Last edited 30 Sep 2014

Self-build homes negotiating discounts

Contents

[edit] Introduction

Self-build homes involve purchasing a significant quantity of materials, goods and plant. This gives a degree of purchase power that can allow self builders to negotiate discounts.

In very simple terms, the greater the value of the items being purchased from one supplier, the greater the opportunity to negotiate a discount. This means there can sometimes be benefits from buying more items from a single suppler rather than a number of different suppliers, or sourcing every item direct from manufacturers. There can also be benefits to joining organisations that are able to exploit group purchase power.

Maximising discounts may require that items are purchased in batches, rather than one at a time, and it may be beneficial to show the supplier details of the proposed development so they can gauge the scale of the works involved. Negotiation can be easier where more than one quote has been obtained so that prices can be compared and one supplier played off against another.

Discounts of 10% or more may be possible. Trade accounts may be available to self builders, and these may include an automatic discount and a credit facility for payments.

It is important when assessing potential suppliers to check samples of the items available, and also to determine the lead time for ordering items in relation to the project programme.

Also, be aware that lower-price items may be available simply by changing brand, reducing cost without affecting performance. This requires research, but some suppliers may be willing to give advice.

[edit] Group discounts

Significant savings are available by joining groups that have already negotiated group discounts for self builders:

[edit] Contractors

Custom home developers and kit home suppliers may have already negotiated discounts with suppliers for a range of products that the self builder might want to purchase, and may be able to give advice on the purchase of other items outside of the contract

Contractors working for the self builder should already be benefitting from discounts, and it is important to verify that these are being passed on to the self builder, and that items are not being charged at the full price. Contractors may be able to give advice on the purchase of items outside of the contract.

[edit] VAT

Self-build homes and the conversion of non-residential buildings into dwellings may qualify to reclaim the VAT paid on eligible building materials and services. The building must not be intended to be used for business purposes.

See VAT refunds on self-build homes for more information.

[edit] Organisation

It is important to be properly organised when purchasing large quantities of goods and materials, with files for:

  • Requests for quotations.
  • Submitted proposals and prices.
  • Orders.
  • Confirmation of orders, prices and delivery.
  • Delivery receipts.
  • Invoices (separating the VAT element on the direct purchase of materials).
  • Accompanying product literature such as; assembly instructions, operating manuals, spares and consumables information, maintenance and repair depots.
  • A ledger recording all payments and financial commitments.
  • Receipts of payment.

Other issues to address when obtaining quotations and placing orders include:

  • Allowing for cutting and wastage.
  • Purchasing spares and consumables to take full advantage of purchase power.
  • Obtaining warranties wherever possible.
  • Obtaining servicing and maintenance quotes at the same time to take advantage of competitive leverage. This might include; boiler plant, heat exchangers, security systems, sewage treatment systems, automatic gate systems, garden maintenance and so on.

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