Working Directly for a Home-Owner: 5 Common Myths

What Every Trade Should Know Before Taking on Direct Homeowner Contracts

Sometimes a trade who usually works for a builder will have the opportunity to work directly for a home-owner. This can be a good way for a trade to supplement their income. However, there are many traps for the unwary trade and a number of myths commonly circulating in the industry that do not help. This article addresses some of these common myths.

First, a quick reminder. If you are carrying out any building work in a home and charge more than $10,000 (unless it is a single task like painting or tiling), you must be registered as a builder with the Victorian Building Authority and use a proper domestic building contract (such as one of the HIA contracts). You also need to purchase domestic building insurance for the home-owner if you charge more than $16,000.

5 Common Myths About Working Directly for a Home-Owner

You don’t need to be registered/licenced as a builder if working for an owner builder

Although an owner builder is named on the building permit, they still need to comply with the usual laws governing domestic building work. If a builder or trade works for an owner builder, they are considered a head contractor, not a subcontractor. As a result, if they charge more than $10,000 for the work, they must be registered as a builder.

You don’t need a building permit for inexpensive building work

Regardless of the cost, one should assume that a building permit may be required. However, repairs and maintenance, as well as minor alterations that don’t affect the floor area or height of the structure and don’t compromise its structural integrity, may not need a building permit. To determine whether a building permit is necessary, one should refer to Schedule 3 of the Victorian Building Regulations.

You can split jobs to avoid the job costing more than $10,000 or $16,000

Breaking up a job to avoid a monetary threshold such as $10,000 does not work. This is an obvious way to try to avoid the legal requirements. The legislation considers all the work you do and does not allow you to split your work into a number of contracts.

Domestic building insurance is only required for new home jobs or large alteration, addition or renovation jobs

If a builder or trade is carrying out any domestic building work (building work at a home) where the contract price exceeds $16,000, then the builder not only has to be registered but must also provide a domestic building insurance policy before collecting a deposit or starting work.

Homeowners have the right to choose to use an unregistered builder or trade.

The legislation does not grant homeowners the right to decide whether to use a registered builder or not. Furthermore, it is worth considering that future owners of the home may not accept that the previous owner used an unregistered and uninsured builder if the building work turns out to be defective or non-compliant with Building Regulations. HIA members who need further advice on these issues can contact the Technical Services, Workplace Services, and Planning teams, and stay updated via the organization’s website and regular emails.