Skip to main content

Update on cladding reform - Vic

July 15, 2019

The Victorian Government has announced today a number of measures to address the problems arising from the installation of non-compliant cladding on some multi-storey residential buildings. These measures are designed to help fund the rectification of buildings with high-risk cladding as identified by the auditing undertaken across the Melbourne metropolitan area.

A new authority, Cladding Safety Victoria, will be established to manage the funding of the rectification work and will have some involvement in the management of the rectification process. Information about how this authority will operate is available online here

Today’s announcement includes an initial commitment of $600 million to fund rectification work. Of this, $300 million will be funded directly by the Victorian government and the other $300 million will either be funded from a Commonwealth government contribution or increase to the building permit levy for certain building works.

The possible increase of the building permit levy is a concern, but the increases are not expected to be applicable to detached dwellings and low-rise townhouse projects. The increase would also not be applied to regional Victoria.

The increased building permit levy is expected to be imposed on future multi-storey residential projects and other projects valued over $800,000. Therefore home owners in future apartment buildings will be obligated to contribute to the rectification fund for unrelated existing buildings. This is not necessarily a good precedent.

Any increase in the building permit levy requires an amendment to the Building Act 1993 and therefore approval by the Victorian Parliament. It is understood that if the levy is increased the change would apply from January 2020.

The Victorian Government has also released a further report from the Victorian Cladding Taskforce which makes a number of recommendations about further reform of the building industry and further legislation changes to improve building quality and safety.

HIA will review this report in light of the significant amount of regulatory reform in the building industry in Victoria over the past three years and will continue to work with the Government on the implementation of any further reforms.

For further information contact Fiona Nield or Keith Ryan on 9280 8200.