Combustible cladding - who foots the bill?

Combustible cladding - who foots the bill?

Combustible cladding is a major issue facing many body corporates and owners corporation committees so who is responsible for rectifying it? We explore.


Combustible cladding is a concern for the safety of residents - but also the astronomical costs to remedy it. Who exactly pays? Let’s take a closer look at the latest news.

In 2019 the Victorian government established Cladding Safety Victoria who were given $600 million to cover the costs of rectification costs on the buildings classified as the highest-risk in the state.

At time of publication some 200 building projects have commenced.

The list of buildings with combustible cladding is growing, but there has been no increase in government funding. Concerns now are that owners themselves will need to foot the bill. 

A Victorian government spokesperson told The New Daily “The Cladding Rectification program was funded to rectify the highest-risk buildings, and this is what it is doing.” 

“As part of major reforms to the building sector, the government has also appointed an expert panel, which will provide recommendations to the government to reform building approval process and better protect consumers.”

An anonymous owner of one such building told The New Daily the stress of living in an unsafe building was causing him sleepless nights.

And it’s no wonder as according to The Conversation, there are many costs associated with removing combustible cladding including:

  • special levies to cover the rectification costs
  • higher owners’ corporation fees
  • legal fees
  • increased insurance premiums
  • costs to fix other fire safety defects like sprinklers

On top of these costs is the risk of the property losing value, making selling difficult.

The issue discovered by many owners of buildings with combustible cladding, is that without government intervention, or being considered the highest risk out of some 700 buildings, owners are the ones left out of pocket.

This can cause stress to owners and owners corporation committees who are left in limbo, often unable to move out, rent to someone else, increase their borrowing power or fund the costs of the rectification works.

The Cladding Safety Victoria Bill from September 2020 also extended the time for homeowners to recover the costs of rectification works from 10 years to 12 years.

This is two additional years to pursue legal action against the builders responsible for installing the combustible cladding.

Although it does not help existing owners of combustible clad buildings, from February 1, 2021 many apartment buildings are now banned from using combustible products on the facade. Specifically they are banned from using an aluminium composite panels with a core of less than 93% inert material filler and all expanded polystyrene products in external insulation and rendered walls. 

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Date Published

16 July, 2021

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