Application of a fibre-element nonlinear modelling technique for seismic collapse capacity assessment of RC frame buildings in comparison with conventional lumped plasticity models is investigated in this paper. Constitutive material models of concrete and steel for fibre elements are adopted to enable simulation of the loss in vertical load carrying capacity of structural columns. Inclusion of the nonlinear second order P−Δ effects accelerated by degrading behaviour of steel and concrete materials in the fibre model allows prediction of the sidesway mode of collapse. The model is compared with nonlinear lumped plasticity models in which stiffness and strength degradation is replicated through degrading parameters in structural components. Static cyclic analyses of an example cantilever column and a portal frame indicate that the variation of axial loads in columns may result in accelerated degradation and failure of structural components which is not taken into account by lumped plasticity models. Moreover, incremental dynamic analysis of a ten-storey RC frame shows that the lumped plasticity model may overestimate building collapse capacity when vertical failure of structural components occurs prior to sidesway instability.