The Queensland Building and Construction Commission (QBCC) is advising property owners how they can best protect themselves as they navigate their building project and how the QBCC can help if their contractor enters liquidation.
QBCC Commissioner, Anissa Levy, says the first and most important step is for property owners to thoroughly do their due diligence when they start planning their project.
“As in any industry, the building industry is not immune from financial upheaval and insolvencies but there are a number of steps property owners can take to safeguard their investment, starting with researching the information available to them on the QBCC website,” Ms Levy says.
“The QBCC website really is a goldmine for property owners, with a wide variety of information and advice to help guide owners through what is probably the biggest financial investment of their lives.”
Information includes the appropriate deposit amounts contractors should charge for various work, what work requires a contract, the ins and outs of insurance such as what work requires insurance, what’s covered and who is responsible for taking out the insurance.
The QBCC also suggests that property owners ask their friends and family for recommendations on contractors to use for their project, or use the QBCC's find a local contractor tool.
Ms Levy says in the unfortunate event that a building company becomes insolvent, the QBCC administers the most accessible home warranty scheme in the nation.
“The Queensland Home Warranty Scheme [QHWS] protects residential property owners in the event a contractor fails to complete residential building work or rectify defective work,” Commissioner Levy says.
In the 2023-2024 Financial Year, $88.7M was paid out under the QHWS, helping property owners rectify defective or incomplete building work.
In Queensland, written contracts are required for any residential building work above the value of $3,300. The contract should be accompanied by a QHWS policy, and the contractor is responsible for taking out the policy on behalf of the property owner within 10 business days of entering a contract.
Commissioner Levy also says that if at any stage throughout the build or renovation project, that a contractor or property owner has questions about their situation, they should contact the QBCC.
“If anyone is concerned about their individual situation, or is unsure of what’s required, the QBCC is here to help, so I encourage people to give us a call, or to hop on our website for more information,” Ms Levy says.
“Should difficulties arise, the QBCC may also be able to assist through the QBCC’s early dispute resolution service.”
The QBCC recommends
- Engaging a licensed contractor or company to perform the work –
- this can include researching who to use by talking to people you know for recommendations, as well as looking at photos of, or visiting a contractor’s previous completed projects prior to engaging with them.
- Ensuring your contract includes QHWS insurance.
- Understanding what’s covered under the home warranty insurance, for example -
- Apartments in a building over three storeys are not considered residential building work and are therefore not covered under the QHWS and should not be included by the contractor when quoting the work.
- Claims up to the value of $200,000 are covered under the insurance, but property owners can choose to pay for additional coverage.
- Understanding what deposit and variation amounts contractors can charge. Property owners should not pay excessive deposits, or pay ahead of time, for building work.
- For jobs priced at $3,300 or less, property owners should pay no more than a 20 per cent deposit.
- If the contract price is between $3,300 and $19,999, the maximum deposit is 10 per cent.
- For work of $20,000-plus, the maximum deposit allowed is 5 per cent of the contract price. (An exception applies where more than 50 per cent of the value of the work is performed offsite, in which case a deposit of up to 20 per cent is allowable.)
- Any requests for variations in the project should be presented and agreed to in writing. If the variation changes the contracted price, the date the variation payment needs to be paid should be included in the written variation document.
Important things for property owners to note
Any money paid before a building contract is signed cannot be recovered under the QHWS.
If you need to lodge a claim under the QHWS, remember that everyone's situation is unique and can vary. Therefore, claims and approval times for claims will vary, depending on a range of factors.
Property owners should ensure they do not undertake repairs to reportedly defective work, as this could affect their eligibility for a defective work claim under the QHWS.
The engaged contractor who is carrying out residential work which is covered under the QHWS is responsible for collecting the premium from the property owner and taking out cover on their behalf. Contractors can take out a policy online, over the phone or in person at one of the QBCC’s service centres.
The QBCC does not see contracts between the contractor and property owner. However, the QBCC can provide information to both parties to ensure their obligations throughout the process are being met.
The QBCC has a number of regulatory tools we may use in relation to any licensee that we suspect may be experiencing financial trouble including:
- financial audits
- obtaining management account
- issuing show-cause notices
- licence suspensions and cancellations.
