Why these checks matter
Several Sydney residential builders have gone into administration in recent years, leaving families with half-finished homes. You can’t predict a company’s future, but NSW law gives homeowners specific checks and protections that cost nothing to use. Most people who end up in trouble skipped at least one of them.
Everything below applies to any builder you talk to, including us. A good builder expects you to check and will hand over the documents without being chased.
Step 1: Check the contractor licence
In NSW a written contract is required for residential building work over $5,000 including GST, and the person or company doing the work must hold the right contractor licence. Service NSW provides a free online licence check where you can search by licensee name, licence number, ABN, ACN or location.
When you find the record, confirm four things: the name matches the company named on your quote and contract; the licence class covers the work (for a new home, general building work); the licence is current and not suspended; and whether any conditions or disciplinary records are listed. A licence held by an individual rather than the contracting company is worth asking about — the contract should be with the licensed entity.
Step 2: Get the HBCF certificate before you pay anything
icare states that Home Building Compensation Fund (HBCF) cover is required for residential building work over $20,000. The builder must give you the certificate of insurance before work starts, or before you pay any money under the contract, including a deposit. If a builder asks for a deposit without the certificate, stop.
Check the certificate names your property address, the builder and the contract price. HBCF is not general insurance you can claim on for any dispute. It applies when the builder becomes insolvent, dies, disappears, or has their licence suspended for not complying with a tribunal or court money order.
icare lists the cover periods as up to six years from completion for major defects, up to two years from completion for other defects, and up to 12 months from when work stopped for incomplete or non-started work.
Step 3: Keep the deposit within the legal limit
The NSW Government states that the maximum deposit for residential building work is 10 percent of the contract price, and for jobs over $20,000 the builder cannot ask for payment unless the HBCF certificate has been provided. A request for a larger deposit, a ‘holding fee’ that isn’t credited to the contract, or cash payments are all warning signs.
After the deposit, payments should follow a progress payment schedule tied to completed stages of work — slab, frame, lock-up, fixing, completion — not to dates on a calendar.
Step 4: Read the contract during the cooling-off period
For jobs over $20,000 the NSW Government requires a written large-job contract and gives you a cooling-off period of five clear business days after you receive a signed copy. The NSW Government also publishes a checklist of what a large-job contract must contain. Use the cooling-off period to read every page and attachment, or have a building lawyer review it.
Look in particular at whether the builder’s name, licence number and ABN match the register; whether the price is clear and fixed with a detailed inclusions list; whether prime cost and provisional sum allowances are listed with realistic amounts; and whether variations must be agreed in writing and signed by both parties before the work is done.
Step 5: See their work and talk to past clients
Ask to visit a current site and a finished home, and to speak with recent clients directly rather than reading curated testimonials. On site, look at how tidy and organised it is, whether materials are protected from weather, and whether stage inspections are booked and passed on time.
Ask clients how variations were handled, how often they heard from the builder, and whether the final price matched the contract. Those three answers tell you more about a builder than any brochure.
If something has already gone wrong
If your builder has stopped work, become insolvent or can’t be contacted, contact icare about a HBCF claim and keep copies of the contract, certificate, payments and correspondence. For disputes about quality or delays with a builder who is still operating, NSW Fair Trading offers a complaint and dispute service.
Sources
Service NSW — Check a builder or tradesperson’s licence: https://www.service.nsw.gov.au/transaction/check-builder-or-tradespersons-licence
icare — Home Building Compensation Fund, what we do: https://www.icare.nsw.gov.au/builders-and-homeowners/homeowners/what-we-do
NSW Government — Contracts for residential building work: https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/preparing/contracts
NSW Government — Checklist for contracts over $20,000: https://www.nsw.gov.au/housing-and-construction/building-or-renovating-a-home/preparing/contracts/checklist