Building Contracts Explained: JCT, FMB and More

A guide to building contracts in the UK, including JCT Minor Works, FMB contracts, what to include, payment stages and how to handle disputes.

A written building contract protects both you and your builder. It sets out what work will be done, how much it will cost, when it will be completed, and what happens if things go wrong. Yet many homeowners start building projects worth tens of thousands of pounds with nothing more than a verbal agreement and a quote on the back of an envelope.

This guide explains the main contract options for domestic building work and what you should include.

Why You Need a Written Contract

A written contract is not just good practice - it is your primary protection if something goes wrong. Without one:

• There is no agreed scope of work - disputes about what was included become "he said, she said"
• There is no fixed price - the builder can claim additional costs for work you thought was included
• There is no completion date - you have no grounds to claim for delays
• There is no clear process for variations, defects, or disputes
• Your legal options are severely limited if you need to take action

Even with a trusted builder, a written contract protects both parties and prevents misunderstandings.

Types of Building Contract

JCT Minor Works Building Contract (MW)

The JCT Minor Works contract is the most widely used standard contract for domestic building projects up to approximately £250,000 in value. Published by the Joint Contracts Tribunal, it is professionally drafted and widely understood by builders, architects, and solicitors.

Best for: extensions, loft conversions, renovations, and other projects where an architect or contract administrator is overseeing the work.

Key features:

• Clear provisions for variations (changes to the scope of work)
• Interim payments based on progress (typically monthly valuations)
• Retention - a percentage (usually 5%) withheld from each payment, released on practical completion and after the defects liability period
• Defects liability period - typically 6 months after completion, during which the builder must return to fix any defects
• Extension of time provisions for delays beyond the builder's control
• Liquidated damages - a pre-agreed daily or weekly rate payable by the builder for late completion
• Dispute resolution - adjudication, arbitration, or litigation

The JCT Minor Works contract costs approximately £40–£60 to purchase from the JCT website.

JCT Homeowner Contract

A simpler version of the JCT contract designed specifically for homeowners who are not using an architect to administer the contract. Written in plain English rather than legal terminology.

Best for: smaller projects where you are managing the builder directly without professional oversight.

Key features:

• Simpler language - easier for non-professionals to understand
• Fixed price or cost-plus options
• Payment schedule agreed upfront
• Defects liability period
• No architect/contract administrator role (you manage the builder directly)

FMB Contract

The Federation of Master Builders (FMB) publishes its own contract for domestic building work. FMB member builders often use this contract as standard.

Best for: projects with FMB-registered builders, particularly where the homeowner wants the reassurance of the FMB's warranty and dispute resolution service.

Key features:

• Written in accessible language
• Includes a payment schedule
• Covers variations, delays, and defects
• Linked to FMB's MasterBond warranty - protecting the homeowner if the builder becomes insolvent during the project
• Access to FMB's dispute resolution service

Architect's or Bespoke Contract

Some architects prepare bespoke contracts tailored to the specific project. These can be effective if well-drafted, but lack the legal certainty and widespread understanding of standard contracts. If your architect proposes a bespoke contract, consider having it reviewed by a solicitor.

Builder's Own Terms

Many builders provide their own terms and conditions with their quote. These vary enormously in quality and are typically weighted in the builder's favour. If a builder proposes their own terms, compare them carefully against a standard contract to ensure you are adequately protected.

What Your Contract Should Include

Regardless of which contract you use, ensure it covers:

Scope of Work

• A detailed description of the work to be carried out
• Reference to specific drawings and specifications (attach these to the contract)
• What is included and what is excluded (particularly important for kitchen fitting, decoration, landscaping)

Price

• Fixed price - the builder bears the risk of cost increases (preferred for most homeowners)
• Cost plus - you pay actual costs plus an agreed percentage for the builder's overhead and profit (only suitable when the scope is genuinely uncertain)
• What the price includes - materials, labour, skip hire, scaffolding, plant, building regulations fees
• How VAT is handled - most domestic work is standard rated (20%), but some renovations of empty properties qualify for 5% or 0%

Payment Schedule

• Stage payments - linked to completion of specific milestones (foundations, wall plate, roof on, first fix, second fix, completion)
• Never pay the full amount upfront - a deposit of 10–15% is reasonable; never more than 25%
• Retention - hold back 2.5–5% until the defects liability period expires

Programme

• Start date
• Expected completion date
• Key milestones
• What happens if the builder is late (liquidated damages or right to terminate)

Variations

• How changes to the scope are agreed - always in writing before the work is done
• How additional costs are calculated
• Impact on the completion date

Defects

• Defects liability period (typically 6 months)
• The builder's obligation to return and fix defects at no cost
• What constitutes a "defect" vs normal wear and tear

Insurance

• The builder must have public liability insurance (minimum £2 million, £5 million preferred)
• Employer's liability insurance (if the builder has employees)
• Who is responsible for insuring the works during construction

Payment Tips

1. Never pay large sums upfront - legitimate builders can fund materials from their own cash flow or credit lines
2. Pay against completed milestones - not time elapsed
3. Always retain 2.5–5% until the defects period expires
4. Get receipts for every payment
5. Do not release final payment until snagging is complete and you have the building control completion certificate

Handling Disputes

If problems arise during the project:

1. Discuss first - most issues are resolved through conversation
2. Put it in writing - follow up verbal discussions with an email confirming what was agreed
3. Refer to the contract - the contract should provide a clear process
4. Mediation - a neutral third party helps you reach agreement (cheaper and faster than legal action)
5. Adjudication - a legally binding decision by an independent adjudicator (available under JCT contracts)
6. Legal action - as a last resort, through the courts or arbitration

A clear, fair contract is the foundation of a successful building project. It protects your investment, sets expectations, and provides a roadmap for resolving problems. Never start building work without one. Find a reputable contractor near you and discuss contract terms before work begins.