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Deposit for Tradies: How Much Is the Ideal Amount?

Homeowners in Queensland should remember that deposit payments to tradies must not exceed 10 per cent of the amount for small home improvement or repairs, according to the Domestic Building Contracts (DBC) Act of 2000.

If you need repairs for the roller doors in your garage in Cairns, the 10 per cent rule applies to projects that cost more than $3,300 and below $20,000. It includes the cost of labor and supplies for the contracted work. Projects that cost more than $20,000 should ideally incur a 5 per cent deposit.

The Ideal Percentage

The actual percentage of a deposit will vary among contractors in Queensland. Some contractors may charge up to 50 per cent of the project’s upfront cost, so they can have the money to buy the required items for the job. These companies usually implement this for contracts worth less than $3,500. The DBC doesn’t mention any ideal percentage for such projects, which means you need to negotiate the amount with the contractor.

You can consider a 20 per cent initial deposit once you hire a tradie. Pay 50 per cent of the project’s cost upon reaching halfway completion and you can settle the remaining amount once the tradie finishes the job. Another option involves dividing the payment into four parts: 25 per cent on the initial deposit, two payments with the same percentage in the middle of the project and the remaining 25 per cent upon completion.

Location Matters, Too

contractors installing windows

While the DBC offers a general perspective on making deposits, certain rules may vary in each state. In Queensland, the 10% rule can be waived if off-site work will exceed over 50 per cent of the project’s value. In this case, a contractor can require a 20 per cent deposit based on the Queensland Building and Construction Commission’s (QBCC) rule.

If you change your mind and want to pull out of the project, you only have five business days to do so after receiving a signed copy of the agreement. Projects that are worth more than $20,000 should have a copy of the QBCC Consumer Building Guide. Once you submit a signed notice of withdrawal to the contractor, you must pay them $100 in most cases aside from the expenses incurred by the building contractor before the withdrawal.

Take note to pay just the right amount under the contract for deposits and progress payments. The QBCC said that your protection under the Queensland Home Warranty Scheme can be reduced if you pay more than what’s necessary. Homeowners who plan major home improvements worth more than $20,000 should also consider seeking advice from a lawyer.

Remember that a contractor in Queensland can suggest or even require a different deposit amount for smaller projects. If you’re uncomfortable with this, you should think of other necessary repairs around the house to reach the minimum 10% threshold for deposits. You should always ask for quotes from at least three different contractors to compare rates for deposits and get the best deal for the project

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