What are you working with?
Home building contracts come in various types, including:
- preliminary agreements
- fixed-price contracts
- cost plus contracts
- construction management contracts
- new home construction contracts.
Each has different rules and risk levels. For example, cost plus contracts often carry higher financial risks for home owners.
Reports show final costs under these contracts can exceed expectations by 50–100 per cent. So, as you can see, it’s crucial to understand the terms before signing.
Deposits—what’s legal?
Deposits are the upfront payments made before work begins. Queensland law limits the maximum deposit a contractor can request based on the total value of the project:
- Projects up to $3,300: Maximum deposit is 20%
- $3,301 to $19,999: Maximum deposit is 10%
- $20,000 or more: Maximum deposit is 5%.
Exceptions to the rule
In some cases, a deposit of up to 20 per cent is allowed—for example, if more than half the work (by value) is being custom-built or fabricated off-site. This might include bespoke kitchen cabinetry, prefabricated sheds, pergolas or cladding.
What are progress payments?
Progress payments are made in stages as the build moves forward. These payments should always match the actual work completed and should be clearly outlined in your contract.
There are two common ways to structure them:
1. By construction stage
This approach links payments to clear project milestones—like laying the slab, framing, or installing the roof. It allows you to inspect the work and confirm the stage is complete before handing over more money.
2. By time
Sometimes payments are set at regular intervals (e.g. monthly). If so, contractors must provide evidence showing the value of work completed during that period.
Home owner homework
Before you sign any contract, take time to understand the financial terms—including how much you’re paying, when, and why.
Clarifying expectations around deposits and progress payments upfront helps avoid stress and protects your investment throughout the project.
