Council to run ADR pilot to tackle soaring number of housing disrepair claims, review whether scheme can be made mandatory for disputes above £5,000

Lambeth Council is to consider introducing an alternative dispute resolution (ADR) scheme, amongst other initiatives, in an effort to tackle a surge in housing disrepair claims.

The local authority's ‘Housing Disrepair Project’ is to be discussed by its Housing Scrutiny Sub-Committee next week (item 6).

The report prepared for the meeting reveals that the number of live disrepair cases at the end of the second quarter of 2021 was six times higher than in 2017.

“The majority have been submitted by claims lines based outside of Lambeth as law firms seek to supplement loss of revenue throughout the COVID pandemic – housing disrepair being one such revenue stream. Claims Management Companies who previously focussed on PPI claims have also turned to housing disrepair,” it says.

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The report notes that in 2019/20, the average settlement was £6,500 with a total annual spend of £2,716,198 comprising legal costs and compensation. This increased to £3,179,652 in 2020/21.

It says: “Up to 80% of compensation money awarded can end up with the legal firms rather than going to the residents through conditional fee agreements – residents often reporting they had no idea that when they appointed their legal advisor under such an arrangement that they would receive so little of their compensation.”

The report adds that the estimated average cost to settle cases via ADR is much lower – estimated at £3,500 (of which £1,000 relates to the cost of an arbitrator).

Although the council has a complaint procedure in place, it does not offer tenants or leaseholders the opportunity of resolving disputes via ADR.

“An ADR process will give the council the ability to prevent the repair issues coming to the attention of the claims lines by remedying the repair issues early - before a resident instructs a solicitor,” the report says.

A Disrepair Project Group, created to ensure the actions are delivered, will work with residents, including the appointment of arbitrators to "provide a more equitable and resident-focused alternative to litigation".

The ADR scheme proposed for Lambeth is "simple", according to the report, and involves an independent barrister to hear and award cases.

"The intention is for the arbitration scheme to be up and running in pilot form before the end of this financial year. It will be reviewed monthly and then a full annual review will inform whether any changes need to be made," the report says.

The council will also be pursuing an amendment to the terms of Lambeth's Tenancy Agreement so that arbitration becomes an alternative form of dispute resolution.

Lambeth estimates that 120 cases will be covered by the pilot scheme in 2022/23 at an estimated cost of £120,000 per annum.

The council plans to invite five barristers' chambers to tender proposals to act as independent arbitrators on disrepair claims.

The Housing Disrepair Project came after Lambeth's Housing Services undertook a "broad appraisal" of disrepair. It sets out a list of actions the council should prioritise and complete over the next 12 months.

In all, the report lays out 16 actions to address rising disrepair cases. These include:

  1. Map out Disrepair Process - review and map out the disrepair process and pre-action protocol to identify critical events, interdependencies, opportunities and controls;
  2. Project Manager – appoint a project manager to record all stages of all disrepair cases and provide a proactive case management system;
  3. ADR Process – implement an arbitration process to provide residents with an alternative dispute resolution procedure; review whether existing tenancy agreements can be amended to make arbitration mandatory for disputes above £5,000;
  4. Freehold sales – undertake a marketing campaign to implement a more proactive approach to selling the freehold of a property to the leaseholders where it is wholly occupied by leaseholders.  At present the council has a continuing liability for disrepair in these situations;
  5. Additional Contracting Resource – allocate additional contracting resource (including Community Works) to speed up the delivery of disrepair remedial works;
  6. Robust Contract Management – embed dedicated and financially linked disrepair KPIs into all relevant repair contracts; undertake dedicated weekly case-specific disrepair meetings with all contractors;
  7. Strategic Data Review – undertake a detailed review of disrepair and general repair data to identify trends; develop disrepair ‘hotspot’ maps;
  8. Strategic Asset Partner – appoint a strategic asset partner to undertake stock condition surveys of all assets susceptible to disrepair and identify an investment strategy to reduce disrepair;
  9. Additional Technical Support – realign surveying teams to provide additional technical support and accountability on disrepair matters;
  10. Surveyor ‘Buddy’ Programme – develop a buddy system whereby surveyors provide ongoing support to residents experiencing damp or condensation issues;
  11. Specialist Disrepair Training – all technical staff involved in the disrepair process to receive specialist training;
  12. Preventative Maintenance – develop a planned maintenance programme that targets the prevention of disrepair;
  13. Signposting / Referral Procedure – develop a disrepair signposting procedure accessible to all staff; develop a referral procedure for the Income Team;
  14. Resident Awareness and Early Intervention – provide residents with damp and condensation awareness tutorials to prompt early reporting of disrepair that can be remedied without legal proceedings;
  15. Repairs Manual – update Repairs Manual to provide key information on damp and condensation and the benefits of the new arbitration process; and,
  16. Disrepair Forum – create a disrepair forum with other local authorities to share experiences and develop preventative solutions.

Adam Carey

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