Clarion Housing Association Limited (202016709)

REPORT

COMPLAINT 202016709

Clarion Housing Association Limited

6 December 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: –

The level of rent the resident is required to pay.

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

The landlord’s handling of the resident’s complaint.

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(g) of the Scheme, the following aspect of the complaint is outside of the Ombudsman’s jurisdiction.

This Service cannot consider the resident’s complaint about the level of his rent (or service charge). These issues are dealt with by the First Tier Tribunal (Property Chamber). This aspect of the complaint has therefore, not been considered by this Service. Our position here is in accordance with paragraph 39(g) of the Scheme which states that ‘the Ombudsman will not investigate complaints which, in the Ombudsman’s opinion concern the level of rent or service charge or the amount of the rent or service charge increase.”

The resident is advised to make enquiries with the First Tier Tribunal (Property Chamber) if he remains dissatisfied with the level of his rent and/or service charges.

Background and summary of events

Background

The resident occupies his property under a secure tenancy dated 25 June 2018. He is responsible for paying both rent and services charges. At the time the tenancy was created the weekly rent was £106.83 with a service charge payable of £30.03, total £136.86 (£593.06 per calendar month).

The landlord sent notices to the resident in February each year revising the rent as follows: –

Date of Notice	Financial Year	Current Weekly Rent £	Current Service Charge £	Current Weekly total £ (monthly)	New Weekly Rent £	New Service Charge £	New Weekly Total £ (monthly)
28.02.19	2019/20	106.83	30.03	136.86 (593.06)	105.76	29.46	135.22 (585.95
21.02.20	2020/21	105.76	Nil	105.76 (458.29)	108.62	48.47	157.09 (680.72)
22.02.21	2021/22	108.62	25.44	134.06 (580.93)	110.25	49.08	159.33 (690.43)

Summary of Events

On 7 May 2020 the landlord wrote to the resident in response to his “enquiries” about the rent/service charge (the increase between 19/20 and 20/21 amounting to almost £100 pcm). It confirmed his rent had increased by 2.7% which was “in line with the formula set by the government”. It confirmed the resident had paid service charges for year April 2019 to March 2020 (the 20/21 revision notice had failed to include them in its figures). It confirmed that in its view the charges “appear to be correct”.

On 25 September 2020 the resident emailed the landlord to complain. He stated he had received a letter informing him that his rent was to increase by £100 per month and that, as a 17% increase, this was excessive. He stated he had received a similar letter “a few months ago” which he had queried three times but none of the landlord’s staff were able to answer simple questions about the situation. He stated that two months after and “without any dialogue” he had received a letter from the landlord advising that his rent was to decrease to £580 with the direct debit being adjusted accordingly. Now he had been told the landlord wanted to increase his payments to £680. He complained that the landlord did not appear to know what it was doing and its communication on the issue was poor.

Further the resident stated he had received a statement showing a £400 credit on his rent account but had now received a letter suggesting he was in arrears by £400. He requested the landlord respond to five questions: –

Why was the rent being raised?

Why had there not been any prior warning or discussion?

Why had nobody answered his previous queries about the situation “well before Covid issues?

Why had his account gone from showing a credit to showing a debit?

If the debit was correct, why had his account been allowed to fall into arrears?

The landlord acknowledged the complaint on 30 September 2020 and confirmed it was investigating the situation.

On 13 October 2020 the resident emailed the landlord asking for an update as he had not heard anything further. The landlord responded the same day that it was still investigating the complaint and thanking him for his patience.

On 22 October 2020 the landlord wrote to the resident with its complaint response pursuant to the first stage of its complaints procedure. It stated that: –

The resident’s direct debit had been raised to £680.72 per month to reflect the correct rent. It pointed out a rent review letter had been sent in February 2020 to advise the rent (incl. service charge) had increased to £157.09 pw, which equated to £680.72 monthly, but the resident’s direct debit currently only paid £580.93 per month.

The discrepancy in the direct debit was noticed by the landlord in September 2020 and was corrected with the first increased payment to be taken from 30 November 2020. The change triggered a letter to be sent to the resident confirming the increase in the direct debit.

The landlord’s staff member who had dealt with the situation had not had any contact with the resident prior to September 2020 and could not say what contact had taken place with the resident prior to this. It apologised for the lack of communication before this point.

Any credit on the resident’s account would have been eroded over the months by the fact the direct debit was not collecting the full rent payment each month.

The landlord confirmed that when rent changes took place, residents’ direct debits had to be altered “manually” and this was done in March 2020 when the landlord set it at £580.93. The landlord’s system had failed to generate a “Poor Payment History” notification about the underpayment which it confirmed was a “system error” which had been resolved.

The landlord concluded that the direct debit was now reflecting the correct amount. It accepted that there had been a lack of communication over the issue and that this amounted to a failure in the service it had offered. It therefore upheld the resident’s complaint. No remedy was offered.

The resident was dissatisfied with this response and on 23 October 2020, he requested his complaint be escalated to the second stage of the landlord’s complaints procedure. His reasons were: –

The direct debit was changed by the landlord. He had been paying £620 pcm and was now paying £580 pcm. He considered that if the landlord had made a mistake, it should take responsibility and not “recover your errors without consultation and reasoning”.

He accepted a letter of increase had been sent to him but maintained he had spoken to at least two members of the landlord’s staff about it as he considered it excessive. Following this the direct debit was reduced by £40. He therefore understood the position had been corrected and the £580 was the correct current figure. He did not accept the additional amount had been collected appropriately.

He considered the landlord must have internal records of the conversations he had had with its staff.

He disputed the problem had been caused by a “system error” and was unhappy with the suggestion he had a “poor payment history”. He pointed out that it was not his fault his account had changed from being in credit to being in arrears and there was nothing before this to alert him to there being a problem with his payments.

He was now left with a sudden rent increase of £100 monthly as well as unexpectedly being £400 in arrears and whilst the landlord had upheld his complaint, it had made no offer to remedy the situation.

On 17 November 2020 the resident requested an update on his escalation request stating he had not heard further from the landlord. He emailed again on 29 January 2021 complaining of the lack of a response. The landlord responded the same day stating that according to its records the complaint had been resolved and asking what points were left outstanding. The resident replied by return, confirming the complaint was not resolved and inviting the landlord to consider “the entire email chain”.

On 17 February 2021 the landlord acknowledged the resident’s escalation request indicating that due to a higher workload than usual, there would be a delay, but his case would “be assessed and allocated” as soon as a member of staff was available to deal with it. No timescale was given. The landlord apologised for the delay.

On 22 February 2021 the landlord wrote to the resident about his revised rent for financial year 21/22 as set out in the table above. Upon receipt, the resident contacted the landlord. According to that letter, the resident’s rent was increasing from £580.93 per month to £690.43 monthly. However, his direct debit for the current financial year was now set by the landlord at £680.72 per month and not the £580.93 quoted. He stated he was confused by the information supplied and demanded an explanation.

On 2 March 2021 the landlord acknowledged the resident’s contact and stated it would be passed to the complaints team to be addressed.

On 5 March 2021 the landlord emailed the resident acknowledging his request to escalate his complaint to the next stage of its complaints’ procedure. It apologised for the delay in responding, which was down to volume of enquiries, and stated it aimed to provide a response within 20 working days.

On 29 April 2021 the landlord emailed the resident, attaching its final review response (dated 9 April 2021) and which had been missing from a previous email. It stated the outcome of its review was as follows: –

The landlord’s rents team was responsible for issuing tenants with rent review letters whilst its customer accounts team held responsibility for administering payments. However, the landlord had introduced a change of IT in 2019 resulting in the data being used by the two teams “not aligning”. For the resident this meant that the rent team had advised of the correct rent for 2020/21 of £680.72 pcm but the customer accounts team – which set the direct debit – had been referring to incorrect information and had the direct debit at £580.93 instead. The landlord stated this issue with its systems had only recently been discovered.

The recent rent review letter (for 21/22) was again incorrect. It confirmed the current rent at £580.93 when the figure of £680.72 had actually been correct, but the amount moving forward for the new financial year at £690.43 was accurate and would now apply.

The landlord confirmed that the service charge had increased due to the introduction of a concierge.

The landlord apologised for the lack of clarity and acknowledged that this had not been helped by delays in its response to the complaint. It offered compensation of £150 made up of delay in complaint process, £50; Communication failures £50; and inconvenience/impact on resident, £50. The landlord stated this sum would be offset against the arrears that now existed on the resident’s account due to the underpayments. It maintained, however, that the full amount of the rent was due for the period that the incorrect direct debit had been in place, and it made no offer in respect of the arrears.

On 13 May 2021 the resident rejected the landlord’s offer of compensation indicating a £400 surplus on his account had been wiped out and he had been “labelled a poor credit risk” through no fault of his own. He considered the landlord’s offer was “derisory” and invited it to reconsider. However, the landlord responded to state its complaints process was now exhausted and it would not be considering the situation further.

On 22 June 2021 the resident represented to this Service that he had been put to considerable time and trouble in trying to resolve the confusion with the landlord; that its staff had been unable to explain the discrepancies for a prolonged period; that a surplus on his account had been used up; and that his credit worthiness had been called into question. By way of remedy, he wanted the landlord to write off two years of rent increases and restore his account to show the £400 surplus he considers should exist.

Agreements, policies and procedures

The landlord’s Complaints Policy sets out that it operates a two-stage procedure for handling complaints. The first stage is for an initial attempt to be made to resolve the situation. If the resident remains dissatisfied, they can escalate the complaint to a second stage which consists of a peer review.

The landlord also operates a Compensation Policy which sets out its approach to awarding compensation for service failings. Compensation is divided between actual losses which are quantifiable, and discretionary payments for the impact the situation has had on the resident.

Discretionary awards are divided into three brackets, £50 – £250, £250 – £700 and £700 and above depending upon the severity of the service failing and the impact upon the resident. The policy states that “the impact experienced by the complainant could include distress and inconvenience, time and trouble, disappointment, loss of confidence and delays in getting matters resolved: £50 per quarter per failure (as a guide).

However, the policy also states that the landlord’s staff should “work toward £100 for every year the issue has taken us to resolve”.

Assessment

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

The landlord revises the rent and service charge for the resident’s property annually in April and the resident has not challenged its right to do so. This complaint centres around the landlord’s handling of that process and its communication about it.

The landlord has produced a printout of the resident’s rent account. It shows that as at 28 October 2019 the resident was £433.50 in credit. Rent and service charges were being debited to the account at the rate of £131.50 per week (slightly less than the £135.22 notified to the resident in its yearly update as due at the time). Whilst this equated to £585.92 monthly, the statement shows there was a direct debit in place for payments of £612 (as opposed to the £620 quoted by the resident).

In February 2020 the landlord sent the resident updated figures showing an increase of almost £100 per calendar month to take place that April 2020. It is reasonable to conclude the resident would have queried this with the landlord. Whilst it has not produced evidence of any such contact, its email to the resident dated 7 May 2020 confirms the resident had questioned the increase.

The statement of account shows that starting with the resident’s first payment for the financial year in question (that is, at the end of April 2020) the landlord started collecting £580.93 monthly by direct debit instead of the £680.72 it was entitled to. This continued for seven months, until the landlord noticed the discrepancy and increased the direct debit amount.

The landlord has acknowledged that the IT system error it identified as the cause of the confusion meant it had provided conflicting information to the resident. Indeed, after the error with the direct debit was noted and the increase applied, the landlord sent out a further yearly notice (for the next financial year 2021/22) again giving the lower and incorrect figure of £580.93 as representing the current rent/service charge (instead of the correct figure of £680.72). The resident reasonably reports finding the whole situation confusing.

The landlord has accepted that there were failings in the service it offered which was appropriate, but the issue here is about what it might reasonably have been expected to do to remedy the complaint.

The landlord points to the fact the notice to the resident advising him of the increased rent for 2020/21 of £680.72 means that it can fairly claim that sum from him as he should have been aware of the figures. This is notwithstanding that it accepts it was responsible for setting the direct debit and collecting the wrong sum.

However, in the Ombudsman’s view the resident was reasonably entitled to assume the notice was incorrect because the level of the increase was far more than in previous years and the landlord had set the direct debit at a lesser sum suggesting it had accepted it was wrong. This is notwithstanding the landlord’s email of 7 May 2020 which confirmed the figures were correct but stated there had been a 2.7% increase which did not, in the Ombudsman’s view, properly explain an increase of £100 pcm. The evidence demonstrates that it was the introduction of a concierge service at an approximate cost of £20 per week which mainly accounted for the large increase, but the landlord has produced no evidence to demonstrate it identified this was the primary explanation for the position and explained this to the resident accordingly.

During the seven months that the error continued for, the rent account statement shows the landlord collected a total of £4,066.51 (7 x £580.93) from the resident, but it applied charges of £4,712.70 (30 x £157.09) to his account, creating an underpayment of £646.19. In the Ombudsman’s view the landlord should have fully considered the impact of the amount of arrears which had accrued to the resident in its offer of compensation. However, as indicated above, this Service does not have jurisdiction to determine whether the level of the increase itself, was fair.

The landlord’s annual notice for the next year also contained an error, but this did not affect the resident in terms of the rent being paid – it simply caused more confusion. The Ombudsman does not consider the landlord should reasonably be expected to waive that increase.

The landlord offered the resident compensation of £50 for its communication failures which had led to an “unreasonable level of involvement from” the resident and £50 for the impact on him and his inconvenience. The initial issue arose in February 2020 and appeared to be resolved in April 2020 but then resurfaced in September-November 2020. Matters were not finally resolved until April 2021 when the landlord’s complaint review offered an explanation for what had occurred although the resident was still dissatisfied with the outcome.

In the Ombudsman’s view, the resident was put to time, trouble and inconvenience in chasing the position, on and off for over one year and according to the landlord’s Compensation Policy, which contains calculations of £50 compensation per quarter (and £100 per annum per issue that remains unresolved), it might reasonably have offered the resident compensation of £200 as a result – £100 for the lack of communication and £100 for the impact upon him. The landlord did not properly apply its Compensation Policy in this regard which was inappropriate.

The landlord’s handling of the resident’s complaint.

The resident complained on 25 September 2020. The landlord might reasonably have been expected to offer a response (or a request for more time) within ten working days – that is by 9 October 2020 – but did not reply until 22 October 2020. This represented a short delay.

However, once the resident made a request to escalate his complaint to the next stage of the landlord’s procedure (23 October 2020), he did not receive confirmation of the outcome of its review until 29 April 2021 (albeit it was dated 9 April 2021) and this was after he had chased the landlord twice for an update. The landlord might reasonably have provided the review response in 20 working days, that is by 10 November 2020. This represented a much longer delay during which the resident was left unclear as to what was happening with his situation.

Whilst the landlord’s complaints policy does not set out time limits for a response, it is the Ombudsman’s view that ten and 20 working days respectively are reasonable response times for first and second stage complaints.

The landlord’s Compensation Policy suggests it might have offered compensation of more than the £50 it offered because the delay continued for more than “a quarter”. However, the resident is receiving compensation for his time, trouble and inconvenience already and the offer is therefore considered to be appropriate.

Determination (decision)

In accordance with paragraph 39(g) of the Scheme, the resident’s complaint about the level of his rent and/or service charge is outside the jurisdiction of this Service to consider.

In accordance with paragraph 54 of the Scheme there was service failure by the landlord in respect of its administration of the resident’s rent account.

In accordance with paragraph 55(b) of the Scheme the landlord has offered reasonable redress in respect of its handling of the resident’s complaint.

Reasons

The landlord provided the resident with conflicting information regarding the level of his rent payments and/or service charges for two consecutive financial years. It set his direct debit at an incorrect figure which resulted in an underpayment of rent, and which gave him a false expectation of his liabilities in this regard.

The landlord offered compensation which was not appropriate according to its Compensation Policy in respect of its communication failings and the impact this had upon the resident.

There were delays in the complaints process for which the landlord offered a fair level of compensation.

Orders and Recommendations

Orders

The landlord to pay compensation to the resident of £250 which is an increase of £100 on the sum previously offered for poor communication as well as time, trouble and inconvenience.

The landlord to confirm to this Service within 28 days that it will comply with this order.

Recommendations

The landlord to reoffer the £50 compensation to the resident in respect of its complaint handling if this has not already been paid. This offer demonstrated a recognition on the landlord’s behalf of the impact on the resident of its service failure and the above findings are made based on this offer being made.