How much deposit can a builder or tradie legally ask for?
How much deposit can a builder legally ask for in Australia?
It depends on the state and the size of the job. In NSW the maximum deposit for residential building work is 10% of the contract price. In Victoria it is 10% for contracts under $20,000 and 5% for contracts of $20,000 or more. In Queensland it is 20% up to $3,300, 10% from $3,301 to $19,999, and 5% from $20,000. In Western Australia it is 6.5%.
A builder asking for half the money up front is one of the most common warning signs in home building, and in most of Australia it is not just unwise to agree to -- it is illegal for them to ask.
Every mainland state with a home building law caps the deposit on residential work. The caps are lower than most people assume, they differ from state to state, and in some states they change with the size of the job. Here is what applies where.
The limits, state by state
These apply to residential building work -- building, renovating, extending or repairing a home. The deposit is any money paid before work starts.
- New South Wales: 10% of the contract price, set by section 8 of the Home Building Act 1989. It applies to residential building work generally, not only to large jobs.
- Victoria: 10% if the contract price is under $20,000, and 5% if it is $20,000 or more, under the Domestic Building Contracts Act 1995. A builder who asks for more lets you end the contract before it is finished.
- Queensland: 20% for jobs up to $3,300, 10% for $3,301 to $19,999, and 5% for $20,000 or more. Up to 20% can be allowed where more than half the work by value is custom-made off site, such as bespoke cabinetry.
- Western Australia: 6.5% of the contract price, under the Home Building Contracts Act 1991, which covers most home building contracts between $7,500 and $500,000.
Why the caps are there
A deposit is the one payment made before you have anything to show for it. If a builder takes a large one and then stops trading, that money is usually gone -- and construction has been Australia's largest single source of company failures for years.
The caps keep the amount you can lose that way small. They also remove the most common pressure tactic: a quote that is only valid if you pay a big deposit today.
What comes after the deposit
The rest of the price should be paid in progress payments tied to stages of work actually completed -- slab, frame, lock-up, fixing, completion -- not to dates on a calendar. You pay for what has been done, not for what has been promised.
If a builder asks for a payment and the stage it relates to has not been reached, you are entitled to ask to see it first.
If you are asked for more
Say no and ask for the contract to be corrected. A builder who knows the rules will not argue; one who does is telling you something useful about how the rest of the job will go.
If you have already paid more than the cap, contact your state's building regulator or consumer affairs office before paying anything else.