Contracts and Payment Schedules
The money must never get ahead of the building, and most of what belongs in a domestic building contract exists to keep that testable.
You have a contract with your builder from the moment you both agree the work, whether or not anything is signed. English law does not require a building contract to be in writing. So the document does not create the deal, it records it, and its entire value is evidential. Almost every domestic building dispute is an argument about what was agreed rather than about what the law says.
What the law puts in whether you sign anything or not
A set of statutory terms sits inside every consumer building contract, and nothing you sign can take them out.
The Consumer Rights Act 2015 applies wherever a trader supplies a service to a consumer, which is what a builder working on your home is doing. It implies terms that operate even where the parties never discussed them.
- Reasonable care and skill (section 49). This is about the way the work is carried out rather than the end result, so careless work is a breach whatever the finished job looks like.
- What you were told becomes a term (section 50). Information the trader gives you about the service or about themselves, which you take into account when deciding, is binding. The promise made in your kitchen is a contract term, and it is only worth anything if you wrote it down at the time.
- A reasonable price (section 51) where no price was fixed, and a reasonable time (section 52) where no time was. Both are fallbacks for gaps, not substitutes for agreeing properly.
- Remedies: repeat performance at the trader’s cost where that is possible, and a price reduction where it is not, alongside the ordinary right to claim damages.
Part 2 of the same Act covers unfair terms. A term that was not individually negotiated, and which creates a significant imbalance to your detriment, can be held unfair and unenforceable, and terms have to be transparent. A trader cannot contract out of the reasonable care and skill standard against a consumer.
The forms you can use
Three routes are sensible, and the least formal of them still beats nothing at all.
A published standard form written for domestic work is the tidiest option. The best known are the home owner contracts issued by the Joint Contracts Tribunal, one version for a homeowner who has not appointed a consultant to oversee the work and another for a homeowner who has. They run to a few pages, in plain English, designed to be filled in by the two of you across a table. Several trade bodies publish their own equivalents.
More commonly, the builder’s own terms are attached to the quotation. That is workable, provided you read them and query anything one-sided, because this is where the unfair terms rules earn their keep. Least elegant, and still enforceable, is an exchange of emails setting out scope, price, payments and dates with both parties agreeing in writing.
Which document you use matters less than one test: everything you were told verbally has to appear somewhere inside it. An assurance that survives into the written scope is a term. One that does not is a memory.
What the document has to contain
Eight clauses do the work. The rest is administration.
| Clause | What it should say | What happens without it |
|---|---|---|
| Parties | Registered company name and number, or the trader’s own name and trading address | You are enforcing against a name that does not exist |
| Scope and specification | Included work item by item, specified for anything that varies widely: glazing, insulation, electrical points | Every assumption becomes an argument |
| Price and exclusions | The figure, whether VAT is included, and a named list of what is out | A price that grows without anyone acting badly |
| Ground allowance | The foundation depth allowed for and the rate beyond it | A negotiation beside an open trench |
| Programme | A start date and a duration, plus what happens if either moves | A completion promise nobody could keep |
| Payments | The schedule, and what each payment buys | The failure below, which ruins jobs |
| Variations | Who instructs, how they are valued, whether time moves, written approval first | Work you did not order |
| Defects | The period, how you report, how long they have to attend | No route back once the last payment clears |
Add to those the statutory housekeeping: who notifies Building Control and obtains the completion certificate, who serves any party wall notices, whose insurance covers what, and the agreed working hours and access arrangements. None of it is contentious at the start. All of it is contentious later.
Payment schedules, built properly
One rule does most of the work: the money must never get ahead of the building.
Four structures turn up on domestic work, and they are not equally safe.
- Stage payments against completed work. Each stage is a visible physical event: foundations in and inspected, walls up to plate level, roof on and watertight, first fix complete, plastering done, practical completion. You can stand in the garden and see whether it has happened, which is the whole point.
- Monthly valuation. Payment for the work done during the month, valued at the end of it. Sensible on longer jobs, and it needs someone honest doing the valuing.
- Fixed instalments on fixed dates. The dangerous one, because it decouples payment from progress. If the job stalls, the dates keep arriving.
- The full amount up front. Not a payment schedule.
The test applies at any point and takes a minute. Add up what you have paid, look at what has been built, and if the first is meaningfully ahead of the second the structure is wrong regardless of who is doing the work. Once the money leads, the only leverage left is what you have not yet handed over.
A deposit is legitimate where it buys something. Structural steel, rooflights and large glazed units are made to order and paid for before they can be installed, and materials bought specifically for your job are not stock a builder can resell. Ask what the deposit is for, and ask for the contract to describe it as what it buys. It is not a booking fee and not an advance on profit.
Retention is the other end of the same idea: a percentage held back until a defects period expires. Standard on commercial work, less common domestically, where the equivalent is a final payment released once the snagging list is clear. Either works. What does not is a schedule where the last payment falls due before the snagging list has been written.
What actually protects your money
There is no statutory deposit protection for building work, and assuming otherwise costs people real money.
A tenancy deposit has to be placed in an authorised scheme by law. Nothing equivalent exists for building work. Money paid to a builder is money paid to a business, and if that business fails you join the queue as an unsecured creditor. Four things help, in descending order of how much you should rely on them.
- A payment schedule that never leaves much at risk. The real protection, free, and the only one entirely within your control.
- Deposit protection insurance, offered through some trade bodies. Being a policy, it carries a percentage cap, a monetary cap and a time limit, and commonly runs only until work starts. Ask for the certificate rather than the description, and read the limits.
- Paying by credit card. Under section 75 of the Consumer Credit Act 1974 the card issuer is jointly liable with the trader for breach of contract or misrepresentation, and the claim can cover the full contract value even where only the deposit went on the card. The cash price of the item has to be more than £100 and no more than £30,000. Whether a whole extension priced above that ceiling counts as a single item is the sort of question that gets argued, so treat this as dependable for a discrete purchase inside the job and uncertain for the job itself.
- Debit card chargeback. A scheme rule run by the card networks rather than a legal right, with its own time limits. Ask your bank early rather than late.
Signing at the kitchen table
A contract agreed in your own home carries a cancellation right that most homeowners never hear about.
Agreeing terms at your kitchen table makes it an off-premises contract under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013. An extension is not caught by the exclusion in regulation 6, which covers the construction of new buildings and of substantially new buildings by the conversion of existing ones. Adding to the house you already live in is neither.
Four points follow. You have fourteen days from the day after the contract is concluded, and you need no reason. Work may not begin inside that period unless you make an express request, and for an off-premises contract that request has to be on a durable medium, meaning in writing rather than a nod on the doorstep. If you request an early start and then cancel, you pay a proportionate amount for what was done up to the point you gave notice. And where the trader never told you about the right at all, the cancellation period extends by up to twelve months, during which you are not liable for the cost of services supplied.
That last point matters more to the builder than to you, which makes it a useful signal. Anyone who hands you the cancellation notice unprompted is showing you how they handle paperwork generally, and choosing well in the first place is a separate exercise.
Variations, and the pricing mechanism underneath them
How a variation gets priced was settled when you signed, not when the problem appeared.
Three mechanisms are in use. A fixed price is one figure for defined scope, with variations priced individually as they arise. A provisional sum is an allowance for something that cannot be priced yet, foundation depth being the standing example, replaced by the actual cost once known, in either direction. It is neither a cap nor a promise, and people read it as both. Cost plus is actual cost with an agreed percentage on top: transparent, open-ended, and sensible for genuinely unknown work rather than a whole extension.
Whichever applies, the clause should say who may instruct a change, how it is valued, whether the completion date moves with it, and that nothing chargeable proceeds without written approval. Written can be an email. It cannot be a conversation on the scaffold that the two of you remember differently in March. How that runs day to day is on our page about acting as main contractor.
If it goes wrong, and which routes you actually have
The honest answer depends on your contract, and adjudication is the clearest illustration of that.
Adjudication is the fast binding process the construction industry uses to settle disputes without stopping work. You probably do not have it. Section 106 of the Housing Grants, Construction and Regeneration Act 1996 excludes a construction contract with a residential occupier, meaning a party who occupies or intends to occupy the dwelling as a residence, so the statutory right does not reach an extension to your own home.
It reaches you only where the contract gives it to you. The home owner forms mentioned above do provide for adjudication under their own rules, and both RICS and RIBA run adjudication services aimed at homeowner disputes. Even then, a clause imposed on a consumer in a form they did not negotiate can be challenged as an unfair term under Part 2 of the Consumer Rights Act, and the decided cases have gone both ways depending on whether it was drawn to the consumer’s attention and whether they took advice. Whether you can adjudicate is therefore a question about your document, not about the law in general.
What you do have, roughly in the order you would use it: the builder’s own complaints procedure; conciliation or alternative dispute resolution through a scheme, where the builder belongs to one and the scheme binds them to take part; Citizens Advice and trading standards, who enforce consumer law but do not recover your money; mediation, which needs both sides to agree; and the courts. Claims up to £10,000 are normally allocated to the small claims track, where recoverable costs are limited and you can act without a solicitor. Above that, up to £25,000 is the fast track and £25,000 to £100,000 the intermediate track.
On time limits, a claim for breach of a simple contract runs for six years from the breach, or twelve where the contract was executed as a deed. Separately, section 2A of the Defective Premises Act 1972, inserted by the Building Safety Act 2022 and applying to work completed on or after 28 June 2022, imposes a duty on anyone working on an existing dwelling in the course of a business, with a fifteen year limitation period. The threshold is high: it bites where the work leaves the dwelling unfit for habitation, well past ordinary defective workmanship. It is not a general defects remedy, and what a builder stands behind is a separate question answered in their workmanship guarantee.
If the builder stops trading mid-job
This is the situation the payment schedule was always about.
Where a limited company becomes insolvent, money paid in advance is an unsecured debt and is rarely recovered in full. Materials delivered to your site may or may not belong to you, depending on the contract terms and whether they have been paid for. This is where a qualifying credit card payment becomes the most useful thing you did.
Practically: stop paying, photograph the state of the work in detail on the day you find out, secure the site, and get an independent view of what is genuinely complete before anyone else touches it. Expect the next builder to price the remainder above the equivalent share of the original contract, and to warrant only their own work. That is not opportunism. Taking on half-finished work means adopting risk nobody can see.
Before you sign anything
Read the payment schedule first, then the exclusions, then everything else.
Those two clauses tell you more about how a job will go than the rest of the document combined. If the schedule is sensible and the exclusions are honest, the contract was probably written by someone who has been through this before. If a large sum falls due before anything is on site, nothing else in the document rescues it.
Our quotations carry the scope, the specification, the exclusions, the stage payments and the variation procedure, and we will talk any of it through before you sign rather than after. The account above is a general description of how domestic building contracts work in England and Wales. It changes over time and it is not legal advice on your own agreement.
Last reviewed August 2026. Planning and Building Regulations change, and your property may differ.
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