What deposit can a builder legally ask for in NZ?
Short answer
There's no statutory cap on a builder's deposit in NZ — but a 10% deposit is the unofficial industry standard. Anything above 10% can void your Master Build Guarantee or NZCB Halo deposit cover. The Building Act requires a written contract for residential work over $60,000 and requires that the contract clearly states the deposit. Pay big deposits in cash without that paperwork and your protection drops sharply.
Key facts
- No legal cap — but 10% is industry norm
- Deposit over 10% can void warranty deposit cover
- Written contract is required for residential work over $60,000
- Section 362K-Q of the Building Act mandates contract content
- Master Build Guarantee deposit cover is capped (currently 10% or a dollar cap)
Why 10% became the line
It's a hangover from the Registered Master Builders and NZCB Halo policies, both of which cap deposit cover at 10% of contract price. Anything paid above that line is uninsured.
Some builders ask for 20-30% citing material costs. That can be genuine on a high-spec build with imported finishes. It can also be a cashflow problem. Ask why, get the answer in writing, and price the risk.
What the Building Act actually requires
Section 362K to 362Q (and the Building (Residential Consumer Rights and Remedies) Regulations 2014) say residential work over $60,000 needs a written contract with specific content: parties, work description, price, payment schedule, defects period, dispute resolution, and contact details. The deposit is part of the payment schedule.
If your builder hasn't given you a contract that meets these requirements, that's a breach of the Act and a major red flag in itself.
What to do if you've already paid more
Don't panic. Stop further over-payments. Get a copy of every receipt and bank record. If the build proceeds normally you'll never have to use the warranty.
If things go wrong, your warranty deposit cover is capped — but you still have your direct claim against the company (subject to its solvency). A Disputes Tribunal or BDT claim doesn't go through the warranty at all.
Knowing the rules is half the job. The other half is knowing who you're hiring — check any NZ builder's court action, insolvency history, director track record and AI risk score in minutes.
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Related questions
Sources: Building Act 2004, sections 362K-Q; Building (Residential Consumer Rights and Remedies) Regulations 2014; Registered Master Builders Guarantee schedule. General information for NZ homeowners, not legal advice — building rules change and vary by council, so confirm critical details on the official source before acting. Last updated 2026-05.