How much deposit can a builder ask for, and how do you get it back?
In Queensland, a builder can ask for a deposit of no more than 20%, 10% or 5% of the price, depending on the size of the job. If you have paid a deposit and the work never started, home warranty insurance may pay it back.
How much deposit can a builder ask for?
QBCC sets these limits:
- $3,300 or less: no more than 20%
- $3,301 to $19,999: no more than 10%
- $20,000 or more: no more than 5%
So for a $40,000 renovation, the most a builder can ask for up front is $2,000.
There is one exception. If more than half the price is custom work made off site, the deposit can be up to 20%. Made-to-measure kitchen cabinets, windows, sheds, pergolas and cladding are examples QBCC gives.
What if the builder asks for more?
You don’t have to pay more than the limit. Ask the builder to explain the amount and to put it in writing.
Be careful if you have already paid too much. QBCC says the extra above the limit can’t be recovered through a home warranty claim. A large deposit is also more money at risk if something goes wrong.
Can I get my deposit back if I change my mind?
For contracts over $3,300, you have a cooling-off period of 5 business days. It starts the day after you get a signed copy of the whole contract.
To cool off, give the builder a written, signed notice that you are withdrawing from the contract. QBCC says the builder can usually keep $100 plus any out-of-pocket costs they had, so most of the deposit should come back to you.
Once the cooling-off period ends, ending the contract is harder. Read the contract and get advice before you try.
What if the builder took my deposit and never started?
First, contact the builder in writing and ask when work will start. Keep a copy.
If they won’t start or can’t be reached, home warranty insurance may help. When work has not started, it can pay back the deposit you paid under the contract. It can also cover the cost of finishing the job if work started and stopped.
To claim:
- The contract must be properly ended first. This step isn’t needed if the builder has died, the company has been deregistered, or the builder is bankrupt or insolvent and their licence has been cancelled. Ending a contract the wrong way can hurt your claim, so talk to QBCC or a lawyer before you do it.
- Stop any further payments. Tell your bank or lender in writing.
- Gather your papers: the contract, receipts for the deposit, and every message with the builder.
- Lodge a claim through the QBCC portal.
There are time limits. The contract must end within 2 years of work starting, or of signing if work never started. You must claim within 3 months of the contract ending. Home warranty insurance only covers fixed-price contracts.
Check the builder before you pay anything
Search the builder on this site to see their licence class and any suspension or cancellation in QBCC’s records. Then confirm today’s status on QBCC’s licence search. Our guide to checking a builder has the other checks.
If your job is already in trouble, see My builder walked off the job.