Cladding rectification funding guidelines

Cladding Safety Victoria may provide funding for the rectification of external wall combustible cladding of some higher risk private residential apartment buildings, as assessed by the Victorian Statewide Cladding Audit led by the Victorian Building Authority (now the Building and Plumbing Commission) or a Municipal Building Surveyor, and through CSV’s own risk prioritisation processes.

Cladding Safety Victoria defines high-risk flammable cladding as external walls on apartment buildings with a rise in storeys of 3 or more (i.e., currently operating as Class 2 Type A construction), that comprise:

aluminium composite panels with a polyethylene core of more than 93% by mass in external cladding as part of a wall system; and/or
expanded polystyrene products used in cladding.

Funding may be provided for the removal and replacement of other flammable products or non-cladding features/attachments present on these types of buildings if Cladding Safety Victoria determines that their rectification:

contributes to the best solution to make a building safe; and
provides the most cost-efficient approach to addressing the risk (this would not include Essential Safety Measures) to complement partial removal works where it is proven to be cost-effective.

This means that commercial buildings/operations, serviced apartments, retail and office spaces, townhouses, car parks and buildings used primarily for providing student accommodation, aged care or community housing, will not be considered for funding through this program.

Funding for eligible buildings may be provided to owners corporations to design and implement cladding rectification solutions which comply with the relevant Victorian building regulations.

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Who can apply?

Cladding Safety Victoria will contact owners corporations to invite participation in the program if they are eligible.

To be eligible for funding, an owners corporation must be responsible for a residential building that has been:

assessed as having combustible cladding and deemed to be of higher risk;
referred to Cladding Safety Victoria by either the VBA (now the Building and Plumbing Commission) or a Municipal Building Surveyor; and
prioritised for rectification by Cladding Safety Victoria. Cladding Safety Victoria will not fund a sole owner of a building for the rectification of that building.

Where the original builder is an owner in a building prioritised for rectification, participation in the Cladding Rectification Program will not be prohibited unless the builder is the sole owner of the building.

Where it is demonstrated that an individual owns a controlling interest in more than a third of the building’s lot entitlements i.e., more than 33 per cent, but is not a sole owner, Cladding Safety Victoria will enter into negotiations with that owner to develop a plan for co-funding the rectification, with the owner contributing a proportion of funding equal to the proportion of their lot ownership of the building.

Where these negotiations fail, and the majority owner refuses to contribute, Cladding Safety Victoria will refer the owner to the relevant Municipal Building Surveyor to compel the owner under the Building Act 1993 to cause works to be carried out.

Owners corporations will need to declare the ownership structure of the building when it registers for funding with Cladding Safety Victoria.

Funding conditions

The terms and conditions for funding will be set out in a funding agreement. Owners corporations must:

engage practitioners that are on a pre-approved government register
ensure agreed project milestones are met
ensure regular progress reports are provided to Cladding Safety Victoria and
fund non-cladding latent building defects discovered through the course of rectification works.

It is important to note that as a condition of funding, Cladding Safety Victoria will progressively assess the ongoing willingness of owners and owners corporations to act in good faith when dealing with Cladding Safety Victoria and engaged parties, both at the eligibility review stage and when works are underway. Owners corporations will be expected to provide ongoing cooperation and ensure necessary decisions and consent are made in a timely fashion, including the provision of relevant information and building access to ensure rectification works are not impeded.

Where buildings are assessed as non-eligible to have their building rectification funded, Cladding Safety Victoria may still be able to provide other forms of non-financial assistance in the form of information, advice and support to owners and owners corporations of buildings in relation to cladding rectification work. Separate guidance will be available on Cladding Safety Victoria’s website.

Scope of works to be funded

Cladding Safety Victoria will only fund building works associated with cladding rectification connected with, or otherwise related to the stated external wall cladding products.

Where all combustible cladding is removed and replaced, funding will include replacing the cladding, and where necessary, sarking and insulation, and providing external fire rated linings where a Fire Resistance Level (FRL) is required to the outside of the external wall system. Where problems with spandrels exist, CSV may fund those lower cost items required to improve fire resistance levels and which are considered by the Relevant Building Surveyor as best done while the cladding is removed. This will be at the direction of the Municipal Building Surveyor or Relevant Building Surveyor to limit the risk of fire spread and may also include items such as cavity barriers.

Any additional works will need to be financed by the building’s owners. See below for what owners corporations must fund themselves.

Funding stages

Funding will be agreed in the following stages:

design, or
design and construct.

In many cases, these stages will be undertaken sequentially. However, in other instances, it may be desirable for a building practitioner to be retained to develop and implement a solution under a design and construct contracting model.

1. Design Stage – pre-works commencement

The design stage focuses on developing a rectification solution which would reduce cladding risk on the building. This may include preparation of a submission to the Building Appeals Board (BAB) for approval of the rectification solution, if necessary.

Costs within scope for funding by Cladding Safety Victoria for the design phase may include:

professional project management services for the entire rectification process, from planning and design to completion of rectification works
design solution costs – Fire Safety Engineer (FSE) services – required to determine if a performance solution is available to achieve compliance and, if required, to attend a BAB process
where a solution to rectify is identified, other costs may include professional services (e.g. architectural services, façade and structural engineering, quantity surveyors, etc) related to the cladding rectification solution design
BAB application and hearing fees and
relevant Building Surveyor services, including building permit application fees.

2. Design and Construct Stage

Funding for design, construction and materials may also be provided by Cladding Safety Victoria where a building practitioner is engaged to undertake a direct design and construct standard approach to fully remove and replace the combustible cladding from the building.

Cladding Safety Victoria will not fund:

rectification works not directly linked to addressing building risk posed by combustible cladding – this includes but is not limited to building infrastructure, general building maintenance, upkeep and any other additional defect works which are not cladding related
services not directly or reasonably sought for achieving compliance with a building notice or order, e.g., non-essential items such as internal fixtures, exterior blinds and awnings, solar panels and reticulation systems (not fire-safety related)
any internal works to the external wall system, any framing alignment or framing renewal to support external cladding, or rectification of spandrels where no cladding removal and fire resistance levels are required, e.g., constructing new spandrels
internal fire resistance deficiencies such as internal linings or passive fire upgrades
cladding or wall system works that are not within the scope of the recommended rectification solution, e.g., fixing other problems with cladding such as glazing, leakage in unrelated areas, inadequate structure, full removal of cladding where it has been determined by the BAB that partial rectification is adequate, or aims to achieve a higher standard than the National Construction Code minimum requirements
addressing other fire safety risks required to comply with an Emergency Order or Building Order/Minor Works only
legal costs that fall outside matters requiring resolution with the BAB processes
costs incurred for action against a practitioner or any other cost recovery actions, and
any legal expenses incurred by the owners corporation.

Funding related to cladding works to reduce fire risk

Cladding Safety Victoria will not fund building work unless it is directly related to cladding rectification to address fire safety risks as outlined above. This further includes where buildings are:

required to undertake additional non-cladding related defect work, or
has opted to fully remove the cladding where an alternative design solution has been recommended and approved by the BAB.

In these circumstances, Cladding Safety Victoria will determine the amount of funding to be provided for the cladding rectification works, and these works must be invoiced and accounted for separately.

Owners corporations will fund non-cladding latent defects

As a condition of funding, owners corporations will be required to pay for any non-cladding latent building defects that are identified during the course of construction and which must be fixed in order for the rectification work to proceed/be finalised. These can include the removal and replacement of internal linings, non-compliant and non-fire protected timber framing, rotten/sub-standard timber studs and unprotected spandrels as well as mouldy insulation; or the structure of the wall has not been constructed as per building permit-approved plans.

If latent defects are known in advance and need to be addressed as part of the cladding rectification, CSV and the owners corporation will establish the necessary co-funding arrangement prior to works starting.

Owners Corporation required to set aside at least 10 per cent surety upfront as condition for funding

To ensure there are no delays and that there is assurance that an owners corporation has available funds, Cladding Safety Victoria will require the owners corporation to establish an upfront surety or a bond of at least 10 per cent of the estimated capital works funding for that particular building (i.e. site-specific) which guarantees that non-cladding related works will be paid for as a prerequisite for funding.

Funding private property

Where combustible cladding is required to be rectified it will be funded by Cladding Safety Victoria, regardless of whether it is on common property or private residential lots. Individual owners will not be required to directly contribute to the cost of rectification. However, owners must facilitate access to the building to allow construction works to be undertaken.

Mixed use / non-residential ownership arrangements

Mixed use developments are a common building type and make up a significant number of buildings prioritised for rectification. Mixed use developments offer complexity as they may have multiple owners corporations and multiple types of non-residential building uses (e.g. commercial, hotels) throughout the building.

For all buildings, where a commercial owner is present in private residential buildings, Cladding Safety Victoria will consider whether to enter into co-funding arrangements.

As a matter of principle, Cladding Safety Victoria will expect any commercial owner of a mixed-use development to self-fund cladding rectification on their portion of those buildings which are more than 8 storeys in height.

Commercial owners will be subject to any compliance and enforcement measures arising from building notices or orders issued by the Municipal Building Surveyor and will not be funded by Cladding Safety Victoria to address any required regulatory measures to address the combustible cladding.

Where a commercial owner refuses to contribute, Cladding Safety Victoria will refer the matter to the relevant Municipal Building Surveyor to compel the owner under the Building Act 1993 to cause works to be carried out to ensure cladding-related fire safety risks for the entire building are addressed.

Assessing the cost-effectiveness of the rectification solution

Cladding Safety Victoria will undertake an assessment of the proposed costs of work. This may include cost benchmarking against other similar projects or through quantity surveying.

In assessing if the costs charged are reasonable and that the solution proposed is cost-effective, Cladding Safety Victoria will also be interested in:

the complexity of the design and construction of the rectification solution
the time and skill involved in the design and construction process
any scale of costs that might be applicable to the process, and
reasonable costs incurred in obtaining quotes for approved rectification work (full removal or MBS or BAB approved solution only), that is, the cost of quoted work for both full and MBS or BAB approved solutions.

Retrospective funding

Owners corporations remain responsible for rectification of non-compliant combustible cladding. This includes complying with building notices and orders issued under the Building Act 1993.

Some owners corporations may commence cladding related rectification works prior to being notified of eligibility for the Cladding Rectification Program. In these cases, owners corporations may still be eligible to participate in the program, providing they demonstrate that:

rectification works related to cladding (including the process of procuring works) did not commence prior to the establishment of the Victorian Cladding Taskforce on 3 July 2017, and
the rectification works meet the same principles and standards of the Program.

Importantly, Cladding Safety Victoria is progressing its program of work in a prioritised way, based on the risk profile of each building.

Cladding Safety Victoria will enter into funding agreements with an owners corporation which may reimburse it for costs incurred to complete the design phase of the rectification process. Where this is agreed, an agreed schedule for works and reimbursement milestones will be developed with each owners corporation wishing to proactively rectify their buildings on a case by case basis.

However, if any retrospective funding to reimburse the construction phase is to be released, this will only be provided to an owners corporation at the same time in the program that their building would have been designated for funding through Cladding Safety Victoria’s usual program. In addition, any retrospective funding will be subject to funding availability at that time.

More information

For more information, please contact us.

Updated 9 July 2025

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Mini vic.gov.au

Cladding rectification funding guidelines

1. Design Stage – pre-works commencement

2. Design and Construct Stage

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