Town and Country Housing (202124061)

REPORT

COMPLAINT 202124061

Town and Country Housing

14 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

The complaint is about the landlord’s response to the resident’s concerns about his rent account payments.

Background and summary of events

The resident is an assured tenant of the landlord which is a housing association. The tenancy began on 3 June 2019. The resident has advised that he has medical conditions, and he is considered a vulnerable adult.
The resident’s tenancy agreement specifies that rent payments are due weekly in advance on Mondays over 52 weeks of the year. When the tenancy began, the weekly rent amount, payable in advance, was £132.52 which was subject to review each year.
On sign-up, the resident made a payment of £662.60 to cover his initial rent payments. The landlord contacted the resident on 13 June 2019 as the payment had failed. The resident apologised and explained that he thought he had transferred enough money into his account to cover the payment.
On 17 June 2019, the landlord received notification that the resident had applied for Universal Credit (UC). On 20 June 2019, a direct debit of £20 per month was set up to begin on 1 July 2019 to clear the arrears that had arisen on the resident’s rent account due to the initial failed payment.
The resident met with the landlord on 24 June 2019 and requested it to ask the Department of Work and Pensions (DWP) to pay the housing element of his UC directly into his rent account with the landlord. He advised that he had a health issue at the time which was affecting his cognitive function.
The resident’s rent account statements show that the first direct UC payment of £574.25 was received by the landlord on 26 July 2019, leaving the rent account in arrears by £465.91.
A letter was sent to the resident on 4 February 2020 which stated that his new weekly rent amount from 1 April 2020 would be £136.10. It stated that if the resident received UC, then he would need to inform DWP of the new rent figure. The rent account statement shows that the resident’s monthly direct debit increased to £28.25 on 1 April 2020.
The landlord emailed the resident on 7 July 2020 to advise that the UC payments it had received were for the previous year’s rent amount. It asked the resident to update the DWP so that the correct amount was paid, or the rent account would fall further into arrears.
On 24 July 2020, the landlord increased the resident’s direct debit to £32.75 as the UC amount had not been updated to reflect the current years rent figure. The evidence shows that a letter was sent to the resident on the same day to advise him of the increase from August 2020, although the resident disputes receiving the letter. The evidence shows that the UC payment was increased from 25 August 2020 to be in line with the annual rent increase.
A letter was sent to the resident on 25 February 2021 to advise that his new weekly rent figure from 1 April 2021 would be £138.14. It said that the resident would need to inform DWP of the increase. The rent account statement shows that the resident’s monthly direct debit increased to £33.06 on 1 April 2021.
On 13 October 2021, the resident called the landlord to ask why he was paying £30 per month via direct debit on top of his UC payments. He was advised that UC payments were made in arrears, but his tenancy agreement required him to pay rent in advance and the direct debit was initially set up for this reason. The resident said that he would check when his UC claim started and the landlord advised that it would send him rent account statements. The resident said that he cancelled his direct debit to the landlord in October 2021.
The resident pursued his concerns with the landlord on 16 November 2021 alongside a representative. In response, the landlord explained that the monthly figure paid by UC amounted to 52 weeks rent divided by 12 months.
On 5 January 2022, the resident called the landlord to express concern that he had been overcharged on his rent. The landlord advised that rent was due in advance and for the start of 2020/21, the resident had not informed DWP of the rent increase which was the reason his direct debit had increased at the time.
The resident raised a formal complaint on 6 January 2022. He stated that he was taking legal advice regarding a direct debit which had been taken without his consent when he had been ill. He advised that UC covered 100% of his rent and did not understand why additional funds had been taken. He added that the amount had increased without notice.
The landlord issued its stage one complaint response to the resident on 24 January 2022 and explained the following:
1. In line with the tenancy conditions, when accepting the property, the resident had accepted that the rent needed to be paid weekly in advance.
2. The payments made by UC were paid in arrears and a direct debit was set up with the resident on 20 June 2019 to build the account to a point where it no longer fell into arrears between payments from UC.
3. The direct debit had increased over time and stood at £33.06 when the last payment was made in October 2021.
4. Since April 2021, the rent per week had been £138.14, meaning that the rent account needed to be in credit by £598.61 when the UC payment was received. It explained that following the resident’s direct debit payment on 8 October 2021, the account was in credit by £513.40, which meant that there was a shortfall of £85.21.
5. It acknowledged that the resident had advised that he had not been contacted about arrears on his account and believed money had been taken illegally. It noted that a member of staff had explained the arrears on the account with the resident on 13 October 2021 and again on 16 November 2021.
6. It was satisfied that the direct debit payments taken to date were collected with the resident’s permission and that the situation had been fully explained to the resident.
The resident called the landlord on 14 February 2022 and asked that his complaint was escalated to stage two of its complaints process. He was not sure whether he had sent an email confirming this but advised that he would resend this if he had not.
The landlord’s internal records suggest that the resident left the landlord a voicemail around 18 February 2022 following a phone call with it which he had terminated. The landlord emailed the resident on 18 February 2022 to confirm that the reason for the call was to discuss the resident’s reasons for wishing to escalate his complaint. It confirmed that the complaint had been escalated to stage two and that it aimed to respond within ten working days. The resident responded to advise that he was not prepared to listen to “further nonsense” and maintained that he was dissatisfied that approximately £786 had been taken from him via direct debit when UC covered his rent payments in full.
The landlord issued its stage two complaint response on 4 March 2022 and explained the following:
1. It provided a timeline of events involving the rent account since the beginning of the resident’s tenancy (as detailed above).
2. It confirmed that the resident had accepted the condition that rent was payable in advance when accepting the tenancy.
3. The resident had requested that the landlord applied to receive UC payments directly from DWP in June 2019 and it was explained at the time that the resident would need to make additional payments because his initial payment failed. This was set up at £20 per month with the resident’s permission.
4. In 2020, the UC payments it received were not increased in line with the April 2020 rent increase for five months. The direct debit paid by the resident was changed to reflect the delay in UC payments being increased.
5. The direct debit payment was reviewed each year at the point of the annual rent increase. This took into account the remaining arrears on the account and the amount of UC it anticipated to receive. It confirmed that the UC payments covered the current rent amount in full but that the account still fell into arrears during the payment cycle.
6. The total amount the resident had paid into the account (£786.42) was less than the total arrears that had accrued on the account as a result of the initial failed payment, delay in receiving UC directly into the rent account and the five month delay between April 2020 and August 2020 before the UC payments were increased. It confirmed that the remaining shortfall was £86.30.
7. It was the resident’s responsibility to update the DWP of any rent increases. It advised the resident that he could pursue his concern that he should have been entitled to the full rent amount with DWP directly. It added that, as the resident had not informed DWP of the increase and appeals were time limited, this may not be successful.
8. It offered to provide a further explanation of the process for updating the DWP and clarity around the rent increases if the resident wished. It also offered use of its Money Support team if the resident believed he was facing financial difficulty.
9. It did not uphold the complaint as it could not find evidence to support the resident’s claim that payments had been taken incorrectly and was satisfied that the direct debit payments had been put in place in accordance with its policies.
The resident referred his complaint to this Service as he remained dissatisfied with the landlord’s explanation of the reasons it had increased his direct debit and the reasons for the arrears on his rent account. He advised that he should not be in arrears as his rent was covered by UC and that he had not been informed of any direct debit increases. He added that since cancelling his direct debit in October 2021, he had not been pursued for payment which he believed to be a “red-flag” and added that he believed the direct debit had been set up under false pretences when he was recovering from illness. He asked that the total payment he had made into his rent account (£786.42) be refunded as a resolution to his complaint.

Assessment and findings

Policies and Procedures

The tenancy agreement states that the resident is to pay the rent for the property every week in advance on a Monday. If the landlord agrees to a payment at a different frequency, this must be paid in advance. It adds that if the resident receives housing benefit (universal credit), it is their responsibility to inform DWP immediately if their circumstances change. The landlord may also increase the weekly rent figure each year in April following the start of the tenancy. The landlord would send a letter informing the resident of the increase before it takes place.
The Government website regarding Universal Credit states that:
1. In most cases Universal Credit is a single, monthly payment which is paid in arrears directly into the claimant’s bank account. If rent is paid weekly, a monthly amount will be calculated by multiplying the weekly rent by 52, then dividing by 12.
2. Claimants will be expected to arrange their own rent payments unless they are unable to manage their finances effectively. In such circumstances, a managed (direct) payment to the landlord may be put in place where the housing element of the payment will be sent directly to the landlord each month.
3. Claimants are responsible for telling DWP of any changes that might affect their Universal Credit payment. This includes things like annual rent changes. The claimant is responsible for paying any shortfall in their rent to their landlord.
The landlord’s income recovery policy and procedure states that all tenants must ensure that full rent is paid and that any benefits are received where appropriate. If a tenant is not able to immediately pay their rent monthly in advance, they must agree an additional amount over a given period to bring the rent account in line with the tenancy agreement.
Should arrears accrue on the rent account, action should be taken to make contact with the resident and an arrangement made to clear the arrears. If arrears continue unaddressed then a Notice of Seeking Possession may be issued. In some circumstances, the landlord can apply to receive payment of ongoing rent and arrears directly from the DWP, although where the arrears represent between four and eight weeks rent, this may be declined by the DWP. All debts that exceed a balance of £150.00 will receive recovery action. Debts of up to £150 would only be pursued where it is economical to do so.

The landlord’s response to the resident’s concerns about his rent account payments.

In this case, the resident has raised concern that there should not have been arrears on his rent account as his rent payments were covered in full by the housing element of his UC claim. He maintains that he should not have needed to pay an additional direct debit into his account during his tenancy for this reason and expressed concern that the landlord had been paid twice. He has also raised concern that he was not informed when his direct debit increased and the landlord has not pursued him for arrears on his account since he cancelled the direct debit in October 2021.
As part of this investigation, the landlord was asked to provide relevant information related to the resident’s rent account and contemporaneous documentary evidence in the form of communication with the resident. This was provided and the Ombudsman has seen evidence of the resident’s rent account statements from the beginning of his tenancy until 6 March 2023.
The rent account statements provided by the landlord show that the weekly rent figure was charged each Monday in line with the tenancy agreement, taking into account the yearly rent increase. The number of rent charges on the account aligns with the number of weeks the resident has been a tenant of the landlord within the property. There is no evidence to suggest that any additional charges have been applied to the account.
Whilst the resident has an obligation to pay his rent in accordance with the terms of the tenancy agreement, the landlord has an implied obligation to manage his rent account effectively and to have appropriate systems in place to enable it to do so. Therefore, when the resident raised an issue with the overpayment made to the rent account, the landlord’s first objective would have been to investigate the circumstances of any alleged overpayment and clearly confirm its position to the customer in that regard. In this case, the landlord has demonstrated that it had taken steps to investigate the resident’s concerns and confirmed its position on a number of occasions.
The rent account statements show that there was an initial failed payment at the start of the resident’s tenancy which caused his rent account to fall into arrears. There was then a delay in receiving the first UC payment directly until 26 July 2019 and a delay between April 2020 and August 2020 where the housing element of the resident’s UC payments was not aligned with the increased weekly rent figure; this led to additional arrears on the rent account. Overall, the landlord’s explanation of the reasons for arrears on the resident’s rent account aligns with the rent account statements provided and there is no evidence of any service failure on the part of the landlord.
The evidence shows that at the start of the resident’s tenancy, he paid £662.60 to cover his initial rent payments, however, this payment was not successful which led to arrears on his rent account. The evidence shows that the resident apologised to the landlord and explained that he thought he had transferred enough money into his account to cover the payment. The resident has since advised this Service that he was off work due to illness at the time, did not have the funds to cover the first payment and had applied for UC.
The resident has advised that he has evidence to confirm that his rental payments were covered by the housing element of his UC since his tenancy began on 3 June 2019. The resident has provided evidence which confirms that he was in receipt of UC payments from 10 July 2019 which was after his tenancy began. Whilst the Ombudsman does not doubt the evidence provided by the resident, the information provided appears to relate to the UC payments received by the resident and does not specifically refer to the housing element of the UC payment paid directly to the landlord. On viewing the rent statements, the figures within the information provided by the resident do not correlate with the UC payments made into the resident’s rent account.
In addition, while the resident initially received UC payments directly, it is noted that he raised concerns with the landlord about the impact his health was having on his cognitive function and had asked that the landlord request payment directly from DWP on 24 June 2019 in order to prevent him from needing to do this himself. The landlord acted appropriately in line with the resident’s request by requesting payment directly from the DWP. There is no evidence to suggest that the landlord expected to receive rental payment directly from the DWP prior to this date. As such, the resident would have been responsible for managing his own UC payment and paying his rent manually prior to the request for direct payment on 24 June 2019.
If the resident believes that UC should have been paid directly to the landlord prior to 26 July 2019, he may wish to review his rent account statements and contact the DWP for a list of payments made directly to the landlord which relate to the housing element of his claim to ensure that there are no discrepancies. If he finds that there are any UC payments that should have been paid directly into his rent account that are missing, he may wish to raise this with DWP in the first instance should a correction need to be made.
The resident has an obligation to pay his rent in line with the tenancy agreement. It was reasonable, and in line with the landlord’s income recovery policy, for the landlord to request an additional credit of £20 into the account on a monthly basis given the arrears that had accrued on the account due to the initial failed payment and the resident not being able to pay his rent in advance. This was also reasonable as it prevented any recovery action being taken against the resident’s tenancy due to the arrears. The evidence shows that the landlord explained the reasons that the direct debit was required to the resident at the time and the arrangement was set up with the resident’s permission on 20 June 2019, with the initial payment of £20 on 1 July 2019.
The resident has advised this Service since the landlord’s final complaint response that he was recovering from illness at the time the direct debit was set up and believes that this was set up under false pretences. It should be noted that the Ombudsman is unable to comment on the resident’s capacity at the time the direct debit was agreed, however, we can consider whether the landlord’s explanation and actions were reasonable and in line with its policies and procedures.
The landlord’s internal records showthat the reason for the direct debit was explained to the resident at the time and several times since he initially raised concerns in October 2021. The Ombudsman is satisfied that the direct debit was set up to cover the initial failed payment into the account and to ensure that the resident was paying in advance of his weekly rent in line with the conditions of his tenancy agreement. The rent account statements show that each payment made via direct debit was paid into the resident’s rent account against the arrears balance on the account. This amounted to £786.42 in total between 1 July 2019 and 1 October 2021 before the direct debit was cancelled by the resident.
While the landlord may have been able to request an additional payment from the DWP directly to cover the arrears on the rent account and prevent the resident from needing to pay via direct debit, this is subject to agreement by the DWP. Where the total arrears amount to less than eight weeks rent, this may not be agreed. In addition, any additional payment made by the DWP would usually be deducted from the UC payment the resident received directly from DWP. As the resident had a direct debit of £20 in place to pay back the arrears that had accrued due to his initial failed payment, and the arrears amounted to less than eight weeks rent at the time, it was reasonable that the landlord did not request this directly from DWP and continued the direct debit arrangement to offset the arrears on the rent account. It was also reasonable for the payment to be requested via direct debit given the resident’s medical concerns related to his cognition at the time.
The landlord has provided a reasonable explanation as to why the direct debit figure was increased in August 2020. The evidence shows that the resident’s weekly rent figured increased from April 2020 and that the resident was informed via letter of the increase on 4 February 2020 and advised that he would need to inform DWP of the increase. The landlord also acted appropriately by contacting the resident via email on 7 July 2020 to inform him that the housing element of the UC which it received directly had not been updated to reflect the new weekly rent amount. He was asked to contact the DWP to inform them of the increase otherwise the account would fall further into arrears.
In line with the tenancy agreement, government guidance and the landlord’s policies, the resident would be responsible for paying his rent and covering any shortfall. It would also be the resident’s responsibility to update the DWP in relation to changes in his circumstances, including an increase in the payable rent figure. This is to ensure that the UC is adjusted to prevent underpayment to the rent account. As the payments received from UC had not been increased to align with the new weekly rent figure, it was reasonable for the landlord to amend the resident’s direct debit to ensure that any shortfall was covered and the rent account did not fall into further debt.
Alongside his concern that he should not have needed to make any direct debit payments into his account as he was covered by UC, the resident has raised concern that he was not informed when his direct debit amount increased at any stage. While it is noted that the resident said he had not received this information, the landlord has provided documentary evidence of letters that were sent to the resident informing him of his direct debit figure.
The landlord has provided evidence of a direct debit letter addressed to the resident dated 16 March 2020, advising that from 1 April 2020, the direct debit figure would increase to £28.25. Another letter, dated 24 July 2020, advised that the direct debit figure would increase to £32.75 from 1 August 2020. A further letter addressed to the resident dated 18 March 2021, advised that from 1 April 2021, the direct debit would increase to £33.06. Each letter noted that the resident was entitled to cancel his direct debit at any stage.
It is understood that the resident maintains that he was not informed of an increase in his direct debit at any stage and the Ombudsman does not dispute that he may not have seen the letters. However, the documentary evidence shows that the landlord had acted appropriately by attempting to notify the resident of the increase on each occasion in advance of the due date in line with its obligations. The Ombudsman is satisfied that the resident would also have had the opportunity to challenge the increased figure on each occasion the direct debit was taken from his bank account.
The resident has raised additional concerns that the landlord had not pursued him for payment towards any arrears on his account since he cancelled his direct debit in October 2021. The landlord has advised this Service that the resident’s rent account is up to date, but falls into arrears each month before a UC payment is received which brings the account back into credit. It has further advised that while the ideal situation would be for the resident to pay in advance of his weekly rent payment in line with the tenancy agreement, as the rent account was not incurring any additional debt, it did not intend to pursue further action.
As the arrears on the rent account were cleared each month when the UC payment was received, it was reasonable that no further action was taken by the landlord in pursuing the resident for an additional payment to clear the arrears. The landlord’s decision not to pursue the resident for the arrears on his account once he had cancelled his direct debit in October 2021 is also appropriate as it is in line with its income recovery policy. The total level of arrears did not exceed £150 but amounted to approximately £86.30, as detailed by the landlord within its final response to the resident on 4 March 2022.
The landlord also acted reasonably by confirming that it was willing to provide a further explanation regarding the process for updating the DWP and clarity around the rent increases if the resident wished. It also acted reasonably by confirming that it had a Money Support Team to offer additional assistance should the resident feel he needed this. It remains unclear as to whether the resident has sought additional advice through this team, however the landlord’s offer was reasonable in the circumstances in an attempt to support the resident.
In summary, the Ombudsman notes the resident’s comments that his rent payments should have been covered by the housing element of his UC claim from the beginning of his tenancy on 3 June 2019. However, the Ombudsman has not seen any evidence to confirm this. It is noted that the resident wants the landlord to refund £786.42 he had paid into the account via direct debit. The Ombudsman is satisfied that the direct debit was set up with the resident’s consent and was reasonable to prevent recovery action being taken against his tenancy. If the direct debit had not been set, the resident’s rent account would remain in arrears and the landlord would have been entitled to pursue the arrears by other means, or take recovery action against the resident’s tenancy where no agreement had been made.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration by the landlord in respect of its response to the resident’s concerns about his rent account payments.

Reasons

There is no evidence to suggest that the resident’s rent account had been overcharged or that the direct debit payments were taken inappropriately from the resident. The evidence shows that the direct debit had been set up with the resident’s permission and that each direct debit payment was made into the resident’s rent account to offset any rent arrears that were owed and prevent any recovery action against his tenancy. The landlord’s complaint responses demonstrate that the landlord undertook a full investigation of the resident’s rent account. It also provided explanations to the resident on a number of occasions as to the reasons for the arrears on his rent account. The explanations provided were consistent with the resident’s rent account statements and evidence provided. There is no evidence of any service failure by the landlord in its administration of the resident’s rent account or its handling of the resident’s concerns.

Recommendations

It is recommended that the landlord provides the resident with copies of his rent statements from the start of the tenancy so that he can review these if he wishes.
The landlord should reply to this Service within four weeks of the date of this report to confirm its intentions in regard to this recommendation.