The single fastest way to lose money on a residential build is to hand it over too early. Once your cash is in the builder's account ahead of the work, your leverage is gone. The deposit and the payment schedule are the two clauses that decide whether you keep that leverage or give it away. Get them right and a struggling builder cannot drag you down with them. Get them wrong and you are funding someone else's overdraft with no recourse.
This is a guide to what a reasonable deposit actually looks like, what it is for, and how a properly staged schedule protects you from start to finish.
What a reasonable deposit looks like
In the South African residential market, a deposit of 10% of the contract value or less is normal. Many reputable builders ask for nothing upfront and take their first payment against mobilisation work already done. Anything above 10% is unusual and you should ask why. Above 20% is a hard red flag and you should treat it as a reason to walk, not a point to negotiate.
The logic is simple. A deposit above 20% means one of two things: either the builder cannot fund the start of your project from their own working capital, or they intend to use your money to finish someone else's job. Both are financial-distress signals. A builder who needs 30% or 40% of your contract before a brick is laid is telling you they are not solvent enough to carry your build, which is exactly the builder most likely to collapse mid-project and leave you with a half-finished shell and no money to appoint a replacement.
A deposit is not a measure of commitment. It is exposure. Every rand you pay ahead of verified work is a rand you might never see again.
What a deposit is actually for
A deposit exists to cover mobilisation: the genuine, upfront costs a builder carries before productive work begins. That means setting up site establishment (boundary hoarding, temporary ablutions, water and power connections), securing the site, and lodging the documentation that has to be in place before the first stage payment can be certified.
A deposit is not there to fund the builder's general cash flow. It is not a float for buying materials for several projects at once, and it is not a cushion against the builder's existing debts. A builder who frames the deposit as "so I can buy your materials upfront" is usually describing a cash-flow problem, not a procurement plan. Material suppliers extend 30-day accounts to established builders precisely so that materials can be ordered against work, not paid for in advance out of your pocket.
Deposit versus the mobilisation stage payment
It helps to separate two things that often get blurred.
- A deposit in the loose sense is any sum paid before work starts. In a well-structured contract it should be small or zero.
- A mobilisation stage payment is the first certified payment in the schedule below: 10% of the contract value, released only once the agreement is signed, the NHBRC enrolment certificate is in hand, the site has been handed over, and the performance guarantee is lodged.
The difference matters. A mobilisation payment is tied to defined deliverables you can verify. A bare deposit is tied to nothing but trust. Where you can, fold the deposit into the mobilisation stage so that even your first payment buys you something concrete: a signed contract, an enrolment number, and a lodged guarantee.
Why stage payments protect you
Stage payments tie money to verified, inspected work. Instead of paying against promises or against a calendar, you pay against physical progress that has been built, inspected, and in several cases signed off by an engineer or the local authority. If the builder walks off site at stage 4, you have paid only for stages 1 to 4, all of which are standing in front of you. The unpaid balance is your budget to finish the job.
This is the whole point of a staged schedule: it keeps the value of completed-but-unpaid work roughly in step with the cash you have already released, so you are never badly out of pocket relative to what is physically on the ground.
The JBCC-aligned stage-payment schedule
The schedule below follows the JBCC Guide to Completion and Payment (Edition 6.2). These nine stages and their percentages are the spine of a fair residential payment plan. They sum to 100%. Do not accept a schedule that front-loads the early stages or invents a different split.
| # | Stage | % | Trigger (when it is earned) | Homeowner watch-out |
|---|---|---|---|---|
| 01 | Mobilisation | 10% | Signed agreement, NHBRC enrolment certificate, site handover, performance guarantee lodged. | Refuse to pay mobilisation against an unsigned contract. Insist on the NHBRC enrolment number. |
| 02 | Foundations & ground floor slab | 15% | Excavation, footings, foundation walls and ground-floor surface bed cast and inspected. | Engineer to sign off foundations before backfill. Don't pay against a covered foundation. |
| 03 | Brickwork to wall plate | 20% | All external and internal walls up to roof level, lintels in place. | Check coursing, DPC at correct level, lintel bearing on both ends. |
| 04 | Roof structure & cover | 15% | Trusses up, roof covered and waterproofed, fascias and gutters fitted. | Engineer certificate for trusses. Pull a tile sample to confirm spec. |
| 05 | Plastering, screeds & first fix | 12% | Internal plaster, screeds, electrical and plumbing first fix complete. | First-fix plumbing & electrical inspections logged with the local authority. |
| 06 | Joinery, tiling & second fix | 13% | Doors, windows, ceilings, tiling, kitchen and bathroom carcasses installed. | Insist on a snag walk-through at this stage. Fixes are cheaper now than after handover. |
| 07 | Finishes & paint | 8% | Painting, final electrical and plumbing fix, sanitaryware connected, appliances installed. | Match paint, taps and PC items against the contract schedule line by line. |
| 08 | Practical completion | 5% | Snag list closed, occupation certificate issued, keys handed over. | Retain 5% for the 90-day defects period. Half of retention released at practical completion. |
| 09 | Final completion (90 days) | 2% | All defects resolved, as-builts handed over, NHBRC enrolment certificate filed. | Don't release final retention until you have written confirmation of NHBRC enrolment. |
Read the schedule as a sequence of inspections, not a sequence of payments. Each percentage is earned by passing a checkpoint, not by the passage of time. The early structural stages (foundations, brickwork, roof) carry the largest weight because they represent the largest tranches of irreversible work, and each one is gated behind an engineer's sign-off or a local-authority inspection. That gating is what keeps your money honest.
Retention: the last lever you keep
The schedule above carries retention into its final two stages, and it deserves its own explanation because it is the part homeowners most often give away.
Retention is 5% of the contract value, held back rather than paid as work proceeds. Half is released at practical completion (stage 08, when the home is fit to occupy and the occupation certificate is in hand), and the remaining half is released only after the 90-day defects period has run (stage 09), once any defects that surfaced have been put right.
Retention is your warranty enforcement mechanism. The 90 days exist because some defects (a leaking valley, a hairline crack, a door that swells, a damp patch) only appear after the building has been lived in and rained on. A builder who pushes you to "just sign the release" at handover is asking you to surrender the one financial reason they have to come back. Hold the line. Do not release the final retention until the period is up, you have walked the building, and you have written confirmation that the NHBRC enrolment has been filed.
Performance guarantees and bank confirmation
A staged schedule is stronger still when it sits on top of a proper security clause. JBCC offers a variable construction guarantee of 10% reducing to 5% at practical completion, issued by a bank or an insurer. Demand that, not a personal cheque and not a cash deposit. A guarantee is money a third party (the bank) will pay you if the builder defaults, which is worth far more to you than a deposit you have already handed over and cannot claw back.
Alongside the guarantee, ask for a bank confirmation letter in the company's name before you sign. Cash flow is the leading cause of contractor failure mid-build, and a builder who can produce a guarantee and a bank confirmation is a builder whose finances are in order. A builder who can produce neither, and who instead needs a large deposit to get going, has answered the question for you.
How to refuse over-front-loading
Over-front-loading is when a builder weights the schedule so that the early payments exceed the value of early work. A schedule that bills 40% by the end of foundations, or that asks for a large mobilisation payment "to cover materials", has shifted your risk forward in time. Refuse it on three grounds, in writing:
- Payments must match the JBCC stage percentages. Hand them the table above and ask them to map their schedule onto it.
- Every payment must be gated by an inspection or sign-off, named in the contract, before the funds are released.
- No payment is due against covered or uninspected work. If the engineer has not signed off the foundations, the foundation stage is not earned, full stop.
A builder working in good faith will accept this without friction, because it is simply the industry-standard schedule they already know. Resistance is the signal. A refusal to work to a staged schedule is a refusal of accountability. It tells you the builder wants your money before they have earned it and does not want their work checked before they are paid for it. There is no innocent version of that position on a residential build.
The cash-off-record red flag: walk away today
If a builder asks for cash off the record, whether framed as a VAT discount, a "cash price", or a way to keep the deposit simple, walk away. Today.
A registered builder cannot legally refuse VAT, and an unregistered one cannot legally charge it. Either way the offer is fraud, and the only person left exposed is you: no invoice, no proof of payment, no enforceable contract, and no standing to claim against the NHBRC warranty or to pursue the builder for defects. Cash off-record is not a saving. It is the deliberate removal of every paper trail you would need to protect yourself later.
Use the written schedule to protect yourself in a dispute
A written, signed payment schedule is not just a payment plan. It is evidence. When a dispute lands, the schedule is the document that proves what was agreed, what was due at each stage, and what each payment was for. A builder who has been overpaid relative to the schedule cannot credibly claim they were owed more. A builder who walked off at stage 5 cannot claim entitlement to stage 6 money. The schedule fixes the facts before emotions and selective memory take over.
Keep three things on file from the start: the signed schedule itself, a dated record of every payment tied to the stage it cleared, and the inspection or sign-off (engineer certificate, local-authority log, snag list) that triggered each release. Those three documents together are what turn a "he said, she said" into a clean account that a court, an adjudicator, or the NHBRC can read in five minutes.
Putting it to work
You do not have to draft any of this from a blank page. Build your schedule with the payment schedule tool, run your builder against the red-flag checklist before you sign anything, and make sure your contract carries these terms properly by reading the JBCC contract annotated. If you are weighing a builder's own document against the industry standard, JBCC vs a builder's quote shows you what a one-page quote leaves out. And if you are still at the appointment stage, how to hire a turnkey builder walks you through vetting the builder before the first rand changes hands.
A deposit of 10% or less, a staged schedule that ties money to inspected work, retention held to the end of the defects period, and a bank-backed guarantee behind it all. Those four things are the difference between funding a home and funding a builder's cash-flow gap. Insist on every one of them in writing, and walk from anyone who will not.