Chapter 5: Circumstances where a remediation contribution order may be appropriate
This chapter sets out considerations applicants may wish to make when applying for a remediation contribution order under different circumstances.
Before making an application, prospective applicants may need to consider:
- how much money are they seeking to recover (see 3.1.4)
- how any funds awarded will be spent (see 5.1)
- who is the appropriate party to make the application (see 5.2)
- who should be identified as the respondent(s) (see 5.3)
- who should receive any payment awarded by the Tribunal (see 5.4)
- whether their case involves an insolvent landlord (see 5.5)
This chapter also includes several worked examples of remediation contribution order applications in section 5.6. These are purely illustrative.
This is not legal advice. Interested persons who are considering applying for a remediation contribution order should seek their own legal advice when making any of the decisions listed above.
How a prospective applicant intends any funds awarded to be used may influence the choices they make when they apply for a remediation contribution order. This section explores the different use cases for a remediation contribution order:
- securing funding to make a building safe (see sub-section 5.1.1)
- securing funding for interim measures (see 5.1.2)
- Securing funding for obtaining an expert report (see 5.1.3)
- recovering remediation costs charged to leaseholders (see sub-section 5.1.4)
- recovering temporary accommodation and associated costs for decanted residents (see 5.1.5)
- recovering remediation costs paid by relevant landlords (see sub-section 5.1.6)
- compelling developers to pay for remediation (see sub-section 5.1.7)
This is a non-exhaustive list. How any funds awarded would be used may also influence who is best placed to make the application (see section 5.2) and who should be named as the recipient (see section 5.4).
5.1.1 Securing funding for remediation to take place
Remediation contribution orders can be used to secure funding for remediation works to take place. The person with the right to carry out remediation works – such as a landlord, RTM company or RMC – may not have access to sufficient funds to pay for remediation works themselves. In those circumstances, they could apply for a remediation contribution order to compel another party to provide the necessary funding.
5.1.2 Securing funding for interim measures
Depending on the nature of a defect, it may be appropriate for a relevant landlord to take relevant steps (see 2.5) to mitigate the risk caused by a defect. For example, introducing a waking watch patrol to ensure residents’ safety while remediation is being carried out.
If a relevant landlord does not have access to the funds necessary to pay for these relevant steps, they could apply for a remediation contribution order, to secure the funding from another party.
Prospective applicants should be aware that a single remediation contribution order application could cover both the costs of interim measures and remediation works themselves.
5.1.3 Securing funding for expert reports
Remediation contribution orders can be used to secure funding for expert reports. Expert reports means a report or survey which relates to either relevant defects or potential relevant defects, in a relevant building, and the relevant steps that might be taken in relation to a relevant defect. This could include, for example, fire safety assessments or intrusive structural investigations.
These could be expert reports paid for previously, and a remediation contribution order could be used to reimburse these costs, or it could be a report which is ordered by the First-tier Tribunal as part of proceedings to gather specific evidence on the remedial works and costs required if the evidence provided already is not sufficient.
5.1.4 Recovering remediation costs charged to leaseholders
Leaseholders who have paid remediation costs through their service charge, which are covered by the leaseholder protections in Schedule 8 to the Building Safety Act 2022 may be able to recover these service charge payments through a remediation contribution order. This includes the costs of interim measures. If a landlord issues a service charge demand which includes remediation costs covered by the leaseholder protections, the demand is not enforceable by the landlord, and leaseholders do not need to pay it. For more information on which costs are covered by the leaseholder protections, see Annex A.
If leaseholders with the benefit of the leaseholder protections have paid a service charge demand for remediation costs, they can apply for a remediation contribution order to recover the funds subject to the leaseholder protections paid in error.
Remediation contribution orders can also be used to recover service charge costs paid by leaseholders before the introduction of the leaseholder protections. Leaseholders, subject to the leaseholder protections of the Building Safety Act, who paid service charge demands relating to remediation of the building prior to 28 June 2022 can apply for a remediation contribution order to recover any costs subject to the leaseholder protections.
5.1.5 Recovering temporary accommodation and associated costs for decanted residents
If the relevant defect is so serious that the residents of the building are no longer able to remain in residence, or the works required to remedy the relevant defect require that the building is vacant, then residents may be required to vacate their flats. This is referred to as a decant.
Where residents have been decanted, landlords may be prepared to arrange and contribute to the costs of alternative accommodation. If they do not, residents may have to make their own arrangements.
If residents do incur costs for temporary accommodation in connection with a decant, these costs may be recoverable through a remediation contribution order. Residents may also be able to recover reasonable costs associated with the decant such as travel costs, removal costs and storage costs.
5.1.6 Recovering remediation costs paid by relevant landlords
If a landlord who has incurred costs in the process of remediating relevant defects, or implementing relevant steps, in their building wishes to recover those costs, they may be able to apply for a remediation contribution order to do so. Parties who could be named as a respondent in such an application include a former landlord who owned the property at the qualifying time, the developer(s) responsible for the defects, or associated persons. However, a landlord may have other mechanisms to compel a developer to pay for remediation – see section 5.1.7 below.
If the landlord is a head lessor, they may be able to also apply for a remediation contribution order to recover costs incurred from the building’s freeholder (see Annex A for an explanation of the leasehold ownership system).
5.1.7 Compelling developers to pay for remediation
The government is clear that developers should pay to remediate historic defects which they caused. Interested persons can apply for remediation contribution orders to compel a developer to pay for defects which they caused to be fixed.
Many developers in England have already accepted responsibility to remediate unsafe buildings which they are responsible for. Major developers have signed the developer remediation contract and committed to remediate buildings that are 11 metres and over in height that they developed or refurbished in England between 5 April 1992 to 4 April 2022. The developer remediation contract commits developers to remediating “life-critical fire safety defects.” See developer remediation contract for more information on developers’ responsibilities under the contract.
The majority of developers who have signed the contract are also members of the Responsible Actors Scheme (RAS). This scheme provides planning and building control prohibitions that impose commercial consequences on any developer who is eligible for the Scheme but chooses not to join or later fails to comply with the Scheme’s membership conditions (which include signing the developer remediation contract). Find the published list of companies who are members of the RAS, and the entities subject to the scheme’s prohibitions.
In general, MHCLG will be responsible for making sure developers comply with their obligations under the developer remediation contract and the RAS, and will hold them to account when they do not.
You may wish to contact the department if the developer has signed the contract or is a member of the RAS and is failing to fulfil their liabilities.
If a developer has not signed the developer remediation contract or joined the RAS, or the defects they are responsible for do not meet the definition of “life critical fire safety defects”, they may still be made to pay for remediation work, using a remediation contribution order.
If granted, a remediation contribution order would compel the developer and/or their associates to pay costs associated with remediating relevant defects (to the amount specified in the order).
An application for a remediation contribution order can be made by any interested person. However, leaseholders should note that regulators (local authorities, fire and rescue authorities and the Building Safety Regulator) do not have a duty to intervene in service charge disputes between leaseholders and landlords. Regulators also have long-standing enforcement powers under the Housing Act 2004, Regulatory Reform (Fire Safety) Order 2005, and Building Safety Act 2022 to compel landlords to carry out certain works where a building is unsafe and will decide on a case-by-case basis whether to pursue enforcement action, and if so, which of their enforcement powers to use.
A proposed respondent may not have sufficient assets within the UK to meet any sum awarded. Applicants can name another party against whom an order could be made, or all parties against whom an order could be made. Legal advice should be taken before pursuing this course of action.
The specified amount might not be recoverable from a respondent if they:
- do not have access to sufficient funds to pay the specified amount (see sub-section 5.3.1)
- are based overseas (see sub-section 5.3.2)
The most appropriate parties to name as additional or alternative respondents will depend on the facts of the case – provided they are eligible to be named as respondents under Section 124(3) of the Building Safety Act 2022.
5.3.1 If the intended respondent lacks the funds to pay for remediation
A respondent may not have access to sufficient funds to pay the specified amount or have sufficient assets within the UK against which an order could be enforced.
A remediation contribution order can still be granted against a respondent even if they are not able to pay the contribution sought. However, applicants might not be able to recover the full amount ordered if the respondent(s) lacks the necessary assets or the ability to secure the necessary funds.
It is not always apparent at the initial application stage whether a company has access to the necessary funds to pay the specified amount. Information on a company’s reported accounts is available on Companies House in respect of previous years. Applicants can also seek specialist advice to determine a respondent’s ability to pay.
If a relevant landlord lacks the funds to carry out remediation, they can investigate opportunities for public funding from the government’s remediation funding schemes. If they have additional costs not covered by government funding, they could seek to recover remediation costs from a developer or associated person using a remediation contribution order. If a landlord does not take the necessary steps to begin remediation works within a reasonable timeframe, they risk enforcement action from regulators.
5.3.2 If the intended respondent is based in an overseas jurisdiction
Although companies incorporated and/or based overseas are eligible to be named as respondents to a remediation contribution order, it can be challenging to engage them in the First-tier Tribunal process and, if the application is successful, enforce an order against them if they do not have assets in the jurisdiction.
A UK-based associated person with sufficient assets in the UK to meet the order could be named as respondent. Information on companies’ directors and financial statements are available with Companies House. Interested persons may also wish to seek specialist legal advice when considering a remediation contribution order application against a person associated with an overseas entity. Prospective applicants should seek specialised legal advice if they are considering applying for a remediation contribution order against an overseas-based company.
As explained in sub-section 3.2.2, the BSA2 form requires applicants to specify who should receive any funds awarded by a remediation contribution order (“the recipient”). The recipient can be, but does not need to be, the applicant. It will depend on how the applicant intends for any money awarded to be spent.
Where the application is intended to secure funding for remediation works to take place, an appropriate recipient would be the party with the right to carry out remediation works (this will depend on the terms of the lease, and may be the party with the repairing obligation). Applicants may wish to apply for a remediation order in parallel, to ensure that remediation work is done. See more information on applying for a remediation order.
Where the application is intended to recover costs already incurred by a party in the course of remediation works (such as costs incurred by relevant landlords, or charged to leaseholders), an appropriate recipient would be the party who incurred those costs. For example, if the purpose of a remediation contribution order application is to recoup remediation costs passed to leaseholders, the most appropriate recipient is likely to be the leaseholders themselves, or a trusted representative of the leaseholders if necessary.
Interested persons should seek specialist legal and operational advice if they are considering an application for a remediation contribution order to raise or recover funds for remediation, for a building where a landlord is insolvent, or is likely to become insolvent.
Below are four examples of how the application process for a remediation contribution order could work in a series of complex scenarios.
These examples are not legal advice and should not be relied upon as such. They are purely illustrative and have been provided to demonstrate the stages of the application process for persons considering applying for a remediation contribution order.
Example 1: Offloading
Building A is a is a multi-occupant residential building over 18 meters in height. Before 2022, the freehold of the building was owned by Company B, a UK-based property management company. In March 2022, ownership of the freehold was transferred to Company C, a company registered in an overseas jurisdiction with opaque corporate ownership laws. Responsibility to manage repairs was taken over by an RTM company formed by leaseholders which took responsibility for managing the building.
After the transfer of ownership to Company C, the RTM company assesses the building and becomes aware of defects in Building B which qualify as relevant defects.
The RTM company uses data from Land Registry to identify that Company B was a landlord at the qualifying time, and could therefore be named as a respondent in a remediation contribution order application. The RTM company employs forensic accountants, who identify that Company B is still active and based in the UK and has assets to meet any order.
The RTM company decides to enforce a remediation contribution order against a UK-based company with assets in the UK, and applies for a remediation contribution order against Company B.
To calculate the amount requested from Company B, the RTM company commissions quotes from contractors for the works required to remediate the defects.
The RTM names itself as the recipient of the funds in the application, to use any funds secured by the remediation contribution order to pay for remediation.
Example 2: Compelling developers to pay for remediation
Building D is a multi-occupancy residential unit over 11 meters in height. It was originally developed by Company H in 2005. The freehold of Building D is now owned by Company G (and was in Company G’s ownership on 14 February 2022). In January 2024, the local authority inspects Building D, and identifies several hazards relating to the building’s internal compartmentalisation, which qualify as relevant defects.
These defects were caused by works carried out by Company H. Company H is not a member of the RAS, and has not signed the developer remediation contract.
Company G initiates a programme of works to remediate the defects identified by the local authority. They apply for government funding schemes to meet the costs of remediation, and agree to fund the remainder of the works which would not be eligible for government funding. They enter into a grant funding agreement, and funding is provided.
Company G requests that Company H compensates Freeholder G and taxpayers by paying for the remediation of the defects. Company H refuses. To compel Company H to pay, Company G applies for a remediation contribution order to recover:
- the costs borne by Company G
- the costs paid by government funding schemes, which Freeholder G will repay to the government in order to fulfil the terms of the grant funding agreement, to fulfil Company G’s obligation to seek to recover costs under the government funding agreement
To demonstrate that Company H was the developer responsible for the relevant defects, Company G gathers planning documentation relating to the building’s construction from the local authority’s planning portal. When deciding what amount to request from Company H, Freeholder G compiles quotes from contractors for the relevant works.
As the purpose of the application is to recover costs for itself, Company G makes the application itself, and names itself as the recipient of funds awarded through any remediation contribution order made by the First-tier Tribunal.
Example 3: Decant costs
Building I is a multi-occupancy residential unit over 18 meters in height, owned by Company J. A local authority inspects the building in September 2024 and identifies several structural safety defects in Building I, which require urgent and intrusive remedial works before the building is safe for residents. As such, the local authority issues Company J with a prohibition notice for Building I, and residents are decanted into temporary accommodation.
The terms of the leases in the building do not specify what party is liable for temporary accommodation costs in the event of a decant, and Company J does not provide residents with compensation for their temporary accommodation costs.
In order to recover their temporary accommodation costs, leaseholders apply for a remediation contribution order. They will need to provide evidence to prove that the reasons for being decanted into temporary accommodation were as a result of relevant defects in a relevant building and evidence of the costs incurred by the individual leaseholders. They name Company J as the respondent on the BSA2 form.