Midland Heart Limited (202112571)

REPORT

COMPLAINT 202112571

Midland Heart Limited

5 July 2022

Our approach

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.

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

1. The complaint is about:
   1. The landlord’s administration of the resident’s rent account including arrears
   2. The landlord’s decision to offset his compensation against his rent account

Background

2. The resident is a tenant of the landlord which is a housing association. The property is a flat within a block of flats.
3. The tenancy agreement advises that the weekly rent including service charge was £69.61 and payable on the first Monday of each month. The resident received housing benefit which covered his rent and service charge in full.
4. The resident informed the landlord in February 2021 that he had paid his rent toward a different account in error and was awaiting reimbursement. According to the landlord’s records, it contacted the local authority in February 2021 and arranged to have his housing benefit directed toward the landlord. It advised the resident of this on the same day.
5.  The landlord wrote to the resident from January to March 2021 informing him of the increasing arrears on his rent account. It asked that he make the payment due to avoid further action or contact it to discuss the situation and arrange a payment agreement. In March 2021 it advised the resident that he would be served with notice of seeking possession of his property, it asked that he clear his arrears in full within six months or contact it to make payment arrangements. On 7 April 2021, the landlord wrote to the resident again advising that the rent arrears were £673.35 and it would issue a notice of seeking possession.
6. An internal email between the landlord and its staff showed that the resident raised a formal complaint on 14 April 2021 regarding his rent account. He was dissatisfied that the landlord directed his housing benefits toward itself, and in May 2021 he chased for a response to his complaint. The resident contacted this Service as he had not received a complaint response and this was passed to the landlord on 1 September 2021. The landlord issued the resident its stage one complaint response on 24 September 2021. The landlord explained that it had arranged to have the resident’s housing benefit directed toward itself, as his rent account remained in arrears and had exceeded more than eight weeks. It said that once his arrears were brought below four weeks, the benefit would revert back to being paid directly to him. The landlord said the benefit change was sent as an early resolution response to his query. It advised that feedback had been provided to its team to ensure complaints were raised as and when requested. The landlord offered the resident £140 for the delay and inconvenience caused and said that as there were arrears the compensation would be paid directly towards his rent account.
7. The resident asked to escalate his complaint as he said the landlord had not addressed his complaint regarding it requesting housing benefits paid directly to itself. The resident disputed the landlord’s offer to use his compensation toward the rent account. He said that the landlord’s claim that he was in arrears was “malicious bullying” which caused him stress and inconvenience.
8. The landlord issued its final complaint response on 25 October 2021. It said that it had attached a copy of the resident’s rent statement showing there had been arrears on his account since 2019. It explained that it had tried on several occasions to arrange a payment agreement with him but had been unable to. It noted that it had tried to contact him on a number of occasions to discuss his arrears before it proceeded. The landlord said it recognised that the resident had paid another bill in error, but that it still had an obligation as a landlord to apply direct to ensure his arrears did not continue to grow. It advised that the alternative would have been to apply to the courts to seek possession of the resident’s property, and that it had tried to avoid doing so to prevent costs to him. It noted that its application to have benefits paid directly to itself had been retracted once the arrears fell below eight weeks. The landlord said that the compensation was fair and in line with its policies and procedures, and as there remained an outstanding balance, the compensation would be credited to his rent account.
9. The resident passed his complaint to this Service as he disputed that he was in arrears and had made the landlord aware of his error in paying the wrong account.

Assessment and findings

The landlord’s administration of the resident’s rent account including arrears

10. The tenancy agreement states that the resident is responsible for paying his specified rent when it is due. The landlord’s rent guidance sets out the actions it would take if a resident fell into arrears. The resident raised a formal complaint in September 2021 as he was dissatisfied with the landlord’s decision to have his housing benefit paid directly toward it. In accordance with the landlord’s rent guidance once there has been a missed payment of either rent or housing benefit, it will first contact the resident to discuss the account and arrange for the repayment of the debt. In this case the landlord appropriately wrote and informed the resident of his arrears, and offered support from its money advice team regarding setting up a repayment plan. Notwithstanding the resident’s explanation of his error made in February, the landlord would still be obliged to offer a repayment plan to ensure his arrears did not continue to grow. The tenancy agreement states that the resident consents for his housing benefit authority to make any payment of any housing benefit which he may claim as part or whole payment of his rent direct to the landlord. In this case the resident consented to this arrangement in principal by signing the tenancy agreement. Therefore, as a payment plan had not been implemented and arrears increased, the landlord’s decision to direct his benefit to it was reasonable in the circumstances.
11. However, the landlord has acknowledged that there were delays in its response to the resident’s concerns and it should have logged a complaint sooner and responded accordingly when the resident first asked to complain. The landlord has offered £140 compensation for any distress and inconvenience caused by its errors. This amount is in line with the landlord’s own compensation policy which suggests a maximum of £70 can be paid for each occasion of service failure. In this case there were two failings identified, not logging a complaint sooner and delays in responding, leading to the total award of £140. This amount is also in line with the Ombudsman’s remedies guidance (published on our website) which suggests awards of between £50 to £250 in cases where there has been service failure by the landlord but where the service failure may have been of short duration and may not have affected the overall outcome for the complainant. In this case, there were errors in the landlord’s handling of the resident’s concerns about the rent arrears but these errors did not affect the overall outcome of the complaint as the landlord was entitled to claim the resident’s housing benefits directly while he was in arrears.
12. It is noted that the landlord has ceased claiming the housing benefit directly as the arrears fell below eight weeks’ worth of rent. This was a reasonable action for the landlord to take in line with its guidance concerning rent arrears.

The landlord’s decision to offset his compensation against his rent account

13. As explained above, the landlord offered the resident compensation of £140 for its recognised service failure and advised that it would be directed toward his rent arrears. The resident disputed that he was in arrears as well as its decision to apply compensation toward his rent account. The Ombudsman’s remedies guidance, as referenced above advises that a landlord may wish to offset payments of compensation and arrears against a resident’s rent arrears. The guidance notes that this approach will often be set out in a landlord’s compensation policy. While in some circumstances this would be reasonable, the Ombudsman would expect this approach to be specifically set out in its policies and procedures. In this case, nothing in the landlord’s policies or procedures outlined that this was its process. Therefore, the landlord’s actions were unjustified and this constitutes service failure. It should offer compensation as detailed below in view of the distress and inconvenience the resident experienced as a result of the landlord not acting in line with its policies. As the landlord does not have a compensation policy the Ombudsman has assessed the level of compensation which should be paid using our own remedies guidance, which as explained above suggests awards of between £50-250 in cases where the landlord failed to meet service standards for actions and responses but where the failure had no significant impact. In view of this, the landlord should pay the resident £100 compensation in addition to the £140 it offered previously. The total compensation of £240 should be paid to the resident directly rather than being credited to his rent account.

Determination

14. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the landlord has made an offer prior to our investigation in respect of its administration of the resident’s rent account including arrears which in the Ombudsman’s opinion resolves this aspect of the complaint satisfactorily.
15. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure by the landlord in its decision to offset the resident’s compensation against his rent account.

Orders

16. The landlord should pay the resident the £140 in compensation previously offered directly to him rather than applying it to his rent account. This should be paid within four weeks from the date of our decision. 
17. The landlord should pay the resident £100 for inconvenience and its delay in applying compensation directly to the resident. This should also be paid within four weeks from the date of our decision.