© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
© 2025 News On The Block. All rights reserved.
News on the Block is a trading name of Premier Property Media Ltd.
The Construction Act is changing and if you are not prepared you may find yourself out of pocket. If you do not issue the correct notices under the Act, as a client you could be forced to pay for commercial construction and maintenance works which have not been properly carried out and you will be unable to correct the position until the next pay date.
The new Construction Act has changed the way payments are made, and you will need to update your internal procedures and notices. There is also a greater emphasis on giving timely notices with the payee having greater rights in the absence of the correct notices being given on time.
You may think that because you don’t operate with written contracts, particularly when you instruct a contractor to carry out low value and routine maintenance, adjudication does not apply to you, but you would be wrong. Changes to the Act means that adjudication will be available on a wider range of construction contracts. Previously statutory adjudication was only available where the contract’s terms were ALL in writing. The new Act now allows statutory adjudication in any construction contract, therefore the number of adjudications are likely to increase and could pose serious traps if you are not familiar with the tight timescales of adjudication.
Previously, there were no consequences to a failure to give a payment notice. Under the new Act if the paying party fails to give a timely payment notice, the receiving party can issue a default payment notice setting out what they consider due. Further, the Act may permit the contractor’s application for interim payment to stand as the default payment notice provided it fulfils certain criteria.
This is a significant change and shifts the balance of power entirely. In short, if you don’t tell your contractor what you are going to pay, you will have to pay the amount they request as due, irrespective of how accurate the bill is. For a contractor this is a wonderful opportunity to ensure fair payment, but the consequences for a client who fails to give a notice are obvious.
The new Act replaces withholding notices with pay less notices. Previously you would state what you would not pay and why, now you must state what you are paying and why. You can no longer combine a payment notice with the corresponding pay less notice, they must be supplied separately.
You must also ensure that contracts managers are aware of the potential consequences of a failure to issue timely payment notices, what to do on receipt of a default payment notice and that pay less notices must be issued on time.
It’s obvious to see the benefits the new Act may have on cashflow. However, there are pitfalls for the unwary and those who don’t want to get caught out must get prepared.
Rebecca Evans is a solicitor with Thomas Eggar LLP.