The ceiling has not moved since 2007. Building costs have. A government discussion paper now proposes lifting it to $800,000, with the recommendations report due next month.

Western Australia’s Home Building Contracts Act 1991 does not apply to every home building contract in the state. It applies to a band, and a contract that sits above the top of that band is not a home building work contract for the purposes of the Act at all. The current band runs above $7,500 and below $500,000.

On the state government’s own figures, drawn from home indemnity insurance data, the proportion of home building contracts valued under $500,000 has dropped from 94 per cent in 2014 to 82 per cent in 2024. The paper notes comparable data is not available back to 2007. The contracts above that line sit outside the Act, and the homeowners on those jobs do not get the protections it creates.

A discussion paper released by the Department of Local Government, Industry Regulation and Safety proposes lifting the upper threshold to $800,000. Consultation closed on 24 June, and the final recommendations report is due to government in September, unless the timetable is extended.

Why the ceiling has been quietly closing

The thresholds are not new and they are not indexed. When the Act was enacted the band ran between $6,000 and $200,000. It was revised on 29 June 2007 to the current $7,500 and $500,000, and it has not moved since.

Construction costs have. The discussion paper cites the ABS Western Australia Housing Construction Price Index showing a 133.2 per cent increase in the cost of building a home between 30 June 2007 and 31 December 2025.

The result is a threshold doing something nobody legislated for. Every year that build costs rise against a fixed ceiling, a further slice of the market crosses it and leaves the regulatory framework behind. Nothing is repealed. The Act simply stops reaching.

Nobody decided to remove those protections from one in five contracts. The number just sat still while the market moved past it.

The paper is also blunt about Western Australia’s position nationally. It states that Western Australia remains the only jurisdiction in Australia to impose an upper limit on the value of contracts covered by home building legislation. No other jurisdiction caps its coverage at the top end.

What actually falls away above the ceiling

This is the part builders and homeowners most often misunderstand. Crossing the threshold does not weaken the protections. It removes them.

Above the ceiling, the Act’s requirement that the contract be in writing and signed does not apply. Nor does its requirement that a variation be in writing and given to the owner before the varied work starts. The statutory deposit limit does not apply, and neither do the rules restricting payments to genuine progress payments for work already performed or materials or services already supplied.

The implied term making the builder liable to make good defects notified in writing within four months of practical completion does not apply. The prohibition on rise and fall clauses does not apply. The provisions dealing with unconscionable, harsh or oppressive conduct in connection with a contract do not apply.

The discussion paper adds the consequence that matters most in a dispute. Homeowners whose contracts are not captured lose access to the dispute resolution process for home building work contract complaints, which exists to give an accessible and efficient route to resolving contractual disputes.

What remains is the contract itself and the general law. For a $600,000 build in Perth, the contract is doing all the work, because the statutory backstop that a homeowner on a $450,000 build takes for granted is not there.

One consequence cuts the builder’s way

It is worth being even handed about this, because the effect is not uniformly bad for builders.

The prohibition on rise and fall clauses is one of the provisions that stops applying. A builder working above the ceiling is not barred by the Act from including a clause allowing the price to move with labour or material costs. After several years in which fixed price contracts signed before a cost surge did serious damage to builders across the country, that is a live commercial difference rather than a technicality.

It also means two builders in the same suburb, doing similar work, can be operating under materially different contract rules depending on which side of $500,000 the job lands.

What the discussion paper proposes

Three proposals matter most.

The first is the thresholds. The lower limit would rise to $10,000, which the paper says removes the overlap with the minor case claims facility of the Magistrates Court. The upper limit would rise to $800,000. Both would then be reviewed every three years with a report to the Minister, so the erosion does not simply restart.

The paper is candid about why it stopped at $800,000 rather than removing the cap. It points to fixed price controls having been identified as a cause of financial distress for builders during recent periods of high inflation, and to there being a value point at which consumers should reasonably be expected to contribute to protecting their own interests. That is a policy judgement stated plainly rather than buried.

The second is deposits. The current limit is generally 6.5 per cent of the total amount payable, with a higher limit of 20 per cent where the work is principally cabinetry work and at least half the contract value is off site. The proposal is 10 per cent capped at $40,000.

The cap is what makes that proposal narrower than it sounds. Ten per cent is only available in full up to a $400,000 contract. At $500,000 the effective limit is 8 per cent, at $600,000 it is 6.7 per cent, and at $800,000 it is 5 per cent. For anyone building at the upper end, the upfront cost position barely improves.

There is a consumer side to that too. Home indemnity insurance covered lost deposits to $20,000 from 1997 until 2022, when the Western Australian Government doubled cover across the board and lifted deposit cover to $40,000. The paper notes that raising the contract ceiling to $800,000 will see some deposits become partly uninsured again. On an $800,000 contract, 6.5 per cent is $52,000, of which $12,000 would sit outside cover.

The third is penalties, and this is where the paper is least ambiguous. The penalty for failing to put a variation in writing and give it to the owner would rise from $500 to $5,000. The penalty for failing to put the contract in writing and give the prescribed notice would rise from $2,000 to $10,000. Several others, including the deposit and progress payment limits and the rise and fall prohibition, would rise from $10,000 to $25,000.

What this means for builders now

Nothing here is law. These are proposals in a discussion paper, and consultation only closed in June. But the direction is consistent with everything else moving in Western Australia this year, including new powers to intervene before a builder formally collapses and a separate decision that lifted the registration threshold for Class 10a structures.

The immediate practical point does not depend on the reform passing. Know which side of $500,000 each of your jobs sits on, because it changes what your contract has to carry.

Below the ceiling, the Act supplies a floor of terms whether or not you thought about them. Above it, anything you have not written into the contract is not there. Variations, deposit structure, progress payment triggers, defects liability and price movement all have to be dealt with expressly, because no statute is filling the gaps.

If the thresholds do move, the more significant change for most builders is not the ceiling at all. It is the penalty schedule, which would tighten the compliance obligations that sit on a registered builder considerably, with the variation penalty rising tenfold.

THE GOOD BUILDER TAKE

The threshold has not been a policy decision for nineteen years. It has been a number standing still while the market walked past it, and the effect has been to remove statutory protection from a growing share of contracts without anyone voting to do that.

For builders the takeaway is smaller and more immediate. Check where each job sits relative to $500,000, and make sure the contract on the high side carries everything the Act would otherwise have supplied.

Frequently asked questions

Sources: Reforming Western Australia’s Home Building Contract Laws: Discussion Paper, Department of Local Government, Industry Regulation and Safety, released for public comment 13 May to 24 June 2026, including Appendix 1. Home Building Contracts Act 1991 (WA), current consolidation. Review of Western Australia’s home building contract laws, Building and Energy, Government of Western Australia, page last updated 25 June 2026. The review is led by Parliamentary Secretary, the Hon Dan Caddy MLC.

Last updated: 21 August 2026.

General Information Disclaimer
This article is general industry reporting and does not constitute legal advice. The reforms described are proposals in a government discussion paper and are not law. Thresholds, penalties and prescribed amounts may change. Builders and homeowners should obtain their own legal advice on their specific circumstances and confirm current requirements with Building and Energy. The Good Builder does not accept liability for any loss arising from reliance on information published here.

Author: TGB Editorial