Combustible cladding is one of the most serious safety and financial issues facing strata buildings in NSW today. It affects insurance premiums, property values, sale transactions, and in the worst case, the safety of people living in the building. This article explains what combustible cladding is, how to find out if your building is affected, what the law requires, and what the OC's obligations and options are in NSW.

What is combustible cladding and why is it dangerous?

Cladding is the external material applied to the outside walls of a building. It serves both aesthetic and functional purposes, including insulation and weather protection. Combustible cladding refers to cladding materials that, when exposed to fire, can ignite, melt, and allow fire to spread rapidly across a building's external facade.

The key concern is not just that these materials burn, but the speed at which they allow fire to travel. In a building clad with combustible material, a fire that starts on one floor can reach the roof in minutes. The Grenfell Tower fire in London in June 2017, in which 72 people died, was the event that forced governments worldwide to confront this risk. The fire spread from a single kitchen appliance on the fourth floor to engulf the entire 24-storey building in under an hour, largely driven by the combustible ACP cladding on its exterior.

The two main types of combustible cladding

Two cladding materials account for most of the risk in Australian buildings:

• Aluminium Composite Panels (ACP): ACP consists of two thin sheets of aluminium bonded together with a core material. The critical variable is the core. ACP with a high polyethylene (PE) core is highly combustible. ACP with a mineral-based core is significantly less so. NSW has banned ACP with a core comprised of more than 30% polyethylene by mass for use on external walls. This is sometimes called 'FR-grade' (fire retardant) versus 'PE-grade' (combustible). The banned PE-grade was widely used in construction between approximately 1994 and 2018 because it was cheaper and lighter than mineral-core alternatives.
• Expanded Polystyrene (EPS): EPS is a foam-based insulation material that has been used as an external cladding or insulation backing on some buildings. It is classified as B3 (highly flammable) and can melt, drip burning material, and spread fire rapidly. While EPS may comply with the Building Code on buildings of two storeys or less in some contexts, insurers treat it as a significant fire risk regardless of building height, and underwriters will seek detailed information about any EPS present.

Audience	Relevance	Why it matters
Lot owners in affected buildings	Critical	Your safety, insurance, and property value are directly affected. You have the right to know the status of your building's cladding and what the OC is doing about it.
Strata committee members	Critical	The OC has legal obligations around registration, fire safety, and remediation. Failure to act can expose committee members and the OC to liability.
Strata managers	Essential	You advise the committee, coordinate registration, engage fire safety professionals, and manage the remediation process.
Prospective buyers	Very important	Buying into a building with unresolved combustible cladding creates exposure to significant special levies and ongoing insurance difficulties.
Investors and landlords	Very important	Buildings with combustible cladding face higher insurance premiums, potential for reduced coverage, and disclosure obligations on sale.

Which buildings are at risk?

Combustible cladding was widely used in construction in Australia from the mid-1990s until approximately 2018, when bans and mandatory requirements began taking effect. Buildings constructed or significantly renovated during this period using ACP or EPS on their external walls are most likely to be affected.

Building types covered by the NSW registration requirement

Under the Environmental Planning and Assessment Amendment (Identification of Buildings with Combustible Cladding) Regulation 2018, the following types of buildings with external combustible cladding must be registered with the NSW Government:

• Residential apartment buildings (Class 2) of two or more storeys
• Residential buildings used for lodging, such as hotels, boarding houses, student accommodation, and backpacker hostels
• Aged care facilities, hospitals, and day surgeries
• Public assembly buildings, including theatres, cinemas, schools, and churches

Cladding types that trigger the registration requirement

Registration is required if the building has external cladding made from:

• Metal composite panels, including products with aluminium, zinc, or copper outer layers bonded to a core material
• Insulated cladding systems, including systems incorporating polystyrene (EPS), polyurethane, or polyisocyanurate

The NSW regulatory framework

The ban on PE-core ACP

In 2018, NSW banned the use of aluminium composite panels with a core comprised of more than 30% polyethylene by mass on external walls, effective from 15 August 2018. This ban was made under the Building Products (Safety) Act 2017 by the NSW Fair Trading Commissioner.

Importantly, the ban does not automatically require existing buildings to remove cladding that was installed before the ban came into force. For buildings that already have banned ACP installed, the Commissioner can issue an 'affected building notice' to the owners, occupiers, local council, and relevant enforcement authority. Whether rectification is required is then assessed on a case-by-case basis, taking into account the entire building, its fire safety systems, the coverage and placement of the cladding, and the specific risk it poses. The ban itself is primarily aimed at preventing future use. Enforcement against existing buildings operates through the affected building notice and rectification order process.

Mandatory registration

Under the 2018 regulation, building owners with combustible cladding were required to register on the NSW Cladding Registration portal. Buildings occupied before 22 October 2018 had to be registered by 22 February 2019. Buildings first occupied after 22 October 2018 must be registered within four months of first occupation. A strata manager can register on behalf of an owners corporation.

The NSW Cladding Taskforce

The NSW Cladding Taskforce was established in July 2017 to systematically identify buildings with potentially combustible cladding and support local councils in addressing the risk. The Taskforce audited over 185,000 building records and inspected more than 4,000 buildings across NSW. Fire and Rescue NSW conducted operational assessments of each building, and those considered higher risk were referred to local councils or the Department of Planning for further investigation and action.

The Taskforce maintains a tracking list of buildings in the remediation process. As at mid-2025, hundreds of buildings across NSW remained at various stages of assessment, remediation planning, and active works.

Fire Safety Orders

Where a building is assessed as having combustible cladding that poses an unacceptable risk, the local council or Fire and Rescue NSW can issue a Fire Safety Order requiring the OC to carry out specified works. These orders are enforceable and failure to comply can result in council enforcement action. Any Fire Safety Order or 'affected building' notice received by the OC must be disclosed in any contract of sale for a lot in the scheme.

Design and Building Practitioners Act 2020

Any cladding rectification work in NSW must comply with the Design and Building Practitioners Act 2020 (DBPA). This means a registered design practitioner must prepare and lodge designs for the remediation work on the NSW Planning Portal before a registered building practitioner can commence work. The DBPA requirements apply whether the work is done under Project Remediate or independently by the OC. Works that do not comply with the DBPA may be deemed non-compliant, which can have adverse insurance consequences.

What the OC must do

If your building has or may have combustible cladding, the OC has a series of obligations. These are not optional. Failure to act can expose the OC to enforcement action, and committee members who knowingly allow a safety risk to go unaddressed may face personal liability.

Step	Action	Detail
1	Check registration status	Confirm whether your building has been registered on the NSW Cladding Registration portal. Your strata manager can check this. If the building has combustible cladding and has not been registered, registration should be completed immediately.
2	Review building records	Review construction plans, specifications, and building documents to determine whether ACP or EPS was used in the building's external walls. This may involve contacting the original developer or builder, or engaging a consultant to review the original design documentation.
3	Engage a fire safety engineer	Appoint a qualified fire safety engineer to inspect and test the cladding. The engineer will determine whether the material is a banned product, assess the risk it poses given the building's design and fire safety systems, and recommend a course of action. A visual inspection alone is not sufficient to determine whether ACP is combustible.
4	Obtain a fire safety risk assessment report	The fire safety engineer will produce a detailed report setting out their findings, the risk rating, any interim safety measures recommended, and whether rectification is required. This report is essential for engaging with the insurer, the council, and Project Remediate if applicable.
5	Implement interim safety measures if recommended	Pending full remediation, the engineer may recommend interim measures to reduce risk, such as additional fire detection or suppression systems, evacuation procedure updates, restrictions on barbecues or heating on balconies near cladding, or enhanced monitoring. These must be implemented promptly.
6	Develop a remediation plan	The OC must develop a plan to remove and replace the combustible cladding with compliant materials. This plan must comply with the DBPA, and designs must be lodged on the NSW Planning Portal by a registered design practitioner before works begin. The OC should consider whether it is eligible for Project Remediate funding.
7	Carry out and certify remediation works	Remediation must be carried out by a registered building practitioner in accordance with the approved design. Upon completion of works under Project Remediate, the OC receives a Remediation Assurance Certificate. This certificate provides insurers with confidence that the combustible cladding risk has been addressed and should result in improved insurance terms.

Project Remediate: the NSW Government's support program

Project Remediate is a voluntary program introduced by the NSW Government to assist eligible Class 2 residential apartment buildings with the cost of cladding remediation. It is managed by the NSW Building Commission and has been extended to 2027, with more than $105 million in targeted investment as at late 2025.

What Project Remediate offers

• 10-year interest-free loan: The NSW Government pays the interest on the remediation loan. Lannock Strata Finance administers the loans on the government's behalf. The OC repays the principal over 10 years via monthly direct debit from its bank account.
• Project management: Hansen Yuncken is the government-appointed Managing Contractor. They manage the investigation, design, and construction phases on behalf of the OC, providing a centralised procurement model that removes much of the complexity from the OC.
• Two remediation design options: The design team presents the OC with two compliant design options for the replacement cladding. The OC chooses between them.
• Remediation Assurance Certificate: On completion, the OC receives a certificate confirming the works are compliant and the risk has been addressed. This is the key document for restoring normal insurance terms.
• Hardship support: A hardship support framework is available for owners who have difficulty meeting their share of loan repayments.

Eligibility requirements

To participate in Project Remediate, a building must:

• Be a Class 2 residential apartment building in NSW (multi-use buildings, such as part commercial and part residential, are also eligible)
• Have been confirmed by the Cladding Taskforce and the relevant consent authority (local council or the Department of Planning) to have a high-risk combustible cladding facade that requires remediation

How to register interest

Eligible OCs should contact the NSW Building Commission to register interest. The Building Commission can be contacted at projectremediate@customerservice.nsw.gov.au or through the NSW Planning Portal. Retrospective financial assistance may also be available for OCs that began cladding remediation before Project Remediate was introduced.

Insurance implications

Combustible cladding has a significant and direct impact on building insurance. This is one of the most practical consequences for owners in affected buildings, regardless of where their building sits in the remediation process.

Disclosure obligations

The OC has a duty of disclosure to its insurer. When renewing or obtaining strata building insurance, the OC must be able to confirm whether ACP, expanded polystyrene, or other combustible cladding materials are present on the building. Insurers ask for specific product names of any ACP present, not just generic references. Where the OC cannot confirm the absence of combustible cladding, the insurer may require a detailed cladding report before providing terms.

Impact on premiums and coverage

Buildings with identified combustible cladding face:

• Significantly higher insurance premiums, reflecting the increased fire risk
• Higher excesses on claims, particularly for fire-related events
• Possible restrictions on coverage, particularly where the cladding is classified as high-risk
• In some cases, difficulty obtaining insurance at all, with some insurers declining to quote

EPS is treated particularly firmly by insurers, with some declining to offer cover if the percentage of EPS in the building exceeds their underwriting appetite. Buildings that have received a fire safety engineer's report, even if it identifies risk, are generally viewed more favourably by insurers than buildings that have no assessment at all, as the report demonstrates awareness and due diligence.

After remediation

Once cladding remediation is complete, particularly where a Remediation Assurance Certificate has been issued under Project Remediate, the OC should promptly contact its insurance broker to have the risk reassessed. A successfully remediated building should return to normal insurance terms and premiums, which over time helps recover some of the cost burden of the remediation itself through lower insurance costs.

Implications for buyers and sellers

Buying into a building with combustible cladding

Before buying a strata lot, prospective purchasers should investigate whether the building has combustible cladding and, if so, what stage of remediation it is at. Key checks include:

• Request a strata inspection report, which should include details of any outstanding orders, fire safety issues, or cladding investigations
• Check the strata records (available on payment of the prescribed fee) for meeting minutes, committee resolutions, and any fire safety engineer reports relating to cladding
• Ask the selling agent and strata manager whether the building is registered on the Cladding Register and whether a Fire Safety Order or 'affected building' notice has been issued
• Review the capital works fund balance and any special levy resolutions to understand what costs the OC has already committed to or is planning for

Selling a lot in an affected building

If the OC has received a Fire Safety Order or an 'affected building' notice in relation to combustible cladding, this must be disclosed in the contract of sale for any lot in the scheme. Failure to disclose can give the purchaser rights to rescind the contract. The strata manager can confirm whether any such notices or orders are on record and ensure they are included in the strata inspection report.

What residents can do right now

While cladding remediation is ultimately the OC's responsibility, there are practical steps residents can take to reduce fire risk in the interim:

• Do not use barbecues, outdoor heaters, or open flames on balconies, particularly near any external cladding
• Keep balconies clear of combustible materials, including stored furniture, boxes, and rubbish
• Ensure smoke alarms inside your lot are connected, working, and not covered or disabled
• Know your building's evacuation plan and evacuation assembly point
• Keep fire stairwells, corridors, and common area exits clear of objects at all times
• Report any concerns about fire safety, cladding damage, or balcony storage to your strata manager promptly

Frequently asked questions

How do I find out if my building is registered on the NSW Cladding Register?

Ask your strata manager. They can check the NSW Cladding Registration portal and confirm whether your building has been registered. You can also visit the NSW Planning Portal at planning.nsw.gov.au for information on the registration process and to search relevant records.

Our building was inspected by the Cladding Taskforce and cleared. Does that mean we have no cladding issue?

Not necessarily. The Taskforce's operational assessments were risk-based and not exhaustive technical inspections. A Taskforce clearance means the building was not identified as posing a high fire risk based on the assessment conducted at that time. It does not guarantee that no combustible materials are present, and it does not remove the OC's ongoing obligations around fire safety. If there is any doubt, a fire safety engineer's inspection is the only way to be certain.

The committee does not want to spend money on a cladding inspection. Can they refuse?

No. Where there is reasonable cause to believe a building may have combustible cladding, the committee has an obligation to investigate. This flows from both the registration requirements under NSW law and the general duty under Section 106 of the SSMA to maintain common property in a safe and serviceable condition. A committee that knowingly ignores a potential safety risk could expose the OC and individual committee members to significant legal liability if an incident occurs.

We have combustible cladding and our insurer has increased our premium significantly. Is this normal?

Yes. Insurers price risk, and a building with identified combustible cladding presents a materially higher fire risk. Premium increases, higher excesses, and in some cases restricted coverage are a standard market response. The most effective way to address the insurance cost is to complete remediation and obtain a Remediation Assurance Certificate, which gives insurers confidence that the risk has been removed. In the interim, your strata manager or insurance broker can approach the wider market to ensure you are getting the most competitive terms available for your risk profile.

Who is responsible for the cost of rectification: the OC, the builder, or the developer?

Ultimately the OC is responsible for ensuring the building is rectified, but that does not mean it must bear the cost. OCs may have legal claims against the original builder or developer. Combustible cladding is a prescribed major defect under the Home Building Regulation 2014, which means the 6-year statutory warranty period under the Home Building Act 1989 (NSW) applies, running from the date of the occupation certificate. Once that period expires, the Design and Building Practitioners Act 2020 may still provide a further avenue through its statutory duty of care, which has its own 6-year period running from when the OC knew or ought to have known of the loss, subject to a 10-year long stop overall. These regimes operate in parallel and both should be considered. Given the complexity and the time-sensitivity of these claims, OCs that believe the original developer or builder is responsible should seek specialist strata or construction law advice promptly.

We are in the process of remediating. What should we tell owners about the timeline?

Transparency is the best approach. The OC and strata manager should provide owners with regular written updates on the remediation process: what stage the works are at, what the expected timeline is, what interim safety measures are in place, and what the expected cost impact on levies will be. Owners who are not kept informed are more likely to raise concerns at AGMs or through NCAT. A simple quarterly update email or notice board post can head off much of the anxiety that typically surrounds a cladding remediation project.

Related reading

• Insurance in strata schemes: coverage requirements and claims — learning.netstrata.com.au
• What the latest strata law changes mean for owners in 2025 and 2026 — learning.netstrata.com.au
• Disputes and resolution: conflict resolution processes — learning.netstrata.com.au