It is widely considered that withholding money owed to a contractor, until all work is completed to a client’s satisfaction, is outdated and open to abuse.
Lord Aberdare’s Construction (Retentions Abolition) Bill seeks to address this by inserting a new Section 113A into the Housing Grants, Construction and Regeneration Act 1996. In short, the Bill provides that:
• Any clause in a construction contract which enables a payer to withhold retention monies will be of no effect from 25 January 2025.
• Any retentions withheld at that date must be paid within 7 days.
This proposal to amend the legislation goes further than previous drafts to alter the way retention is dealt with. The new Bill was introduced to the House of Lords on 25 October 2021 and has passed its First Reading (a mere formality). The Bill will receive its first proper scrutiny in the Second Reading, which is yet to be fixed, before going to committee stage.
At present it is unclear how much support the Bill is likely to receive but it seems it is going to require a great deal of support from the Government and the construction industry in order to pass. However it is notable that once again the issue of retention is being considered to try and assist with cash flow through the supply chain.