Summary: Ms Y complains the Council has not made the agreed rental payments for two homeless people which she agreed to accommodate as lodgers. We do not find fault in the substantive complaint however there is an outstanding payment for one tenant which the Council will now make.

The complaint

1. Ms Y complains the Council has failed to make the full rent payments for two tenants which it placed in her property in October 2020.

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The Ombudsman’s role and powers

2. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word fault to refer to these. We consider whether there was fault in the way an organisation made its decision. If there was no fault in the decision making, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
3. 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 an organisation’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)

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How I considered this complaint

5. During my investigation I discussed the complaint with Ms Y and considered any information she submitted.
6. I made enquiries of the Council and considered its response.
7. Ms Y and the Council had an opportunity to comment on my draft decision. I considered their comments before making a final decision.

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What I found

8. In September 2020 Ms Y agreed with the Council to accommodate two homeless people in her home. I will call the lodgers Mr A and Mr B. Records show that Ms Y agreed to rent a room to Mr A for £900 per month and to Mr B for £800 per month. The Council inspected Ms Y’s property and found both rooms to be suitable.
9. Due to Mr A and Mr B not having recourse to public funds at the time, the Council agreed to pay rent on their behalf via funding available from the Ministry of Housing, Communities & Local Government (MHCLG).
10. In an email sent to Ms Y on 11 September 2020 the Council said, “We spoke about using AST (Assured Shorthold Tenancy) agreements for all 3 rooms will come with an incentive, a month’s deposit (repayable to Merton Council at the end of the tenancy) and a month’s rent in advance (repayable to Merton Council once you have received housing benefit for the first month’s rent). However, we realised afterwards that you will only be able to issue an AST agreement for the first-floor studio, and we are proposing a £500 incentive for that which is yours to keep…. Unfortunately we cannot offer incentives for a licence agreement for the 2 rooms on the ground floor but we will assist our clients to make housing benefit claims to cover their rents”
11. After sending that email, the Council decided that only two of the three rooms would be suitable due to the smallest room not having a window.

What happened: Mr A

12. The Council does not have a copy of the lodger agreement signed for Mr A. However, the available records show that Ms Y agreed to rent a room to Mr A from 2 November 2020 for £900 per month, inclusive of bills.
13. Ms Y submitted her first invoice to the Council for Mr A on 4 January 2021. This covered the first month of his tenancy from 2 November to 2 December 2020. Ms Y submitted a duplicate invoice, in error, on 14 January 2021 which the Council did not pay.
14. On the same day, Ms Y also submitted an invoice for the period 1 December to 31 December 2020 which the Council paid.
15. Two days later Ms Y submitted another invoice. The invoice covered the period 2 November to 2 December, which the Council had already paid. The invoice also included the £500 incentive payment. The Council asked Ms Y to reissue a separate standalone invoice for the incentive payment.
16. Ms Y submitted an invoice on 3 March 2021 covering the period 1 January to 31 January 2021. The Council noted the invoice was not correctly formatted but, with Ms Y’s permission, the Council amended the invoice and paid. Ms Y submitted a further invoice on the following day for the period 1 February to 1 March 2021. Again, the invoice was not correctly formatted, but the Council amended and paid.
17. The final invoice submitted to the Council for Mr A was received on 25 March 2021 and covered the last period of Mr A’s tenancy from 1 March to 11 March 2021, which the Council paid in full.

What happened: Mr B

18. The lodger agreement signed by Mr B on 16 October 2020 contains information about the contents of the room and confirms a rental payment of £800 inclusive of bills. The Council asked Ms Y to issue invoices to receive rent payments.
19. The Council’s records show that Ms Y issued the first invoice for Mr B on 16 January 2021. This covered the first month of his tenancy, from 16 October to 16 November 2020. The Council advised Ms Y that it could not pay the invoice due to it being incorrectly formatted and asked her to reissue the invoice with the correct information.
20. The Council informed Ms Y about Mr B’s benefit claim in January: “As for [Mr B], he has recourse to public funds so his rent needs to come from Housing Benefit. Once his benefits come through, we will calculate the shortfall if there is one and will ask you to invoice us for the shortfall”
21. Ms Y received a further email about Mr B’s claim in February: “We are helping [Mr B] with his Universal Credit claim at the moment but it does appear that we won’t be able to get payment backdated all the way back to 16 October. Can you please send me 2 separate invoices for his stay at your house, one for the period 16/10/20 – 30/10/20, and another for the period 01/11/20 – 31/11/20 and we will get these paid immediately. We will update you about the December and January payments shortly once we have heard back from the DWP”
22. Ms Y reissued an invoice on 9 February 2021 for £416 covering the period 16 October to 31 October 2020. On the same day Ms Y also issued an invoice for 1 November to 30 November 2020. The Council paid both invoices.
23. The records show the next invoice which Ms Y issued for Mr B was on 2 March 2021 covering the period 1 February to 1 March 2021. The Council said this invoice was incorrectly formatted, but in any event decided it would not pay Ms Y because Mr B became eligible for Universal Credit from 9 January 2021.
24. Ms Y ended the tenancy without notice on 12 March after a disagreement with both tenants about damage to her property. Ms Y did not allow the tenants back into the property to retrieve their belongings. The Council arranged emergency accommodation for Mr A and Mr B.
25. Ms Y then submitted two further invoices on 25 March 2021 covering the period 1 December 2020 to 8 January 2021. Although the invoices were not in the correct format, the Council contacted Ms Y seeking her agreement to make amendments on her behalf. She agreed and the Council subsequently paid both invoices.

Was there fault in the Council’s actions causing injustice to Ms Y?

26. It is clear from the records, and from speaking with Ms Y, that she experienced great confusion and frustration when trying to create and issue invoices for the payment of Mr A and Mr B’s rent. Although Ms Y issued the first invoices without problem, from January she experienced difficulties and asked the Council for assistance. On occasion the Council returned invoices to Ms Y because they were incorrectly formatted or contained wrong information. The Council says it tried to support Ms Y and offered to amend invoices on her behalf from January 2021.
27. There is evidence of further confusion when Ms Y continued to invoice the Council for Mr B’s rent after he became eligible for welfare benefits. When the tenancies started, neither Mr A or Mr B were eligible for any public funding and so the only way to secure their tenancies was for the prospective landlord to issue invoices so the Council could pay rent on the tenants’ behalf via MHCLG funding.
28. From the records I have seen, there is reference to Mr B applying for benefits in emails sent to Ms Y from the Council on 11 September and 28 October 2020. The Council further confirmed on 14 January 2021 that Mr B’s claim was successful.
29. On balance, whilst I appreciate Ms Y would have preferred a greater level of support from the Council, I consider the Council did enough to help Ms Y with invoicing once she raised concerns in January 2021.

Rent arrears for Mr A

30. Mr A has ‘No Recourse to Public Funds’ (NRPF) and is not eligible to receive benefits. Therefore, the Council agreed to cover the whole cost of Mr A’s rent during his tenancy at Ms Y’s.
31. From the records I have seen, the Council has made payments in respect of Mr A from 2 November 2020 to 11 March 2021. However, it has not made the agreed £500 incentive payment to Ms Y due to an error with the invoice she submitted in January 2021. The Council asked Ms Y to reissue a separate invoice, but I have seen no evidence of this. The payment therefore remains outstanding.

Rent arrears for Mr B

32. Ms Y says she has not received any rent for Mr B from 9 January 2021 until his departure on 12 March 2021. The Council says this is because it ceased paying Mr B’s rent from the MHCLG funding once he became eligible for Universal Credit (UC).
33. As the housing element of UC was paid to Mr B directly, he was responsible for paying his rent to Ms Y. If Ms Y has not received rent between January and March 2021 this is because Mr B has, for whatever reason, withheld payment. The Council is not responsible for Mr B’s decision to withhold his rent and so I am unable to say Ms Y’s injustice is from Council fault.

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Agreed action

34. Within four weeks of my final decision, the Council will assist Ms Y with the production of an invoice for Mr A’s £500 incentive payment

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Final decision

35. I have completed my investigation. We do not find fault in the substantive complaint; however, the Council did fail to make the agreed incentive payment which it has now agreed to resolve.

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Investigator's decision on behalf of the Ombudsman