Gerhard Kotzé, CEO of the ERA South Africa property group, has sounded the alarm bells in this respect, pointing out that the instance of defaulting contractors and dubious business practices appears to be rising in the current market.

“Not for a moment do I wish to tar all home builders with the same brush. There are plenty of excellent operators out there who are surviving in the current tough economic climate by dint of quality work and good management,” he says. “However, the scarcity of work, keener contract prices, lack of bank credit and rising labour and materials costs all increase the risk of builder default and bad practice right now and ‘caveat emptor’ must now be the call among potential clients.”

Kotzé cites an instance in East London recently where a client placed his faith in a builder who insisted upon advance payments for a semi-completed structure and then simply disappeared, leaving the unfortunate client to cough up even more money to get the job finished.

“Typically in tough times, such operators have a number of contracts in hand simultaneously, with the various cash flows being juggled to meet their obligations, but it takes just one thing to go wrong and the whole house of cards collapses.

“Poor planning and bad management are clearly to blame in many of these instances and there’s also evidence to suggest that newcomers in the market, including artisans who have been retrenched from established firms, are competing for what business is available by offering prices that are unsustainable – but of course tempting to the unwary. The results are predictable.”

Consequently, he says, the only answer for homeowners is to run some checks before hiring any builder. Firstly, you should establish whether the builder is a member of the National Home Builders Registration Council (NHBRC), the organisation set up to uphold construction quality in the home building industry and protect consumers. You can visit www.nhbrc.org.za to search for your builder and / or view his current registration status.

“But it is important to note that the NHBRC protection against shoddy workmanship or financial loss does not extend to additions or alterations made to existing homes – so in such cases NHBRC registration is really only a measure of the builder’s good intentions.

“What you really need are real, positive testimonials from previous clients – ones you can contact and speak to personally. And finally, you should carry out your own credit check on the builder (see www.credithealth.co.za) and obtain a letter of reference from his bank.

“All this may appear onerous, but at the end of the day, it’s your best financial safeguard.”

Article by: www.era.co.za