NSW Government Launches A Rescue Package for NSW Residential Apartment Buildings Containing Combustible Cladding

Owners of residential apartment buildings and construction industry stakeholders will welcome the launch of Project Remediate, a NSW Government scheme focused on providing financial assistance and technical/quality assurance measures to the owners of residential apartment buildings affected by high risk combustible cladding.

As announced within the NSW Budget 2020/21, the NSW Government has committed to meeting the interest costs on commercial loans for combustible cladding remediation carried out on high risk residential apartment buildings (as identified by the NSW Cladding Taskforce and consent authorities).

The assistance provided to owners through Project Remediate will likely incentivise owners to remediate problematic cladding, and, in turn, the financial assistance delivered through the package may permit resources to be allocated by owners to explore the recovery of rectification costs from responsible supply chain stakeholders.

Background

Combustible Cladding (ACPs)

Combustible cladding, commonly comprising aluminum composite panels (also known as ‘ACPs’) consisting of flammable plastic sandwiched between sheets of aluminum, has presented building owners with legacy issues and incredibly high remediation and replacement costs to mitigate the fire risk associated with this type of cladding.

NSW Cladding Taskforce

The inter-agency ‘Cladding Taskforce’ was established by the NSW Government in June 2017, to spearhead action and reforms in NSW concerning the fire safety risks associated with the use of ACP cladding on buildings in NSW.

NSW 2020-2021 Budget Remediation Allocation for Residential Apartment Buildings

In its 2020 budget, the NSW Government provisioned an allocation of $139M to co-ordinate the remediation process for affected residential apartment buildings.

A key program funded by that budget allocation is a three-year program titled ‘Project Remediate’, which will provide financial assistance and technical/quality assurance for building owners.

Initially Project Remediate will target approximately 225 affected residential apartment buildings known to the Cladding Taskforce as high-risk buildings requiring urgent remediation works.

Key Elements: Technical & Financial Assistance

While the details of the scheme are scheduled to be announced in December 2020 or early 2021, the key elements of Project Remediate involve two key pillars:

1. Financial Assistance: Through the NSW Government paying the interest on loans by commercial lenders to building owners and owners corporations
2. Project Assurance Service: Through the appointment of program assurance managing contractors coordinated through the Office of the NSW Building Commissioner to control risks, costs and quality of remediation works, at no additional cost to owners

Eligibility

The NSW Government has indicated that the eligibility criteria will comprise:

1. The building must be a residential apartment building (Class 2) in NSW – residential apartment buildings and mixed use buildings that are part commercial and part residential
2. The building must have been assessed by the Cladding Taskforce and consent authority to contain high risk combustible cladding material in its façade that requires remediation.

Further detail on eligibility will likely emerge with further announcements expected in December 2020 / early 2021.

At this stage, the NSW Government has indicated applications for the scheme will likely open in March 2021.

Key dates

The key dates which are currently timetabled for the Project Remediate scheme are:

Impact

The Project Remediate Scheme will be welcomed by key building industry stakeholders, owners corporations and building owners.

It will encourage more building owners to progress with plans for remediation of at-risk combustible cladding in circumstances where:

1. The suggested Quality Assurance program will provide welcome technical assistance for building owners; and
2. The Financial Assistance package, which sits at the core of the scheme and will defray the costs of rectification works by meeting the interest costs of loans from commercial lenders, will provide much needed financial assistance for building owners.

There are options available for owners corporations and building owners to explore to recover rectification costs from various members of the supply chain, and it is likely that these options will be considered by owners corporations and building owners on the back of the Project Remediate scheme.

Nexus is actively monitoring Project Remediate Scheme and will provide updates as details are announced.

If you require assistance in relation to any combustible cladding issues or have queries in relation to the Project Remediate Scheme, please contact us on construction@nexuslayers.com.au

Resources: NSW Government, Projects & Initiatives, Project Remediate

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