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Residential building contracts regarding work worth more than $20,000 requires a full home building contract. As well as all of the requirements of the ‘small jobs’ contract, it must include other comprehensive information such as the details of the statutory warranties the builder must provide, the cost of any applicable HBC cover and the contract price or warning that the contract price is not known. The contract must also include a checklist prescribed by Fair Trading. Find a complete list of contract requirements on the fair trading websiwebsite.
All contracts over $20,000 in value must have a progress payment schedule. Progress payments must match the work carried out and, for cost plus contracts, be supported by receipts or other verifying documents.
Any change you need to make to a contract is a ‘variation’. Variations must be in writing and be signed by both parties to the contract. Almost all will impact the contract price.
The maximum deposit you can be asked to pay before work starts is 10%.
Common traps and tricks
Beware of:
● an extremely low quote compared with others. This may indicate the job’s quality is being compromised, or that the builder may not fully understand what is required
● `sales pitches ́ putting pressure on you to sign a contract quickly to avoid a price increase
● a builder who recommends you get an owner-builder permit while they organise all the building work. The builder may be trying to avoid responsibility and may
not have the right kind of licence or HBC cover.
When things go wrong Statutory warranties
Builders and tradespeople must guarantee that their work is fit-for-purpose, performed diligently and delivered in a reasonable timeframe, in line with the contract. Unless otherwise specified, materials should be new and appropriately used. These warranties are time-limited: legal proceedings to enforce them must be
commenced within 6 years for major defects and 2 years
for all other defects. There is another 6 months for both warranty periods if the defect only became apparent after 18 months or 5 and a half years. Find out more about these warranties on the Fair Trading website.

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Budget is the most limiting factor for the vast majority of homeowners looking to build. It’s said in the industry you can have anything you want – as long as time and money are unlimited. Congratulations if you’re in that top 1 per cent!
For the rest of us, we need to determine how much we can afford to spend on our construction project.
The biggest mistake most people make when planning a dream home is not understanding build costs. It’s very easy to think that $1 million is lot of money for a home but if that has to include everything from GST to fees of all the consultants, you are actually left with significantly less for the actual build cost.
Budget allowance calculation example;
1. A 300-square metre house built at $3,000 + GST per square metre= $900,000 + GST 
2. Luxury items: for a heated swimming pool with cover and self-cleaning capability, allow and extra $100,000 + GST 
3. Landscaping and fencing: allow an extra 15% = $135,000 + GST 
4. Existing house demolition and site preparation: allow an extra $20,000 + GST 
5. Architect’s fees including interior design: allow an extra at 12% of $1,115,000 = $138,600 + GST 
6. Other consultants and fees: allow an extra $20,000 + GST.
TOTAL BUDGET ALLOWANCE = $1,363,600 + GST = $1,499,960
From the above example, we can see that someone with $1 million wanting a 300-square metre house might assume that they are ready to proceed, but after considering all factors, they might in fact be almost half a million dollars short.
The result might be that you hope to build the dream home for $1 million but, if you had to, you could go to $1.3 million. Exceeding $1.3 million would lead to trouble of the sort that does not go away in a hurry, and you’re not prepared to do it.
Remember to factor this in – before a hammer is swung or a tree is felled, there will be money going out the door, including the cost of quotation, the cost of the early concept design and the cost of the full documentation including detailed drawings. Then there’s permits and approvals – it adds up, so make sure you allow for these in your budget.
When you have your budget, don’t keep it to yourself. Tell your builder exactly how much you have to spend, because the builder understands costs and has the experience to know whether what you want can be built for that budget and – usually – the common sense to tell you when it can’t. ​

Engage your builder at the design stage

Architects and designers come up with some great designs, but only your builder knows what it is going to cost. Don’t rely on your architect or designers cost estimate, as all too often the design does not match the clients budget.

Don’t spend thousands of dollars on designs and DA approvals only to find the build is not what you intend to spend.

And particularly when it comes to home renovations, don’t rely on m2 calculations, as every renovation is different and there are too many anomalies.

Experienced builders can discuss a project in brief and have a gut feeling for the overall costs within 20% of accuracy.

Start Planning your dream build today and Contact Spannenberg & Son
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