Tradesmen fear for jobs as black economy hits home improvements

THE black economy has seen a steep increase in the home improvement sector and may put many registered professionals into receivership, according to a new survey.

Based on a sampling of 6,400 small builders and tradesmen nationwide, 84% reported an increased demand by home owners for ‘nixers’ or ‘cash only’ prices for their home improvement projects, making the sector difficult for compliant and registered trade professionals.

Some 13% of those surveyed expect to go out of business during 2011. The survey was taken by the professional network Onlinetradesmen.ie as part of their outlook for the Irish trade sector in 2011.

“While our members are winning more business than most, tradesmen throughout the sector are reporting an increase in the number of property owners requesting ‘cash only’ prices for projects,” said Ted Laverty, managing director of Onlinetradesmen.ie.

“This is fuelling the black economy. Registered trade professionals with overheads such as insurance, VAT and taxes are struggling to compete with non-compliant operators. This will result in more businesses failing within the sector in 2011 and the Government needs to tackle it quickly.” Mr Laverty advises that hiring tradesmen on this low-cost basis can cause problems over time.

“Where VAT is not paid on a home improvement project, it can be difficult to claim against a builder or tradesman if their workmanship fails down the line. Going down the nixer route often results in poor workmanship and the use of low grade materials.”

Jobs done on a nixer basis, where the tradesperson gets paid and the home owner saves cash, invites below par workmanship as the tradesperson carries no obligation if something goes wrong, and allows the property owner no recourse to the small claims court or other legal avenues.

Onlinetradesmen.ie also underlines that cash-only transactions cannot be declared as income, and may result in these rogue operators “shooting themselves in the foot” when looking for mortgages or business loans, as well as defrauding the Irish exchequer.