London & Quadrant Housing Trust (202101738)

REPORT

COMPLAINT 202101738

London & Quadrant Housing Trust

16 February 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

The complaint is about the landlord’s decision to increase rent payments following an IT error.

Background and summary of events

Background

The resident has a 12-month fixed-term shorthold tenancy with the landlord that started in 2014. The resident rents the property under an Intermediate Rent (IMR) scheme whereby she paid rent at approximately 80% of the market rate. The property is a third floor flat with two bedrooms. The rent from November 2019 was £730 a month.
The tenancy agreement says that before the end of the tenancy, the landlord would ask the resident either to move out or renew her tenancy depending on her circumstances at the time and the way she had conducted the tenancy. If the tenancy is renewed, this will be on a new, recalculated rent.

Summary of events

On 9 November 2020 the resident made a complaint to the landlord saying every year at renewal the information on her tenancy agreement was incorrect as it often said the property was a one-bedroom flat and often had the floor wrong. She said she always sent it back for correction; however, this year she had been told the rent would be increased from £730 to £840 to reflect the extra bedroom. She said this had not happened in the past and asked for some help.
On 11 November 2020 the landlord spoke to the resident to acknowledge the complaint.
In an internal email dated 17 November 2020 the landlord noted that details on its system were incorrect which meant the resident had been paying for a one‑bedroom flat in error. It noted the system should be corrected.
On 17 November 2020 the landlord responded to the resident’s complaints. It apologised for sending out a tenancy agreement with incorrect information on it. Regarding the rent increase, it said that upon further investigation it had transpired that it had been charging her for a one-bedroom property, rather than a two bedroom because the original details on its database including its renewals portal had recorded the property as a one-bedroom property. The landlord apologised for the inconvenience and distress this had caused the resident but said it was not in a position to reduce the rent.
On 19 November 2020 the resident told the landlord she was not satisfied with its response and asked how it could justify the increase in rent.
On 18 December 2020 the landlord wrote to the resident at stage one of its formal complaint procedure. In relation to the complaint brought to this Service it reassured her that it was taking action to rectify the data and apologised that this matter was not picked up earlier. The landlord confirmed that it had not overcharged her as the previous charges were based upon a one-bedroom property; as she was on a tenancy priced at 80% of the market price (paragraph 2), it explained it was not in a position to reduce the new proposed rent. The landlord apologised for any inconvenience and distress this matter had caused.
On 21 December 2020 the resident asked for a review of her complaint.
On 2 March 2021 the landlord issued its final response under its formal complaint procedure. The main points were:
1. The resident had said she had corrected errors on the renewal contract every year since she had moved to the property which included the number of bedrooms. The landlord said that the problem with the amount of rent charged to her was identified in November 2020 and was due to an IT error.
2. This error meant that the resident was paying for a one-bedroom property instead of two bedrooms. As a result of the error being corrected, the rent increased by £110 a month which the landlord recognised was a substantial increase for her as a sole tenant.
3. The landlord noted, to resolve the complaint, the resident wanted her rent to remain the same as it had been previously.
4. As a way of resolving matters and as a gesture of goodwill, the landlord agreed to offer a reduction on her rent renewal and would increase the rent by £55, rather than the full £110. It explained the rent due would be £785 a month until the next renewal.
5. The landlord confirmed that it was not seeking to recoup the previous years’ lost payment as it acknowledged the error was due to its IT systems. It apologised for the inconvenience and distress this matter had caused to the resident.
The landlord signposted the resident to the Ombudsman.
On 22 March 2021 the resident asked the landlord when the next rent review would be and what the rent increase would be.
On 30 March 2021 the landlord responded saying the final complaint response was not open to further review or appeal and signposted her to the Ombudsman.
On 15 April 2021 the landlord responded to the resident. It explained that the increase proposed (of £55) was for the 2020 renewal and would last up until October 2021. It said it would not backdate the increase for the resident it would start from 1 May 2021 if she was in agreement which would have saved £330 that year. The landlord said that the rental value of the unit was still £880 as per the recent valuations so this would be increased again in October 2021 but it would need to await the valuations nearer the time to confirm the increase. It subsequently confirmed it could not give an estimate for rent from October 2021.
On 19 April 2021 the resident asked the landlord to confirm that her rent was now increasing to £785 and from October 2021 would be £840 or £880. She asked for clarification. In response, the landlord confirmed her rent would increase to £785 as of 1 May 2021 until the renewal in October 2021; in August 2021 it would be in touch regarding the renewal when it would confirm the rent for the following year from October 2021. It reiterated that the current rental value of the flat was £880 but that was subject to change.
On 20 April 2021 the landlord confirmed it would change the information held on its database in response to an email from the resident who said that the latest tenancy agreement was again incorrect. It attached an amended document.
On the same day the landlord sent an email to the resident acknowledging that it was a big increase from £785 to £880 a month. It therefore offered to stagger the rent over the following two years to bring the rent up to the market rental value of £880 a month.
On 21 April 2021 the resident said that she did not accept the landlord’s offer. She said, “the stress of all this is killing me”. In earlier correspondence the resident had described how her wages had been reduced as part of a review.
On 22 April 2021 the landlord wrote to the resident. It acknowledged that the error was not her fault and was an internal issue it was trying to resolve. It added it would not expect her to be penalised for its mistake and that was why it was offering the staggered increase. However, it said it could not allow her to continue paying below the market rental value for the flat on which she was already receiving a 20% discount. The landlord re-iterated its offer of

Renewal for November 2020 to November 2021 at £785.00.

Should the resident renew in November 2021 to November 2022 the rent would increase by £50 to £835.

Should the resident wish to renew again in November 2022 to November 2023 the rent would increase by £45 to £880 (should the value not change from what it was at that time).

The landlord apologised for the impact this matter had had on the resident and noted that it had closed her complaint.
On 20 May 2021, in response to an enquiry from the resident, the landlord confirmed that the rental value of the flat was £880; it had been £840 when it had written to her in November 2020 (paragraph 4).
On 8 June 2021 the landlord noted that the resident had signed the tenancy agreement for 2021-22.
When the resident approached the Ombudsman, she said that she was happy to stagger the rent increase but would like to do that over four years, not two so that she could get used to the increase and her salary reduction. The resident said this was “so stressful for me, I suffer with COPD and this stress is affecting my health”. She also said that her rent had increased to £850 from October 2021.

Assessment and findings

The landlord’s administration of the rent account was not appropriate. It had wrongly recorded on its database that the flat had one-bedroom, rather than two. This meant that the rent the resident had been paying since she moved into the property (which this Service understands was in 2014) was incorrect. That was a record keeping failure by the landlord

It is not disputed that that the resident informed the landlord on every renewal that the information in the tenancy agreement was wrong. While the landlord corrected the tenancy agreement annually, it did not identify that the information on its database was incorrect. The annual contact from the resident about the incorrect tenancy agreement should have meant that the error was picked up much earlier. Its failure to do so was maladministration.
This meant that the resident was paying lower rent than she should have paid for a period of some six years. When the error was finally identified by the landlord, its decision that the resident should immediately start paying the full amount of rent immediately (which would have been an increase of £110 a month from £730 to £840) was not reasonable.
In its complaint handling, the landlord offered to increase the rent due by half the full amount so that the resident would pay £785 on renewal from November 2020, rather than the full amount due of £840. It subsequently made a further offer whereby the resident would pay then pay £835 from November 2021 and £880 from November 2022 if she renewed the tenancy (should the rental value not increase).
This was a reasonable offer by the landlord which acknowledged the impact of an immediate rent increase and staggered this to give the resident time to adjust. It is noted, however, that this offer was not implemented by the landlord but instead the rent was increased to £850 a month – an additional £15 a month – from October 2021. Having made this offer, it would have been reasonable for the landlord to have implemented it and I have made an order below to reflect that. This order reflects that the resident’s statement that she has been paying £850 a month from October 2021, rather than the offer of the staggered payment of £835.
In relation to the failures identified, the Ombudsman’s role is to provide fair and proportionate remedies where maladministration or service failure has been identified. In considering this the Ombudsman takes into account whether the landlord’s offer of redress was in line with the Ombudsman’s Dispute Resolution Principles: Be Fair, Put Things Right and Learn from Outcomes as well as our own guidance on remedies.
The landlord apologised for its errors and offered a reasonable period over which the rental value would be increased to full market value. From when the error was identified in November 2020 the landlord will have undercharged the resident the rent amounting to £1,915 based on its staggered rent payments (compared to the market value of £880 a month) offered on 22 April 2021. In view of that, further financial compensation is not appropriate for the period from when the error was identified in November 2020.
However, the landlord has not acknowledged the evident frustration and inconvenience caused to the resident at the annual renewals from 2014 to 2020. Financial compensation is appropriate here for the fact that this matter took so long to be rectified, despite the annual prompting that something was wrong by the resident. An order for financial redress has been made, below, and reflects the fact that there has been an undercharge of rent from 2020-2022.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its decision to increase rent payments following an IT error.

Reasons

The landlord failed to recognise an error on its database over a period of six years. When this error was identified, it eventually made a reasonable offer to the resident to stagger the increase in rent over a couple of years. The frustration and inconvenience caused to the resident over the six years merited financial compensation.

Orders and recommendations

The landlord shall take the following action within four weeks of the date of this report and provide the Ombudsman with evidence of compliance with the orders.
1. Implement the rent payments as set out in its correspondence of 22 April 2021 and either i) refund any overpayment that the resident has made; or ii) reduce the rent payments due before November 2022 to adjust for any overpayment.
2. Pay the resident compensation of £150 for the distress and inconvenience caused by the failings identified in this report.
3. Write to the resident to confirm that the error on its database has been corrected.