Building cladding defects

Residential construction projects have been on the rise around the country over the past 10 years, with unit and apartment blocks becoming a common solution to house our growing populations. Unfortunately, this rise in opportunities has its downside: It has attracted its share of “phoenix” developers, who rise to complete a single project then close down. Rushed jobs, cut corners and poor standards have led to an increase in significant building defects. And with the offending companies already gone, it’s the apartment owners themselves that are having to pick up the tab.

A story broke in June this year of a 10-storey tower block that had to be evacuated after cracks in the building were discovered in crucial support beams as well as elsewhere. Latest reports from ABC News cite the repair bill as being in the order of $20 million, and residents still don’t know when they’ll be able to move back home.

In Victoria, cladding issues have been at the forefront of strata news since 2017, when hundreds of buildings were discovered as having been built using materials that not only failed to comply with current building regulations, but also were highly flammable. Victorian Premier Daniel Andrews last month announced $600 million to fund rectification works, but also called on the federal government to contribute. While the Morrison government has so far refused this request, Mr Andrews and Strata Community Australia made it a national issue at this month’s COAG meeting.

As well as assessing the extent of the problem, and providing advice on rectifying non-compliant cladding, the Victorian Cladding Taskforce has been working to recommend changes in the regulatory system. Strata Community Australia used COAG as an opportunity to applaud Mr Andrews’ approach, and encourage other state governments to follow his lead, as well as that taken by the British government following similar incidents.

Massive east coast law suits

Strata Community Australia cited the problem as affecting in the order of 10,000 buildings in Victoria, New South Wales, and Queensland. With a billion-dollar-plus repair bill, the issue has the potential to prompt some of the biggest class-action lawsuits in Australian history.

Should the federal government not contribute to Mr Andrews’ rectification package, the shortfall would be made up from increased building levies on projects worth more than $800,000. The Victorian government would also try to recover costs from negligent businesses.

Some advocates say even $600 million dollars won’t be enough, estimating the true costs in the billions of dollars. The Andrews’ government is targeting the highest risk buildings in its current package, meaning those in the medium- to low-risk profiles may miss out. Having said that, the Premier has not ruled out finding more resources in the future if it was in the interests of public safety.

What this means for apartment owners

The government is not releasing the list of high-risk buildings, citing potential terrorism threats. However, if you’re concerned about the risks to your own building, talk with your building manager and body corporate. You can also talk to your local Council  or state member.

If you’re considering buying into an apartment complex, be sure to get external and common areas that you’re concerned about included in your building inspections.

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