The Madness of Building Licence Lending

How Licence Lending Exposes Builders to Major Liability

Anyone who holds a building registration or licence knows how hard it is to get. There is a lot of work involved in applying to the VBA, now the Building and Plumbing Commission, to get registered as a builder. If a registration is suspended or cancelled, it can be very hard to get back.

So, it is incredible that there are some registered builders who think it is okay to lend their licence to someone else so they can get a building permit to carry out building work. Lending your building licence might seem like a harmless favour or a quick way to earn passive income, but make no mistake, this practice is not only reckless, it’s legally and financially dangerous.

This is the case even if the person borrowing the licence is also a registered builder. A registered builder might think it is a good idea to borrow another registered builder’s licence if they have domestic building insurance eligibility available. It is not, especially when the insurer has the capacity to pursue you for repayment of any compensation they have to pay to a homeowner.

What Is Licence Lending?

Licence lending occurs when a registered builder allows another person—often unregistered or underqualified—to use their licence to obtain building permits, insurance, or contracts. The registered builder may receive a fee, but they typically have no involvement in the actual building work. They usually have no or little contact with the homeowners and have no way of knowing what promises or expectations the homeowners have about the work. This lack of knowledge about the project leaves the registered builder without an opportunity to step in if they later decide they want to protect their business.

Why It’s a Terrible Idea

1. Legal Liability: Under the Building Act 1993 and the Domestic Building Contracts Act 1995, it is illegal for unregistered individuals to carry out major domestic building work. If you lend your licence, you could be fined, sued, and even face criminal charges.
2. Insurance Risks: Domestic building insurance only covers work done by the builder named on the contract and insurance policy. If someone else does the work, the insurer may refuse to pay for defects or incomplete work, leaving the registered builder exposed to claims.
3. Reputation Damage: If the project goes wrong—and it often does—the registered builder’s name is on the line. Poor workmanship, delays, or disputes can lead to VCAT cases.
4. Misrepresentation and Consumer Law Breaches: Lending your licence could be found to be misleading and deceptive conduct under Australian Consumer Law. You’re essentially misleading clients and authorities about who is responsible for the build.
5. Loss of insurance cover: Getting sufficient insurance cover to purchase domestic building insurance policies is difficult. If you lend your licence, you reduce your capacity to buy insurance policies for your jobs.

The Bottom Line

Your building registration cannot be traded. It’s a business licence earned through hard work and experience. Lending it out is not just stupid—it leads you to legal difficulties, financial ruin, and disgrace.

If someone asks to “lend” or “borrow” your licence, the only sensible response is: No.

HIA members are welcome to contact us on 1300 650 620 for further advice or visit our website for additional information.