ACT offers low rate loans to replace combustible cladding

The ACT government will be opening up applications for a “low interest rate concessional loan” from 29 August 2022 for the removal and replacement of combustible cladding.

The Private Buildings Cladding Scheme aims to support eligible owners corporations with the upfront costs of rectifying combustible cladding on private buildings.

Administered by Lannock Strata Finance on the ACT government’s behalf, the concessional loan will open for applications on 29 August and aims to help owners corporations in remediating their cladding issues.

Combustible cladding has been of concern on some buildings – particularly apartment blocks – as several building fires have allegedly started due to the nature of the building material used to skin the outside of a building.

Claddings of particular concern include those aluminium composite panels; expanded polystyrene systems; and “biowood” (a reconstituted wood plastic composite product).

The concessional loan can cover the costs of:

• The design and work of cladding remediation
• “Make good” works necessary due to cladding remediation
•  Regulatory fees, such as building approvals

Details of the loan

Owners corporations applying for the concessional loan will first need to pass an eligibility assessment by the ACT government.

If eligible, the ACT government will provide Lannock Strata Finance with the owners corporation’s application details for contacting.

The loan can be up to $15 million per owners corporation’s and offers a fixed interest rate at the “the cost of governing borrowing” (currently 4.2 per cent) with no application or other fees.

Owners corporations have 10 years to repay both the principal and interest, starting from the date on which the works are completed.

Applications will be open for 18 months, allowing eligible owners corporations until 29 February 2024.

The ACT’s Minister for Sustainable Building and Construction, Rebecca Vassarotti, commented: “The ACT Government takes the safety of Canberra residents seriously and we are committed to reducing the risk of potentially combustible cladding on residential apartment buildings in the ACT.

“We recognise the challenges faced by apartment building owners to address combustible cladding without assistance, which is why we have provided financial support firstly with our testing and assessment rebate scheme and now with a concessional loan scheme to assist with rectification work.”

According to the ACT government, 74 applications from 73 owners corporations were received for the testing and assessment rebate of the Private Building’s Cladding Scheme. 

Of these, 62 applications have been approved, six deemed ineligible, two applications were withdrawn and four are still being assessed.

The ACT’s Private Buildings Cladding Scheme is one of several state government initiatives set up to help apartment building owners remove combustible cladding.

The NSW government has previously provided building owners who have “high-risk combustible cladding” with access to interest-free loans solely for the use of rectifying combustible cladding on residential apartment buildings.

[Related: NSW to offer interest-free loans in cladding removal project]