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Magenta Living (202322785)

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REPORT

COMPLAINT 202322785

Magenta Living

25 July 2024


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 concerns the landlord’s:
    1. Administration of the resident’s rent account.
    2. The related complaint.

Background

  1. The resident is an assured tenant of the landlord. The tenancy commenced in June 2017. The property is a 2-bedroom house. The resident has since terminated the tenancy.
  2. The landlord told us it had no vulnerabilities for the resident recorded on its system.
  3. On 14 March 2023, the resident gave notice to terminate the tenancy. The notice period ran from 20 March 2023 until the termination date of 16 April 2023. This was in accordance with the tenancy agreement (TA) which required 4 weeks’ notice (notice to end on a Sunday).
  4. On 20 April 2023, the landlord sent the resident a letter informing her that she owed £106.46 in rent arrears.
  5. On 12 May 2023, the landlord sent the resident a further letter regarding the arrears which referenced its intention to either commence proceedings for the recovery of the debt or refer the matter to a debt collection agency.
  6. On the same date the resident called the landlord to raise a concern about the arrears on the rent account which she disputed. She said she had only been advised of the arrears after terminating the tenancy and she was unhappy about how this came about. The landlord’s notes of the call show it explained the termination process had been carried out correctly and that the arrears was a “true debt”. The resident was unhappy about this and told it she wanted to raise a complaint which it agreed to do.
  7. The landlord’s records show the resident called it on 15 June 2023 chasing a response to her complaint.
  8. On 16 June 2023, the landlord provided a letter acknowledging the resident’s complaint.
  9. On 30 June 2023, the landlord provided its stage 1 response. This stated its investigation into the resident’s complaint showed it had processed her termination request of 14 March 2023 correctly. It said as per its procedure, the termination process started on 20 March 2023 and terminated on 16 April 2023. It explained the arrears of £106.46 was because there was insufficient credit on her account to cover the termination period. Her rent account was calculated as followed:
    1. Weekly rent charged:£115.44
    2. Weekly housing benefit (HB) award:£10.55
    3. Weekly shortfall in rent for the resident to pay:£104.89
  10. The landlord stated its former tenancy arrears (FTA) team confirmed a direct debit (DD) that credited the account on 3 April 2023 was recalled back via her bank on 14 April 2023 putting the rent account at £528.81 in arrears. It said this was then credited back onto the rent account on 18 April 2023. It said once all adjustments via HB, and a further week rent charges for the period 10 to 16 April 2024 had been made, this left the rent account £106.46 in arrears.
  11. The landlord stated it did not agree to the resident’s request for compensation as her complaint was not upheld. It recommended that she contacted its FTA team to come to an arrangement in relation to her outstanding arrears.
  12. On 16 August 2023, the landlord sent a letter to the resident regarding the arrears on the rent account.
  13. On 17 August 2023, the resident called the landlord expressing her dissatisfaction with receiving letters about arrears. The landlord reiterated that the outstanding balance was correct and owed. The resident said she would escalate her complaint and on 22 August 2023 she did so. Within her complaint the resident stated the landlord never informed of arrears until the end of the tenancy, which she deemed was unacceptable and irresponsible. The resident explained to the landlord the stress and frustration caused to her due to the situation.
  14. On 31 August 2023, the landlord acknowledged the resident’s request to escalate her complaint and informed her it would provide a stage 2 final complaint response by 26 September 2023.
  15. On 12 September 2023, the landlord issued its final response in which it:
    1. Acknowledged there were arrears on the account of £106.46 and that the resident was only informed about this after terminating the tenancy agreement. The landlord said it was sorry that she was not informed previously, however this did not mean she was not liable to repay the arrears.
    2. Explained that the contribution she was making towards her rent, on top of what HB was paying, did not add up to meet the full weekly rent liability. It said the shortfall each month was only small although this had accumulated over time.
    3. However, as payments received onto the rent account put it in credit for a period of each month before the rent was deducted, its system did not automatically recognise the arrears. It said the arrears did not flag on the system until the contributing payments had stopped and arrears stayed on the account.
    4. It apologised for not highlighting arrears but stated that as a resident she was always responsible for ensuring the rent was paid in full. Therefore, it was unable to uphold her complaint and said that it would continue to work with her in arranging the repayment of the arrears of £106.46.
  16. In the resident’s referral to this Service dated 20 September 2023, she told us that she was unhappy about the rent arrears of £106.46 and the landlord’s failure to inform her until after she terminated the TA. The resident believed the landlord ought to have informed her of this when it first happened so she could have corrected it straight away. The resident would like an apology and for arrears to be “wiped” to resolve her complaint.

Assessment and findings

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

  1. The TA states the resident is responsible for paying weekly rent (in advance) in the amount specified including any changes in rent as notified by the landlord in accordance with the tenancy. The landlord’s rent collection policy explains its arrears recovery process at the end of a tenancy. This states when a customer gives notice of their intention to end their tenancy, efforts will be made to advise of any arrears to be cleared before end date and if required, agree a repayment arrangement.
  2. In this case, when the landlord notified the resident of arrears at the end of the tenancy as per its rent collection policy, the resident disputed this and said she had not been notified of any arears prior to this. In response, the landlord checked if the termination process had been carried out correctly and then confirmed to the resident that it believed it had been and that the arrears were correct and due.
  3. The resident’s rent account shows the resident made a rent payment every 4 weeks and that payment in a smaller amount was received from HB around the same time. This evidence also shows that throughout most of the tenancy, the combined payments did not add up to the full weekly rent. This shortfall gradually built up during the course of the tenancy (which was nearly 6 years in total).
  4. Based on the evidence seen by this Service in particular the rent account, the amount of arrears as advised by the landlord at the end of the tenancy, was correct. Therefore, the landlord’s response to the resident advising of the same as well as offering a repayment arrangement, was appropriate and in line with its policy.
  5. However, in her formal complaint the resident explained she was unhappy that she had not been notified of the arrears prior to the end of the tenancy which she said was “irresponsible” of the landlord. The Service considers it is reasonable to expect landlords to notify residents of any rent arrears to enable them to avoid an accumulation of debt. This is in accordance with the landlord’s rent collection policy which states that it will provide advice and assistance to residents to help avoid any rent arrears including by aiding residents “as soon as rent arrears start to accrue”.
  6. In its stage 1 and stage 2 complaint responses the landlord explained that due to the small amount of arrears and the rent account mainly being in credit, its system did not automatically recognise the arrears. It told the resident the arrears were only flagged on the system when the contributing payments had stopped at the end of the tenancy and arrears stayed on the account.
  7. Having seen the rent account, this shows that because the arrears remained relatively small and rent payments were received on time, for some years, the rent account was in credit after payments were received on to it each month. However, it is clear that due to the arrears increasing over time, this eventually (in September 2021) put the account in debit and it was no longer in credit at any stage even after monthly payments were received.
  8. The landlord’s policy does not make clear the threshold for arrears before its system is activated and a letter is sent to residents notifying of the arrears. However, in this case, on balance, it was reasonable to expect the landlord to have notified the resident at least by September 2021 when the accumulation and level of arrears meant the rent account was no longer in credit. The landlord did not send the resident any paper rent statements. While it confirmed to this Service that residents can access and view their rent account by using the customer online portal available through its website, the landlord told us it would only inform the resident of this if they contacted it for information about their rent statement.
  9. Therefore, while the level of arrears at the end of the tenancy may still be considered a relatively small amount (equating to less than 1 weeks rent payment), this was caused by a shortfall in rent payments that accrued over a number of years that was significant enough to have put the rent account in debit by September 2021, albeit by a small amount. As the landlord failed notify the resident of the arrears at any stage during the tenancy, failed to send her rent statements and did not take sufficient steps to inform the resident of the online facility to view these, it acted unreasonably in the circumstances. As a result, the resident was not given a reasonable opportunity to pay the monthly shortfall to avoid the arrears in question which had increased over time.
  10. In its final response, the landlord apologised to the resident for not informing her of the arrears previously and reiterated the offer or a repayment plan. Bearing in mind that the landlord’s failings led to the arrears on the resident’s account, on balance, the redress provided by the landlord did not put right its failing or fully resolve the resident’s complaint. This is indicative of service failure by the landlord.
  11. In the circumstances, it is reasonable for the landlord to pay the resident compensation of £106.46 for the distress, inconvenient, time and trouble caused. This figure is in line with the level of compensation recommended in the Ombudsman’s Remedies Guidance for findings of service failure. While it is accepted that the resident was caused some distress and frustration by the situation, the impact on the resident was minimal. While we usually expect landlords to pay any compensation awarded directly to residents, in this case the resident requests for the arrears to be cancelled as the resolution to her complaint. Therefore, it is appropriate here for the landlord to pay this compensation amount to the resident’s rent account to reduce it to a ‘zero’ balance.

Complaint handling

  1. The landlord operates a 2-stage complaints process. Its complaints policy states that it will acknowledge a complaint within 5 working days and provide the resident with a stage 1 complaint response within 10 working days.
  2. The resident initially told the landlord she wished to make a complaint about rent arrears during a call on 12 May 2023. The landlord’s records show as the resident told it she did not have internet access, it agreed to raise a complaint for her about this issue. The landlord however only acknowledged her complaint 24 working days later on 16 June 2023 after the resident had contacted it again on 15 June 2023 chasing a response to her complaint. This indicates the landlord missed its 5 working day timescale by 19 working days.
  3. Following this, the landlord issued its stage 1 response. Although this response was undated, the landlord told us this was sent on 30 June 2023 which demonstrates that it provided its response 19 working days after the 10-working timescale.
  4. It is noted that the landlord’s internal communication dated 15 June 2023 referred to the resident’s complaint never having been “fully logged”. However, in its complaint responses, the landlord did not acknowledge or explain the delay in providing its stage 1 response. This indicates an unwillingness to learn lessons to avoid the same issue reoccurring. The landlord also failed to offer any redress which would have been appropriate in the circumstances. This is indicative of maladministration by the landlord while handling the resident’s related complaint.

Determination (decision)

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in its administration of the resident’s rent account.
  2. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord when handling the resident’s related complaint.

Orders and recommendations

  1. The Ombudsman orders the landlord to, within 4 weeks:
    1. Provide an apology to the resident for the failings identified in this investigation.
    2. Pay the resident £231.46 in total compensation made up of:
      1. £106.46 for distress, inconvenience, time, and trouble for failings in its administration of the resident’s rent account. The landlord may pay this amount to the resident’s rent account to reduce it to a ‘zero’ balance.
      2. £125 for distress, inconvenience, time, and trouble due to failings while handling the related complaint.
    3. Within 8 weeks, the landlord should review its policy and procedure around notifying residents of rent arrears and provide the Ombudsman with the outcome of its review. This review should consider:
      1. setting a threshold for notifying residents of rent arrears.
      2. including a threshold in its rent collection policy.
      3. automatically informing residents of the how to view and access rent statements online or alternatively how to request paper copies.
    4. Provide this Service with evidence of compliance with the orders above.