Catalyst Housing Limited (202111784)

REPORT

COMPLAINT 202111784

Catalyst Housing Limited

17 March 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 the landlord’s recovery of arrears on the resident’s rent account.

Background and summary of events

2. The resident has held an assured tenancy since 2011 and has no vulnerabilities recorded.

Summary of events

3. The landlord emailed the resident on 28 May 2020 and informed her that her rent account was in arrears, and she was not paying the full shortfall. The current weekly rent was £181.08 and Housing Benefits (HB) was paying £175.72, leaving a weekly shortfall of £5.96, or £26.32 per month. The landlord attached a rent statement and shortfall letter and asked the resident to ‘please make sure you also pay your arrears as well.’ The email asked the resident to call to make an ‘easy arrangement’ to pay the arrears.
4. The resident emailed her local councillor on 30 May 2020 and said that she felt harassed by the landlord who threatened her with legal action, and that HB could not be paid in advance. She said she had previously raised this with the councillor in September 2019. The councillor said she would chase this issue for the resident.
5. The resident contacted the HB department on 8 July 2020 and asked for confirmation that HB was being paid and said the landlord was harassing her and threatening legal action because the HB was paid in arrears. The HB department replied to say that it paid in arrears, and that the landlord is aware of this.
6. The resident emailed the landlord on 29 July 2020 as she had received arrears notices regarding the static arrears on her rent account in 2018, 2019 and 2020. She had made a complaint in 2019 but no action was taken, and she wished to complain. The complaint was acknowledged on 31 Jul 2020 and the resident was told a response would be sent by 13 August 2020.
7. Internal landlord emails on 10 August 2020 discussed that the landlord expected the rent payment regardless of the HB payments and that rent can never be in arrears, as this is the primary condition of tenancy. The landlord recognised that people on HB are financially vulnerable so would use its discretion to allow tenants to get up to date by paying a small amount each week but cannot accept arrears on a rent account. The resident’s current arrears were over £800 and growing, so the landlord had emailed to ask the resident to increase her personal payments to manage this.
8. The councillor’s enquiry was logged on 12 August 2020 and an internal email showed that despite a search, the landlord had been unable to locate the councillor’s email from around September 2019.
9. The landlord responded to the complaint the same day:
   1. The legally binding tenancy agreement stipulates rent must be paid in advance.
   2. The landlord therefore reserves the right to request a small increase in the monthly payments to bring the account up to date.
   3. The landlord apologised if the resident felt threatened by the officer but was happy to discuss an affordable monthly plan.
   4. The resident was advised to approach this Service within 12 months as the complaint could not be resolved.

Since the stage two response was issued

10. A rent statement dated 25 January 2022 showed a static rent arrears balance of £178.56 after payments of HB. Rent is £172.07 per week, HB payable £665.40 x 4 weekly. The historic rent account showed a static arrears balance of approximately £188 effective January 2020.
11. On 4 March 2022, the landlord provided this Service with a rent statement dated 24 February 2022 which showed arrears of £327.68, and a static arrears figure of 178.56 after the four weekly housing benefit credit. There is a compensation credit of £150.00 to the rent account which was directly paid out to the resident on 11 February 2022. 
12. The landlord said:
    1. The resident’s ‘current weekly Housing Benefit entitlement is £166.35, and her weekly rent is £172.07. The weekly shortfall she must pay is £5.72 or monthly £24.79. Unfortunately, the tenant’s rent account was never in credit; the last time we saw a small credit was on 24/03/2014 by £6.06’.
    2. ‘We occasionally inform the tenant to pay their rent in advance, as it states on their tenancy agreement page 2, section 2, “The payment of weekly rent is due in advance on the Monday of each week.” There is no legal requirement to remind the tenant to pay their rent in advance, as stated in their tenancy agreement, and this does not exclude tenants who receive housing benefits. At the landlord’s discretion, if the tenant faces financial challenges, we may not ask the tenant to pay in advance; however, we encourage all tenants to pay in advance.  We offer flexible amounts to pay in advance for tenants facing financial difficulties.’ 

Assessment and findings

The tenancy agreement

13. The tenancy agreement sets out the rights and responsibilities of both the resident and the landlord. Part 1, section (2) of the General Terms Section of the resident’s tenancy agreement dated August 2011 says that the payment of weekly rent is due in advance on the Monday of each week. Part 3. The tenant’s obligations, rent and other payments, says at section (2) that the tenant must pay the rent and other charges weekly and in advance.

The rent arrears and credit procedure

14. The landlord’s rent arrears and credits procedure at section 2.4.3 gives the agreed levels for repayment (per week in addition to rent and service charge payments) for tenants in receipt of Housing Benefit. The minimum payment set by the DWP (Department of Work and Pensions) is shown as £3.75 per week.
15. Section 2.5.1 of the procedure says that if no response is received to an initial letter, the landlord should send a letter warning that a Notice of Seeking Possession (NOSP) will be considered. Section 3.1.3 covers further enforcement action.
16. Section 3.7.4 says that where there are low/static arrears the landlord can also consider applying to the small claims court as an alternative method of arrears recovery. The summary on page 19 of the policy says that that contact letter one is issued once an account hits one week and one day arrears.

The complaints policy

17. The landlord’s complaints policy says that the landlord aims to resolve all complaints within 10 working days. If necessary, customers will be informed of the outcome of stage two complaint reviews within 10 working days.

Scope of investigation

18. This investigation is about the complaint logged by the resident on 29 July 2020 concerning the arrears notice issued on 28 May 2020 and whether the landlord has acted reasonably and in accordance with the tenancy agreement and its policies and procedures. Although the resident has referred to an earlier complaint and enquiry via her councillor in 2019, she would have needed to pursue this with the landlord, and if necessary, this Service, nearer the time. This investigation does not include the issue of the resident’s energy meters, which has been the subject of a separate complaint.  

Assessment

19. The landlord is entitled to ask for the rent in advance, as per the terms of the tenancy agreement signed by the resident. Landlords may have tolerated some static arrears when HB is paid in arrears, however, this is not a right and the Ombudsman cannot insist the landlord does this.
20. The landlord is entitled to take recovery action as outlined in the rent arrears and credits procedure. The Ombudsman has not seen any evidence that the landlord took any action which is outside this procedure, and in fact formal recovery action could have been taken earlier and further by the landlord given the arrears on the account. The DWP has issued guidelines on the repayment of arrears for tenants who are in receipt of HB, and it seems reasonable in all the circumstances that the landlord seeks to move the rent account out of an arrears position.
21. The landlord’s most recent correspondence said the resident had reduced her arrears with a payment of £150. However, this credit is labelled as compensation and matches the sum of compensation offered by the landlord in respect of the other complaint which has been considered by this Service, so appears to relate to this. In any event, the sum was paid out to the resident on the same day so had no effect on the arrears.  
22. Whilst the Ombudsman is mindful of how distressing any suggestion of possession of a tenancy will be for a tenant, the correspondence from the landlord does not appear heavy handed or threatening. There is no evidence of recovery action escalating or of any further arrears’ letters having been issued after 2020. The landlord has also asked that the resident engage with it to come to an arrangement to clear the arrears, and there is no evidence that the resident has done so.
23. The landlord is entitled to receive rent in advance, and to take recovery action in excess of that which it has taken. Its communication has not been excessive, and it has offered help to the resident to come to an agreement, which the resident may now feel she is able to do, to avoid any further distress being caused due to correctly issued arrears notices.

Determination (decision)

24. In accordance with paragraph 54 of the Scheme there was no maladministration in respect of the landlord’s actions for the recovery of arrears on the resident’s rent account.

Reasons

25. The landlord is entitled to request the rent account be paid up to date.