Lacrosse owners, hit by soaring insurance premiums, take $11m recladding loan
Financial Review
27 August 2018

Owners of the 328 apartments in Melbourne's troubled Lacrosse building have taken out an $11 million loan to cover replacing its combustible cladding, nearly four years after the original fire at the residential tower.

The owners corporation committee, which next week squares off with builder LU Simon in the Victorian Civil and Administrative Tribunal in its damages claim for $24 million, opted for a 15-year loan from finance group Lannock Strata Finance after Macquarie Bank declined to offer it that much and only for 10 years, court documents show.

The residents will be counting on paying back the loan, which will have an interest-only period of two years, well before the expiry date, based on its damages claim against the builder, but the details, contained in a witness statement of Owners Corporations chairman Jeffrey Dawson, reveal the cost for apartment owners of living with potentially dangerous cladding.

Continued existence of combustible polyethylene-core cladding on the building has pushed up their insurance premiums by 80 per cent each year they've had the cladding on the building, according to Mr Dawson's statement.

The building's insurance premium had increased every year since FY2016 due to cladding that had still to be removed and in total as much as $534,270 out of the total $1,023,209 that had been paid in insurance since 2016 was attributable to cladding-related rises, he said.

"As a result of the fire, the building's strata insurance premiums have significantly increased," Mr Dawson said.

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