What does 'Retention' mean when buying a property?

Find out what Retention means when you are buying a property. 'What does Retention mean?' plus over 150 other property related terms and jargon in plain English


There are two types of retentions

  • Survey retention - the surveyor refuses to value the property at or above the agreed price until a possible issue is investigated.
  • Solicitor retention - the buyers solicitor asks for some funds to be put aside until clarity can be obtained on an issue.

Survey retentions

If you need a mortgage, of if you just want peace of mind that your not paying too much, a surveyor will carry out a valuation of the property you want to buy.

If the surveyor has a concern about a particular aspect of that property he might say something like "I agree that this property is worth £200,000 but I only recommend paying £30,000 until the roof is checked.

The £30,000 being held back is known as a retention.

The surveyor is not saying there is £30,000 worth of work needed on the roof.

As the surveyor is not a roofer he does not know for sure if there are any real issues with the roof but his training means he has seen signs that there could be problems. As he can't tell if these problems are real or how much it would cost to put them right he picks a nominal figure which is just really big and would pretty much cover everything all the way up to a completely new roof on most houses.

It is then up to the buyer and seller to agree how to split the costs of getting a specialist to come and look at the issue. In the case of the roof the costs are fairly small and the buyer usually pays.

The roofer might do their inspection and announce that no work is required. His report is then forwarded to the surveyor who will remove the retention from his valuation.

Solicitor Retention

The use of this retention is often to allow exchange of contracts or even the completion of a sale (so the buyer can move in) when there are still matters outstanding. The retention funds are usually held by the vendor's solicitor.

Example One: The property is a flat and the seller owes some service charge payments but it is not clear how much as the managing agent's books are out of date. The vendor agrees that £5,000 should be held in retention to clear these debts when they are clarified. The balance - any amount left from the sale price after the £5,000 is deducted - is then given to the vendor.

A time limit will be put on the retention. For example the buyer has up to 12 months to make a claim on that £5,000 after which it is given to the vendor.

Example Two: In a survey it is suggested that the roof of a house must be replaced but due to the unusual nature of the structure quotes from builders vary and none of the builders are prepared to guarantee their quotes. £50,000 is held in retention until the work is carried out by the buyer after they move in. Any funds left over once the roofing work is complete and the roofers are paid are then forwarded to the vendor.

To learn more about retentions and how you can use them when purchasing a property pick up a copy of my ebook How to Really Buy a Property.

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How to Really Buy a Property

"... surveyor may decide that the property is worth the money you are prepared to pay as long as he can be sure that a certain issue is not going to be a major problem. He may, for example, believe the roof is at the end of its natural life and will need to be replaced. This could cost over £10,000 and may affect the property value. He will therefore place a retention on the value. This may say, "I agree the property is worth £250,000 once the roof has been checked. Until this has been done I am not convinced the property is worth more than..."

"... types of survey and which ones are worth the cost; Why surveyors should never estimate the cost of potential works; Why retentions don't suggest the cost of repairs; The difference between rising damp and penetrating damp; How to check more than a structural survey covers and pay..."
"... on flats generally annoys the vendor who knows they can probably sell to someone else a little less awkward or a little less naive. - retentions in a Survey - If the surveyor, carrying out any of the above surveys, believes the property is worth the price you have agreed to pay for it all is..."
"... retention can be a small amount or the total price agreed (usually in the case of suspected subsidence or other major structural issues). The best way to deal with them is as described in the remainder of this chapter. Take them in your stride, in most cases the issue is much smaller than the surveyor believes and retentions are removed after investigation of the..."
"... and Nicki had successfully offered on a two bedroom lower ground floor garden flat just off Islington Green in London. They had seen no end of properties and although this one was above their original budget they stretched to afford it. They then cut costs by going with a lender that had the lowest fees. The surveyor that looked at the property was a self employed individual who agreed that the property was worth £240,000 (their offer) but said £5,000 should be held back as a retention because of damp in the..."

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