How to Pay a Builder: Deposits, Stage Payments and Retention
Good payment terms share one feature: money follows work that has actually been done. The trade should never be far out of pocket, and you should never be far ahead of the value on site. Here is what deposit is reasonable, how to tie stage payments to milestones a person can check, what retention is for, and why paying the deposit by credit card is the cheapest insurance you will ever buy.
What a normal payment schedule looks like
Good payment terms share one feature: money follows work that has actually been done. The trade should never be far out of pocket, and you should never be far ahead of the value on site.
| Job size | Typical shape | What to avoid |
|---|---|---|
| Small (a day or two) | Nothing up front, pay on completion. | Any deposit at all on a job this size. |
| Medium (one to three weeks) | A materials deposit, then the balance on completion, or a single mid-point stage. | Large up-front sums described vaguely as "to get started". |
| Large (a month or more) | Materials deposit, then stage payments against defined milestones, with a retention at the end. | Payments tied to dates in the calendar rather than work completed. |
Deposits: what is reasonable and what is not
A deposit exists to stop a trade funding your materials out of their own working capital. That is legitimate. It is not a way of securing your commitment, and it is not an advance on labour that has not happened.
- Tie it to named materials — what is being bought, and roughly when. "Deposit" as a bare line is where trouble starts.
- Ask for evidence — a supplier order or receipt. A trade buying genuine materials has no reason to object.
- Be wary of round numbers that happen to equal a third or half of the job with no material list behind them.
- Never pay a deposit before you have the quote in writing, with the scope on it.
- Pay it by credit card if it is over £100 — that is the payment with the most risk attached, so give it the most protection.
Under the Consumer Contracts Regulations 2013, a contract you agree in your own home is usually an off-premises contract, which normally carries a 14-day cancellation right. If you ask for work to begin inside those 14 days you can be charged for what has been done, but the right itself still exists — and if the trader never told you about it, the cancellation period extends substantially. Citizens Advice sets out how this works.
Stage payments tied to milestones, not dates
The single most useful thing you can do on a larger job is define each stage payment by a visible, checkable event. "Week three" is not a milestone; "first-fix electrics complete and tested" is.
| Weak trigger | Better trigger |
|---|---|
| "On starting on site" | Materials delivered to site and set out |
| "After two weeks" | Foundations poured and signed off by building control |
| "Halfway" | Structure watertight — roof on, windows in |
| "When plastering starts" | First fix complete and inspected |
| "On completion" | Snagging list agreed and cleared, certificates handed over |
Write the milestones into the quote before work starts. A trade who will not define them is telling you something.
How you pay changes what you can recover
The payment method is the part homeowners think about least and regret most. These are the practical differences when something goes wrong.
| Method | Protection | Practical note |
|---|---|---|
| Credit card | Section 75 joint liability for purchases over £100 and up to £30,000. | Strongest route. Worth using for the deposit even if you pay the rest another way. |
| Debit card | Chargeback — a card scheme rule, not a legal right, with time limits. | Better than transfer, weaker than credit. Raise it quickly. |
| Bank transfer | None as such. | Fine for a trade you know and trust; poor for an unknown one taking a large deposit. |
| Cash | None, and no paper trail. | Weakens guarantee and evidence. The discount rarely covers the risk. |
Payment red flags
- Pressure to decide today for a discount that expires — legitimate trades' prices survive the weekend.
- A request for a large deposit in cash, or to a personal account that does not match the business name.
- No written quote, or a quote with no scope, no dates and no payment schedule.
- Asking for the next stage payment before the current stage is finished — the earliest reliable warning sign of a job going wrong.
- Claiming a supplier demands full payment up front — trade accounts do not normally work that way.
- No VAT number on an invoice that charges VAT. See builder invoices and VAT explained.
- Reluctance to be paid by card at all.
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