Compensation policies - housing association

Housing associations - there is a lot to be gained from putting compensation policies in place.

Disrepair claims have always been the scourge of social landlords. Whilst they can be avoided with a sensible programme of maintenance and management most housing associations will experience such claims from time to time.

Most tenancy agreements are silent in respect of a tenant’s entitlement to compensation for disrepair. A well worded clear policy on compensation claims can ensure that such claims are dealt with quickly and ensure housing associations avoid paying out large and unnecessary sums.

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Case background

Stephensons report that in one such disrepair case a tenant brought action against a housing association for substantial compensation owed due to disrepairs of the property over a prolonged period of time. The tenant sought to recover in excess of £20,000 in relation to the damage that had arisen and the failures of the housing association to repair the said damage. The housing association carried out several works relating to the structure of the property to extinguish the cause of the damage. The work was complex and the housing association restructured various parts of the property including the roof.

Arguably the tenant had suffered losses having been subjected to some persistent disrepair, albeit the landlord had attempted some repairs. The claim was settled for £2000 to which the tenant accepted. The persuasive factor was the housing association’s carefully worded and clear compensation policy. The difference in the amount originally claimed for and the amount in which the claim was settled is vast and illustrates that there is a lot to be gained by housing associations relying on such compensation clauses.

Compensation policy

Any compensation policy should cap the amount in which a tenant can recover in respect of damages that has gone without repair within a time limit. The housing association in this case had inserted a clear clause whereby a tenant could be paid a base amount and an additional sum per day whilst the repairs remained outstanding. The policy included a provision whereby a ‘disturbance package’ would be paid to the tenant by way of recognition that the repairs would limit the tenant’s use and enjoyment of the property where they are moved to alternative housing whilst the landlord repaired the property.

The housing association inserted a clear provision relating to partial loss of the use of the property. In this instance the kitchen was claimed to be unusable by the tenant. The wording of the compensation policy meant that the tenant could only claim for up to 40% of the rent value in compensation as this did not affect the tenant’s enjoyment of the entire property. The overall policy has allowed the housing association to control the compensation procedure when such claims arise and has put them in a more favourable position than being forced to pay the initial £20,000 claimed.

Such policies are important, particularly when dealing with a tenant who is not motivated by costs.

Conclusion

Housing associations can protect themselves from a claim arising in this nature by ensuring the compensation procedure is in place. It is the difference of paying out a large sum and becoming involved in protracted and expensive litigation, or settling on a basis of minimal loss to the landlord. In summary, there is a lot to be gained; or rather less to lose from ensuring a well constructed compensation policy.

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