Who's Responsible for The Price Hike? Client or Builder?

Hi OzBargainers, I'm seeking advice for a granny flat build and I'll try to keep it short and simple.

Paid initial deposit + fees for approval to builder at the start of the year for granny flat (around $20k). Granny flat total cost is $120k. Contract signed and agreed at the time that the build will commence mid June.

Builder now rings me up and wants an additional $15k because of the recent interest and price hike. He mentions materials are now all up 10% at least and prefers to cancel the project if we can't come to an agreement.

Any help/advice is much appreciated.

Thank you all.

Comments

  • +25

    What does the contract say? Is it clear it's a fixed price delivery or are there clauses that fee is adjustable based on market conditions? Latter is much more likely from ones I've seen before.

  • +3

    Welcome to the world of cost plus construction.
    Unfortunately residential properties largely have this in their contract that they can vary the price depending on market conditions.

    Unfortunately you, like many will have to suck it up.

    Although you can ask for justification/invoices etc otherwise they could be taking the mickey.
    But yeah, in this case you'd more than likely have to wear it unless the contract says otherwise.

  • +4

    You mentioned that you signed a contract. The contract is between you and the builder for the granny flat that will include all of the info you need to check that the price increase will be based on other posts and news articles valid and above board.

    Watch cancelling the contract and make sure you read fully or get legal advise on the ramifications of cancelling and who is starting the cancellation and why as there may be penalties as per the contract.

    In summary before signing any contract read it and understand it!!!!

  • +2

    Can they keep turning around at building stages to ask for more?

  • are there clauses that fee - Hybroid
    unless the contract says otherwise. - Drakesy
    before signing any contract read it and understand it!!!! - AndyC1

    Please read it and report back.

    • +5

      just want to add a fair and balanced view of both sides here:

      you should never read contracts and just ignore whatever it says about the fee and keep arguing instead

      • These are the days of our lives.

  • +11

    Here we go again. FFS

    • +4

      steady… take your pills with a Red Bull..

      • +3

        Done. Thanks for the reminder. I'm feeling better already. Cheers.

    • Got some spare popcorn left over from last night's Origin match that I have ready at hand.

      • +1

        My company has asked me to stop using the microwave for popcorn. They said they are supplied for heating lunches.

        • +12

          One of our office girls put a sign on our work microwave saying it's "not for heating up hot chips" (because she doesnt like the smell) so, now it only gets used for heating up hot chips. :D

          • +2

            @pegaxs: You could try heating up a left over Chinese dish that has fish sauce in it and see if the request is changed to add fish sauce as it smells worse than chips when reheating IMHO.

            Heating up chips in a microwave are nicer when wrapped in paper towel or if you have a microwave browning dish (got my second hand one on ebay cheap a few years ago).

    • +1

      Eat a Snickers. Better?

  • +1

    Who's responsible for the price hike?

    Could it be Putin's price hike or Rona's supply chain or both?

    • funny how during the Gulf war there was no major oil price shocks or shortages, but lets blame everything on Putin now

      • It's actually COVID-19 and 5G fault's.

      • +1

        Wish I could give you a 100+

      • +5

        ??

        https://www.investopedia.com/history-of-oil-prices-4842834

        First Gulf War

        In August 1990, Iraq invaded Kuwait, sending the price of oil soaring from about $34 per barrel to nearly $77. After a U.S.-led military coalition succeeded in removing Saddam Hussein's Iraqi forces from Kuwait in early 1991, the price fell to about $37.

  • +1

    depends on the contract - but even so i'd guess there wouldnt be much you could do without taking 'legal' action in which it might be better to just pay the 15k or find someone else and get your deposit back

  • +3

    id say youre pretty lucky its only 15k (<10%).
    ive seen builders demanding 20%+ in this market.

    • +1

      These are for contracts signed 12+ months ago.

    • 12.5%

      • apologies for my terrible maths XD

  • +3

    interest hike has nothing to do with builders

    theyre just trying to gouge you

    • Some builders need to pay their suppliers before they get the money from you, so they have to borrow money to pay the suppliers.

    • +4

      There has certainly been significant increases for material over the past 6 months - 10% IMO is conservative.

      Since the start of the year for my build project:

      Steel battens for roofing - up about 50%
      Timber for wall frames - up about 20%
      Timber roof trusses - up about 20%
      Sarking - if you can find it - up about 30%
      Hoop iron - up about 30%
      Wall and rood insulation - up about 20%

      This just the things I've had dealings with - I'm sure every material item has increased similarly.

      • I heard glass is the thing that got up the most.

        • +1

          I'm not sure of increases, but I can confirm that the aluminium windows (and glass) cost an absolute #^(& load and be ready to wait months from order.

  • +1

    Who's Responsible for The Price Hike?

    Surprised no one blame the govt yet.

    • Not this government at least. The $25k home builder grant was pretty good at stimulating building. It was budgeted at $650m and now at $2.1bn (total of $25k grants, not total work). So you can see the amount of work that's been contracted. It is nuts. Everyone rushing in to try to build at the same time.

  • In Canberra, builders have mentioned that material is up 50-80% in some cases - just the reality of how things are at the moment. Though, I wouldn't be surprised if some people are taking advantage as well.

  • Since it's a 6 figure contract, did you consult a lawyer before signing? Ask that lawyer.

    No lawyer? You may have gotten screwed over for cheapening out on the contract without a lawyer review. Get a lawyer to review it ASAP and advise you. The culture of she'll be right when it comes to contracts is asinine when it's so much of your money on the line!

  • Building costs have gone through the roof !

    • How is that possible since the walls aren't even up yet to hold the roof?

  • In WA, people have been quoted extra $36-70k or like $20k to cancel (house not granny flat tho)

  • +3

    Container homes people! It's the only way!!!

    only half kidding, I've always thought converting shipping containers into a house (done properly, not just a welding touch and a nail gun) would be cool.

    • There is one not far from me and a mate did this to build an extension on his house. After it was all finished you would not even know containers were used.

    • I've always thought converting shipping containers into a house (done properly, not just a welding touch and a nail gun) would be cool.

      Not worth it

      • Australia - Ocean - Salt - Rust. What are containers made of? Steel ? Certainly not Stainless ….

    • Didn't know container homes were a thing until you said it. Some do look quite nice in a modern lifestyle kind of way.

  • I knew based on what was going on in the construction industry, and based on what's in my contract that a 'variation' was inevitable.

    If it wasn't going to be 'site costs' it would be a 'variation'

  • I know it's a crystal ball thing, but when should we expect prices to return to normal? A year? Years? Never?

  • +2

    there are reports in the US that construction materials have come back to normal.

    I would expect we are close to being in that situation but how long exactly im not sure

  • Contract?

  • +1

    If you go and attend a lawyer to draft a letter and read the contract you will be out by $ 3 to 5K.

    The builder has got your $ 20K, he can rescind the contract due to a situation beyond his control.

    It's your choice as you are not going to get another contractor to do the job @ your original price and finally new contractor will start your project next year and so he may also change his price at that time.

    With the current inflation going up you have no choice but to bite the bullet and let it go.

    Also, rest assured Contractors are already sent a letter to the client for the delay in execution of the project as no materials are available on shore and hence no penalty for late delivery of the project.

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