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Sian EvansSian is an experienced speaker, presenting on such topics as ...more
Disrepair costs proposal is good news for landlords
A review has called for a limit on the amount landlords can pay to settle disrepair claims brought by tenants. Sian Evans explains more
Disrepair costs proposal is good news for social landlordsSian EvansSian is an experienced speaker, presenting on such topics as ...more
Lord Justice Jackson, the architect of the major reforms to the personal injury market introduced in 2013, has recommended that the government extend its regime of fixed legal fees to cover housing disrepair claims.
His proposals, published this week in a long-awaited conclusion to the 2008 review of civil litigation costs, would limit the value of claimant legal fees that landlords are liable to pay out for when settling disrepair claims brought by tenants.
If the government takes this up, it would be very welcome news for the social housing sector because those costs are often highly disproportionate – based on many multiples of the damages awarded.
This has seen relatively small claims spiral to cost landlords tens of thousands of pounds to settle.
As I’ve previously written for Inside Housing, disrepair has become a lucrative source of business for claimant law firms in recent years.
With other types of compensation limited by the 2013 reforms, claims management companies have increasingly rounded on the sector, using aggressive marketing tactics to encourage tenants to seek compensation. In some instances, landlords have seen the volume of claims they face increase by as much as 400% over the past year.
Lord Jackson’s recommendation is to introduce fixed recoverable costs (FRC) in disrepair cases, with one level of set fees for fast track claims (those up to a value of £25,000 – the bracket the majority of disrepair cases fall within) and another for those valued between £25,000 and £100,000.
“Disrepair has become a lucrative source of business for claimant law firms.”
The FRC that gets applied would be based on the stage the case is at when it is settled and will be calculated as a fixed fee plus a percentage of the damages awarded.
This is good news on two fronts. It would give landlords greater certainty over the likely costs they face from a disrepair claim, which could in turn lead to lower insurance premiums.
It is also likely to discourage the claims management industry from targeting the sector, which should translate into fewer bogus claims – which absorb time and resource and present financial risks.
However, Lord Jackson’s proposals will be subject to further consultation, meaning it could take up to two years before any reform is implemented.
Until then it remains business as usual for the claimant community. In the run-up to the 2013 personal injury reforms, we saw a spike in claims being brought forward and we could see a similar effect here.
Those elements of the industry that have geared their business models towards disrepair claims may well double down on their efforts before fixed fees are introduced.
That places a great need on landlords to continue to not only respond quickly to instances of disrepair, but to fully document the contact they have with tenants and the steps they take to resolve complaints – all of which can make the difference in successfully defending claims.
Sian Evans, sector lead for housing, Weightmans
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