Tender Pricing Disclosures for AU Residential Builders

What it is

A residential building tender is the priced proposal a builder gives a buyer at the end of the design and pre-construction phase. It sets the contract sum, the inclusions, the PC and PS allowances and the contract clauses. How the builder advertises the path to that tender, and how it presents the tender itself, is captured by the Australian Consumer Law and by each state Fair Trading Act.

Two sections of the ACL do most of the work. Section 18 prohibits misleading or deceptive conduct in trade or commerce. Section 48 requires that where a price is quoted as part of a representation, the single total price including GST and any quantifiable charges must be displayed at least as prominently as any component price.

"From $XXX,XXX" pricing

A "from" price is allowed but only if the price is achievable in real life by a real buyer on a real block. The ACCC and state Fair Trading regulators have repeatedly stated that a headline price is misleading if the base inclusions list does not produce a habitable home that meets council, energy and bushfire requirements.

A safer pattern looks like this:

• Headline: "From $XXX,XXX" (the price of the base specification on a flat M-class slab block in a normal estate)
• Below the headline, in equal prominence: "Typical site costs add $30,000 to $80,000. Energy compliance, BAL upgrades and council fees vary by lot."
• A link to a full base inclusions list with no asterisk traps

The closer the headline gets to a realistic finished number, the lower the ACL risk. A builder that publishes a "from $299,000" home but cannot point to a single home it has actually delivered for that number in the last 12 months should expect a regulator letter.

Two-price comparisons and discounts

The ACCC has taken multiple actions against retailers using "was $X, now $Y" pricing where the higher price was fictional. The same rule applies to builders. "Save $50,000 if you sign before 30 June" only works if the unsold price actually was $50,000 higher on a recent sustained basis, and if the offer is honoured exactly as advertised after the deadline.

PC and PS items

A Prime Cost (PC) item is an allowance for a product the buyer will choose later (taps, tiles, ovens). A Provisional Sum (PS) item is an allowance for work the builder cannot price exactly at tender (site works on unknown soil, complex landscaping). Allowances are legitimate, but they must be honest.

State law backs this up. The Domestic Building Contracts Act 1995 (Vic), the Home Building Act 1989 (NSW) and the Domestic Building Contracts Act 2000 (Qld) all require PC and PS items to be reasonable estimates made on the information available at the time of the contract. An allowance set artificially low to keep the headline contract sum down is misleading under ACL section 18 and a contract breach under the relevant state Act.

If a builder lists $20,000 PC for floor tiles for a 250 square metre home, the buyer will blow that figure on standard ceramic. The honest allowance is the figure the builder genuinely expects a typical buyer to spend. A regulator looks at the gap between the allowance and the eventual actual cost. Large, repeated gaps across many contracts evidence a deliberate pattern.

Rise and fall, escalation and "subject to" clauses

A "fixed price contract" headline is only true if the contract really is fixed. Common clauses that quietly unfix the price include:

• Rise and fall in steel and timber pricing
• Council and authority fee variations passed through
• Soil class upgrades after the soil test
• Energy or BAL compliance upgrades after the formal assessment
• "Subject to engineering" with no cap

Each of these is acceptable in a contract, but advertising the same home as "fully fixed price" while the contract carries them is a section 18 breach. The fix is plain language. Call it a "fixed inclusions, variable site cost" contract and explain which items can move.

State Fair Trading overlay

Each state Fair Trading Act mirrors the ACL within its jurisdiction and adds extra rules for building advertising. NSW Fair Trading enforces under the Fair Trading Act 1987 (NSW) and the Home Building Act 1989 (NSW). Victoria uses the Australian Consumer Law and Fair Trading Act 2012 (Vic) and the Domestic Building Contracts Act 1995 (Vic). Queensland uses the Fair Trading Act 1989 (Qld) and the QBCC Act 1991 (Qld). WA uses the Fair Trading Act 2010 (WA). Each one allows the regulator to issue infringement notices, accept enforceable undertakings or bring court proceedings.

What a builder should do

Set one realistic base price per design. Publish the base inclusions list in full, with no exclusions in fine print. Show typical site costs side by side with the base price. Train sales reps and estimators on plain-English PC and PS explanations and document those explanations on every tender. Audit allowance accuracy quarterly across closed jobs. Where allowances repeatedly under-shoot actual costs, lift the published number.