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Metropolitan Housing Trust Limited (202104657)

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REPORT

COMPLAINT 202104657

Metropolitan Housing Trust Limited

26 August 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 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 handling of the administration of the resident’s rent account.
    2. The landlord’s handling of the associated complaint.

Background and summary of events

  1. The resident is a shared ownership leaseholder of the landlord at the property.
  2. On 13 February 2020, the landlord wrote to the resident to provide notice of his rent and estimated service charges for the upcoming financial year. On the breakdown of costs, the entry for the new charge for rent was left blank.
  3. The resident subsequently emailed the landlord on 16 December 2020 to raise a stage one complaint about its recent contact about his rent account. He relayed that he had received a letter from it on 13 March 2020, which had informed him that his rent had been reduced from £562.25 to £42.07 per month. The resident reported that he had contacted the landlord upon receipt of the letter to query this, and that he was told by it that he did not need to pay the previous rate of rent for the coming financial year and only needed to pay the amount specified in the letter. He requested the recording of this call from it if this was recorded.
  4. The resident said that he then received a call from the landlord on 8 December 2020 during which he was informed that he had rent arrears of around £4,000, and it implied that these arrears were “deliberate” and were his “fault”. He said that it had told him that the matter had been due to a “system error”.
  5. The landlord issued a stage one complaint response to the resident on 30 January 2021 in which it confirmed that it was partially upholding his complaint. It advised that its investigation had found that his rent account was under review in April 2020, which led to him only being charged for his service charge through his direct debit for a period. Once this review was complete, the landlord backdated the resident’s rent account to include the rent payments over this period. It disagreed that he had been financially disadvantaged, as the amount of the arrears was the amount which he would normally have been expected to pay.
  6. The landlord confirmed that no additional charges nor interest had been applied to the resident’s rent account, and that it would be contacting him to agree a payment plan to assist in reducing the arrears. It also confirmed that the arrears had no impact on his credit file and would not do so unless an arrangement to make payment was not agreed, as this might result in legal action. The landlord apologised for the “confusion”, and it assured the resident that it was committed to working with him to resolve the matter. It also informed him that the complaint would be used to address training needs with its staff and to improve its service in future.
  7. On 31 January 2021, the resident emailed the landlord to query the above stage one complaint response that he had received. He asked why his complaint had been partially upheld. The resident also raised that the member of staff who he had spoken to in December 2020 had told him that they were aware of this situation happening before, which caused him concern. He added that, although the error had not caused him financial difficulty until now, he would now experience difficulties in paying the arrears. The resident asserted that the arrears had not accrued through any fault of his own, and that it was now “frustrating” to have to budget for these payments. He said he was “aggrieved” that it had not offered a reduction of the arrears as a goodwill gesture, as the mistake had been on the landlord’s part.
  8. The landlord replied to the resident on 1 February 2021 to explain why his complaint was partially upheld. It explained that this was because, although it had made a mistake, the outstanding rent was still due in accordance with the lease, and he had not been over-changed or had any other additional charges applied to his account. The landlord acknowledged the resident’s concerns about budgeting for the payment of the arrears, and it said that this was why it wanted to agree a payment arrangement with him to prevent any financial difficulty. It explained that it had decided not to reduce the amount of the arrears, as it only offered redress to restore residents to the position that they were in before the issue arose.
  9. The resident emailed the landlord on 7 February 2021 to escalate his complaint to the final stage of its complaints procedure. He challenged its point that he would not financially impacted, as he should have been paying rent during the period between April and December 2020. The resident said that he had never disputed that he needed to pay rent, and this was evidenced by his contact with it when he received the letter in March 2020. He asserted that he had acted in good faith based on the information given to him, and he was now dissatisfied with being in arrears and this implied that he was at fault. The resident also raised the point that it had taken the landlord eight months to rectify its mistake. He said that it was “unfair” to expect him to pay the rent arrears, and that the situation was causing him stress.
  10. The landlord issued a final stage complaint response to the resident on 23 March 2021, in which it noted that he continued to be dissatisfied because he disputed its assertion that he had not been financially impacted. It acknowledged that it had actioned a rent change in April 2020, which had resulted in a letter being sent that incorrectly omitted the rent figure from the charges payable for the property. The landlord explained that this had affected a several properties. It rectified this in November 2020 and a letter should have been sent to the resident to inform him of this; it apologised for this not being received by him.
  11. The landlord referred to paragraph 6(a) of Schedule 5 of the resident’s lease agreement with it, which stated that, if rent was not set by 1 April each year, then he was to continue paying the same rent as before. It argued that, if he had continued paying the rent in accordance with his lease, then there would have been no build-up of arrears. The landlord noted that the resident had contacted it in March 2020 to query the rent charge, but it advised that it did not have access to a record of the discussion. It suggested that the staff member advising him at the time would have been acting on the information available to them at the time.
  12. The landlord confirmed that, as stated in the lease, the resident was liable for paying any unpaid rent. It acknowledged that there were “a number of errors”, and that he had been “misadvised” leading to confusion for him. Due to this failure, the landlord confirmed that there would be no rent increase from April 2020, and that there would be no interest charged on the rent arrears, unless legal action was necessary. It also said that the rent would remain unchanged until the resident purchased the property outright.
  13. The landlord stressed that the arrears were made up only of rent that had not been paid. It noted that it had attempted to contact the resident to set up a direct debit for this. The landlord therefore partially upheld the complaint again, and it offered total compensation of £125 to the resident, which comprised of £50 for its poor complaints handling and £75 for his time and trouble.
  14. The landlord responded to the resident’s subsequent correspondence about the complaint on 8 April 2021 to inform him that its decision would stand, although it acknowledged that it had made an error. It referred him to his lease agreement. The landlord asserted that he had not been financially disadvantaged, as it had not applied any interest to the rent arrears. 
  15. The resident informed this Service on 9 June 2021 that he felt that the landlord had not taken his financial situation into account during the complaint. He said that having to budget now for the £6,000 rent arrears had “significant implications” for him. The resident asserted that he was now in debt “through no fault of [his] own”. He said that the landlord’s communication had been poor and had made him feel as if he was at fault. The resident’s desired resolution was a reduction of the rent arrears by £1,500.

Assessment and findings

Policies and procedures

  1. The landlord’s lease agreement with the resident confirms at clause 3.1.1 that he agrees to pay the specified rent for the property to the landlord “without deduction or set off.” Schedule 5, paragraph 3 of the lease confirms that it will only carry out “upwards only” rent reviews, with the rent only to increase, not decrease. This is confirmed in paragraph 3 in appendix 3 of the lease. Schedule 5, paragraph 6(a) of the lease also confirms that, if the new rent is not determined before the review date, then the resident is to continue paying rent at the previous rate. Once the new rent figure is determined, the resident is to pay all of the arrears of the specified rent which accrued in the meantime within 14 days, including interest.
  2. The landlord’s complaints policy provides for a two-stage complaints procedure, with responses to be provided within ten working days at stage one, and within 20 working days at the final stage.
  3. The landlord’s compensation policy provides for offers of compensation up to £150 for poor complaint handling. For the resident’s time and trouble expended as a result of the landlord’s failure, compensation offers of up to £50 are specified for “minimal effort” on his part. For a longer period of delay, where the resident has had to chase several times, compensation offers of up to £150 are specified.

The landlord’s handling of the administration of the resident’s rent account

  1. The lease agreement, above at point 17, forms the legal contract between the resident and the landlord, therefore he was obliged to pay rent to it in accordance with this. It was therefore appropriate for it to maintain, in its contact with him, that he was still liable for the rent. This also means that the resident’s desired resolution for the landlord to reduce his rent arrears is an outcome that is not within this Service’s authority to provide, as we do not have the legally-binding power necessary to do so in the way that a court or tribunal might. As a result, the scope of this investigation is limited to considering its handling of the administration of its rent account, and the level of compensation that it offered him for this.
  2. It is not disputed that the landlord misadvised the resident in March 2020 when he contacted it about his notice of rent and service charge costs for the year. It acknowledged its error in this, and in leaving the rent section of this notice blank. While the landlord provided incorrect and incomplete information about this to the resident, however, this did not preclude him from paying the rent, as it remained his responsibility to do so in accordance with the lease above at point 17.
  3. The landlord acknowledged its error and apologised, in its final stage complaint response on 23 March 2021, for not clarifying its omission in its notice of rent and service charges sooner. It was nevertheless reasonable for it to say that it had not financially disadvantaged him, as it had not applied any additional charges or interest to the outstanding rent, and it was requesting payment only of the rent which he was liable for. In accordance with the lease, above at point 17, it was entitled to apply interest to the rent arrears and to seek payment of all of the arrears within 14 days, which it declined to do. This was a reasonable response from the landlord, which recognised its failure to provide correct information to the resident at the correct time and provided a form of redress to him.
  4. Furthermore, the landlord offered compensation of £75 for the resident’s time and trouble in bringing the complaint. This amount was in accordance with its compensation policy, above at point 19, and with this Service’s remedies guidance, where there was a “service failure which had an impact on the complainant but… may not have significantly affected the overall outcome for the complainant”. The landlord also pledged, in its final stage complaint response on 23 March 2021 to freeze the resident’s rent until he bought the property outright. This was also a reasonable offer of redress, as it was entitled to increase the rent each year in accordance with the lease agreement, above at point 17.
  5. It is noted that the resident has said that budgeting for the payment of the rent arrears to the landlord would now prove to be problematic for him. In its stage one complaint response on 30 January 2021, and in its subsequent response on 1 February 2021, it offered to agree a payment arrangement with him to enable him to make affordable payments towards the arrears. The landlord’s assurance in its stage one complaint response that the arrears would not accrue interest nor would affect the resident’s credit also demonstrated that it took his circumstances into account, and so this was a reasonable response from it to help him to manage the arrears.
  6. In conclusion, the landlord acknowledged and apologised for its failure to provide complete and correct information to the resident about his rent payments and it offered him compensation, did not apply interest to his rent arrears which it was entitled to do, and pledged to freeze his rate of rent until he purchased the property outright. These were reasonable responses from it and constituted an offer of reasonable redress to him.

The landlord’s handling of the associated complaint

  1. The landlord’s stage one complaint response was issued on 30 January 2021, 30 working days after the resident had raised his stage one complaint on 16 December 2020. This was 20 working days in excess of the ten-working-day timeframe specified in its complaints policy, above at point 18, and was a failure to adhere to its policy.
  2. The landlord’s final stage complaint response was issued to the resident on 23 March 2021, 31 working days after he raised his final stage complaint escalation on 7 February 2021. This again exceeded the 20-working-day timeframe specified in its complaints policy above at point 18, by 11 working days. Again, this was a failure by the landlord to adhere to its policy.
  3. In its final stage complaint response on 23 March 2021, however, the landlord offered £50 compensation to the resident for its failure to handle the complaint within its timeframes. This amount was in accordance with its compensation policy for complaint handling failures, above at point 19, and was broadly in accordance with this Service’s remedies guidance where there has been a “failure to meet service standards for actions and responses but where the failure had no significant impact”. As the delay in response did not change the outcome of the complaint, and there was no evidence of detriment to the resident from this, the offer of £50 compensation was a reasonable offer of redress.

Determination (decision)

  1. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the landlord has offered redress to the resident prior to investigation which, in the Ombudsman’s opinion, resolves the complaint concerning its handling of the administration of his rent account satisfactorily.
  2. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the landlord has offered redress to the resident prior to investigation which, in the Ombudsman’s opinion, resolves the complaint concerning its handling of the associated complaint satisfactorily.

Reasons

  1. The landlord acknowledged and apologised for its failures in the administration of the resident’s rent account, and it offered a reasonable level of redress in recognition of this.
  2. The landlord acknowledged its failure to handle the complaint in accordance with its specified timeframes, and it offered a reasonable level of redress in recognition of this.

Recommendations

  1. It is recommended that the landlord:
    1. Pay the £125 compensation to the resident that it previously offered him, if it has not yet done so. 
    2. Confirm its pledges to the resident to not increase his rent for the property until he purchases this outright, and to not apply interest on the rent arrears, providing that legal action does not become necessary.
    3. Carry out a review to ensure that its income and complaint handling teams are adequately trained and resourced to enable it to respond to future rent enquiries and complaints in an accurate and timely manner, in accordance with its specified rent and complaint requirements and timeframes. This should include the completion of this Service’s free online dispute resolution training for landlords at https://www.housing-ombudsman.org.uk/landlords-info/e-learning/, if this has not been done recently.
  2. The landlord should contact this Service within four weeks to confirm whether it will follow the above recommendations.
  3. The Ombudsman accepts that, because of the present restrictions due to the corona virus pandemic, the timing of the above actions will depend on what is reasonable in the light of Government guidance regarding the health of the resident and of the landlord’s staff.