Summary: We found fault by the Council on Mr J’s complaint about how it dealt with the lease renewal for the property it rents from him. It failed to properly communicate with him and also failed to carry out what it said it was going to do. The agreed action remedies the injustice caused.

The complaint

1. Mr J complains about the Council’s failure to pay the correct rent for a property it leases from him and his partner from:
1. January 2020, after returning a Heads of Term document in May following improvement works; and
2. January 2022, after returning a Heads of Term document in July.
2. As a result, he is owed almost £2,000 in underpaid rent.

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The Ombudsman’s role and powers

3. 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)
4. 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)

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How I considered this complaint

5. I considered all the information Mr J sent, the notes I made of our telephone conversation, as well as the Council’s response to my enquiries. I sent a copy of my draft decision to Mr J and the Council. I considered their responses.

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What I found

6. Mr J and his partner rented their property to the Council for more than 15 years. Under the agreement, the Council then rents the property to social housing tenants. Mr J receives rent from the Council during this period, regardless of whether it finds tenants for the property.
7. In January 2020, Mr J says they agreed a new two-year lease with the Council which would expire in January 2022 and that an officer told him:

• the new increased rent would be paid by the Council once it had done all required repairs to the property.

The Council confirmed it has no record of officers telling him it would pay a new rent after the repairs. It accepts sending him an email in December 2019 offering a £10 a week increase when he renewed the lease. The new lease rental amount was not processed by the legal team because all renewals were placed on hold until a new scheme was agreed, and eligible properties found in line with the scheme’s criteria. The scheme was agreed in August 2020; and

• it agreed to backdate the payments to January from completion of the works.

The Council says there is no evidence of it agreeing to backdate payments which is not allowed under its scheme.

8. In response to my draft decision, Mr J sent a copy email from the Council he received the following month (email 1). This told him once he signed the Heads of Terms, and it had gone to legal to progress the lease, the new rent would be applied and, ‘any backdate awarded if applicable’.
9. He also sent a copy of another email the officer sent him in April (email 2). This told him all renewals were on hold, ‘but any rent will be backdated to lease expiry’.
10. The Council said it told Mr J all renewals were on hold because of the pandemic but Mr J said he was not told the reason. All three officers who had contact with him have since left the Council. Mr J said he was not told renewals were on hold because of the pandemic. I have seen an email sent to Mr J in April explaining only that ‘all renewals are on hold at present but any rent will be backdated to lease expiry.’ (email 2)
11. The Council confirmed it sent a new Heads of Terms to Mr J in May 2020, but this was not returned. A Heads of Terms is a list of all items agreed between a landlord and tenant before granting a lease and forms the basis of the terms to be included in the legal document.
12. I have seen a copy of the email sent to him that month attaching these documents for him to sign and return. It warned the Council could not currently progress any lease renewals and told him, ‘however once received this will be actioned upon our return to business as usual’.
13. The Heads of Terms set out the rent payable between January 2020 to January 2022 at the rate of £200 a week. Mr J confirmed repairs were done in February 2020 as a tenant was in the flat by the end of the month.
14. They signed and returned the document in May by post. The Council explained it never received the form. Mr J complains the Council never chased them for it, but the Council explained all the officers he dealt with have since left and it has no record of whether they chased him or not. This meant the Council continued to pay rent at the previous 2018 rent level agreed, not the new one.
15. Mr J only realised the Council had not received the document in February 2021. He explained he had difficulty speaking to the officer dealing with the case who worked part time, went on maternity leave, and did not return to work. He managed to speak to another officer who said the document was not on its system. The Council continued to pay Mr J at the 2018 rate.
16. An email from an officer said her manager was on leave but would be back shortly and would discuss his payment proposal then. The email told him the Heads of Terms had not been uploaded on to its system, but another officer would contact him about it. Until the new Heads of Terms was signed and returned, he would be paid at the old rate. Mr J says he heard nothing further.
17. When the lease would have expired in January 2022, the Council sent them a new Heads of Terms to sign with a new rental payment figure. They signed and returned it.
18. In March, the Council told him the legal process can take between 4-6 weeks.
19. In April, the Council upheld his complaint about the lease renewal process and said it would review its communication process with tenants.
20. Mr J complains the Council took until June to inspect the property and identify repairs needed.
21. During a meeting with Mr J in July, officers told him backdated payments were not allowed under the scheme, but a new payment rate was agreed for the new lease. Mr J said he received and signed the new Heads of Terms
22. They received the new lease from the Council in October to start the following month for another two years but again, the rent paid to them was the old rate.
23. The Council explained:

• Between January 2019 to 4 January 2022, the amount payable under the lease was £190 a week paid in arrears. This was paid up to November 2022;
• The rate of £200 a week was agreed but never went through to legal for completion;
• The rate of £220 a week was agreed in July 2022;
• From December 2022, the new payment rate of £220 will be paid to Mr J; and
• It took longer than usual to finalise the new lease because of planned and unanticipated staff absences.

My findings

24. I make the following findings on this complaint:
1. The draft Heads of Terms sent out in May 2020 confirmed what the Council said about a £10 a week rental increase.
2. The evidence shows the documents were sent to Mr J in May 2020. The email explained lease renewals were on hold for the time being. It did not explain why. This is fault.
3. It was also fault for the Council not to tell him when it had returned ‘to business as usual’. The email had said it would action the Heads of Terms when he signed and returned them once business returned to normal. There is no evidence it told him it had returned to business as usual.
4. While Mr J may have waited until he heard from the Council that it had returned to business as usual, there is nothing to show he chased it from April 2020 until early 2021. When considering the injustice to Mr J caused by this fault, I took this into account.
5. Although I have no reason to doubt Mr J, there is no evidence of him posting the documents back to the Council. Even if there had been evidence, it would be difficult to discover whether the Council not receiving them was due to an internal fault with its post or, the fault of the company delivering the documents.
6. I considered the copy emails Mr J supplied about the Council saying it would backdate rent:

• Email 1: This referred to backdating rent in the context of Mr J needing to sign the Heads of Terms before they went to legal to prepare the lease. It said backdating would be awarded ‘if applicable’. This alerted Mr J to the fact backdating was not automatic although how the Council would decide what was applicable was not explained.
• Email 2: This referred to all renewals being on hold but said any rent would be backdated to lease expiry.

On balance, while I am satisfied there is evidence of the Council referring to backdating rent to the expiry of the lease, I am not satisfied they applied on the on the facts of this case. This is because email 1 made it clear backdating had to be ‘applicable’ which means it was by no means a certainty the Council would agree to it. In addition, it referred to it in the context of action Mr J and then legal had to take. I do not accept it was intended to cover more than a two-year period taken in this case for a new lease to be signed.

Email 2 implies backdating rent would be considered once renewals were no longer on hold. Renewals were not on hold for more than two years.

As well as considering the actions of the Council, I took account of Mr J’s actions, which I set out below.

7. There is no evidence of the Council chasing Mr J for the signed documents when it did not receive them following its email to him in May 2020. I am not satisfied this was fault. This is because the Council and Mr J had a business relationship. In the absence of any renewal, the payments the Council had to pay Mr J continued at the previous agreed rate. Clearly, there was a benefit to the Council of the arrangement continuing at the old rate. I consider there was a responsibility on Mr J to identify what payments were paid by the Council and raise a query if they differed from what he was expecting under the Heads of Terms he had returned. He was also aware he had not been sent a new lease to sign.
8. When the Council emailed Mr J in February 2021, an officer said a manager was on leave but would be back shortly which would be when they would discuss his proposal. The officer would then update Mr J. There is no evidence of this happening. This is fault.
9. The email also told him another officer would contact him. There is no evidence of this happening either. This is fault.
10. Nothing happened from February 2021 until the Council contacted him about lease renewal in January 2022. Again, while I have taken account of the injustice these failings caused Mr J, I have also taken account of his own inaction during this period.
11. In early January 2022, Mr J told the Council he was happy to renew the lease for a further two years. It took the Council until March to let him know an officer would need to inspect the property before the lease renewal could be processed. The Council claimed it had difficulty contacting the tenants to arrange the inspection, which it eventually did in June. It provided no evidence of the problems it faced. This is fault.
12. Evidence from Mr J suggests the Council might have had a problem with the tenant who had changed her email address. Taking account of the possible problems with contacting the tenant, I consider the Council delayed making arrangements to inspect the property between January and June. While it was not responsible for all the delay during this period, on balance, I consider it was responsible for about four months of it. This takes account of the problems with the tenant and how long we would expect it to take usually.
13. The new Heads of Terms were not processed until October, four months after the inspection had taken place. I would expect it would usually take about a month to do. If there were staffing issues causing problems, the Council needed to take action to resolve the problem.
14. I consider the identified fault caused Mr J injustice. He had the uncertainty of not knowing whether the lease could have been renewed earlier and lost the opportunity to receive the higher rent for a period of about seven months. He also had the frustration of poor communication from the Council.

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Agreed action

25. I considered our guidance on remedies.
26. The Council agreed to carry out the following action within four weeks of the final decision on this complaint:
1. Send Mr J a written apology for its failure to: communicate properly with him about the renewal and delays; provide an update as promised; ensure another officer contacted him about the process also as promised.
2. Remind officers of the need to give landlords enough information about the process and the reasons for any temporarily delay with it.
3. Remind officers of the importance for them to ensure action promised in correspondence is carried out.
4. Calculate the difference between the old and new rental rate payable from November 2022 and pay Mr J this difference for the seven-month period of delay.
5. Pay £300 to Mr J for the distress caused by the fault.
27. The Council should provide us with evidence it has complied with the above actions.

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Final decision

28. I found fault on Mr J’s complaint against the Council. The agreed action remedies the injustice caused.

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Investigator's decision on behalf of the Ombudsman