Deposit Limits for Residential Building Contracts in Western Australia

What it is

Section 10(1)(a)(i) of the Home Building Contracts Act 1991 (WA) stops a builder entering a contract that entitles the builder to demand or receive any payment before work starts, unless the payment is a deposit of not more than 6.5 per cent of the total amount payable to the builder under the contract for the home building work.

Six and a half per cent is the only statutory deposit cap in Australia that is not a round number. It sits well under the 10 per cent most builders carry, though it is not the lowest in the country: South Australia drops to 5 per cent once the contract price reaches $20,000. A builder who carries a 10 per cent deposit clause across the border is committing an offence on the day of signing.

The cap only bites inside the band

The cap attaches to a "home building work contract" as defined in section 3(1). That definition excludes a contract where the amount stated as payable for the work is at or below a prescribed floor, or at or above a prescribed ceiling. Regulation 2A of the Home Building Contracts Regulations 1992 sets those at $7,500 and $500,000.

Building and Energy states the consequence plainly: the Act does not apply to contracts valued below $7,500 or over $500,000, so there is no limit on the deposit a builder may request on contracts outside that range. On a $700,000 new home the 6.5 per cent cap does nothing at all. That is a large and widely misread gap, and it is why the regulator pairs the point with a warning that home indemnity insurance cover for loss of deposit is capped at $40,000 regardless of what was paid.

The definition of home building work contract also excludes a cost plus contract, so section 10 does not reach cost plus work either.

The cabinetry exception

Regulation 3A is the single carve-out. It applies only where the builder enters a home building work contract in respect of cabinetry work, and the value of the off-site work under that contract is more than 50 per cent of the total amount payable. Where both limbs are met, the builder may demand a deposit of not more than 20 per cent.

Regulation 3A defines cabinetry work as the manufacture and installation of custom-made cabinets and fitments, plus the refurbishment or repair of fitted cabinets and fitments. It expressly excludes off-the-shelf cabinets. Off-site work means work performed somewhere other than where it will finally be installed. A joinery shop building custom kitchens in a factory is the intended case. A fitter installing flat-pack is not.

What it costs to get wrong

Section 10(1) carries a penalty of $10,000. It is also a prescribed offence under regulation 8 of the Home Building Contracts Regulations 1992, with a modified penalty of $1,000 payable on an infringement notice, so the regulator can deal with it without going to court.

Section 10(4) gives the owner the more expensive remedy. If the builder enters a contract in breach of section 10(1), the owner may terminate under section 19. The offence is committed by entering the contract, not by banking the money, so a non-compliant deposit clause hands the owner a termination right before a single brick is laid. Section 10(5) then separately prohibits demanding or receiving any payment after work starts that is not a genuine progress payment, with its own $10,000 penalty.

How the other states compare

Jurisdiction	Deposit cap
WA	6.5 per cent, or 20 per cent for qualifying cabinetry work
NSW	10 per cent flat, regardless of contract price
QLD	10 per cent level 1, 5 per cent level 2, 20 per cent where off-site work exceeds 50 per cent

New South Wales is the simplest: section 8(1) of the Home Building Act 1989 fixes the maximum at 10 per cent of the contract price with no tiering and no band. Queensland tiers by contract value under Schedule 1B section 33 of the QBCC Act 1991, with 10 per cent up to the $20,000 level 2 amount and 5 per cent at or above it, plus the same off-site 20 per cent concession that Western Australia limits to cabinetry.

The practical point for a builder working across borders is that the Western Australian cap is the narrowest in operation. It sits below the New South Wales and Queensland rates, and unlike them it switches off entirely at each end of a price band.

What is changing

Deposit limits are inside the terms of reference for the current review of Western Australia's home building contract laws. Building and Energy released a discussion paper on 13 May 2026, consultation closed on 24 June 2026 and final recommendations are due to government in September 2026. Anything drafted now should be built to be repriced.