Summary: Mr B complains that the Council refused to reimburse him for loss of rent and damage to his property under its Deposit Bond Scheme. Although the Council has now agreed to pay Mr B £450 after receipt of new information, the Ombudsman has found no fault in the way the Council decided that Mr B had not previously provided enough information to compensate him under the scheme. There was delay in responding to his complaint, but the Ombudsman considers the apology already provided sufficient remedy for any injustice that this has caused Mr B.

The complaint

1. Mr B complains that the Council refused to reimburse him for loss of rent and damage to his property under its Deposit Bond Scheme.
2. He says that, as a result, he has lost more than £4,000 in rent, and the cost of repairing his property. This has in turn affected his credit rating.

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The Ombudsman’s role and powers

3. We investigate complaints about “maladministration” and “service failure”. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as “injustice”. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. 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)
5. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)

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How I considered this complaint

6. Mr B first sought to make a claim on the bond as far back as 2016. Since then, he has been in contact with the Council about this matter each year. There have been significant periods of time between his contacts with the Council, but he has nevertheless continued to raise this matter. The Council also did not progress his complaint when it had undertaken to do so.
7. On balance therefore and having regard to whether it is in the interests of all parties to reach a conclusion on this matter, I have exercised discretion to investigate Mr B’s complaint that the Council should have paid his claim under the Deposit Bond Scheme.
8. I have considered Mr B’s written complaint and supporting papers and information received from the Council. I have sent Mr B and the Council a draft decision and invited their comments. I have also considered comments and information received from Mr B after issuing my final decision and the Council’s response to the new information.

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What I found

Legal and administrative background

9. As part of its role in helping to prevent homelessness, the Council operates a Deposit Bond Scheme. Under the scheme, the Council provides a guarantee to landlords to the value of up to one month’s rent to enable prospective tenants to cover their deposit at the start of the tenancy. If the landlord suffers loss of rent or damage to the property, they may reclaim up to the value of the bond at the end of the tenancy.
10. There are some exclusions under the terms of the bond. These include that the bond does not cover claims from landlords who have themselves breached the terms of the agreement.
11. The terms of the agreement include that the landlord must:
• “notify the Council in writing immediately if notice is served on or given by the Tenant to end the Tenancy…
• before claiming any sum from against the Deposit Bond to notify the Council in writing of the loss or damage claimed and to afford the Council a reasonable opportunity to inspect the Property and agree the amount of the claim…
• keep proper written or computerised records and accounts of rent received during the Tenancy…
• issue the Tenant with a rent book or other similar document and to maintain it by recording all payments of rent and any adjustments…
• respond to all inquiries from the Council in a prompt and efficient manner…
• report any theft from or malicious damage to the Property to the Police within 24 hrs of becoming aware of the problem.”

What happened

12. Mr B is a private landlord who owns a leasehold flat. In 2012 he rented his flat to Mr C at a rate of £450 per month. At the start of the tenancy, he, his tenant, and the Council signed a Deposit Guarantee Bond Agreement in the amount of £450, representing a deposit of one month’s rent.
13. Mr B has explained that his tenant did not pay his rent in full or, on occasion, at all. After he contacted the Council about this, it agreed to pay the tenant’s housing benefit directly to him. However, the housing benefit payments were only around £320 four-weekly, falling to around £265 four-weekly. With Mr B’s tenant not contributing towards the rent, this left Mr B with a substantial shortfall on the rent.
14. Mr B wrote to his tenant on several occasions regarding the rent arrears, which he says had reached £2,175 as of March 2015. He also contacted the Council about a review of the Rent Deposit Scheme Agreement. The Council advised him, in view of the arrears, to evict his tenant.
15. The Council suspended housing benefit payments on the tenant’s account in January 2016. Mr B repossessed his flat in April 2016. He also took court action against his tenant to recover the unpaid rent and says that the court ruled against his tenant. A Council officer visited the flat and took photographs of damage to the flat.
16. Mr B wrote to the Council and asked what information he needed to provide in respect of the issues with his flat, in relation to the bond. He told the Council that the arrears as of December 2015 were £4,542.82. He also considered that, as his tenant had not returned the keys and he had not gained possession of the flat until April 2016, his tenant was liable for a further £1,800 in rent.
17. Between June 2016 and May 2017, there was further contact between Mr B and the Council. Mr B provided a scanned copy of the tenancy agreement, details of expected rent payments, details of housing benefit payments received and a quote for repair works. He said he could not provide a final rent statement because of the circumstances in which his tenant had left. The officer explained that, in order to progress his claim, the Council needed a full final rent statement. This would allow the Council to put the bond claim details to the tenant and give him the opportunity to respond to the claim.
18. Mr B contacted the Council about this matter again in November 2018. The department’s manager explained that he understood that the Council had not received all the relevant evidence in respect of the claim and asked Mr B to resubmit this to him directly. He explained that the Council would need to see a copy of the rent account, and notices served on the tenant and any court order.
19. There were further exchanges between Mr B and the manager seeking to clarlfy what papers had been sent. Mr B did not have all the papers, so it would therefore be necessary for the Council to recover the papers from archive. Mr B complained to the Council in March 2019 that he had heard nothing more from the manager.
20. The Council acknowledged his complaint but then overlooked it, so Mr B complained to the Ombudsman in September 2019. The case was then passed to another manager at the Council to investigate.
21. The manager apologised for the delay in dealing with Mr B’s complaint. She also asked Mr B to provide the date and crime number for the reported criminal damage, details of the arrears at the time when his tenant left the property, the date of leaving and the monthly rent.
22. After further exchanges of correspondence, the manager wrote to Mr B in January 2020. She explained that the maximum sum payable under the agreement was £450.
23. With regard to Mr B’s claim for non-payment of rent, she said that the letters that Mr B had sent his tenant about rent arrears were not sufficient evidence to make payment. She said that, under the agreement, Mr B was obliged to keep rent accounts. So, in order to consider his claim, she needed to see the actual rent accounts. She also needed to see a copy of the court judgment in Mr B’s favour for non-payment of rent.
24. As to Mr B’s claim for damage to the property, she noted that the Council had stopped making housing benefit payments on his tenant’s account in December 2015. She noted that Mr B became liable for Council tax for the property from January 2016, but he had not contacted the Council until June 2016. Without evidence that Mr B’s tenant was occupying the flat in the period prior to the claim for damage, she was therefore unable to authorise payment on this basis.
25. Following Mr B’s complaint to the Ombudsman, he has now provided a copy of the court judgment to the Council. Although the Council has still not received a full rent statement, it has now exercised discretion to pay Mr B £450 under the Deposit Bond agreement.

My assessment

26. There was delay by the Council in progressing Mr B’s complaint in March 2019. This was fault. However, the Council has apologised to Mr B for this delay and has responded promptly to Mr B’s correspondence since that time.
27. In relation to the Council’s handling of Mr B’s claim under the Deposit Bond agreement, I note that Mr B has referred in correspondence with the Council to “your tenant”. That is incorrect. Mr B was the landlord and Mr C his tenant.
28. It is clear that the Council is a party to the Deposit Guarantee Bond Agreement and may be liable, in some circumstances, under that agreement. But the Council’s liability under the scheme is limited to a maximum of £450. Any sums in excess of £450 are matters which Mr B would need to seek separately from his former tenant, as he has done through the courts.
29. As to whether the Council should pay Mr B up to £450 under the agreement, that would depend on whether Mr B provided sufficient evidence, in accordance with the terms of the agreement.
30. With regard to a payment for loss of rent, the Council consistently told Mr B that he needed to provide a copy of the full rent account. It was requirement of the agreement that he keep a rent account. He did not provide a copy of the final rent account, so I see no reason to question the Council’s declining to make payment on this basis. Moreover, as Mr B had also taken court action against his former tenant for non-payment of rent, I also consider it was reasonable for the Council to request a copy of the judgment before considering making payment.
31. As regards the requested payment for damage to the property, I note that the Council had previously taken photographs of the damage and received a copy of a quotation for works to the flat. But there was a gap of nearly six months between the tenant leaving the flat and Mr B making a claim for damage, and Mr B was responsible for Council Tax from January 2016. There was also a gap of two months between Mr B gaining possession of the flat and claiming under the agreement. Given this, I see no reason to question the Council’s unwillingness to make a payment on this basis.
32. I note that the Council has now exercised its discretion to pay him £450 under the Deposit Bond agreement. This is because it has now received further evidence from him in the form of the court judgment showing the monies owned by his tenant (although he has still not provided a copy of the rent account).
33. Although the Council has now agreed to exercise discretion to pay out under the bond on receipt of further evidence, for the reasons set out above I do not consider that this indicates that the Council was at fault in refusing to pay out previously.

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Final decision

34. I have closed my investigation into Mr B's complaint. I consider the apology made to be a suitable response to the delay in dealing with his complaint. However, I see no fault in the way the Council decided that Mr B had provided insufficient information for it to make payment under the Deposit Bond agreement.

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Investigator's decision on behalf of the Ombudsman