What deposit is normal?

5–10% of contract sum at signing. Higher signals contractor cash flow weakness. Some larger contractors require 0% deposit; smaller builders often request 15–25% — assess based on contractor financials (Companies House check). Never pay deposit before signed contract.

Can I pay weekly to ease cash flow?

Some contractors offer weekly payments — fairer for both parties but increases admin. Monthly is standard. Weekly payment requires weekly valuation and CA certification — admin cost can exceed benefit. For renovations under £100k weekly may suit; over £100k monthly with milestone reviews is industry norm.

What if I can't pay on time?

Communicate early. Contractor may charge interest on late payments (typically Bank of England base rate + 8% under Late Payment of Commercial Debts Act); may halt site until paid; in extreme cases serve notice of termination. Mitigation: hold 1–2 months of payments in available cash; agree payment terms with contractor at signing (extended terms 21–28 days sometimes negotiable); communicate cash flow issues immediately, not after deadline.

Should I pay direct to suppliers?

Generally no — contractor manages supply chain. Direct payment risks: supplier delivers wrong/late items; warranty disputes; contractor doesn't take responsibility for supplied items. Exceptions: specialist items where contractor has no relationship with supplier; client-supplied FFE (curtains, furniture). Always agree in advance and document in writing.

Construction Cash Flow London Renovation 2026 | Builderr

How Should I Manage Cash Flow on a London Renovation?

Manage London renovation cash flow via monthly milestone-based payments — deposit capped at 5–10%, interim payments tied to verifiable work done, 3–5% retention held back. Never pay more than work-in-place value plus reasonable material on site. Use contract administrator or QS to certify each application. Front-loaded payment schedules signal financial weakness in contractor. Plan 90-day cash buffer above contract value for variations.

Payment schedule structure

Best-practice payment schedule for £200k renovation over 22 weeks. Deposit at contract signing: 5–10% (£10–20k) — secures contractor commitment, covers initial materials and prelims, not for labour. Monthly interim valuations (months 1–5): each based on actual work-in-place + materials on site, certified by CA or QS. Typical curve: month 1 12%, month 2 20%, month 3 25%, month 4 22%, month 5 16% (totalling 95%). Retention 3–5% withheld from each valuation. Practical Completion: half retention released (e.g. 2.5% of contract = £5k). End of Defects Liability Period (6–12 months later): remaining retention released. Application for payment: contractor submits with measured quantities; CA certifies actual value; client pays within terms (typically 14 days). Variations approved during build paid same way — VO + valuation + payment.

Red flags in payment schedules

Avoid these patterns. (1) Large deposit (20%+): contractor needs your cash to start work — financial weakness. (2) Front-loaded payments (50% of contract in first 25% of programme): contractor will be paid for work not yet done; if builder fails mid-project, your money is gone. (3) Equal monthly payments regardless of progress: doesn't reflect actual value delivered; risky in early stages. (4) Material payments without site presence: paying for materials not yet delivered. (5) No retention: removes incentive to remedy defects post-completion. (6) Payment-on-stage with no certification: contractor self-declares completion of stage; no independent check. (7) Variation payments without VO: pre-paying for changes not documented. Healthy payment schedule: deposit small, payments back-loaded slightly to ensure value-for-money, retention 3–5%, independent certification, written VOs for variations.

Variations and the cash flow surprise

Variations are the largest cash flow surprise on renovations. Typical project sees 8–25% variations of contract value (£16k–£50k on £200k contract). Cash flow impact: variations paid in addition to contract; if contingency held separately, no problem; if assumed to be in contract sum, sudden cash demand. Best practice: hold contingency 10–20% of contract sum in separate account; track variation total monthly against contingency; alert client when 50% of contingency consumed. Variations payment timing: typically paid in valuation month following authorisation; can spike monthly payments significantly. Plan cash flow with 90-day buffer above contract sum — typical scenario: £200k contract + £30k contingency + £20k FFE + £10k professional fees + £15k buffer = £275k total cash plan.

Lender drawdowns and timing

Lender-funded renovations introduce drawdown lag. Self-build mortgage drawdowns: client applies for valuation after each stage; lender's surveyor inspects (2–10 days lag); lender releases funds (3–7 days lag); total 7–17 days between work completion and cash receipt. Bridging loan drawdowns: faster (1–4 days typical) but more expensive. Practical implication: client pays contractor on monthly cycle, but receives lender funds 1–3 weeks later — gap must be bridged from client cash. Plan: client holds 1.5–2 months of payments in available cash; lender drawdowns refill account; never run on lender-funds-only timing. Lenders typically refuse to fund: variations, FFE, professional fees, VAT — these must come from client cash. Budget £35k–£75k client cash for typical £200k lender-financed project.