Retention is money you've earned that somebody else is holding. For a lot of small firms it's the single biggest pot of cash they've lost track of. Here's how it works and how to get it in.
What it is and why it exists
Retention is a percentage held back from each payment as insurance that you'll come back and fix your defects. The client holds it from the main contractor, and the main contractor usually holds it from the subbies. It's normal, it's in most contracts, and it's not a sign anyone thinks you're dodgy.
The problem isn't the principle, it's that it quietly drifts. Small firms rarely track it, and money nobody's chasing has a habit of staying where it is.
How much, and when you get it
Typically 3% to 5% of each payment, with 5% common on smaller jobs. It usually comes back in two halves:
- Half at practical completion, when the works are handed over and usable.
- The other half at the end of the defects liability period, commonly 6 or 12 months after completion, once any defects are sorted.
So on a £40,000 order with 5% retention, £2,000 is held. £1,000 comes back at completion, and the last £1,000 could be a year later. That's your money sitting in someone else's account while you pay wages out of yours.
Before you sign anything
Retention terms are negotiable, especially on smaller work. Worth checking, and worth asking about:
- The percentage, and whether it's capped at a maximum figure.
- The release dates, and exactly what triggers each half.
- Whether there's retention at all. On domestic and smaller commercial work, plenty of firms simply don't have it, and you won't know unless you ask.
- What the defects period actually is. Six months and twelve months are very different waits.
How to get it back
Retention rarely arrives on its own. What works:
- Know what's held. Write down the retention on every payment, per job, as it happens. If you can't say what you're owed to the pound, you can't chase it.
- Diarise both release dates the day the job completes. Put them in your phone a fortnight early.
- Close out your defects fast and in writing. Photos, dates, an email confirming it's done. The commonest excuse for not releasing retention is an open snag nobody told you about.
- Ask early and politely. A fortnight before the date: "Retention of £1,000 on the Sample Court job is due for release on the 14th, can you confirm it'll be in that payment run?"
- Escalate to the people who pay, not the people on site. Site managers can't release money. Go to commercial or accounts, with your figures attached.
- If it's ignored, your contract and the Construction Act give you routes: payment notices, interest on late payment, and adjudication. Most retention gets paid at the point somebody realises you've been keeping proper records.
The thing that makes the difference
Firms that get their retention back aren't tougher negotiators. They just know exactly what's held, on which job, due on which date, and they ask before it's late. The ones who lose it are the ones who find out eighteen months on that £4,000 is missing and can't prove where it went.
General guidance, not legal advice. Your contract decides what actually applies, so read it, and take proper advice before formal action.