Most contractors in Singapore are honest, but it pays to protect yourself and your renovation budget from the less ethical ones.
Hiring a contractor for your home renovation is a nerve-wracking experience because of the cost. But if you’re unlucky, contractors can actually make your bill skyrocket through negligence or outright scams.
If you live in an HDB flat, you are better protected than those who stay in private housing. HDB only allows approved contractors, most of whom are reliable (they don’t want to lose their approved status).
If you get a contractor for condos and private housing however, you need to be on your guard. Standards are inconsistent between different contractors. For example, some contractors claim to be interior design firms, despite having only a few designers who will not be involved in implementing the renovations. (Note: interior designers and contractors are not the same. Some individuals may be qualified to be both, but the two are separate jobs.)
While most contractors in Singapore are honest, it pays to protect yourself from the less ethical ones. Here are some ways your contractor can potentially screw you over.
Your Contractor Can Cause You to Lose Your Deposit
When you obtain a permit for renovations, you will usually be asked to make a security deposit. This varies between the management councils of different developments, but the typical deposit is S$1,000.
This deposit is to ensure that your contractor does not cause damage to the property (besides your own unit). While you think that may be simple to avoid, losing the deposit is actually a common complaint. Some examples of how this can happen include:
- The contractor damages the elevator, when moving heavy items into it
- The contractor jams the rubbish chute for the block, by dumping waste materials (wood, plaster, paint buckets, etc.) in it instead of bringing it to the dumpster.
- The contractor breaks a door in the common corridor, while trying to squeeze equipment through
- The contractor damages the tiling in lobby, cracking or scuffing it by dragging heavy equipment
The last thing you want is to be caught in an argument between your contractor and your management council (it’s also an argument you might end up paying for).
Always clarify that your contractor understands the rules, and check the terms of the service contract. Ensure it spells out who has liability, in the event of such cases. Note that you will almost always have to pay for the damages first (seek legal counsel for more information); but you can claim it from the contractor later, if your contract spells it out.
Your Contractor’s Insurance Gets Lapsed
Any legitimate contractor will have valid insurance. However, it’s not unheard of for some contractors to allow their policy to lapse (but lie that it’s still valid). This is problematic for you, in the event that they cause accidental damage.
Most home insurance policies – or home content insurance – do not pay out in the event your contractor damages something. Such claims are supposed to be made against your contractor’s insurance. If your contractor doesn’t happen to have insurance, you had best hope they can make up for the damage somehow.
While the contractor is likely to fix it for free, remember that they may need to buy materials to repair the damage. If they don’t have cash on hand, this could mean they’ll take a while to get around to it.
Your Contractor Can Source for Cheaper or Knock-Off Furnishings
When you get your contractor to purchase and move in various furnishings (like your sofa set), always be sure to check the paperwork. The invoices and receipts should show they came from a legitimate dealer.
The reason is that sometimes, the contractor will source for a cheaper supplier; unethical ones will even produce their own knock-offs, and try to pass it off as the real thing. This could be problematic if you need to claim the warranty later. But that’s the least of your problems.
You might find, further down the road, that your knock-off furnishings don’t last. By the time they fall apart in six months, the contractor may no longer be contactable or liable (shady contractors close and open under new names all the time, thus absolving them of the liabilities of their old company).
Busting the Budget After Taking the Renovation Loan
The maximum renovation loan is often six months of your income, or S$30,000 (whichever is higher). However, some contractors will “lowball” you at the start. They will try to get your business by offering an absurdly low and attractive rate.
Later, they will find themselves unable to complete the job within the given budget. This can be a nightmare for you, if you have already taken a renovation loan for a given amount. It’s a pain to have taken a S$20,000 reno loan, and then get told you need S$5,000 more. It will cost you money to take another renovation loan, as you will pay processing fees again. You will also pay more interest, as each of the loans has its own interest rate at around 5% p.a.
If you have already taken the maximum loan amount of S$30,000, you may need to take personal loans to top up renovation costs. These have higher interest rates at around 6% p.a. to 9% p.a., but check on SingSaver.com.sg. and we may be able to get you a better deal.
Currently, Citi Ready Credit Paylite Personal Loan has one of the lowest rates in Singapore, at 4.55% p.a. (EIR 8.5% p.a.) for new customers. You also get a S$100 NTUC voucher if you apply for it through SingSaver.com.sg. before 31 March 2017.
Regardless, if it’s clear your contractor is only halfway through and already asking for more money, then consider pulling the plug. You may have been lied to about how cost-effective their services are.
Making You Pay Unnecessary Fees to Suppliers That Give Them Commissions
Be wary if your contractor offers to buy your air-conditioner. The same goes with appliances like stoves and refrigerators. Where possible, it is always best to shop for these yourself first, so you can check against prices they quote.
Some contractors will tell you they have special deals and can get these items cheaper. This may be true, as contractors have close working relationships with these companies. However, an unethical contractor may not be interested in finding you the best deal. They may just refer you to the company that pays the biggest commission. In extreme cases, you may wind up paying more than if you just go to the contractor yourself.
It’s convenient to just let the contractor pick everything, but don’t give in to the temptation. Do a little legwork and see if you can find a better deal.
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By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.