For managing agents, right to manage (RTM) companies and resident management companies (RMCs), a remediation contribution order (RCO) under the Building Safety Act 2022 is now one of the most important tools available for making developers, landlords and their associates pay for fixing dangerous cladding and other fire safety defects. Most of the attention an RCO application receives is focused on the headline figure: the cost of the remediation works themselves. But two recent First-tier Tribunal decisions, concerning Empire Square in Southwark and Hallings Wharf Studios in Stratford, show that the real scope of what can be recovered under an RCO is considerably wider than the works alone, and that the tribunal’s approach to those “extra” costs is still developing and is far from settled.
This matters directly for anyone managing a building affected by relevant defects. Waking watch fees, legal costs of bringing or defending the application, expert reports, and management time can run into hundreds of thousands of pounds on top of the remediation bill, often before a single scaffold pole goes up. Knowing what can realistically be claimed and what a tribunal is likely to resist is essential.
The statutory starting point: section 124 of the Building Safety Act 2022
An RCO is made by the First-tier Tribunal (Property Chamber) on the application of an “interested person”, a category that includes the landlord, a manager appointed under the lease, an RTM company, a fire and rescue authority, and the Secretary of State. The order can require a current or former landlord, a developer, or a person “associated” with either of them to pay towards the cost of remedying relevant defects.
Section 124(2) of the Act defines what an RCO can cover in deliberately broad terms: costs “incurred or to be incurred in remedying, or otherwise in connection with, relevant defects”. Section 124(2A) then gives a non-exhaustive, illustrative list of the kinds of costs that fall within this, including the cost of relevant steps taken to remedy defects, the cost of obtaining expert reports, and the cost of temporary accommodation where residents have had to be decanted from the building. Because the list is expressly non-exhaustive (“among others”), it was always likely that tribunals would be asked to decide how far the net could be cast, and the Empire Square and Hallings Wharf decisions are the first real test of that question.
Empire Square: a generous reading of what an RCO can cover
Empire Square is a 572-apartment development at 34 Long Lane in Southwark. The leaseholders applied for a remediation order against their landlord, Fairhold Athena Limited, and Fairhold Athena in turn applied for a remediation contribution order against the original developer, Berkeley Homes.
Handing down its decision in June 2025, the FTT took an expansive view of section 124. As well as the cost of the remedial works themselves, it held that the following were, in principle, recoverable under the RCO:
- Legal and litigation costs of both responding to the remediation order application and pursuing the remediation contribution order application, on the basis that these fell within costs incurred “otherwise in connection with” relevant defects, and that the litigation itself amounted to a “relevant step” serving the Act’s fire safety objectives. The landlord had claimed just over £308,000 in legal costs, and rather than fix that figure itself, the tribunal directed that the sum be assessed in detail (effectively, on a county court costs assessment basis).
- Expert costs, including the fees of the surveyors and fire engineers instructed to investigate and evidence the defects.
- Waking watch costs, including an ongoing monthly sum (around £13,890 at the date of the order) for the interim waking watch protecting the building’s basement car park, which the tribunal found was a reasonable measure even after a fire alarm system had been installed.
- Reasonable management costs incurred in connection with remedying the defects or facilitating the remedial works.
The tribunal’s reasoning was as much about policy as about the wording of the statute. It noted the practical concern that RTM companies and other applicants would be discouraged from bringing RCO applications at all if they could never recover the cost of doing so.
Hallings Wharf: the tribunal pulls back on litigation costs
In Hallings Wharf Studios in Stratford, it was the Secretary of State for Housing, Communities and Local Government who brought the application, against Hollybrook (UK) Limited, a company found to be an “associate” of the original developer within the meaning of section 121 of the Act.
In its decision of 21 May 2026, the FTT ordered Hollybrook to pay £3,682,997.78 towards the cost of the remediation works, rejecting the developer’s argument that the works could have been carried out more cheaply. The tribunal confirmed that the relevant test is whether the remediation undertaken fell within a range of reasonable responses to the building safety risk, and that the mere existence of a cheaper alternative does not, of itself, justify reducing or refusing an RCO, a helpful confirmation for anyone worried that a developer’s hindsight critique of the chosen remediation scheme could unpick an award.
Where Hallings Wharf departs sharply from Empire Square is on legal costs. The Secretary of State sought to recover litigation costs of over £1 million as part of the RCO, but the tribunal declined to include them. It expressed real doubt as to whether section 124(2) gives it jurisdiction to include litigation costs in an RCO at all, pointing out that the FTT is generally a “no-costs” jurisdiction and that the illustrative list in section 124(2A) does not mention litigation costs. Even if it did have jurisdiction, the tribunal found that on the facts of this case, the remediation works had already been completed by the time of the hearing, so the litigation costs could not properly be said to have been incurred “in connection with” remedying the building, and it was not “just and equitable” to include them. It expressly distinguished Empire Square on its facts rather than declining to follow it outright, but the practical result is that two FTT decisions handed down within a year of each other have reached opposite conclusions on whether litigation costs can form part of an RCO.
The Hallings Wharf decision was not entirely unfavourable to the applicant on costs, however. The tribunal rejected Hollybrook’s argument that including VAT in the RCO would amount to double recovery by the government, meaning VAT on the remediation costs remained recoverable. It also rejected Hollybrook’s “betterment” argument, which had been advanced to try to reduce the sum payable on the basis that the works left the building in a better condition than before, on the grounds that it was not supported by sufficient evidence. And the tribunal accepted that the RTM company had acted reasonably in proceeding with remediation without first obtaining a PAS 9980 fire risk assessment, given the delay that would have caused and the ongoing safety risk to residents, a point of some comfort for managing agents who have had to make similarly urgent calls.
What this means in practice for managing agents and RTM/RMC boards
Read together, Empire Square and Hallings Wharf tell managing agents and leaseholder-run boards two things. First, an RCO is not limited to the remediation works: waking watch, expert reports, management time and, depending on the circumstances, legal costs can all potentially be recovered, so it is worth keeping a careful, itemised record of every cost connected to a defect from the moment it is identified, not just the eventual works contract.
Second, recovery of litigation costs specifically cannot be assumed. The tribunal’s own jurisdictional doubts, and its focus on whether an application is brought before or after remediation is complete, suggest that applicants who want the best chance of recovering their legal costs should issue proceedings, and keep them live while the defect remains unremedied and the works are still needed, rather than waiting until after completion to chase reimbursement of legal spend.
Given that the case law in this area is moving quickly and the tribunal has openly acknowledged that outcomes on costs recovery are likely to remain “case and fact-sensitive”, any managing agent, RTM company or RMC considering a remediation order or remediation contribution order application, or facing one as a respondent, should take early specialist advice on both the strength of the underlying claim and how to frame the costs being sought.
Colman Coyle regularly advises on applications for remediation contribution orders. If your building is affected by relevant defects and you would like to discuss what could be recovered, please get in touch with Anjani Purohit.
