Construction Glossary
Retention
Definition
Retention is a percentage of each payment the client holds back as security that the work will be finished and any defects put right. On UK contracts it is commonly 5 percent, sometimes reducing once practical completion is reached. It is usually released in two halves, one at practical completion and one at the end of the defects liability period. It is your money, held until you have earned it back.
Each time the contractor is paid, a small slice is retained rather than handed over. The first half is typically released at practical completion, when the building is usable, and the second half once the defects liability period ends and any snagging is complete.
Retention gives the client comfort that the contractor will return to fix faults. The exact percentage and release points are set out in the contract.
Why it matters
Retention ties up your cash for months after a job is finished, and it is one of the most common things builders fail to chase. If you do not track it and apply for release on time, you can simply lose it. Treating retention as money you are owed, not a bonus, keeps your cash flow healthy.
We set retention out clearly in your bill of quantities and estimate so there are no surprises when it comes to releasing your money.
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