Mark Gannon considers the impact of the pandemic on landlords’ ability to deal with the soaring number of disrepair claims.
Housing disrepair claims have been a longstanding issue in the housing sector. However, in the last few years these claims have grown exponentially. Disrepair claims have become a major issue for all landlords, but social landlords in particular have had to deal with an influx of claims, resulting in extensive financial exposure. There is no single reason for the rise in these cases and it certainly is not because housing stock has suddenly become substandard. The recent increases in these cases can be attributed to any of the following factors:
There has been an increase in reports of “claim farmers” knocking on tenants’ doors and leafleting – trying to generate disrepair claims. Tenants answering the door have, at times, been led to believe that these people are a representative of the landlord and without carrying out the appropriate investigations have been told that their properties suffer from defects and they are entitled to significant sums of money.
The power of advertisement and social media cannot be overstated. Tenants are now more than ever aware of their rights and the consequences of landlords not complying with their statutory and contractual obligations.
The majority of disrepair claims are costs-led in that the legal costs incurred in pursuing such claims far outweigh any damages the tenant may be entitled to. In the past this has led to some landlords settling even spurious claims on a commercial basis. The settlement of such claims may have unintentionally encouraged tenants to share their experiences with neighbours and friends and also bring further claims in the future.
Recent personal injury reforms have impacted the costs that solicitors can recover from dealing with such claims, making them less profitable than they once were. This has led to firms that have historically focused on dealing with personal injury claims looking for alternative income streams. Housing disrepair claims are not subject to the same fixed-fee costs regime as personal injury claims.
The funding arrangements for disrepair claims have changed over the years. Due to cuts in legal aid, there is only funding for the most serious cases of disrepair or counterclaims. As a consequence, a lot of disrepair claims are run on conditional fee agreements, which are more commonly known as “no win no fee”. Under such agreements tenants may not be required to pay costs in the event that their claim is unsuccessful. These funding arrangements can encourage tenants to bring claims with no merit purely on the basis that they have little to lose if the claim should fail.
Rent arrears have become a big issue for landlords in recent times. Where a tenant has had possession proceedings brought against them, they can counterclaim in those proceedings for the disrepair and seek an injunction for the repair works and compensation for the inconvenience caused by the disrepair. Legal aid is available for these types of claims.
In the past 15 months many tenants have been forced to spend more time at home. There is every possibility that spending significant periods of time may lead to some tenants noticing and becoming irritated by defects.
Budget restraints have resulted in some landlords being unable to invest in repair, maintenance and improvement works to the extent that they would like. With ageing housing stock, this presents obvious challenges.
The impact of Covid-19
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Mark Gannon considers the impact of the pandemic on landlords’ ability to deal with the soaring number of disrepair claims.
Housing disrepair claims have been a longstanding issue in the housing sector. However, in the last few years these claims have grown exponentially. Disrepair claims have become a major issue for all landlords, but social landlords in particular have had to deal with an influx of claims, resulting in extensive financial exposure. There is no single reason for the rise in these cases and it certainly is not because housing stock has suddenly become substandard. The recent increases in these cases can be attributed to any of the following factors:
There has been an increase in reports of “claim farmers” knocking on tenants’ doors and leafleting – trying to generate disrepair claims. Tenants answering the door have, at times, been led to believe that these people are a representative of the landlord and without carrying out the appropriate investigations have been told that their properties suffer from defects and they are entitled to significant sums of money.
The power of advertisement and social media cannot be overstated. Tenants are now more than ever aware of their rights and the consequences of landlords not complying with their statutory and contractual obligations.
The majority of disrepair claims are costs-led in that the legal costs incurred in pursuing such claims far outweigh any damages the tenant may be entitled to. In the past this has led to some landlords settling even spurious claims on a commercial basis. The settlement of such claims may have unintentionally encouraged tenants to share their experiences with neighbours and friends and also bring further claims in the future.
Recent personal injury reforms have impacted the costs that solicitors can recover from dealing with such claims, making them less profitable than they once were. This has led to firms that have historically focused on dealing with personal injury claims looking for alternative income streams. Housing disrepair claims are not subject to the same fixed-fee costs regime as personal injury claims.
The funding arrangements for disrepair claims have changed over the years. Due to cuts in legal aid, there is only funding for the most serious cases of disrepair or counterclaims. As a consequence, a lot of disrepair claims are run on conditional fee agreements, which are more commonly known as “no win no fee”. Under such agreements tenants may not be required to pay costs in the event that their claim is unsuccessful. These funding arrangements can encourage tenants to bring claims with no merit purely on the basis that they have little to lose if the claim should fail.
Rent arrears have become a big issue for landlords in recent times. Where a tenant has had possession proceedings brought against them, they can counterclaim in those proceedings for the disrepair and seek an injunction for the repair works and compensation for the inconvenience caused by the disrepair. Legal aid is available for these types of claims.
In the past 15 months many tenants have been forced to spend more time at home. There is every possibility that spending significant periods of time may lead to some tenants noticing and becoming irritated by defects.
Budget restraints have resulted in some landlords being unable to invest in repair, maintenance and improvement works to the extent that they would like. With ageing housing stock, this presents obvious challenges.
The impact of Covid-19
During the initial stages of lockdown, many landlords were only prepared to attend to emergency works. They were not prepared to carry out non-urgent or routine issues. This position was reasonable in light of the uncertainties faced because of the voracity of infection and their overriding duty to protect the health and safety of tenants, staff and contractors.
MHCLG has since published Covid-19 and renting: Guidance for landlords, tenants and local authorities, which deals with disrepair. As far as repair and maintenance obligations go, nothing has changed, despite Covid-19. Landlords are still required to carry out works “within a reasonable time” once there is a defect. What is deemed a reasonable period of time will ultimately depend on the nature of the defect, the impact it is having on the occupants of the property and when the landlord was notified.
The guidance makes clear that a landlord’s repair obligations have not changed but appreciates that planned inspections and maintenance may be more difficult at present. It suggests that issues should still be reported to a landlord but that a pragmatic and common-sense approach should be taken to non-urgent issues that are affected by Covid-19-related restrictions. For urgent issues, every effort must be made to resolve the problem, particularly if it affects the tenant’s ability to live safely and maintain their mental and physical health in the property.
The current guidance relating to carrying out works/inspections in other people’s homes can be summarised as follows:
If tenants are not self-isolating, tenants can allow access for routine inspections, essential and non-essential repairs and maintenance and planned maintenance.
Landlords should be aware that some tenants may still want to exercise caution and should respect this when engaging with their tenants.
No work should be carried out in the home where a tenant or the household is self-isolating.
The disruption caused by Covid-19 to landlords is unprecedented and unquantifiable. With little warning landlords have had to deal with and adapt internally to remote working, furloughed staff and contractors, vulnerable tenants, shortages of materials and also supporting those staff, contractors and tenants who contracted Covid-19.
Covid-19 has inhibited landlords in responding to and dealing with disrepair claims swiftly. Reduced staff and contractor levels has meant that some landlords have struggled to clear the backlog of works required as well as carrying out other planned maintenance and programmed works. In addition, several contractors have had to cancel and rearrange works because they lacked the necessary materials as a result of supply shortages during the pandemic.
The Pre-Action Protocol for Housing Conditions Claims (England) sets out specific procedures and timetables that must be adhered to once a tenant initiates a housing disrepair claim. Covid-19 has completely disrupted this process. Independent experts have been unable to carry out inspections. Landlords have had to cancel and try to rearrange inspections and works. In some cases, where tenants are shielding or vulnerable, works and inspections scheduled to take place last year are still outstanding due to no fault of the landlord or tenant. A landlord’s failure to complete works also heightens their potential exposure to having to pay the tenant’s reasonable legal costs.
In addition, the courts have been gravely impacted by Covid-19. Those disrepair claims that have been litigated and required judicial intervention have been delayed while the court continues to adapt its processes and works its way through the backlog.
When dealing with repairs, landlords should continue to:
prioritise the most urgent works;
document the reason for any delays (eg no access, works cancelled as a result of Covid-19, etc); and
communicate with tenants and their solicitors regarding the issues of access and works.
What does the future hold?
As restrictions are gradually eased, landlords are slowly finding the time and resources to address the plethora of outstanding works and inspections. It will take time, but landlords and their associates are working tirelessly to ensure that any outstanding and reported defects in properties are attended to.
It is unlikely we will see a reduction in the amount of disrepair claims being brought in the immediate future because, in addition to all of the challenges associated with the Covid-19 pandemic, claims management companies and solicitors acting for tenants are seeking to escape the fixed-costs personal injury reforms to increase their revenue streams. It is important to note that an increase in claims being brought by tenants may not translate into an increase in successful claims.
Landlords are generally showing a greater understanding and desire to tackle the issue of disrepair. Many landlords are now feeling the benefits of an enhanced focus on their record keeping, ensuring that their records contain sufficient detail and information placing themselves in the best possible position to defend disrepair claims. The formation of best practice groups and sharing of experiences and knowledge from one landlord to another will be invaluable.
However, following the fixed recoverable costs consultation in 2019, it is more than likely that some form of fixed-fee costs regime will be implemented sooner rather than later for disrepair claims. There is no magic cure for disrepair, and it is likely to continue to exist in some form, but the introduction of fixed fees will likely shift the focus of claims management companies, solicitors acting for tenants and tenants in the future. Watch this space.
Mark Gannon is an associate in the housing and regeneration team at Brabners
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