Finance for kit homes
A shed or a kit home may cost a lot of money. Think about how much you’ll need to pay—upfront and in total—before you enter into any contract.
The contract
The kit home supplier will ask you to sign an agreement or contract for the supply of the kit home or shed.
Get independent legal advice before entering into a contract.
Check the requirements for domestic building projects before you enter into any contract. Contact:
Upfront payment or deposit
The supplier
The supplier will usually ask you to pay a deposit before they process your order. Unlike other building suppliers, they have no legal limits on how much deposit they can charge.
Be very careful about suppliers who:
- demand very large deposits
- make you pay the entire price upfront.
It’s a big risk to pay large sums of money before you get any materials.
On-site builders
On-site builders are subject to legal limits in how much deposit they can charge. They can only charge:
- 5% deposit for work that costs over $20,000
- 10% deposit for costs between $3,300 and $20,000.
If the same business supplies and builds your kit home or shed, they will be subject to the deposit limit.
Examples
Example 1
A homeowner enters into a contract with a business. The business will supply and build a kit home on her property for $350,000. The company can only ask her to pay a 5% deposit, which comes to $17,500. She will need to pay the balance at the end of the project.
Example 2
A handyman enters into a contract with a company. He will pay them $150,000 for a shed kit and become an owner-builder. The company charges him the full amount in advance. This isn’t breaking the law.
The handyman will also need to apply for an owner-builder’s permit.
Example 3
A couple decides to build a kit home on their property. They enter a contract with one company to buy the materials for $150,000. After this, they enter into a separate contract with a different company to build the home for $190,000. The total cost is $360,000.
The first company (the supplier) can charge the full $150,000 upfront. The second company (the builders) may only charge a deposit of up to 5% of the total price (in this case $9,500). The couple will need to settle this account at the end of the project.
Insurance
You should make sure that you are aware of the insurance conditions attached to:
- buying the kit home
- building it.
The QBCC's Home Warranty Scheme lets you access an insurance fund when:
- your licensed contractor doesn’t finish the job
- their work is defective
- the soil under the house moves or subsides (which can result in structural damage).
This only applies to work done by licensed contractors.
If the same company provides the supplies and does the building work, then the insurance fund covers the whole cost of the project. Otherwise, it only covers the cost of the building work itself.
You cannot access it for compensation if:
- the contract is only for the supply of a kit home
- you are an owner-builder.
Get independent advice about insurance before you register as an owner-builder.