Building cladding – latest developments in Victoria, NSW, and Queensland

Several States have started taking action to address the widespread use of flammable building cladding in high-rise constructions following widely reported building fires both locally and overseas (such as the Grenfell Tower fire in London).

Victoria: the Building Amendment (Registration of Building Trades and Other Matters) Bill 2018

In Victoria, following an effective ban on the use of aluminium composite panels and expanded polystyrene products as external cladding on multi-storey buildings in March 2018, the Building Amendment (Registration of Building Trades and Other Matters) Bill 2018 (Vic) now proposes to introduce the following further measures to deal with dangerous combustible building cladding:

• Amendments to the Building Act 1993 (Vic) will grant the Minister for Planning the power to prohibit the use of high risk cladding products if they present a serious risk to human life or property. The second reading speech for the Bill indicates that aluminium composite panels with a polyethylene core and expanded polystyrene cladding are likely to be banned. If this reform is passed, under the Building Act, builders who knowingly contravene these prohibitions will face a fine of up to $96,714 or 5 years' imprisonment or both for natural persons, or a fine of up to $483,570 for bodies corporate.
• Amendments to the Local Government Act 1989 (Vic) will introduce "cladding rectification agreements" (CRAs) which may be entered into between councils, owners or owners corporations, lenders and others to facilitate access to affordable loans for owners or owners corporations to finance the rectification of non-compliant cladding. It is proposed that under a CRA, the lender will advance funds to the owner or owners corporation to undertake cladding rectification works and the council will levy a "cladding rectification charge" on the affected property, with proceeds of that charge to go towards repayment of the loan, interest and council's administrative charges. It is intended that a cladding rectification charge will be repaid in equal instalments over at least 10 years to reduce the burden of repayment on owners. Importantly, it is proposed that a cladding rectification charge will run with the affected property and will be passed to subsequent owners. Councils will not be obliged to enter into a CRA and, where an owners corporation is involved, 75% of members must vote in favour of entering into a CRA.

NSW: the Building Products (Safety) Act 2017 and Environmental Planning and Assessment Amendment (Identification of Buildings with Combustible Cladding) Regulation 2018 (NSW)

In NSW, on 10 August 2018, the Commissioner for Fair Trading issued a Building Product Use Ban on aluminium composite panels under the Building Products (Safety) Act 2017 (NSW). The ban commenced on 15 August 2018 and prohibits the use of such panels as external cladding if they have a core comprised of greater than 30% polyethylene. The ban now brings NSW into line with similar bans in Victoria and Queensland.

The ban applies to specified classes of buildings, including residential, office, retail, industrial and public buildings with more than specified numbers of storeys. Exceptions will apply if the cladding is able to pass combustible testing. Importantly, the ban has retrospective effect, but guidance notes issued by the Commissioner indicate that this does not mean that all affected buildings are automatically required to be rectified. Existing buildings which use the prohibited cladding will become "affected buildings" and the Commissioner may issue an affected building notice for that building. A local council or other enforcement authority may then issue a building product rectification order for the affected building, which may require the building owner to eliminate or minimise the safety risk posed by the cladding.

The Conveyancing (Sale of Land) Regulation 2017 requires a vendor to disclose in a contract for sale any building product rectification order that has not been fully complied with and any affected building notices that are in force.

Separately, the Environmental Planning and Assessment Amendment (Identification of Buildings with Combustible Cladding) Regulation 2018 (NSW) will commence on 22 October 2018. This Regulation will require owners of residential apartment buildings, hotels, motels, boarding houses, student accommodation, aged care facilities, hospitals or buildings used for public assembly (eg. theatres, cinemas, schools and churches) to register those buildings online with the NSW Government if they have external combustible cladding made up of metal composite panels (including products that consist of aluminium, zine or copper), or insulated cladding systems (including those comprising polystyrene, polyurethane or polyisocyanurate). These categories of cladding products include the products banned on 15 August 2018 by the above Building Product Use Ban.

For buildings occupied before 22 October 2018, registration must occur by 22 February 2019. In any other case, registration must occur within four months after the building is first occupied.

NSW owners of buildings with external combustible cladding should take action and get prepared now because they will have immediate obligations under the Environmental Planning and Assessment Amendment (Identification of Buildings with External Combustible Cladding) Regulation 2018 (NSW) once it commences on 22 October 2018.

Queensland: the Building and Other Legislation (Cladding) Amendment Regulation 2018

In Queensland, the Building and Other Legislation (Cladding) Amendment Regulation 2018 (Qld) comes into force on 1 October 2018. The Regulation will apply to buildings constructed after 1 January 1994 and will require owners to complete an online checklist by 29 March 2019 to identify buildings affected by combustible cladding. Depending on the type of cladding disclosed, owners may then be required to procure further expert reports or give fire safety notices to tenants and future purchasers.

The authors acknowledge and thank Sarah Mazzer, Christina Wu, John Philip and Melissa McKenzie for their contributions with cross-jurisdictional research.

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• Time is running out for owners of buildings with combustible cladding in NSW