Just when you thought it was safe to go back into the water, a new wave of claims against solicitors is gathering pace. This time, the catalyst is the Right to Buy (RTB) scheme for council house tenants. Below we explain the background to these claims and the issues they give rise to.
The scheme is nothing new. Originally introduced in the 1980s, it was a social policy intended to create more home owners. Its statutory origins lie in the Housing Act 1985, as amended. The scheme operates by providing qualifying council house tenants with a right to purchase their home for a discounted market value. How much of a discount depends on the how long the tenant has occupied the property. The maximum discount is 70 per cent.
Following the introduction of the scheme, an array of companies were created to put it into effect. In many cases, and for a set fee, those companies offered to facilitate the process for tenants, by completing forms, arranging mortgage finance and instructing a conveyancing solicitor. This service was then marketed by individual brokers, often door-to-door.
The scheme was a success. It delivered an increased number of home owners and was accompanied by a conveyancing process that protected the proprietary interests of those involved. However, an increasing number of purchasers have been encouraged by certain law firms to consider if they are dissatisfied with the implementation, in particular the expense involved.
This has resulted in purchasers making claims against their professional advisors. Whilst it is unclear how many claims have already been made, the numbers have the potential to be substantial. It is far from clear how these cases will be progressed/managed.
For insurers, policy issues around notification and aggregation will arise, and as regards the claims themselves, they appear largely opportunistic. As such, defence co-ordination will be a relevant factor to consider. We have seen this sort of litigation before, and no doubt another event will result in some law firms seeking to exploit an opportunity for mass litigation, but it is imperative that insurers are not unduly concerned by the potential scale of it when determining how best to proceed.