Cladding bills could cost owners a quarter of units’ values – report

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Australian apartment owners in buildings fitted with flammable cladding face bills of up to one quarter of the value of their homes, according to a new report.

And state governments show no signs of helping apartment owners with the costs of rectification, even though it is clearly not the owners’ fault that they have bought into potentially dangerous blocks.

The must-read article in The Conversation,  was co-written by two lecturers at RMIT, one of whom owns an apartment in a block that has been revealed to have dangerous cladding, despite  it being certified as compliant.

He is among tens of thousands of apartment owners who face bills that could, nationally, run into billions of dollars to replace combustible cladding.

The cost estimate is based on Simon Lockrey and Trivess Moore’s calculations for Victoria, where there have been two significant cladding fires in the past five years.

“We looked at Victoria as a case study,” they write. “Our modelling produced cost estimates of between A$250 million and A$1.6 billion.”

“Many owners simply will not be able to pay,” write Lockrey and Moore. “Some individual bills sighted are as much as a quarter of the owner’s property value. On top of this, some insurance premiums have quadrupled.”

The report says more that 600 buildings in Victoria have  been identified as having flammable cladding, about 275 of them high-risk.  More than 400 blocks in NSW have also been identified.

Thus far, state governments have done little more than identify the at-risk blocks and inform the owners corporations (apartment owners) that they legally have the ultimate responsibility for maintaining and repairing common property, regardless of who is at fault.

This, says the Conversation article, is in stark contrast to the situation in the UK – home to the notorious Grenfell fire which sparked public concern over flammable cladding on high-rise residential blocks — where the government has provided  $364 million in financial help.

Victoria has offered 10-year low-interest loans but few if any owners corporation have taken one up. One alternative is potentially expensive and risky legal claims, including class actions, against the developers who installed the cladding.

“While billions in revenue is recouped from stamp duty, owners are being told to rectify a problem for which they were not responsible – all at their own cost,” say the report’s authors. They argue  that governments and industry should provide substantial financial support to owners because of the ‘mass failures of policy, regulatory policing and industry practice’.

“It is time to support Australian owners in a billion-dollar crisis they were not responsible for creating.”

The Conversation is a free online magazine largely written by academics, on a variety of topics for general consumption.

 

One Reply to “Cladding bills could cost owners a quarter of units’ values – report”

  1. Avatar Jimmy-T says:

    This is now being discussed in the Flat Chat Forum

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