Combustible Cladding and Fire Safety in Strata Buildings: What Every NSW Buyer Must Check

Combustible cladding remains a critical check for NSW apartment buyers in 2026. After the Grenfell Tower fire in London, the NSW Cladding Taskforce reviewed over 185,000 building records and inspected more than 4,000 buildings. Around 420 were identified as high-risk. The building you are considering may still carry unresolved fire safety obligations, special levy risks, or lending restrictions that affect your purchase. Understanding what to look for in your strata report before you commit is essential.

Takeaway: Combustible cladding is not a historical footnote. It is a present-day due diligence issue for every NSW apartment buyer.

What is Combustible Cladding and Why Should Buyers Care?

Combustible cladding typically refers to Aluminium Composite Panels (ACPs) with a polyethylene core, which can ignite and allow fire to spread rapidly up a building facade. These panels were widely used in Australian construction between the 1990s and mid-2010s for their low cost and modern appearance. When exposed to high heat, the core can melt and feed a fire across multiple storeys in minutes.

The scale in NSW is significant. According to the NSW Government, the Cladding Taskforce established in 2017 reviewed over 185,000 building records and conducted more than 4,000 inspections. 9News reported that 420 buildings were identified as high-risk. While not every building with ACP panels is immediately dangerous, the presence of combustible cladding changes your insurance costs, your owners corporation obligations, and your exposure to special levies.

Takeaway: Combustible cladding is not automatically a dealbreaker, but it is a material risk that changes the financial and legal profile of a building.

NSW Laws and Programs: What Exists to Fix the Problem

NSW responded with a layered regulatory framework. The Environmental Planning and Assessment Amendment (Identification of Buildings with Combustible Cladding) Regulation 2018 requires building owners to register certain buildings with external combustible cladding through the NSW Cladding Regulation Online Registration System, which has operated since 2018. Owners must then complete assessment and rectification steps, as outlined by the NSW Government.

The centrepiece support program is Project Remediate, announced in November 2020. This voluntary opt-in program targets roughly 225 to 230 high-risk Class 2 residential apartment buildings already identified by the NSW Cladding Taskforce. It offers 10-year interest-free loans as part of a $1 billion program, with up to $19.5 million available per building, according to News.com.au. Pre-qualified contractors and accredited fire engineers guide owners corporations from assessment through to completion, ensuring quality assurance throughout the process.

Progress, however, has been slower than planned. According to ABC News, as of late 2025 only 30 of the 76 buildings in the program had work completed. New fire safety compliance requirements also came into effect on 13 February 2026, adding further obligations for Class 1b and Class 2 to 9 buildings in NSW, according to the NSW Building Commission. Non-compliance can result in penalties, meaning the owners corporation’s legal exposure is growing rather than shrinking.

Takeaway: Regulation exists, but remediation is moving slowly. Buyers should verify whether a building is registered, whether it has a remediation plan, and whether that plan is actually funded.

The Real-World Cost: Special Levies, Insurance, and Lending

For owners, combustible cladding translates directly into dollars. Special levies for cladding rectification range from $15,000 to $220,000 per unit, according to News.com.au. Ferres Wang, an owner at Pyrmont Harbour Mill Apartments, faces a $70,000 special levy for her 60 square metre one-bedroom apartment, which she purchased off-plan in 2012 for $580,000, as reported by ABC News. Owners in affected buildings have told media they feel failed at all levels.

Insurance and lending markets have also reacted. Paynter Dixon notes that strata insurance premiums are rising alarmingly for buildings with combustible cladding. Fire Safe Cladding explains that insurers consider these buildings risky, leading to exclusions or sharply higher premiums. On the lending side, the Australian Financial Review reported that Resimac, an ASX-listed major lender, stopped offering mortgages for buildings with combustible cladding. Banks may flag cladding issues in valuations, causing loan denials or reduced lending.

Property values have suffered. AURIN research on the Melbourne market shows approximately a 9 per cent decline in prices for owner-occupiers in affected buildings, while rental properties in the same buildings were only 3 per cent cheaper. According to Complete Pumps and Fire, apartments in buildings with flammable cladding have plummeted in value, leaving owners trapped in unsellable homes.

Takeaway: Cladding affects your wallet through levies, insurance, lending access, and resale value. These are tangible, quantifiable risks that belong in your purchase decision.

Your Pre-Purchase Checklist: What to Look For

A thorough strata report or strata inspection report is your primary defence. When reviewing records, look for these specific items:

Cladding compliance certificates or reports. Does the report mention a completed Combustible Cladding Checklist, registered status, or engineer assessment?
AGM minutes and building reports. Check for references to combustible cladding, fire safety orders, or related defects that may indicate broader maintenance neglect.
Registration status. Verify whether the building is registered on the NSW Cladding Regulation Online system.
Special levies and capital works fund. Look for existing or proposed special levies, and check whether the capital works fund has any provision for cladding remediation. Our guide on capital works funds versus special levies in NSW explains how buildings should budget for major works.
Annual Fire Safety Statement (AFSS). Confirm the building has a current AFSS and that it covers all essential fire safety measures.
Fire safety schedules and council enforcement orders. Any outstanding orders suggest unresolved compliance issues.

Direct questions to ask the strata manager or vendor:

Is the building registered under the NSW cladding regulations?
Has a fire safety risk assessment been completed by an accredited fire engineer?
Is there a remediation plan, and how is it funded?
Are there current or planned special levies for cladding or fire safety works?

If the answer to the first question is yes and the remaining answers are vague, that is a signal to dig deeper or seek professional advice before proceeding.

Takeaway: Do not rely on verbal assurances. The written strata records should contain clear evidence of registration, assessment, funding, and compliance.

Strata Obligations and Who Is Responsible

Under the Strata Schemes Management Act 2015 (NSW), Section 106 places a strict duty on the owners corporation to maintain and repair common property. This includes the building facade and any cladding attached to it. The owners corporation — not individual lot owners or the strata manager — is the legal entity responsible for fire safety compliance, according to Finer Property Services.

The owners corporation must also comply with fire safety laws and maintain a current Annual Fire Safety Statement. Complete Pumps and Fire warns that non-compliance poses personal risks to strata committee members, who may face liability if they fail to act on known fire safety defects. Under the Environmental Planning and Assessment Regulation, penalties for non-compliance are real and enforceable.

This matters to buyers because you are not just purchasing a lot. You are buying into a legal entity that may already carry significant unresolved obligations. If the owners corporation has deferred action, the cost and responsibility will land on current and future owners through increased levies or emergency special levies.

Takeaway: The owners corporation is legally liable for cladding compliance. Buyers should confirm that the current committee is actively managing this duty, not deferring it.

Frequently Asked Questions

How do I know if an NSW apartment building has combustible cladding?

Start with the strata report. It should reference any cladding assessments, registration on the NSW Cladding Regulation Online system, or fire engineer reports. You can also ask the strata manager directly whether the building is registered and whether a fire safety risk assessment has been completed.

What is Project Remediate and does my building qualify?

Project Remediate is a NSW Government voluntary program offering 10-year interest-free loans for eligible high-risk Class 2 residential buildings identified by the Cladding Taskforce. It targets roughly 225 to 230 buildings. If the building you are considering is eligible but not yet enrolled, that may mean the owners corporation has not yet committed to a remediation pathway.

Can I get a mortgage on an apartment in a building with combustible cladding?

It is becoming more difficult. Resimac stopped offering mortgages for buildings with combustible cladding, and other lenders may reduce valuations or deny finance if cladding appears in the property report. Speak to your broker early and share any cladding documentation you find.

Who pays for combustible cladding removal in a strata building?

The owners corporation pays as part of its common property maintenance obligations under the Strata Schemes Management Act 2015. The cost is typically funded through the capital works fund, special levies, or government loan programs such as Project Remediate. Individual owners contribute via their levy share.

Should I walk away from a building with combustible cladding?

Not necessarily. The key is certainty. A building with a funded remediation plan, active owners corporation engagement, and compliant fire safety records may still be a sound purchase. A building with no plan, no funding, and rising insurance premiums deserves much more caution.

Combustible cladding in NSW strata buildings is a serious but manageable due diligence issue. The information you need exists in the strata report, the AGM minutes, and the building’s registration records. Your job as a buyer is to verify whether the owners corporation has identified the risk, assessed it, and funded the fix. StrataClear analyses your strata report and turns complex documents into clear, structured summaries, so you can spot cladding risks, fire safety gaps, and levy exposures faster. It is a tool for due diligence, not a replacement for professional legal or financial advice.