Builder deposits and progress payments in NSW: what's allowed

In NSW, a builder can ask for a deposit of no more than 10% of the contract price before work starts. If the job needs home building compensation (HBC) cover, which applies to most residential work over $20,000, the builder can’t ask for the deposit or any other payment until the cover is in place and you’ve been given the certificate.

By the BuilderVet team · Last reviewed 2 Nov 2026 · Sources checked 2 Nov 2026

After the deposit, progress payments must follow the schedule in your contract and pay for work actually done, not time on the job. Paying more than 10% up front, or paying early or outside the schedule, can reduce what you can recover under HBC cover if the builder can’t finish. This guide is general information, not legal advice.

The NSW rules at a glance

Sources are listed in full at the end, each checked on 2 Nov 2026.

How much deposit can a builder ask for in NSW?

The maximum is 10% of the total contract price, paid before work starts. Building Commission NSW’s Consumer Building Guide, which builders must give you before signing a contract for work over $5,000, says the same.

Some practical points:

• 10% is a ceiling, not a default. You can agree a smaller deposit. The NSW Government notes that for bigger jobs, where much of the cost is in materials, a builder may ask for a deposit. For small jobs such as changing a powerpoint, you’re unlikely to be asked for one.
• It’s 10% of the contract price. Work it out from the price on the first page of the contract, not from an estimate or a quote that has since changed.
• Specialist work. Legal Aid NSW notes the 10% limit doesn’t apply where the work is only specialist work, such as plumbing or electrical work, that doesn’t involve other home building work.
• Anything above 10% is at risk. The NSW Government says any payment above 10% may not be recoverable under HBC cover.

A quick check: on a $600,000 contract, 10% is $60,000. If the contract or invoice asks for more than that before work starts, it’s over the limit.

Do I need the HBC certificate before paying a deposit?

Yes, if the job needs HBC cover. The NSW Government says it’s illegal for the contractor to ask for a deposit or any other payment under the contract unless the cover has been taken out and a certificate of the cover has been given to you. icare, which runs the Home Building Compensation Fund, says the builder must give you a Certificate of Insurance for your property before work starts and before you pay any money, including a deposit.

According to Service NSW, HBC cover is needed for work valued at $20,000 or more (including GST) for:

• building a new home or new apartment building up to 3 storeys
• renovating a home, whatever the height of the building
• swimming pool work

Official pages describe the threshold as both “over $20,000” and “$20,000 or more”. If your job is close to that figure, ask the builder or the insurer which applies.

What the certificate should show

icare says to ask your builder for the Certificate of Insurance and check that it shows your name, your property address and the contract details correctly, then keep a copy. icare also says each project needs its own certificate, so a certificate for another job isn’t cover for yours.

We’d add one more check: read the builder’s name on the certificate, the contract and the licence side by side. If they don’t line up, ask why before you pay.

How to check it

Search the official HBC Check register by certificate number, contractor name or licence number, company name, or property address. Service NSW says it shows the issue date, the insured property address, the contractor’s name and licence number, and any claims paid on the certificate. You can also contact the insurer named on the certificate.

We read certificates from HBC Check for the builders we’ve checked, and our HBC check by address shows what we hold for a site (NSW only). No certificate on our record isn’t proof there’s none. It’s also not proof of cover. Ask the builder for the certificate and confirm it on HBC Check. Our longer guide is How to verify home building compensation insurance in NSW.

What HBC cover does

The NSW Government describes HBC cover as a last resort. It can help if the builder can’t complete the work or fix defects because they’ve become insolvent, died, disappeared, or had their licence suspended for failing to comply with a tribunal or court order to compensate a homeowner. icare says it isn’t a day-to-day building warranty and doesn’t cover delays, disagreements or unfinished work while the builder is still operating. The NSW Government’s delays page gives the maximum cover as $340,000 for non-completion or defects within the statutory warranty period.

If you pay before cover is in place, you may not be able to recover that money if the builder can’t finish. That’s why the order matters: certificate first, then deposit.

What about payments before the building contract?

The NSW Government says builders commonly ask for a separate agreement and an upfront payment to prepare plans and do other work before the building contract is signed. This payment is generally not covered by HBC cover and may not be recovered if the builder becomes insolvent.

Before you pay a pre-contract fee:

• ask exactly what it covers and get it in writing
• ask whether it’s credited against the contract price if you go ahead
• ask who owns the plans if you don’t go ahead
• keep the amount in proportion to the work described

How do progress payments work in NSW?

A progress payment is a payment made on a specific date or after a specific event, for completed work. All contracts over $20,000 must have a progress payment schedule.

The NSW Government says the schedule can only include:

1. Fixed payments after specified stages of work. Each payment is a set amount or a percentage of the contract price, and each stage must be described in clear, plain language.
2. Payments as work is done and costs are incurred, which can include a margin, either at intervals fixed by the contract or “as invoiced”. These claims must be backed by invoices, receipts or other documents.
3. A combination of the two.

Progress payments must match the work carried out. For cost plus contracts, they must be supported by receipts or other verifying documents.

What an “authorised” progress payment is

The NSW Government uses the term “authorised” progress payment. A payment is authorised when:

• the contract sets out specific stages of work and the amount or percentage payable when each stage is complete, or
• the contract provides for fixed payment intervals or “as invoiced” payments for labour and materials already supplied, with invoices and receipts

If you make a payment that isn’t authorised, such as an extra or early payment, it may affect your ability to recover losses for that payment under HBC cover.

What a stage-based schedule can look like

The table below is an illustrative example of how stages are often named in a new-home contract. It isn’t a legal standard or a recommended split. Your contract’s stages and amounts are what count.

How to check a stage claim:

• Read the stage definition in your contract. Pay against that wording, not a verbal summary.
• Look at the work, or have someone do it. The NSW Government suggests considering an independent building consultant or architect for a progress inspection before each payment, and gives $250 to $500 per inspection as a guide.
• Ask for documents on “as invoiced” claims. Invoices, receipts and evidence of the labour and materials the claim covers.
• Match the claim to the schedule. Same amount, same stage, same entity name.
• Tell your lender. The NSW Government suggests checking with your bank about any special requirements for progress payments.

Should I keep paying during delays?

The NSW Government says you should keep making progress payments as agreed in your contract, and only after the work has been completed. If you don’t pay a progress payment as the contract sets out, the builder can start legal recovery. If you pay something that isn’t a required progress payment, you may not be able to recover it under HBC cover.

What should I do if the builder asks for more?

Stay calm, put it in writing, and check it against the contract and the law before paying anything. Here is a step-by-step approach.

If the deposit asked for is more than 10%. Reply in writing that NSW law caps the deposit at 10% of the contract price, and that you’ll pay that amount once you hold the HBC certificate for your address. Point to the NSW Government contracts page. A builder who insists on more is asking for a payment the law doesn’t allow.

If they ask for a deposit before the HBC certificate. Don’t pay. Ask for the certificate, check it names your builder and your address, and confirm it on HBC Check or with the insurer.

If a progress claim is early or doesn’t match a stage. Ask the builder to show which stage in the contract the claim relates to, and that it’s complete. For “as invoiced” claims, ask for the invoices and receipts. You can arrange an independent inspection.

If they ask for a payment that isn’t in the schedule. Ask what it’s for. If it’s for a variation, the variation must be in writing and signed by both of you, with the cost impact explained, before work starts (except urgent safety work). If it’s to “help with cash flow”, that’s a payment outside the schedule, which may not be covered by HBC.

If they want the price raised. On contracts over $20,000, the NSW Government says the builder can’t increase prices unless the contract contains a clause allowing it. Check for that clause, and get advice before agreeing to anything.

If you can’t resolve it. Building Commission NSW offers free dispute resolution for home building disputes, and both parties need to agree to take part. If that doesn’t settle it, you may be able to apply to the NSW Civil and Administrative Tribunal (NCAT). Building Commission NSW’s number is 13 27 00.

A short email you can send

Hi [name],

Thanks for the invoice dated [date] for $[amount]. Before I pay, can you please:

1. send the HBC Certificate of Insurance for [address], naming [entity] as the builder
2. confirm the deposit is no more than 10% of the contract price of $[price], which is $[amount]
3. show which stage in the contract’s payment schedule this claim relates to, and confirm the work for that stage is complete

I’ll pay as soon as these are confirmed, in line with the contract.

Thanks, [your name]

Deposit and payment checklist

• The builder’s licence is current on Verify NSW, and the holder is the entity on your contract
• The contract is in writing and signed by both parties (required over $5,000)
• For work over $20,000: you hold an HBC certificate for your address that names your builder
• You’ve confirmed the certificate on HBC Check or with the insurer
• The deposit is 10% of the contract price or less
• Any pre-contract fee for plans is in writing, and you know whether it’s credited
• The contract has a progress payment schedule with described stages, or invoice-backed claims
• Each stage payment roughly matches the value of the work in that stage
• You’ll inspect, or have someone inspect, before each stage payment
• You’ll only pay what the schedule says, when it says, and keep receipts
• Variations are written, signed and priced before work starts
• Your lender’s progress payment process matches the contract

What’s different in Queensland?

Queensland has its own rules under the QBCC Act, and the deposit limits are lower for bigger jobs. The Queensland Building and Construction Commission (QBCC) gives these maximum deposits:

The 20% exception covers substantial customised or prefabricated work done away from the site, such as made-to-measure kitchen modules, windows, sheds, pergolas or cladding.

Other QBCC points:

• Overpaid deposits. If you pay more than the lawful deposit, you won’t be entitled to recover the excess in a claim under the Queensland Home Warranty Scheme for refund of the deposit. QBCC says to query it first, and if the contractor persists, you’re not obliged to pay more.
• Progress payments. For contracts over $3,300, you and the contractor negotiate the number and timing of progress payments, but every payment must relate to the work completed. QBCC’s example: the 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.
• Pay on schedule only. QBCC says paying more than the contract amount, or paying before the due date, reduces your protection under the Queensland Home Warranty Scheme.
• Cooling-off. You generally have five business days to withdraw, starting the day after you receive the signed contract (and, for contracts of $20,000 or more, the QBCC Consumer Building Guide). Withdrawing usually costs $100 plus the contractor’s reasonable out-of-pocket expenses.

BuilderVet is free for NSW and QLD builders, so our check covers Queensland too: the QBCC licence, suspensions and cancellations, and ASIC and ABN records. See How to check a QLD builder. Build Watch and our HBC check are NSW only.

Watch the builder while you’re paying

Deposits and stage payments are spread over months. If you’d like a dated record of the builder’s licence, company and NSW regulator records from before you paid, and a notice if any of them change, Build Watch does that for one NSW builder for A$79 once, with 24 months of change notices from deposit to handover. It doesn’t monitor HBC certificates, certify a builder or predict financial trouble.

Check a builder free before you pay the deposit. For the full set of checks, see How to check a NSW builder in 5 minutes, and if the builder works across states, Check a builder licence in any Australian state.

Frequently asked questions

What is the maximum deposit for a builder in NSW?

10% of the contract price, paid before work starts. You can agree to a lower deposit. Legal Aid NSW notes the limit doesn’t apply to contracts that are only for specialist work, such as plumbing or electrical, with no other home building work.

Can a builder ask for a deposit before giving me the HBC certificate?

Not on work that needs HBC cover, which is most residential building work valued over $20,000. The NSW Government says it’s illegal for the contractor to ask for a deposit or other payment until the cover is in place and you’ve been given the certificate.

Is a 20% deposit legal in NSW?

No. NSW residential building work has a 10% maximum deposit, and any payment above 10% may not be recoverable under HBC cover. A 20% deposit is allowed in Queensland only in limited cases, such as where off-site work is more than 50% of the contract price.

What happens if I’ve already paid more than 10%?

The NSW Government says the amount above 10% may not be recoverable under HBC cover if the builder can’t finish. Make sure the HBC certificate is in place, keep all receipts, and contact Building Commission NSW or get legal advice about your options.

How are progress payments calculated in NSW?

Your contract sets them. For contracts over $20,000, the schedule can include fixed payments after described stages of work, payments for work done backed by invoices or receipts, or a mix. Payments should match work actually done, not time on the job.

Can my builder ask for a payment that’s not in the schedule?

Only for something the contract allows, such as a signed variation. The NSW Government says extra or early payments that aren’t authorised progress payments may affect what you can recover under HBC cover.

Do I have to keep paying my builder during delays?

The NSW Government says to keep making progress payments as agreed in the contract, and only after the work for that payment has been completed. If you don’t pay a progress payment the contract requires, the builder can start legal recovery.

What is the maximum deposit in Queensland?

QBCC sets 20% for work of $3,300 or less, 10% for $3,301 to $19,999, and 5% for $20,000 and over. Up to 20% is allowed where off-site work is more than 50% of the contract price.

Does BuilderVet tell me if my builder has HBC cover?

Our HBC check shows certificates we’ve read from the official HBC Check register for an address, for the builders we’ve checked. It’s NSW only and isn’t proof of cover. Always ask the builder for the certificate and confirm it on HBC Check.

Sources

All checked on 2 Nov 2026.

1. NSW Government, Contracts for residential building work (last updated 29 Apr 2026): https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/preparing/contracts
2. Building Commission NSW, Consumer Building Guide (version 2025): https://www.nsw.gov.au/housing-and-construction/compliance-and-regulation/your-obligations-to-your-customers/how-to-use-consumer-building-guide/guide
3. NSW Government, Protecting yourself in case of builder insolvency (last updated 1 Sep 2026): https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/protecting-yourself-case-of-builder-insolvency
4. NSW Government, Home building delays in NSW: https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/building-delays
5. icare, What is icare HBCF and why do I need it?: https://www.icare.nsw.gov.au/builders-and-homeowners/homeowners/what-is-icare-hbcf
6. icare, What is a Certificate of Insurance?: https://icare.nsw.gov.au/builders-and-homeowners/builders-and-distributors/what-is-a-certificate-of-insurance
7. Service NSW, Use the Home Building Compensation (HBC) Check: https://www.service.nsw.gov.au/transaction/use-the-hbc-check
8. Legal Aid NSW, Home building and renovating FAQs: https://www.legalaid.nsw.gov.au/lawprompt/legal-topics/consumers/home-building-and-renovating/home-building-and-renovating-faqs
9. NSW Government, Resolving building disputes with your builder or tradesperson: https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/resolving-building-disputes
10. QBCC, Deposits and progress payments (last reviewed 27 Jun 2025): https://www.qbcc.qld.gov.au/home-owner-hub/build-renovate/contracts-payments/deposits-progress-payments
11. QBCC, Cooling-off period: https://qbcc.qld.gov.au/home-owner-hub/build-renovate/contracts-payments/cooling-off-period

Last reviewed 2 Nov 2026