Are Deposits Safe? A Guide for New Zealanders Hiring a Tradie

You've found a tradie, agreed on the job, and then comes the question that makes a lot of homeowners hesitate: "Can you pay a deposit before we start?"

It's a completely normal request. But it's also the moment where a lot of things can go wrong — and where most of the horror stories you've read about begin. So, are deposits safe? The honest answer is: it depends entirely on how you pay them.

Why tradies ask for deposits

First, it helps to understand that deposits are usually legitimate and reasonable. A tradie asking for money up front generally isn't trying to pull a fast one. They're covering real costs:

• Materials. For a job with expensive supplies — a hot water cylinder, timber for a deck, tiles for a bathroom — the tradie may need thousands of dollars of materials before they've earned a cent.
• Commitment. A deposit confirms you're serious and lets them block out time and turn down other work.
• Cash flow. Small trade businesses often can't afford to fund a large job entirely out of their own pocket while they wait to be paid.

So a deposit request isn't a red flag on its own. What matters is the size of the deposit, and how the money is handled.

What's a reasonable deposit?

There's no single legal figure in New Zealand, but some rough guidance helps:

• Small jobs (a day or two): often no deposit, or a modest one to cover materials.
• Medium jobs: a deposit of 10–30% is common and reasonable.
• Large jobs with expensive materials: deposits can run higher, but should still be tied to actual upfront costs, not the total job.

Be cautious if someone asks for a very large chunk — say 50% or more — of a big job before any work has started, especially if they can't explain what the money is for. That doesn't automatically mean it's a scam, but it's worth asking questions.

The real risk: how you pay

Here's the thing most guides miss. The danger with deposits isn't usually the amount — it's the method. A bank transfer or cash deposit is gone the moment you send it. If the tradie never shows up, does a poor job, or disappears, your money has already left your account with nothing protecting it.

That's the trap. You're being asked to pay first and trust that the work will follow. And you're carrying 100% of the risk.

How to protect your deposit

You've got a few options, from least to most protective:

Get everything in writing

At a minimum, get a written quote that states the price, the scope, the deposit amount, and what it covers. This gives you something to point to if there's a dispute later. It won't get your money back on its own, but it's the foundation for everything else.

Never pay cash with no record

Cash feels simple, but it leaves you with no proof the payment ever happened. If you do pay a deposit, always use a traceable method and keep the record.

Pay the deposit into escrow

The strongest protection is to not hand the money over at all — at least, not directly. With escrow, your deposit goes into a protected trust account instead of straight into the tradie's pocket. The tradie can see the money is real and committed, so they're happy to start. But the funds aren't released until the agreed conditions are met.

This flips the risk. Instead of paying first and hoping, you're paying into a neutral account that protects both sides. If something goes wrong before the work starts, the money hasn't disappeared. This is exactly what escrow payments are built for, and we go deeper on deposits specifically in paying a deposit to a tradie safely.

Warning signs worth noticing

Most tradies are honest, hardworking people. But a few patterns are worth paying attention to when a deposit is involved:

• Pressure to pay quickly, in cash, or to a personal account with an urgent excuse.
• A deposit that's wildly out of proportion to the materials or job size.
• Reluctance to put the quote, scope, or deposit terms in writing.
• No verifiable business details, reviews, or history.
• A price that's dramatically lower than every other quote (a classic hook).

None of these alone proves anything, but several together should make you slow down.

What if it goes wrong anyway?

If you've paid a deposit and the work never happens or is seriously defective, you're not out of options. You can raise it with the tradie in writing, lodge a claim with the Disputes Tribunal for smaller amounts, or seek advice from Consumer Protection. But all of these are far harder once the money is already gone — which is exactly why protecting the deposit before you pay matters so much.

The bottom line

Deposits are a normal, reasonable part of hiring a tradie in New Zealand. They're not the problem. The problem is paying a deposit in a way that gives you zero protection if things go sideways.

Get the details in writing, keep the deposit proportionate to real upfront costs, and — most importantly — pay it into escrow rather than handing it over directly. That way you get the job started and keep your money protected until the work is actually underway.

If you're about to hire someone, you can pay safely with CASHBOX: your money is held on trust and only released when you confirm the work is done.