Key points
- In NSW, residential building work over $5,000 (including GST) needs a written contract. Jobs from $5,000 to $20,000 need a small job contract. Jobs over $20,000 need a large job contract with a progress payment schedule and a five clear business day cooling-off period.
- The maximum deposit is 10% of the contract price.
- On jobs that need home building compensation cover (contracts over $20,000), you can’t ask for any deposit or payment until the cover is in place and the client has the certificate.
- Variations must be in writing, signed by you and the client, and attached to the contract, before the extra work starts. Urgent safety work is the exception.
- Progress payments must match the work actually done.
When you need a written contract
NSW Fair Trading sets contract rules for residential building work by the price of the job, including GST. If the price isn’t known, the reasonable market cost of labour and materials is what counts.
| Job price (inc GST) | What you need | Key extras |
|---|---|---|
| Up to $5,000 | No written contract required | A clear written quote is still smart business |
| $5,000 to $20,000 | Small job contract | Basic required information |
| Over $20,000 | Large job contract | Detailed checklist, progress payment schedule, five clear business day cooling-off period, home building compensation certificate |
A copy of the signed contract must be given to the client within five business days of signing.
How much deposit you can take
The maximum deposit for residential building work in NSW is 10% of the contract price. Some examples:
- An $18,000 bathroom renovation: up to $1,800 deposit.
- A $9,500 switchboard and rewire: up to $950 deposit.
- A $42,000 extension: up to $4,200, but only once home building compensation cover is in place and the client has the certificate.
The insurance rule catches people out. On jobs that require cover under the Home Building Compensation Scheme, you can’t ask for a deposit or any other payment until the cover is in place and the certificate has been given to the client.
Asking for the deposit
- Put it in the quote. State the deposit amount and that work is booked once it’s paid.
- Send the deposit invoice the day the quote is accepted. Momentum matters. A client who just said yes is the most likely to pay straight away.
- Include a pay link. Card payments through your Xero get deposits in faster than bank details alone.
- Take it off the final invoice clearly. Show the full price, the deposit paid and the balance owing.
Variations: the “one more thing” problem
You’re halfway through the job and the client asks, “While you’re here, can you also...” You say yes, do the work, and add it to the final invoice. Then the client says they thought it was included, or that it should have been cheaper. Now the whole invoice is in dispute, not just the extra.
NSW rules for variations on residential building work exist to stop exactly this. According to NSW Fair Trading, a variation must:
- be in writing
- be signed by the client and by you, or your nominated supervisor or agent
- be attached to the contract
- be agreed before the variation work starts, with a written description, any plans or specifications, and the extra cost and time.
The exception is urgent work where there’s a risk of danger or damage to property. In that case the written variation can be completed after the work is done.
A good variation includes the job address and contract reference, what’s changing, the price (inc GST), any extra time, the date, and both signatures.
A five-minute variation on site
- Take a photo of the area the extra work covers.
- Write down what’s changing, the price and any extra time.
- Send the client a variation from a template to sign electronically on their phone.
- Wait for the signature before you start.
- Add the signed variation to the job so it lands on the final invoice.
Electronic signatures are generally valid in NSW under the Electronic Transactions Act 2000 (NSW). Use a tool that records who signed and when. This is the process Tradie Quo runs for you with our variations service, using a lawyer-approved template.
Progress payments
Contracts over $20,000 must include a progress payment schedule. Each claim should match the work actually completed. For cost-plus contracts, claims need to be backed by receipts or other documents. Tie stages to things the client can see, like “frame complete” or “rough-in complete”, so there’s no argument about whether a stage is done.
Common mistakes
| Mistake | Why it hurts | Fix |
|---|---|---|
| Taking more than 10% upfront | Breaches NSW rules for residential building work | Cap the deposit at 10% and use a progress schedule |
| Deposit before insurance | Not allowed on jobs that need home building cover | Get the certificate to the client first |
| Verbal variations | Easy to dispute, and can drag the whole invoice into the argument | Written, signed variation before starting |
| “Small job” with no contract | Jobs over $5,000 need a written contract | Check the price, including GST, before you start |
| Final invoice weeks later | The client’s memory of the job fades and so does their urgency | Invoice the day the job is done |
FAQ
Can I take more than a 10% deposit if the client agrees?
For residential building work in NSW, the maximum deposit is 10% of the contract price. Client agreement doesn’t change the cap. Use a progress payment schedule to get paid as the work is done.
Do verbal variations count?
For residential building work in NSW, variations must be in writing and signed by both you and the client. A verbal OK leaves you exposed if the client later disputes the cost.
Does this apply to plumbers and electricians?
It can. Specialist work such as plumbing, gasfitting and electrical work in homes can fall under the Home Building Act. Check with NSW Fair Trading for your specific job.
Can a variation be signed electronically?
Generally yes. Electronic signatures are accepted under the Electronic Transactions Act 2000 (NSW). Use a tool that records who signed and when.
Sources
- NSW Government: Contracts for residential building work
- Home Building Act 1989 (NSW)
General information only, current as at October 2026. This isn’t legal or financial advice. Rules change, so check your situation with NSW Fair Trading or a lawyer.
