After the 2014 Lacrosse Tower fire in Docklands and the 2019 Neo200 fire in Spencer Street, Victorian regulators identified more than 1,000 buildings with potentially dangerous aluminium composite panel (ACP) and expanded polystyrene (EPS) cladding. The Cladding Safety Victoria program is funding rectification on priority buildings, but most buildings are funded entirely by lot owners through special levies — typically $50,000 to $200,000 per apartment.
This guide covers what combustible cladding is, how to detect it, what the Cladding Safety Victoria program does and doesn’t cover, and what every apartment buyer should check before bidding on a building constructed between 2002 and 2018.
What is combustible cladding?
Two main types of cladding sit at the centre of Victoria’s rectification program:
- Aluminium composite panels (ACP) — sheets of polyethylene core sandwiched between thin aluminium skins. Burns at 700°C. Sold under brand names including Alpolic, Reynobond and Vitrabond. Some ACP variants are fire-rated (FR or A2) and compliant.
- Expanded polystyrene (EPS) — foam insulation panels often used as render-finish cladding. Highly flammable. Common in mid-rise buildings 2005–2015.
Building Code of Australia rules tightened progressively from 2018, but tens of thousands of Victorian buildings constructed between 2002 and 2018 used non-compliant cladding because it was cheaper and the fire-rating compliance was poorly enforced.
The risk register — Cladding Safety Victoria
Victoria operates a buildings risk register administered by Cladding Safety Victoria (CSV) under the Building Act 1993 (Vic). Buildings are assessed and assigned a risk category:
| Risk category | Action required | CSV funding eligibility |
|---|---|---|
| Extreme | Immediate occupant safety measures + rectification | Yes (priority) |
| High | Rectification within 2–4 years | Yes (subject to budget) |
| Moderate | Risk-mitigation measures + future rectification | Limited |
| Low | Monitoring only | No |
Who pays for rectification?
Cladding rectification costs in Victoria typically range from $1.5m to $25m per building, divided across all lot owners through OC special levies. The funding picture:
- CSV funding (Extreme/High risk). Substantial state government contribution — typically 50–80% of costs for priority buildings. Lot owners pay the balance via special levies.
- Builder / certifier liability. OCs may have legal claims against the original builder, certifier or supplier. The 2019 Lacrosse Supreme Court decision established that builders, fire engineers and building surveyors share liability. Recovery depends on those parties still existing and being solvent.
- Lot-owner special levies. Where CSV funding and builder recoveries fall short, OCs raise special levies. Typical per-apartment cost: $50,000–$200,000 over 2–4 years.
How to detect cladding risk before buying
- Building age check. Apartment buildings constructed 2002–2018 are highest risk. Newer than 2018 generally compliant; older than 2002 used different cladding systems.
- Visual inspection. ACP panels look like flat aluminium sheets, often in 1.2m × 2.4m modules. Check window surrounds, upper-floor cladding, atriums.
- OC certificate disclosure. Under section 151 of the Owners Corporations Act 2006, the OC must disclose known cladding issues, special levies for cladding, and any rectification works in progress.
- Cladding Safety Victoria portal.The CSV register is publicly searchable for some risk categories. Confirm the building’s status before bidding.
- OC meeting minutes. Often included in the Section 32 disclosures. Look for resolutions about cladding, special levies, fire engineering reports, building surveyor inspections.
- Insurance disclosure. Cladding-affected buildings carry substantially higher insurance premiums. Spike in OC insurance levy is a strong indicator.
Section 32 red flags — cladding-related
- OC special levy of $5,000+ per quarter (well above standard $500–$1,500)
- References to “fire safety upgrade”, “facade rectification”, or “ACP replacement”
- Building permits issued for “exterior cladding works” in the last 3 years
- OC certificate noting CSV involvement
- OC certificate noting current or recent VCAT/court proceedings
- Insurance premium increases of 30%+ year-on-year
Negotiation considerations
If cladding rectification is in progress or imminent, the asking price should be discounted by:
- The full present value of expected special levies (typically $50k–$200k)
- An additional 5–10% buffer for cost overruns
- The reduced rental yield during disruption (typically 20–30% lower for 12–24 months during works)
Vendors and agents rarely volunteer these figures. Request the OC certificate, the most recent special levy resolution, and the building’s CSV risk classification before making an offer.
Walk-away triggers
- Building is “Extreme” risk with no agreed rectification plan
- Pending OC litigation against builder/certifier with unclear recovery
- Special levy already imposed but not paid by previous owner (debt may transfer)
- Builder or certifier insolvent — no recovery path
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.