If you are planning on building a new home then you will have to sign a building contract which outlines the scope of the work, the contract price, how progress payments are made and what happens with delays, changes and other issues that could arise. This contract is set out to protect both you and the builder. Therefore, it is important that you understand what should be included in the contract and what is expected by and of you. This will also assist in making the building process more straightforward.
Because each state has slightly different requirements when it comes to building contracts, it is important that you understand what your state outlines. These can be found through different government departments, so we have compiled the most important things you need to know.
When is a Building Contract Needed in my State?
Victoria
There have been some recent changes to building contract requirements lately in Victoria. A contract is now required for any work that totals over $10,000, previously this was $5,000. Along with a few other changes, a new version of the Domestic Building Consumer Guide (attached to the back of all HIA contracts) has been released. To understand if any of these changes will affect your new home build make sure you head over to Consumer Affairs Victoria.
When you are using a building contract, especially for a project as big as building a new home, there are some important points that the Victorian Government suggest you check or clarify with your builder and record in the contract. These include:
- State the contract amount as well as the amount of deposit and progress payments that are required.
- Set out implied warranties.
- Advice about the five-day cooling-off period.
- Details of the required domestic building insurance, if the contract is over $16,000.
New South Wales
Building contract requirements in New South Wales are slightly different, with two different contracts available depending on how much the total contract price is. Building work that is between $5,000 and $20,000 requires a small jobs contract. These are generally used for trade work, alterations, maintenance, and repair work and don’t require extensive detail.
However, if you are building a house, or spending over $20,000 you are required to have a much more extensive contract in order to protect all parties with so much money being paid. There are some general requirements regarding this type of contract. These are listed on the Fair Trading NSW Government website, however, some that you should keep your eye out for are:
How payment will be made. This can be done in a few different ways, but most importantly it needs to be clearly outlined in the contract and understood by both parties. You can pay:
- Progress payments (a timeline and cost needs to be in writing).
- Fixed payments made at completion or at a specific stage of work.
- A combination of the two.
- A checklist of 14 items (outlined by Fair Trading NSW) that are listed in the Home Building Regulation guide.
Queensland
If you are building in Queensland and the cost of building work is above $3,300 you will need to sign a contract with your builder, and if the cost adds up to over $20,000 you will also be supplied with a signed copy of the QBCC (Queensland Building and Construction Commission)- approved Consumer Building Guide. This guide is a great resource for anyone building a new home, as it helps outline many of the common pitfalls associated with building and helps you avoid disputes. Builders in Queensland are able to use a contract created by QBCC, generally meeting state legislation, or interstate contracts, these however, may not meet all state legislation so make sure you check what you are entitled to on the QBCC website and on their contracts.
Western Australia
A building contract is required in Western Australia for work over $7,500. The contract is a detailed document which will include the schedule of building, payment schedules and details, drawings & specifications. The builder is also required to pass you a copy of the Notice for the Home Owner. This, similar to the Queensland Consumer Building Guide, is a guide that assists you, the new home buyer, understand what your rights and responsibilities are when you have a builder constructing your new home. Understanding important aspects of the contract such as home indemnity insurance, contract termination rules, building changes after the contract has been signed and disputes, can help make the new home building process straightforward and risk-averse. Other things to keep your eye out for are:
- Payment details and schedules.
- Building inspections and how when you can have a look at the progress.
- A time limit to have the house completed and when handover will happen.
South Australia
For those building a new home in South Australia any building work that you are doing that is over $12,000 requires a building contract to be written by the builder. This contract must be:
- Show the business name and licence number of the builder and any associated partner
- Be signed by both the client and the builder
- State a total price for the work and payment terms
- This can have a rise and fall clause which means that prices can change slightly, for example in the cost of materials change.
For more information about what is required in a South Australia building contract, make sure you head over to the South Australia Government website.
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While most of the above is relatively straight forward, if you have any questions related to build contract or more broadly about the home building process, including finding the correct house plan, builder or developer, then don’t hesitate to call us on 1800 184 284 or book a call online at a time that suits you.
Let us do the legwork for you.
- We’ll ask the right questions to better understand your needs
- We’ll create a recommended shortlist ideally matched to you
- We’ll answer specific questions or concerns related to home building, land purchasing or financing
Zoe Langenberg
Zoe is passionate about coffee and interior design. You can find her most weekends exploring an art gallery or devouring a good book.
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