On 1 January 2020, the State Government implemented the combustible cladding levy to fund rectification works for high-risk buildings. The levy will apply to all Building Permit Applications (including staged permit applications) received by building surveyors on or after 1 January 2020 and is IN ADDITION to the current building permit levy.

The new levy applies to buildings:
  • with a classification of 2 to 8;
  • that are not located in ‘regional Victoria’; and
  • that have a cost of works of $800,000 or more.
Summary of applicable classes:

Class 2 – apartments
Class 3 – hotels
Class 4 – dwellings attached to commercial buildings
Class 5 – offices
Class 6 – shops
Class 7 – car parks and warehouses
Class 8 – laboratories and factories

What are the rates of additional cladding rectification levy payable?

For buildings with a cost of works (single-stage project) or cost of the entire building works (multiple stages of works) of $800,000 or more, the following rates of cladding rectification levy are payable.

Cost of works  Cladding rectification levy rate
Between $800,000 and $1 million 0.128 cents in the dollar
Between $1 million and $1.5 million 0.256 cents in the dollar
$1.5 million or more 0.82 cents in the dollar

An online levy calculator is available to provide an estimate of the total building permit levy payable.

  • If a permit is required for a building with multiple classifications, including Classes that do not attract the new levy (Class 1, 9 or 10), the cladding rectification levy is calculated on the entire cost of works for that project;
  • The cladding levy is calculated on the total cost of works, not just the part that exceeds the various thresholds noted in the above table; and
  •  If a Building Permit Application received after 1 January 2020 is for a staged permit, the cladding levy is calculated on the cost of works for that stage only and does not apply to previous stages issued prior to 1 January 2020

For further information, please visit the VBA website