Legal developments in construction law: September 2025

1. Court of Appeal Confirms Wide Scope of Remediation Contribution Orders

On 8 July 2025, the Court of Appeal handed down a much-anticipated decision on the operation and scope of Remediation Contribution Orders (“RCO”) under the Building Safety Act 2022 (“BSA”).

Following the identification of building safety defects in a residential development in Stratford¹ that had been leased by the social-housing provider Triathlon Homes LLP (“Triathlon”), the estate manager, East Village Management Limited (“EVML”), carried out extensive remedial works. Those works were initially funded by the Government’s Building Safety Fund in the sum of approximately £27.5 million.

The BSA subsequently altered the landscape of liability for such defects, including the introduction of a new measure² that protects leaseholders from the cost of remedial works where the original developer³ - in this case Stratford Village Development Partnership (“SVDP”) - remains the landlord (or superior landlord) of the building. Accordingly, Triathlon ceased to be liable for its share of the remediation costs through service charges, a sum exceeding £16 million.

Triathlon applied to the First-tier Tribunal (“FTT”) for RCOs compelling SVDP and its current parent company, Get Living plc (which had acquired SVDP in 2014), to pay Triathlon’s share of the remediation costs. The FTT granted the RCOs, leading to the appeal to the Upper Tribunal, which then leapfrogged the case to the Court of Appeal.

The Court of Appeal unanimously dismissed the appeal, upholding the FTT’s decision to grant the RCOs against SVDP and Get Living plc. The judgment focused on two issues: (i) whether it was “just and equitable” to make the orders, and (ii) whether section 124 of the BSA operates retrospectively so as to allow recovery of costs incurred before its commencement. The Court answered both questions in the affirmative.

The judgment underscores the Court’s commitment to giving full effect to the objectives of the BSA, ensuring accountability for building-safety defects and shifting the financial burden of remediation away from the public purse and onto developers (and their associates), even those who may not have been involved when the development was completed.

For any party associated with buildings in England and Wales that may turn out to have fire safety defects, the implications of this Court of Appeal judgment are significant.  This is particularly stark for a party that may have acquired an interest in another company that originally developed the property.  This should be a 'red flag' issue for due diligence on any acquisition.  More generally, the Court's approach to what may be “just and equitable” is potentially of wider application.  Whilst this phrase will necessarily import fact specific elements in deciding if a matter falls with its ambit, the same phrase is used under the Civil Liability (Contribution) Act of 1978 in contribution claims where two or more parties are liable to the same claimant.  As such, this judgment is a useful illustration of how the Court weighs up the factors when applying this test; fire safety claims have the propensity to draw in multiple parties as those deemed responsible seek to share the burden with others.   

Triathlon Homes LLP v Stratford Village Development Partnership & Ors [2025] EWCA Civ 846

2. IS AN ARCHITECT RESPONSIBLE FOR ENSURING THAT A CLT ROOF IS PROTECTED FROM MOISTURE DAMAGE?

What is the scope of an architect’s duties in respect of Cross Laminated Timber ("CLT") and the need to adequately protect it from moisture during the works? In Vitsoe v Waugh Thistleton, the High Court (TCC) considered this issue and provided important guidance.

Vitsoe procured the construction of its new office and distribution headquarters using a construction management route, appointing an Architect (Thistleton Architects Limited (“WTA”)), a Construction Manager (JCA Concept Construction Limited (“JCA”)), and a series of Trade Contractors, including Hess Timber GmbH (“Hess”) as the timber frame Trade Contractor and Stoneleigh Services Limited (“Stoneleigh”) as the roofing Trade Contractor.

During the works, the timber components of the CLT roof became wet during heavy rainfall and subsequently began to rot and decay. As a result, Vitsoe brought a claim against the Architect, WTA, alleging that the damage was the result of the architect breaching its duties by failing to provide a moisture content control plan, recommending that a temporary protective roof be installed or failing to act when construction did not take place according to the planned timetable.

However, the court found that WTA’s duties were limited to design, drawings, specifications, and design coordination and that it had no responsibility for supervising works, programming, or protecting materials on site.  Ultimately, the responsibility for coordinating the trades, maintaining the programme, and protecting works lay with the Construction Manager, JCA, supported by duties on the Trade Contractors (Hess and Stoneleigh) to safeguard their works.

The court reaffirmed that the scope of contractual duties must be respected and parties should always carefully consider their contracts, particularly when undertaking work with timber or other materials that are susceptible to weather conditions. In this case, the nuance of Construction Management procurement and the engagement of a Construction Manager added some complexity when compared to a “traditional” procurement method (which would normally allocate the risk to protect the works to the main contractor, which is responsible for the acts and omissions of its subcontractors). The case highlights the importance of detailed responsibility matrices and clearly delineating responsibilities when deciding which procurement route to adopt.

Construction Management as a procurement route has been use in the UK construction industry since the 1980s, having been imported as a concept from the USA.  It requires a competent Construction Manager to manage the various Trade Contractors, because the ultimate performance risk is retained by the Employer, whose enters into the Trade Contracts direct.  In this sense, Construction Management is sometimes referred to as "all fee and no risk".  However, that is not the full picture as the Construction Manager retains responsibility for management of the Trades and if it fails properly to discharge those duties.  The Construction Manager, JCA, entered into voluntary liquidation in December 2018, which presumably explains why it was not also pursued.

3. WHEN DOES A CAUSE OF ACTION ARISE UNDER A NHBC insurance policy?

On 26 June 2025, the Court of Appeal upheld the High Court’s decision to dismiss an application made by the NHBC for summary judgment and/or to strike out of a claim brought by the Peabody Trust.

The dispute concerned the widely used “Option 1 – Insolvency cover before practical completion” extension contained in the NHBC Buildmark policy. That extension applies where an employer has “to pay more to complete the building of the home(s), because the contractor is insolvent or commits fraud” subject to various specific conditions and exclusions.

The Court of Appeal confirmed that the NHBC’s position—that the cause of action arose, and the limitation period began, immediately upon the contractor’s insolvency—was legally unsound. Instead, the cause of action accrues only when the employer (the insured) is actually required to spend further sums to complete the building works.

While this is yet another case arising from fire safety defects, any case that helps clarify when liability periods run from for the purpose of claims for any defects is noteworthy. This judgment is significant because it clarifies when the limitation period begins to run under the NHBC Buildmark policy’s insolvency cover. By confirming that time starts only when the insured incurs additional costs to complete the works, the decision provides greater certainty and protection for policyholders, ensuring that valid claims are not prematurely time-barred.

National House Building Council v Peabody Trust [2025] EWCA Civ 932

4. The Building Safety Levy – UPDATE

A building safety levy, to raise funds to remediate unsafe buildings, has been under discussion by the Government for some time. Some progress has now been made as the draft Building Safety Levy (England) Regulations have now been laid before Parliament.

The draft Regulations are lengthy and complex but the key points are summarised below.

• It is intended that the levy will come into effect from 1 October 2026 (although the legislation will first need to be approved by Parliament).
• The new levy will be applied on all new "major residential developments", irrespective of building height, defined as either (a) a minimum of ten new dwellings, or (b) at least thirty new bedspaces in purpose-built student accommodation. Retirement housing is included.
• There is a long list of exemptions, including affordable housing, social housing, care homes, hotels and hostels and hospitals. Further detail is included in Schedules 1 and 2 of the draft Regulations.
• The levy payable is calculated on a square metre basis of gross internal area with rates varying for each local authority (based on average house prices). The details of area rates can be found in Schedule 3 of the draft Regulations and these rates are set to be reviewed every three years.
• Importantly, the levy is payable in one tranche by developers, charged at the point at which an application for building regulations approval is submitted. Local authorities will be responsible for collecting the levy on behalf of central government..
• In addition, there is a 50% discount for previously developed land (as defined in the draft Regulations).
• Until the levy is paid the building control completion certificate will not be issued.

The levy poses another, potentially significant, upfront cost which will need to be accounted for in the financing and timeline of projects. The timing of implementation coincides with the significant delays currently being experienced by the industry at Gateway 2, potentially increasing the financial pressure on developers. The Building Safety Levy Guidance provides further helpful information.

The Building Safety Levy (England) Regulations 2025

Building Safety Levy: Guidance - Guidance - GOV.UK

5. BOOST FOR HOUSING AND INFRASTRUCTURE IN UK GOVERNMENT SPENDING REVIEW

The June 2025 Comprehensive Spending Review sets out where the UK plans to spend its money over the next three years. The NHS and Ministry of Defence are getting the biggest funding increases, but the housing and infrastructure sectors will also benefit from significant cash injections.

There has been much discussion surrounding the government’s promise to build 1.5 million new homes before this Parliament ends. There is a general consensus that if the government is to come anywhere close to meeting this ambitious target, it will not be able to rely on private sector developers alone.

On 4 June 2025, the cross-party Select Committee for Housing, Communities and Local Government wrote to the Chancellor, Rachel Reeves, asking for a big boost in funding for social and affordable housing. After some reportedly last-minute and tense talks with the former Housing Minister, Angela Rayner, the Chancellor announced a huge £39 billion package for affordable housing over the next ten years. That’s more than three times what was set aside in the last Affordable Homes Programme.

This long-term funding is meant to give housing providers the confidence they need to invest and build more homes. On top of that, there’s another £2.5 billion in low-interest loans to help get more building projects off the ground.

Of course, it will take more than this increased funding to successfully achieve this goal. Recent data confirms that 2024 saw the lowest number of new homes built since 2017 (excluding Covid). Total completions for 2024 were just 217,911 compared to 231,000 in 2023 and over 253,000 in 2022.  Bridging this gap will require surmounting persistent challenges, including rising construction and borrowing costs, acute labour and skills shortages, protracted planning processes, and ongoing supply-chain constraints for key materials. Until these structural impediments are mitigated, translating headline funding commitments into bricks and mortar will remain a formidable task in the prevailing economic climate.

https://www.gov.uk/government/publications/spending-review-2025-document/spending-review-2025-html

6. Building Safety Act Working Group update

The BSA Working Group brings together judges, barristers, and solicitors whose aim is to ensure that disputes about building-safety issues are handled in a consistent way. This includes considering what areas in particular are causing concerns to practitioners, and how any issues might be addressed.

In that respect, the Working Group has recently considered whether amendments to the TCC Guide (October 2022) (the “TCC Guide”) are required to address practical issues where proceedings rely upon Part 5 of the BSA.⁴

In short, the proposed changes would do five main things:

• Make it clear that BSA disputes fall within the kinds of cases the TCC can hear;
• Confirm that, before starting a court claim, parties should still follow the usual “pre-action protocol” for construction disputes—even when the BSA is involved;
• Explain when the court expects the parties to try out-of-court methods (like mediation) to settle the dispute;
• Provide guidance on procedural issues which may arise where proceedings involve the BSA; and
• Provide for a streamlined resolution process when a single dispute needs decisions from both the TCC and the FTT (because they have overlapping powers under the BSA).

See: Technology & Construction Court Guide revision for applications or claims under the Building Safety Act 2022 ; Building Safety Related Claims; and Building Safety Related Claims – Annex 1.

¹ This development was originally constructed as part of the Athletes’ Village for the 2012 London Olympic Games, with the intention of being converted into permanent housing thereafter.

² Paragraph 2 of Schedule 8 to the BSA

³ Or an “associated” entity of the original developer

⁴ Part 5 of the BSA focuses on the remediation of historical building defects and restrictions on leaseholder costs, and introduces measures such as remediation orders and building liability orders.