Torus62 Limited (202015133)

REPORT

COMPLAINT 202015133

Torus62 Limited

10 March 2022

Our approach

1. The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme (the Scheme). The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.
2. Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

3. The complaint is about the landlord erroneously sending letters of tenancy breach and demand for payment in respect of water charges, and its handling of enquiries about these letters and the subsequent complaint.

Background and summary of events

Background and policies

4. The resident has been an assured tenant of the landlord, at the property, from 29 November 2010.
5. The landlord’s ‘Income Collection & Recovery Policy’ makes reference to its ‘current tenant arrears process’ although this process has not been provided to this Service.
6. The landlord has a two-stage complaint procedure whereby it aims to investigate, respond and put things right within 10 working days at stage one and within 20 working days at stage two, where a complainant is dissatisfied with its stage one response and requests escalation of the complaint.
7. The landlord collects money for water charges, which are set and levied by a utility company.

Summary of events

8. On 29 July 2019, the landlord sent the resident a letter which stated he owed £267.10 in arrears and that he was consequently in breach of the tenancy agreement.
9. The resident telephoned the landlord the same day to query the charge and an escalated conversation ensued, with which the landlord ended the telephone call.
10. Two months later, on 26 September 2019, the resident received a further letter from the landlord, advising that he now owed £266.80, again, this meant he was in breach of the tenancy agreement. It confirmed this was the total debt owing on all accounts including any charges for water.
11. On 2 October 2019, a letter was sent by the landlord stating the resident owed £291.48. The resident emailed the landlord with concerns about how payments were being allocated and the threats of eviction due to breach of tenancy within the letters.
12. The landlord responded on 7 October 2019 to explain that the letters the resident received were not eviction notices, rather, stage one of the rent arrears process. It confirmed that the resident was sent a rent statement on 2 October 2019 showing the last housing benefit received and indicating an outstanding balance of £27.62 which was a static balance that had been outstanding for a long period of time. The resident responded in disagreement with the information that was provided, explaining that he felt none of his payments for water charges were credited to the correct account and instead allocated towards the rent.
13. The landlord responded to the resident’s email reiterating that the letters sent were not threatening eviction, but rather explaining the account was in arrears. The landlord advised that by the resident paying short on the water charges, he was effectively in breach of the tenancy agreement.
14. On 8 October 2019, the landlord emailed the resident, apologising for its delay in contacting him back following his communication on 1 October 2019, confirming the issue had been raised with its member of staff. The landlord confirmed that the resident was a regular payer and the balance in question of £27.62 was a static balance on the rent account going back as far as 2016. It confirmed it was this amount that triggered the arrears letters to be issues in line with its arrears pursuance process. The landlord apologised for the distress caused and as a gesture of goodwill offered to write off the static debt.
15. The resident responded declining the debt write off and requested details of exactly what the debt related to. The resident requested an explanation regarding why his water rate payments were not credited in full to the water rate account, a full written apology for being advised that his water rates were incorrectly in arrears, confirmation that this situation would not affect his credit file and assurance that residents’ concerns are taken seriously.
16. The landlord responded advising that payments made to any tenants account will firstly be made against the rent due. It explained that because housing benefit is paid to the account in arrears every four weeks, when the resident makes a payment and the account appears in arrears, that payment will always default to the rent due and not the water. The landlord apologised for the distress caused and explained that the letters were issued in line with its process. It confirmed it would not affect the resident’s credit rating and confirmed that it welcomed tenant’s feedback and concerns to enable It to improve its service where possible. The landlord attached two rent statements, one from April 2004 to January 2018 and another from January 2018 to date.
17. The resident responded on 8 October 2019 with concerns about the payment allocation. As there were two accounts advised to the resident 0010 being the rent and 0020 being the water charges, the resident was unhappy that his water payments were being used to offset the rent account. As such, he would continue to have arrears on the water charge account even though the landlord was aware of how housing benefit was paid.
18. The landlord responded the following day to explain that although there were different sub-accounts for the rent and water charges, these sat on the same account as they are charges for the same tenancy. The landlord suggested the resident speak with his local authority to find out if they could amend his housing benefit payments to weekly. The landlord explained that there was a debt on the account on 12 April 2004 however it was unable to confirm the specific date the payment went into arrears. It advised the amount fluctuated due to the frequency of payments on to the account and stood at £27.62. Whilst the landlord advised it could move the credit showing on his rent account to his water charge account, it would not alter the balance outstanding on the overall account and if a payment is received directly again from the resident, and the rent is showing in debt, the payments will be allocated to the debt first.
19. On 21 October 2019, the resident emailed the landlord expressing his dissatisfaction at the correspondence received and disputed he was in arrears. He advised he had paid all water charges owed and believed the money he had paid to the landlord for water, had not been transferred to the utilities company, resulting in it appearing as though he was in deficit.
20. One year later, on 29 September 2020, the landlord wrote to the resident, advising he owed £361.34 in arrears on the account. It confirmed this was the total debt owing on the account, including any water charges.
21. Four months thereafter, on 29 January 2021, the landlord sent a text message to the resident advising that he owed £17.32 in water charges. The resident made a formal complaint the same day, about the letters sent by the landlord with regards to water charge arrears which he did not owe and the length of time the situation had been ongoing for, despite him actively trying to get answers and to resolve it.
22. On 4 February 2021, the landlord sent its stage one response to the complaint. The landlord explained that the water charges in question were collected by the landlord as management agent and set by a separate utilities company. It added that statements of charges for water were sent each February for the coming financial year.
23. In term of monies owed, the landlord advised that two water payments for the weeks commencing 23 and 30 March 2020, were not received and therefore £17.32 in water charges were due.  The landlord asked for evidence of this amount having been paid if that was the case and also asked for evidence of its lack of response in relation to the issue.
24. The resident was dissatisfied with the landlord’s response to his complaint and so it was escalated to stage two of the complaints process. On 9 February 2021, the resident sent information and receipts of water payments in March 2020 to the landlord, to evidence payment of his water bills.
25. On 17 February 2021 (which the resident has said was received on 14 May 2021), the landlord provided its stage two response to the complaint. It did not uphold the complaint, reiterating that the water charge is set by the utilities management company and not by it and that it collects the money on its behalf.
26. The landlord reiterated also that its statement of charges is sent out each February, which become payable from April, in accordance with its obligations and the tenancy agreement. The landlord acknowledged the receipts for the payments the resident made in March 2020. It included within its letter an extract of the rent and service charge account and said that this showed £17.32 was owed on the water charge, although it had decided to waive this as a gesture of goodwill.
27. On 14 May 2021, in an email to the landlord, the resident advised he had commenced court proceedings and an undated ‘N1’ court claim form for £3980 has been provided to this Service, although there is no further suggestion that court action has been pursued.

Assessment and findings

28. Notwithstanding that this Service has not been provided with the ‘current tenant arrears process’, the landlord was entitled to send a letter to the resident advising him that he owed money for arrears on the account including water charges, where this was the case and, where letters were not responded to, this may have led to a breach in his tenancy agreement which it would be prudent for the landlord to advise.

 

29. However, it was not the case that the resident owed the significant amounts demanded and that is the crux of this issue, with the secondary issue being that the letters continued, and caused distress to the resident.

 

30. The resident contacted the landlord about the issue on a number of occasions across a protracted period of time and despite this, the problem continued, and it is clear from his contact that he became increasingly anxious and distressed about the situation. 

 

31. The landlord responded to the resident’s queries in October 2019 and did attempt to explain how payments were allocated to the account.

 

32. I note that on 8 October 2019, the landlord incorrectly advised that the resident had paid short on the water charges, however it did correct this advice the next day, to confirm that it was actually a static debt of £27.62 that triggered the arrears letters. The landlord did apologise for the distress caused and offered to write off this debt. I note that the resident declined the offer and instead requested that supporting evidence for this debt was provided.

 

33. The landlord did explain that the debt was showing as far back as 2004 and whilst it was able to provide him with the rent statements dating back to April 2004 showing the debt, it was unable to pinpoint exactly when this occurred. It is not unreasonable that the landlord was unable to provide this information due to the length of time that the debt had been on the account. Whilst it was unable to confirm when this debt occurred due to the time that had past, it offered to write off the amount and this was a reasonable action by the landlord as it was not obliged to do this.

 

34. In his correspondence with the landlord, alongside disputing the amount owed, the resident asked for breakdown in water costs and asked for copies of the water account, which was not provided, save for a small extract of the account in its stage two response to the complaint. I do note that it provided him with his rent statements dating from 2004 however, it could have also provided the water statement as well to show how payments were allocated to this and for the resident to cross check this with payments he made.

 

35. In the documentation provided to this Service, the resident has referred to being told by the landlord when he contacted it to query the letters, that they were auto generated and to ‘ignore them’, although this response by the landlord has not been provided as supporting evidence.  

 

36. It is the case, however, that auto generated letters are increasingly created and sent by the systems of organisations and landlords’ and that the nature of auto-generation means that sometimes mistakes are made.  I do appreciate that in this instance, the way in which the payments are made by the local authority for housing benefit have resulted in arrears reflecting on the residents account and misallocation of manual payments for water charges. The Service appreciates that the landlord did explain this to the resident and that it would subsequently keep reoccurring. As the payments were automatically allocated to the rent debt first, the landlord was limited with regards to what it was able to do about this issue reoccurring. It did suggest to the resident to speak with the local authority about the option of changing his payments to weekly which was reasonable advice to stop the account appearing in arrears over four weeks.

 

37. In its response to the complaint, the landlord confirmed that the resident in fact owed £17.32, with it writing this amount off at stage two, as a gesture of goodwill. It was appropriate that the landlord clarified the situation in respect of monies owed and reasonable in its decision to write off the £17.32. It was reasonable to write off the money it said he owed because the landlord was not obliged to do this. 

 

38. I note that the resident provided four receipts for the payments he made for water charges in March 2020 and noted that he paid these in advance. The landlord has not clearly addressed this to reflect how the payments were allocated towards the account and the reason for the outstanding water balance, particularly as it is noted in the tenancy agreement that this is paid in advance on the Monday of each week. There is no evidence to indicate where the resident missed any water charge payments.

 

39. Responding to a complaint, provides an opportunity for the landlord to demonstrate that it has heard and understood the issues raised and a chance to put things right. The landlord, whilst reassuring the resident that he only owed £17.32 and that it would write this off, did not use the complaints process as an opportunity to satisfactorily resolve the complaint by providing advice about the water rate charges and how this figure is calculated. 

 

40. The resident’s questioning of how the figures were arrived at, was not fully addressed, with the landlord simply stating that it did not set the amount and that it was collecting it on behalf of the utilities company. Although this may be the case, the landlord did not explain how the resident could seek clarification as to this. There is no evidence of investigation into why the reason of the rate difference.

 

41. I note that the landlord did apologise for the stress caused by the arrears letters during its communication with the resident. 

 

42. Evidence indicates the landlord did respond to the resident’s enquiries about the letters and explained why the account was appearing in arrears. I appreciate that the landlord did not investigate the actual water charge when it had the opportunity to do so. Therefore, although the landlord did respond to the resident’s queries about the arrears letter, it failed to provide the breakdown of the water charge, which led to increasing frustration on the part of the resident and contributed to the further breakdown of the landlord-tenant relationship. 

Determination (decision)

43. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure by the landlord in respect of the complaint.

Reasons

44. Due to how the payments were made to the account by the local authority, it resulted in the account appearing in arrears. As a result, manual payments the resident made towards the water were automatically allocated to the rent debt first and the Service appreciates this was out of the landlord’s control. The landlord did explain this to the resident and did offer to write off the small debt amounts showing on the account.
45. There was service failure in so far as the landlord did not sufficiently investigate the situation or explain the charges when the resident questioned them, nor did the landlord apologise for its mistakes or take steps to prevent a recurrence.

Orders

46. The landlord to pay the resident £100 compensation for the service failure for not being proactive in providing the resident a breakdown of the water charge from the utility company.
47. The landlord should provide the resident with his water rates statement, and provide information on how these payments were allocated, clearly reflecting the reason for the £17.32 debt.
48. The landlord should provide the resident with a breakdown of the water charge and seek clarity from the utility company about the difference in the amount charged.
49. The landlord to confirm compliance with the above orders within four weeks of the date of this report.

Recommendations

41. The landlord should consider better recording keeping, being clear on how payments are allocated. It can also make this clear within its Tenancy Agreement going forward.