Handing over money was the scariest part of doing up our first home in Papamoa — not the building work itself. When a builder asked for a deposit before he’d lifted a hammer, my stomach dropped. Was that normal, or was I about to get burned? I’m no tradesperson myself, just a first-home buyer in Papamoa, on the edge of Tauranga, who learned all this the nervous way. A friend in Roslyn went through the same worry with her renovation not long after, so I’ve written up the plain-English version of how paying contractors in New Zealand actually works — deposits, progress payments, retentions, the lot.
What’s a normal deposit, and when to get cautious
Yes, a deposit is normal. Contractors often ask for one to secure materials and lock in your slot, and that’s fair — they’re out of pocket ordering timber and fittings before a single day of work happens. What matters is the size of it. A deposit of around 10 to 15 percent of the job total is pretty standard around here. If someone asks for 50 percent or more before any work has started, that’s when I’d get cautious — once they’ve already got half your money, their incentive to actually turn up drops.
The contract you’re legally owed once a job passes $30,000
There’s a legal side to this that I didn’t know about at the start. For residential building work over $30,000 including GST, the contractor is required by law to give you a written contract and prescribed disclosure information. That’s not a nice-to-have, it’s your right, and any decent tradie will already have it ready to go without you having to ask twice.
Paying for work done, not work promised
For anything bigger than a small job, you don’t pay it all at the end, and you don’t pay it all at the start. You pay in stages as the work progresses. The golden rule I’ve held onto ever since is simple: pay for work that’s actually been done, not work that’s only been promised. A sensible progress-payment schedule usually looks something like this:
- A modest deposit to get started and cover initial materials.
- A payment when a clear milestone is finished — say the deck substructure is in, or the concrete is poured.
- Further payments at agreed stages as things progress.
- A final payment once everything is complete, you’ve had a proper look, and you’re happy.
The point of staging it this way is that you’re never a long way ahead of the work. If the contractor walked off tomorrow, you shouldn’t have paid for much more than what’s actually built and sitting in front of you.
The numbers in one place
| Item | Detail | Typical figure |
|---|---|---|
| Deposit | Normal range to secure materials and booking | 10–15% of job total |
| Deposit | Get cautious above this, before work has started | 50%+ of job total |
| Written contract | Legally required threshold (residential building work, incl. GST) | Over $30,000 |
| Retention | Held back until snags are fixed and you’re satisfied | 5–10% of final payment |
Get it in writing — my biggest early mistake
I agreed to things verbally in the early days because it felt awkward asking for paperwork. Never again. A written contract, or at minimum a written quote, should spell out the total price (or how it’s calculated), the payment schedule, what’s included, and what happens if things change. When variations come up — and they always do — get those in writing too, with the extra cost agreed before the work happens, not sprung on you in the final invoice. The Building Performance site has a clear rundown of what building contracts must include, and reading it gave me a lot more confidence to ask for what I was entitled to. It pairs well with our guide on how to get honest quotes from regional tradies, which is really the step that comes before any of this.
Why I hold back a small retention
An older builder gave me this tip and it’s stuck: hold back a small final payment — a retention — until you’re genuinely satisfied and any little snags are fixed. It doesn’t need to be huge; even holding the last 5 to 10 percent until the job’s properly finished gives you real leverage to get the last details sorted. Most good contractors expect this and won’t blink at it. And keep records no matter what: pay by bank transfer with clear references, keep every invoice and receipt, and get a GST receipt for each payment. If something ever goes sideways, that paper trail is your best friend.
Questions I get asked most about this
How much deposit should I pay a builder in NZ? Around 10 to 15 percent of the total job is standard. Be cautious about deposits of 50 percent or more before any work has started, as it reduces the contractor’s incentive to complete the job.
Do I need a written contract with a contractor? For residential building work over $30,000 including GST, a written contract and disclosure information are legally required. Even under that threshold, always get the price, payment schedule and scope in writing to protect yourself.
Should I pay contractors before or after the work? Pay in stages for work that has actually been completed, not for work that is only promised. A modest deposit to start is fine, but the bulk should follow finished milestones, with a small retention held until you’re fully satisfied.
What’s a retention, and do I have to offer one? A retention is a small slice of the final payment — commonly 5 to 10 percent — held back until the last snags are sorted. It’s not compulsory, but most established contractors are used to it and it gives you real leverage right at the end of a job.