What is the maximum residential building deposit in NSW?

Where the 10% limit applies

The limit appears in Building Commission NSW's guide to home building contracts for residential building work. A written contract is required when the price is over $5,000 including GST, or when the price is unknown and the reasonable market cost of labour and materials is over $5,000.

The guide treats jobs of $5,000 to $20,000 as small and jobs over $20,000 as large, and the deposit limit applies to both. It is a residential building guide, so do not read it as the deposit rule for commercial work.

Sources[1]

Larger contracts need more than a capped deposit

A contract over $20,000 needs the extensive form of contract. Among other things it must show the cost of Home Building Compensation cover if insurance is required, include a progress payment schedule and state a cooling-off period of 5 clear business days.

The contractor also has an obligation to give an insurance certificate when the contract value is over $20,000. That check is separate from the deposit cap, so see our Home Building Compensation guide before you invoice anything on a large job.

Sources[1]

Pre-invoice deposit check you can copy

The numbers here are a made-up example and our own arithmetic. An $18,000 contract has a 10% limit of $1,800, and a $30,000 contract has a limit of $3,000.

Contract price: $[amount]
Signed and dated written contract on file: [yes / no]
Deposit limit: $[price] x 0.10 = $[amount]
Deposit I plan to invoice: $[amount]
At or under the limit? [yes / no]

If the contract is over $20,000:
[ ] Home Building Compensation insurance certificate given to the owner
[ ] Contract includes the cost of cover, payment schedule and cooling-off statement

Sources[1][3]

Common questions

What is the maximum deposit a builder can ask for?

In NSW, Building Commission NSW says a deposit cannot be more than 10% of the contract price. That applies to both small contracts of $5,000 to $20,000 and large contracts over $20,000.[1][3]

What type of contract is required for home building work over $20,000 in NSW?

An extensive written home building contract, signed and dated by both parties. It must include the contract price, plans and specifications, a progress payment schedule, the cost of Home Building Compensation cover if required, and a 5 clear business day cooling-off statement.[1]