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Housing disrepair claims on the rise

24 January 2019

There has been an unprecedented surge in the number of housing claims where it is alleged the property is in disrepair, resulting in extensive financial exposure to private landlords, local authorities and insurers. DWF's intelligence suggests that these types of claims are presented by a handful of solicitors and claims management companies. Denise Brosnan, Hannah Turner and Samuel Dawber take a look at the potential reasons for the rise and how local authorities can deal with this increase and help combat claims farming practices.

Homes (Fitness for Human Habitation) Act 2018

The Homes (Fitness for Human Habitation) Act 2018 ("the 2018 Act") received royal assent on 20.12.18 and will be coming into force from 20.3.19.  This will have a dramatic effect on a landlord’s obligations as well as opening the potential floodgates for further legal claims if a property is not fit for human habitation at the start and through the duration of the tenancy agreement.

The Act replaces section 8 of the Landlord and Tenant Act 1985 ("the 1985 Act") which requires landlords to let properties “fit for human habitation". However, those provisions only applied to properties within a certain rent limit. The new Section 9A removes any rent limit and now imposes a covenant on the landlord, that the dwelling (previously referred to as a “house” only) is fit for human habitation at the start of any lease and will remain so throughout the term of the lease.

There are a number of determining factors to consider when assessing whether a claim is fit for human habitation pursuant to section 10 of the 1985 Act.  The salient (not exhaustive) points are:

  • Repair
  • Stability
  • Whether damp is present (NB have regard to whether a dwelling has had cavity wall insulation)
  • Internal arrangement in respect of occupancy;
  • Natural lighting i.e., are any of the windows boarded up or does the property have windows?
  • Ventilation
  • Water supply
  • Drainage and sanitary conveniences
  • Facilities for preparation and cooking of food, and for the disposal of waste water; and in relation to a dwelling in England, any prescribed hazard.

If a landlord fails to maintain a property which is fit for human habitation, the Act will allow tenants to take action against their landlord if their home or the building in which it is located contains a hazard which presents a risk to their health or wellbeing. As a result, it is expected to contribute towards the increase in claims against them.

Housing disrepair claims: a target for claims management companies?

In its 2018 annual report the MOJ claims management regulators showed that there had been over a 100% increase in reported revenue from housing disrepair claims in the previous 12 months. The regulator confirmed that this coincided with a surge in reports of activity in this area from local authorities and social landlords. 

Whilst an increase in disrepair claims is not a new concept, it is unlikely that landlords and local authorities will see a reduction in these types of claims as solicitors, claims management companies and assessors look to escape the fixed costs personal injury reforms to increase their revenue streams. DWF LLP have already demonstrated this with cavity wall insulation claims which have been described by the Government of the day as the new PPI.

Disrepair claims are often driven by professional enablers given the benefits they reap from the revenue stream.  Housing estates are being targeted and methods such as letter dropping, cold calling and the use of social media are drawing in a significantly large number of tenants. Social landlords in particular are being targeted. The same methods were historically used to target personal injury claims prior to their ban of this means of targeting, for example the targeting of claimants by way of marketing techniques. They are an attractive solvent defendant for claims management companies looking to exploit the system to drive profits from sales to solicitors and dissatisfied tenants are an easy target. Housing disrepair helplines are being set up and 'no win, no fee' agreements are being offered, increasing the potential for disrepair cases to be heard.

Defending claims

Upon receipt of a complaint relating to disrepair, act quickly and fully document any contact with tenants and all steps taken to resolve complaints. Ensure you have an effective and efficient reporting system in place and provision of training to ensure good housing management and co-ordination.

Once a claim is received, ensure all documents relating to any works carried out, visits to the property, inspection records, complaints records and any maintenance logs are collated to strengthen the defence.

A disrepair claim can be defended if the landlord can show that it responded promptly to any suggestion of disrepair and that any necessary works were carried out within a 'reasonable' period of time. What is 'reasonable' will depend on the nature of the repair to some extent - local authorities should aim to arrange for works to be carried out as quickly as possible. Further, we must stress the importance of liaison between insurance/legal and housing teams in local authorities and housing associations as this provides the opportunity to be able to present counterclaims for any rent arrears in housing disrepair claims.

High volumes of claims can be overwhelming and push the defendant towards settlement. Landlords that have a large stock of rented properties may want to take a proactive approach in anticipation of a high volume of disrepair claims. It is important to review contracts to consider whether they place obligations on the landlord which go above and beyond that required by statute. Landlords also need to ensure that the systems employed when dealing with notices of disrepair are best practice and will provide an effective platform to defend these claims.

If you would like more information on DWF's bespoke housing disrepair strategy/intelligence tools please contact: Perry Hill, Denise Brosnan, or Dave Toulson.

Our DWF housing claims team is known for delivering a unique and bespoke service to every client.  We understand that the nature of housing claims requires expertise that develops and changes, as the legislative and regulatory landscape evolves. Whether providing in-house training, regular updates, newsletters and briefings, or delivering industry-focused seminars, regardless of the nature of the claims you face, our commitment to long-standing relationships and adding value sets us apart.