Government pressed to rule out fixed costs for housing cases

The Law Society has urged the government to enshrine the ongoing exemption of housing cases from the fixed costs regime.

The Ministry of Justice has already committed to keeping the exemption in place until at least October 2028, despite fixed recoverable costs being in place for most civil cases valued up to £100,000.

The Civil Procedure Rule Committee, working alongside the MoJ, has recently run an evidence-gathering exercise on how the whole FRC regime is working. This was partly carried out to improve understanding of how the housing-related costs regime currently operates.

The MoJ said the information gathered will not be used to make decisions at this stage, but it may help inform thinking when the regime is reviewed in 2028.

In its response, the Law Society said the government should make a long-term pledge to rule out the imposition of fixed costs.

Brett Dixon, Law Society vice president, said: ‘Housing cases should continue to be excluded from the extended scheme. We suggest this exclusion should be made permanent, given our concerns about how the regime is operating and the catastrophic impact FRCs could have on housing legal aid providers.’

The Jackson review, upon which most of the fixed costs reforms in 2023 were based, had recommended that it should be extended to housing disrepair and possession claims.

Local authorities, which have faced rising numbers of claims from tenants supported by a new cohort of specialist law firms, would naturally support any such move.

But the government is believed to be wary of making costs reforms in this field due to the substantial ongoing change in the housing sector caused by the Renters’ Rights Bill, Leasehold and Freehold Reform Act 2024 and Awaab’s Law, which is designed to address damp and mould issues in social housing.

The FRC exemption was extended on the basis that more time was needed to allow for these pieces of legislation to take effect.

Writing last year on the issue, costs lawyer and director of Kain Knight Nick McDonnell said there were valid reasons for continuing to keep fixed costs out of housing disrepair cases.

‘The financial value of the claim can be low, but the claims themselves can be complex and of profound importance to the client, many of whom are highly vulnerable, especially when a claim may result in them having to leave their home,’ said McDonnell. ‘The claims are mostly non-monetary, and the remedy sought by a tenant from a landlord is usually for specific performance to complete repairs to a property.

‘Where there are no, or very low, financial damages in addition, most claimants will be unable to contribute to their legal fees and if the legal representatives specialising in those areas are subjected to fixed recoverable costs, it is highly likely those legal representatives will be unable to conduct claims profitably for the fixed recoverable costs alone.’

On the wider fixed costs extension implemented in 2023, the Law Society said the regime is currently failing to deliver what it promised.

Dixon added: ‘Our members represent both claimants and defendants and they have told us that changes must be made to the current process to help mitigate the issues with the regime.

‘These include concerns about access to justice. The FRC regime is appearing to unfairly penalise the successful party, who could now be responsible for paying the difference between lawyers’ reasonable costs and the amount of FRCs, rather than this cost falling on the unsuccessful party. This disparity should be looked at as a priority.’