Contract and start · High risk
How and when do you pay?
Tie every payment to completed, visible progress — never to the calendar.
- When it lands
- Agreed in the contract, before the start date.
- What it costs to get wrong
- Paying ahead of progress is how homeowners lose money. If you are ever ahead, you have no leverage left.
The single most protective decision a homeowner makes is refusing to pay ahead of completed work. Everything else in the payment relationship follows from it.
Pay for what exists, not for what week it is
A homeowner paid to a calendar schedule rather than to progress. By week eight, 60% of the contract sum had been paid and roughly 30% of the work was built. When the relationship broke down, the money to finish the job was already gone.
Once you are ahead of the work, you have no leverage — and the person best placed to notice is you, at each payment.
Define each stage physically
Not stage three, but: foundations complete and building control inspection passed; structure up and roof watertight; first fix complete and inspection passed; plastering complete. Something you can look at and verify.
Vague stage names are how two payments quietly end up covering the same work.
Hold retention
Typically 2.5–5% of the contract sum, half released at practical completion and half at the end of the defects period. It is normal, builders expect it, and it is the reason snags get fixed after you have moved back in.
Deposits
A modest deposit for materials ordered up front can be reasonable. A large deposit before anything happens is not. If materials are being bought, ask for the supplier order confirmation, and prefer paying the supplier directly for long-lead items.
Why this one matters
Cash flow is the builder's real constraint, so payment terms shape behaviour on site more than any other clause. Stage payments against visible milestones keep both sides honest.
Do this week
- Write the payment schedule against physical milestones.
- Agree the retention percentage and both release points.
- Confirm the schedule sits inside the signed contract.
The realistic choices
Stage payments on milestones
Standard and safest. Slab, frame, roof, first fix, second fix, completion.
Monthly valuation
For longer projects. Pay for what has been done that month.
Large deposit up front
Treat with real caution. Materials deposits should be evidenced.
What good looks like
- You are never more than one stage ahead of the work
- A retention or final payment held until snags are cleared
Questions worth asking
- What exactly must be finished for this stage to be payable?
- What is held back at the end, and for how long?
From real projects
60% paid, 30% built
A homeowner paid to a calendar schedule rather than to completed work. By week eight, 60% of the contract sum was paid and roughly 30% of the work was done. When the builder left, the cost to complete exceeded the money remaining by £24,000.
The lesson: Pay for what exists. The money must never be ahead of the building.
Putting it into practice
What this decision should leave behind
The steps to work through, the paperwork worth keeping and the questions to send your builder today.
- · Never pay ahead of completed work
- · Define each stage physically
- · Hold retention
- · Template: Stage payment schedule
- · Paperwork: Agreed stage payment schedule
- · Paperwork: Receipts and invoices for every payment made
Next decision
When does it start and how long will it take?