Deposit Limits for Residential Building Contracts in Queensland

What it is

Queensland caps the money a builder can take before starting work on site. There is no single number. The cap moves with the contract level set by Schedule 1B of the Queensland Building and Construction Commission Act 1991 (Qld), so the same builder can be entitled to 10 per cent on one job and 5 per cent on the next.

Schedule 1B section 33 is the operative provision. It applies to a regulated contract, which section 5 defines as a domestic building contract priced above the regulated amount of $3,300.

Level 1 and level 2 contracts

Schedule 1B splits regulated contracts into two levels by price:

• Level 1 regulated contract (s 6): price more than $3,300 but less than the level 2 amount.
• Level 2 regulated contract (s 7): price equal to or more than the level 2 amount.

The level 2 amount is not in the Act. Section 7(2) leaves it to regulation, and section 45 of the Queensland Building and Construction Commission Regulation 2018 prescribes $20,000. The boundary sits at exactly $20,000, and a contract struck at $20,000 on the nose is level 2 rather than level 1. Both figures are GST inclusive.

For a cost plus contract the level is fixed by the reasonable estimate of the total amount payable rather than by a fixed price.

The caps

Section 33(1) says the builder must not, before starting to provide the contracted services at the building site, demand or receive a deposit of more than:

Contract	Maximum deposit
Level 1	10 per cent of the contract price
Level 2	5 per cent of the contract price
Level 1 or 2 where off-site work is worth more than 50 per cent of the price	20 per cent of the contract price

The 20 per cent uplift is the only exception in section 33, and it is not a kit home rule. It turns on value. Section 33(3) defines off-site work as contracted services performed at a place that is not the place at which the domestic building work is to be finally installed or constructed, and that work has to be worth more than half the contract price. QBCC gives made-to-measure cabinetry, windows, sheds, pergolas and cladding as typical examples.

Below $3,300 Schedule 1B does not apply at all. QBCC states the maximum deposit for works valued at $3,300 or less is 20 per cent.

What counts as a deposit

Section 33(3) casts the net wide. A deposit is any payment for domestic building work demanded or received before the contracted services commence at the building site. The definition names the Queensland Home Warranty Scheme premium as an example, which means the premium sits inside the cap rather than on top of it. On a $500,000 level 2 build the whole 5 per cent, being $25,000, has to absorb the premium as well. Section 33(2) applies the cap to the estimated amount for a cost plus contract.

What happens if the builder takes more

Section 33(1) carries a maximum penalty of 100 penalty units. A conviction also attracts 4 demerit points under Schedule 5 of the Regulation. QBCC allocates the points, and 30 points across a 3 year period means the licensee cannot hold a licence for 3 years. A second accumulation within 10 years is a lifetime disqualification.

The owner-side consequence drives most of the complaints. QBCC warns that an owner who pays more than the lawful deposit cannot recover the excess in a refund-of-deposit claim under the Queensland Home Warranty Scheme. The overpayment is unprotected money.

How Queensland compares

Queensland is not the only state that steps the cap, but the step is its own:

• NSW: flat 10 per cent regardless of price.
• VIC: 10 per cent below $20,000, 5 per cent at or above it.
• WA: 6.5 per cent.
• SA: $1,000 or 5 per cent, depending on the contract price.
• TAS: 10 per cent below $50,000, 5 per cent at or above it.
• NT: 5 per cent.
• ACT: no statutory cap.

Victoria lands on the same 10 and 5 per cent split at the same $20,000 line, which makes Queensland look familiar to a builder crossing the border. The real difference is the off-site test. Queensland lifts the cap to 20 per cent when more than half the contract value is fabricated away from the site, so a builder pricing a prefabricated job in Queensland should run that test before setting the deposit.