Cladding Ban, Insurance Offers Welcome Guidance to Developers


Victoria’s government will spend $7 million on insurance to get builders to take on rectification work on hundreds of residential buildings covered with combustible cladding across the state.

Victoria's cladding taskforce, Cladding Safety Victoria, headed up by Dan O’Brien, plans to file an insurance gap so that companies can get cladding exemption-free professional indemnity cover during and after rectification work is completed.

Last year, the Victorian government announced a $600 million rectification package, to be put towards 500 privately-owned buildings across inner-Melbourne.

An audit of more than 2,200 buildings in Victoria found cladding on hundreds of buildings posed a safety risk, including an "extreme risk" in 72 cases.

The state government recently announced further measures that all aluminium composite panels will be banned from use in the construction of all apartment buildings, hotels, aged care facilities and other residential buildings with two or more storeys.

It will now go after developers on behalf of owners with penalties of $80,000 applicable to individuals and up to $400,000 for businesses.

The Victorian government has also extended the time owners have to launch claims against builders that installed combustible cladding on their buildings to two years.

Slattery managing director Sarah Slattery, who is joining The Urban Developer’s upcoming Australian Property Development Outlook vSummit on Thursday 25 February, said developers in Victoria and NSW would adapt quickly in the face of new state-based policies.

“The construction industry considers safety as paramount and will continue to adapt to new and changing materials to ensure compliance.

“Over the years we have seen the development industry adapt quickly to changes in legislation.

“One example being the adaption to alternative materials in the 80s following the discovery of risks associated with asbestos.

“A renewed focus on safety by banning materials will ensure the long-term reputation and sustainability of building stock in Victoria.

“Victoria will continue to be looked upon as a quality and trustworthy place to invest and develop,” Slattery said.

NSW estimates it will cost $1 billion to remediate 225 residential towers the state’s Cladding Taskforce has identified as most in need of work to replace combustible PE-core panels similar to those used on Melbourne’s Lacrosse or London’s Grenfell towers.

More than 100 apartment and ­office buildings in the City of Sydney have been classified as at “high risk” of fire because of flammable cladding.

The state government set aside $139 million in its November budget towards what it said would be a three-year rectification process for the 225 buildings, but has not yet said how the process will be rolled out.

“The construction industry will adapt and use alternative products that will comply and we don’t consider that this change will impact the bottom line of developer’s [nationally],” Slattery said.

“Moving forward, developers and architects will better consider options and ensure compliance.”

Slattery will be joined by Maxcap chief investment officer Brae Sokolski, Jinding Developments managing director Liz Ronson and Pacific East Coast managing director Brent Severino at The Urban Developer’s upcoming vSummit to discuss the residential recovery and predictions across the industry for the year ahead.

To register for this upcoming event, click here.


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