Getting the payment schedule right with your builder is one of the most important ways to protect yourself financially during an extension or renovation. Pay too much upfront and you risk losing money if things go wrong. Hold back too much and you might upset a good builder who needs cash flow to complete your job. This guide reveals what payment schedules actually work in 2025, which terms protect you best, and the red flags that signal trouble.

Key topics covered:

  • What deposit amounts are reasonable for UK building projects
  • Standard payment stage percentages that protect both parties
  • How retention payments work and why they matter
  • Red flags that indicate payment scams or cowboy builders
  • Written contracts and why you absolutely need one
  • What happens if your builder stops work or disappears
  • Industry-standard contracts like JCT that set fair terms

What Is a Fair Deposit for Building Work?

The deposit is the first payment your builder receives before work starts. It secures your project on their schedule and covers initial costs like materials and labour setup. But how much should you actually pay?

Recommended Deposit Amounts

Based on UK industry standards and builder feedback, fair deposit amounts vary by project size:

Small jobs under £10,000

10-15% deposit maximum. For an £8,000 bathroom renovation, a £1,200 deposit is reasonable. Some builders with good cash flow do not ask for deposits on smaller jobs at all.

Medium jobs £10,000-£50,000

15-20% deposit. For a £30,000 kitchen extension, a £4,500-£6,000 deposit is typical.

Large jobs over £50,000

20-25% deposit maximum. For an £80,000 double storey extension, a £16,000-£20,000 deposit is standard.

When Deposits Become Red Flags

Be extremely cautious if a builder asks for:

  • More than 25-30% upfront payment
  • 50% or more before any work starts
  • Full payment before completion
  • Cash only with no receipt
  • Vague reasons for needing large deposits

Reputable builders typically have trade accounts with suppliers that allow 30-day payment terms. They should not need massive upfront payments to buy materials. If a builder cannot cash flow your job without huge deposits, they may not be financially stable enough to complete your project.

The No-Deposit Alternative

For smaller jobs, some experienced builders work on a no-deposit basis, particularly if they know you or come recommended. Instead, you can offer to:

  • Pay suppliers directly for materials when they arrive on site
  • Provide proof of funds showing you can pay
  • Agree to weekly or fortnightly payments based on work completed

This approach protects both parties. The builder gets materials covered and you only lose labour costs if problems occur.

What Are Reasonable Payment Stages?

Stage payments tied to actual work completed provide the best protection. You pay for what you see, and builders get regular income to maintain cash flow.

Standard Payment Stages for Extensions

Here is a typical payment schedule for a home extension based on industry practice:

Stage 1: Foundations complete (10-15%) Payment due when footings are dug, concrete poured, and foundations reach damp proof course level. You can physically see and verify this work.

Stage 2: Walls to wall plate/roof level (20-25%) Payment due when external walls are built up to roof height. The structure is clearly taking shape.

Stage 3: Roof watertight (20-25%) Payment due when the roof structure is complete, tiles/covering installed, and the extension is weatherproof. This is a critical milestone.

Stage 4: First fix complete (15-20%) Payment due when electrics, plumbing, and heating are roughed in, internal walls are up, and plastering is done. The infrastructure is in place.

Stage 5: Second fix and near completion (15-20%) Payment due when decorating is finished, kitchens/bathrooms fitted, flooring laid, and the job is substantially complete.

Stage 6: Final payment with retention (5-10%) Final payment made after all snagging completed, building control sign-off received, and you are completely satisfied. Always hold back 5-10% as retention.

Alternative Payment Structures

Some builders prefer different schedules:

Weekly or fortnightly payments

For jobs lasting several weeks, equal payments (e.g. five payments of 20% each for a £25,000 job) can work well. However, ensure each payment corresponds to visible progress.

Monthly payments

Common on larger projects. An architect or quantity surveyor values work completed each month and certifies how much is due.

Materials on delivery

Some builders request payment when expensive items like windows, doors, or steelwork arrive on site. This is reasonable if you can verify delivery and materials are specific to your project.

How Does Retention Work and Why Is It Critical?

Retention is a percentage of the total cost you hold back until after practical completion. It is your insurance against defects and snagging issues.

Standard Retention Percentages

Industry standard retention in UK construction contracts is:

5-10% retention at practical completion

When the main work finishes but before final sign-off. Typically 5% is most common.

Half released after initial defects period

After 3-6 months with no issues, release half the retention (2.5% if you held 5%).

Final retention released after 6-12 months

Once any defects are rectified and you are completely satisfied, pay the final retention.

Why Retention Matters

Retention keeps your builder motivated to finish snagging properly. Without retention, builders often move to new jobs and snagging drags on for months. With 5-10% outstanding, they have strong financial incentive to complete everything quickly.

Retention also protects you if defects appear. If your extension develops leaks or cracks shortly after completion, you have funds available to pay another contractor to fix issues if your original builder does not respond.

When Retention Gets Contentious

Some builders resist retention, arguing they have bills to pay and families to support. While this is understandable, retention is standard industry practice for good reason. Professional builders expect and accept it.

If a builder refuses any retention at all, this is a red flag. They should be confident enough in their work to accept 5% retention for a few months.

What Red Flags Should I Watch For?

Certain payment demands or behaviours signal potential problems. Watch for these warning signs:

Payment Red Flags

Demands for large cash payments

Insisting on cash with no receipts or paper trail suggests tax avoidance or worse.

Pressure for immediate full payment

Using scare tactics or emergencies to extract early payment is classic scam behaviour.

Vague payment terms

Refusing to specify when payments are due or what triggers them.

Changing payment schedule mid-job

Suddenly asking for more money than agreed before completing the next stage.

No itemised breakdown

Unable or unwilling to explain what each payment covers.

Behaviour Red Flags

No written contract

Any builder refusing to work with a proper contract should be avoided completely.

Unlicensed or uninsured

Cannot provide proof of public liability insurance or relevant qualifications.

No trade references

Unable to provide previous customer references or examples of completed work.

Unusually cheap quotes

Quotes significantly lower than others may indicate corner-cutting or a plan to demand extras later.

Pushy or aggressive

High-pressure sales tactics or getting angry when you ask questions.

Do I Really Need a Written Contract?

Yes. Absolutely, non-negotiably yes. Never start building work without a signed written contract, regardless of what your builder says.

What a Proper Contract Must Include

Detailed scope of work

Every task the builder will complete, referenced to drawings and specifications.

Contract price

Total cost broken down by major elements, plus how variations will be priced.

Payment schedule

Exact amounts and dates or triggers for each payment, including retention terms.

Start and completion dates

Clear timeline with provisions for extensions due to genuine delays.

Materials specification

Brands and quality levels for key materials to prevent substitution.

Insurance details

Proof of public liability insurance and employers liability if they have staff.

Dispute resolution

How disagreements will be handled, ideally through adjudication rather than courts.

Termination clauses

What happens if either party needs to end the contract early.

Industry-Standard Contracts

Rather than creating bespoke contracts, use proven industry-standard forms:

JCT Building Contract for Home Owner/Occupier

Designed specifically for homeowners doing extensions and renovations. Simple plain English. Costs £35 plus VAT.

RIBA Domestic Building Contract

Another excellent option for home projects. Costs £45 plus VAT for digital copy.

JCT Minor Works Contract

For projects up to £500,000 with more complexity. Costs £88 plus VAT.

These contracts have been tested in courts for decades and provide balanced protection for both parties. They include proper payment terms, retention provisions, and dispute resolution procedures.

What If My Builder Won’t Sign a Contract?

Walk away. Immediately. Any builder refusing to work with a written contract is either incompetent or planning to take advantage of you. There are thousands of good builders who happily work with proper contracts, we’re one of them!

What Happens If My Builder Stops Work?

Even with good planning, building projects sometimes go wrong. Here is what to do if your builder abandons the job or you need to terminate the contract.

If Your Builder Stops Turning Up

Document everything

Photograph the work completed, keep all correspondence, and note dates they failed to attend.

Send written notice

Formally write (recorded delivery) asking them to return within seven days and explain the situation.

Check your contract:

Follow the termination procedures specified in your contract.

Stop further payments

Do not pay any more money until the situation is resolved.

Get quotes from other builders

Find out what it will cost to complete the remaining work.

Seek legal advice

If significant money is involved, consult a solicitor specialising in construction disputes.

If You Have Paid Too Much

If you paid large deposits or advanced payments and your builder disappears, your options are limited but not hopeless:

Report to Trading Standards

They can investigate rogue traders and potentially warn others.

Contact your bank

If you paid by credit card, Section 75 protection may help recover funds. Debit card chargebacks are possible but harder.

Small claims court

For amounts up to £10,000, small claims court is relatively straightforward and affordable.

Contact trade associations

If your builder claimed membership of FMB, TrustMark or similar, report them for investigation.

The harsh reality is that recovering money from disappeared builders is difficult. This is precisely why proper payment schedules and retention are so critical.

How Does Payment Work With an Architect?

If you have appointed an architect to oversee your project, they handle payment certification, which provides extra protection.

Architect-Led Payment Process

Monthly valuations

The architect or quantity surveyor inspects work completed and values it according to the contract schedule.

Payment certificates

The architect issues a certificate stating how much you should pay the builder. You typically have 14 days to pay.

Retention deducted

The certificate shows the retention amount held back (usually 5%).

Quality control

Only properly completed work gets included in valuations. Defective work must be corrected before payment.

Practical completion

The architect certifies when work is substantially complete, triggering release of half the retention.

Final certificate

After the defects period (typically 12 months), the architect issues a final certificate and remaining retention is paid.

Cost of Architect Services

Architects typically charge 10-15% of the total build cost for full services including payment certification. For a £60,000 extension, architect fees might be £6,000-£9,000.

This seems expensive but provides significant value. The architect ensures work quality, prevents overpayment, and gives you professional backup if disputes arise.

Why Cash in Hand Is Always a Bad Idea

Some builders offer cash-in-hand deals claiming you will save money by avoiding VAT. Never, ever accept this. Cash payments are always a terrible idea with no exceptions.

Why Cash Deals Always End Badly

No paper trail

When things go wrong, you have absolutely no proof of what was agreed or paid. Your money is gone with zero recourse.

No legal protection

Cash transactions make it impossible to pursue legal action, insurance claims, or any form of dispute resolution.

Tax evasion

You become complicit in tax fraud, which can have serious legal consequences for you personally.

No guarantee

Builders working cash-in-hand never have proper insurance, meaning you are personally liable if someone gets injured on your property.

Quality is terrible

Builders avoiding tax always cut corners everywhere else too. Cash jobs consistently deliver the worst quality work.

You fund criminals

Cash-in-hand builders often have court judgements against them or are evading creditors. Your cash payment helps them avoid responsibilities.

The supposed VAT saving (20%) is worthless when you need to hire another builder to fix the inevitable shoddy work, and you have no legal recourse to recover your money.

Always Pay by Bank Transfer

Every single payment to your builder should go through the banking system:

  • Get a proper written contract first
  • Pay by bank transfer with clear references
  • Get itemised invoices for all payments
  • Verify they have appropriate insurance
  • Keep records of every transaction

If a builder insists on cash or gets pushy about avoiding VAT, end the conversation immediately. They are advertising themselves as unprofessional at best, criminals at worst.

The Rosebrick Developments Approach to Payment

At Rosebrick Developments, we have refined our payment approach through many, many of projects across Mansfield, Nottinghamshire, South Yorkshire and Derbyshire since 2014.

Our Standard Payment Structure

For typical extension and renovation projects, we work on this schedule:

Deposit on contract signing

15-20% to secure materials and commit our team to your project.

Stage payments

Four equal payments at foundation complete, walls to roof height, roof watertight, and first fix complete.

Final payment with retention

Final 10% paid as 5% when practically complete and 5% after three months defect-free period.

This structure provides regular cash flow for materials and labour while protecting you through every stage. You can always see what you are paying for.

Why We Insist on Written Contracts

Every Rosebrick project uses either the JCT Home Owner Contract or JCT Minor Works Contract depending on project scale. These provide:

  • Clear payment terms both parties understand
  • Professional dispute resolution if needed
  • Proper insurance and liability protection
  • Quality standards we commit to meeting
  • Timeline accountability

We would rather lose a job than work without a proper contract. It protects everyone involved.

What Makes Our Approach Different

Transparent pricing

Every quote breaks down costs by element so you understand what you are paying for.

Regular progress photos

We provide weekly photos showing work completed, so you see where your money goes even if you cannot visit site daily.

Materials verification

We show you materials before installation and provide receipts for expensive items.

Snagging commitment

We return promptly for any snagging during the retention period because we want that final payment released as much as you want the work perfect.

Among builders in Mansfield, we understand that trust goes both ways. Fair payment schedules protect good builders from bad customers and good customers from bad builders.

Making the Right Payment Agreement

The best payment schedule balances your need for protection with the builder’s need for cash flow. It ties payments to measurable progress, includes proper retention, and operates within a written contract.

Red flags like huge deposits, cash demands, or refusal to use contracts should end discussions immediately. Good builders welcome proper payment structures because they protect everyone.

Never feel pressured to agree to payment terms that make you uncomfortable. If a builder cannot explain their payment schedule clearly or gets defensive when you ask questions, walk away. There are plenty of professional builders who work transparently.

Whether you are planning a small renovation or major extension, getting the payment schedule right from the start prevents most financial problems during your build.

Ready to Discuss Your Project?

At Rosebrick Developments, we offer:

  • Clear payment schedules agreed before work starts
  • Industry-standard JCT contracts on every project
  • Regular progress updates and photo evidence
  • Professional insurance and guarantees
  • Honest advice on protecting your investment

We do not do pushy sales or pressure tactics. Just straight answers, fair terms, and quality work from experienced Mansfield builders.

If you are in Derbyshire, South Yorkshire, Mansfield or the local Nottinghamshire areas and planning building work, let’s talk about your project and agree a payment schedule that protects both of us.

Get a free, no-obligation proposal from Rosebrick Developments today. Call us or fill out our contact form and we’ll get back to you shortly.