Holding back money until building works completed

[Mutley56]

Dear all,
I understand that it is normal to hold back a certain amount of money from the building contractor until the project is complete. On an £84,000 house extension, what percentage is reasonable until the project is fully completed and the Local Autjority Building Control completion certificate, electrician certificate for bathroom works and any other paperwork is received?

Thanks in advance.

Mutley56

 

[Newboy]

What does you contract with the builder say?

 

[tomfe]

5-10%
But normally nothing on small domestic projects.

But really it normally gets signed off before work is actually finished. If it does not get labc cert then the build is not complete and you can withhold your final payment. This all has to be written in the contract.

 

[Mutley56]

Contract says weekly payments. I have honoured this to date. At this time, 13% of contract price remains outstanding. I thought to retain the final payment until full completion, amounting to approx 6%. I will take your advice. Thank you

 

[^woody^]

2.5% under standard building contacts.

But, and this is a big but, if your contact does not allow for this explicitly, then you have no right to do so, and will be in breach of contract if you do.

 

[^woody^]

5-10%

What contacts do these figures come from?

 

[Mutley56]

Thanks ^woody^

 

[John D v2.0]

Ours is 5% retention on all payments until practical completion of all the contract. Then it reduces to 2.5% until the end of the defects fixing period which is 12 months after. Seemed to be standard for the contract from our architect, but I think builders normal prefer stage payments and the full balance on completion.

 

[noseall]

Completion for the builder may not coincide be completion for the building. If for example, the client wished to leave a utility room or shower room unfurnished (like my own extension) for a period of time, then BC will not sign off the completion cert.
There may be other reasons such as a project where the builder is only solely responsible for the shell and the client manages the remaining trades i.e. plumber, electrician, windows etc which would garner a raised eyebrow from the builder, should payments be withheld until completion.

I certainly do not need 12 months to fix any snags or defects.

 

[cjard]

Bigger jobs might.. the local playschool was a half million pound building job and their retainer was 10 grand, so sounds like 2percent in that case.. quite a few defects have arisen over the 12 months, from minor things such as door handles breaking off leaving people getting stuck in rooms to major things like roof leaks because the design wasn't followed.. it's not about you taking 12 months to rectify, it's about the work surviving 12 months of normal use..

 

[cjard]

Contract says weekly payments. I have honoured this to date. At this time, 13% of contract price remains outstanding. I thought to retain the final payment until full completion, amounting to approx 6%. I will take your advice. Thank you

It should really be rigged on work completed, not passage of time. If the builder doesn't turn up for 2 weeks, are you still supposed to pay him?

I think if you have concerns you should talk to your guy now, as nothing turns a relationship to **** faster than one side not holding up their end of the financial bargain. If there is no agreement in the contract for you to withhold a sum until a particular milestone, you shouldn't take it upon yourself to do it just because you feel like it

 

[tomfe]

What contacts do these figures come from?

Some Carillion jobs are held at 10% I've seen. Depends on works and who and what is subbed etc.

5% from normal works contract which is 2.5 after completion 2.5 after 6 months.

 

[motorbiking]

The payment schedule is not necessarily binding. It depends upon the basis of the contract. If the builder has agreed to build X for price Y, and the payment schedule is based on the estimate of a duration, then your position would be that he is behind schedule. Personally, I always like to be in a position that I can get someone else to finish the job, with the money outstanding. Its actually quite hard for a builder to successfully sue a domestic client before the work is complete.

Also payment is not acceptance

 

[Mutley56]

Thanks all for the replies. I am happy with the build to date. I just wanted to know if there was a normally accepted practice in this regard.

 

[londoner1]

Its normal within large companies but not unusual in large domestic jobs, if it was me i would put it into a contract if total value of job was over 50k and agree this with builder who may even price the job even higher.