BuildSafe launches new escrow service for prefabricated building components and indent goods BuildSafe, the New Zealand building and construction sector specialist escrow service has launched a companion service to its residential security of payment scheme. Tradesafe was recently launched specifically to meet the needs of suppliers and purchasers of prefabricated components and indent supplied goods for building projects such as joinery, windows, fireplaces, flooring, furnishings etc. With a minimum fee of $10 and a maximum fee of just $37.50 TradeSafe is already making its mark as a credible and practical means of protecting parties to what can otherwise be high risk transactions for both sides. The recent failure of furniture supplier PK Furniture is a good example of why paying deposits to suppliers/merchants in advance of receiving goods and services is a high-risk game plan.
More building companies go bust The recent high-profile failures of former Certified Builders member Point to Point Holdings and former Master Builders member Cranston Homes are just further examples of why using BuildSafe’s independent escrow services is just ‘plain commonsense’. Point To Point is reported to have gone into liquidation owing almost $2 million to creditors including 30 homeowners who have been left in the lurch, some for the second time, having paid deposits of $40-50,000 per dwelling and with nothing to show for it. To add insult to injury, it would seem the company operated on a heavily front-loaded milestone payment system with one couple reported to have paid $130,000 with only an unusable foundation on their Gulf Harbour section. Cranston is reported to have failled owing creditors about $1.5 million including customers who paid deposits for houses who are owed about $160,000. Despite record building activity levels, residential building remains a high-risk activity with many building companies operating well beyond their capacity, experience and resources in a virtual financial nirvana as a result of iniquitous front-loaded milestone payment regimes. This false sense of ‘financial wellbeing’ created by taking money in advance of delivering services sees them artificially cash rich until it comes time to finish projects for which there is no longer any money available from their clients and the only source of finance to complete those projects becomes the deposits they take from new clients – it’s called robbing Peter to pay Paul and among other things, it’s a recipe for disaster for both the builder and its clients.
UK Government offers no cost cladding checks in wake of Grenfell Tower fire In the wake to the Grenfell tower disaster the Department for Communities and Local Government (“DCLG”) is offering to test the cladding of private residential blocks in England. This is due to the public concern about problems with the type of cladding which was used on Grenfell Tower. DCLG has asked owners, landlords and managers of private residential blocks to consider checking their properties to identify whether any cladding panels are made of Aluminium Composite Material. If Aluminium Composite Material is identified, then a sample can be submitted to the Building Research Establishment (“BRE”) for testing. Priority is being given to buildings over six storeys or 18 metres high. Initial testing will be paid for by