More on the Cladding Rectification Works

For the past several months, we have been mentioning about the cladding rectification works and Victorian government’s $600 million-package allotted for this rectification as per Cladding Safety Victoria. Now, here’s an update on this matter. But looks like the latest development in government plan is not good news for many developers.

According to the latest news update, an additional building permit tax to fund the cladding rectification work will apply, starting New Year’s Day. “The new levy applies to building work in metropolitan areas with a cost of works of at least $800,000 and a classification of 2 to 8 under the National Construction Code.” However, it does not apply to stand-alone houses or class 1 buildings. Class 1 buildings include residential or domestic buildings.

“Domestic or residential buildings – single, standalone single houses and horizontally attached houses, such as terrace houses, row houses or townhouses. Includes two sub-classifications:

  • Class 1a – a single dwelling or one of a group of attached dwellings, e.g. a terrace house

  • Class 1b – a boarding house, guest house or hostel with a floor area less than 300 m2.

About the additional levy, the Victorian Building Authority estimates that 3% of all building permit applications will draw the additional tax. As mentioned before, the government granted a package for the cladding rectification. The additional levy is essentially “for buildings found to have the highest fire safety risk”.

After January 1, building permit applications that have been submitted before or after the said date will be subjected to the new tax which is estimated to raise over $300 million in five years. All the funds collected by the Victorian Building Authority from the levy will be distributed to the Cladding Safety Victoria or the agency handling the rectification of the highest risk buildings.

VBA has provided a levy calculator on their website, so the industry will have the estimate of the levy payable. This will help to build surveyors who will use the BAMS or Building Management Activity System to calculate the total building permit levy starting from January 1st.

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