In New Zealand, the law requires builders to provide a written contract for most residential building work valued at $30,000 or more (including GST). This requirement sits under the Building Act 2004, and it's designed to protect both homeowners and tradespeople by making expectations, costs, and responsibilities crystal clear before work begins.
The Legal Threshold: $30,000 and Over
Under the Building Act, any residential building work costing $30,000 or more (GST inclusive) must be covered by a written contract before work starts. This applies whether you're building a new home, doing a major renovation, or adding a substantial extension.
If your project sits below that threshold, a written contract isn't legally required — but it's still strongly recommended. A simple written agreement protects everyone if a dispute arises later.
What Must the Contract Include?
The Building Act sets out minimum requirements for what a residential building contract must contain. Your contract should include:
- The names and contact details of both parties (you and the builder)
- A description of the work to be carried out
- The contract price or how it will be calculated (e.g. fixed price, cost-plus, or hourly rate)
- Payment terms — when and how payments are to be made
- The expected start and completion dates (or a timeframe)
- How variations (changes to the scope of work) will be handled and priced
- Dispute resolution processes
- Details of any guarantees or warranties on the work
- Insurance information — the builder's public liability and, where applicable, contract works insurance
For projects requiring a building consent, the contract should also reference the consented plans and specifications.
Licensed Building Practitioners (LBPs) and Their Obligations
If your project involves restricted building work — such as structural work, weathertightness (cladding, roofing, windows), or foundations — it must be carried out or supervised by a Licensed Building Practitioner (LBP). You can check whether your builder holds a current licence at Licensed Building Practitioners.
LBPs are also required to provide you with a Record of Work on completion, confirming what restricted building work they carried out. This document is important for your property records and any future sale.
What About Smaller Jobs?
For work under $30,000, there's no legal obligation to provide a written contract — but both parties can still request one, and it's good practice to do so. At minimum, get a written quote that clearly states:
- What work is included (and what isn't)
- The total price or rate
- An estimated timeframe
- Payment milestones
A written quote, once accepted, forms a basic contract in itself.
Fixed Price vs. Cost-Plus Contracts
It's worth understanding the two main contract types used in NZ residential building:
| Contract Type | How It Works | Best For |
|---|---|---|
| Fixed price | You pay an agreed total, regardless of actual costs | Well-defined, straightforward projects |
| Cost-plus | You pay actual costs plus a margin or fee | Complex or uncertain-scope projects |
Fixed-price contracts give you more certainty on budget. Cost-plus contracts can be appropriate for renovations where the full scope isn't known upfront, but make sure the contract clearly defines how costs are tracked and reported.
Variations: Changes During the Build
One of the most common sources of disputes in building projects is variations — changes to the original scope of work. Your contract should spell out:
- How variations must be requested (ideally in writing)
- How they will be priced and approved before work proceeds
- How they affect the overall timeline
Never agree to significant changes verbally. Always get a written variation order signed by both parties before the extra work begins.
Building Consents and Your Contract
If your project requires a building consent (which is needed for most structural, plumbing, drainage, or significant alteration work), the contract should reference the consented documents. Your builder is responsible for ensuring work is carried out in accordance with the consent. For guidance on what requires consent versus what falls under Schedule 1 exemptions, check with your local council or visit MBIE Building Performance — exemptions can vary and it's always best to confirm.
Deposits and Progress Payments
It's normal for builders to request a deposit before starting work, and to invoice at agreed progress milestones (e.g. foundation complete, framing complete, lock-up). Be cautious of any builder asking for a very large upfront payment. A reasonable deposit is typically 10–20% of the contract value, though this can vary.
Make sure your contract clearly states when each payment is due and what stage of work it corresponds to.
When to Call a Professional
If you're unsure whether your contract meets legal requirements, or if you're entering into a large or complex building project, consider getting independent advice before signing. A solicitor experienced in construction contracts can review the document for you. For disputes that arise during or after a build, MBIE Building Performance provides guidance on your rights and options, including adjudication processes (note that the Weathertight Homes Resolution Service is no longer open to new claims — check with MBIE for current dispute resolution options).
For any building work — large or small — hiring a qualified, licensed builder gives you important legal protections. You can find trusted local builders on tradedirectory.co.nz.
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