Is this builder licensed for this job?

Who needs a licence

The NSW Government’s licensing page puts it plainly: “You must have a contractor licence to carry out, advertise or contract for residential building work in NSW that is valued at more than $5000 in labour and materials (including GST). A general builder can do any work that is residential building work.”

The rule reaches the trades a builder brings in, too. “Tradespeople (whether contracting directly with home owners or sub-contracted through a builder), who do home building work costing over $5,000 (labour and materials), must hold a relevant licence for the type of work they need to do.”

From NSW Government, Categories and classes of building and trade work and NSW Government, Working as an owner-builder.

Behind those pages is the Home Building Act 1989. Section 4 says no one may contract to do residential building work or specialist work unless they do it as, or for, a person, partnership or company holding a contractor licence that covers that work. The $5,000 line comes from the Act’s definition of residential building work, which leaves out work, other than specialist work, whose reasonable market cost of labour and materials is $5,000 or less; clause 12 of the Home Building Regulation 2014 sets that amount.

Breaking section 4 carries a maximum penalty of 200 penalty units for a person and 1,000 for a company, and a penalty unit is $110 under section 17 of the Crimes (Sentencing Procedure) Act 1999. That is $22,000 and $110,000, the same figures the NSW Government’s general building work page gives for unlicensed work.

Specialist work, at any price

Some trades need a licence whatever the job costs. In the NSW Government’s words: “You need a licence or certificate to carry out, advertise or contract for specialist work in NSW regardless of the cost of the work or whether the work is residential, commercial or industrial, including any associated electrical wiring that would otherwise be done by an electrician.”

“Specialist work includes electrical wiring, plumbing, drainage and gasfitting work and air conditioning and refrigeration work (except plug-in appliances).” The electrical work page adds that a licence or certificate is needed before any electrical wiring work in NSW, and the plumbing page says the same of any plumbing, draining or gasfitting work.

So a general builder does not do the wiring under their own licence unless they hold that category too: “Unless the builder holds the required category of specialist work themselves, the works must be subcontracted to the holder of a contractor licence in the relevant category of specialist work.”

From NSW Government, Categories and classes of building and trade work and NSW Government, General building work.

A worked example: one quote, checked

Say a quote arrives for a $30,000 kitchen renovation in Sydney, in the name of a company. These are the NSW Government’s own checks, applied to it one at a time.

1. Look the licence up. “Use the Verify NSW website to look up your contractor’s name or licence number to make sure their licence is valid.” The register of building work orders shows whether a builder has current orders or restrictions on their projects.
2. Check whose licence it is. “A licence in the name of an individual does not permit the individual’s company or partnership to make the contract, even if the individual is a director of the company or member of the partnership.” A company making the contract needs a licence in the company’s name.
3. Match the licence to the work. The NSW Government’s kitchen, bathroom and laundry renovation page says a kitchen, bathroom and laundry renovation licence is needed for that work valued at more than $5,000, but that category does not include work affecting any load-bearing part of the building essential to its stability, such as walls, floors or beams. A quote that moves a structural wall needs a licence that covers it.
4. Check the trades inside it. The NSW Government gives an example that fits this job: “if you subcontract to undertake dry plastering work worth $3,000 as part of a $30,000 kitchen renovation contract held by a general building contractor, you need to hold a dry plastering contractor licence.” The electrician and plumber need their own licences at any price.
5. Check the name across the papers. icare, which runs the compensation fund, says the name on the building contract must be the same as the name on the licence and on the certificate of insurance. At $30,000 the job is over $20,000, so that certificate must come before any money; the compensation cover guide explains it.

From NSW Government, Step by step guide to choosing the right tradesperson or builder and icare, Before I build, what do I need to know?.

Warning signs

The NSW Government’s contracts page lists three. Be wary of any contractor who:

• encourages you to sign a contract quickly to avoid a price increase. This is usually a sales pitch.
• suggests you get an owner-builder permit while they organise all the building work for you. This could be a ploy if they don’t have the right kind of licence, can’t get home warranty insurance or want to avoid responsibility.
• gives you a quote which seems extremely low compared to others.

Licensing is not the only cover worth asking about. If the builder has no public liability insurance, the NSW Government warns, you could be liable because you own the property; and if employers are not insured for workers compensation, you could be liable to pay the costs of a claim.

From NSW Government, Contracts for residential building work and NSW Government, Insurance requirements for contractors working on your home.

Once the licence checks out, the next question is the contract. The contract guide sets the small and large job contracts side by side, and the deposit guide covers what you can be asked to pay up front.