Rectification of every strata building in Australia with combustible cladding can be financed immediately without a single owner having to increase their mortgage.
Lannock Strata Finance is financing the cladding rectification of Melbourne’s Lacrosse building with an $11 million strata loan and has the funding capacity to lend to other buildings in a similar position.
Until the cladding problem is fixed, owners are facing huge decreases in property values and severe discounts for units in buildings which are suspected of having flammable cladding.
The matter has become more urgent for owners across Australia as state governments have passed legislation targeted at banning composite aluminium cladding on buildings and setting deadlines for reporting and rectification.
Combustible cladding is a problem that crosses into all states. It is already taking a heavy emotional and financial toll which will be exacerbated with the inevitable hit to property values. Until it’s fixed, buildings that are perceived to have a cladding problem will have slow sales and decreased prices.
The huge expense of rectifying combustible cladding could not have come at a worse time for many owners. And a special levy can make the situation even harder for many people. Even those with substantial equity in their property will encounter difficulties in refinancing in this new post-Haynes environment. Banks will not do asset lends because tighter regulations force them to focus on serviceability. A lot of people have old loans that they would never get if they applied today.
The simplest, cheapest and quickest way to finance cladding rectification is through a strata loan taken out by the strata corporation. The unsecured loan is to the strata body, not to the individual owners. There are no mortgages and no charges or caveats on the title of the unit and no personal guarantees. Owners benefit from off-balance sheet financing and investors get additional breaks.
Lannock’s 15-year $11 million loan to the Lacrosse owners’ corporation will allow the 328 owners to finally move ahead with their lives.
The Lacrosse owners have shown the way forward for others, embracing a solution that is equitable for all and makes the best financial sense. They can begin rectification work immediately and once again enjoy living in what is a fantastic building.
Lannock will provide all of required funding for cladding rectification with no fixed minimum or maximum amount.