Retention in construction
Retention in construction is a percentage of each payment the customer holds back as security that the contractor will return and put right any defects. It is released in two stages, part at practical completion and the balance at the end of the defects period.
In practice for trades
The standard shape is 5% held from every interim payment, halved to 2.5% at practical completion, with the remainder released once the defects period ends. That period is commonly six or twelve months. All of it is a matter of contract, so the figures only bind you if they are written down.
Retention is the single most common reason a profitable job pays out badly. The money is already earned, already spent on wages and materials, and sitting in someone else's account. On a £40,000 job, 5% is £2,000 that arrives up to a year after you finished.
Two habits protect it. Put the retention percentage, the release triggers and the defects period in your quote rather than accepting whatever the main contractor's terms say. Then diary both release dates the day the contract is signed, because retention is very rarely released without being chased.
Worked example
A £40,000 job with 5% retention. £2,000 is held across the interim payments. At practical completion half is released, so £1,000 is paid and £1,000 stays. Twelve months later, with the snagging list signed off, the final £1,000 falls due.
Related terms
- Practical completion: the milestone that triggers the first half of the release
- Snagging: the defects that must be cleared before the balance is paid
- Final account in construction: where the retention position is settled for good
Chase it in FieldHive
Keep every held retention visible with its release date instead of finding it a year later, using the Statement of Account Generator.
Statement of Account Generator→
