Do I need a building contract for renovation?

I have just bought a house which needs renovation. I have an architect who has prepared plans and I now need to engage a contractor. What are the main things that I need to be worried about? The cost of the works is likely to be in excess of £500,000.

Thomas Moran, partner at Speechly Bircham, says that in the current economic environment many people choose to expand or renovate their existing homes. This is particularly evident in central London owing to the demand for housing and the high price of property.

However, most people know someone who has had a “nightmare” with a builder. Quite a lot can go wrong, including cost overruns and the work not being “up to standard”. More worryingly, there have been several notorious collapses of underground basement excavations in London. It is therefore advisable to put a well-drafted building contract in place when you are renovating.

This should specify the cost of the works (rather than relying on an initial quote that may spiral out of control) and provide a timetable for the works to be carried out so that both the owner and contractor are clear on what is to be done and when.

The building contract should also identify who bears the risk if something goes wrong. It should confirm that appropriate insurance is held by the contractor so that you can be sure you will be reimbursed for any losses.

Finally, the building contract should confirm that the contractor will provide all the appropriate warranties and guarantees relating to the renovation work. Not only will these documents provide you with peace of mind while you continue to live in the property, but they can also help when you come to sell, as any well-advised purchaser will ask for them.

Taking specialist advice to put in place a building contract that clarifies these issues should put you in the best position to control the situation, and ensure that you get what you pay for and are protected if, or when, things go wrong.


Where there’s no will...

I have never written a will because my affairs are reasonably simple and, on my death, I want all of my assets to pass to my wife or, if she does not survive me, then to my children. Do I need to go to the expense and effort of writing a will?

William Begley of Speechly Bircham, says that if you die without a valid will, your assets will pass in accordance with prescribed rules, known as the intestacy rules. These dictate who receives what and when, without any thought to your personal wishes.

Any assets which you own jointly, such as a property, may pass automatically to your co-owner outside the intestacy rules or any will. How your jointly-owned assets are held should therefore be checked, taking into account whether you want them to pass automatically. Everything else you own will, in the absence of a will, pass as determined by the intestacy rules.

These rules dictate that if your estate is worth less than £250,000 then it will pass to your wife in its entirety. However, if your estate exceeds £250,000, your wife will receive your personal belongings and only a further £250,000 of other assets outright. The remaining assets will be divided between your wife and your children so that your wife will have a life interest in half of those remaining assets and the other half will pass to your children in equal shares at the age of 18.

Depending on the value of your assets, this may unnecessarily trigger inheritance tax on your death, which could mean that assets, including your home, would need to be sold to fund the liability.

Putting a will in place directing that all your assets pass to your wife on the first death and, if she does not survive you, to your children, should mean that no inheritance tax is payable on your death.

There are many other reasons why people choose to write a will. These include the ability to choose your executors as well as to appoint guardians for minor children (although this can be done other than by a will). It could also be to facilitate the making of gifts to charities, friends or other beneficiaries who would not receive anything under the intestacy rules as well as to state an age at which children inherit so that they do not receive assets at an unsuitably young age.

Some people write a will simply for the peace of mind of knowing that their assets will pass in accordance with their wishes, rather than a statutory formula.

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