ST Explains: What to look out for when engaging renovation contractors

SINGAPORE - When renovation contractors ask for large amounts in deposits, some home owners may not bat an eyelid.

But it is often a tricky situation to navigate when things go awry, such as in the case of an owner of a Novena penthouse, who

paid a deposit of more than $152,000 to renovate his home,

only for it to be left in a wrecked state since July.

The contractor from the company Renosaves Project is nowhere to be found. He had promised to install a marble feature wall and chandelier, among other things, but left the more than 3,000 sq ft unit in a mess, with construction material piled up in the rooms and wires dangling from the walls.

More than 10 home owners who engaged Renosaves Project, and were similarly left in the lurch, have contacted The Straits Times since the report in November.

They have lost amounts ranging from $20,000 to $30,000 since 2022, and several have lodged police reports and filed claims with the Small Claims Tribunals.

Contractors were consistently among the top three industries with consumer complaints from 2021 to 2023, according to the Consumers Association of Singapore (Case).

Here are some tips on how to remain vigilant when you are looking for a renovation contractor:

1. Engage accredited contractors

Case president Melvin Yong advised consumers planning home renovations to engage CaseTrust-accredited renovation contractors.

“CaseTrust-accredited renovation companies are required to adopt the CaseTrust Standard Renovation Contract, which clearly outlines work and payment schedules and service warranty, and provides transparent pricing,” he said.

Contractors that are CaseTrust-accredited have to keep initial deposits capped at a maximum of 20 per cent of the total cost, and payments are collected in phases upon agreed milestones.

They are also required to purchase a deposit performance bond, which safeguards deposits against business closure before the renovation is completed.

Mr Vincent Li, a committee member of the Singapore Renovation Contractors and Material Suppliers Association (RCMA), said consumers should engage renovation companies that are also listed in the Housing Board’s Directory of Renovation Contractors or the Building and Construction Authority’s directory as these companies have a good record and are vetted.

“A well-established company will consistently update and maintain these certifications to demonstrate its credibility and capabilities,” he said.

“Even if you are renovating a condominium, I would still recommend engaging a contractor that is licensed by the HDB.”

They can also check if the company is a member of the RCMA, which screens accredited renovators and limits the number of members to about 10 per cent of registered renovation companies.

2. Find out more about the company

An Accounting and Corporate Regulatory Authority search can reveal information about a company, such as its paid-up capital, and the details of its officers and shareholders. It costs $5.50 to purchase a business profile.

Mr Li, who is also the founder of interior design company Starry Homestead, said details such as paid-up capital can be useful as it is an indicator of the company’s financial health. In Renosaves Project’s case, it has a paid-up capital of $20,000, he noted.

Mr Li asked: “If the business owner spent only $20,000 to set up the company, how can it carry out projects with over $200,000 in value?”

HDB requires private limited companies to have at least $50,000 in paid-up capital to be listed in its Directory of Renovation Contractors.

Mr Li added that consumers should always check a company’s website and social media reviews.

“A reputable company would list its designers, manpower, track record and portfolio on its website,” he said.

3. Compare companies and look out for red flags

Mr Li advised consumers to consult at least three renovation companies, visit their showrooms and compare their quotations.

“If a deal is too good to be true, it likely is,” he said.

Consumers should insist on a written contract – which indicates the agreed payment terms – and a renovation schedule to protect their interests.

If a contractor requests payments that are not covered in a contract, it is a red flag, he added.

“Some contractors may ask for quicker payments and attribute it to cash flow issues, but a company’s cash flow has nothing to do with the customer,” he said.

4. What to do if you are faced with an errant contractor

Consumers should report the incident to the police and Case.

Mr Yong, who is also the MP for Radin Mas, said that when Case receives a complaint, a Case officer will review the information and contact the consumer for supporting documents.

If the incident falls within its purview, Case can represent the consumer in negotiations with the retailer.

“If the matter is not resolved at this stage, Case will advise the consumer on their possible recourse, which can include filing a claim with the Small Claims Tribunals or seeking their own legal advice,” he said.

Consumers can file a claim with the Small Claims Tribunals if their claim has a total value of up to $20,000, or up to $30,000 if both parties agree to it. They will have to file a civil claim for larger amounts.

Case can also refer errant retailers – including renovation contractors – who persist in unfair trade practices to the Competition and Consumer Commission of Singapore (CCCS) for investigation.

CCCS can file injunction applications with the courts against persistent errant retailers, according to its website.

If they do not comply with the injunction order, CCCS can take them to court for contempt of court. If convicted, the offender could be fined up to $10,000 or jailed for up to one year, or both.

While CCCS has not taken any renovation contractors to task, it remains “vigilant in monitoring market practices”, a spokesman told ST on Nov 30.

CCCS’ focus is on identifying and addressing unfair trade practices that are particularly egregious, such as situations where there are numerous cases against a single contractor who persists in unfair practices despite Case’s intervention.

“CCCS will assess the reasonableness of the contractors’ actions and the extent of consumer harm to decide whether to investigate such cases with the view of obtaining orders from the court to stop the contractor from persisting in the unfair trade practice,” its spokesman said.