Which contracts does the Act cover?
Part II of the Housing Grants, Construction and Regeneration Act 1996 applies to construction contracts: contracts to carry out construction operations, or to arrange for others to carry them out, and contracts for related professional work such as architecture, design and surveying. This guide covers England and Wales; Scotland has its own Scheme.
Since 1 October 2011 the Act has covered oral contracts and contracts only partly in writing. The main exceptions are contracts with a residential occupier for work on their home, supply only contracts, and certain work on process industry sites.
Am I entitled to stage payments?
If the work is expected to last 45 days or more, you are entitled to payment by instalments, stage payments or other periodic payments (section 109). The parties can agree the amounts and intervals. If they do not, the Scheme sets a payment period of 28 days, with each payment based on the value of the work done.
The due date and the final date for payment
Every construction contract must have an adequate mechanism for working out what payments become due and when, and must set a final date for payment (section 110). The due date is when a payment becomes owed and starts the notice timetable. The final date is the last day for paying it. If the contract does not set them, the Scheme does:
- Interim payments fall due 7 days after the end of the payment period, or on the date of the payee’s application if that is later.
- The final payment falls due 30 days after completion of the work, or on the date of the application if that is later.
- The final date for payment is 17 days after the due date.
What is a payment notice?
Under section 110A, not later than 5 days after the payment due date, the payer, or a person the contract names such as a contract administrator or quantity surveyor, must give a payment notice. It must state the sum the payer considers to be due at the due date and the basis on which that sum is calculated. The sum can be zero.
Some contracts reverse this and require the payee to give the notice, usually its application for payment, by a date the contract sets. The application must then state the sum the payee considers due and how it is calculated.
What if the payer gives no payment notice?
The payee can give its own notice, known as a payee’s notice in default, at any time after the payer’s deadline has passed (section 110B). The final date for payment then moves back by the number of days the payee’s notice came after that deadline. If the contract allowed the payee to apply before the payment notice deadline, and it did, its application already stands as that notice, and the final date does not move.
The notified sum and pay less notices
The sum stated in the payment notice, or in the payee’s application or default notice where the payer gave no payment notice, is the notified sum. The payer must pay it by the final date for payment (section 111). The only way to pay less is a pay less notice given in time, stating the sum the payer considers due on the date of the notice and how it is calculated. Under the Scheme it must be given at least 7 days before the final date for payment. See our guide to pay less notices.
What payment terms does the Act forbid?
- Pay when paid. A term making payment conditional on the payer being paid by someone else is ineffective, unless that party, or one further up the chain, is insolvent (section 113).
- Pay when certified. A term making payment conditional on performance of obligations under another contract, or on a decision that they have been performed, is not an adequate payment mechanism (section 110(1A)).
- Due dates triggered by a notice to the payer. A term under which a payment only falls due when the payer receives a notice about what is due, such as an invoice, is not an adequate mechanism either (section 110(1D)).
Where a payment term does not comply, the relevant parts of the Scheme replace it, while the rest of the contract stays in place.
How are the days counted?
A period from a date starts the day after that date. Christmas Day, Good Friday and bank holidays in England and Wales are left out; weekends still count (section 116). Our payment dates calculator applies these rules for you.
What about retention?
The Act does not ban retention or set a maximum percentage. Check when each half is released and what triggers it. Release that depends on certificates or events under another contract may be open to challenge, and long release periods are best negotiated before you sign.
If you are not paid
If the sum due is not paid by the final date, you can give 7 days’ notice and suspend some or all of your work (section 112), and you can refer the dispute to adjudication at any time. Our guide to construction payment disputes sets out the steps.
Questions
What is the difference between the due date and the final date for payment?
The due date is when a payment becomes owed and starts the notice timetable. The final date is the last day the payer can pay without being in breach. Under the Scheme it is 17 days after the due date.
Does the payer have to give a payment notice if it agrees with my application?
The Act requires one for every payment. If the payer gives none, your application or default notice becomes the notified sum, so a payer gains nothing by staying silent.
Do the rules apply to consultants?
Yes. Architectural, design and surveying work, and advice on building and engineering in relation to construction operations, fall within the Act’s definition of a construction contract.
Do bank holidays count when working out the dates?
No. Christmas Day, Good Friday and bank holidays in England and Wales are left out when counting periods under the Act. Weekends still count.
General guidance on the law of England and Wales, not legal advice. Last reviewed 2 November 2026.