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Until properties with illegal cladding are fixed, property values are set to face “huge” decreases and units are expected to sell slower than usual.
Property owners are increasingly facing a situation where waiting to fix cladding problems is not an option, according to Lannock Strata Finance CEO Paul Morton.
“Until this illegal cladding problem is fixed we are looking at a huge decrease in property values and severe discounts for units in buildings which are suspected of having flammable cladding,” Mr Morton said.
Currently, property owners in Victoria have to wait for the finer details of the proposed Cladding Rectification Agreements that are yet to be finalised, but for Queensland legislation will come into effect next month. In NSW, cladding with a core of more than 30 per cent polyethylene was banned from 15 August 2018 and applies for all property past, present and future.
“The matter has become more urgent for NSW owners since the government passed retrospective legislation banning composite aluminium cladding on buildings over two storeys and setting a deadline of February to provide a report to the Department of Planning,” Mr Morton said.
“In Queensland the onus falls on strata owners to identify and fix combustible cladding under legislation coming into effect next month.
“It’s a problem that crosses into all states. It is already taking a heavy emotional and financial toll and that is going to be exacerbated with the inevitable hit to property values. Until it’s fixed, buildings that are perceived to have a cladding problem will have slow sales and decreased prices.”
Even if rectification orders are not issued, property owners and strata bodies can still be fined under the Building Products (Safety) Act in NSW, with fines of up to $1.1 million per day plus $110,000 per day the cladding is not changed for corporations, and up to $220,000, two years in jail and $44,000 per day the cladding is not changed for individuals.
Meanwhile in Queensland, the Building and Other Legislation (Cladding) Amendment Regulation 2018 has a maximum fine of $21,540.75 for an owner who does not comply with completing a combustible cladding checklist, a report about the cladding used and a statement of the building fire safety risk assessment to the Queensland Building and Construction Commission.
Cladding is a non-loadbearing layer attached to the outside of a home or building to shed water and protect it from the effects of weather.
An owner is an individual or entity that has legal ownership and rights to an asset or property.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.
Rectification is an equitable remedy where the Court can amend the terms of a legal document because of a mistake or failure to accurately reflect the intention of the parties involved.