A deposit can look harmless right up until it isn’t. You get a quote, the builder asks for money up front, and the number either feels normal or it doesn’t. The problem is that “normal” is not one rule across Australia. For residential building work, the legal cap can change by state or territory, by contract value, and sometimes by the kind of work.
Here’s how to think about deposits and progress payments properly, what the official rules look like around Australia, and what should make you slow the job down before you pay.
Start with the law, not the sales pitch
The first thing to clear up is scope. These hard deposit caps are mostly rules for residential building work on homes, not every single tradie visit and not every commercial job. A blocked drain, a one-hour repair, or a straight service call can sit in a different bucket. If the job is home building, renovating, extending, improving, or similar residential work, check the actual rule in your state before treating a deposit as standard.
The cap changes depending on where you live
As at April 2026, the official state and territory guidance does not line up to one neat national percentage. The short version looks like this for residential building work:
- NSW: up to 10 per cent under home building law.
- Victoria: up to 10 per cent if the contract is under $20,000, and 5 per cent if it is $20,000 or more.
- Queensland: 20 per cent up to $3,300, 10 per cent from $3,301 to $19,999, and 5 per cent over $20,000, with a limited off-site work exception up to 20 per cent.
- Western Australia: 6.5 per cent for covered home building work contracts.
- South Australia: no more than $1,000, or 5 per cent if the contract price is over $20,000.
- Tasmania: for residential building work of $20,000 or more, 10 per cent for contracts between $20,000 and $50,000, 5 per cent for $50,000 or more, and 20 per cent where off-site work is more than half the price.
- ACT: the official guidance says there is no legal cap on the initial deposit, though industry practice is usually up to 10 per cent.
- NT: the standard schedule says no more than 5 per cent before commencement.
That is why broad statements like “10 per cent is normal” can mislead people. Sometimes that is right. Sometimes it is too high. Sometimes it is lawful only for a particular type of contract.
Progress payments should follow real work, not a builder’s cash flow problem
The second trap is progress payments that get too far ahead of the build. Across the official guidance, the pattern is pretty consistent: progress payments should match work actually done, or clearly defined stages that can be inspected. NSW says progress payments on larger jobs must match the work carried out. Victoria uses defined domestic building stages. Queensland says payments must be relative to work completed. WA says progress payments must only be for work performed or materials already supplied. SA, Tasmania and NT use the same basic idea in plainer language: pay for work done, not hope.
Off-site work is one of the main exceptions
If a builder points to custom joinery, prefabrication, windows, sheds, or other made-to-order work that is being built away from the site, they may not be making it up. Queensland and Tasmania both allow higher deposit levels in limited off-site circumstances, tied to how much of the contract value is genuinely being created away from the job. That does not mean every builder gets to say “custom materials” and charge whatever they like. Ask what exception they rely on, and where that work is described in the contract.
Insurance and paperwork matter before the first dollar moves
In several states, the issue is not just the percentage. It is also whether the builder has sorted the required cover before asking for money. NSW, Victoria, WA and NT all say there are situations where the insurance or cover certificate needs to be in place before payment is demanded. If the certificate is meant to exist and it does not, stop there.
The job value changes the answer too
Another easy way to get misled is hearing a correct rule for the wrong contract value. Victoria switches at $20,000. Queensland changes at $3,300 and again at $20,000. Tasmania changes again at $50,000. South Australia uses a dollar cap or percentage cap depending on price. If a builder says a deposit is legal, ask under which state rule, for which contract value, and for what category of work.
A clean payment schedule should be boring
Good payment terms are usually a bit dull. That is a compliment. The deposit is stated clearly. The progress stages are named clearly. The trigger for each payment is visible in the real world. Where the state uses standard stages, the contract should respect them or properly document any lawful variation. If the schedule is fuzzy or front-loaded, do not talk yourself into it because the builder seems busy or confident.
What should make you slow the job down
Slow down if the deposit feels high and nobody can point to the state rule behind it. Slow down if the builder wants money before the required insurance or certificate is in place. Slow down if the progress payments are based on dates instead of work. Slow down if more than half the contract price is due before half the work is actually there. Slow down if the quote says “deposit required” or “stage payments apply” without saying how much, when, and why.
Before you pay a deposit on residential building work, check the rule that applies where you live, check the contract value, and check whether the builder is relying on any off-site exception or insurance certificate. Then line the payment schedule up against the work that will actually be on the ground. It is much less painful than finding out later that the money got ahead of the job.