Deposits and progress payments: what homeowners should know

Money is where a lot of building disputes start. Paying too much up front, or paying for work that isn't finished yet, can leave you exposed if your builder stops work or goes out of business. The good news is that most states set clear rules on deposits and progress payments, and knowing them makes it much easier to spot a bad deal.

This guide explains how deposits and progress payments generally work, with examples from NSW, Queensland and Victoria. Rules differ between states and change over time, so always check your state regulator's current guidance before you sign or pay.

What a deposit is for

A deposit is money you pay before work starts. It shows you're committed and helps the builder order materials and book the job in. It isn't meant to fund the whole project, and in several states the law caps how much a builder can ask for.

NSW

The NSW Government's guide to protecting yourself if a builder becomes insolvent says a builder can only ask for a maximum of 10% of the total contract price as a deposit before work starts. It also warns that anything you pay above that may not be recoverable under home building compensation cover.

Queensland

The QBCC's page on deposits and progress payments sets the maximum deposit by job value: 20% for work valued at $3,300 or less, 10% for work from $3,301 to $19,999, and 5% for work over $20,000. A higher deposit is allowed only in limited cases where most of the work is custom-made off site, such as made-to-measure cabinetry or windows.

Victoria

Consumer Affairs Victoria's paying for building work checklist says a deposit can be no more than 10% if the contract price is under $20,000, or 5% if it's $20,000 or more. For work over $16,000, it says not to pay a deposit until you've seen evidence of the builder's domestic building insurance and checked their registration.

How progress payments should work

After the deposit, you'll usually pay in instalments as the job moves along. These are progress payments. The key principle across states is the same: you pay for work that has actually been done, not for work that's coming.

Payments linked to stages

Most contracts link each payment to a clearly described stage, such as the slab, frame, lock-up or fixing stage. That makes it easy to check whether a stage is finished before you pay.

Victoria spells this out in law for major domestic building contracts. Consumer Affairs Victoria's checklist sets out a standard schedule for a contract to build all stages: 10% at base, 15% at frame, 35% at lock-up and 25% at fixing, alongside the deposit, with the rest paid at completion. Builders can ask you to agree to a different schedule, but you should understand it before signing.

In Queensland, the QBCC says progress payments must be relative to the work completed. Its example is that a contractor can't claim more than 50% of the contract price, including the deposit, until at least 50% of the work on site is done.

Payments at regular intervals

Some contracts use monthly or "as invoiced" payments instead of stages. In that case, ask for detailed evidence with each claim showing what work was done and what it cost. The NSW Government says these payments should be for labour and materials already provided, backed by invoices and receipts.

Don't pay early or pay extra

It can feel friendly to pay a bit ahead when a builder asks, but it can cost you. Regulators in NSW, Queensland and Victoria all warn that paying more than the contract says, or paying before a payment is due, can reduce what you can claim under your state's home warranty or building insurance scheme if things go wrong.

A few simple habits help:

• Pay only the amounts and stages written in your contract
• Inspect the work, or have someone independent inspect it, before each stage payment
• Make sure any required inspections for that stage have been passed
• Pay by a traceable method, like bank transfer, and keep the receipts
• Get every variation in writing, with the price, before the extra work starts

Before you pay anything

Before handing over a deposit, check the basics:

1. Licence or registration. Look up the builder on your state regulator's register and make sure the name matches the contract.
2. Insurance. Where your state requires home warranty or domestic building insurance for the job, get the certificate before you pay. Your regulator's website explains when it's needed.
3. A written contract. It should set out the deposit, every progress payment and what each one is tied to.
4. The final payment. Know what has to happen before the last payment, such as completion of the work and any final certificate or inspection.

If you're not sure whether a payment request is fair, contact your state's consumer or building regulator before you pay. They can explain the rules that apply to your job.

Find a local builder

When you're ready to get quotes, you can search for builders near you on Find My Tradie, including builders in Sydney, and contact them directly. Ask each one how they structure deposits and progress payments, and compare that alongside the price.

Find builders in your area

Frequently asked questions

This guide is general information only, not legal or financial advice. Rules change, so check the official sources linked above for your state.