The second half is the one that disappears
Retention releases in two moieties, and they are not equally likely to arrive. The first falls due at practical completion, when you are still on site, still in the meetings and still being spoken to. It usually turns up, and if it does not, somebody notices within a fortnight.
The second falls due at the end of the rectification period, typically twelve months later. By then the job has left your system. The contract file is in a cupboard, the people who ran it have moved on, and the sum is small enough on its own not to trigger anything. It is exactly the same money as the first half, and it is the half that quietly does not come back.
Half of a 3% retention on a £200,000 job is £3,000. Three jobs like that and you have £9,000 sitting with people who are not going to remind you.
"We'll release yours when we get ours" is not enforceable
This is said constantly, and it is the everyday form of something the Construction Act specifically addressed. Section 110(1A) of the Housing Grants, Construction and Regeneration Act 1996:
The requirement in subsection (1)(a) to provide an adequate mechanism for determining what payments become due under the contract, or when, is not satisfied where a construction contract makes payment conditional on (a) the performance of obligations under another contract, or (b) a decision by any person as to whether obligations under another contract have been performed.
In plain terms: your retention cannot lawfully be made to depend on a certificate under a contract you are not a party to. Tying your release to the main contract's defects period, or to the employer signing off the main contract, is precisely what that subsection is aimed at.
Have it to hand rather than paraphrasing from memory. That is why the tool lets you copy the section. Most of the time quoting it is the whole conversation.
The percentage and the cap are on different bases
The retention percentage applies to the value certified. A limit of retention, where the contract has one, applies to the contract sum. Two different bases, and running them together is the usual arithmetic error.
On a £200,000 job at 3%, once everything is certified you would expect £6,000 held. If the contract caps retention at 1.5% of the contract sum, the most that can ever be held is £3,000, and the cap is reached halfway through the job. After that no further retention accrues however much more gets certified, which is worth knowing before you assume the running total on your own ledger is right.
Retention is contractual, never statutory
Retention is contractual, not statutory. The percentage, the cap, the length of the rectification period and the events that trigger release all come from your contract, and nothing on this page overrides what you signed. The figures used here are the common ones because they are the common ones, not because they are the law.
What the tool does is keep the second moiety visible after everybody has stopped thinking about the job. The arithmetic is not hard, and it is not the arithmetic that loses people money.
Common questions
When is retention released?
In two halves. The first falls due at practical completion. The second falls due at the end of the rectification period, usually twelve months later. Both dates come from your contract rather than from any statute, so read the contract, but the two-halves shape is close to universal in UK construction.
Why does my retention never fully come back?
Because of the second half. The first is released while you are still on site and still being spoken to, so it tends to arrive. The second falls due a year later, when the job is out of your system, the file is in a cupboard and nobody is chasing. It is exactly the same money as the first half and it is the half that quietly disappears.
Can my retention be held until the main contractor gets theirs?
No. Section 110(1A) of the Housing Grants, Construction and Regeneration Act 1996 says a payment mechanism is not adequate where a construction contract makes payment conditional on the performance of obligations under another contract, or on a decision by any person as to whether obligations under another contract have been performed. Your release cannot lawfully depend on a certificate under a contract you are not a party to.
How is retention calculated?
As a percentage of the value certified, commonly 3% or 5%. Many contracts also cap it with a limit of retention set as a percentage of the contract sum. Those are two different bases and mixing them is the usual arithmetic error: 3% of certified value and 1.5% of the contract sum are different numbers, and the cap bites long before the job finishes.
What is a limit of retention?
A ceiling on the total that can be held, expressed against the contract sum rather than against what has been certified. Once the running percentage reaches the cap, no more retention accrues however much more work is certified. If your contract has no cap, leave the field at zero.
How long should I keep chasing retention?
For as long as it is owed, which is longer than most people think. This exists to stop the second half being forgotten rather than to tell you when to give up, and the ordinary limitation periods for a debt are far longer than the twelve months everybody mentally allows.