Deposits, staged payments and retention with a London builder: how to pay without funding someone else's next job

The builder who wants half the job up front "to order materials" is asking you to become their bank. Sometimes the materials arrive; sometimes the van moves to a better-paying site and your deposit funds someone else's kitchen. This guide sets out how London homeowners can structure deposits, staged payments and retention so that money follows verified work, with the consumer protections that actually matter. Sources were checked on 28 October 2026.

What Citizens Advice and the schemes say about deposits

Citizens Advice tells homeowners to keep deposits as low as possible, to avoid paying large sums up front, and not to agree more than 25 per cent as a deposit. Prefer firms that offer deposit protection. TrustMark expects registered businesses to provide financial protection covering deposits and prepayments and a period after completion - but you must still check the protection on TrustMark's own tools, not on a logo alone. A handshake and a mobile number are not a payment plan.

Citizens Advice also reported in August 2025 that its consumer service handled 36,534 complaints about home maintenance and improvements between July 2024 and June 2025, with 5,230 of those (about one in seven) involving scams or rogue traders. Paying ahead of verified work is how many of those cases begin. If a salesperson leans on urgency - "we can only hold the price if you pay today" - treat that as information about their cashflow, not about your project.

A sensible stage structure for a domestic build

Exact percentages depend on the job, but a structure that keeps leverage with the client usually looks like this:

1. Modest deposit (well under 25 per cent) to secure the start date and place long-lead orders, paid only after the written contract is signed and you have verified the company.
2. Stage payments tied to visible milestones you can photograph: foundations poured and signed off, structure up, watertight, first fix complete, second fix complete, decoration.
3. A retention (commonly around 5 per cent in traditional contracts) held until practical completion, with half or all released after a defects liability period written into the contract.
4. No payment for "next week's materials" without invoices in the company's name and evidence the goods are for your address.

Use a written contract such as a JCT Home Owner / Occupier contract or another clear domestic form that names the stages, the retention and the defects period. Under the Consumer Rights Act 2015, the service must be performed with reasonable care and skill; paying ahead does not waive that duty, but recovering money after an insolvency is hard, so prevention beats litigation. Ask your solicitor or a RICS surveyor to review the payment schedule on larger jobs before you sign.

How to pay - and what each method actually protects

• Credit card. Section 75 of the Consumer Credit Act 1974 can make the issuer jointly and severally liable with the trader where the cash price is over £100 and not more than £30,000. Citizens Advice notes this can apply even if only part was paid by card. Use it for deposits and significant stage payments where the firm accepts cards.
• Debit card / chargeback. Weaker than Section 75, but still better than cash if you act quickly through your bank.
• Bank transfer. Match the payee name to the limited company on Companies House and on the contract. Never accept a last-minute "new account" email without ringing a known number from the contract - invoice-redirection fraud is a well-documented risk.
• Escrow / deposit protection. For larger sums, an FCA-registered escrow or scheme protection beats holding funds in a contractor's current account.
• Cash. Almost no trail and almost no remedy. Avoid it for anything beyond a trivial materials top-up you have agreed in writing.

Checks before every payment leaves your account

• Confirm the limited company is still active on Companies House and that accounts and confirmation statements are not overdue. A sudden change of directors or a Gazette notice deserves a pause.
• Walk the site against the stage description. If steel is "up" on the invoice but only half the beams are in, do not pay the full stage.
• Collect invoices, delivery notes and building-control notes with each valuation.
• Keep a running total of deposit + stages + variations so you never quietly exceed the contract sum.
• Photograph the milestone before you authorise the transfer, and keep the messages that authorised it.

Variations and the money trap

Extras destroy payment plans. Agree that no variation is payable unless it is priced and confirmed in writing before the work starts. A builder who does the extra first and argues later owns the argument on site; you own it on paper. Price labour and materials separately so you can see markup. Do not let a variation become an excuse to bring forward the next stage payment. If the variation is large, treat it as a mini-contract: scope, price, programme impact, and who pays if building control rejects the change.

If the builder threatens to walk unless you pay more

Stay calm, do not hand over cash, and ask for the demand in writing against the contract stages. Take advice from the Citizens Advice consumer service before escalating. If you paid by card, contact the issuer promptly. If you believe you are being intimidated, that is a police matter - call 999 if you feel at risk. Most disputes are commercial, not criminal, but pressure tactics are a reason to stop paying and document everything.

Retention in plain English

Retention is not a punishment; it is a small slice of each valuation held back so that defects get fixed without another argument about money. On many domestic contracts it is around 5 per cent in total. Half may be released at practical completion and the balance at the end of a defects liability period - often three to six months, sometimes twelve - once snags are cleared. Write the percentages and the release tests into the contract. A builder who refuses any retention on a multi-month project is asking you to give up the one lever that still works after the scaffolding comes down. On very small jobs a short snagging retention at the final invoice can be enough; on an extension it should be explicit.

Red flags that mean pause the payment

• Requests for more than 25 per cent up front, or for the whole kitchen and bathroom supply cost before anything is ordered in your name.
• Pressure to pay a personal account, a different company, or cash "for the lads".
• Stages that do not match anything you can see.
• Threats to walk off site unless an unscheduled payment is made today.
• Refusal to use a written contract or to allow a retention.
• A company that will not show insurance certificates or a matching Companies House record.

If a firm fails mid-job, contact your card issuer or bank immediately, gather the contract and photos, and take advice from the Citizens Advice consumer service. Paying for verified work is not distrust - it is how professional clients and professional builders already operate.

Sources checked on 28 October 2026: Citizens Advice, Before you get work done on your home; Citizens Advice, home-improvement complaints (August 2025); Citizens Advice, Getting your money back if you paid by card; TrustMark for homeowners; Consumer Credit Act 1974, section 75; Consumer Rights Act 2015, section 49. Nothing here is legal or insolvency advice.