Midland Heart Limited (202012874)

REPORT

COMPLAINT 202012874

Midland Heart Limited

25 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 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:
1. The landlord charging the resident rent for a property he is not living in.
2. The landlord’s disposal of the resident’s belongings and communication.
3. The landlord offsetting the resident’s home loss payment against rent arrears.
4. The landlord’s delay in making the home loss payment to the resident.

Jurisdiction

What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme (the Scheme). When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.
After carefully considering all the evidence, in accordance with paragraph 39(i) of the Scheme, the following aspect of the complaint is outside of the Ombudsman’s jurisdiction: the landlord offsetting the resident’s home loss payment against rent arrears.
Section 39(i) of the Scheme says that the Ombudsman will not investigate complaints which, in the Ombudsman’s opinion: concern matters where the Ombudsman considers it quicker, fairer, more reasonable or more effective to seek a remedy through the courts, a designated person, other tribunal or procedure.
Section 29 of the Land Compensation Act 1973 is silent on the right of a landlord to set off arrears from a home loss payment. The landlord’s policy is that it can do so. This Service notes that there is caselaw that found a council was entitled to deduct arrears of rent from the home loss payment as there was nothing to prevent such an equitable set-off in the 1973 Act. Should the resident wish to challenge the landlord’s position, he would need to appeal to the Upper Tribunal (Lands Chamber). Accordingly, this matter falls outside the Ombudsman’s jurisdiction under section 39(i) of the Scheme.
This report will consider the complaints about the landlord charging the resident rent for a property he is not living in, its disposal of his belongings and its delay in making the home loss payment.

Background and summary of events

Background

The resident had an assured tenancy with the landlord from mid-2008. The property was a one-bedroomed flat in a block. The landlord has no vulnerabilities recorded for the resident.
The tenancy agreement for the property says that the landlord can only bring the assured tenancy to an end by getting a court order for possession on one or more of the grounds listed in Schedule 2 of the Housing Act 1988 (this includes redevelopment).
Under section 29 of the Land Compensation Act 1972, the landlord shall make a home loss payment where a resident has a legal ‘interest in the dwelling’, that is, been a legal tenant who has been required to move by the landlord as a direct consequence of its plans to improve or redevelop a property. The resident must also have lived in the property for more than one year at the date of moving. Tenants are entitled to a one-off statutory home loss payment of £6,400 (as of 1 October 2019). To claim the home loss payment tenants must complete a form and return it to the landlord’s lettings team once they have moved from the property. In its home loss payment request form, the landlord says it may deduct rent arrears and other charges arising from the tenant and landlord relationship from this home loss payment.
The landlord has a three-stage complaint procedure: first stage resolution, investigation and formal review.

Summary of events

In Feb 2019 the landlord identified the block in which the property was located for demolition to build a new development.
In August 2020 the resident signed a tenancy agreement for a new property. Under the tenancy agreement a resident has an obligation to pay rent when it is due.
On 6 February 2019 the landlord wrote to the resident informing him that the block had been identified for demolition and that it would visit the block on 14 February 2019 to discuss next steps with him.
On 14 February 2019 the landlord met with the resident. It noted his preferences for where he might like to be moved to and sent these details to its lettings team. The landlord noted that it had explained to the resident that it would apply to the court to end the tenancy if he did not move. It also informed him that he would be entitled to a home loss payment. The landlord also said it would pay to move the resident’s belongings and would pay for new flooring at the property he would move into.
On 1 March 2019 the landlord noted that the resident had turned down a one‑bedroomed flat. The landlord has no evidence of it making any other offers to the resident from March to November 2019. On 19 November 2019 the landlord contacted the resident about properties that he might be interested in. Later that month the landlord noted that the resident was not actively bidding on other properties.
On 29 January 2020 the landlord issued a Notice of Seeking Possession to the resident on the ground that it required the building be vacated for the building to be demolished to allow for a new development to be built.
In February 2020 the landlord asked its lettings team to make direct offers of one‑bedroomed properties to the resident.
On 4 March 2020 the landlord noted that one property had been offered to the resident but he had not responded.
On 11 March 2020 the landlord noted that the block had been vandalised and there had been unauthorised access into the resident’s flat. The landlord noted it had attended the block with the police and had taken action to secure the property by arranging to have the rear windows and rear door screened to secure it and the block from further damage. The landlord further noted that, failure to secure the rear of the property, would have resulted in further unauthorised access into the flat and the block, resulting in further damage and vandalism.
On 23 March 2020 another resident in the block reported to the landlord that the flats had been broken into and the doors completely kicked off their hinges. She said that goods had been stolen, the police had been informed and an arrest made. Later that day the resident told the landlord he could not access the property as it had been “sitexed”. (Sitex is a perforated steel barrier that allows light and ventilation into a property.) The landlord said it would arrange access for him.
On 25 March 2020 the landlord asked its contractor to install a working door at the property and noted the door had been patched up and left in working order.
On 31 March 2020 the landlord noted that the flats had been broken into again and the door to the resident’s property was “damaged beyond repair”. The landlord contacted the resident who said, he felt he had been “left homeless” and no one at the landlord had been in contact with him.
On 1 April 2020 the landlord told the resident it would be stepping up its attempts to find somewhere for him to move to. The landlord discussed potential properties with him and he told it he was staying with his mother due to the lockdown and nuisance behaviour from unauthorised visitors to the block.
On 6 April 2020 the landlord told the resident that he was entitled to return to the property and it could fit a new door and frame to enable him to do so.
On 16 April 2020 the landlord gave details to its lettings team of new preferred areas for the resident and said he was the last resident in the block that needed rehousing. The landlord was subsequently in frequent contact with the resident about potential properties.
On 18 May 2020 the resident told the landlord he might move back to the property. It told him to let it know and it would install a new front door and frame.
On 26 June 2020 the landlord offered the resident a property that it felt met his household size and circumstances. The resident signed the tenancy agreement for this property on 10 August 2020.
On 12 August 2020 the landlord noted that the property was void as of 2 August 2020 and asked the voids team to start work. The same day the landlord sent a message to the resident by text. It said it had told the lettings manager that he had moved out of the property on 5 March 2020 and had not returned to it since. It said it had requested an adjustment to the date of his tenancy agreement as his furniture was locked up in the old property. It asked for a list of items he wanted moving to the new property. The evidence suggests that the resident did not respond to that request.
In August 2020 the landlord applied for a home loss payment on behalf of the resident.
The landlord asserts that it contacted the resident by text on 2 and 12 September 2020 to find out if he had moved into the new property. It was unable to provide evidence of those texts.
In October 2020 the resident became aware from contact with the landlord that the old property had been emptied and his possessions disposed of.
On 27 November 2020 the landlord took the step of raising a formal complaint on behalf of the resident as it recognised there had been service failures in its handling of the resident’s move.
On 15 December 2020 the landlord wrote to the resident at stage one of its formal complaints procedures. The main points of the response were:
1. Its records showed that the block was broken into and the property was illegally accessed on 5 and 11 March 2020. The resident did not report these incidents but did to the police and obtained crime reference numbers.
2. As a result of those incidents, the block doors and each flat door were made secure and the resident did not have access to his property. The landlord said it understood it had told the resident that he could move into back into his flat, but he had agreed he would stay at his mother’s house and have access to the flat when he needed to. The resident was no longer required to pay rent at the property from that time.
3. In August 2020 the resident agreed to move to a new property but refused to sign the tenancy agreement until he had clarification about his arrears (which he was disputing from previous properties) and had confirmation of when the property would be carpeted and his belongings moved from the old property. The resident then agreed to sign the tenancy agreement as he was advised that he could lose the flat without doing so.
4. The rent team had confirmed that they used a credit from the resident’s account to pay off debts from his previous properties. The remaining arrears of £16.94 was deducted from his home loss payment which the resident had refused to sign in August 2020.
5. The landlord said it understood that the resident was not currently paying rent on his new property and that this was because he was not living in it and waiting for the carpet to be fitted and his belongings to be moved there.
6. As of 24 November 2020, the home loss payment had reduced to £4,388.06 to cover the debt and four weeks credit since the tenancy start date.
7. On 12 August 2020 the landlord had asked for a list of belongings in the property and a suitable date for removal by text. It said the resident had confirmed he did not respond. On 2 and 22 September 2020 the landlord said it had contacted the resident by text again to ask if he had moved in. When it did not receive responses, it believed he had moved in.
8. The rent team had agreed to move the tenancy start date to 2 September 2020 and the resident would receive a letter confirming his outstanding arrears which would be deducted from his home loss payment.
9. In a call between the landlord and resident in October 2020 it came to light that his belongings had not been moved from the old property but had been disposed of by the voids team. The landlord apologised for the inconvenience that error had caused him, which it said was due to a breakdown in internal communication.
10. The carpet was arranged to be fitted on 4 December 2020; however, the resident was unhappy with the quality of carpet and the landlord agreed to provide a contribution to allow him to choose his own carpet. The landlord agreed to contribute £400.
11. The landlord upheld the complaint. It said, whilst there was clear communication with the resident when trying to find him a property and several properties were offered to him, there was initially a lack of communication with regards to boarding up the old property and a breakdown in internal communication once he had signed his new tenancy agreement. This resulted in a delay in arranging the carpeting, moving his belongings and the disposal of his items.
12. It had implemented additional measures to ensure that there was clearer communication between the voids team and estates team when disposing of belongings. It assured the resident it had taken this matter seriously and it had been fed back to senior management overseeing these areas to ensure this did not happen again.
13. It awarded compensation of £220 made up of:
  1. £50 – lack of communication
  2. £70 – administrative error
  3. £100 – inconvenience
14. The landlord thanked the resident for providing a list of possessions disposed of when it had cleared the property. It said, if the resident could not provide receipts, then he should provide further evidence for each respective item namely the make, model, place and date of purchase as well as the original purchase price. It said it would then calculate the compensation due.
The landlord explained how the resident could escalate the complaint.
On 31 December 2020 the resident asked the landlord to escalate his complaint. He said that this had been an “extremely stressful time” and some of the items the landlord had disposed of were of sentimental value and could never be replaced. He enclosed a list of items that he wanted reimbursement for; the list included white goods, a bed, mattress and bedding as well as small electrical items and clothing.
On 5 January 2020 the landlord acknowledged receipt of the resident’s list of items and said its final complaint response would deal with compensation and rent payments.
On 28 January 2021 the landlord wrote to the resident at the final stage of its formal complaints procedure. The main points were:
1. The resident moved out of the property as this was due to be disposed of; however, it allowed him access whilst not charging him rent between April 2020 and August 2020.
2. It understood the resident was not paying rent for the new property and, as it had provided a suitable home, it would continue to charge rent and any arrears would be credited by his home loss payment once signed for unless he commenced payment.
3. The tenancy agreement for the new property stated that the resident would use it as his “main and principal home”. Therefore, as the tenancy had started on 2 September 2020 it would have expected him to have moved in and to be occupying this property. If he failed to take up residence, the landlord would take legal action against him in line with the tenancy agreement.
4. It acknowledged “issues with communication” during the move period it had acknowledged and apologised for but said there had also been delays in the resident coming back to it. The landlord noted it was satisfied with the response given to the resident at the formal investigation stage.
5. It thanked the resident for providing details of the items he had declared were disposed of and said it was registering a claim with its public liability insurers. It said they would write to him direct.
6. It had previously awarded the resident £400 as a contribution towards a carpet of his choice. It said, if he had already purchased carpet, to send it the receipts so it could cover the full cost of the three rooms.
7. It said it had offered compensation of £220.
The landlord signposted the resident to the Ombudsman.
The landlord subsequently told the Ombudsman it had recalculated redress for the resident after the introduction of the Ombudsman’s Complaint Handling Code. It calculated that it could offer the resident £340 made up of:
1. £100 for the breakdown in internal communication causing belongings to be disposed.
2. £35 for the breakdown in internal communication when handing back workload whilst the Estates Officer was on leave.
3. £35 for the initial lack of communication with regards to boarding up the old property.
4. £170 for upset and inconvenience.
The evidence is not clear on whether or not that new compensation offer was shared with the resident.
As of 28 July 2021, the balance of the home loss payment was £2,753.
When providing this Service with the evidence we had requested, the landlord told us that from June to October 2020, the resident had not contacted it or treated the new property as his main address having chosen to continue to live with his mother. It said its contractor had told it that there was “little to nothing” in the previous property but did not produce evidence of that.
When the resident approached the Ombudsman, he said that there had been no progress with the insurance claim. He said that he had been asked for receipts by the landlord for the destroyed items but, any receipts he had, were disposed of by the contractors in error.

Assessment and findings

The landlord charging the resident rent for a property he is not living in

The resident has an obligation to pay rent at the new property under the tenancy agreement that he signed in August 2020. By signing the tenancy agreement, the resident was agreeing that he understood, and would agree to abide by, the terms of the tenancy agreement. The landlord was therefore within its rights to charge him rent from the date he moved in. There was no service failure by the landlord in charging the resident rent from the start of the tenancy.
The Ombudsman notes that the landlord moved the start date of the tenancy from 10 August to 2 September 2020, which was the date it first contacted the resident after the tenancy agreement had started to check if he had moved in. This meant that the resident was not charged rent for more than three weeks at the start of his tenancy. The landlord used its discretion to change this date; it was not obliged to do so and in doing so demonstrated its willingness to try to achieve a resolution in this instance.

The landlord’s disposal of the resident’s belongings and communication

While there is no reliable evidence as to what remained in the previous property, the landlord has acknowledged that it was its mistake that the resident’s belongings that had remained in that property were disposed of (paragraph 33.i). It attributed this to a breakdown in internal communication and said it had put in place additional measures to ensure that there was clearer communication between it and its voids team when disposing of belongings. This measure was appropriate and in line with the Ombudsman’s dispute resolution principles “learn from outcomes”.
The resident’s stance is that, following the destruction of his belongings, he has nothing with which to move into the new property. The Ombudsman notes that there is no evidence that he responded to the landlord’s text of 12 August 2020 which asked what belongings he wanted moving to the new property from the old one. Had the resident responded at that time, it is likely that these possessions would have been moved prior to the voids team starting their work.
In its stage one response, the landlord confirmed that the resident had provided it with a list of items that had been destroyed of and asked for further evidence (paragraph 33.q). Its complaint response noted “we will then be able to calculate how much compensation you are due for these items”. However, by the time the final complaint response was issued, the landlord had decided that this matter should be dealt with by its insurance company and said it was registering a claim with them. The landlord offered no explanation to the resident about why it had changed its position on compensating the resident and had handed matters over to its insurer. It would have been good customer service for it to have done so.
The landlord’s disposal of the resident’s belongings without contacting him or arranging to move those he wanted, as it originally said it would, amounts to a service failure. However, the landlord has acknowledged this failing and has taken steps to put things right, which I have assessed, below.

The landlord’s delay in making the home loss payment to the resident

The landlord decided to apply for the home loss payment on behalf of the resident (paragraph 29). However, it did not pay this to the resident. Having applied for this payment, it is not clear on what grounds the landlord decided to retain it in full to off-set current – as well as future – rent arrears. There is nothing in the Act nor the landlord’s policies that allows for this nor does the payment depend on the resident moving into a new property.
There is no evidence that the landlord made the resident aware of this until the stage one complaint response in December 2020 (paragraph 33). That was not reasonable. The landlord should have engaged with the resident much earlier to make sure he was fully aware of the implications of not paying rent; the effect of that on his home loss payment that it had retained; and given him a named contact within its insurer so that he could chase matters up as he saw fit.
It would also have been appropriate for the landlord to have offered the home loss payment to the resident when it received it and explained that he could use that to buy the necessary furniture etc. for the new property while awaiting the outcome of the insurance claim. The landlord’s failure to engage with the resident was a service failure.
By the time the resident had completed the landlord’s internal complaints procedure in January 2020, the home loss payment originally due to the resident of £6,400 was being reduced weekly by the unpaid rent for the new property from September 2020 onwards. There is no evidence to suggest that the resident was in contact with the landlord during this period apart from asking it to escalate the complaint.
In relation to the failures identified, the Ombudsman’s role is to consider whether the redress offered by the landlord put things right and resolved the complainant’s complaint satisfactorily in the circumstances. 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 has offered the resident the sum of £340 (paragraph 39). While this sum includes compensation for poor communication, it does not include an amount to reflect its failure to pay the resident the home loss payment or its lack of engagement with him in relation to how his home loss payment would be reduced by the non-payment of rent. Effectively, the situation is in stalemate and has been for almost twelve months. The landlord has not taken any meaningful steps to resolve this matter. The resident says he cannot move into the new property as he cannot afford to buy new possessions for it; at the same time, the money that he could have used to buy these new items is not being made available to him.
This Service notes that there has also been a lack of engagement by the resident; however, having claimed the home loss payment on behalf of the resident in August 2020, this Service considers the landlord had an obligation to pay it and explain to him the consequences of his actions in not paying rent. There is no evidence that it did so until the first complaint response in December 2020 (paragraph 33). This Service considers that additional compensation of £250 would be appropriate for the inconvenience and distress caused to the resident by the landlord’s failure to engage with him and the almost twelve-month delay in making the home loss payment to him. This delay meant that he could not afford to replace the possessions needed to move into the new property and therefore lost him the opportunity to move in. The compensation ordered, below, should be made direct to the resident and not off–set against rent arrears.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of:
1. Its disposal of the resident’s belongings and communication.
2. Its delay in making the home loss payment to the resident.
In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of it charging the resident rent for a property he is not living in.

Reasons

The landlord acknowledged it made a mistake in destroying the resident’s belongings. There was also a lack of engagement with the resident and the compensation previously offered by the landlord did not fully reflect the impact on him.
Having applied for the home loss payment on behalf of the resident, the landlord had an obligation to pay it to him and explain how rent arrears were accruing on the new property.
The resident had an obligation to pay rent under his tenancy agreement that he signed in August 2020. The landlord moved the tenancy start date back by three weeks as a gesture of goodwill.

Orders

The landlord shall take the following action within four weeks of the date of this report:
1. Pay the resident the remaining home loss payment and explain that he will accrue rent arrears should he continue not to pay rent for the new property.
2. Pay the resident compensation of £590 made up of:
  1. £340 which is the sum previously offered by the landlord.
  2. £250 for the additional service failures identified in this report.

Recommendations

It is recommended that the landlord keeps record of texts to residents as they can be used to provide evidence of the landlord’s actions in complaint handling.