What is retention in construction?

Retention is a percentage of each payment that a contractor holds back from a subcontractor as security until the work is complete and any defects are put right. It is commonly 3% to 5%, and is usually released in stages.

How it usually works

The contract sets the percentage and when it is released. A common pattern is to release half at practical completion and the rest after the defects period. Each application for payment should show the retention held to date.

Why it is a cash-flow problem

Retention is money you have earned but cannot spend, sometimes for a year or more. Keeping your own record of what is held, and the release dates, makes it much easier to chase.

Is retention being banned?

Proposals to end or restrict retention have been put to Parliament, but at the time of writing (October 2026) they are not law. Retention is still in live contracts, so keep tracking it.

Common questions

How much retention can a contractor hold?

Whatever the contract says, commonly 3% to 5%. Check the contract, because the percentage and release terms vary.

When is retention released?

The contract sets this. Often half is released at practical completion and the remainder when the defects period ends.

This page is general information for UK construction subcontractors and is not legal advice. Contracts differ, so check yours, and take advice on a specific dispute.