Builder gone bust mid-project: what happens to your money

A builder going bust is not the same as a builder vanishing, but the two often look identical from your side of the site fence: the vans stop coming, the phone goes unanswered, and you are left with a half-finished job. The first part of this guide covers what to do when a builder disappears. The second covers formal insolvency: the company enters liquidation or administration, the site goes quiet, and a letter from an insolvency practitioner lands on the mat. It happens more than most homeowners realise. In the 12 months to September 2026, construction had the largest share of company insolvencies of any industry in England and Wales, roughly one in six, according to Insolvency Service statistics (opens in a new tab).

Establish whether your builder is actually gone

Before escalating, distinguish between a builder who has genuinely disappeared and one who is running late, dealing with a personal emergency, or juggling too many projects. Try every channel: phone, text, email, WhatsApp. Send a written message (email is best for the paper trail) asking for an update on the timeline and a confirmed date for returning to site. Be factual. State what work remains outstanding and when you last saw activity on site.

Give them 48 to 72 hours to respond. If you have their business address (check Companies House), send a letter by recorded delivery as well; some builders who ignore calls respond to formal correspondence. If after 72 hours there is no response and no activity on site, you are likely dealing with an abandonment.

Secure the site and document everything

Your immediate priority is to prevent further damage. A half-completed renovation left open to the weather deteriorates quickly, particularly if roofing is incomplete, walls are open or plumbing has been disconnected. If there is an immediate safety risk (exposed wiring, structural instability, water ingress), get an emergency electrician, plumber or builder in to make the site safe, and keep every receipt. Those costs may be recoverable.

Photograph and video every part of the site in its current state: the quality of work done, materials left on site, any damage, the overall condition. These records underpin any legal claim, insurance claim or briefing to a replacement builder. Do not dispose of materials the builder has left; ownership depends on your contract and on whether you have already paid for them.

Work out how much you have paid against the work done

Pull together the contract, every quote and invoice, records of every payment, the messages discussing the work, and any variation agreements. Check the contract for termination clauses. If there is no written contract you still have rights: under the Consumer Rights Act 2015 a builder must carry out work with reasonable care and skill and within a reasonable time, even on a verbal agreement, so abandoning a job is a breach.

Then calculate what you have paid versus the value of work completed. If you paid 60% of the contract value and 30% of the work is done, you are significantly exposed. If payments were tied to completed stages, your exposure is far smaller, which is why structuring stage payments properly matters so much.

Send a letter before action

If communication fails, send a letter before action: a formal letter setting out the breach, the losses you have calculated, and a deadline, usually 14 days, for the builder to return and complete the work or refund the overpayment. Send it by recorded delivery and by email. You do not need a solicitor to write one, though having one review it adds weight. If there is still no response, the small claims track covers claims up to £10,000 in England and Wales (the court fee depends on the amount; see the court fees on GOV.UK (opens in a new tab)). Winning a judgment and recovering the money are different things: if the builder has no assets or the company is dissolved, a court order may not result in payment, which is where the rest of this guide comes in.

Report the builder to Trading Standards through the Citizens Advice consumer helpline (0808 223 1133). It creates a formal record and may trigger an investigation if there is a pattern. If the builder belongs to a trade body such as the FMB or BALI, file a complaint there too; both have disciplinary processes.

When the company has gone into insolvency

If the letter comes back from an insolvency practitioner rather than the builder, you are in a different process with different rules. The rest of this guide covers that.

What happens to your money when a builder goes bust

Any money you have paid for work not yet done becomes an unsecured debt owed to you by the company. The company's contract with you effectively dies with the business: the liquidator or administrator takes over the company's affairs, gathers whatever assets exist, and distributes them in a strict legal order.

You are near the back of that queue. The insolvency practitioner's own fees, secured lenders, employees' unpaid wages and certain HMRC debts all rank ahead of unsecured creditors. Whatever is left after all of them is shared between everyone in your position: you, the builders' merchant, the scaffolding firm, the plant hire company.

Why deposits are rarely recovered

Deposits are rarely recovered because unsecured creditors are typically paid pence in the pound, and often nothing at all. Your deposit was never ring-fenced. The moment it hit the builder's account it became working capital, and in a struggling firm it was almost certainly spent on an earlier job's bills, wages or materials. That is usually why the company failed: each new deposit was plugging the hole left by the last project. On your next project, you can stay out of that queue altogether if you ask your builder to use milestone-based payment protection: the money for each stage is held securely until you approve the work, so it is not in the builder's account beforehand.

The process is slow as well as thin. Liquidations commonly run for a year or more before any distribution, and many close with nothing for unsecured creditors. Plan your finances on the assumption the deposit is gone; treat anything recovered as a bonus.

Practical steps to take this week

Start by confirming the insolvency is real and formal: check the company on Companies House and look for a liquidation or administration notice in The Gazette. A builder claiming to be "going under" while asking you for a goodwill payment is a different problem entirely. Then:

• Contact the insolvency practitioner. Their details appear on the Companies House filing. Register as a creditor and submit a proof of debt for everything you have paid for undelivered work.
• Check how you paid. If any payment went on a credit card, Section 75 of the Consumer Credit Act 1974 makes the card provider jointly liable for breaches of contract on purchases over £100 and up to £30,000, even if you only paid part of the bill on the card. For debit cards, ask your bank about a chargeback, usually within 120 days of the payment or of discovering the problem.
• Dig out any protection you bought. Deposit protection or an insurance-backed guarantee may respond to insolvency. Check the policy wording carefully: we compare what these products actually cover in deposit protection insurance vs escrow.
• Secure the site and document everything. Photograph the state of the work, gather invoices and receipts, and list materials on site. Materials you have clearly paid for may be yours, but suppliers sometimes have retention of title claims, so tell the insolvency practitioner before anything is removed.
• Be wary of white knights. Anyone appearing within days offering to "take over the contract" deserves the same checks you would give a brand new firm, because that is what they are.

Finishing the work

Treat the remaining work as a new project, not a continuation. Get an independent assessment of what has actually been completed and to what standard, ideally from a surveyor, because a new builder will not warrant the old builder's work. Contact Building Control to check which inspections were passed and which stages remain open. Then tender the remaining scope properly. Expect quotes to carry a premium: picking up a half-finished job means taking on unknowns, and builders price unknowns.

Why escrow funds sit outside the insolvent estate

Money held in escrow for work not yet signed off is not the builder's money, so it never becomes part of the insolvent estate. That is the structural difference between a deposit and a funded milestone. A deposit is a payment: once made, it belongs to the company, and if the company fails you join the creditor queue. Escrowed funds are conditional: they transfer when a milestone is completed and approved.

With milestone escrow you fund each stage before it starts, and money that has not been released stays held rather than being claimed by a liquidator. On Renopay, neither side can touch the money for a stage until the work is signed off. Client funds are held by OPP, an FCA-authorised electronic money institution. Builders lose nothing in this arrangement either: they see the funds exist before starting, and the money is released as soon as each stage is approved (it can take up to a day to reach their bank).

Insolvency is the risk you cannot vet for. A firm can be honest, skilled and busy right up until the week it fails. Ask your builder to set it up on Renopay and keep your renovation money out of the creditor queue.

Frequently asked questions

Can I get my deposit back if my builder goes into liquidation?

Rarely from the company itself: as an unsecured creditor you are paid only after fees, secured lenders, employees and certain HMRC debts, which usually means pence in the pound. Your realistic routes are a Section 75 claim if you paid by credit card, a debit card chargeback, or any deposit protection or insurance-backed guarantee you hold.

Who finishes the work when a builder goes bust?

You appoint a new builder; the liquidator will not complete the project. Get the finished work independently assessed first, check the Building Control record, and tender the remaining scope as a fresh job. Expect a price premium for taking over part-done work.

Can I get my money back if my builder walks off the job?

You can claim back what you have overpaid, but getting it is not certain. Under the Consumer Rights Act 2015, a builder must carry out work with reasonable care and skill and within a reasonable time, even on a verbal contract, so abandoning a job is a breach. Start with a letter before action, then the small claims court for claims up to £10,000. If the builder’s company is dissolved or has no assets, a judgment may not result in payment.

How do I report a builder who has abandoned a job?

Report them to Trading Standards through the Citizens Advice consumer helpline on 0808 223 1133. This will not recover your money directly, but it creates a formal record and may prompt an investigation if there is a pattern of complaints. If the builder belongs to a trade body such as the FMB or BALI, make a formal complaint to that organisation too.

Will a new builder charge more to finish another builder’s work?

Often, yes. Completing someone else’s work means assessing what has been done, finding defects and taking responsibility for a structure they did not build, and that risk commands a premium. Show potential replacements your photographs, the original contract and any building control certificates, let them make their own assessment, and get at least three quotes rather than hiring the first builder available.

Are materials on site mine if I have already paid for them?

Sometimes. If you can show you paid for specific materials, you may have a claim to them, but suppliers with unpaid invoices can assert retention of title. List and photograph everything on site and notify the insolvency practitioner before removing anything.