5. Be careful entering into a building contract
Andreas Suwono – National Risk and Compliance Manager
Since the introduction of the HomeBuilder grant in June 2020, the number of people looking to renovate or build a new house has skyrocketed. The result has been a dramatic increase in construction costs in 2021.
While some builders have passed on the price increase to their customers, those locked into a fixed-price contract have taken a hit to their bottom line putting them under significant financial stress.
With demand still well above the long-term average, builders will continue to feel the pinch next year as they struggle to source building materials, especially timber, at an affordable price. The expectation is that some will have to make the unfortunate decision to declare bankruptcy.
If you are building in 2022, expect higher costs and possible delays in completing your project.
If you’re signing a building contract that includes numerous out of contract items or a high percentage of provisional sum allowances, you must be vigilant. Without a turnkey building contract, you may end up well over budget. And make sure you stick to the agreed progress payment schedule. Don’t pay your builder upfront for work they have not yet completed.