Yorkshire Housing Limited (202208530)

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REPORT

COMPLAINT 202208530

Yorkshire Housing Limited

13 April 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 regarding the landlord’s response to the resident’s queries about the rent category of the property and its handling of the rent and service charge increase process.

Background and summary of events

  1. The resident is the assured shorthold tenant of the property, a two bedroom flat, owned by the landlord.
  2. The resident’s tenancy began on the 3 December 2020. She contacted the landlord about the increase of her rent on 7 January 2022 and it explained that she was on affordable rent, which meant that the rent increase of 1.5% was on gross basis as it included her service charges. She continued this query in February 2022 when she also challenged the issue of her being on the affordable rent category. She wanted to know why she was charged a different, and higher, rent amount from her neighbour. The landlord considered a formal complaint on the issues in April 2022, following queries by the resident.
  3. In its stage one decision of April 2022, the landlord stated that the rent increase was based on “regulations” which was within CPI (Consumer Price Index) +1% a year for existing tenants. It apologised that it has not made it clear at the time she was taking up the tenancy that the resident was on affordable rent but maintained that this was the case and had been verified. It acknowledged that “the leaflet provided” did not clarify level of increase of service charges but did state that they were subject to increase.
  4. In its stage two decision of May 2022, the landlord apologised that the property had not been advertised as affordable rent category. It stated that the area had differing rent categories and some tenants were on social rent. It also stated, “as an affordable rent, the service charge is included in the full amount charged. Your rent increase will be on the rent amount only.”
  5. The resident referred the matter to this Service as she disputed the landlord’s responses to the rent issues.

Assessment and findings

Scope of investigation

  1. This investigation will consider the landlord’s response to the resident’s queries on the category of the rent for property (affordable or social) but will not decide what the category should be. This is in accordance with paragraph 42(p) of the Housing Ombudsman Scheme (the Scheme) which provides that “The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion concern matters where the complainant is seeking an outcome which is not within the Ombudsman’s authority to provide.”
  2. The landlord owns the property and it is for it to decide the applicable rent category within the appropriate policy. Thus, this assessment will solely investigate the adequacy and reasonableness of its response to this issue.
  3. In considering the landlord’s handling of the process of increase/decrease in the rent and service charge amount this report will not consider the actual increase/decrease level or amount. Our investigation is limited to whether the landlord’s handling of the process was reasonable and in accordance with applicable policy. This is in accordance with paragraph 42(e) of the Scheme which provides 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.”
  4. Further to the above, this report will not consider any issues in relation to the rental value of the property versus similar properties as this is at the landlord’s discretion and market forces.
  5. This report has, however, considered the adequacy of the landlord’s response to the resident’s query on why her rent was higher than her neighbour’s.

The category of the property and the increase/decrease process

  1. The tenancy agreement provided to this Service does not specify the category of the property. The landlord has not provided evidence to show that the property is in the category of an affordable tenancy beyond the email responses to the resident. It has acknowledged that the advertisement for the property did not indicate that it was being let at that rent category.
  2. The resident, in her communications with the landlord, also drew its attention to the information leaflet which it provided to its tenants on the rent increase process. This leaflet indicated that the rent element was different from the service charges and included a formula to show that the service charges were not included in the calculation of the rent increase. The landlord advised in its stage one decision that this leaflet would be reviewed. Its response did not consider the combined effect of all its errors in the matter of the resident’s rent category and the resultant increase calculations.
  3. Firstly, she had been provided with both a starter and an assured tenancy, then she had not been made aware that she was on affordable rent, then she was given a leaflet indicating that the calculations of increase did not include service charges. However, the service charges had been included in the increase on the basis of a rent category she did not know applied to her.
  4. The landlord’s internal communications show that, on the 7 April 2022, it discussed the fact that all previous tenancies of the property were signed up as “social, assured rent property group 10.” Within this same email the landlord’s argued over the fact that the resident has not evidently been signed up as an affordable tenant. The landlord further stated that the only evidence that the resident is an affordable rent tenant is a tick box within an internal CRM which is not visible to her.
  5. The landlord stated in its stage one complaint response to the resident that it had taken steps to verify that the property is one of the affordable rent properties within the block. It is, on the contrary, evident from the information provided by the landlord that its staff members could not easily ascertain whether the resident was signed up to an affordable or a social rent. Some of the communication to her was also contradictory, indicating that there was lack of expertise on the issue of the rent type and insufficient proof that the property was in the affordable rent category.
  6. The evidence provided to this Service by the landlord indicates that it internally identified a recurring issue were the tenancy agreements for social rent and affordable rent properties were very similar. The affordable tenancy agreements did not state clearly that the tenants are on affordable rent and it indicated awareness that it had affordable rent tenants who were unaware that this is different to a social rent.
  7. In response to the resident’s queries about why another tenant was paying less rent, the landlord explained that rent charges for properties in the area was not uniform and were based on factors including the rent category. The landlord’s response to this issue is both accurate and reasonable. The Ombudsman does not seek to establish why a landlord has dealt differently with another tenant. Instead this investigation seeks to ascertain whether the landlord has dealt fairly with the resident with respect to the issues raised. This is because a landlord should be responding to the individual circumstances of a case which will be different depending on the tenant.
  8. The status of the property has a significant effect on the process of calculating the rental increase/decrease as affordable and social rent increases are calculated on a different basis. The landlord correctly states in the stage one outcome letter, (12 April 2022) that the regulatory requirements for affordable rent and social rent are different. However, its responses did not go far enough in both acknowledging its considerable failings and taking steps to offer redress.
  9. The tenancy agreement shows a net rent of £85.46 and a service charge of £8.05 with a total payable of £93.51 weekly gross rent. The tenancy agreement states the term ‘rent’ refers to the sum of the net rent plus service charge. However, this does not explain that its rent increase calculations will include the service charges.
  10. The tenancy agreement further states that the landlord may increase or decrease the rent with at least one calendar month notice in writing and the notice should specify the new rent. The landlord may also vary the service charge with not less than one calendar month’s written notice about any changes and may only do this is no more than twice in one year.
  11. The tenancy agreement shows that, with the exception of charges, the agreement may only be altered if both the resident and the landlord agree in writing. The tenancy agreement does not state whether the tenancy is to be on an affordable or social rent basis.
  12. The UK government official guidance indicates that affordable rent setting is based on gross rent which includes the service charges on the property. It also indicates that rent setting for social tenancies is based on net rent.
  13. On the 22 February 2021 the landlord provided written notice to the resident showing the new weekly rent and service charge which was to commence on the 5April 2021. The rent increase was to £89.63 and the service charge decrease to £5.28. The rental increase, if based on affordable rent, was within the government guidance. The government published “Limit on annual rent increases” shows a rent cap requirement of 1.5% for the 2021-22 year.
  14. On the 21 February 2022 the landlord provided written notice to the resident showing the new weekly rent and service charge which was to comment on the 5 April 2022. The rent increase was to £92.73 and the service charge increase to £6.07. The rental increase, if based on affordable rent, was within the government guidance. The government published “Limit on annual rent increases” show a rent cap requirement of 4.1% for the 2022-23 year.
  15. From the foregoing, while the landlord’s inclusion of the service charges in the rent changes is the correct process for affordable tenancy, the resident was unaware that this was her rent category until she challenged the increase. Thus, there was significant distress to her due the landlord’s omission.
  16. The landlord further contradicted itself within the supplied evidence on the process of increase and whether this should be applied to gross rent or net rent. It informed the resident in writing on the 24 February 2022 that the increase is on gross charge (rent plus service charge). Its stage two complaint response letter of 10 May 2022 stated the service charge is included in the full amount of charges but also that “the rent increase will be on the rent amount only.”
  17. The landlord, after sending the stage two decision, sent another letter to the resident on 12 May 2020 stating that the increase is applied to gross rent (rent plus service charge). This was the cause of further confusion and distress to the resident.
  18. Overall, this Service finds that the landlord’s decision was not in consonance with the communications by its staff members who were discussing the situation internally in a bid to provide a response to the resident. These communications occurred before the formal complaint was considered and indicated considerable confusion about the correct rent category. However, the landlord did not consider the significance of the information indicating that the tenancy had never been made clear.
  19. This Service concludes that landlord was unreasonable and unfair in its response to the issue of her tenancy category and consequent rent change process. It acknowledged that the property was not advertised as an affordable tenancy but did not consider that the resident was essentially being informed that she had been signed up to a rent category without her knowledge. It failed to consider that compensation was warranted in the circumstances and did not utilise the opportunity of the formal complaint to offer redress for the failings in its actions.

Determination (decision)

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in relation to the rent and service charges and the process of increase/decrease.

Orders

  1. The landlord should pay compensation of £500 to the resident for the inconvenience and distress to her of its handling of her queries on her rent category.
  2. The landlord should provide the resident with a written apology acknowledging the contradictions in its communications to her.
  3. The landlord should provide this Service with evidence of its compliance with these orders within 28 calendar days of the date of this report.

Recommendations

  1. It is recommended that the landlord carries out staff training (to include senior staff) on the difference between social and affordable housing categorisation and how this is logged within any internal process and systems for individual properties.
  2. It is recommended that the landlord reviews and makes improvements to the process for affordable rent sign ups. This is to include every tenancy going forward, clearly stating the categorisation of the property.
  3. It is recommended that the landlord informs its existing tenants of their rent categorisation, including the attendant implications, where it has not previously done so.