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Victorian cladding update

July 16, 2019

On the 16th of July 2019, the Victorian Government announced the establishment of “Cladding Safety Victoria” to fund and manage rectification works to remove non-complaint cladding.  

The announcement includes an initial commitment of $600 million to fund cladding 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 being sought or an increase to the building permit levy for certain building works. Whilst the possible increase of the building permit levy is a concern, 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 and requires legislation to be changed to do this. Home owners in future apartment buildings could therefore be obligated to contribute to the rectification fund for unrelated existing buildings. This is not necessarily a good precedent. Changes to the building permit levy would not be applied until January 2020 and HIA has stated that whilst the reform may assist with providing some certainty to the process, any raising of the levy will see an increase in costs for businesses and new apartment purchasers.

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