Your customer is a homeowner and the Construction Act does not apply

You finished a £42,000 extension in June, the family moved back into their kitchen, and the final £8,750 has been unpaid since. So you go looking for the seven day suspension notice and the pay less notice deadline the trade talks about, and every page you open turns out to be about a statute with one line in it that excludes you by name.

That line is section 106 of the Housing Grants, Construction and Regeneration Act 1996. It is not a gap in your knowledge, it is a deliberate carve-out, and it has been there since the Act was passed. The machinery that gets a commercial subcontractor paid in 28 days is switched off the moment your customer is the person who lives in the house.

This page is what section 106 takes away, what the consumer statutes hand you instead, and the two things that decide whether a domestic debt comes back in six weeks or six months: what your payment schedule says, and whether you put an adjudication clause in your own terms before anybody signed anything.

Section 106, in its own words

Section 106(1) says that Part II of the Act "does not apply to a construction contract with a residential occupier". Section 106(2) defines that:

"A construction contract with a residential occupier means a construction contract which principally relates to operations on a dwelling which one of the parties to the contract occupies, or intends to occupy, as his residence."

The same subsection says "dwelling" means a dwelling-house or a flat, that a dwelling-house "does not include a building containing a flat", and that a flat is "separate and self-contained premises constructed or adapted for use for residential purposes and forming part of a building from some other part of which the premises are divided horizontally".

Part II is the whole payment and adjudication scheme, so switching it off switches off all of this at once.

That last row catches people out on its own. Section 2(1) of the 1998 Act applies it "where the purchaser and the supplier are each acting in the course of a business". A homeowner having their own house extended is not acting in the course of a business, so the 11.75% and the fixed sums that a subcontractor can add to a main contractor's late invoice have no purchase here. Interest on a domestic debt comes from a rate written into your own contract, or from the court under section 69 of the County Courts Act 1984, which lets the judge add simple interest "at such rate as the court thinks fit".

Part II of the 1996 Act extends to England, Wales and Scotland, so section 106 does the same job in Aberdeen as it does in Bristol. Northern Ireland runs the same rule through Article 5 of the Construction Contracts (Northern Ireland) Order 1997, which was rewritten by section 2 of the Construction Contracts (Amendment) Act (Northern Ireland) 2011 with effect from 14 November 2012 and carries the identical residential occupier wording.

Four jobs that look domestic and are not

Section 106 looks at the two parties to the contract in front of you, and at what the work principally relates to. Change either and the answer changes.

The landlord. A buy-to-let owner refurbishing a flat they do not live in and do not intend to live in is not a residential occupier. The Act applies in full, and because they are acting in the course of a business, so does the Late Payment Act. Same building, same trade, completely different set of rights.

The developer. Somebody converting a terrace to sell is in the same position. The exclusion turns on occupation as a residence, not on the building being residential.

The subcontract. A homeowner engages a main contractor, and the main contractor engages you. Your contract is with the main contractor, who is not a residential occupier, so Part II applies to your subcontract even though the job is somebody's back garden. The payment notice, the pay less notice and the seven day suspension are all live for you, which is the pay less notice deadline and suspending work for non-payment.

The wreck. A customer who has bought a derelict cottage and intends to move in once you have finished is inside the exclusion, because section 106(2) covers a party who "intends to occupy" the dwelling as their residence.

The word doing quiet work in the definition is "principally". A contract for a shop fit-out with a flat above it does not principally relate to operations on a dwelling. Where the split is genuinely arguable, the answer sits in the scope of works you wrote, which is one more reason the scope is worth an hour rather than ten minutes.

The contract is now the whole of the law

With Part II gone, there is no statutory backstop deciding when your money falls due. Whatever you and the customer wrote down is the mechanism, and if you wrote nothing down, two sections of the Consumer Rights Act 2015 fill the space with words somebody else gets to interpret.

Section 51 says that where the price is not fixed by the contract, the consumer "must pay a reasonable price for the service, and no more". Section 52 says that where the time is not fixed, the trader "must perform the service within a reasonable time". Reasonable is a question of fact decided after the argument has started, by a judge who was not on site.

So the written payment schedule is the entire game on domestic work. It needs four things per stage and it fits on one side of A4: the physical event that triggers the payment, the sum, the number of days to pay, and what happens next if it is not paid.

Section 50 of the same Act is worth knowing while you write it. Anything you say about the service or about yourself, which the consumer takes into account when deciding to enter the contract or in making any decision about the service afterwards, is treated as a term of that contract. Your written quotation, your scope of works and your programme are contractual the moment they rely on them. That cuts both ways, and it is the reason a specific quotation beats a vague one: it binds the customer to the same document that binds you.

One more provision belongs in the drafting. Section 62 says an unfair term is not binding on a consumer, and section 64 exempts the price and the main subject matter from that fairness test, but only where the term is "transparent" and "prominent": expressed in plain and intelligible language, legible, and brought to the consumer's attention in such a way that an average consumer would be aware of it. A payment schedule set out on its own page, in the same size type as the rest, initialled by both of you, is doing exactly what section 64 asks for. A payment schedule buried in clause 19 of standard terms on the back of a quote is not.

What the Consumer Rights Act lets them ask for, and in what order

Section 49 implies into every contract to supply a service a term that "the trader must perform the service with reasonable care and skill". Section 57 stops you excluding or restricting that, so there is no clause to write around it. This is the standard your work is measured against on a domestic job, and it is the standard a customer reaches for when the final invoice arrives.

The useful part is the order the remedies run in, because it is your order.

Section 55 gives the consumer the right to require repeat performance: the right to require you "to perform the service again, to the extent necessary to complete its performance in conformity with the contract". You must do it within a reasonable time, without significant inconvenience to them, and bear the cost of the labour and materials.

Section 56 gives the right to a price reduction, and section 56(3) is the sentence to read twice. Where the consumer has the right to repeat performance, they may only demand a price reduction if repeat performance is impossible under section 55(3), or if you have failed to do it within a reasonable time and without significant inconvenience.

Read together, that is a statutory right to go back and put it right before anybody starts knocking money off. A customer who withholds £8,750 for a run of cracked render, without asking you to come back and re-render it, has skipped the step the Act gives them. The single most valuable email on a domestic job that has gone quiet is the one offering a date to return and fix a listed defect, sent in writing, because it either resolves the job or it puts you on the right side of section 56(3).

The fourteen days you handed over at the kitchen table

A contract agreed in the customer's house is an "off-premises contract" under regulation 5 of the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013: a contract concluded in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader. Their kitchen table is not your business premises.

Regulation 29 then gives the consumer the right to cancel "at any time in the cancellation period without giving any reason", and regulation 30 makes that period 14 days after the day the contract is entered into.

Two exits exist and both are narrow. Regulation 7 says the rules do not apply to an off-premises contract where the payment is not more than £42. Regulation 6(1)(e) takes out contracts "for the construction of new buildings, or the construction of substantially new buildings by the conversion of existing buildings", which covers a new house and a full barn conversion and does not obviously cover an extension. Regulation 28(1)(e) takes the cancellation right away where "the consumer has specifically requested a visit from the trader for the purpose of carrying out urgent repairs or maintenance", though regulation 28(2) puts it straight back for any additional services or any goods beyond the replacement parts needed for the repair. Emergency callouts sit inside that carve-out. Planned work does not.

Everything else turns on paperwork you hand over before they sign. Regulation 10 requires the Schedule 2 information, given on paper or another durable medium the consumer has agreed to, plus the cancellation form in Part B of Schedule 3. Three of those Schedule 2 items decide whether you get paid for work done inside the 14 days:

• (l) the conditions, time limit and procedures for exercising the right to cancel;
• (m) where applicable, that the consumer bears the cost of returning goods;
• (n) that if the consumer cancels after asking you to start under regulation 36(1), they are liable to pay your reasonable costs under regulation 36(4).

Regulation 36(1) is the other half. You cannot begin before the 14 days are up unless the consumer has made an express request, and on an off-premises contract that request has to be on a durable medium. Do that, and regulation 36(4) entitles you to be paid for the period the service was supplied, "in proportion to what has been supplied, in comparison with the full coverage of the contract", calculated on the total contract price under regulation 36(5).

Regulation 36(6) is what happens when the paperwork was not there. The consumer bears no cost at all for what you supplied if you failed to give the information at Schedule 2 (l) or (n), or if the work was not supplied following a request under regulation 36(1). Four days of groundworks, at no charge, on a signature you already have. Regulation 19 adds a criminal offence for failing to give the (l), (m) or (n) information on an off-premises contract, punishable on summary conviction by a fine at level 5 on the standard scale, and regulation 31 stretches the cancellation window to 12 months and 14 days where the cancellation information was withheld.

Counted end to end on one job. Contract for a £42,000 extension agreed in the customer's kitchen on Monday 7 September 2026, over a 40 working day programme.

Without the express request on a durable medium, and without the (l) and (n) wording in their hands, the same row reads £0. That is the whole cost of one page of paper.

Stage payments that leave you one stage exposed

Section 109 does not give you a right to stage payments here, so you build the ladder yourself, and the design rule is simple: the money you are owed at any moment should be worth less than the money still to come. That way walking away is more expensive for the customer than paying you.

A £42,000 extension, VAT included, invoiced against physical events and payable within five days.

Three things are doing the work in that table. The triggers are events an outsider can verify, so there is nothing to argue about on the day the invoice goes out. No single stage is large enough to fund the rest of the job out of your own pocket. And the final payment is the smallest one, because the last invoice is the one most likely to be disputed, and £2,000 of exposure at the end of a job is a phone call while £12,000 is a court claim.

The deposit deserves its own thought. Schedule 2 of the Consumer Rights Act 2015 carries a list of terms that may be regarded as unfair, and paragraph 5 names a term requiring a consumer who decides not to perform the contract to pay "a disproportionately high sum in compensation or for services which have not been supplied". A deposit that matches money you have actually committed, the window order and the steel fabrication, is proportionate and defensible. A flat non-refundable third of the contract price is the shape that paragraph 5 was written about. Say in the contract what the deposit is for, and it stops being a penalty and starts being a purchase.

The letter before claim

When the final invoice has gone quiet, the next document is not a court claim. It is a letter that follows a protocol, and the protocol you follow depends on why they are not paying.

Where the debt is simply unpaid, the Pre-Action Protocol for Debt Claims applies. Paragraph 1.1 puts it exactly where a builder sits: "any business (including sole traders and public bodies) claiming payment of a debt from an individual (including a sole trader)". Paragraph 1.4(a) hands the matter over to another protocol where one covers it, and the Pre-Action Protocol for Construction and Engineering Disputes covers all construction and engineering disputes. In practice, an unanswered invoice runs under the Debt Claims protocol, and a customer disputing the workmanship or the valuation turns it into a construction and engineering dispute, where paragraph 7.1 sets out the letter of claim, the defendant acknowledges within 14 days, responds within 28 days, and the parties hold a pre-action meeting within 21 days of that response.

The Debt Claims Letter of Claim is prescriptive, and paragraph 3.1 lists what goes in it: the amount of the debt; whether interest or other charges are continuing; where the debt arises from a written agreement, the date, the parties and the fact that a copy can be requested; where it arises from an oral agreement, who made it, what was agreed as far as possible in the words used, and when and where; details of how the debt can be paid and how to discuss payment options; and the address for the Reply Form. Paragraph 3.1(b) requires an up-to-date statement of account. Paragraph 3.1(c) and (d) require you to enclose the Information Sheet and Reply Form at Annex 1 and a Financial Statement form. Paragraph 3.2 says the letter must be clearly dated near the top of the first page and posted that day or the next. Paragraph 3.3 says post it, and email it as well if you have the address.

Then the clocks. Paragraph 3.4 gives the customer 30 days from the date at the top of the letter before you may issue. Paragraph 5.2 gives you 30 days to provide any document they request or explain why it is unavailable, and paragraph 4.2 pushes the earliest issue date to 30 days from the later of their Reply Form or your documents. Paragraph 6 requires both sides to consider alternative dispute resolution. Paragraph 8.2 requires at least 14 days' notice of your intention to start proceedings once they have replied and no agreement has been reached.

Counted from a real invoice date, on the £8,750.

Ninety-two days from the invoice to the claim form, and none of it wasted: a customer who intends to pay gets several dated chances to do it, and a customer who does not has put their reasons in writing on a form you can hand to a judge. This protocol is an England and Wales instrument. In Scotland the equivalent step is a formal letter of demand before raising proceedings, and in Northern Ireland the county court's Small Claims Online service takes the claim directly.

Money Claim Online and the small claims track

A claim of £10,000 or less is issued online through Money Claim Online and, under rule 26.9(4) of the Civil Procedure Rules, the small claims track is the normal track for it. Six years is the outside limit for issuing at all, under section 5 of the Limitation Act 1980.

The £8,750 claim costs £455 to issue and £346 to be heard, so £801 in total. Rule 27.14(2) then decides what you recover, and it is a short list: the fixed costs of issuing the claim, any court fees the other party paid, reasonable travel expenses to and from the hearing, up to £95 per day for loss of earnings for a party or witness attending, up to £750 for an expert, up to £260 for legal advice where the claim includes an injunction or specific performance, and further costs against a party who has behaved unreasonably.

That list is why running a small claim yourself is normal rather than brave. Solicitors' fees are not recoverable on this track, so a customer who instructs one is spending money they will not get back, and the hearing is designed for people presenting their own case: an informal session in front of a district judge, an hour or two, with the documents you already have. The documents that win it are the signed contract with the payment schedule, the invoices with their dates, the photographs at each stage sign-off, and the written offer to return and fix the defects under section 55.

Your court fees are recoverable under rule 27.14(2)(c), so on a judgment for the full amount the £801 comes back with the debt. What comes after judgment is a separate set of fees: £96 to issue a warrant of control, £69 for an order requiring the debtor to attend court and give information about their means, £139 for an attachment of earnings order, and £139 to apply for a charging order. That last one is the closest thing in England and Wales to a claim against the house itself, and it exists only after judgment, which is the structural difference set out in what a UK contractor has instead of a lien.

North of the border the route changes rather than the principle: Simple Procedure in the sheriff court handles claims of £5,000 or less, raised through Civil Online, with ordinary cause procedure above that figure.

Mediation happens before a judge does

A disputed money claim of £10,000 or less in England and Wales goes to the HM Courts and Tribunals Service Small Claims Mediation Service before it reaches a hearing. It is free when the court arranges it, it is conducted by telephone, and the appointment lasts up to one hour, with the mediator speaking to each side separately.

Treat it as the fastest paid outcome available rather than as an obstacle. An hour on the phone that ends in £7,500 paid within 14 days beats a judgment for £8,750 that takes a warrant of control and four months to collect. Go into it with a number you have already decided you will accept, and with the reason the shortfall is what it is, because a mediator can move a settlement across a gap that both sides can explain.

Contractual adjudication: buying back the fast route

Section 106 removes your statutory right to adjudicate. It does not stop the two of you agreeing to one, and that agreement is the single most valuable clause a domestic builder can put in their own terms. Adjudication produces a decision in about 28 days that binds both parties on an interim basis until a court says otherwise, which on a domestic debt means the money moves this quarter rather than next year.

The ready-made version is the JCT Home Owner suite. HO/B 2021, the building contract for a home owner or occupier who has not appointed a consultant, is written for extensions and alterations and covers the work, planning permission, building regulations and party walls, the price, payment, the working period, insurance, working hours and disputes, and it carries its own Rules for Adjudication at HO/Adj. It costs £40 plus VAT. HO/C and HO/CA 2021 do the same job where an architect or surveyor is involved.

Whether an adjudication clause binds a consumer is decided by the fairness test in Part 2 of the Consumer Rights Act 2015. Section 62(4) makes a term unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer, and section 62(1) makes an unfair term not binding on them. So the clause has to be written in plain language, sit somewhere the customer will see it rather than in small print, be pointed out and explained before signature, and leave their right to go to court afterwards intact, which interim adjudication does by design. A published consumer form such as HO/B, handed over and talked through at the quotation stage, is doing all four of those things at once. If you are drafting your own terms rather than adopting a standard form, an hour with a construction solicitor on the dispute clause is the one legal spend that pays for itself across every job you sign afterwards.

Choosing the contract at all is the decision underneath this one, and the shapes available to a UK builder are in which contract a UK builder signs.

What it costs

Setting the whole thing up costs less than a day's labour. The JCT HO/B 2021 contract is £40 plus VAT. The Schedule 2 information and the Part B cancellation form are a page each and cost nothing. The Letter of Claim is a stamp. Mediation arranged by the court is free. The only real money is the court fee, £455 to issue an £8,750 claim and £346 to have it heard, and both are recoverable under rule 27.14(2)(c) if you win.

On AEC Stack there is no monthly subscription. The platform fee is 2.5% of each invoice processed through the platform, taken when the invoice is paid, so a quiet month costs nothing. Your stage payments carry the trigger event, the sum and the days to pay that a domestic payment schedule is made of, each stage invoice dates itself against the event that released it, and the photographs and sign-offs you take at each stage sit against the job rather than in a phone, which is what a Letter of Claim and a small claims hearing both ask you to produce.

Put your stages, their trigger events and their payment days into a live job and see what you are exposed for at each one: open the payment schedule.