High-rises in the Metropolitan Melbourne Region

by Michelle khor

Like every other first-home buyer in Melbourne, I was and continue to be torn between fuss-free apartment living or the temptation to move farther from work and have a spacious garden and backyard.

Section 32 vendor statements reveal a lot about a property that we are seriously considering making an offer for, but they do not reveal everything you need to know and commission a risk assessment for.

The flavour of the month? Cladding and fire risks.

Most of us would not know about this. As far back as 2016, buildings and high-rises in metropolitan Melbourne are being identified as fire risks as a result of the types of cladding used and the configuration in which they are being placed on the interior and exterior of buildings.

One of the reasons why we do not hear more about them in the media or know which buildings they are: until substantial work has been performed to ameliorate the fire risks, naming the buildings or publicising the progress of the VBA’s cladding audit may attract the attention of pyromaniacs and increase the likelihood of fires being deliberately started in these at-risk buildings.

Know this: buildings with expanded polystyrene (EP) or aluminium composite panel (ACP) cladding are not going to combust into flames spontaneously. If there are appropriate fire risk management systems in place, such as a comprehensive system of automatic sprinklers or fire doors that minimise the spread of fire, they can still be deemed as safe for occupation. If your neighbours and fellow occupiers in the building are fire-conscious and do not cause fire hazards (a lit cigarette butt, trash being hoarded behind emergency exits and fire doors), the cladding will have little chance to catch fires. The risk that EP and ACP carry are risks only to the extent that there are actual fire hazards in the area.

What does it mean for purchasers who are adamant and committed to apartment-living? You ought to undertake due diligence, obtain independent legal advice as to the contract and section 32 vendor statement, and commission building inspection reports. Be aware that as the Victorian Building Authority (VBA) and local councils have probably only just started issuing building notices and are at a preliminary, information-gathering stage of the cladding audit process, any reports you commission or obtain may not reveal a lot of useful information for you at all.

At the end of the day, depending on the information received from the builders and architects, local councils – in conjunction with the VBA – may issue building orders for a fire risk assessment to be conducted on the building that you live in or order that all offensive cladding be removed and replaced with a less combustible alternative.

The cost of retaining a fire risk engineer and obtaining and implementing an assessment may be less than the remove-and-replace route, but neither will come at a small price. Those costs can be claimed against the owners corporation insurers, the builders, the architects, or be spread amongst all three and the lot owners in whichever proportion the parties can agree to. Even then, this means that the owners corporations will need to raise funds to pay those costs, which may result in a special levy or levies being struck over a prolonged period of time.

Any independent investigations should be undertaken BEFORE you sign the contract and vendor statement. Otherwise, you are restricted to making requisitions on this matter.

If you require specialist advice on property acquisitions and cladding risks, please contact Richard Mackenzie on (03) 8621 1000 or via email at advisors@emlawyers.com.au. Michelle Khor is fluent in Mandarin Chinese and Cantonese and can also be of assistance.

Liability limited by Professional Standards Legislation.