Posted by Grant Beaumont on April 1, 2019

Strata Building Defects – Dealing with Aluminium Cladding in a New Building

 

So you’ve bought into a beautiful new building, but worried that “all that glistens is not gold”? Aluminium cladding has been used extensively across Australia (and the world) – it presents very nicely: clean, slick lines and very “on trend”. However, in recent times, its flammability has contributed to significant damage, including loss of life, and so it is natural (and I would say essential!) that owners seriously consider what risk might be lurking on the outside of their buildings.

The Grenfell Tower block blaze in London is a disaster that could happen anywhere. The onus is on body corporates and owners to be educated and well-informed of cladding products that present as a fire hazard to properties.

Domain cited veteran Australian building consultant Robert Hart’s insights into the matter, where he warns “early indications are that defective composite cladding, routinely used on apartment buildings throughout Australia, was a major factor in the fire which tore through the 24-storey building.”

Since the fire in London, ministers have sought to update the National Construction Code’s fire testing requirements.

Further, the Australian Building Codes Board, the governmental agency that oversees the building code that governs construction standards will incorporate a new standard for testing the spread of fire within buildings. The AS5113 standard was written following Melbourne’s 2014 Lacrosse residential tower fire in Melbourne, another incident involving a fire at a cladded residential building.

 

 

The early amendment of the code – which is otherwise scheduled to occur only every three years – comes after the building ministers, at their last meeting in June 2018, promised to expedite processes to prevent the use of non-compliant cladding on Australian buildings.

The amendment, due to be adopted in March 2019, will require suppliers of materials to ensure they comply with the improved standard. However, a valid concern from consumer groups is that it doesn’t consider whether the supplied materials perform to the standard, and it may not resolve the problem of products with incorrect labelling.

 

Private Certification

Private certification is an ongoing concern that requires further regulation. It has been on the radar for many years, especially amongst councils that have been dismayed at the quality (or lack of quality) of certifiers’ incident work. This has really been brought under the spotlight following the press surrounding the Opal Tower in Sydney.

A looming issue for the cladding concern is whether the cladding installed on buildings was compliant when installed. In most cases, it seems that there will be little recourse to the certifier or suppliers of the product. Notwithstanding, it has been a natural question as people simply ask: why?

Currently, certifiers are governed by the Building Professional Board. According to their website, the Board can investigate and take disciplinary action against a certifier, but:

  • The Board can’t order building work to stop.
  • The Board can’t order unauthorised work to be rectified.
  • The Board can’t take-action against builders, tradespeople, property owners or councils.

Robert Ledger in his NSW Government submission said;

“The private certifier is selected by the developer so there is a conflict of interest straight away as the developer is the paymaster of the certifier. It goes without saying that whoever pays the bills receives the service. As there is no overall independent authority that checks the compliance of a development, approval comes from the certifier. It rests alone with the certifier to say that it is does. The only time that a certifier will be brought to task is when there is a severe injury or death of someone and the ensuing investigation finds out that there are non-compliances that should not have been signed off.”

Currently in NSW there are no statutory protections for purchasers of non-residential strata estates that require latent repairs. Recourse is through common law with a limited time of six years to make a claim for defects. Fortunately, purchasers of residential units are offered far greater protection with the Home Owners Warranty which covers residential buildings up to three storeys in height and now there is the additional (some would say token) benefit of the strata building bond.

 


Strata Building Bond

The strata building bond resulted from the Strata Schemes Management Act 2015 and commenced 1 January 2018. It applies to residential and mixed-use buildings (with a residential component) that are four storeys or higher. Residential buildings three storeys and under are protected by the statutory Home Owners Warranty scheme.

The reform introduced a building bond and mandatory defect inspection reports. It is intended to provide a structured, proactive process that is designed to resolve building issues quickly and cost effectively.

 

Developers are required to lodge a bond with NSW Fair Trading equal to two percent of the contract price for residential and mixed use high rise strata buildings. The building bond will secure funds (up to the amount of the bond). This money can then be used to pay the costs of rectifying any defective building work identified in a final inspection report. This would obviously include cladding if not installed in compliance with the code.

 

So how does it work?

In short, developers are required to arrange and lodge the building bond with NSW Fair Trading equal to two percent of the contract price of the building work.

Developers must source and appoint an independent building inspector from the strata inspector panel, with the approval of the owner’s corporation. Between 15 and 18 months after the building work has been completed, the inspector will conduct a first inspection of the strata property and prepare an interim report identifying any defective building work.

 

If no defects are identified, the building bond will be released to the developer two years after the date of completion. If defects are identified, they must be rectified by the developer.

Further, between 21 and 24 months after the building work has been completed, the inspector will conduct a final inspection of the strata property and prepare a final report.

If no defects are identified, the building bond will be released in full to the developer. If defects remain, the building bond may then be used to pay the costs of rectification.

 

The Verdict?

In light of recent events, is this enough to protect consumers? Perhaps not, but it is a start. The responsibility and obligation is on the owners corporation and owners. According to the NSW Department of Fair Trading, there are four key elements in assessing and dealing with the risk arising out of cladding:

  1. Find out if the building has aluminium cladding
  2. Check that the annual fire safety statement for the building is up-to-date
  3. Engage a fire safety professional
  4. Take immediate action to make any recommended changes to the building

You can find more information on the NSW Fair Trading website:

https://www.fairtrading.nsw.gov.au/housing-and-property/fire-safety-and-external-wall-cladding

Measures adopted in Australia will enhance what is already a well-regulated issue. Unlike the UK, Australia’s full suite of comprehensive fire measures, including fire separation, mean that the horror of the Grenfell Tower is less likely (but not impossible) here. The popular press has brought building standards into dinner table conversations across the country. This perhaps reflects the relevance and importance of this issue. No longer is conversation limited to the rising (or falling) property prices, but now the possible latent cost that might be lurking should the beautiful façade on the building not be quite as attractive as first thought.

 

Contributing writer: Ashley Bassa | Head of Strata & Community Management | Beaumont Strata Management

About the Author, Grant Beaumont

Grant Beaumont

As Director of Beaumont Strata, Grant is passionate about the management of Commercial & Industrial Property. With an enthusiastic attitude toward innovation, and adoption of modern practices, the businesses have significantly developed in terms of the internal processes, creating business efficiencies and enhancing the customer experience for clients and customers. In addition, he handles much of the administration side of the businesses, comprising legal, accounting, human resources and office matters.

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