Skip to main content

Progress payments and banks

July 01, 2019

Members often call in when the client’s bank raises concerns about the progress payment schedule that has been agreed between the builder and the owner. Often they will refer to ‘industry standard’ progress payments or sometimes refer to (outdated) legislation.

What does the Queensland Building and Construction Commission Act (1991) require?
The QBCC Act, for domestic building contract progress payments, states:

(1) The building contractor under a regulated contract must not claim an amount under the contract, other than a deposit, unless the amount—
(a) is directly related to the progress of carrying out the subject work at the building site; and
(b) is proportionate to the value of the subject work that relates to the claim, or less than that value.

Other than deposit limits, there are no fixed percentages for defined stages under the QBCC Act.

Under the old, now outdated, Domestic Building Contracts Act 2000, there used to be defined stages. At times banks mistakenly refer to this legislation.

HIA contracts have two progress payment sections that parties can use; Part A or Part B. Part A has common defined stages such as base stage, frame stage and enclosed stage. Part B is for the parties to the contract to make their own progress payment stages (subject to the legislation notes above). Most new dwelling constructions use Part A which is often acceptable to banks’ lending criteria.

At times though banks will still not lend to the customer based on the building contract and what has been agreed between the owner and builder. This can be because the banks evaluation, or the banks internal lending criteria, have not been met.

For more information please contact your Workplace Advisor on 1300 650 620 or email enquiry@hia.com.au