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Thursday, October 6, 2022
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HOME RENOVATION: MAN SAYS MANY INTERIOR DESIGNERS DOING SHADY BUSINESS

Renovation the part and parcel of life especially for those that are getting an HDB or a new condominium.

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A man recently shared a story about how interior designers became uncontactable after he made a deposit and his home was left half done.

Here is the story:

The issues homeowners face from our local renovation industry are not being discussed enough online. There are a ton of under-the-table deals at the expense of homeowners, zero regulation and a lot of scams homeowners have to dodge.

It should not be this hard for the average Singaporean to renovate a home. Things need to change in this industry.

IDs don’t require going through any courses or getting certifications before they become IDs. This is different from for e.g the real estate industry where you have to register with CEA and wear your tag whenever you are on-site. Or the financial industry where a business may need MAS regulation. For IDs, anyone can call themselves one, start a company and the moment there is a disupute, close down / run away with the deposit / start a new company. There are many such reported cases in the papers.

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But what I want to talk about here is the under-the-table relationship between IDs and suppliers that many Singaporeans are not aware of. Because homeowners like us will never know the real prices of materials, we will always be vulnerable to shady IDs and contractors. Because of the lack of regulation, there is nothing to stop IDs from overcharging as they please. Or even suppliers overcharging customers (us homeowners) when we try to manage the process directly.

We may even be thinking we’re getting a good deal when we’re not. Think of the Tuk Tuk’s in BKK that camp outside a tourist spot in a cartel-like manner to jack up prices together or the taxi mafia that prevents Grab drivers from coming in to pick up tourists. Sure, you can get market rates if you walk 1km+ out with your luggage to the open road and try your luck there. But it should NOT be that way.

I am sharing my experience with a recent interior designer (ID) because what happened to us is very common in the industry and we should talk about it and push for change.

Why it is difficult for the average homeowner:

  • The Interior Designer I worked with has just two people (project managers) in their company. They engage various contractors for all the work done. So think of them as the main-con.
  • Usually how it works is this: You either pay a project management fee and that is the price you pay for the convenience and they are then supposed to work in your interest to get the best rates for you, since they are already getting paid for that service. OR you don’t pay a project management fee and they take a cut from the sub-contractors to earn. I understand that they have to make money too.
  • In my case, my ID requested a project management fee of $15,000+ for the management and design of our home. (Context: The whole renovation project cost was over $100k and I stay in a private property.) Because of the fee, she said she would will not charge any mark-ups and will provide me with all the invoices. At first, she claimed it was not a practise to provide any invoices to clients. But I insisted for them. This rang some alarm bells but because they were a third-party recommendation, we still went ahead.
  • Throughout our time working with her, we realised several contract amounts not tallying up, many promises to fix things always were “forgotten” and I’m not gonna go into detail but at this point, there were over 10 instances of dishonesty (that we just gave her the benefit of the doubt for) and it was getting hard to trust the things she was saying.
  • We started to get suspicious when we requested for add-ons which required new quotes. I would request for 3 quotes but she always came back with just one. At first, I thought she was just lazy for always using the same expensive supplier because she didn’t want to find more quotes for us and always said there was no one else.

How shady interior design firms operate in Singapore

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  • Our suspicions lead us to ask around and get the quotations ourselves and boy did we get a huge shock. For 3 separate additions (small issues like blinds/curtains/etc), our quotes were half the price as the quotes she was giving us.
  • Turns out, one of the contractors we ended up getting the quote from was a current supplier of hers, who offered us a much lower rate. And he explained to us how her company operates, and how the ID + supplier industry works in general.
  • He said they will approach the supplier and ask for the cost price that they will charge. Then, they will add their own cut to it between 20%-50% markup and ask the supplier to issue clients the invoice with the inflated amount. The more she thinks she can get away with it, the higher % she will add. Once she finds a supplier who is willing to do this with her, she will keep using that same supplier. Hence that guy giving better rates was not chosen.
  • So any homeowner who receives the invoice will feel that it is legit, but actually, it is heavily inflated due to the special agreement between her and the supplier. The invoice is a clever ruse to trick homeowners.
  • We ended up exceeding our renovation budget by about $30k with the provisional charges for things like electricity doubling from $10k to $20k.
  • What makes us so angry is how she said she was going to charge an overall fee for project management ($15k+) so everything would be transparent. e.g same logic as hiring a main contractor. But all this while, she was getting under the table deals too, inflating the invoices and effectively charging us twice – one from the comms and one for her lump sum fee.
  • Because she inflated the amount, instead of us getting our dream home we saved up years for, we had to do away with some features we really wanted because it was over our budget due to the extra money was going to her as under the table profit.

Apparently, my story isn’t anything new. This is common in the ID industry as homeowners like us who are looking to renovate will never know the real pricing. And we probably just do this once or twice in our lives and then the ID moves on to their next victim. It does make business sense for the ID and supplier to continue work together to mark up invoices for the next project.

In other industries, there is regulation. When given a fee, an agent is supposed to act in the best interest of the principal, otherwise there is a conflict of interest and it must be declared. This is why laywers etc have to do a conflict of interest check before taking up a case. And if there is a conflict of interest found e.g the NP parks Brompton bikes case where bikes were bought at heavily inflated rates, things get called out and the culprits do jail time. But there isn’t anything like this in the ID industry and conflict of interest is rampant.

Has anyone here faced issues like this before? Is there any action we can take? Not sure what to do now, hope someone can help.

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