The return of the debate on retentions

When it comes to retentions, it appears a few more ‘tries’ need to be added to the old saying “if at first you don’t succeed, try, try again”.

Readers may recall the various attempts by the Government over the past few years to address the issue of retentions (see our previous blogs: November 2017, January 2018 and October 2019). Now, a new Private Members’ Bill has been introduced in the House of Lords by Lord Aberdare which makes provision for the complete abolition of retentions within construction contracts.

On 25 October 2021, the Construction (Retentions Abolition) Bill 2021-22 had its first reading. Through amendments to the Housing Grants, Construction and Regeneration Act 1996, the Bill proposes that any retention clause within a construction contract entered into after the passing of the Bill would have no effect. Additionally, any retentions withheld must be paid in full not later than seven (7) working days after the date on which they were due but withheld. The draft Bill stipulates that the new Construction (Retentions Abolition) Act would come into force on 1 January 2025.

The new Bill is quite a departure from the previous Construction (Retention Deposit Schemes) Bill introduced in early 2018 by MP Peter Aldous which proposed a deposit scheme for retentions.

With a second reading of the Construction (Retentions Abolition) Bill yet to be scheduled, it will be extremely interesting to see how the industry reacts to the potential of a complete abolition of retentions.

If you have any questions regarding this topic, please contact Brenna Baye, or any other member of our Construction & Engineering team.

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