Excessive Building Deposit in Western Australia: The 6.5% Cap and How to Recover Your Money

A Narrogin man was convicted this month after taking a $27,866.52 deposit for home building work in the Wheatbelt town of Highbury and then doing no work at all. In Western Australia that deposit was never lawful to begin with: for most home building contracts, a builder can ask for no more than 6.5 per cent of the contract price before work starts. If you paid more than that, or paid a deposit and the builder has gone quiet, you have a clear legal basis to demand it back. Claim Done can draft that letter of demand from your contract and payment records, and you review and approve it before it is sent by email.

What happened in the Highbury case

According to the report in Smart Property Investment (published 11 November 2026), the man was contracted in September 2023 to carry out home building work worth $92,888.40: a new roof, an ensuite with a walk-in robe and a large timber deck. He asked for a deposit of $27,866.52, which is 30 per cent of the contract price. The home owner paid it. No work was carried out.

The court heard three separate problems. The deposit was over the legal limit. The home owner was never given the prescribed notice explaining their contractual rights. And he never held building contractor registration, which the job needed because it was worth more than $20,000 and required a building permit. The magistrate fined him $7,500 for the registration offence, $3,500 for the excessive deposit and $1,000 for the two contract offences, plus $821.30 in costs. A separate payment arrangement was put in place to refund the deposit.

Run the numbers and the size of the problem is obvious. At 6.5 per cent, the most he could lawfully have asked for on that contract was $6,037.75. He took $21,828.77 more than that, more than four and a half times the cap. Notice also that the fines went to the state; the home owner’s money came back through a payment arrangement. Prosecution punishes the builder. Getting your own money back is a separate job, and it is usually yours to start.

The 6.5 per cent rule, in plain terms

The WA Government’s page on building or renovating your home (last updated 21 September 2026) sets it out directly. The Home Building Contracts Act 1991 covers home building work under a fixed-cost contract between $7,500 and $500,000, and its protections apply whether or not your builder is registered. Under that Act:

• the maximum deposit a builder or tradesperson can require before starting work is 6.5 per cent of the contract price
• after work starts, progress payments should only be for work actually done or materials actually supplied (the page’s example: no progress payment for bricks until the bricks are on site)
• apart from the deposit, upfront payments are not allowed, and paying them can affect a home indemnity insurance claim
• the builder must give you the “Notice for the homeowner” before you sign

“Home building work” is wider than a new house. The same page lists renovations, repairs and alterations, plus swimming pools, cabinetry, tiling, garages, sheds, pergolas and landscaping.

There is one narrow exception. Where off-site cabinetry makes up more than 50 per cent of the contract value, a builder can ask for up to 20 per cent. Outside the $7,500 to $500,000 band the Act sets no deposit limit at all, so a $600,000 build or a $5,000 job is not covered by the cap.

For smaller jobs, WA Consumer Protection’s guidance on estimates, quotes and deposits recommends paying no more than 10 per cent and points to the Australian Consumer Law rule that traders must not accept payment and then fail to supply the goods or services.

Paid a deposit and nothing has happened? Your first three moves

1. Work out exactly what you paid and what was done. Pull together the contract or quote, every invoice and receipt, bank transfer records, and the messages where start dates were promised. Photograph the site. If no work has been done, that is your evidence; if some work was done, record what and when.

2. Check whether home indemnity insurance is in place. Home indemnity insurance is required for building work that needs a permit and is worth more than $20,000. According to the WA Government page above, it can cover loss of a deposit up to $40,000 if the builder dies, disappears or becomes insolvent. Your builder must give you the certificate, and you can check a policy on the register QBE maintains. A builder who is unregistered, as in the Highbury case, is a red flag that this protection may be missing, which makes acting early more important.

3. Put the demand in writing. A phone call is easy to ignore and impossible to prove later. A written demand sets out the contract, the amount paid, the 6.5 per cent limit (if it applies), the fact that no work has started, the amount you want back and a firm date. It is also the document everyone will look at first if this goes further.

If you paid by credit card, WA Consumer Protection’s May 2026 Commissioner’s column on tradies who take deposits notes that a chargeback may be available where services were not provided as agreed. The same column says that if a tradie cancels a job after taking a deposit without providing any goods or services, they must return the deposit in full.

The Building Commissioner route, and the 14-day notice most people miss

Western Australia has a free-standing complaint process that sits outside the courts. The building dispute resolution guide explains that an owner under a home building work contract valued between $7,500 and $500,000 can complain to the Building Commissioner about a breach of the contract or the Act.

Two details matter.

Time limit. For contract matters such as breach of contract, variations and termination payments, the limit is generally three years from when the contract was entered into or from when the dispute arose. If your builder took the money a couple of years ago and has been stringing you along with new start dates, check that clock now. Our piece on why waiting can run the clock out on your claim covers the general problem.

The notice comes first. Before lodging a formal complaint, you must complete the department’s Notice of proposed complaint and give it to the builder at least 14 days beforehand. The guide says email is sufficient, and to keep a copy of the sent email. A clear letter of demand sent before or alongside that notice does useful work here: it puts the builder on notice of the exact amount and gives them a last chance to pay before the formal process begins.

Once the Commissioner accepts a complaint, the complaint resolution process page lists what can happen. A home building work contract remedy order can require an amount already paid to be repaid, or compensation to be paid for loss or damage. Matters can go to conciliation, and complex disputes are referred to the State Administrative Tribunal. The Commissioner cannot make orders over $100,000 without both parties’ consent. If a builder ignores a monetary order, it can be enforced in the Magistrates Court for orders of $75,000 or less.

Other options if the builder is outside the building scheme

Not every deposit dispute fits the building complaint process. The job may be under $7,500, the “builder” may really be a landscaper or handyman, or you may simply want a debt judgment. In those cases the usual path is a letter of demand, then a claim in the Magistrates Court. Our guide to making a minor case claim in WA walks through it, and you should check the court’s current fees on its own website before you file.

If the work started but stalled rather than never starting, read what to do when a builder won’t finish the job. And if you are about to sign a new contract to get the job done by someone else, look over the deposit and payment schedule first: our building contract review by state shows what to check.

What your demand letter should say

Keep it factual and short. A good deposit-recovery letter covers:

• the parties, the property address and the date of the contract
• the contract price and the deposit paid, with dates and payment method
• the deposit limit, where the contract falls between $7,500 and $500,000 (6.5 per cent of the price, and the dollar figure that represents)
• what work has been done, if any, and the start date you were promised
• the amount you require repaid and a firm deadline
• what you will do if it is not paid, such as giving the Notice of proposed complaint and lodging with the Building Commissioner, or filing a claim

Leave out threats you do not intend to carry out, and leave out abuse. The letter may well be read by a conciliator or a magistrate later, and a calm, specific letter reads better than an angry one.

How Claim Done fits in

Claim Done drafts a letter of demand from the details and documents you provide: your contract, receipts and the timeline. It sets out the amount, the deadline and your next step in plain language. You read it, change anything you want, and approve it; only then is it sent by email. There is a flat fee with no subscription and no hourly billing, and you can see current prices on the pricing page.

Why not just write it yourself? You can, and some people do. The value is in getting the structure right the first time: the right figures, the right deadline and a clear statement of what happens next, without spending an evening on it. Claim Done is not a law firm, and it does not lodge complaints or file claims for you. You stay in control of each step.

If you have paid a building deposit in Western Australia and the work has not started, the sensible order is: gather your paperwork, check for home indemnity insurance, send a written demand, then give the 14-day notice and use the Building Commissioner process if the money does not come back.

Start your letter of demand on Claim Done. Answer a few questions about the contract and payment, upload what you have, and review the draft before anything is sent.

Frequently asked questions

What is the maximum deposit a builder can ask for in WA?

For home building work under a fixed-cost contract between $7,500 and $500,000, the Home Building Contracts Act 1991 limits the deposit to 6.5 per cent of the contract price before work starts. The one exception is where off-site cabinetry makes up more than half the contract value, where up to 20 per cent can be requested. Outside that price band the Act sets no deposit limit.

Does the 6.5 per cent limit apply if my builder is not registered?

Yes. The WA Government's guidance says the protections in the Home Building Contracts Act apply whether or not your builder is a registered builder. In the Highbury case reported in November 2026, the man was unregistered and was still fined for taking an excessive deposit.

How long do I have to complain to the Building Commissioner about a deposit?

For home building work contract matters such as breach of contract, the time limit is generally three years from when the contract was entered into or from when the dispute arose. Before lodging, you must give the builder a Notice of proposed complaint at least 14 days beforehand, and email is sufficient.

Will home indemnity insurance cover a lost deposit?

Home indemnity insurance is required for building work that needs a permit and is worth more than $20,000. According to the WA Government, it can cover loss of a deposit up to $40,000 if the builder dies, disappears or becomes insolvent. Ask your builder for the certificate and check it on the QBE register before paying anything.

Can I just send a letter of demand instead of complaining?

A letter of demand is usually the first step either way. It puts the amount, the legal limit and a deadline in writing. If the builder does not pay, you can then give the 14-day Notice of proposed complaint and use the Building Commissioner process, or file a claim in the Magistrates Court.