Fixed costs in housing disrepair costs delayed by two years
1 March 2023
Landlords will be very disappointed by the news that the Government will delay the implementation of fixed costs in housing disrepair costs by two years.
The decision is not entirely unexpected given the level of lobbying by tenant lawyers and charities over recent months, together with high profile media cases, particularly in respect of the tragic death of toddler, Aawab Ishak.
A Ministry of Justice (MoJ) spokesman said: “We want to reform civil justice costs because giving all parties certainty upfront will ensure no one is locked out of justice for fear of how high their legal fees might be if they lose.”
The vast majority, if not all, the cases brought by tenants are through a Conditional Fee Agreement otherwise known as “no win no fee” agreements. Without such a fee arrangement, most tenants would not be in a position to bring a claim and so the risk of adverse legal fees remains low.
The MoJ spokesman went on to say:
“However, it is important that our reforms are aligned with wider reforms in the housing sector which is why we’ve taken the decision to delay introduction in these instances by two years.”
The Social Housing Regulation Bill is currently going through Parliament, which is intended to address both the regulation of social housing and the terms of approved schemes for the investigation of housing complaints. The intention is for housing complaints to be dealt with quickly and fairly, with increased powers for the Housing Ombudsman.
Whilst the reforms with the Housing Ombudsman will hopefully offer tenants a better means of redress for those landlords who are not complying with their duties, it is unfortunately likely that tenants will instead continue to be encouraged to make legal claims by tenant solicitors who no doubt promise a better financial outcome.
Public services are under financial pressure and social housing landlords are no different. The legal spend involved in dealing with disrepair cases only depletes precious resources, which would be better invested in their properties and tenants.
The introduction of fixed costs would have gone some way to ensuring that claims were focused on resolving matters for the tenant expeditiously, but far too often they become costs driven resulting in a delayed outcome for the tenant. For example, there are firms who discourage the tenant from allowing their landlord’s surveyor access to their property in order that they can instruct their own surveyor at a significantly higher cost. In the meantime, their client remains in a property potentially in a state of serious disrepair. These surveyors are often instructed via an agency who share directors with the tenant’s solicitors, which clearly causes concern around conflict of interest issues given the Courts require that experts should be independent.
It is unfortunately the case that despite other costs reforms such as the introduction of law on proportionality, legal costs continue to vastly outweigh both the costs of damages and repairs.
Far too often, landlords are forced into paying higher legal costs simply to avoid the threat of Court proceedings at the time of settlement. The same issues arise in relation to costs as the only opportunity for a landlord to ask the Court to consider issues such as proportionality is via a Court assessment of the costs. Whilst costs below £75,000 are assessed on paper and the costs of the process are capped at £1,500 plus VAT and the Court fee, this still carries an element of risk and simply adds to the legal spend. However, there will be instances where landlords will be better served in asking the Court to determine the costs. Part 36 offers can be made on costs so that if a landlord has made an offer on costs and the tenant does not “beat” that offer on assessment, the Court will award the costs of detailed assessment (costs) proceedings to the landlord.
As things stand, the next general election is not until January 2025. Fixed costs are unlikely to be revisited, for the housing disrepair sector, by the current government and it is difficult to predict whether they will be a priority for the next government. As inflated costs claims are likely to continue for at least the next two years, landlords may wish to consider a more robust approach to those cases which warrant a stronger challenge. Whilst an assessment of costs may appear disproportionate based on the figures of a single case, it will serve landlords well if the Court has the opportunity to consider common issues (such as whether the agency uplift applied to surveyor’s reports are reasonable and proportionate), and therefore create a body of case law to help bring the costs to a more sensible level.
How can Birketts help?
Birketts has an in house costs team to assist our clients in challenging tenant’s costs. Our expert lawyers can advise on where the costs can be challenged, appropriate settlement parameters and negotiations. If required, we can also assist with the preparation of Points of Dispute/Replies and detailed assessment hearings.
If you have any queries regarding the content of this article or wish to discuss any issue regarding costs, please contact Sarah Burwood, Melanie Bonté or Naomi Chan-Jackson to see how Birketts can help you.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at March 2023.