, do don't leave the family jewels lying around.

Try to use a CaseTrust-accredited company

If you're paranoid about losing money, you might be able to sleep a bit more soundly at night by using a CaseTrust-accredited company.

In theory, you'll be able to receive compensation or get back your deposit if the company doesn't deliver on its promises. Accredited companies get to display the CaseTrust logo on their storefront.

Do all of the above and your dream home is less likely to become a nightmare. If you're looking for a way to finance your renovation, compare renovation loans right here on MoneySmart.

The article first appeared on MoneySmart.

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