Orbit Group Limited (202201795)

REPORT

COMPLAINT 202201795

Orbit Housing Association Limited

4 March 2023

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 administration of the resident’s rent account.

Scope of investigation

2. The resident has raised dissatisfaction with a payment of £355 made to the local authority’s benefits team by her ex-partner which was not reflected against her rent account. The resident has also contended that housing benefit payments were made to the rent account while she was making payment directly and these were not credited to the rent account; however, there was no evidence presented of these. These matters will not be considered within this investigation as disputes regarding benefits payments are properly within the jurisdiction of the Local Government and Social Care Ombudsman (www.lgo.org.uk). Furthermore, there was no evidence that the latter issue was raised to the landlord as a formal complaint.
3. The resident may wish to approach the benefits agency directly to query these payments and raise a complaint if she is dissatisfied with the response. Please note, the Local Government and Social Care Ombudsman will not investigate until a complaint has been made to the relevant agency.
4. Consequently, a determination will not be made about the benefits agency’s handling of payments to the resident’s rent account and this investigation will focus on the landlord’s administration of the rent account.

Background

5. The resident was a tenant of the landlord and her tenancy ran between 11 August 2020 and 19 September 2021. On commencement of the tenancy, it informed her that payment of £384.58 was required to complete the sign-up process.
6. After the resident ended her tenancy she was contacted by the landlord’s debt collection agency about rent arrears of £269.75 which she disputed. She raised a complaint with the landlord, through the debt collection agency, on 10 May 2022. The reason for the complaint was the resident’s dissatisfaction with the rent arrears, which she contested, and for which she sought an explanation.
7. The landlord provided an initial response to the resident on 7 June 2022 which explained that the arrears had arisen because she cancelled her final direct debit on 27 August 2021 and rent charges were subsequently applied to the account. It provided a stage one response to her on 14 July 2022 which reiterated its earlier position.
8. The landlord issued its final response to the resident on 1 August 2022 which provided further explanation of the payments to the rent account and acknowledged that it had made errors in the calculation of the direct debit rent amounts on two occasions. It confirmed that, in addition to this, there had been a shortfall in rent payments. The landlord asserted that, against rent charges of £5,166.74, it had received payment of £4,896.99. It noted that the resident had confirmed that she had received housing benefit payments directly after 27 October 2020 and that she had cancelled the final direct debit rent payment. The landlord acknowledged that there had been “confusion” and “incorrect management” of the rent account and offered compensation by clearing the outstanding balance of £269.75 on the rent account.
9. The resident informed this Service on 8 November 2022 that she continued to be dissatisfied as she maintained that she should not have been in arrears at the end of the tenancy. She added that £355 had been paid by her partner which was not reflected on the rent account statement and that the landlord had been receiving payments of housing benefit while she was simultaneously making payments.

Assessment and findings

10. The landlord’s tenancy agreement with the resident confirmed she was obliged to pay the rent for the property, and this rent of £88.75 was payable in advance on the Monday of each week at the commencement of the tenancy. The landlord has provided the letter given to the resident on commencement of the tenancy. This confirmed that an initial payment of £384.58 was required to complete the sign-up process.
11. The rent statement provided by the landlord to the resident and the Ombudsman shows that housing benefit payments were made in arrears to the rent account from 24 August 2020 to 27 October 2020. This left the resident’s rent account in credit by £295.83 at that point; this was the initial £384.58 she paid, less one week’s rent. This corresponded with the landlord’s explanation, in its final stage complaint response, that the direct debit it set up on 30 November 2020 failed to account for the additional week’s rent which had not been paid in arrears by housing benefit. This also explained why, from this point onwards, the rent account went into arrears each month in the week before the rent payment was made by the resident.
12. The landlord’s final stage response also acknowledged that it did not adjust its direct debit payment for a rent increase starting in April 2021, which led to the rent account accruing more arrears. This is reflected on the rent statement; however, this also shows that the shortfall was collected in the following month’s direct debit payment.
13. The rent statement shows that, after the last payment of housing benefit on 27 October 2020, payment was not taken by the landlord in advance; instead, rent payments were deducted from the initial payment made by the resident at the start of the tenancy. Therefore, while it may have been the resident’s belief that her initial payment remained on the rent account in full, this was not the case, and explains why, in her dispute with the landlord, she felt that she was owed some money back.
14. While the rent statement shows that the rent account went into arrears each month in the week before the direct debit payment was taken, the rent amounts taken were equivalent to four and a third of a week’s rent. This is common practice where landlords charge rent monthly to enable twelve monthly payments to account for 52 weeks’ rent charges across a year. Therefore, by 23 August 2021, the account was actually in credit by £0.49 due to the monthly payments making up for the earlier shortfall. This was the point where the resident’s direct debit rent payment was rejected, and three weeks’ rent was subsequently applied to the account. This accounts for the arrears on the rent account of £269.75 which amount to three weeks’ rent for the period between 30 August and 19 September 2021, when the tenancy ended.
15. Therefore, while the landlord acknowledged that it had made errors in the administration of the rent account, these ultimately had no bearing on the arrears which accrued. The arrears occurred because the final direct debit was not paid. It would have been more helpful for the landlord to explain to the resident, in its complaint responses to her, that her rent payments had been taken from the initial £384.58 she had paid at the start of her tenancy, and that there was no ‘deposit’ amount which remained on the account. It would also have been useful for the landlord to inform her sooner that her rent account was going into arrears at the end of each month.
16. On review of the rent statement for the period between 11 August 2020, when the tenancy commenced, and 19 September 2021, when the tenancy ended, there was a total of £5,166.74 in rent charges and £4,896.99 in payments received on the account. These figures correspond with those quoted in the landlord’s final response and it was evident that arrears arose because of the rejected final direct debit rent payment. It was appropriate for the landlord to seek payment of this, in accordance with the resident’s obligation, under the tenancy agreement, to pay rent.
17. While it was evident that there were failures in the landlord’s administration of the rent account, and that it could have communicated more clearly to explain the situation to her, this did not override the resident’s obligation to pay rent. As specified above, this was one of her contractual obligations stipulated in the tenancy agreement. Therefore, despite the errors made by the landlord, the resident was still required to pay the £269.75 outstanding on her rent account. The landlord’s subsequent removal of the £269.75 arrears from the resident’s rent account was effectively an offer of compensation to her, as it was still entitled to seek payment of the rent arrears.
18. The Ombudsman’s remedies guidance provides for awards of compensation of between £100 and £600 where there has been a failure over a significant period of time which led to detriment for the resident which may not have been permanent. The landlord’s ‘writing off’ of the outstanding £269.75 was therefore a reasonable offer of compensation to the resident, which was higher than the amount of compensation the Ombudsman would normally order for the failures exhibited in this case. This offer adequately recognised the distress and inconvenience she experienced, and her expenditure of time and trouble, in seeking resolution of the matter.

Determination

19. In accordance with paragraph 53(b) of the Housing Ombudsman Scheme, the landlord made an offer of redress to the resident which, in the opinion of the Ombudsman, resolves the complaint satisfactorily concerning its administration of her rent account.

Recommendations

20. The landlord should:
    1. Remove the £269.75 arrears from the resident’s rent account, if it has not done so already.
    2. Offer to speak to the resident to provide an explanation of how the arrears had accrued on her rent account.
    3. Review its procedures for the administration of rent accounts to ensure that rent payments are debited correctly.