On 7 August the public saw for the first time the changes the Building Amendment (Registration of Trades and other matters) Bill 2018 (Bill) are likely to have on the building industry in Victoria. This article highlights the key changes if the Bill is enacted, which includes the requirement for a mandatory swimming pools and spas register and the introduction of Cladding Rectification Agreements.
Councils in Victoria should be aware that some of the proposed amendments would impact their day-to-day operations.
The Bill, which was introduced into Parliament on 26 July 2018, proposes to amend both the Building Act 1993 (Vic) and the Local Government Act 1989 (Vic).
We summarise some of the more important amendments relating to Victorian councils.
Cladding Rectification Agreements
Cladding Rectification Agreements (CRAs) are intended to provide an avenue to owners and owners corporations to obtain finance for the cost of removing dangerous combustible cladding. They aim to do that by providing that any money loaned to the owner for rectification work must be repaid via a levy collected by Council and secured by a charge.
The Bill inserts the provisions relating to CRAs in Part 8B of the Local Government Act 1989 (Vic). In summary:
- A CRA is an agreement between Council, a lending body and an owner of rateable land (including an owners corporation). The CRA must set out the nature of the rectification work that is carried out, require the lender to advance funds for that work and provide for the Council to levy a cladding rectification charge to repay the lending body.
- Importantly, councils should note they can choose to enter into a CRA or not. There is no obligation on a council to do so.
- Council must, if it enters into CRA, use any money received under the cladding rectification charge and repay it to the lender.
- Council may charge an administration fee for its involvement in the CRA.
- Before entering a CRA, Councils must undertake a due diligence of establish that the capital improved value of the land is, in light of the existing taxes, rates, charges and mortgages, sufficient to provide adequate security for repayment of the charge.
- The period of the CRA must be no more than 10 years, so Councils need to be aware that a CRA is a long standing commitment.
- The Minister is to issue a notice on the types of work to which CRAs can apply;
- Whilst Council are required to use their best endeavours to recover the cladding rectification charge, which is treated as a ‘service charge’ under the Local Government Act 1989, Council are not liable to a lending body if the charge is not paid.
These provisions will come into operation on 30 October 2018 if the Bill is passed.
The Bill also amends the Building Act 1993 to require Councils to establish and maintain a register of swimming pools and spas in their municipality.
The register will contain not only registered swimming pools and spas which are part of a Class 1, Class 2, Class 3 or 10 building or a Class 4 part of a building, but also contain any other swimming pools and spas that Council are aware of.
The register must be kept in a form and manner prescribed by the regulations and on request, must be submitted to the Victorian Building Authority or a prescribed person, agency or body.
Additionally, the Bill also refers to regulations (yet to be released) which deal with, amongst other things, the obligation on owners to:
- register swimming pools and spas;
- arrange for mandatory inspections of swimming pools and spas. Importantly the obligation to carry out mandatory inspections will not rest with Council; and
- report to Council on the compliance of swimming pool or spa barriers.
Finally, the Bill contains miscellaneous provisions relating to the issue of combustible cladding in Victoria. These provisions, which are likely to directly and indirectly impact Council, include:
- Emergency Orders can require owners to have a product or material on a building be subject to destructive testing and the results of that testing to be provided to the municipal building surveyor;
- Building Orders can require owners to have a product or material on a building be subject to destructive testing and the results of that testing to be provided to the relevant building surveyor;
- A private building surveyor’s power to issue building notices and building orders continues beyond the issue of a certificate of final inspection or occupancy permit;
- The Minister may make declarations prohibiting the use of high risk external wall cladding products;
- Broadened inspection powers to allow authorised persons to demolish, open, cut into or test (including destructively test) products or materials in a building.
These are intended to come into operation on the day after Royal Assent.
Parliament is due to resume debate on the Bill this week.
If you would like more information about the Bill, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Construction and Projects team.