How to Choose a Builder in Australia: Complete Checklist

Your builder will manage the single largest expenditure of your project — and if they go bust, cut corners, or simply do poor work, the cost to you could be catastrophic. Builder insolvencies in Australia have surged in recent years, making due diligence more important than ever. Here is a comprehensive checklist.

Step 1: Verify Their Licence

Every state requires residential builders to hold a licence. An unlicensed builder means no statutory warranties, no home building compensation fund protection, and potentially no insurance coverage.

Where to check:

• NSW: NSW Fair Trading — search the licence register
• VIC: Victorian Building Authority (VBA) — practitioner register
• QLD: QBCC — licence search and financial status check
• SA: Consumer and Business Services SA
• WA: DMIRS WA — building services register

Check not just that the licence exists, but that it is current and covers the type of work you need (e.g. "General Building" or "Builder — Medium Rise" in NSW, not just "Contractor" or "Tradesperson").

Step 2: Check Their Insurance

Ask for evidence of:

• Home Building Compensation Fund (HBCF) cover — mandatory in NSW for work over $20,000. This protects you if the builder dies, disappears, or becomes insolvent. Other states have equivalent schemes (Domestic Building Insurance in VIC, QBCC Insurance in QLD).
• Public liability insurance: Minimum $10 million is standard
• Workers compensation insurance: Required if they have employees

Do not accept verbal assurance. Ask for certificates of currency.

Step 3: Check Their Financial Health

After the wave of builder collapses in 2022–2024, financial health is critical:

• QLD: QBCC publishes a financial status for every licensed builder — use it
• All states: Run an ASIC company search ($9) to check their registered company status, any external administrations, or director disqualifications
• Ask your broker: Mortgage brokers who specialise in construction often know which builders are in financial difficulty
• Red flag: If a builder asks for a large deposit upfront (more than 5–10%), be cautious — it may indicate cash flow problems

Step 4: Review Their Track Record

• Ask for 5+ references from completed projects in the last 2 years — and actually call them
• Visit a current build site: A tidy, well-organised site indicates good management
• Check reviews on Google, ProductReview, and Houzz — but weigh them carefully. One bad review is normal; a pattern of complaints about the same issue is a red flag
• Check tribunal records: Search NCAT (NSW), VCAT (VIC), or QCAT (QLD) for any disputes involving the builder

Step 5: Understand the Contract Type

There are three main residential building contract types in Australia:

• Fixed-price (lump sum): You agree on a total price upfront. The builder bears the risk of cost overruns (within scope). This is the most common and safest option for homeowners.
• Cost-plus: You pay the actual cost of materials and labour, plus a builder's margin (typically 15–25%). You bear the risk of cost overruns. Only suitable if you have deep pockets and trust the builder completely.
• Design and construct: The builder provides both design and construction. Convenient, but you have less independent oversight of the design process.

For most KDR projects, a fixed-price contract with a detailed specification is the safest approach.

Step 6: Scrutinise the Specification

The specification document lists every material, fitting, and finish in your home. Vague specs lead to disputes.

• Every item should specify brand, model, and colour — not "or equivalent"
• Check what is included vs excluded — common exclusions are driveways, landscaping, fencing, window furnishings, and air conditioning
• Provisional sums and prime cost items: These are allowances for items not yet finalised (e.g. kitchen appliances). Understand what happens if the actual cost exceeds the allowance
• Compare specifications line by line between competing quotes — the cheapest builder often has the thinnest spec

Step 7: Red Flags to Walk Away From

• Builder pressures you to sign quickly ("this price expires Friday")
• No written quote or contract — only verbal promises
• Asking for more than 5% deposit before any work begins
• Cannot provide current insurance certificates
• Previous company names or director history involving insolvency
• Refuses to include a detailed specification in the contract
• No fixed completion date or liquidated damages clause
• Negative QBCC financial status (QLD) or expired licence

Step 8: Negotiate Key Contract Terms

Before signing, ensure these are clearly stated:

• Completion date and liquidated damages for delays (typically $150–$350 per day)
• Variations process: How changes are priced and approved during construction
• Defects liability period: Typically 6–12 months after handover
• Progress payment schedule: Should align with construction milestones, not arbitrary dates
• Dispute resolution mechanism: Mediation before tribunal or court

The Bottom Line

Choosing a builder is not about finding the cheapest quote. It is about finding a financially stable, properly licensed, well-insured company with a track record of delivering quality homes on time. Spend 2–3 weeks on due diligence now to avoid 2–3 years of stress later. You can browse vetted builders in your area on AusBuildCircle.com.