Banks and Progress Stage Valuations
May 09, 2019
Workplace Advisers have fielded a large number of calls from members relating to the client’s bank suggesting that the contract price be divided into payment stages that reflect industry practice or standard. It is important to note that this ‘standard’ they refer to is the lending industry’s standard, not the residential building industry standard. Furthermore, HIA NSW has at no time agreed or approved any standardised progress claim schedules with any bank or lending institution.
It is a requirement under the Home Building Act 1989 (NSW) that a contract for residential building works greater than $20,000 contains a progress payment schedule that provides a clear description of the works to be completed and the value of that stage. There is no regulation in NSW that stipulates what the milestones are to be within the schedule, nor a percentage of the contract price a stage must not exceed (which does exist in some other states).
HIA encourages parties (this does not include banks or lending institutions) to negotiate what stages of work will occur and the value of the contract price that will be claimed. However, the general rule is that the amount should reflect the value of works completed. For more information please contact your Workplace Advisor on 1300 650 620