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Clarion Housing Association Limited (202008803)

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REPORT

COMPLAINT 202008803

Clarion Housing Association Limited

29 April 2021


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. This complaint is about the landlord handling of a refund on the resident’s rent account.

Background and summary of events

  1. The resident has a five year fixed term tenancy with the landlord which commenced on 6 April 2016. The resident’s tenancy agreement states that in addition to the monthly rent, the resident was also required to pay £1,053.36 arrears carried forward from when her provisional tenancy period, for the same property, ended.
  2. On 23 April 2019, the landlord wrote to the resident to advise her that, following an internal audit, it had established that there had been an error in the application of the rental charges to her rent account. The landlord said that this had resulted in her rent account being overcharged by £4,755.41 since 6 April 2016.
  3. The landlord said that it would be applying a credit to her rent account to the value of the overcharge and that it would also be including compensation of £820. The landlord explained that the £820 was made up of £20 for each month the charges were incorrect plus an additional £100 in recognition of the inconvenience and distress this matter may have caused.
  4. The landlord said that the resident would receive a total refund payment to her rent account of £5,575.41 and that once that had been done it would do a complete review of her rent account, make any applicable refunds to Housing Benefit and any remaining credit would be paid to the resident by cheque.
  5. Between 24 and 25 April 2019, two credits of £5,575.41 (made up of the overcharge of £4,755.41 plus £820 compensation) were applied to the resident’s rent account. One of the two credits of £5,575.41 was reversed on 14 May 2019 leaving a credit balance on the resident’s rent account of £3,335.31.
  6. On 28 May 2019, a cheque refund of £820 was sent to the resident. A further cheque refund payment of £2,226.15 was sent to the resident on 18 June 2019, which the landlord said had been done at the resident’s request.
  7. On 5 July 2019, the landlord refunded Housing Benefit £4,828.40 for overpayment of Housing Benefit which resulted in the resident’s rent account being £4,368.97 in arrears. The landlord asked the resident to contact it in order to reach an agreement to clear the arrears.
  8. On 15 August 2019, the resident made a formal complaint to the landlord. The resident said that when she received the cheques for £820 and £2,226.15 she was under the assumption that she was only receiving payments due to her. The resident said that the entire process was very confusing and that she had now been left with ‘‘vast’’ arrears on her account for which she took no responsibility as, if the payments were made in error, it was an error that lies solely with the landlord.
  9. The landlord issued its Stage 1 response on 20 September 2019. The landlord explained what had happened with regards to the resident’s rent account. The landlord confirmed that the two refunds sent to the resident, one for £820 on 30 May 2019 and a second for £2,226.15 on 18 June 2019, had been sent to her in error. The landlord said that these amounts should not have been refunded to the resident until the local authority had confirmed the Housing Benefit overpayment amounts. The landlord said that the resident was now required to pay the arrears of £4,422.85. The landlord said that it was sorry for the inconvenience this had caused and that it would be happy for the resident to enter into an affordable agreement to repay the debt.
  10. The resident responded to the landlord by email on 3 October 2019. In her email the resident said that she accepted that the payments were made to her in error but felt that this was ‘‘due only to the failings of the accounts team and the lack of full investigation’’ by the landlord. The resident said that she was not in a position to make any large payments towards clearing the debt and so would have no option but to set a minimal payment plan. The resident also said that she was currently living in a two bedroom flat with three children and so was concerned that the arrears would directly impact her ability to move to a larger property more suitable for her needs.
  11. The landlord issued its final response on 19 November 2019. The landlord said that as the resident was in receipt of full Housing Benefit throughout her tenancy, she would have been aware that she would not be entitled to a refund. The landlord said that a large refund had been made to the resident, to which she was not entitled. The landlord said that as the resident had not returned the refund her rent account remained in arrears. The landlord also confirmed that her arrears would affect her ability to move and should she wish to be considered for a move then she would need to clear her arrears in full.

Assessment and findings

  1. Under Section 2a of the resident’s tenancy terms and conditions the resident is obliged to pay the landlord a monthly rent.
  2. Following an internal audit, the landlord wrote to the resident on 23 April 2019 to advise her that there had been an error in the calculation of her rent which had resulted in an overcharge of £4,755.41 to her rent account since April 2016, a period of three years. The landlord apologised to the resident and offered her £820 for its error which it said it, in accordance with its compensation policy, would be credited to her rent account, which at the time was £1,834.26 in arrears.
  3. In its letter to the resident of 23 April 2019, the landlord explained that only once it had refunded Housing Benefit any remaining credit would be paid to her, the landlord having a duty to advise the local authority of the mistake it had made and to return any incorrect Housing Benefit payments.
  4. However, the landlord did not wait for the Housing Benefit refund to be processed before refunding the resident the £820 compensation plus a further £2,226.15 (a total of £3,406.15). This meant that once the refund of £4,828.40 was made to Housing Benefit on 5 July 2019, the resident’s rent account fell £4,368.97 into arrears.
  5. It is clear from the evidence that the landlord did not take appropriate steps to ensure that the resident was only refunded monies that she was entitled to. This was recognised by the landlord in its Stage 1 response, in which it said that it was sorry for the inconvenience this had caused and that it would be happy for the resident to enter into an affordable agreement to repay the debt.
  6. The resident said that as it was the landlord’s error in refunding her monies that she was not entitled to, she wanted the landlord to remove the £3,046.15 she had been paid from the arrears on her rent account. This would not be reasonable as the resident had already been paid the £3.046.15 and so were the landlord to do as the resident requested, this would result in her effectively be being paid the £3,046.15 twice.
  7. The resident also complained that the arrears would directly impact her ability to move to a larger property more suitable for her needs. Having reviewed the evidence, the landlord’s response to the resident’s concerns about her being unable to move whilst her rent account is in arrears reflected the landlord’s Arrears policy which states that the landlord will not permit any tenancy changes, such as transfers or mutually exchange, for resident’s with arrears.
  8. Whilst the arrears on the resident’s rent account were higher following the adjustments for the overcharging on her rent account, the repayments to the resident and the refund to Housing Benefit, ultimately the resident is responsible for the arrears as she is responsible for paying her rent and making up any shortfalls in her housing benefit entitlement. 
  9. The landlord’s actions were confusing and it is understandable if the resident believed she was entitled to the refund when she received it. However, the landlord’s consideration of its handling of the rent account in its complaints process clearly explained what had happened. The landlord also made clear both the current position with regards to the resident’s rent account and her obligations with regards to any arrears on that account.

Determination (decision)

  1. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme there was reasonable redress by the landlord in respect of its handling of a refund on the resident’s rent account.

Reasons

  1. Whilst there were failures in the landlord’s overall handling of the rent account the landlord rectified any errors on the rent account and offered the resident £820 compensation for the initial overcharging. With regards to the refund to the resident, the landlord explained what happened, apologised and advised the resident that she was now obliged to pay the outstanding arrears on the account. Given that the resident was not entitled to the refund, the landlord’s explanation and apology for her being refunded provided the resident with reasonable redress for its handling of that refund.

Recommendation

  1. That within 6 weeks of the date of this determination, the landlord:
    1. Reviews its refund process to ensure that there are safeguards in place to ensure that payments are not made to resident’s where the landlord is aware that refunds are still due to, for example, Housing Benefit.
    2. Checks the resident’s rent account to ensure it is up to date and accurate.
    3. Seeks to agree a repayment plan with the resident if one isn’t already in place.  
  2. The landlord is to advise this service what actions it has taken in respect of the above recommendations by 10 June 2021.