When to Withhold Payment From a Builder
When holding back part of a payment is fair, how to keep the amount proportionate, and the risks worth weighing before you do it.
The short version
Holding back part of a payment can be fair when specific work is unfinished or not right. Kept in proportion and explained in writing, it helps get the problem fixed.
You can generally hold back a fair amount against specific work that is unfinished or defective, where your payment terms and the facts support it. What you should not do is hold back more than the problem is reasonably worth, or keep back money that is plainly due for work done properly. That can put you in breach of the contract and move the argument away from the contractor's work and onto your unpaid bill.
The difference usually comes down to what your contract says about when payments fall due, whether the problem is specific and real, and whether the amount you keep back reflects what it would cost to put right. Get those right and you are on firm ground. Get them wrong and a small snag can become a dispute you are defending.
This guide explains the general principle, how to arrive at a fair figure, the risks worth weighing and when to take advice before you act. It is part of our guide to when building work goes wrong. This is general information, not legal advice.
The starting point
What you owe depends on what you agreed
Every payment on a building job falls due under the terms you accepted: usually a deposit to secure the work, perhaps stage payments as it progresses, and a balance on completion. Those terms are the reference point for any decision to hold money back, so read them again before you decide anything. Our guide to payment schedules explains how the stages normally fit together.
In general terms, a contractor is entitled to be paid for work done as agreed, and a customer is entitled to work carried out with reasonable care and skill. Where part of the work falls short, the law generally allows that to be reflected in what is paid, but only to the extent of the shortfall. Holding back a sum tied to a real, identifiable problem is one thing. Refusing to pay because you are unhappy in general is another.
The kind of problem matters too. Work that has simply not been done yet is the clearest case: you pay for what has been done. Work done badly is similar, although the value of the problem is harder to judge. Work done as agreed that is not what you pictured is not a defect at all, and holding money back over it is unlikely to be justified.
Weighing it up
When holding back tends to help, and when it tends to backfire
Neither column is a legal test. They describe the situations that usually settle well, and the ones that usually make matters harder.
Usually reasonable
- A specific item in the quote is clearly unfinished
- A defect you can point to, photograph and describe
- An amount that reflects the cost of putting it right
- The reason explained to the contractor in writing
- The rest of the payment made on time
- The held amount released promptly once the item is done
Likely to backfire
- Holding the whole balance over a minor snag
- General dissatisfaction with no specific item named
- Changes you would now like but never agreed
- A figure chosen to apply pressure
- Keeping money back in case something goes wrong later
- Saying nothing and simply not paying
Doing it properly
How to hold back a payment fairly
If you decide it is justified, the way you do it matters as much as the decision.
Re-read your terms
Check when the payment falls due, what it covers and whether the contract says anything about disputed amounts or defects.
Pin down the problem
Write down exactly which item is unfinished or not right, where it is, and how it differs from the quote. Take dated photographs.
Put a fair value on it
Base the figure on what it would reasonably cost to finish or correct that item, not on how frustrated you feel. More on this below.
Pay the rest on time
Pay everything that is not in dispute when it falls due. It shows good faith and keeps the disagreement small.
Explain it in writing
Tell the contractor what you have held back, which item it relates to, how you reached the figure, and that you will pay it once the item is dealt with.
Release it promptly
When the work is put right, check it and pay the held amount straight away. Confirm the payment in writing.
Putting a figure on it
What counts as proportionate
Proportionate means the amount you keep back bears a sensible relationship to the problem. A missing piece of trim on an otherwise finished job is a small cost to put right. Holding the entire balance over it is not proportionate, and a contractor would have good grounds to say so.
Start with the cost of putting it right. The fairest measure is usually what another competent contractor would reasonably charge to complete or correct the item. For anything beyond a small snag, a written estimate from someone independent gives your figure a basis other than your own view.
Leave out what is not about the work. The time spent chasing, the disruption and the stress are real, but they are not the same thing as the value of the defect. Adding them to a withheld sum tends to harden positions on both sides.
Be ready to explain the number. If you cannot say how you reached a figure, the contractor will assume it is a negotiating position. A line such as 'held back against the unfinished flashing on the rear slope, based on the attached estimate' is much harder to argue with.
Consider an independent view on larger sums. Where the amount is significant or the problem is technical, a report from a chartered surveyor or another qualified professional can establish whether the work is defective and what it would take to put right. It costs money, but it can settle an argument that would otherwise run on. Our guide to keeping evidence and records covers what to gather in the meantime.
Under the Consumer Rights Act 2015, a trader must carry out a service with reasonable care and skill. Where they do not, you can generally ask them to put the work right, and if that is not possible, or is not done within a reasonable time and without significant inconvenience to you, you may be entitled to a price reduction. How this applies depends on your contract and the facts, and some areas of law work differently in Scotland and Northern Ireland. Citizens Advice and GOV.UK publish guidance. This is general information, not legal advice.
The other side of the scales
What can go wrong if you withhold too much
Withholding is not risk-free, and it is worth being clear-eyed about that before you act. If a payment is properly due and you keep back more than the problem justifies, you may be the one in breach of the contract. The contractor may then be entitled to pursue the unpaid amount through the courts, and depending on the terms and the circumstances, other costs as well.
Part-way through a job, a contractor who is not paid a sum that is properly due may stop work or leave site. The dispute then becomes about money rather than the defect, and your project sits unfinished while it is argued out. That is rarely the outcome anyone wanted.
There is a practical cost too. Once money is held back without a clear reason, some contractors become less willing to return, including for warranty work later on. A fair, clearly explained amount tends to keep them engaged. An unexplained one tends to end the conversation.
None of this means you must pay for work that has not been done properly. It means the size, timing and explanation of any amount you hold back all matter, and that on anything beyond a small item it is worth taking advice first.
At each stage
How the question changes through a job
Holding back looks different depending on which payment is due.
The deposit
The deposit secures the work before it starts, so there is rarely anything to hold back against. Doubts at this point are best settled before you accept the quote. Building deposits explained covers what is normal.
Stage payments
Each stage should be tied to work you can see. If a stage is not finished, ask when it will be, and pay when it is. Keep any question about quality specific to that stage.
The final balance
This is where most withholding questions come up. Walk round with the contractor, agree a written snagging list and link any amount held to named items. Final payment and snagging sets out the process.
A retention
Money kept back for a period after completion is a retention, and it has to be agreed before work starts. It cannot fairly be added at the end. See retention on building work.
Extras and changes
If you dispute an extra charge, the question is whether the change was agreed and priced. Pay the undisputed part and ask for the basis of the rest. Variations and extra costs explains how these should be handled.
After you have paid
A defect that appears later is a warranty matter, not a reason to reclaim money informally. Report it in writing and give the contractor the chance to put it right.
Getting help
When to take advice before you act
For a small, clearly unfinished item, a fair amount held back with a written explanation is usually straightforward. Advice becomes more worthwhile as the sum grows, as the problem becomes more technical, or when the contractor disputes that anything is wrong at all.
Citizens Advice is a good first stop in England and Wales, with Advice Direct Scotland and Consumerline in Northern Ireland offering similar consumer help. For a larger dispute, a solicitor who handles construction or consumer matters can tell you where you stand on your particular contract. The Law Society in each part of the UK keeps a directory of solicitors.
If the disagreement is about whether the work is defective in the first place, an independent report can help both sides, and if talks stall, mediation offers a way to settle it without going to court. Our guide to raising a complaint with a builder covers how to set out the problem clearly from the start.
If you use Mortaro
Tell us before the balance falls due
Mortaro coordinates domestic building projects. Your quotation names the appointed main contractor, an independent company from our network who carries out the work, holds the insurance and provides the workmanship warranty. Your construction contract is with them.
The payment terms are a 25% deposit to secure the works and the balance on completion, both paid to your contractor. We receive them as your contractor's payment administration agent and pass them on without unnecessary delay. Any question about holding part of a payment back is a matter between you and your contractor, under your contract with them.
What we can do is help it not come to that. If something is unfinished or not right as the job ends, tell us before the balance falls due. We raise it with your contractor on your behalf, push for a visit and a resolution, and keep you updated. We don't inspect the work, so we can't value a defect for you, but we can make sure your contractor deals with it. Payments explained and putting things right cover both in full.
Straight answers
Questions about withholding payment
Can I refuse to pay a builder for bad work?
You can generally hold back an amount that fairly reflects specific work that is defective or unfinished, and explain why in writing. Refusing to pay anything at all when most of the work has been done properly is likely to put you in the wrong. Take advice on anything significant. This is general information, not legal advice.
How much should I hold back?
An amount that reasonably reflects the cost of finishing or correcting the specific item, ideally supported by an independent estimate. Not the whole balance over a small problem, and not a figure chosen to apply pressure.
Should I tell the contractor I am holding money back?
Yes, in writing, before or when the payment falls due. Say what it relates to, how you reached the figure, and that you will pay once the item is dealt with. Silence tends to turn a snag into a dispute.
Can I hold money back in case problems appear later?
Only if a retention was agreed before the work started. Otherwise, defects that appear later are dealt with under the contractor's workmanship warranty.
What if the contractor says they will take me to court?
Take advice promptly, keep your records together, and consider whether a fair offer or mediation could settle it. Our guide to small claims for building work explains how the process works from either side.
Start here
Tell us about the work you have in mind
We will confirm we cover your postcode, arrange a site visit with a contractor from our network and send you a written quotation. No charge, no obligation.