The Lacrosse, Melbourne

Victoria will introduce a “world-first” financial mechanism to help residential building owners pay for urgent rectification works caused by the installation of non-conforming and non-compliant flammable cladding on high-rise apartment buildings in the state.

Planning minister Richard Wynne on Thursday said changes to the Local Government Act would introduce “Cladding Rectification Agreements”, or CRAs, which would be similar to the Environmental Upgrade Agreement (EUA) model, which allows owners to upgrade buildings and pay off the costs via council rates.

Under the model, owners or owners corporations would enter into an arrangement with lenders and a local council, accessing a long-term low-interest loan to pay for the building works, which would then be paid off by an increase in council rates over a minimum period of 10 years.

Costs would be transferred to new owners if the property were sold.

“This scheme is the first of its kind anywhere in the world and offers owners the cheapest and most efficient way of removing dangerous cladding from their buildings,” Mr Wynne said.

He said as well as ensuring properties became compliant with building laws, the agreements would allow cladding to be removed quickly without affecting property prices.

However, according to Strata Communication Association Victoria general manager Rob Beck, while the agreements would provide a level of “certainty and transparency”, they would not stop prices from being affected, as disclosures would need to be made indicating the agreements and the higher council rates needing to be paid.

And while the proposal was a world first and “a step in the right direction”, it did not address the fundamental issue of who should ultimately be responsible for paying for rectification works.

“Fundamentally, to get a fair outcome out of this, the cost shouldn’t rest solely with the owners,” he told The Fifth Estate. 

We’re thankful to see some action happening, [but] we don’t see this as being an end game.”

The change to the Act to allow CRAs was one of the key recommendations of the Victorian Cladding Taskforce, which was established last year. It comes as the Victorian Building Authority finalises its investigations into 1369 planning and building permits, which has already seen 100 building orders issued demanding rectification work.

The Fifth Estate recently reported that strata apartment owners were facing serious financial hardship from replacement costs.

Flammable cladding first emerged as a serious issue in 2014 when a fire in the Lacrosse apartment building in Docklands rapidly spread up the facade of the building.

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Following the Grenfell fire in London in 2017, which killed 72 people, Australian state governments promised to act on the issue.

3 replies on “Victoria turns to EUA model to rectify flammable cladding crisis”

  1. @ Anne Paten, that a good analysis of the issues with the system, the LU Simon courtcase is a considerable setback for consumer/property owner rights, however I wonder if there is still room within this for a class action against developers and builders who have breached the law, in many cases knowingly — cladding is certified by the supplier and certification checked by the builder, often non-compliant cladding is used as a cost-saving measure, (compliant cladding is typically more expensive); For example, if I live in a building identified as having non-compliant cladding, if it was constructed recently, I may have access to specification documents which reveal the type of cladding used, etc. which would be very useful in launching a civil suit.
    The government/MFB will not reveal the 5000+ buildings identified, apparently due to fears of lost property value and deliberate fires — In the absence of information, as a buyer I would avoid any building that has aluminium cladding, (especially if its constructed prior to the release of new compliant cladding this year).

  2. There are no consumer rights in this state. I pity those who have purchased one of these apartments and have been saddled with massive debt. The builders/developers who built these apartments need to be held accountable and pay for the massive rectification bill associated with non-compliant cladding. The regulator was well aware of this issue and failed to take appropriate action until the Grenfell Tower disaster. The VBA is complicit, ignoring the problem and overseeing the building surveyors who signed off on the use of non-compliant cladding. I would never consider buying an apartment in this country. Doing so would be walking down the road to financial ruin.

  3. Once again this Government (directed by the Business-Bureaucracy Band) has put the blame and financial pain on the innocent owners. There is no commitment to clean up the industry, no thought of making builders/developers who ignored building regulations (combustible cladding has been banned for years) responsible for rectification as they should be, and no punishment ever to be metered out.

    Worse, it was Wynne’s ‘laws’ of 2016 which paved the way for the LU Simon victory in the Supreme Court in December 2017. Purposely devised to get the cladding builder “out of trouble”, it enabled LU Simon the “get-out-of-jail-free” card. It set the precedent for all others involved in the cladding debacle to likewise be ‘free of any blame’. It also well provided the same ‘safeguard’ for all builders no matter the major defects and disregard for safety and confirmed that ‘compliance’ with building laws is not required. It’s a joke, but in no way amusing to the victims betrayed by Government. In effect, Wynne’s ‘laws’ endorsed “business as usual”, authorised ‘non-compliance’ and sent the strong message that all recalcitrant crooks are ‘untouchable’. So they get off scot-free whilst Australia’s ordinary mums and dads are saddled with the damage and mega scale debt. Many people will go under as the casualties of the Greatest Australian Disaster in our history. Simply because our governments collectively agreed to continue to the ‘systemic failure’. The obvious question is: “Why?” The answer lies in who really runs government and the rewards for the pollies prepared to play the role of string puppets.

    In Victoria alone the bill for flammable cladding is likely to be between $50 and $200 billion. And today when it is nearly four years since the Lacrosse fire in Melbourne, prospective buyers cannot find out which buildings have this dangerous, non-compliant cladding. Minister Wynne and the VBA will NOT release the list of buildings known to have the fiery material to the public, and so a new group of victims are now being drawn into the web, conned by a lack of information into financial loss and misery. Even under FOI, one cannot access the basic ‘Buyer Beware’ information. Hence, one cannot protect oneself against the government policy of ‘legalised fraud’ which underpins protecting the crooks and selling out consumers. This despite Australia being a signatory to ‘Consumer Rights’ via Consumers International, and despite the ‘Right to Safety’ and the ‘Right to be Informed’ number 2 and 3 of our supposed 8 basic ‘Consumer Rights’. This shameful man-made consumer disaster is set to get bigger, to increase the number of people already damaged from hundreds of thousands (or possibly millions) to mega millions. This official abusive strategy of denying basic information signals that we are on a very slippery slope. It is one of two key elements in Margaret Atwood’s 1985 dystopian novel ‘The Handmaid’s Tale’ and sends a BIG warning to all Australians begging a call to action. Wake up Australia!

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