London Borough of Islington (202316635)

REPORT

COMPLAINT 202316635

Islington Council

23 June 2025

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. This complaint is about the landlord’s handling of the resident’s mutual exchange.

Background

2. The landlord in this case was a council. At the time of the complaint, the resident was a secure tenant of another member landlord, which was also a council. The property the resident lived in, at the time she submitted a 3-way mutual exchange application on 25 July 2023, had 3 bedrooms.
3. On 3 August 2023, the landlord wrote to its tenant to say the 3-way mutual exchange had been refused. The landlord explained the grounds for the refusal were arrears on one of the existing tenancies and that the property was substantially larger than was reasonably required by the resident in this case.
4. On 7 August 2023, the resident made a formal complaint to the landlord about its decision to refuse the mutual exchange. The resident also asked the landlord to provide evidence of the bedroom size of the property she had applied for and when it was signed off for its ‘most recent adjustment’.
5. The landlord issued its stage 1 response on 1 September 2023, in which it said:
   1. It had previously been in contact with the resident about her application and explained that the mutual exchange was being reconsidered.
   2. Upon further review, it was discovered there was an error in the resident’s original exchange application. Her daughter had not been included, which meant she did not meet the housing requirements for the property she had applied to move to. It subsequently contacted her current landlord, clarified the situation, and confirmed her daughter as part of her household.
   3. With this clarification, it could now progress the exchange, following its standard processes and procedures.
   4. References had been requested, a standard requirement during the mutual exchange process, and it would provide a response accordingly.
6. The resident escalated her complaint on 19 September 2023, in which she said:
   1. Whilst she appreciated its response, the landlord was ‘deliberately trying to sabotage this mutual exchange by being difficult and ignorant’.
   2. In accordance with its allocations scheme it was possible to swap to a property that had 1 bedroom more than required.
   3. Even with her error of missing her daughter’s name from her application form, she would still have been eligible to apply for a 5-bedroom property.
7. On 9 October 2023, the resident moved into the property she had requested through the mutual exchange.
8. The landlord issued its final response on 12 October 2023, in which it said it was sorry the service the resident received did not meet her expectations and for the inconvenience this caused. However, it had not identified any delays in processing her application. In summary, the landlord said:
   1. The initial application was incomplete and was brought to the resident’s attention. Once this error had been rectified, the current tenant’s application was reviewed and this too had missing information. Some of the conditions required to progress the application had also not been met.
   2. The onus was on the parties submitting the application to ensure that all mutual exchange conditions, including clearing any rent arrears, were met. The landlord said it was not reasonable to expect it to waive some of the conditions in order to meet timelines set by the applicants. As such it did not consider that there was a delay in approving the application.
   3. With regards to the number of bedrooms:
      1. The floor plan indicated the property had 6-bedrooms.
      2. The property was inspected and it was confirmed that the room, which the resident referred to as being unfit to be classified as a bedroom, had a window; heating facilities and a boundary wall between other facilities such as a kitchen and/or bathroom. As such it could be considered as a bedroom.
      3. It had noted the existing tenant had erected a structure which was blocking the window and as such the room fell short of the required standards.
      4. As per its policies and procedures, the existing resident was instructed to remove the structure before the application could proceed..
   4. It was sorry the resident felt ‘patronised’ when advised she would be required to pay rent for a 6-bedroom property, noting the resident said the officer who told her this was suggesting she could not afford the rent.

Assessment and findings

9. The Ombudsman’s role is to assess whether the landlord has followed proper procedure, good practice, and behaved reasonably, taking account of all the circumstances of the case.
10. When considering how a landlord has responded to a complaint, the Ombudsman considers not just what has gone wrong, but also what the landlord has done to put things right in response to a complaint. In considering this, we assess whether the landlord’s actions were in line with the Ombudsman’s Dispute Resolution Principles: Be fair, put things right and learn from outcomes.

Relevant legislation, policies, and procedures

11. The landlord’s mutual exchange policy states:
    1. All Council tenants have a statutory Right to Exchange, under Schedule 3 of the Housing Act 1985 as amended by the Local Government and Housing Act 1989. They may arrange to exchange their tenancy with another local authority tenant or a tenant of a Registered Social Landlord.
    2. It may grant conditional consent if the tenant has rent arrears or is in breach of a condition of the tenancy. It is not permitted to impose any other form of condition. This will ordinarily include a requirement to remove any unauthorised alterations which had been fitted by the outgoing tenant without its written permission.
    3. It may only refuse consent on specific grounds, these are set out in Schedule 3 of the Housing Act 1985 and the Housing Act 2004 (chapter 6, part 1). The key grounds in relation to this complaint are:
       1. Ground 1: where ‘The tenant or the proposed assignee is subject to a possession order or a suspended possession order’.
       2. Ground 3: where ‘The accommodation is substantially larger than is reasonably required by the proposed assignee (accommodation would be substantially larger if there is more than one bedroom above that which the household requires)’
    4. It has 42 days to respond to an application for an exchange.

Assessment

12. The resident submitted her completed application for a 3-way mutual exchange on 25 July 2023.
13. In an internal email of 28 July 2023, the landlord noted that it had received a 3-way mutual exchange request for one of its tenants, who was the current occupier of the property the resident was looking to exchange to.
14. In accordance with the landlord’s mutual exchange policy, the resident could have expected it to have either approved or refused the application by 8 September 2023, 42 days after it had received the completed application from its tenant.
15. Whilst it was the case that the landlord initially refused the application on 3 August 2023:
    1. As the resident’s initial application only included herself and her 4 sons, and as the property she was seeking to exchange into had 6 bedrooms, it was reasonable for the landlord to initially refuse her application under Ground 3 of Schedule 3 of the Housing Act 1985 and the Housing Act 2004 (chapter 6, part 1).
    2. As the resident stated, the landlord’s mutual exchange policy allows tenants to under-occupy by 1 bedroom. However, even taking into account the needs of the resident’s son, and based on the information the landlord had available at the time of its initial refusal, it remained the case that it was reasonable for it to refuse her application for a mutual exchange into a 6-bedroom property.
    3. As part of her complaint, the resident also challenged the number of bedrooms in the property she was applying for. The resident said she believed it should be classified as having 5 and not 6 bedrooms and therefore the landlord should have approved her application even with only her sons on listed on her application. However, as the property classified as having 6 and not 5 bedrooms by the landlord, again it was reasonable for it to initially refuse her application. In its complaint responses the landlord also explained how it classifies its properties and confirmed that the property had been inspected and was deemed to meet its classification as a 6-bedroom property.
16. Having been made aware there had been an error on the resident’s application, the landlord took prompt action, contacting the resident’s current landlord to seek confirmation of the makeup of her household. Having done so, the landlord confirmed in its stage 1 response of 1 September 2023, less than 1 month after its refusal and still within the 42-day timescale, that it would now progress the exchange and had requested references.
17. The mutual exchange was completed, and the resident moved into the property on 9 October 2023, 1 month after the 42-day deadline for the landlord to either refuse or approve the application.
18. Whilst we are satisfied the landlord did not unreasonably delay the resident’s mutual exchange, we have seen instances where the information it provided was not entirely consistent with its mutual exchange policy. These include:
    1. Stating in its refusal letter of 3 August 2023, that the grounds for refusal included:
       1. Ground 1, which it said related to outstanding arrears on one of the existing tenancies. However:

(1)  Ground 1 actually refers to ‘The tenant or the proposed assignee (being) subject to a possession order or a suspended possession order’, not just being in arrears. As such, on the basis of the evidence we have seen, it was not reasonable for the landlord to have relied on Ground 1 when it initially refused the application on the basis of arrears.

(2)  It is also noted that its mutual exchange policy states that it ‘may grant conditional consent if the tenant has rent arrears or is in breach of a condition of the tenancy.’, which we have seen no evidence that it considered.

2. Ground 6. However:

(1)  This was not correct as Ground 6 states the landlord can withhold consent to exchange where ‘There is a conflict with charitable aims’.

(2)  The Ground related to ‘the accommodation (being) substantially larger than is reasonable required by the proposed assignee’ is in fact Ground 3.

(3)  It is noted the landlord repeated this error in its email to the resident on 11 August 2023.

2. Telling the resident that the outgoing tenant would need to remove a structure they had erecting in one of downstairs rooms ‘before the application could proceed,’ despite its mutual exchange policy stating it was not permitted to impose any ‘other form of condition.’, other than the ‘conditional consent if the tenant has rent arrears or is in breach of a condition of the tenancy’.

19. Whilst the above did not result in an unreasonable delay in the resident’s mutual exchange being progressed, it would have understandably caused unnecessary frustration for the resident. To put this right, a finding of service failure has been made for which the landlord has been ordered to apologise and pay the resident £100. This amount being in line with those set out in our remedies guidance in circumstances where there have been minor failings by the landlord which did not significantly affect the overall outcome.
20. In order to ensure the landlord learns from the outcome of the complaint, it has also been ordered to review the responses that resulted in the finding of service failure in this case. The purpose of this review is to establish the reason for the inconsistency between the information it provided and its mutual exchange policy. It is also to establish whether any action needs to be taken to ensure that going forward the information it provides accurately reflects its policy.

Determination

21. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in respect of its handling of the resident’s mutual exchange.

Orders

22. Within 4 weeks of the date of this report the landlord is ordered to:
    1. Apologise and pay the resident £100 for the unnecessary frustration caused as a result of the failures identified in this report.
    2. Review the responses that resulted in the finding of service failure in this case. The purpose of this review is to establish the reason for the inconsistency between the information it provided and its mutual exchange policy. It is also to establish whether any action needs to be taken to ensure that going forward the information it provides accurately reflects its policy.
    3. Confirm compliance with the above orders.