China combustible cladding fire: Australia, this is our reality too

September 21, 2022

Another week, another combustible cladding fire. This one in China...again. We don’t know if anyone was killed or injured but we do know that the inferno was triggered by the outer cladding of the 42-storey building catching fire, according to preliminary investigations. We also know that hereon home soil in Sydney alone, we have at least 225 buildings that have been assessed as high risk. Yet the cladding remains, 8 years after our firstAustralian combustible cladding fire at Lacrosse, Melbourne.

We need to talk about why we continue to live with this risk.

One square metre of combustible cladding is the flammable equivalent of 5.5 litres of petrol. Why do owners corporations, responsible for replacing this banned building product, think it’s OK to leave occupants to live with this risk?

The answer of course is money. It can cost millions to make this problem go away, and that’s the amount for just one building. No one knows the true cost of ridding our cities of combustible cladding, because each building is different and because the extent of other defects is discovered when the cladding is removed, and these defects cannot be accurately assessed until the work begins. Owners feel cheated and that someone else should pay.Some developers, committed to their reputations, are coming back to do the work at their cost. Others do so more reluctantly. But even more have flatly refused, and have escaped liability.

It’s a difficult political problem. There’s no doubt that government must share part of the blame for allowing this to happen, but no government, it seems, is going to pay for the lot. If they did, owners of detached homes would kick up a stink, arguing that they shouldn’t fork out for choices made by those that bought poorly.

The NSW government, unlike any other state government inAustralia, has come to the party with an attractive support package calledProject Remediate. It involves:

·     10-year interest free strata loans

·     $10,000 to $15,000 grants for additional strata management fees incurred

·     Hardship provisions for owners who qualify allowing extra time for them to pay their share of the interest free loan

·     Hand-picked design and project management team consultants to eliminate risk of further non-compliance or repair mistakes

·     Clean bill of health certificates upon completion so insurance can be resumed ate market rates  

Still, when the project was audited in April 2022, some 2 years into the 3-year program, not a single owners corporation had signed up, instead choosing to live with the ongoing risk of death and property damage for their occupants. At the time of posting, no information available indicates that anything has changed.

We have a standoff. Many disaffected private property owners unwilling to ultimately fund the repairs, verse a somewhat contrite government that has crafted a thoughtful assistance package that stops short of issuing blank cheques.

How and when will this standoff be resolved? Here is my prediction. The NSW Building Commissioner will use the wide-ranging powers in the proposed Building Compliance and Enforcement Bill 2022 (NSW) to force owners corporation to do the work, with or without the Project Remediate assistance package. You can read my post about these powers here. They include the power to enter, inspect, and order an owners corporation to do work.

As messy and unpleasant as this will be we, it’s hard to see any other result. I’m pretty sure (and hope) that the regulators are not going to take on these powers and sit idly by, waiting for another fire to occur, with their fingers crossed that there’s no loss of life.  

Michael Teys

Strata expert

Michael is a strata expert with over 30 years experience in strata law and management. He is a strata researcher with City Futures Research Centre UNSW, a consultant to strata industry suppliers, and conducts executive education for strata managers and property processionals.