Lessons from Opal Tower: What property owners in Queensland and Victoria should know

NSW Government’s stance on the Opal Tower incident – the story so far header image

Lessons from Opal Tower: What property owners in Queensland and Victoria should know

Compliance and safety is a huge issue within the building and construction industry, with country-wide implications

So, there is much debate across Australian states regarding the gaps in regulation and how they should be addressed. Here’s what Victoria and Queensland property owners can learn from Sydney’s Opal Tower.

In the heels of the Opal Tower incident in Sydney, there is an increasing public demand for legislation changes around building compliance and safety, especially to regulate strata managed properties. To prevent such mishaps in the future, the New South Wales government has authorised various agencies to carry out investigations to get to the root of the problem, find the factors that could have caused the damage and identify non-compliant parties.

In response the ‘Building confidence‘ report by Professor Peter Shergold AC and Bronwyn Weir, the NSW government plans to put in certain key measures to regulate the building and construction industry as prescribed in the Building Code of Australia.

In the meantime, other Australian states are also closely monitoring the situation and gearing up to tighten their regulations. Here’s what property owners in Queensland and Victoria should know:

  1. Lessons from the Opal Tower for Victoria
  2. Lessons from the Opal Tower for Queensland
  3. What should you do when state laws are in flux?


Lessons from the Opal Tower for Victoria

Current legislation regarding compliance

In terms of regulating the building and construction industry in the state, there is a lot of ground to be covered. Victoria state laws require compliance from builders and developers whenever there are new plans for construction or renovation. Sadly, most of these mandates fall through the cracks. Compliance failures and ineffective regulations are highlighted in accidents from building defects when it is usually too late.

The Victoria government has proposed the new Owners Corporations Regulations 2018 to replace the Owners Corporations Regulations 2007, which expired on 3 December 2018. The new regulations aim to enforce the information and requirements for the Owners Corporations Act 2006.


Cladding reforms

There is some legislation in place for cladding currently. In 2015, the multi-storied Lacrosse building in Melbourne caught fire due to inflammable cladding. Following this incident, there has been a spate of change in the cladding laws across the states of NSW, Victoria and New South Wales.

They all agree that Aluminium Composite Panels (ACPs) are dangerous and therefore need to be banned from use. Building owners must immediately replace this kind of cladding with safer alternatives and ensure fire safety measures are put in place.

The 2017 report by Victorian Cladding Taskforce highlighted that more than 1400 Victorian buildings could have potentially unsafe cladding. Additionally, an audit by the Department of Health and Human Services revealed more than 1000 publicly-owned buildings and at least eight hospitals that need their cladding to be replaced due to non-compliance. Both these bodies claim that accidents from building defects are usually a result of using sub-standard building materials and a lack of tighter regulations around compliance.


Tripartite loans to enable cladding replacement

To ease the way financially for property owners who might have to tear down their buildings altogether to instate cladding replacement, Victoria government is offering tripartite loans. This scheme relies on the discretion of the local councils who are required to collect the financial details of property owners and judge their eligibility for a loan.

However, the matter of concern is that most of the councils are currently not in agreement to the government’s loan scheme and therefore unwilling to take action. Moreover, the scheme does not guarantee a lower interest rate on the loan. Hence, the tripartite loans may not be what it’s cut out to be as a relief for property owners.


Insurance and warranty covers

NSW laws have certain pre-emptive provisions such as the 2% building defects bond scheme to keep non-compliance in check from developers and builders to a certain extent. However, Victoria does not have any such precautionary measures in place. So, developers have no such obligation to secure the building defect-related costs prior to construction.

By state law, builders do need to provide Domestic Building Insurance to property owners. However, this warranty may not be enough. They only need to provide this insurance when the cost of building work under the contract is more than $16,000 which includes all labour and material costs. So, property owners have limited claim to having warranty or compensation for building defect right from the beginning.

Information PICA Group tip icon

PICA Group tip
The good news is, your residential owners’ corporation can bring a claim against a builder for defective building works within 6 years of completion of the work. The Domestic Building Contracts Act allows owners corporations to take the help of Domestic Building Dispute Resolution Victoria (DBDRV), a dispute resolution body wherever necessary. Make sure to stay updated about the insurance policies taken by your owners corporation for any faulty plumbing or installations from third-party providers.


Lessons from the Opal Tower for Queensland

In the Sunshine state, things are looking more optimistic as the government has been taking certain proactive steps to ensure compliance within the building and construction industry.

The government conducted a comprehensive examination of the building and construction regulatory system in 2016 and introduced the Queensland Building Plan (QBP) the following year.

The idea was to tighten existing regulations around compliance and introduce necessary reforms. Moreover, the regulations empower the Queensland Building and Construction Commission (QBCC) to investigate and take disciplinary action against non-compliant building licensees.

This year, the Queensland government is all set make reforms around the independence of certifiers so that they are not unduly influenced by builders and developers. The QBP will strive to improve professional standards and ensure compliance of certifiers.

The QBCC can conduct regular audits to ensure any lapses in building and construction compliance are dealt with as early as possible so that Queenslanders safety is not compromised. In addition, the Government has enabled a Board of Engineers and Architects to conduct investigations into the professional conduct of those occupations and submit regular reports.

With respect to cladding regulations, there have been sturdier strides in the state.

In October 2018, the Building Regulation 2006 was amended to ensure cladding replacement was prioritised in buildings across the state. The new laws state that building owners must register their buildings and comply with the combustible cladding checklist. They must have the necessary certification to prove their buildings are fire-safe with regard to cladding.

Information PICA Group tip icon

PICA Group tip
As a building owner, if you find any structural and non-structural defects in your building, you can lodge a complaint with the QBCC within a maximum of 12 months of noticing these defects. You can choose to make these complaints anonymously if you wish to. A QBCC officer will then assess the situation, appoint an inspector to inspect the site in detail and direct the builder or contractor to rectify any defective building work. Here’s a fact sheet regarding dispute resolution process along with tips for contractors to stay compliant.


What should you do when state laws are in flux?

Changes in state laws can impact your property differently, so its a hard time for decisions. However, staying updated and compliant is always in your hands. Make sure to keep track of current affairs and how changes in state regulation can affect your property. Be aware of your strata property by-laws and building rules to understand your rights and responsibilities. Keep an eye on important deadlines to ensure your legal documentation is in place and certifications don’t lapse.

While the states continue to enforce compliance regulations with builders, developers, contractors, inspectors, certifiers, and law makers, the responsibility lies on building owners and residents as well to remain vigilant and ensure the safety of their property. The state protects the rights of building owners and residents, so strata building owners must take note of them and stay on their toes. Here is one of our recent articles highlighting who does what when it comes to ensuring compliance for building safety that may be of interest.


If you’d like to find out more on building compliance for your strata property, download your free Community Living guide. Or for a consultation to review your common property insurance by our CommunitySure insurance team, click here.

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