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Too late for medium-rise blocks with danger cladding
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11/09/2017 - 11:15 pm
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Last week the senate committee featured on the ABC TV Four Corners report on the spread of flammable cladding recommended that the potentially lethal aluminium composite panels, widely used on apartment buildings across Australia, should be subject to an immediate total ban on their importation, sale and use. 

The committee also said there should also be measures introduced to make designers, developers, suppliers and installers much more accountable for the highly flammable products – rather than making the owners of the apartments face possibly huge bills to make their homes safe.

But what d you do if you own an apartment in a seven-storey building that is covered in the now notorious cladding?  Thinking of selling before the bills to remove and replace it come in?  Too late.

Following theFour Corners report last Monday (Sep 4), everyone has gone cladding crazy.  Those images of the Grenfell Tower fire in London and the one in the Lacrosse Building in Melbourne will stick in your potential purchasers’ minds just as much as yours.

And then we had those experts talking about how the material in the middle of every square metre the cladding sandwich was the equivalent of 5 litres of petrol. Scary stuff.

But not all buildings with composite cladding are likely to go up in smoke any time soon.  Some of them have been there for a couple of decades already with nothing more than the smell of burnt toast to worry residents.

Even so, for the past couple of weeks strata committees in NSW have been getting letters telling them that the government thinks they have cladding and they need to get it checked.

Once they have done that, the letters say, fire inspectors will look at all the other fire safety measures in their building.

If you are in a medium-rise building, that means you have a double problem.  Modern concrete buildings under 25 metres (about eight storeys) high don’t need fire sprinkler systems. And if they don’t need them, developers probably won’t have installed them.

On the other hand, much higher buildings must have automatic fire sprinklers.  In those where cladding that has gone on fire, the sprinklers have kept the fire outside.

The Grenfell Tower had no automatic fire sprinklers and 80 people died.  The Lacrosse, and Torch Tower in Dubai had sprinklers and no fatalities from three spectacular blazes.

Now, it’s impossible to predict what our state governments will do to deal with cladding dangers. Will they expose all affected apartment owners to bills of between $10,000 and $20,000 each, on average, to repair and replace suspect cladding?

One thing is certain: when the government comes knocking, the only group that has a legally established responsibility to maintain and repair common property is the owners’ corporation – in other words, the apartment owners.

You can point your fingers all you want at developers but they will then point theirs at the architects who called for the cladding, the certifiers and fire safety consultants who OK’d it and the subcontractors who installed it.

They in turn will blame the suppliers who delivered it by the truckload. There is no legally established duty of care or chain of responsibility in strata.

A conference in Sydney last week heard about an (un-named) ongoing legal dispute over cladding where everybody right down the line had done the right thing – apart from the overseas supplier who had photoshopped certificates to pass dangerous cladding off as the fire-resistant kind.  Who do you sue in that cluster-funk?

The Queensland government is proposing legislation that will make everyone involved in the installation of dangerous cladding responsible.  But that can’t be retrospective.

Perhaps governments will sit down with the insurance industry and starts talking about actual risk rather than fear. Meanwhile, you don’t want to be stuck with a flat in a medium-rise building that has lots of flammable cladding but no sprinklers.

And until the hysteria wears off, the smart money may well migrate to higher buildings that already have all the fire safety measures in place but where cladding-phobia has pushed prices down.

Part of this article appeared in the Australian Financial Review on Saturday, September 9.  Flat Chat appears in the weekeend AFR every Saturday in the Smart Investor section



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