QBCC for Property Developers: Licensing and Warranty

A property developer in Queensland can generally commission a build without holding a contractor’s licence, but the exemption that gets them there is narrower than most people assume, and on its face it does not extend to residential construction work. That carve-out sits in schedule 1A of the Queensland Building and Construction Commission Act 1991 (Qld), and it is where a good many Queensland residential schemes appear to get their licensing position wrong.

Before considering how licensing and home warranty obligations apply to a specific Queensland project, you’ll need professional advice from a construction lawyer who practises in Queensland, and usually from your accountant as well. The exposure here is not abstract. Contracting for building work without the right licence is a criminal offence for an individual at the top penalty tier, the consequences of an unlicensed builder land on the party who engaged them, and getting the home warranty position wrong on a multi-unit scheme can leave purchasers without cover on a building you have already sold. Those outcomes fall on the developer entity and, in some cases, on the people behind it. This guide is written to inform that conversation with your adviser, not to replace it, and there is a list of specific questions to put to them at the end.

Everything below was current at the time of writing, and the figures move. Penalty unit values change each July, financial thresholds are reviewed, and the Queensland Government has an active reform programme with the home warranty threshold and cover amount explicitly on the list. Each primary source is linked so you can check the position on the day you need it.

Does a property developer need a licence from the Queensland Building and Construction Commission?

The starting point is section 42 of the Queensland Building and Construction Commission Act 1991 (Qld), and the wording matters more than the summary of it:

“Unless exempt under schedule 1A, a person must not carry out, or undertake to carry out, building work unless the person holds a contractor’s licence of the appropriate class under this Act.”

Read section 42 closely. The phrase “or undertake to carry out” is the one that catches developers. The offence is not limited to picking up tools. Entering into a contract to have building work done can be enough, which is why a developer’s licensing position turns entirely on whether an exemption applies.

Two exemptions in schedule 1A do most of the work.

Schedule 1A section 6 covers consumers:

“A consumer who engages 1 or more licensed contractors to carry out building work for the consumer does not contravene section 42(1) if the consumer does not provide building work services for the work.”

The examples given in the section include a consumer who, as principal, enters into construction management trade contracts and engages a construction manager for the building work services. That is a recognisable development structure.

Schedule 1A section 8 covers head contracts, and this is where the residential carve-out appears:

“An unlicensed person who enters into a contract to carry out building work does not contravene section 42(1) merely because the person entered into the contract if the building work— (a) is not residential construction work or domestic building work; and (b) is to be carried out by a person (an ‘appropriately licensed contractor’) who is licensed to carry out building work of the relevant class.”

Two conditions, both of which have to hold. The work must not be residential construction work or domestic building work, and it must be done by an appropriately licensed contractor. Subsection (3) then withdraws the exemption if the unlicensed person “causes or allows any of the building work to be carried out by a person who is not licensed to carry out building work of the relevant class”. One unlicensed trade in the chain could, on the face of the section, unwind the principal’s own protection.

The Commission’s plain-English restatement is consistent with the section. On its when you need a licence page it states that an unlicensed person may enter into a principal contract for building work “provided the work is not residential construction work or domestic building work”, that the unlicensed principal cannot personally carry out or provide building work services, and that every subcontractor must hold the relevant licence. Elsewhere the regulator puts it more directly: developers entering into contracts for commercial work do not need to hold the relevant licence as long as they engage an appropriately licensed contractor.

So the practical position tends to look like this. On a commercial, industrial or mixed-use scheme where the developer is the principal and a licensed head contractor does the work, no licence is generally needed. On a residential scheme, the section 8 exemption does not apply on its terms, and the developer’s position depends on whether it falls within the consumer exemption in section 6 instead, which turns on whether it is providing building work services. That is a question of fact about how the project is actually run, not a question you can answer from an org chart, and it is the first thing to put to your lawyer.

One structural point worth knowing early: the Commission states that a trust cannot hold a licence. Where a trust structure is used, the individual or company acting as trustee is the entity that would need to apply.

What is building work, and what does the $3,300 threshold actually catch?

The threshold is not in the Act. It sits in schedule 1 of the Queensland Building and Construction Commission Regulation 2018 (Qld), which lists work that is not building work. Section 2 of that schedule excludes:

“Work of a value of $3,300 or less, unless— … (c) the work is within the scope of work of another licence provided for in schedule 2, and is carried out by a licensee as part of a contract for building work of which the total value is more than $3,300”

Paragraph (c) is the anti-splitting rule, and it is the part developers tend to miss. Small packages cannot be carved out of a larger contract to sit under the line. The test looks at the total value of the contract.

Several licence classes carry no threshold at all. The Commission lists drainage, plumbing and drainage, gasfitting, chemical termite management, fire protection, completed residential building inspection, building design across all three tiers, site classification and mechanical services as classes where a licence may be required at any value. Hydraulic services design has a separate $1,100 threshold.

Schedule 1 also excludes work performed by an architect, engineer or licensed surveyor in professional practice, certification work by building certifiers, earthmoving and excavating, and interior design work that is neither loadbearing nor structural. Those exclusions are useful when working out which parts of a consultant scope sit inside the licensing regime and which do not.

A caution on the number itself. The $3,300 figure has stood for a long time and the Queensland Government’s current reform programme lists “reviewing licensing thresholds and improving consistency across all QBCC licensees” among the changes in progress. Treat it as current rather than settled, and check the Regulation before relying on it.

What happens if your builder is not licensed for the work?

The consequences for the contractor are severe, and they flow back to the developer as programme and completion risk rather than as a penalty.

Section 42 sets a maximum penalty of 250 penalty units for a first offence, 300 for a second, and 350 penalty units or one year’s imprisonment for a third or later offence or where the building work carried out is tier 1 defective work. Section 42(2) makes it a crime for an individual at that top tier. The value of a Queensland penalty unit is $172.70 from 1 July 2026, which puts a first offence maximum in the order of $43,000 for an individual and a third offence maximum in the order of $60,000, before the corporate multiplier that applies to companies.

The commercial consequence sits in subsections (3) and (4). A person who carries out building work in contravention of the section “is not entitled to any monetary or other consideration for doing so”. Subsection (4) then allows a limited claim for reasonable remuneration, but only for amounts the person actually paid in supplying materials and labour, capped at the contract price, and expressly excluding:

“(i) the supply of the person’s own labour; (ii) the making of a profit by the person for carrying out the building work; (iii) costs incurred by the person in supplying materials and labour if, in the circumstances, the costs were not reasonably incurred”

An unlicensed contractor is therefore looking at recovering out-of-pocket costs with no profit and nothing for its own labour. From the developer’s side of the table, that is not good news. A builder that discovers mid-project it cannot be paid for its own labour or margin is a builder with an immediate solvency problem sitting on your site, and the practical outcome is often a stalled programme, an incomplete building and a set of holding costs nobody modelled. The licence check belongs in builder due diligence before award, not after the first payment claim.

Note also that the Act does not say the contract is void. It removes the entitlement to consideration. What that means for the enforceability of the rest of the bargain, for any dispute already on foot and for adjudication rights is a legal question that turns on the facts, and it is one for your lawyer rather than this guide.

Which builder licence class covers your project?

Licence classes are drawn by building class, storeys, floor area and construction type, not by contract value. The scopes are set out in schedule 2 of the Regulation.

Builder, low rise. Building work on a class 1 or class 10 building, plus building work on classes 2 to 9 buildings “with a gross floor area not more than 2,000m², but not including Type A or Type B construction”, plus non-structural work on any building regardless of class or floor area.

Builder, medium rise. Building work on a class 1 or class 10 building, plus “building work to a maximum of 3 storeys, but not including Type A construction on classes 4 to 9 buildings”, plus non-structural work on any building.

Builder, open. Building work on all classes of buildings.

The building classes referred to are those in the National Construction Code, and Type A and Type B construction are the Code’s construction types. A townhouse project of class 1a dwellings sits comfortably inside a low rise licence. A three storey walk-up apartment building of class 2 dwellings will usually need at least a medium rise licence, and if it is Type A construction, an open licence. The line moves with the design, so a scheme that changes construction type during design development can quietly move outside the head contractor’s licence class.

Two points that catch developers out. First, there is no dollar limit attached to any builder licence class. A low rise licensee is not limited to small contracts by its class; it is limited by its financial category, which is a separate control covered below. Second, the medium rise class carries a transitional carve-in for fire protection work “for building work carried out until 2 May 2035”, which is worth confirming against the current Regulation if fire protection scope is being novated or held direct.

If your scheme’s construction type or storey count is still moving, the licence class check may be worth repeating at the point the design is fixed rather than only at tender. This sits alongside the usual checks on scope and risk transfer in design and construct contracts.

What does a builder’s financial category tell you about the contract they can carry?

The Minimum Financial Requirements framework caps how much revenue a licensee may earn in a financial year and sets the net tangible assets it must hold to support that cap. For a developer, it is the closest thing to a public, regulator-tested solvency signal on a builder, and it is free to look up.

The Commission publishes the maximum revenue bands as follows.

Maximum revenue is the total the business may turn over in a financial year, and the Commission counts income from the building and construction industry and from any other source, in Queensland, interstate and overseas. Personal wages and salary are excluded. Partnerships combine licensee and partnership revenue; trustees combine trustee and trust revenue.

Three features of the framework are worth reading as risk signals rather than compliance trivia.

The revenue cap is not a soft target. Once a maximum revenue figure is declared, the Commission’s published position is that a licensee is “not allowed to increase your maximum revenue by more than 10% in a financial year without obtaining prior approval”. A builder whose declared category leaves little headroom above the contract sum in front of you may be one large variation or one additional project away from needing the regulator’s approval to keep trading at that level.

The current ratio requirement is a minimum of 1:1, must be met “at all times”, and the Commission is explicit that it may not be rounded up: “0.9987:1 must not be rounded up to 1:1”. Licensees above $800,000 in revenue have the ratio calculated by an accepted independent accountant as part of a Minimum Financial Requirements report.

Net tangible assets are calculated as total assets less liabilities, less intangible assets, less disallowed assets, and no liabilities may be removed from the calculation, including related entity loans. Disallowed assets are prescribed and include unlisted investments and shares, units in unlisted trusts, inaccessible superannuation, non-monetary credits including cryptocurrency, and a haircut on aged debtors, being 50 per cent of the value of an invoice for debtors over 180 days and 100 per cent for debtors over 365 days.

Annual reporting for categories 1 to 7 opens on 1 August and is due by 31 December each year, per the Commission’s financial reporting obligations. Individual licensees in SC1 and SC2 no longer need to submit annual financial information following the second tranche of the current reform programme, though all company licensees still must, regardless of category. A builder that has been suspended for late reporting is a builder whose licence status can change during your build, which is a live programme risk on a fixed settlement date.

What does the licensee register show, and what should you check before signing?

The licensee register is the public search, and the particulars it must contain are prescribed by section 55 of the Regulation. Among them:

“(d) the licensee’s current allowable annual turnover category; (e) if the licensee is a company and the nominee, a licensed director or a licensed secretary of the company is, or within the last 10 years was, a nominee, licensed director or licensed secretary of another company (the ‘other company’) that was a licensee at the relevant time—the name of the other company.”

Paragraph (e) is the one to read carefully. It surfaces prior licensed companies connected to the same people over a ten year window, which is the most useful phoenix signal available to a developer without paying for a search. Paragraph (d) gives you the financial category, and the Commission notes that the category, not the specific dollar figure, is the only financial information it releases publicly.

The Commission also maintains separate lists and registers, including suspended licences, cancelled licences, excluded individuals and excluded accountants. Checking the excluded individuals register against the directors of a tendering entity as well as the entity itself is a short piece of work that occasionally changes a decision.

What the register cannot tell you is how the licensee performed on projects like yours. Directions to rectify, insurance claims and disciplinary history are dealt with under separate provisions of the Act, and the fields displayed change from time to time. Rather than assume, the search is generally worth running on the entity and on each director at shortlisting, with anything unexplained put to the builder in writing during tender interviews.

When does the Queensland Home Warranty Scheme apply to your project?

The Queensland Home Warranty Scheme applies to most residential building work valued at more than $3,300 including materials, labour and GST. That threshold is materially lower than anywhere else in the country, which means a Queensland project crosses into the scheme at a value where an equivalent project in another state would not.

The Commission’s what work requires insurance page sets out what counts as residential construction work. For a developer, the operative line is that it includes a “townhouse, duplex or multiple-unit dwelling up to 3 storeys above a carpark”, along with new homes, roofed residential outbuildings and manufactured homes.

The exclusions matter more, because they define where cover disappears entirely:

“Multiple-unit dwellings more than 3 storeys above a car park are not considered residential construction work and are therefore not insurable under the Queensland Home Warranty Scheme.”

The Commission’s list of work that is not insurable also covers boarding houses, caravan parks, hostels, backpacker accommodation, guest houses, hotels, schools, hospitals, retirement villages, owner-builder work and commercial building work. And on mixed use:

“Mixed residential-commercial construction is not insurable. For example, if your project has 2 storeys of shops and 1 storey residential you cannot insure it through the Queensland Home Warranty Scheme.”

That is a significant point for anyone running a shop-top housing scheme in a Queensland centre. The residential component of a mixed use building does not carry home warranty cover, and neither the developer nor the eventual purchasers have the scheme to fall back on.

One further trap on the value side. Associated works inside a larger project, being driveways, paths, roads, fences, air conditioning, hot water systems, security doors and grilles, and landscaping, are covered for non-completion claims only and not for defective work. The premium is calculated on them; the defect cover is not.

How is the three storey test applied to a project with basement or podium parking?

The Commission publishes a specific method for deciding whether a car park level counts as a storey, and the rule runs the opposite way to most people’s intuition:

“If your car park covers more than half the full storey do not count it as one of the levels.”

The calculation is the car park area, including access lanes, the ramp and the driveway within the building footprint, divided by the total storey area, multiplied by 100. Count the car park as a storey if the result is 50 per cent or less, and do not count it if the result is greater than 50 per cent.

Worked through on a real geometry: a ground level of 1,100 square metres, of which 780 square metres is car parking and circulation, gives 780 divided by 1,100, multiplied by 100, which is 70.9 per cent. That is greater than 50, so the level is not counted as a storey. The question then becomes how many storeys sit above it. Three residential levels above that car park would sit inside the scheme. Four would not.

Change one input and the answer changes. If that same ground level had 480 square metres of car parking in a 1,100 square metre floor plate, the result is 43.6 per cent, which is 50 per cent or less, and the level counts as a storey.

The edge cases here are genuinely difficult, particularly on split-level and terraced sites, on podium schemes with retail at grade, and where a basement is partly above natural ground. The practical exposure is that a design change of one level, or a change in the parking layout at the ground plane, could move a scheme from inside the scheme to outside it, changing both the premium line in your cost plan and what your purchasers receive on settlement. It is worth resolving with your lawyer and your certifier at the point the design is fixed rather than at the point the premium is being paid, and worth revisiting whenever the parking layout changes.

Who is actually covered when the developer pays the premium?

This is the part of the scheme most commonly misunderstood, and it is the reason the guide exists in this form.

Section 68 of the Act removes the developer’s entitlement:

“(1) A licensed contractor who carries out speculative residential construction work is not entitled to assistance under the statutory insurance scheme for the work. (2) If a person enters into 1 or more building contracts, in force at the same time, to construct 3 or more living units, the person is not entitled to assistance under the statutory insurance scheme for the work carried out under the contracts.”

Subsection (3) explains the counting: a single detached dwelling is one living unit, a residential unit is one living unit, and a duplex is two living units. Subsection (5) then preserves the position of buyers:

“Nothing in section (1), (2) or (4) affects the right of a subsequent owner of residential construction work mentioned in this section to make a claim for assistance under the statutory insurance scheme.”

The Commission restates the effect in developer terms on its maximum home warranty entitlements page:

“The developer will not be covered for incomplete or defective work, but subsequent owners of units and the body corporate will be covered for defects.”

So on a scheme of three or more living units, the premium is payable and the developer generally has no claim rights under it. The cover attaches for the benefit of the people who buy the units and for the body corporate. Meanwhile the developer holds the residual risk on incomplete or defective work during the build, which is the period when a builder failure is most likely to hurt.

That has a straightforward consequence for how the risk gets managed. If the scheme is not going to protect the developer against non-completion or defects during construction, the protection has to come from somewhere else in the deal: the security package in the building contract, the strength of the contractor covenant, retention and bank guarantee levels, and the sizing of the construction contingency. A developer treating the home warranty premium as its own insurance is paying for cover it may not be able to call on.

Note also that section 68B(3) requires the premium on speculative residential construction work to be paid before the work starts, on penalty of 100 penalty units. The obligation to pay does not soften because the entitlement to claim has gone.

There is one narrow exemption where a licensee builds on land it owns. The Commission requires that the licensee holds an active contractor or builder grade licence, the work is within the scope of that licence, the property is registered in the same name as the licensee, and the licensee has “no intention of selling the property for at least 6 years and 6 months”. A statutory declaration is required. If the intention changes and the property is sold inside that window, the Commission’s position is that the licensee “must contact us immediately and pay the appropriate premium”. That is a build-to-hold pathway with a long tail, not a development exit strategy.

How much cover applies per unit, and what happens to common property?

The maximum amounts covered page sets the headline limits. The policy covers a maximum of $200,000 each for three separate categories: refunding a deposit or finishing incomplete work and repairing defects discovered before completion; repairing fire, storm or tempest damage to incomplete works where a non-completion claim has been accepted; and fixing defects and subsidence after the project is completed. Within that $200,000 sits a sub-limit of $5,000 for alternative accommodation, removal and storage costs.

Optional additional cover lifts the limit from $200,000 to $300,000, with the accommodation sub-limit rising to $10,000. It is bought by the owner rather than the contractor, and the window is tight: within 30 business days of entering the contract, or before work has started, whichever comes first. The Commission states plainly that “you cannot purchase this optional additional cover after this time”.

For multi-unit schemes the entitlement is worked per unit, and each unit carries its own maximum of $200,000 under standard cover or $300,000 with optional additional cover. Duplexes are treated differently before completion: the Commission states that for non-completion, defects, accommodation, vandalism and theft it can pay a maximum per unit of $100,000 under standard cover, or $150,000 with optional additional cover, with defects after completion reverting to the $200,000 and $300,000 per unit figures.

Common property is dealt with by apportionment rather than by a separate pot:

“If the claim relates to common property (e.g. car parks, foyers, shared stairs) the claim will be split between each unit’s lot entitlement in accordance with their Community Management Statement.”

Two practical implications for a developer selling units. The lot entitlement schedule you set in the community management statement determines how any common property claim is divided between lots, which is one more reason the entitlement schedule deserves attention rather than a default. And the accommodation component of the cover is available to owner-occupiers only. The Commission is explicit that it “does not apply if you are renting the property to tenants”, which changes what an investor purchaser actually receives compared with an owner-occupier purchaser in the same building.

You may see conflicting statements online about whether the $200,000 figure is a per-unit or a whole-of-project cap. The regulator’s own pages are the place to resolve it for a specific scheme, and the answer differs depending on whether the claim arises before or after completion.

What does the premium cost, and when is it payable?

The premium is struck on the insurable value of the work, which the Commission calculates on the basis that all building and other materials are provided by the contractor, even where they are not. Insurable value includes materials supplied by others, labour, GST, and the QLeave levy for projects valued at more than $150,000 excluding GST. It excludes the premium itself. Associated work in the contract counts towards the value, including landscaping, driveways, fences, pool fences, retaining walls, air conditioning, hot water systems, security doors and grills.

There is an anti-avoidance rule aimed at labour-only structuring. The Commission states that “under Queensland law you cannot avoid paying the premium by contracting to provide ‘labour only’”, and that the cost of the supplied items must still be added to the installation cost when calculating insurable value.

Premium tables are published by the Commission and are banded rather than a flat percentage, so the number cannot reliably be estimated by applying a rate. As an indication of scale, the Commission’s own published worked example puts the premium on an insurable value of $221,150 at $2,395.70. That is the regulator’s example on a single contract, not a rate to extrapolate across a multi-unit scheme. Most developers ask the head contractor for the actual premium figure at tender and carry it as a line in total development cost, rather than assuming it sits inside the builder’s preliminaries.

On timing, section 68B sets the rule:

“(2) The licensed contractor must collect from the consumer, and pay to the commission, the appropriate insurance premium before the first of the following to happen— (a) 10 business days elapse from the day the contract was entered into; (b) the residential construction work starts. Penalty—Maximum penalty—100 penalty units. (3) A licensed contractor who is to carry out residential construction work that is speculative residential construction work must pay the appropriate insurance premium for the work before the work starts.”

Cover then commences on the earliest of the date the premium is paid, the date the contract is signed, or the date work starts. The cashflow point for a developer is that the premium falls due very early in the programme, ahead of most construction drawdowns, which is worth reflecting in your development cashflow rather than smoothing it across the build.

Which clock runs out first when defects appear?

Three separate limitation periods run on Queensland building defects, they start at different moments, and the shortest one is the one most often missed.

The scheme’s cover period. Work is covered for 6 years and 6 months from the earliest of the premium being paid, the contract being entered into, or work starting. The Commission notes the period “may be extended where the work takes longer than 6 months to complete”. Within that, claim windows are short. Structural defects are covered if the owner becomes aware of them within the 6 years and 6 months and claims “within 3 months after the day you first become aware of the structural defect”. Non-structural defects are covered only if the owner becomes aware of them “within 6 months after the day the work is substantially complete” and claims “within 7 months after the day the work is substantially complete”. Non-completion claims require the contract to end within 2 years and the claim to be lodged within 3 months after the contract ends.

The regulator’s rectification power. A direction to rectify cannot generally be given more than 6 years and 6 months after the building work was completed or left incomplete, unless the tribunal is satisfied on application by the Commission that there is justification. Separately, the Commission publishes complaint lodgement windows on its lodge a defective work complaint page, and these are shorter again, with structural complaints generally to be lodged within 12 months of noticing the defect and non-structural complaints tied to a short window after completion. Check the current figures on the page before relying on them.

The general limitation period. Section 10 of the Limitation of Actions Act 1974 (Qld) provides a 6 year period for actions founded on simple contract or on tort where the damages claimed do not include personal injury damages, running from the date the cause of action arose. When a building defect cause of action arises is a contested question that turns on the facts, and it is one to put to your lawyer rather than assume.

For a developer the practical shape of this is that non-structural defects fall out of the scheme within months of practical completion, while your purchasers are still moving in and reporting snags. The defects liability period in your building contract, the timing of your final inspections, and how quickly the body corporate is stood up and briefed all interact with these dates. Whether the Standards and Tolerances Guide treats a given item as a defect at all is a separate question again, and the Commission publishes it as the first reference point for standards and tolerances.

Can the Commission direct a developer to rectify defective work?

Generally no, and that is less comforting than it sounds.

Section 72 of the Act empowers the Commission to direct the person who carried out the building work to rectify defective or incomplete work within a stated period. In deciding whether to give a direction, the Commission may take into account all the circumstances it considers reasonably relevant and is not confined to the terms of the contract or its warranties. Section 72A deals with the powers and limitations of directions, and section 74 sets out the defences for failing to comply. The Commission’s own direction to rectify page describes the process.

Because the direction goes to the person who carried out the work, a developer that engaged a licensed head contractor is not usually the recipient. But the developer owns the asset the direction is about, carries the holding costs while it is being resolved, and is the party the purchasers or the body corporate will look to. A direction issued to a contractor that has since been wound up is worth very little.

There is one definition every Queensland developer should read in full, because it is not limited by its terms to the licensed contractor. Section 67AB defines tier 1 defective work:

“Tier 1 defective work means grossly defective building work that— (a) falls below the standard reasonably expected of a licensed contractor for the type of building work; and (b) either— (i) adversely affects the structural performance of a building to the extent that a person could not reasonably be expected to use the building for the purpose for which it was, or is being, erected or constructed; or (ii) is likely to cause the death of, or grievous bodily harm to, a person.”

The same section defines what it means to carry out that work:

“Carry out tier 1 defective work means— (a) carry out tier 1 defective work personally; or (b) directly or indirectly, cause tier 1 defective work to be carried out; or (c) provide advisory, administrative, management or supervisory services for carrying out tier 1 defective work.”

Limbs (b) and (c) are not on their face confined to the licensed contractor. A developer that directs how work is done, or that provides management or supervisory services on site, may sit closer to that definition than one that does not. Whether it applies in any given case is a legal question, and a live one for developers running hands-on delivery models or in-house project management. The consequences attach to the ability to hold a licence rather than to the developer entity directly, but the reputational and practical fallout is not so neatly confined. It is worth a specific conversation with your lawyer about how your delivery model is documented, particularly where the same people sit across the developer entity and a related building entity. Where the development manager and project manager roles sit with the same person, who directed what tends to be harder to reconstruct after the fact.

Do project trust accounts apply to your project?

For most private developers, the answer at present is that a project trust is the head contractor’s obligation, not yours, but a retention trust may well be yours.

The thresholds under the Building Industry Fairness (Security of Payment) Act 2017 (Qld) have applied since 1 January 2022 and are published on the Commission’s trust account rollout page. Queensland State Government and Hospital and Health Service contracts are caught at $1 million or more excluding GST. State authorities, local governments and private entities and individuals are caught at $10 million or more excluding GST.

The further phases that would have brought private projects down to $3 million from 1 March 2025 and $1 million from 1 October 2025 were paused as part of the Queensland Government’s building regulation reform programme. The framework below $10 million has not been switched on. Treat that as the current position rather than a permanent one.

Where a project trust is required, it is the head contractor that must open it, at an approved financial institution within 20 business days after entering the first subcontract, with the Commission notified within five business days. The Commission’s guidance on when you need a trust account puts the developer’s position directly: where the developer is the highest party in the building contract chain, the builder as head contractor assesses whether a project trust is needed.

The retention trust is different, and it does reach private principals. The Commission’s rollout page lists the contracting parties for retention trust accounts as “head contractors and private sector principals where a project trust account is required for the head contract”, with Commonwealth, Queensland Government, state authority and local government contracting parties exempt. So a private developer on a head contract at or above the $10 million threshold that withholds cash retention from its builder would generally need to hold that retention in a retention trust account in its own name. Retention held as an unconditional undertaking rather than cash sits outside the requirement, which is one reason the form of security is worth settling early rather than at contract execution.

Three mechanics worth knowing before you assume you are outside the framework. Multiple contracts between the same parties on the same or adjacent sites are assessed as a single contract, so a staged scheme let in tranches to one builder may aggregate. A contract can be pulled into the framework by variation, but only where the amended price is at least 30 per cent above the original price and the other criteria are met. And there is an exemption for short term contracts where the period from the trigger date to expected practical completion is less than 90 days, along with exemptions for small-scale residential construction work, maintenance-only contracts and contracts solely for professional design, advisory or contract administration work.

The Commission’s guidance page on when a trust account is needed carries an older review date than the 2024 amendments to the Act, so the exemption list is worth confirming against the current legislation for a specific project. Security structure, retention levels and the form of any bank guarantee also interact with the payment terms you negotiate under a guaranteed maximum price contract, so it is a conversation for contract drafting rather than for administration.

How does Queensland compare with the other states?

Queensland’s $3,300 threshold is well below the equivalent trigger elsewhere, which means a modest Queensland residential project can sit inside a statutory warranty scheme where a comparable project in another state would not.

In New South Wales the equivalent is Home Building Compensation cover, with its own thresholds, exemptions and builder eligibility limits, covered in detail in our guide to Home Warranty Insurance in New South Wales. Victoria has just changed: Home Warranty replaced Domestic Building Insurance from 1 July 2026, applying to domestic building projects up to 3 storeys valued at more than $20,000, with maximum cover of $400,000 and the Building and Plumbing Commission as the only provider from that date.

The common thread across the eastern states is a storey limit at or around three storeys, above which the statutory schemes do not reach. What sits below that line, what triggers it, and what a purchaser actually receives all differ by jurisdiction. A developer running a pipeline across borders should assume the position is different in each and check it per project rather than porting an assumption across a state line.

New Zealand has no directly equivalent statutory home warranty scheme, so the comparison does not carry over.

What may change next

The Queensland Government’s building regulation reform programme is running in four tranches, and two of them are already law.

The third tranche was delivered through the Queensland Building and Construction Commission and Other Legislation Amendment Act 2025, which the government states was passed on 20 November 2025, received assent on 24 November 2025, and commenced on 1 February 2026, covering the digitisation and modernisation of Commission processes.

The fourth tranche is in progress and is directly relevant to everything above. The government’s published scope includes “reviewing licensing thresholds and improving consistency across all QBCC licensees” and “reviewing the insurance threshold, cover amount and timeframes of the Queensland Home Warranty Scheme”, alongside a consistent approach to future National Construction Code implementation timeframes, a Queensland Housing Code, and further reduction of trust account administrative burden.

In practical terms, the $3,300 threshold, the $200,000 cover limit and the claim timeframes are all on the table. None of them has changed at the time of writing. For a scheme that will settle in two or three years, the position at settlement may not be the position at contract, and the reform page is the place to track it.

What to ask your lawyer, your accountant and your builder

For your construction lawyer

• On this specific scheme, does the developer entity need a contractor’s licence, and if we are relying on the consumer exemption in schedule 1A section 6, what exactly are we doing that could be characterised as providing building work services?
• Our project is residential, so the head contract exemption in schedule 1A section 8 does not apply on its terms. What is our licensing position and what changes it?
• If a subcontractor turns out to be unlicensed for part of the scope, what happens to our position under schedule 1A section 8(3), and what practical protections should be in the head contract to manage that?
• Given our design, how many storeys does the building have for the purposes of the home warranty three storey test, and how confident are you in that answer if the parking layout changes?
• If we are outside the scheme, what should the contract of sale disclose to purchasers about the absence of home warranty cover, and what is our exposure if it does not?
• The scheme will not cover us for non-completion or defects during construction. What security package, retention level and step-in rights should we be negotiating instead?
• Given our delivery model and how our people are involved on site, is there any prospect of the developer entity or its people falling within the definition of carrying out tier 1 defective work under section 67AB, and how should our documentation be structured?
• Are we a private sector principal required to hold cash retention in a retention trust, and would using unconditional undertakings instead change that answer?
• When does a cause of action for building defects accrue on a project like this, and how does that interact with the defects liability period we are negotiating?

For your accountant

• Does the head contractor’s declared financial category leave real headroom above our contract sum, and what would their revenue position look like if they won two more projects our size?
• How should the home warranty premium be treated for accounting and tax purposes in this structure, and does it sit as a development cost or elsewhere?
• If we hold retention in a retention trust, what reporting and record-keeping does that create for us?
• If our structure involves a trustee entity, which entity would need to hold any licence, and does that change how we should be contracting?

For your builder, during tender

• What is your licence class, and does it cover this building class, this construction type and this storey count as currently designed?
• What is your current financial category, what revenue have you already committed for this financial year, and how much headroom does that leave?
• Have you been the subject of a direction to rectify in the last five years, and are any current?
• What is the actual home warranty premium for this contract, and is it inside or outside your tender price?
• Which prior licensed companies have your directors been involved with in the last ten years, and can you talk us through what happened to each?
• Will this contract require a project trust, and if so, when will it be opened and how will we be notified?