The Urban Splash dispute: a test case for developer liability under the Building Safety Act 2022

The proceedings in Secretary of State for Housing, Communities and Local Government v Urban Splash and others represent a significant test of the Building Safety Act 2022 to date.

The case concerns the government’s application for a Remediation Contribution Order (RCO) under section 124 of the Act to recover nearly £50m in public money spent on fire safety remediation works across seven residential developments in Manchester.

The dispute

The Ministry of Housing, Communities and Local Government (MHCLG) is seeking to recoup Building Safety Fund expenditure across seven buildings: Burton Place (£23m), the Moho Building (£15m), the Chips Building (£3.1m), Emmeline House (£2m), Box Works (£1.8m), the Christabel Building (£1.5m) and Sylvia House (£589,000).

The Building Safety Fund was established in June 2020 to pay for fire safety remediation following the Grenfell Tower tragedy, and the government, not Urban Splash, oversaw and funded the works on these buildings. Legal proceedings were initiated in 2024 under the Housing Secretary at the time, Michael Gove.

The government’s central contention is that Urban Splash was “responsible for the defects” and “could have chosen to do the right thing and remediate the buildings itself, as the government consistently called on the whole industry to do in the aftermath of Grenfell. It did not.” MHCLG argued in court: “There is a responsibility to reclaim public monies that have had to be paid out only because Urban Splash did not do the right thing.”

Urban Splash’s defence

Urban Splash has advanced several arguments in response. First, the developer contends that it simply did not have the funds to pay for remediation, stating: “We categorically did not fail to do the right thing, we did what we could, when we could.” Due to its comparatively small size, Urban Splash was exempt from the Responsible Actors Scheme launched in 2023 to encourage voluntary self-remediation by larger developers.

Second, Urban Splash argues that the government’s claim is “retrospectively enacted” and breaches human rights law by offending the “principle of legal certainty”, given that its buildings complied with building regulations at the time of construction.

Third, Urban Splash contends that the government-directed works were excessive “Rolls-Royce” improvements, pointing to £1m spent replacing lettering on the Chips Building and £23m on Burton Place upgrades that “significantly exceeds” the market value of the 90 flats in that development.

Finally, Urban Splash warns that if the government succeeds, “SME developers [will fund] much higher remediation costs than major developers after taxpayer money has been wasted through uncontrolled spending.”

Anticipated outcome

The case against Urban Splash is the largest and most significant RCO enforcement action ever pursued by the Secretary of State to claw back Building Safety Fund expenditure.

Although the First-tier Tribunal’s decision will not create a binding precedent, its reasoning is likely to be followed. If the case proceeds to an appeal to the Upper Tribunal by Urban Splash, the result would establish a binding precedent for future cases.

The government is likely to use this case as a test case, which may later be applied to other SME developers, meaning the outcome will be closely watched across the sector.

If the government prevails, more developers may self-remediate to control costs and avoid the higher sums associated with government-directed works. If Urban Splash succeeds, some developers may reconsider their voluntary remediation commitments, potentially requiring the government to spend further taxpayer funds.

Either way, the tribunal’s treatment of the ‘just and equitable’ test, retrospectivity and human rights arguments will shape the enforcement landscape for building safety compliance across the sector.