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Councils spend £45m on legal disrepair claims in four years
Councils in England spent at least £45m on legal disrepair claims brought by tenants between 2017-18 and 2020-21, Inside Housing can reveal.
A Freedom of Information (FOI) request sent by Inside Housing to stock-owning councils across England showed that in the four years up to the end of March 2021, 70 authorities which provided figures faced 11,996 claims, with 55 paying out a total of £45.4m dealing with claims.
This figure grew to councils paying out £55.1m when the period was stretched to November 2021, with that period also seeing an additional 4,875 cases.
Of the 70 councils to respond to the FOI on cases, 65 (93%) local authorities had seen an increase in 2020-21 when compared with 2017/18.
Of those authorities that provided figures for every year, the total costs increased by 77% from £7.9m in 2017-18 to £13.8m in 2021-22.
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The costs facing councils are likely to be significantly higher as many of them did not provide any figures, including more than half of London authorities. Some that did provide figures did not provide the full costs.
The issue appears acute in London. Of the 29 boroughs that own and manage housing stock, including City of London, 12 provided costs to Inside Housing. These revealed they had spent more than £39m on claims since 2017-18.
The 17 councils that provided figures saw the number of cases increase to 7,932, which was up 135% when compared with 2017/18.
It is also a primarily urban problem: the 12 London boroughs plus Birmingham, Manchester and Sheffield represent £48m of total costs – 87% of the total figure. The 11 London councils which provided figures for every year saw costs increase by 53% from £6.4m to nearly £10m in 2020-21.
Lambeth topped the list of total costs paid since 2017-18 at £12.1m, followed by Southwark at £10.1m and Birmingham £5.9m.
The list does not include the councils which refused to provide the figures, as they claimed that finding the information would go over the £450 cost or 18-hours limit permitted by the FOI Act.
Lawyers told Inside Housing that the increases were down to cuts to legal aid in 2013, claims management firms that previously focused on personal injury claims moving into disrepair, and rising cases of disrepair due to ageing stock, lack of investment and social landlords failing to do repairs.
Councils’ responses
Lambeth Council spokesperson: “Lambeth has suffered over a decade of funding cuts through austerity measures and reductions in its income brought about by central government policies; funds the council would have otherwise invested on repairs and maintenance to improve estates across the borough.
“Lambeth, along with other local authorities is experiencing a significant increase in the number of disrepair claims. At the end of the second quarter of last year, we had 789 live disrepair cases – six times higher than in 2017.
“The majority of these claims have been submitted by claims lines based outside of Lambeth, as law firms seek to supplement loss of revenue throughout the COVID pandemic [and] housing disrepair being one such revenue stream. Claim management companies which previously focussed on PPI claims have also turned to housing disrepair.
“The council is introducing an arbitration scheme for disrepairs, as tenants’ rents currently fund rising costs and compensation. An investment of £600,000 into the process will then seek to reduce the overall bill to tenants and redirect funds to deliver frontline services to tenants.
“Despite the financial restrictions, Lambeth has invested hundreds of millions of pounds in improving its council homes and estates in recent years. Homes on the Leigham Court Estate have benefitted from improvements including new bathrooms and kitchens under the Lambeth Housing Standard.
“Lambeth is now pushing ahead with a rolling programme of improvement works, including windows, for properties on the Leigham Court Estate. This will include work to 60 homes in this financial year and more in 2022-23, simultaneously the council are undertaking external repairs, decorations and other works to 41 homes on the estate.”
Stephanie Cryan, cabinet member for council homes and homelessness at Southwark Council: “Southwark is the biggest social landlord in London and one of the biggest nationally. This explains why we have a high number of legal disrepair cases. But it is also why we are adept at managing these cases in challenging times.
“We work to settle most legal disrepair cases without the need to attend court and have closed nearly twice as many claims in the last year, when compared to the year before. However, if we believe a claim is questionable we will always defend the matter. We were recently awarded £17,000 in costs, following the successful defence of such a claim.
“One of the underlying causes for legal disrepair cases in Southwark, and for every other social landlord, is the universal problem created by complex and ageing housing stock.
“As part of our work to support council tenants, we identified a primary cause for repairs, leaks from another property, and have worked to address these with an innovative and people-focused Leaks from Above team. Our dedicated team supports residents from identification to resolution of their repair.
“Another problem that local authorities face are ‘claims farmers’ who litter our estates with flyers and chase work on a ‘no win, no fee’ basis. Southwark is also home to a large number of solicitors, who focus on this area of work.
“We have explored different ways of managing claims, to address their growing number.
“This work and extra resources have helped us to significantly reduce the average cost of settling a legal disrepair claim over the past five years.
“As a result of our updated approach, we are seeing some of our challenges resulting in cases being withdrawn.
“This is becoming more regular and has helped to reduce disproportionate court costs.”
Croydon Council spokesperson: “We are aware of rising disrepairs claims across all social housing providers in recent years.
“Croydon is itself at the start of a wide-reaching housing improvement journey to make sure tenants always receive the high standard of support they rightly expect.
“We are committed to strengthening our responsive repairs service and are working closely with tenants to prioritise the improvements they identify as most important.”
Manchester City Council spokesperson: “Last year Northwards Housing was brought back in house to the council for the first time since 2005.
“We have since been working to review how the service is operated, with the repairs process a key element of this piece of work.
“Even one repair request that escalates to a legal claim is one too many, and we are looking at the reasons tenants are not getting the service they expect and we are determined to ensure that the repairs process will continue to improve as a result.”
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