Victorian developers to help foot bill for dangerous cladding

The Victorian Government will commit $600 million to address the dangerous cladding crisis in a bid to keep Victorians safe, but developers will also be hit with higher building levies to help subsidise the program.

The Andrews Government will foot half of the $600 million bill, while the other funds will come from an increase in building permit levies for some developments. The changes will have the most impact on apartment projects valued upward of $2 million. The current levies on projects over $2 million are $2560, which are set to rise by more than 500 per cent to $16,840.

The increased levies are set to raise $300 million over five years after the Federal Government rejected requests from the Victorian Government to help subsidise the new program.

Dangerous cladding has been an issue in Victoria since the 2014 Lacrosse building in Docklands caught fire. The cladding caught alight when a cigarette burning on a balcony sparked a fire that caused damages of more than $11 million.

Up until this point, owners had been forced to deal with the dangerous cladding out of their own pocket. Effectively the Government will be helping to bail out those affected while getting current developers to help foot the bill.

The grants will fund rectification works on hundreds of buildings found to have high-risk cladding to make sure they’re safe and compliant with all building regulations. The program will be overseen by a new agency, Cladding Safety Victoria, which will manage funding and work with owners corporations.

The task force will be headed by former Victorian Premier Ted Baillieu and former Deputy Premier John Thwaites, who have worked with the Victorian Building Authority to identify 15 buildings that will have their cladding fixed first.

Work on these high-risk buildings was funded in the Victorian Budget 2019/20 and will begin in the coming weeks. Cladding Safety Victoria will also be contacting owners corporations and property owners shortly, starting with those whose buildings are at the greatest risk.

Despite opposition from those in the property sector, Premier Daniel Andrews was keen to put safety back on the agenda.

“This world-first program will fix the buildings most at risk and keep Victorians safe,” Mr Andrews said.

“Combustible cladding is a national problem and we want the Federal Government to be part of the solution here in Victoria.”

There has been growing unrest around the country after the Opal Tower saga that has put the building industry in focus in New South Wales and this is a move that will be put in place to help buyers and owners.

Minister for Planning Richard Wynne said the measures will help protect the public.

“This isn’t just about safety, it’s about fairness for people who bought apartments in good faith and were let down by dodgy builders or dangerous building products,” he said.

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.