When must my retention be released?

On the contract's own triggers, which are usually half at practical completion and the balance after the defects have been made good, not whenever the payer happens to feel ready. Retention is the slice of each payment, often around three to five per cent, that the payer holds back during the job as security and releases later; it is your money, kept back on conditions rather than earned by the payer. Practical completion is the point at which the works are treated as finished and handed over, and making good means putting right the defects that show up in the agreed period afterwards. Each release event turns a slice of the retention into a sum that is due, and once due the ordinary payment machinery attaches to it: you apply for it, and if the payer refuses without serving the notice the Construction Act requires, that refusal can be tested through the payment machinery or adjudication instead of sitting on file as an ignored letter. Excuses that tie your release to the payer's own position further up the chain, for example that it has not yet been paid by someone above it, deserve particular scrutiny: pay-when-paid arrangements (clauses that make paying you conditional on the payer first being paid by someone else) are, with only narrow exceptions such as upstream insolvency, ineffective under the Construction Act.

Say a mechanical subcontractor on an office block has £30,000 of retention held, split so that £15,000 falls due at practical completion and the other £15,000 after the defects period ends. Practical completion happens in June, and the defects are all made good and signed off the following June, so both halves are now due. The subcontractor applies for the £30,000. The main contractor replies that it cannot pay because the developer above it has not released its own retention yet. That reason usually carries no weight: paying you only when the payer is itself paid is a pay-when-paid arrangement, which the Construction Act makes ineffective except in narrow cases such as the party above becoming insolvent. To withhold for a genuine reason, say an outstanding defect, the main contractor needed to serve the proper notice in time. Having served none, and relying only on being unpaid upstream, its refusal can be tested and enforced through the payment machinery.