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25 November 2011 / Kate Knox , David Savage
Issue: 7491 / Categories: Features , Property , Housing
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New developments

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David Savage & Kate Knox provide an update on the latest construction contract changes

There has been a new payment regime that applies to all “construction contracts” entered into on or after 1 October 2011. The changes to the payment provisions set out in the Housing Grants, Construction and Regeneration Act 1996 (HGCRA 1996) have been introduced by Pt 8 of the Local Democracy, Economic Development and Construction Act 2009 (LDEDCA 2009), following extensive consultation across the construction industry over recent years.

Changes to the payment procedure

In simple terms, construction contracts will need to provide for the following payment structure:

  • Payment due date.
  • Payment notice.
  • Payer’s “pay less” notice.
  • Final date for payment.

The new provisions require a payment notice and a pay less notice to be given, even if the sum due is
zero. Separate payment notices and pay less notices must be served.

The scheme for construction contracts will apply to non-compliant contracts (or to the deficient area of the contract). Consequently, the scheme has also been

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