A lot has been said of late about construction companies and questioning their ability to produce a Fixed Price Contract. In order to understand whether there is any truth in the matter, we need to first understand what a Fixed-Price Contract is and how it is compiled. The fact of the matter is that Fixed Price Contracts are becoming a rarity among building companies.
When lending money from a financial institution to build a new home, one of the main requirements is to provide a Fixed Price Contract from a reputable building company. The lender needs to know that should a default occur, for whatever reason, the project can be completed and sold to recoup the funds. This risk taken by the institute to lend you the funds is greatly reduced using a Fixed Price Contract designed to protect the customer, the lender and the building company.
Most building companies who produce a Fixed Price Contract, do so on the building itself from its foundations up. This enables them to “clause out” anything below ground level, as this is often the great unknown. This gives them comfort over what they can control – the actual build. The site works will be given an allowance in the contract on what is expected, and some of the banks are happy with this depending on your personal financial situation and lending requirements. At Keith Hay Homes, we go a step further and produce a Fixed-Price Contract on everything covered in the contract, including any site works required.
The reason why a Fixed-Price Contract is considered preferential to banks, builders and customers alike, is that this gains the most amount of clarity on the true cost of the project. This provides protection for all parties involved.
So, what can...
