How to protect yourself from ghost tradies

Previous winners of The Block, Alisa and Lysandra Fraser. Image supplied.

A game-changer has arrived in the building sector, and it could save you thousands.

Australians spent more than $2.7 billion on renovations in the first three months of this year alone, according to Australian Bureau of Statistics figures. Yet despite the major expense, agreements with tradies are often based on handshakes, pub advice and contracts scribbled on scraps of Gyprock, according to builder and industry veteran James Robinson. 

On a mission to transform the way home renovation projects are managed across Australia, Mr Robinson said change was needed before the industry self-destructed. 

“We have this culture of tradie pub advice - people think it’s the right way to do something because another tradie they met at the pub told them so,” he said. 

To compound the issue, the construction industry has the highest rate of insolvency in Australia. Corporate watchdog ASIC revealed nearly 3000 building companies went bust over the last financial year, creating a real risk of home renovators being left in the lurch. 

Having started his career managing contracts for top-tier infrastructure projects before launching his own residential building business, Mr Robinson was horrified by the lack of documentation in domestic renovation jobs, misunderstandings about the scope of work, and a lax attitude towards deposits. To solve the problems he was encountering himself, he developed Witzer - a free app that manages everything from quotes, contracts and payments to design inspiration, via a trust-account set up to keep deposits safe and all in one place. Now aiming for Witzer to be a game-changer across the building sector, Mr Robinson wants to see building disputes become a thing of the past. Here are some tips for a smooth and successful renovation project. 

Be deposit-savvy

Being asked to pay a 50 per cent deposit for a home renovation job is a common practice in the industry. It’s also illegal. The maximum deposit a tradesperson is allowed to request is between 5 and 10 per cent in most states, with the larger amount restricted to projects worth less than $20,000 in most jurisdictions. Previous winners of The Block, Alisa and Lysandra Fraser, have partnered with Witzer after being stung by ghost tradies in the early days of their interior design business. “This can happen when a tradie takes on too many jobs or has cash flow issues, then disappears once they've secured some initial payment,” Alisa said. Having learnt their lesson the hard way, she advised homeowners to avoid leaving large deposits upfront: “Payment can be tied to specific benchmarks, after certain stages of work are completed, and this ensures the tradie has the incentive to complete the job as agreed.”

Secure the chain

If a project is subcontracted out via a builder, homeowners may unwittingly find themselves with unpaid work or products on their site. Various examples of this have made recent headlines, when unpaid subcontractors have returned to a site to destroy their own work out of frustration. 

“There are four parts to a project - the client, the builder, then the subcontractors and suppliers, and we need to ensure everyone in the chain is safe,” Mr Robinson said. “Witzer helps everyone on the project get paid, if they’re doing the right thing. Funds are only released when both parties agree the job has been completed to standard as per the conditions set out within the contract.”

Understand progress payments

If an occupation certificate (OC) is required, homeowners should not pay the full amount before it’s issued - a rule that some tradespeople routinely breach. “If a certifier won’t sign off the work because it doesn’t comply, but you’ve already paid 100 per cent to your tradie, you’ve got no recourse,” Mr Robinson said. “I’ve seen a lot of homeowners held over a barrel because of this.” 

With Witzer, deposits are held securely in a Macquarie Bank trust account, reassuring tradies that the money has been paid while keeping it safe for homeowners until the job is completed. The free app makes its money off the interest on deposited funds while they’re in trust, in essence enabling deposits to fund their own protection.

Beware of vastly different quotes

A red flag should go up at the quotation stage if quotes from different tradespeople vary by more than 10 per cent, Mr Robinson warned: “it could mean that they’re quoting for a different scope of works,” he said. “The brief needs to be clear, so that they’re all quoting for the same thing and there are no misunderstandings. If a tradie has to guess something, they’re going to quote you on the worst case scenario.”

Share your vision

The Witzer app includes an inspiration tool, enabling homeowners to upload photos, Pinterest links, fittings and selections, so that their vision is easily accessible to all tradespeople involved. This can help keep things clear during the quotation stage, and throughout the project. “It’s all there, you’re not having to look through text messages, emails, bits of paper and things you’ve discussed verbally,” Mr Robinson said. “It keeps everyone on the same page.”

Keep a paper trail

Sometimes projects change along the way, and things can quickly get messy if variations aren’t adequately documented. “Both parties must agree to variations in writing - it’s not good enough to say ‘I wrote it down on a bit of Gyprock’,” Mr Robinson said. 

If a relationship does turn sour, Witzer makes all documents and communication available at the push of a button. “Having this tool, we’re putting trust back into the building industry,” Mr Robinson said. “Everyone involved can just focus on getting a great result.”