Case study: using enforcement powers for the remediation of buildings

The Government has made funding available, up to £100,000 per building, for local authorities to obtain legal advice on pursuing those responsible for remediating buildings – the Remediation Enforcement Support Fund. (The closing date for local authorities to apply for funding is fast approaching and is currently set for midnight on 28 February 2026.) But how does a local authority effectively use its enforcement powers in the Building Safety Act 2022 (BSA) alongside existing powers in the Housing Act 2004 (HA 2004) to increase the pace of the remediation of unsafe buildings? The following case study will review how a local authority can do this.

Over the past 12 –18 months, Walker Morris has been instructed by the London Borough of Tower Hamlets (LBTH), together with local authorities across the country, to use the powers introduced by the BSA to progress remediation of high-rise buildings in their boroughs.

As reported by BBC News, LBTH has had particular success, securing the first remediation order by a local authority, requiring a landlord to remove dangerous aluminium composite material (ACM) cladding from a high-rise building in Stepney.

Since it has been reported that LBTH has now issued one of the first applications for a remediation contribution order by a local authority, with the aim of securing funding from a developer to fund the remedial work to a building that suffers from life-critical fire safety defects.

Issues faced by LBTH

A common set of circumstances in which local authorities instructed Walker Morris on:

1. There is a high-rise residential building that suffers from both external and internal fire safety defects, such as ACM and compartmentation issues. Often, there has also been a lack of maintenance, leaving fire doors in a poor state of repair. The costs to remediate a building such as this can amount to several million pounds.

2. Often, the freeholder will have the funds to carry out the work but does not want to incur the costs. Instead, it wants to look to the developer to either fund the works or carry out the remedial works themselves.

3. In respect of the developer, they may have signed the Developer's Pledge and, in turn, the Government's Self Remediation Terms (SRT).

4. Often, the local authority has served an improvement notice on the freeholder under the HA 2004, being the appropriate (and sometimes only) party against whom the local authority has recourse against pursuant to its HA 2004 powers. Typically, local authorities find that the developer and freeholder may well be in dispute between themselves around the scope of works or access issues, which ultimately result in the freeholder either ignoring the improvement notice or seeking to vary the same, particularly if the freeholder does not have the ability to cover the cost of remedial works itself. This often leads to significant delays / an impasse which prevents work from commencing in a timely manner, and in the meantime, residents continue to live in an unsafe building.

Other common scenarios that the team are seeing from local authorities are where a right to manage company has the repairing obligations but no funds to carry out the work, and where leaseholders do not have the resources to enforce against responsible entities, like developers.

What powers are available to local authorities under the BSA?

The two key powers introduced by the BSA are remediation orders and remediation contribution orders.

What is a Remediation Order?

Section 123 of the BSA sets out the qualifying test for a remediation order, which (a) an interested person may apply to the First Tier Tribunal for an order requiring (b) a relevant landlord of (c) a relevant building to remedy (d) specified relevant defects by a specified time.

- Interested Person: There is a defined list of parties that can apply for a remediation order, including local authorities.

- Relevant Building: A remediation order can only be sought in relation to relevant buildings – which are high-rise residential apartment blocks – at least 11 metres high or which have at least 5 storeys. This should be relatively obvious from inspection.

- Relevant Landlord: This is the party who has the repairing obligation in the lease. Most of the time, this will be the building owner, but not always. If there is a management company that is a party to the lease, they may have assumed the repairing obligations, or if a long lease has been granted, then the repairing obligation may have passed to them.

- Relevant Defects: A remediation order can only be sought in connection with "relevant defects", which are construction defects that cause a risk to people's safety arising from the spread of fire or the collapse of the building. This means that issues of maintenance, i.e. worn fire doors, will unlikely be a relevant defect.

What is a Remediation Contribution Order?

A remediation contribution order is a power, introduced by section 124 of the BSA, designed to ensure that the costs to remediate buildings that suffer from relevant defects are met by those who it would be just and equitable to pay. An order requires a specified body corporate to make payments to a specified person for the purpose of meeting costs incurred or to be incurred in remedying relevant defects relating to a relevant building.

As with remediation orders, there is a gateway criteria that must be met before a remediation contribution order is made:

- Interested Person: Again, there is a defined list of parties that can apply for a remediation contribution order, including local authorities.

- Relevant Building / Relevant Defects – this mirrors the test for a remediation order in that a remediation contribution order can only be sought in respect of a 'relevant building' and in connection with the costs to remediate 'relevant defects'.

- Who can be made to contribute? Applications can be made against:

o The landlord
o The developer
o The landlord as of 14 February 2022; and
o Any entity associated with the above.

An entity will typically be associated with the landlord or developer if they shared a common director between 14 February 2017 to 14 February 2022 or if they are part of the same group of companies on 14 February 2022.

It was common practice for developers to set up SPVs to carry out a development. Then, once the project was completed, the SPV would be wound up, and the assets would be transferred elsewhere. The liabilities would then die with the SPV. By allowing an applicant to pursue a remediation contribution order against an associate, it opens up the pool of potential respondents to ensure that there is someone who can pay for the remedial costs.

- Just and Equitable: The final element is that the Tribunal must find that it is just and equitable for a remediation contribution order to be made. There is no definition as to the circumstances which would be just and equitable for an order to be made, but you could anticipate that a judge may say it is just and equitable for the parent company of a dissolved SPV developer to contribute but might find that it is less just and equitable for a widget company that had no involvement in the building and is only distantly associated by having a common director, to have to make a contribution.

What powers could be used?

Where LBTH faced a similar set of facts, they issued an application for a remediation contribution order against the developer, requiring the developer to pay the costs to remediate the building to the building owner. The developer was also part of a wider group, and so a remediation contribution order was also sought against the parent company.

At the same time, LBTH issued an application for a remediation order against the freeholder to provide reassurance that the building would be remedied by a specified time.

This two-pronged approach helps to ensure that the dispute between the developer and building owner does not further delay remediation and focuses the parties' minds on remediating the life-critical safety defects.

What defences are likely to be run by the Freeholder or Developer?

To date, we have seen that every application for a remediation order that has been issued and reached a final hearing has resulted in an order being made. The only exception was where the Tribunal refused to grant an order because the qualifying criteria were not met - specifically, the landlord was not a "relevant landlord".

Accordingly, the defence run by a freeholder to a remediation order application issued by the local authority is less likely to be based on whether a remediation order ought to be made, but instead, more likely to focus on the extent of the defects, the scheme of works and timescales for delivery. These are issues that may require expert evidence and advice from, for example, a fire engineer. To date, the Tribunal has been taking an inclusive approach to the extent of the remediation works required.

In a recent case involving a building known as Empire Square, where the developer (who had signed the SRTs) was not getting on with the works in a timely manner, leaseholders got fed up and issued an RO application against the landlord, who, in turn, issued an RCO application against the freeholder. The freeholder argued that a remediation order should not be made because the responsibility for the works rested with the developer. The Tribunal rejected this argument, reinforcing that where the conditions for making a remediation order are met, it is very likely that an order will be made.

As the Tribunal will need to determine whether it is just and equitable to make a remediation contribution order, the defences that could be run by the developer are likely to focus on that test, as well as whether the extent of works and costs of works are reasonable.

In the Empire Square case, the developer argued that it should not be responsible for paying any costs that it was not required to pay under the SRTs or for carrying out works to a higher standard than required under the SRTs. The Tribunal rejected both arguments and confirmed that the approach under the BSA was much wider.

Does it cause any problems that the local authority has already served an improvement notice?

No. The Tribunal has been clear in stating that the two regimes are different, and therefore, taking one course of action does not prevent you from taking the other. Indeed, in several reported cases, the fact that an improvement notice had been served but not complied with was a justification for making an order.

Does the fact that the Developer signed the Pledge prevent an order from being made?

No. In Empire Square, the application was successful, and a suspended RCO was granted against the developer, which means that the order kicks in if the developer fails to get on with the works by the Tribunal, set milestones.

If the local authority is successful, will it be entitled to recover its costs from the Developer or Freeholder?

The Tribunal is generally considered to be a "costs neutral forum" – this means that all parties must pay their own costs, even if they are successful. Usually, it would only be if a party has acted unreasonably – which is a high threshold – when costs would be awarded.

However, the Tribunal in the case of Empire Square determined that an applicant could obtain a remediation contribution order to recover the expert costs and its litigation costs. The Tribunal in the Empire Square case stated that where legal costs have been incurred to obtain an order requiring parties to complete/pay for the remedial works, an applicant can apply for a remediation contribution order for a contribution towards their legal costs. Whether to award legal costs is still subject to the just and equitable test.

Can the local authority settle the claim without having to go to a final hearing?

The Tribunal encourages parties to engage in alternative dispute resolution to resolve disputes without the need for trial.

The team's experience is that often, once an application has been issued and the parties have narrowed any gap as to the dispute regarding the extent of the remedial works, a resolution has been found. If this happens, the parties may decide to document the compromise by way of an order made by consent, which is filed with the Tribunal for approval.

What happens if a Respondent fails to comply with the Order?

If there is a failure to comply with an order, it can be enforced with the permission of the county court. This could result in a contempt of court application, and so the implications of failing to comply with an order could be serious.

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