The Ombudsman's final decision:
Summary: Mrs X complained about a tenant introduction service the Council offers to landlords. There was no fault by the Council in the way it introduced a tenant to Mrs X or in the advice it provided.
- Mrs X complained about a tenant introduction service the Council offers to landlords. She said the Council sourced a tenant and falsely told her they were in receipt of full housing benefits and that rent would be paid directly to her. After the tenant did not pay the rent, Mrs X discovered the tenant was not in receipt of housing benefit.
The Ombudsman’s role and powers
- We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
- If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
How I considered this complaint
- As part of the investigation I have considered the following:
- Mrs X’s complaint and supporting information.
- The Council’s response to Mrs X’s complaint.
- The Council’s response to my enquiries.
- The Housing Act 1988.
What I found
- Housing benefit rules allow councils to transfer tenants’ payments direct to private landlords to help prevent arrears. Councils are not allowed to get involved in rent payments once the tenant moves to universal credit, which is run by the Department of Work and Pensions (DWP).
- Section 8 of the Housing Act sets out the law for a landlord to recover the possession of a property from a tenant. The landlord can serve a section 8 notice to a tenant to begin court proceedings to recover the property.
- The Council operates a private rental scheme where it introduces tenants to landlords. The Council offer an incentive payment to landlords willing to rent to a tenant at the local housing allowance rate. Some of the relevant terms and conditions of the scheme are as follows:
- The incentive payment is instead of a deposit or rent in advance.
- The tenancy will be between landlord and tenant.
- The Council is not part of the tenancy and is not liable for any costs incurred due to breach of contract. The landlord is responsible for managing the property. This includes dealing with the rent account and property maintenance as well as communicating directly with the tenant.
- The Council will offer advice and support to help landlords manage their property.
- The Council will agree the rent with the landlord before the tenancy is signed. The landlord accepts the tenant is likely to be claiming local housing allowance.
- The Council will ask the local housing benefit department to pay the rent directly to the landlord.
- Mrs X entered into a letting’s agreement with the Council on 28 January 2019, under the terms outlined at paragraph 8 above.
- Mrs X’s tenant (‘the tenant’) signed the tenancy agreement on 29 January 2019.
- The Council has provided me with records which show, prior to the tenancy agreement being signed, it carried out background checks about the tenant. The Council established the tenant was in receipt of benefits, including income support, a carer allowance and child tax credits, and was entitled to claim housing benefits.
- Six weeks into the tenancy Mrs X had not received any rent payments. She contacted the Council on 28 March 2019 to find out why. The Council said it would contact the tenant. It gave Mrs X advice about serving an eviction notice.
- The Council sent an email to the tenant on 29 March 2019. It said the tenant was entitled to housing benefit, but it did not know if the application was processed. The Council said it could help the tenant with this.
- Mrs X served a section 8 eviction notice on the tenant on 1 April 2019 as rent remained unpaid.
- The Council spoke to Mrs X on 8 April 2019. Mrs X asked who would pay the rent arrears. The Council said it gave Mrs X an incentive and it could place another tenant.
- Mrs X complained to the Council on 26 April 2019. She said rent had not been paid and the Council did not help recover it.
- The Council told Mrs X on 15 May 2019 a housing benefit application was completed with a request for backdated payments.
- Mrs X telephoned the Council on 29 May 2019. The Council told Mrs X it provided an advisory service, not tenancy management. Mrs X asked the Council about rent arrears. The Council asked Mrs X if she had contacted the tenant. Mrs X said she hadn’t and didn’t see why she should. She was unhappy with the service the Council provided and thought the Council miss-sold the tenancy scheme to her. Mrs X asked about the housing benefit claim. The Council said it did not know the details and would need to ask the tenant for an update.
- The Council told Mrs X on 12 June 2019 it was supporting the tenant in getting housing benefit backdated but Mrs X should continue possession proceedings.
- I have reviewed the Council’s case notes for the tenancy. They confirm the tenant did not move into Mrs X’s property. When the Council contacted the tenant about the unpaid rent the tenant explained they did not intend to live in the property because it was unsuitable. The tenant made various complaints about the location of the property and disrepair. The Council asked the tenant why they did not raise any of these issues at the inspection before signing the tenancy agreement. The tenant said they felt forced into signing the agreement but did not explain why. The Council found the tenant had not made an application for housing benefit.
- The notes also show the Council told the tenant to complete a housing benefit application and to ask for it to be backdated to clear the missed rent payments. The Council arranged for an officer to complete the housing benefit application with the tenant, but this was not finished because the tenant did not provide some of the necessary documentation. The Council continued to chase the tenant for the application to be completed, often without response. It asked the tenant to send the application to Medway Council along with the required documentary evidence. The Council asked the tenant to attend the council office in Medway to chase up the application.
- The Council responded to the complaint on 2 July 2019. It said it helps people in need of housing to find private accommodation, and offers landlords an incentive. It referred to the agreement Mrs X signed, which states the Council is not part of the tenancy and is not liable for costs incurred through breach of contract. The landlord is responsible for managing the property, including rent account, maintenance and communicating with the tenant.
- The Council said the tenant raised issues with disrepair shortly after moving in, but its lettings officer confirmed the property was recently refurbished and the tenant did not raise any concerns prior to signing the agreement. The Council relayed this to the tenant and reminded the tenant of their responsibility to pay rent.
- The Council said it made regular attempts to contact the tenant, but they were difficult to engage with. An officer met the tenant to complete the housing benefit form, but the tenant did not provide supporting info and was difficult to contact or meet because they were not living in the rental property.
- The Council said it provides general advice but does not assume management responsibilities for the property. It will encourage tenants to make payments on time, remind them of the implications of not doing so and provide general advice. It said it gave Mrs X the correct advice about serving a section 8 eviction notice but should also have told Mrs X to seek legal advice.
- The Council considered it met its obligations and provided reasonable responses in an appropriate timeframe.
- Mrs X remained unhappy and asked the Council to reconsider. She said she wasn’t advised the tenant had not made a housing benefit application before signing the contract.
- The Council sent its final complaint response to Mrs X on 27 August 2019. It said it always makes a housing benefit application, but it is up to the tenant to supply the documents and information. It met with the tenant to do this and made numerous attempts to assist her, but it proved difficult.
- The Council said the contract is between Mrs X and the tenant, but it appeared Mrs X was relying on the Council to manage the tenancy. The Council said once it was aware of the missed rent it tried to assist, as it offers a general advice service, but it does not assume management responsibilities.
- The Council said it is not its duty to tell Mrs X to seek legal advice before signing the tenancy documents. It also said it is not required to tell her the housing benefit application was outstanding. It is the responsibility of the tenant to tell the landlord about delays or issues with rent. The Council also said Mrs X, as landlord, should have made enquiries with the tenant about this when rent was not paid.
- The Council acknowledged it could make information clearer, as Mrs X clearly relied on the Council to sustain the tenancy despite the agreement being between landlord and tenant.
- The Council said a non-refundable £4,500 payment was made to Mrs X, equivalent to about 32 weeks rent, and it also gave her a copy of the terms and conditions which state the agreement is between landlord and tenant. The Council is not liable for costs. The Council said it provided appropriate support and assistance. The Council signposted Mrs X to the Ombudsman if she remained unhappy.
- Mrs X brought her complaint to the Ombudsman on 13 September 2019. She said the Council failed to give correct information about the tenant’s benefits before the tenancy was signed.
- The Court ordered repossession of Mrs X’s property on 4 November 2019. It ordered the tenant pay Mrs X rent arrears of £4,227.72.
Response to my enquiries
- The Council confirmed Mrs X would have been told the tenant was in receipt of housing benefits and this could be paid to her direct, but this is not a guarantee to pay rent if the tenant fails to make a benefit claim at the new property.
- The Council told me it is in everyone’s interest for the tenancy to be sustainable, so it offers follow on support to resolve issues which may arise. However, it does not act as a guarantor for unpaid rent. The landlord is responsible for managing their property and this is confirmed in the terms which Mrs X signed.
- The Council confirmed the tenant was eligible for benefits and the rent was affordable. The tenant had to make a new application for housing benefit because they were moving into a new home. Because the tenant did not make the application no payments could be made to Mrs X. The arrears were not the fault of the Council but due to the tenant’s actions.
- The Council said Mrs X was given a cash incentive equal to 32 weeks rent to provide security against a default by the tenant. The Council said it is not liable if the tenant does not pay the rent.
- Mrs X is frustrated, and annoyed rent arrears built up. However, there is no evidence the Council agreed to pay these arrears.
- There is disagreement about the Council’s input and the advice it provided. Mrs X told me she expected the Council to act like an estate agent, doing the initial background checks to source a reliable tenant and then managing the tenancy. She put her trust in the Council to do its job and not operate outside its guidelines.
- Mrs X relied on the Council’s assurances about the tenant’s eligibility for housing benefit, and that benefit payments could be made to her direct, as a guarantee she was going to receive rent payments. The Council cannot give guarantees and the terms of its tenant introduction scheme do not make any such promises.
- The agreement in place was for the Council to introduce a tenant. It will carry out initial checks with the tenant, but the landlord must manage the tenancy. The Council does not make guarantees about rent payment.
- Even if the Council did take on the role of an estate agent, which I am not suggesting it did, it could not guarantee the tenant would pay rent. The Council confirmed it would have told Mrs X the tenant was entitled to housing benefit and that payments could be made to her direct. But the Council cannot force the tenant to submit a housing benefits application for the new house. Unfortunately, the evidence suggests the tenant changed their mind about wanting to live in the property soon after signing the tenancy agreement.
- The evidence I have seen shows the Council carried out the initial background checks we would expect, including establishing the tenant’s sources of income and that the rent was affordable. I do not consider the Council was at fault here.
- I am satisfied the Council made efforts to help and persuade the tenant to apply for housing benefit once it was aware the rent had not been paid. But it was not the fault of the Council the tenant failed to apply for housing benefit. This was the tenant’s choice.
- The Council acted in line with guidance it issues about its tenant introduction scheme and met its obligations in the terms and conditions which Mrs X agreed to.
- I have completed my investigation. There was no fault by the Council in the way it introduced a tenant to Mrs X or in the advice it provided.
Investigator's decision on behalf of the Ombudsman