Summary: We found the Council was not a fault in deciding to increase Mrs X’s rent and charge a fee for the renewal of her agreement.

The complaint

1. Mrs X said the Council acted unreasonably in increasing the rent for her garage without notice and asking her to pay professional fees. Mrs X also said the Council gave inconsistent reasons for increasing the rent and did not justify the increased rent or fees.
2. What happened caused Mrs X much inconvenience. Mrs X felt the Council was taking advantage of her, and other tenants, with an unfair rent increase and excessive fees. Mrs X had now given up the garage. She wanted the Council to confirm it would not seek to recover the added rent and fees it had sought to impose. Mrs X also wanted a partial refund of her prepaid 2021 rent.

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The Ombudsman’s role and powers

3. 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)
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)

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How I considered this complaint

5. I have:

• considered Mrs X’s written complaint and supporting papers;
• talked to Mrs X about the complaint;
• asked for and considered the Council’s comments and supporting papers about the complaint;
• shared where possible the Council’s comments and supporting papers with Mrs X; and
• given Mrs X and the Council an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

What happened

6. Mrs X rented a garage from the Council for many years. The Council collected Mrs X’s annual rent for the garage each January by direct debit.
7. In 2016, the Council offered new terms for renting the garage for three years from January 2017. Mrs X accepted the Council’s terms, but her agreement said the rental period was 1 April 2017 to 31 March 2020. The agreement said there would be a rent review on 1 April 2020. The Council continued collecting Mrs X’ rent including in January 2020.
8. In March 2020, the Council sent Mrs X new terms for renting the garage for three years from 1 January 2020. The terms increased the annual rent by £100. The Council also asked Mrs X to pay its fees of £55 for the renewal. Mrs X challenged the new terms and proposed a £25 a year rent increase and removal of the £55 fee. Mrs X also pointed out the terms she had agreed in 2016 said the rent review was due on 1 April 2020, not 1 January.
9. In the correspondence that followed, which included a complaint from Mrs X, the Council accepted the 31 March 2020 end date for Mrs X’s 2016 agreement. The Council said it would apply the rent increase to Mrs X’s garage from 1 April 2020. The Council said it had a waiting list for the garages showing local demand and had recently let other garages at the increased rent. It also said its £55 fee, which covered various overheads, was reasonable. Mrs X questioned the accuracy of the Council’s waiting list suggesting demand from non-residents might be pushing up rents.
10. As COVID-19 restrictions continued, the Council told Mrs X it needed to focus on other tenancy issues. The Council proposed that Mrs X ‘hold over’ on the terms of the 2016 agreement, paying the old rent, until it could research her waiting list concerns.
11. In January 2021, the Council collected, by direct debit, the ‘old’ annual rent for Mrs X’s garage. This triggered further correspondence with the Council asking Mrs X to pay the increased rent. The Council also said it had no duty to provide garages for residents. In offering garages to rent it was providing a discretionary service that was, in practice, a commercial property transaction. It considered the new rent was fair and appropriate, and the agreement renewal fee was reasonable. The Council said residents did not have to rent a garage. And renting a garage benefited the renter not taxpayers throughout the Borough.
12. In responding to the Ombudsman, the Council said, before 2020, its last rent review was 2016 and over those four years there was continuing local demand for the garages. The Council denied that ‘non-resident’ demand affected its rent increase decision and confirmed that it checked local residency when completing new agreements. It accepted it did not check continuing residency but would respond to any breach of a garage agreement brought to its attention. The Council said, it had not agreed Mrs X’s rental proposals (see paragraph 8) as it would have been unfair to residents that accepted the 2020 terms. The Council also provided evidence of another council’s property transaction fees, which were like its fees.
13. During the investigation Mrs X moved home and ended her garage agreement with the Council. The Council said, if Mrs X had continued to refuse to accept the new terms, it would have ended her agreement, if she had not done so. It also confirmed it had let Mrs X’s former garage to another resident at the 2020 rent and on payment of its £55 fee.

Consideration

14. I recognised Mrs X found the 2020 rent increase, and fee, excessive. However, councils generally need to get the best available financial return in their property transactions as they have an overall duty to get good value for all their residents. And fees are invariably payable on property transactions.
15. Here, the added £100 represented a significant increase on the former garage rent. And Mrs X thought ‘out of area’ demand might have affected the increase. The Council produced a waiting list of over 20 names that, with two exceptions, gave addresses in the place where Mrs X lived. The Council confirmed it checked residency when completing new agreements and had recently let a garage to a local resident. I saw no evidence that ‘out of area’ demand affected the Council’s rent decision.
16. Rather, it was four years (2016) since the Council had last considered the rent for the garages and the 2017 agreements included a 2020 rent review. It was for the Council, through its estate surveyors, to decide what rent was appropriate in 2020. Its surveyors had practical experience and knowledge of the local property market. And they would use their professional judgement to reach a view on what rent was commercially sustainable and suitable.
17. The Council said it rented the garages where Mrs X lived at the 2020 rent and received the £55 fee and had relet her former garage. This suggested the Council did set a suitable commercial rent for the garages in 2020. So, while I recognised Mrs X disagreed with the 2020 rental terms, I found no evidence of fault here (see paragraph 3).
18. Mrs X also questioned the £55 renewal fee. The agreement for the garage is short and will contain standard terms that apply to all renters. However, preparing and issuing the agreement would be but part of the overall costs the Council would incur in providing this discretionary service. The Council would have office and administrative overheads and would need to store and manage agreements. It is for the Council to set its fees and, with a discretionary service, residents can take that fee into account in deciding whether to rent a garage. The Council also provided evidence its fees were in line with another council. I therefore found no evidence of fault here.

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Final decision

19. I completed my investigation finding no fault by the Council.

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Investigator's decision on behalf of the Ombudsman