Do I really need a contract for a small extension?

Yes. A verbal agreement is worthless when things go wrong. A JCT contract protects both your money and the builder's payment rights. It is the rulebook for the project.

It is a percentage (usually 5%) of every invoice that you hold back. You keep this money for 3-6 months after the build finishes to ensure the builder returns to fix any defects (snags).

What are Liquidated Damages?

A pre-agreed penalty fee (e.g., £500 per week) that the builder pays you if they finish the project late without a valid reason.

The Paper Shield: Why You Need a JCT Contract

By My Local London Builder Team | January 26, 2025

JCT Contract document on an architect's desk

Summary: Construction is risky. You are handing over your life savings to a team of strangers to tear your house apart. If you do this on a handshake, you are gambling. The Joint Contracts Tribunal (JCT) produces the industry-standard "Homeowner Contract." It is not aggressive legal jargon; it is a fair, plain-English rulebook that protects both you (the client) and us (the builder). This guide explains why you should never start a job without one.

What is a JCT Homeowner Contract?

The JCT is an independent body that writes standard forms of contract. The "Homeowner" suite is designed specifically for domestic projects (extensions, lofts, renovations).

It formalises three critical things:

The Scope: Exactly what works are included (referencing the drawings/quote).
The Price: The agreed sum and payment schedule.
The Time: The start date and the completion date.

Without this, if the builder takes 6 months longer than promised, you have very little legal leverage. With a JCT, the penalties are clear.

The Mechanism of Trust: Retention

One of the most powerful tools in the JCT contract is the "Retention Fund."

How Retention Works

Typically, the retention is set at 5%. This means that for every invoice the builder sends you, you only pay 95% of it. You hold back the other 5% in a pot.

Practical Completion: When the job is finished, you release half of the retention (2.5%).
Rectification Period: You keep the final 2.5% for a further 3 to 6 months. This ensures the builder comes back to fix any "snags" (cracks, stiff doors, loose tiles). If they ghost you, you use that money to pay someone else to fix it.

Liquidated Damages (The Late Fee)

What happens if the project overruns? In a "handshake" deal, nothing happens—you just get angry.

In a JCT contract, you agree on a figure for "Liquidated Damages" upfront. This is a genuine pre-estimate of your loss if the project is late. For example, if you are renting a flat while the work is done, the damages might be equal to your weekly rent (e.g., £500/week).

If the builder finishes 4 weeks late without a valid excuse (like extreme weather), you can deduct £2,000 from their final bill. It focuses the mind wonderfully.

Variations: The "Can you just...?" Trap

The biggest cause of arguments is the "Variation" (or "Extra"). You ask the builder to add a few spotlights or change the tiles. The builder says "sure," does it, and then sends a surprise bill for £2,000 at the end.

Under a JCT, any change to the original scope must be a written instruction. The contract explains how these changes should be valued (usually based on hourly rates or a schedule of rates). It prevents the "surprise invoice" syndrome because the cost must be discussed before the work changes.

Payment Schedules: Valuations vs Milestones

Never pay upfront. A JCT contract typically sets out a payment structure based on Valuations.

Every month (or every 2 weeks), the builder values the work physically done on site (e.g., "Foundations 100%, Brickwork 50%"). You inspect it (or your architect does) and you pay that amount. You are never paying for work that hasn't happened yet. This " arrears" payment system protects you if the builder goes bust—you haven't lost money for unbuilt work.

Dispute Resolution

If things go really wrong, going to court is expensive and slow. The JCT contract includes an "Adjudication" clause.

Adjudication is a fast-track legal process. An independent adjudicator reviews the case and makes a binding decision within 28 days. It is much cheaper than litigation and allows you to resolve an issue (like a disputed payment) quickly so the project can continue.

Insurance: Who Covers What?

The contract clarifies who insures the building works. Usually, for an extension, the homeowner must inform their buildings insurer that work is happening ("Joint Names Policy"). The builder must hold "Public Liability" and "All Risks" insurance for the new works.

If the house burns down due to a builder's blowtorch, the contract clearly states whose insurance pays out. Without this clarity, insurers will fight each other for years while you are left homeless.

Summary: Professional Limits

Some clients fear that presenting a contract makes them look "difficult" or "litigious." The opposite is true. A professional builder prefers a contract. It gives them security that they will be paid if they do the work.

If a builder refuses to sign a standard JCT contract, that is the biggest red flag in the industry. Walk away.

Frequently Asked Questions

1. Where can I buy a JCT contract?

You can buy them online directly from the JCT website or legal stationers. They cost around £30-£40. It is a tiny investment for the protection it offers.

2. Do I need a lawyer to fill it in?

For the "Homeowner" contract, no. It is designed to be filled in by laypeople. It asks simple questions (Names, Address, Price, Dates). For larger projects, your Architect or Contract Administrator will fill it in for you.

3. What is the difference between "Minor Works" and "Homeowner"?

"Minor Works" is more complex and usually used when an Architect is administering the project. "Homeowner" is simpler and used when you are dealing directly with the builder.

4. Can the builder pause the works if I don't pay?

Yes. The contract gives the builder the right to suspend performance if a valid invoice is not paid by the final date for payment (usually 14 days after issue).

5. What counts as a "Relevant Event" for delay?

A "Relevant Event" is a valid excuse for the builder to be late without paying damages. Examples include: exceptionally adverse weather (storms, not just rain), civil commotion, or you asking for extra work (Variations).

6. Can I fire the builder?

The contract sets out specific grounds for "Determination" (firing). You cannot just fire them because you don't like them. They must have significantly breached the contract (e.g., stopping work for 14 days without reason). Following the correct procedure is vital to avoid being sued for "wrongful termination."