Building deposit laws across Western Australia (WA) and Victoria (covering Melbourne) are strictly regulated to protect consumers from financial loss. While both states mandate maximum deposit caps based on contract value, the exact percentages, contract thresholds, and insurance prerequisites differ.
Western Australia (WA)
Your rights and protections for contracts involving this type of work, where the contract is for a fixed-cost between $7,500 and $500,000, are covered by the Home Building Contracts Act 1991 (the Act), and they apply whether or not your builder is a registered builder.
In WA, the Home Building Contracts Act 1991 applies to most domestic building contracts valued between $7500 and $500,000.
Maximum Deposit: The maximum legal deposit a builder can request before commencing work is 6.5% of the total contract price.
Cabinetry Exception: If the work is for custom cabinetry (such as kitchens or laundries) and the off-site manufacturing accounts for more than 50% of the contract value, the deposit cap is 20%
Insurance Precondition: A builder cannot demand or legally accept any deposit until they provide the homeowner with a valid Home Indemnity Insurance (HII) certificate of currency.
Progress Payments: Once work begins, payments can only be claimed for completed stages or materials already supplied to the site. For further clarification on consumer rights and to lodge disputes, consult the WA Building and Energy guidelines. https://www.wa.gov.au/organisation/building-and-energy/building-or-renovating-your-home
Victoria (Melbourne)
In Melbourne and regional Victoria, the Domestic Building Contracts Act 1995 applies to major domestic building contracts (usually those valued over $10,000).
Maximum Deposits:
10% for contracts valued less than $20,000 and 5% for contracts valued at $20,000 or more.
Insurance Precondition: Before requesting any deposit, the builder must give you a copy of their Domestic Building Insurance (DBI) policy and a certificate covering your specific property.
Progress Payments: Builders are only legally entitled to collect payments after specific stages of construction are completed (e.g., base, frame, lock-up, and fixing stages).
Before signing a contract or handing over any money, verify your builder's obligations and review consumer protections on the Consumer Affairs Victoria portal.