Combustible cladding nightmare prompts calls for urgent reform
Thousands of Victorians have enormous costs hanging over their heads after being stuck in combustible cladding nightmares through no fault of their own.
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Thousands of Victorians have enormous costs hanging over their heads after being stuck in combustible cladding nightmares through no fault of their own, prompting calls for urgent reform.
Early downsizers to apartment living say they will “never” live in one again after being caught in a years-long stoush set to cost them hundreds of thousands, with no end in sight.
The Sunday Herald Sun can reveal owners in hundreds of apartment buildings face hefty bills to rectify cladding issues that do not qualify for compensation through the state government’s Cladding Safety Victoria (CSV).
The Victorian Building Authority has rated 1691 residential and public buildings through the statewide audit into the danger of flammable cladding, with 161 buildings deemed “extreme” risk, 736 “high”, 580 “moderate” and 214 “low”.
Owners in apartment buildings rated moderate and low risk do not qualify for compensation through CSV but many are still required to fix them.
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Peter and Angela Collins and their neighbours in a moderate-risk 21-apartment Doncaster East complex have already had to fork out more than $100,000 combined in legal and inspection fees. Millions more is on the horizon after being stuck with cladding deemed a moderate risk, meaning they get no compensation but must cough up to replace materials the builder used.
Mr Collins said they could not sell their apartment, which had dropped about $300,000 in value, because of the outstanding cladding issue.
Only one insurance provider would cover them, so had them “over a barrel”, and the bureaucratic “smoke and mirrors” of multiple agencies had made their life a living hell.
“The biggest problem we’ve got is nobody wants to know,” Mr Collins said.
“None of this is our fault, and yet none of the government bureaucracies that are supposed to be there to protect us will even talk to us.
“There is more legal protection from the government when you buy a faulty toaster than when you buy a $1.2m property.”
The developer, Tony De Felice, who had a good reputation for building houses in the area under De Felice Bros, has since died, though the company is still registered. This has further complicated residents’ fight to get compensation.
“If we are unsuccessful with VCAT or mediation with the builder about who pays for repairs we will be faced with each lot entitlement’s costs for repairs,” Mr Collins said.
“We are currently getting a new quote – more report costs – for the repairs to roof and cladding, and I am expecting that new quote to come in around the $6m mark, so our portion of the costs for repairs will be around the $300,000 mark for each owner.”
Builders Collective of Australia president Phil Dwyer said there was a major problem with homeowners caught with “moderate” cladding that was still susceptible to fire.
“Councils are actually issuing building orders (to remove the cladding) so people are in dire straits,” he said.
“Some are first-home buyers … to find another $60,000 or $80,000 is just not possible for a lot of these people.
“The government has said they’ll organise loans but they can’t afford another mortgage on top of their existing one.”
The state government dedicated $600m to address combustible cladding on buildings that is high or extreme risk, but pushed responsibility for lower-risk buildings back to councils.
Manningham City Council is the municipal building surveyor for the Doncaster East building and, following an inspection, an independent panel gave it a moderate rating.
The Collins family have no confidence in how their building was assessed and say they have never been able to get any information on the grading system.
According to the Victorian Building Authority, the auditing process is consistent across all buildings.
Mr Dwyer said the state should accept there was a bigger problem beyond high-risk homes.
“These people have all bought these properties fully compliant at the time,” he said.
“If the government are not prepared to administer their own legislation then they need to stump up some dollars.
“People are in limbo, they can’t sell their property and it’s worthless to them until rectification takes place, and they can’t afford to do that. It is a seriously bad situation.”
Mr Collins said there were “600 years of ratepayers to Manningham City Council” in the building, including a 93-year-old whose whole ceiling was wet, and a man in his 80s in a wheelchair battling rising damp, while one apartment was uninhabitable due to black mould. He and wife Angela said they bought into the complex trying “to do the right thing” in downsizing. It became the “worst decision we’ve ever made”.
“We have become a fabulous example to all our friends to never buy into an apartment building,” Ms Collins said.
Mr Collins said owners in the building had been issued with a building notice from Manningham Council, on behalf of the VBA, saying they must begin work or face fines.
But he said the body corporate legal team had told them it was not as simple as claiming the costs back from the builder.
The builder could challenge any costs their own experts had not had the chance to question prior to works starting. Another factor is the exorbitant cost of a loan to the body corporate to undertake any work, which Mr Collins said he believed had recently increased from an already high 10.5 per cent to 10.75 per cent.
Manningham Council director city planning Duncan Turner said the Doncaster East building was “one of a number of buildings” in the municipality with cladding.
“Each council is required to undertake enforcement action under the Building Act in accordance with their statutory obligations to address the safety concerns identified through the audit process,” he said.
“It is the VBA expert panel who decides on the risk level of each building and actions required by the relevant council.”
Municipal Association of Victoria president David Clark called on the state to address the burden placed on councils and households.
“The problems now surfacing with building defects – including cladding – are not of local government’s making, yet they are being passed on to councils for the solution,” he said.
“Much of this cladding has only been approved due to the state government’s system allowing developers to pick their own building surveyor.
“It’s inevitable that some people are going to take advantage of that to cut corners.
“Even in buildings adjudged low risk, much of this cladding is still inappropriate and should never have been permitted.”
Mr Clark said inspecting and assessing these buildings was stretching council building departments, and ratepayers ended up forking the bill for these pressures.
“The first step to fixing the system is for the state government to treat the current shortage of building surveyors as a top priority,” he said.
“The issues in the building system don’t start and end with cladding. There’s a whole host of defects that emerge because of our inadequate building approvals system, including waterproofing failures and deficient fire protection systems.”
Mr Clark said the state needed to review the building regulatory system from the ground up.
“We need to ensure the integrity of inspections, or we’ll still be dealing with this in another 30 years’ time,” he said.
A representative of De Felice Bros could not be located for comment.
A state government spokesman said: “We are currently exploring options to ensure that unfunded owners and councils are supported to reduce the cladding related risk on their buildings.”
NOT TOLD OF CLADDING ISSUE
When Alison and Susan Bourke bought into their Doncaster East apartment complex, they thought they were making a smart investment for the future.
Instead their property, which they rent out to tenants, has become a financial burden after they learned of the combustible cladding issues they have been required to resolve.
Alison said they bought the apartment in 2020 without knowing about a building order in place since 2018, because it was not included in documents provided before the sale.
“We are now stuck like many of the residents that live in this building, now unable to sell as banks refuse to loan money,” she said.
“Pity they didn’t do that in 2020!
“The Victorian Building Authority, Cladding Safety Victoria and Manningham City Council are not interested in helping however are happy to keep taking rates and slapping us with fines even though they have been notified of our ongoing disputes and actions with the builders and VCAT.”
Ms Bourke said the state government should “forget about the railway”, referring to projects such as the Suburban Rail Loop, and redirect funds towards this “ticking time bomb”.
“We have a number of retirees in our apartment complex who just can’t afford to fund the repairs and clearly building inspections just don’t happen like they used to,” she said.
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