Understanding the Victorian Cladding Rectification Levy

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Understanding The Victorian Cladding Rectification Levy

Over the past few years, we’ve witnessed a large-scale 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 remediation and cladding rectification programs.

State Governments continue to discuss a national rectification and funding program with the Australian Government. Meanwhile, Victoria has become the first to enact a funding scheme to allow rectification works to proceed.

Table of Contents

Introducing the levy and its role in cladding rectification

The Victorian State Government has proposed a cladding rectification levy following discussions in November and December of 2019. The levy aims to generate an additional $300 million over 5 years to support the cladding rectification scheme. The levy will complement the $600 million which the State Government will provide for the rectification of 1,400 affected buildings across the state. 

Provisions for the levy were included in amendments to the Building Act 1993 in the Building Amendment (Cladding Rectification) Act 2019.

The State Government initially planned for the levy to enter into effect on Wednesday, 1 July 2020. However, discussions last year saw the commencement date brought forward by 6 months. As a result, the levy will apply 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 help understand the costs associated with the new levy, the VBA has established an online Building Permit Levy Calculator. The calculator will provide a more detailed estimate of levies and costs calculated on the entire cost of works. The entire cost of works span 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

If your building has been identified as a risk, partnering with a registered practitioner can help you navigate rectification and risk management efficiently and cost-effectively.

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 obligations under the new levy and coordinate the issuance of building permits.

Our team of Building Surveyors and BCA Consultants have years of experience in assisting clients, government and industry authorities in identifying and managing the risks associated with non-compliant cladding and building products.

Looking ahead

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. Criteria include:

  • 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

According to Cladding Safety Victoria, funding for eligible buildings may be provided to owner’s corporations to design and implement cladding rectification solutions. These solutions must comply with the relevant Victorian building regulations and meet the VBA’s Cladding Guidelines for Building Surveyors.

Need to discuss how the new levy relates to your projects?

Contact our Building Surveying Team to chat about cladding or the new levy in relation to your buildings or projects.

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