Chase retention as its own account
Treat each retention release as a payment in its own right, and apply for it on the day it falls due with the evidence attached. If it comes back as nil with no explanation, ask where the Pay Less Notice is.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
Retention is taken through the job but released only on events long after the last application: practical completion and the end of the defects period. By then the account is closed, the surveyor has moved on, and the money sits in your main contractor's bank, earning nothing for you. Main contractors rarely refuse it outright. They simply do not release it until asked, and then not until asked twice. Each release is a payment in its own right, with its own due date and its own notice rules. An unexplained nil against it is a deduction like any other. Your main contractor has to justify it in a Pay Less Notice under section 111 of the Housing Grants, Construction and Regeneration Act 1996. That is the notice it must send, in time, if it plans to pay you less than the sum due.
How to do it
- Record the retention percentage, the sum held to date and the two release triggers from the subcontract at the start of the job.
- Diarise the expected dates of practical completion and the end of the defects period, and update them as they move.
- Apply for each release on its trigger date, as a separate line with its own sum.
- Check whether a Payment Notice or Pay Less Notice arrives against it, and on what date.
- Pursue any release held back without a valid notice as a notified sum, separately from any final account argument.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontract holds 5 per cent retention on a £600,000 account, half released at practical completion and half at the end of a 12-month defects period. Practical completion is certified on a Friday, and the main contractor's next certificate shows the retention unchanged.
What happens
- The subcontractor applies for the first release of £15,000 in the next application, as a separate line referencing the practical completion certificate.
- No Pay Less Notice is served, and the £15,000 is paid on the final date after one reminder.
- The end of the defects period goes in the diary, and the second £15,000 is applied for on that date.
- The main contractor shows nil against it, citing defects, but serves no Pay Less Notice. The subcontractor demands the notified sum.
The outcome
Both releases, £30,000 in total, are collected within a month of each trigger. Each was applied for on its date and treated as a payment in its own right, not a loose end of the account.
To have this done for you, see our Retention Claim service.