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Property owners facing costly combustible cladding repairs and the threat of criminal prosecution for failing to do so can apply for a strata loan to pay for works to rectify the problems immediately, said strata lender Lannock Strata Finance.
Lannock CEO Paul Morton said while the Victorian government has been providing compensation to those at extreme risk since 1 January 2020, owners corporations in NSW and Queensland have not been offered government funding.
A Lannock strata loan allows owners to start work now on rectifying combustible cladding and resolve occupational health and safety issues, which is particularly important given that many owners corporations have already received notices from local councils to rectify cladding issues within a few months, according to him.
“Many owners in the current [COVID-19-affected] economic climate may face difficulties in obtaining personal finance or increases to their mortgages in order to be able to fund a special cladding levy,” Mr Morton highlighted.
“In the future, if government assistance becomes available, owners can repay the strata loan early – without penalty.
“Lannock provides a funding alternative for all owners – with this funding the works can start immediately at today’s cost, without a single owner having to increase or refinance their mortgage.”
Having the ability to proceed with cladding repair works quickly has a high return on investment and helps restore value to each individual property.
According to Mr Morton: “If the owners choose to have an initial period of [interest-only] then cash outflows are [minimised] and owners have time to evaluate their personal financial position and work out their best options.”
“If they decide to sell their property, they can do so at a time of their choosing when market conditions are best, rather than be forced to sell under current adverse conditions.”
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.