Combustible Cladding in Strata Buildings
What you need to know to protect the interests of your building.
What is cladding?
Who do I contact?
Cladding is any material which forms part of the external surface of a building. It is designed to decorate a building and protect it from the external elements. In recent years, it has been common practice in the construction industry for lightweight Aluminium Composite Panels to be used as cladding on the exterior walls of buildings, particularly high-rise buildings.
As with all building products, cladding must comply with the requirements set out in the National Construction Code and relevant Australian Standards.
An ACP is a composite panel, generally comprised of an outer layer of thin aluminium, a polyurethane or mineral core, and an inner layer of thin aluminium, which have been laminated together.
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Each layer of a panel has different fire performance properties. There are various categories of ACP which also have varying fire performance properties.
Even if a panel is a compliant building product, it can be used or installed in ways which result in it being deemed to be non-compliant.
Due to the considerable differences in the fire performance of cladding, depending upon the type, composition and manner of use, building owners should identify the specific products which have been used in their building and ensure that they are compliant.
To identify if your building has ACP installed, the building will need to be inspected by a qualified building professional. Use the ‘Who do I contact?’ list to find out how to engage the right person.
The building professional engaged should know the ACP identification and reporting protocol prepared by the Insurance Council of Australia. They should:
- identify if your building has ACP
- is so, quantify the materials used
- evaluate the exposure of the building to fire risk
- propose potential remedial actions to be considered
If your building does have ACP, you will need to:
- carefully consider the report of the building professional, particularly the evaluation of the exposure of the building to fire risk and potential remedial action
- obtain any further advice which may be necessary (building/engineering, legal, financial)
- review your strata insurance policy and notify your insurer where necessary
- obtain costs estimates for any proposed remedial action
- identify the relevant level of authorisation needed to approve the undertaking of any works as well as the associated expenditure
- assess the available options for funding the remedial action
Cladding Regulations in NSW
If you are living in a strata titled building you may be aware that the NSW Government has:
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Strengthened the building fire safety certification regime with the Environmental Planning and Assessment Amendment (Fire Safety and Building Certification) Regulation 2017
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Introduced the Building Products (Safety) Act 2017 to prevent the use of unsafe building products
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Banned the use of aluminium composite panels (ACP) with a core comprised of more than 30% polyethylene on certain building types
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Audited 185,000 building records
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Inspected 2,300 buildings
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Identified 435 buildings as high risk
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Sent 33,000 safety letters to building owners and residents
For some strata schemes, the effects of the above may be relatively minor and inexpensive, but for others, this may be a substantial and expensive rectification exercise. Some buildings may be required to remove and replace some cladding in order to maintain the safety of residents. As recent examples in the media demonstrate, this rectification could run into millions of dollars.
It is fair to say that most schemes will not be financially prepared to deal with the impacts of this regulation on their buildings. Also, given the power of local Councils to issue a building product rectification order, failing to do what is required under the order is not an option for owners corporations, regardless of the costs of rectification.
Cladding Regulations in Queensland
If you are living in strata titled building you may be aware that the Queensland Government has introduced new Regulations requiring certain buildings built or renovated after 1994 to register online and notify the Queensland Building and Construction Commission of the cladding materials used on the exterior of their buildings.
For some strata schemes, this may be a relatively simple and inexpensive process, but for others, this may be a substantial and expensive reporting and rectification exercise. The reports alone that may be required to be obtained as part of the compliance process could cost between $10,000 and $40,000. Following this, some buildings may be required to remove and replace some cladding in order to maintain the safety of residents. As recent examples in the media demonstrate, this rectification could run into millions of dollars.
It is fair to say that most schemes will not be financially prepared to deal with the impacts of this regulation on their buildings. Also, given the serious fines which can be imposed for missing the key deadlines in the Regulations, failing to do what is required is also not an option for bodies corporate.
With the Regulations having commenced operation in October this year, bodies corporate should have begun their financial planning for how they will deal with the costs of the compliance program itself as well as any possible rectification costs.
Funding Options
When a body corporate needs money for cladding rectification costs, essential fire services upgrades, renovation or rectification works, emergency repairs, green initiatives, insurance premiums, litigation or other capital requirements there are essentially three options to choose from:
- use money from a sinking fund (only if included in the annual budget)
- raise a special levy
- take out a loan to cover the costs
All options are viable and should be considered depending on the circumstances but what if the budget was not allocated in the sinking fund? Special levies are not often the favourite choice of owners as they are required to find the money to pay for this unplanned expense. By choosing strata finance however, funds are provided directly to the body corporate and the expense is paid through levies over time thereby taking away the burden of a lump sum. Strata financing provides the ability to commence work immediately without the need to raise unpopular special levies or wait for enough money to accumulate in a sinking fund.
Find out more about Strata Finance.
Relevant links for state building audits
Queensland
In Queensland, a task force is operated under the joint supervision of the Queensland Building and Construction Commission and the Queensland Fire and Emergency Service.
New South Wales
In New South Wales, the inter-agency Fire Safety and External Wall Cladding Taskforce has been established, comprising of representatives from the Department of Finance, Services and Innovation, the Data Analytic Centre, the Department of Planning and Environment, Fire and Rescue NSW, the Office of Local Government, Treasury and the Department of Premier and Cabinet.
South Australia
In South Australia, building audits are being led by the Department of Planning, Transport and Infrastructure.
http://www.saplanningportal.sa.gov.au/our_current_system/building_and_development/building_and_technical/building_audits
Western Australia
In Western Australia, audits are being undertaken by an Audit Regulator Group, comprising of representatives from the Department of Fire and Emergency Services local government representatives as well as an Audit Stakeholder Group, comprising of building industry representatives.
Tasmania
The Tasmanian Government has completed its audit and published a report into Aluminium Composite Panels.
ACT
In the ACT, ACT Health has conducted an audit of public buildings.
The ACT Government is working with ACT Fire & Rescue, however, it is unclear at this stage whether an audit of private buildings will be undertaken.
www.health.act.gov.au/node/8183
Northern Territory
The Northern Territory Government does not appear to be undertaking an audit at this stage.
Insurance Council of Australia
A link to the Insurance Council of Australia’s report guidelines can be found below.
The Australian Building Codes Board has prepared a consultation draft with respect to changes to the National Construction Code.
For further information and direction on selecting a suitably qualified building professional please refer to the following authorities:
Board of Professional Engineers (Qld) – phone (07) 3210 3100
The Institution of Fire Engineers – phone (08) 8278 9844