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Building a duplex can be an exciting way to maximise your investment, generate rental income, or accommodate extended family. However, one of the first questions many people ask is, “What kind of deposit is required to start a duplex project?” Understanding the financial commitment upfront is essential to planning and ensuring your project gets off the ground smoothly.
A deposit is typically the initial payment made to your builder to secure their services and begin the construction process. Unlike a property purchase, where a deposit is paid to secure the land or home, a construction deposit is part of the building contract and signals your intent to proceed.
In most cases, the deposit is a percentage of the overall contract price rather than a fixed amount. This ensures that the builder has sufficient funds to prepare for the project while protecting the client from having to pay too much upfront.
In Australia, the deposit amount is generally capped under building regulations. For example, under most state laws, if your contract price exceeds a certain amount, the maximum deposit a builder can request is around 5% of the total construction cost. For smaller contracts, the deposit may be higher, but it rarely exceeds 10%.
Since duplex projects are usually more complex and costly than single dwellings, the deposit will often be calculated on a higher total contract value. This means even at 5%, the upfront deposit could be a significant sum. For example, if your duplex project is valued at $800,000, the deposit could be around $40,000.
When planning your finances, it’s important to remember that the builder’s deposit is only one part of the upfront costs. You may also need to cover:
These expenses can add up quickly, so it’s vital to budget for them alongside your deposit.
Deposits in construction contracts are regulated to protect both the client and the builder. For instance, in New South Wales, building contracts fall under legislation that ensures deposits are reasonable and that builders are licensed and insured. This also ties into NSW duplex laws, which regulate how duplex developments are approved, designed, and constructed. Working with a licensed builder who understands these requirements ensures your deposit is handled in compliance with legal obligations.
The deposit required to start a duplex project will usually be around 5% of the total contract value, though the exact amount may vary depending on your builder and the contract size. In addition to the deposit, you should also plan for associated upfront costs such as design, approvals, and reports. By understanding the financial requirements and working with a licensed and experienced builder, you can enter your duplex project with confidence, knowing you’re prepared for the journey ahead.