Understanding The Victorian Cladding Rectification Levy
Victoria is the first state to enact a funding scheme for cladding rectification works
Following the past few years of investigation and assessment into non-compliant and potentially flammable cladding products in our buildings, most states are now beginning the process of addressing buildings deemed ‘unsafe’ through their respective remediation and cladding rectification programs.
State Governments continue to discuss a national rectification and funding program with the Australian Government. However, Victoria has become the first to enact a funding scheme to allow rectification works to proceed.
Introducing the levy and its role in cladding rectification
Following discussions in November and December of 2019, the Victorian State Government has this month enacted a proposed Cladding Rectification Levy in a bid to raise funds to assist in the rectification of 1,400 affected buildings across the state.
The levy was established following its proposal in 2019 to generate an additional $300 million over five years to support the Victorian Government’s Cladding Rectification Scheme, complementing the $600 million which the State Government will provide.
Provisions for the levy were included in ‘amendments to the Building Act 1993 in the Building Amendment (Cladding Rectification) Act 2019.’
Initial plans by the State Government intended that the levy would enter into effect on Wednesday, 1 July 2020. However, discussions last year saw the commencement date brought forward by six months, applying to new building permits as of Wednesday, 1 January 2020.
Understanding the new cladding rectification levy
The current scope of the levy applies to:
- Building work in metropolitan areas (as defined in section 18(8) of the First Home Owner Grant Act 2000)
- With a cost of at least $800,000, and
- a classification of class 2 to 8 under the NCC
The levy ‘does not apply to stand-alone houses or other class 1 buildings.’
To assist in understanding the costs associated with the new levy, the VBA has also established an online Building Permit Levy Calculator to provide a more detailed estimate of levies and costs calculated on ‘the entire cost of works’, spanning contributions to
- The building control system in Victoria (existing levy)
- The Victorian dispute resolution service (existing levy)
- Cladding Rectification contributions (newly instated)
for the nominated permit.
The VBA has instructed that Building Surveyors will use the Building Activity Management System (BAMS) to calculate the total building permit levy ‘payable from 1 January 2020.’
Where Hendry can assist
Whether you are a building owner, manager or occupant, it is essential to partner with a registered practitioner if your building has been identified as a risk to navigate rectification and risk management efficiently and as cost-effectively as possible.
The same holds true for developers and property owners whose projects are ongoing or have not yet commenced. In their case, a building practitioner is an important resource to manage your obligations under this new levy and coordinate the issuance of building permits.
Our team of Building Surveyors and BCA Consultants have been assisting clients, government and industry authorities in identifying and managing the risks associated with non-compliant cladding and building products over the past few years.
Heading into 2020, the Victorian State Government has detailed funding guidelines for rectifying cladding on buildings deemed to require remediation works.
The website, under Cladding Safety Victoria, specifies conditions surrounding who can apply for funding through the program, including:
- conditions to be met per the funding agreement between Cladding Safety Victoria and the applicant
- the scope of works to be funded
- funding stages
- assessment of cost-effectiveness, and
- retrospective funding
Subject to the criteria as listed on the CSV website, ‘Funding for eligible buildings may be provided to owners corporations to design and implement cladding rectification solutions which comply with the relevant Victorian building regulations and meet the VBA’s Cladding Guidelines for Building Surveyors.’