Retention in construction: how it works and how to get yours back
Retention is money the client or main contractor keeps back from each payment — usually about 5% — as security against defects. Normally half comes back at practical completion and half when the defects period ends, often 12 to 24 months later. It doesn't come back by itself: you have to diarise the dates and ask for it.
The exact rate, dates and release triggers are in your own contract or subcontract. Read it before you sign.
Example: a £100,000 subcontract with 5% retention
Retention is taken off every interim payment, so the amount held grows as the job goes on.
| Stage | What happens | Retention held |
|---|---|---|
| Valuation of £20,000 | £1,000 held back, £19,000 due | £1,000 |
| Work finished, £100,000 valued | 5% of everything held | £5,000 |
| Practical completion | Half released: £2,500 due to you | £2,500 |
| End of defects period (e.g. 12 months) | The rest released: £2,500 due to you | £0 |
Figures before any CIS deduction or other agreed deductions. Your contract may use different stages or percentages.
How to get your retention back
Read the retention clause before you sign
Check the percentage, any cap, when each half is released and how long the defects period is. Ask to lower the rate, cap it, or replace it with a retention bond if you can.
Write both release dates in your diary
Practical completion and the end of the defects period are often months or years apart. Retention is one of the sums most often forgotten — by both sides.
Apply for it in writing
At each release date, send an application or invoice for the retention due, with the date of completion or the end of the defects period. Keep a copy.
Watch the payment notices
A retention release is a payment like any other. If the payer doesn't give a valid pay less notice in time, they must pay the notified sum by the final date. See payment notices and pay less notices explained.
Chase, then escalate
Send a reminder, then a letter before action — free letters ready to send. You can also refer the dispute to adjudication, and you have a right to suspend work after giving at least 7 days' written notice. Take advice before you suspend.
That's usually not a valid reason. Under section 113 of the Housing Grants, Construction and Regeneration Act 1996, a term that makes your payment depend on the payer being paid by someone else doesn't work — unless that other party is insolvent. And since 2011, a construction contract also can't make payment depend on obligations under another contract, such as a certificate under the main contract. If your subcontract says otherwise, get advice — the law may replace that term.
The retention ban: what we know
The plan
In March 2026 the government said it will ban deducting and withholding retention under construction contracts, by changing Part 2 of the 1996 Construction Act.
Where it is now
The ban is in the Small Business Protections Bill, introduced to Parliament on 19 May 2026. When we checked (5 November 2026) it was not law and no start date was set.
What it means for you today
Until the ban is in force, retention in your contract still applies. Keep diarising release dates and asking for your money.
If the firm holding it goes bust
This is the main risk. Government research found that retention lost to upstream insolvency hits many contractors — one reason for the planned ban. Ask for release on time instead of letting it sit.
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See open jobsCommon questions
What is retention in construction?
It's a percentage of each payment — usually about 5% — that the client or main contractor keeps back as security in case the work has defects. It's paid back in stages once the work is finished and the defects period ends.
When is retention released?
Usually half at practical completion and the other half when the defects liability period ends, which is typically 12 to 24 months later. Your contract sets the exact dates.
What is the normal retention percentage?
Around 5%. Government research found an average of 4.8% of the contract value. Some contracts use 3% or cap the total.
Can the main contractor hold my retention until the client pays them?
Generally no. Pay-when-paid terms are ineffective under section 113 of the Housing Grants, Construction and Regeneration Act 1996, unless the client is insolvent.
How do I get my retention money back?
Diarise both release dates, apply for the retention in writing when each one comes, and check for a payment notice or pay less notice. If it isn't paid, send a letter before action and consider adjudication.
Are retentions being banned in the UK?
The government plans to ban them through the Small Business Protections Bill, introduced in May 2026. When we checked in November 2026 it wasn't law yet, so retention in your contract still applies.
What happens to my retention if the main contractor goes bust?
It's often lost. Retention held by a firm that becomes insolvent is one of the main problems the government's planned ban is meant to stop. Getting it released on time is the best protection.
