A letter from the State Government turns up in the mail. It says your building is covered in high-risk combustible cladding and it needs to be removed immediately.

Key points: Hundreds of buildings housing thousands of people across Australia have been identified as having high-risk combustible cladding

Hundreds of buildings housing thousands of people across Australia have been identified as having high-risk combustible cladding Removing the cladding is expensive, but there is no national funding scheme

Removing the cladding is expensive, but there is no national funding scheme No loans have been granted so far through Victoria's scheme, the only one of its type in the country

From thereon in, you are backed into a corner.

On top of the shock of learning your home is a serious potential risk to your life, you also face a fine of almost $400,000 if the cladding is not removed within three months.

The owners in your building band together and seek out quotes to get the cladding removed and replaced. The quotes come back well in excess of $1 million, split between 18 people.

Distraught, you look to finance options, but are wary of alerting your bank, for fear they will re-evaluate your home and change the terms of your loan.

Even the most drastic solution — selling up — is not realistically possible until the cladding is removed.

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This is the predicament young Melbourne couple Jess Howse and Ryan Silvagni found themselves in.

It is possible thousands of other Australians may soon encounter it too, as the combustible cladding crisis continues to engulf Australia.

"It feels like we've done something wrong," Mr Silvagni said. "We haven't done anything wrong."

This apartment block in inner Melbourne was found to have "high-risk" combustible cladding. ( ABC News: Jeremy Story Carter )

A crisis with no national solution

The recent fire in the high-rise Neo200 building in Melbourne's Spencer Street has ignited a new sense of urgency to remove combustible cladding from hundreds of buildings across the country.

It followed a similar blaze at the Lacrosse building in nearby Docklands in 2014 and the 2017 Grenfell Tower block fire in London, which claimed 72 lives.

The Grenfell Tower fire was fuelled by cladding made from similar material to that which fuelled the Spencer Street blaze. ( Reuters: Toby Melville )

Ryan and Jess' four-storey apartment block is in Victoria, where the State Government claims to be leading the national response to the flammable cladding crisis with a scheme designed to help homeowners to fix their buildings.

The Cladding Rectification Agreement scheme, which was announced in the lead-up to last year's state election, is supposed to offer owners low-interest loans to remove the cladding.

Owners pay off the loans through their council rates over a minimum of 10 years.

But an ABC investigation has discovered not a single loan has been granted in Victoria since the scheme was launched last October, and only a handful of councils in Melbourne have agreed to participate.

Sorry, this video has expired The fire swiftly spread up the outside of the Neo200 building on Spencer Street

It is a troubling start to the only scheme of its kind in the country.

Owners like Ms Howse said unless the Victorian Government fixes fundamental problems in the design of the scheme, it is simply window-dressing.

"It's all optics," she said. "It's a very highly-publicised agreement ... that is not accessible."

Mr Silvagni and Ms Howse said they have no option but to wear the cost of removing the cladding. ( ABC News: Jeremy Story Carter )

The problem for the couple and their neighbours is that their local council, Stonnington in Melbourne's east, has explicitly ruled out participating in the scheme.

In order for the loans to work, an owners corporation must enter a three-way agreement with a lender and their council.

But the scheme is voluntary for councils.

Stonnington Council passed a resolution in December opting out because of the financial and legal risks involved, including administration costs and the council's potential role as a debt collector if owners corporations default on repayments.

'This is not about politics'

Victorian Minister for Planning Richard Wynne said councils should sign up to the Government's scheme. ( ABC News: Jeremy Story Carter )

The Victorian Planning Minister Richard Wynne has accused Stonnington of playing politics and urged the council to reconsider its position.

"This is not about politics, this is about community safety," said Mr Wynne.

"Victoria has led the nation in relation to the whole question of cladding.

"I say to the Stonnington Council: 'Clearly you have a responsibility in this space.'"

Stonnington chief executive officer Warren Roberts said the State Government's scheme was flawed.

"The City of Stonnington's priority is to keep our residents safe and we have been and continue to work with State Government agencies to inspect buildings identified as potentially having combustible cladding," he said.

"When we reviewed the proposal put to councils last year we identified significant flaws with the concept of cladding rectification agreements."

The cladding on the building where Minister Wynne's office is housed is currently being removed. ( ABC News: Jeremy Story Carter )

The antipathy extends well beyond Stonnington.

The ABC asked councils around metropolitan Melbourne whether they will participate in the scheme, and only the City of Melbourne, Manningham, Dandenong and Kingston councils in the southern and eastern suburbs, and Yarra Ranges and Whittlesea councils on the city fringe have made it clear that they will.

Almost all other councils, including many with high numbers of buildings covered with flammable cladding, said they were undecided.

Some councils, like Moonee Valley in the city's north-west, have pointed to broader problems in the scheme.

Damage from a fire at the Neo200 apartment building on Spencer St in Melbourne. ( Supplied: MFB )

"We believe it's unfair to expect our residents should bear the cost of replacing dangerous cladding," Moonee Valley Mayor Narrelle Sharpe said.

"The onus should be on the builders or permit issuers."

Governments urged to chip in

RMIT University urban planning expert Michael Buxton said any scheme that relied on owners to pay for remediation was an ineffective way to address the danger of flammable cladding.

"These schemes are unacceptable and they're quite scandalous in their failure to really address the problem," he said.

Professor Michael Buxton said governments are playing Russian roulette with the cladding issue. ( ABC RN: Jeremy Story Carter )

"These are some of the world's most dangerous buildings. It is unacceptable for governments to allow this situation without addressing the need for its immediate removal."

Professor Buxton believes state governments should use some of the revenue raised through property taxes to fund a state-wide cladding rectification program.

Last year's state budget papers show Victoria is forecast to earn more than $10 billion in revenue from land tax and stamp duty this financial year.

"The Government has botched this," he said.

"This is fundamentally the Government's fault. It has to be prepared to put some money in to help fix it."

Richard Wynne said the Government is paying to fix state-owned buildings, and its position will not be changed on residential remediation.

Ms Howse and Mr Silvagni said they will have to borrow money from their retired parents to pay for the cladding removal. ( ABC News: Jeremy Story Carter )

Back at Ms Howse and Mr Silvagni's apartment block, the search for finance to remove the cladding has strained the building's owners.

The couple, who are set to be married later this year, are in a position where they can borrow just enough money from their parents.

Others in the building do not have that option, and may have to sell once the removal of the cladding is complete to pay off personal loans.

In the meantime, downlights on all balconies at the property have been disconnected and residents are prohibited from smoking outside.

Unlike the solutions for removing combustible cladding, Ms Howse and Mr Silvagni's plans for escaping any potential fire is comparatively simple — throw a mattress over the balcony and jump.