6 things you need to know about owners corporation property cladding legislation in Victoria

6 things you need to know about owners corporation property cladding legislation in Victoria

One of the first global initiatives to combat combustible cladding, the Cladding Safety Victoria program offers a $600 million funding scheme

The cladding crisis has become a high-profile concern for those living in owners corporation properties. To help the community with cladding rectification works, the Victorian Government has introduced new owners corporation property cladding legislation and invested millions in state funding to support cladding safety initiatives.

1. Owners corporation property cladding legislation in Victoria

In response to discovering the flammability of certain types of cladding, new owners corporation property cladding legislation was introduced. The Victorian Government issued a ban on the use of cladding panels with polyethylene and expanded polystyrene (EPS) cores. This ban was introduced in the Building Amendment (Registration of Building Trades and Other Matters) Bill 2018.

2. The Cladding Safety Victoria (CSV) program

Following the ban, the Victorian government introduced the $600 million Cladding Safety Victoria (CSV) program, one of the first global initiatives to reduce the risks associated with combustible cladding on residential apartment buildings.

The program was made law with the Cladding Safety Victoria Bill 2020 (Vic) on 4 November 2020. It established CSV as an organisation that will administer cladding rectification across the state and details the rectification program stages.

This piece of owners corporation property cladding legislation also extended the limitation period for cladding building actions from 10 to 12 years. Extending the limitation period will help owners corporations to pursue legal action against builder and developers responsible for installing non-compliant cladding.

The extension will also help the state recoup funding relief that it provides to owners by entitling the state to bring legal proceedings to builders to cover the remediation costs.

3. The benefits of the CSV program

The CSV program is designed to speed up cladding rectification works, to improve apartment safety faster and support the construction industry through the COVID-19 economic downturn.

CSV collaborates with owners and owners corporations to help them rectify high-risk, non-compliant cladding. In line with owners corporation property cladding legislation, CSV provides financial support and guidance, and connects owners to registered and qualified professionals.

CSV assigns project managers to each high-risk cladding case to help owners:

• Source industry specialists
• Draw up a scope of work
• Oversee the tender process
• Supervise the site while works are underway.

4. How the audit program is going

As part of the CSV program introduced through new owners corporation property cladding legislation, the Victorian Building Authority (VBA) commenced a state-wide cladding audit. Since late 2017, over 2,200 buildings have been audited.

Based on audit results, buildings identified as high-risk are referred to CSV. While local councils continue to act as Municipal Building Surveyors (MBSs) for unaffected buildings, the VBA will assume MBS functions for the buildings identified as high-risk.

5. Funding and loans available for owners corporations

The latest owners corporation property cladding legislation had enabled CSV to provide funding for the rectification of external wall combustible cladding for some high-risk multi-unit residential building.

Eligible buildings will be prioritised based on audit results, risk to the community and readiness for rectification works. Eligibility is approved when a building has been:

• Identified as having combustible cladding via VBA audit and is considered high-risk
• Issued a Building Notice or Order for the combustible external cladding
• Referred to CSV by either the VBA or a local council.

Owners ineligible for direct funding for cladding rectification in accordance with owners corporation property clagging legislation may still receive assistance for managing out-of-pocket costs via the Victorian government’s loan scheme.

These loans are known as Cladding Rectification Agreements (CRAs). They are three-way voluntary agreements between an owner or owners corporation, a lender and a council to fund cladding rectification works.

Under a CRA, the lender loans funds to the owner or owners corporation, who then has to make loan repayments through the council rates system. This funding option offers an alternative to self-funding, securing a traditional owners corporation loan, refinancing an existing mortgage or taking out a personal loan.

The loan scheme was made possible by the Building Amendment (Registration of Building Trades and Other Matters) Bill 2018, which created the enabling framework within the Local Government Act 1989.

6. Owners corporation responsibilities

While CSV provides support in the form of guidance and funding to help owners corporations identify high-risk cladding and take remedial action, owners corporations are ultimately responsible for managing and rectifying issues raised through building orders and Building Notices. In this light, its’ extremely important to stay up to date with owners corporation property cladding legislation and ensure your owners corporation is taking remedial action where necessary.

Owners corporations also have broader safety obligations relating to their buildings. As part of this, owners are responsible for their building’s Essential Safety Measures (ESMs), which may reduce risks in instances of fire.

Owner fire safety responsibilities include ensuring that:

• Essential safety measures are maintained and can operate during an emergency
• Fire detection and alarm systems and fire hydrants are installed as necessary
• Fire doors are clear of obstructions, closed and unlocked at all times
• All building occupants know the building evacuation plan and fire safety procedures.

To learn more about your responsibilities as an owners corporation, refer to the Victorian Government’s guidance note for owners corporations involved in Cladding Rectification Program.

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