Residents facing huge flammable cladding bills as builders go bust


By Leith van Onselen

Perhaps the Victorian Government needs to copy New South Wales and set building guarantees to two years to protect their property mates, because a major Melbourne building company facing millions of dollars in claims for flammable cladding has gone bust. From The ABC:

Residents in apartments bound in combustible cladding fear they will have no option but to pay millions of dollars to make their homes safe again, after construction company Hickory placed its subsidiary, H Buildings, into voluntary administration.

H Buildings was facing up to 13 claims for rectification works in the Victorian Civil and Administrative Tribunal, four of which are cladding related, when it was placed into voluntary administration in August, administrators confirmed.

One of those claimants is a Brunswick apartment complex, Anstey Square, which was revealed to be wrapped in non-compliant combustible cladding after a faulty air conditioning unit sparked a fire that spread from one balcony to the one above in 2017.

Creditor documents show residents are seeking $3.8 million from H Buildings for rectification works, which include costs to replace the combustible cladding, but residents have been told legal avenues for compensation are now virtually gone…

Residents in the apartment complex were already dealing with skyrocketing insurance costs after the cladding was identified as non-compliant…

“We’re on the property ladder and all of a sudden the rung that we’re on has been broken,” [resident Andy White] said.

“It was by no fault of our own that that rung of the ladder has broken.

“Owners are left saying, ‘Great, I’ve got no money, I’ve got no life, and I can’t sell'”…

So far, around 100 apartments have been ordered to remove the potentially dangerous material.

The Victorian Building Authority has identified about 45 high-risk apartments.

H Buildings is the first major builder to go into administration since the audit.

As I noted last time, the widespread use of flammable cladding is a text book case of neo-liberalism gone mad.


In the rush to slash evil ‘red tape’ (i.e. health and safety rules), the government effectively watered-down the construction standards and handed over compliance to the developers themselves.

This was a recipe for disaster, facilitating the creation of a shonky industry whereby greedy developers and builders make out like bandits selling thousands of dodgy apartments and other structures to feed the population ponzi, all with the blessing of lax building regulators and policy makers.

Now, apartment owners are facing hefty remediation bills to bring their properties up to code, or worse risk being torched to death as they sleep. It’s market and regulatory failure of epic proportions.


As a point of comparison, New Zealand experienced a systemic problem of leaky homes built in the mid-late 1990s, affecting between 22,000 to 89,000 dwellings, which has cost the New Zealand economy an estimated $11.3 billion (in 2008 dollars) in repair and transaction costs.

Given the magnitude of Australia’s apartment boom, and the shoddiness of construction, Australia’s remediation bill could also be very expensive.

At least it will be good for GDP!


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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.