Government Call for Evidence a step in the right direction against disrepair ‘claim-farming’

Tenants who don’t feel that hazards have been addressed by their landlord can seek redress through the County Court, by bringing a claim against their landlord for housing disrepair. 

In housing disrepair (and other types of cases), organisations such as claims management companies may seek out people who might be able to make a legal claim so they can pass those claims on to law firms and earn a referral fee. Some solicitors also directly seek out individuals who might be able to make a claim.

Whilst claims management companies can play a valuable role in connecting tenants with legal remedies, there will also be instances where unscrupulous activity is resulting in vulnerable tenants being exploited.

The Solicitors Regulatory Authority recently published a thematic review and a discussion paper on high-volume consumer claims, including housing disrepair. The thematic review raised concerns that some of those operating in the sector may not be fulfilling their obligations to always act in their clients’ best interests and follow all the relevant rules and regulations.

Government has had reports of firms encouraging claims when it may not be in the tenant’s best interest, failing to warn tenants of risks involved, and offering counterproductive advice – for example encouraging a tenant not to let landlords in to carry out inspections or fix issues. This can result in tenants having to live with disrepair issues for longer and landlords being unable to undertake their legal duties.

Sarah Davisworth, a Partner in Forbes Insurance team, works with registered providers of social housing across the UK and has successfully defended social landlords against these types of claims. She explains: “Our experience has found that tenants will be convinced to restrict access to their homes by the promise of thousands of pounds in compensation payments.

“We’ve heard reports of tenants being targeted through social media, cold calls and direct mail. Misleading marketing can lure people in by asking ‘Does your home need work doing? You could be entitled to £1,000 in compensation.’ The ability to pursue a payout is made even more appealing by the promise of a tenant not having to pay any legal costs if their claim is unsuccessful. What tends to be less clear, is that these firms may a significant perfecentage of any compensation payment. 

“In some instances, the firms may make it appear they are acting on behalf of a social landlord, a charity, or trade organisation. The aim is to build credibility and confidence among tenants to make it seem like the restriction of access is a justified right to compensation.

“We’ve even received multiple claims of a similar nature from tenants all living on the same street, and within a short timeframe. This shows how systematically and intensively tenants are being targeted.”  Furthermore, it should be noted that cold-calling by solicitors is not permitted and the SRA has issued a warning to firms about this.

Earlier this month, the government launched a call for evidence to help them understand more about the role and impact of claims management activity and the scale of issues this may be causing in the process of redress for housing disrepair. This will allow them to determine what, if any, government action or regulatory improvements are needed.

Sarah adds: “The call for evidence is a step in the right direction against the levels of claim farming that is clearly going on, and shows that government has recognised the problem. However, there won’t be a ‘quick fix’, so housing providers need to continue to do all they can to protect themselves and their tenants.          

“Providers should have a clearly defined and formalised process in place, which provides tenants with a timely notification of access requirements and explains what will be happening and why.

“It’s useful for messaging to clearly explain the benefits to the tenant of a property visit and for communication to be delivered through multiple different channels, such as a phone call, letter, email and text message. Such steps create opportunity to enhance tenant understanding about the importance of access requirements and to schedule visits at their convenience.

“It's also crucial that social landlords document the entire process for seeking tenants’ agreement for access, and they may want to revisit practices for interventions where it’s problematic to organise and confirm property visits. For example, if a contractor has been repeatedly turned away from a home when attempting to undertake repair works, or there’s an instance where a person isn’t willing to agree access, it can help landlords if they are able to demonstrate the extra steps taken to understand what’s causing restrictions and the action taken to resolve matters.

“Social landlords may also want to tackle the issues of restricted access being encouraged head on; by alerting tenants to access restrictions being advised by untrustworthy operators and highlighting the problems this causes for tenants. Proactively asking people to flag any concerns about the condition of their home, as well as repair and maintenance requirements can also head-off possible interference from unprofessional firms.”

Any social landlords experiencing access issues that may be affecting their ability to comply with their legal duties under Awaab’s Law may benefit from support under our new Awaab’s Law Compliance Service.

For further guidance or assistance please get in touch.