Summary: Mr X complained the Council failed to carry out proper checks and misrepresented information about a prospective tenant introduced to him under its private landlord scheme. We have found fault by the Council in failing to carry out, or properly carry out all the checks it said it would complete, and to be open and transparent about this and the information it had obtained, causing injustice. The Council has agreed to remedy this by apologising to Mr X, making a payment to reflect the worry and uncertainty caused and a service improvement.

The complaint

1. The complainant, who I am calling Mr X, owns a rental property with his partners. He complains the Council misrepresented, and failed to pass on, vital information about a tenant it introduced to them under its private landlord scheme. Mr X says:

• They understood the Council had made the appropriate checks and introduced a suitable applicant and so agreed to let the property to the tenant;
• The tenant failed to pay the rent, caused significant damage to the property and concerns to neighbours because of their anti-social behaviour; and
• They had to take court action to recover possession of the property at the end of the tenancy.

2. Because of the Council’s failures, they incurred substantial costs and losses, including rent arrears, cost of repairing the extensive damage and lost income while the property was being repaired. Mr X wants the Council to pay appropriate financial redress for these costs and losses, and the inconvenience caused.

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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 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. I spoke to Mr X, made enquiries of the Council, and read the information Mr X and the Council provided about the complaint.
6. I invited Mr X and the Council to comment on a draft version of this decision. I considered their responses before making this final decision.

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What I found

What should have happened

The Council’s Private Landlord Scheme

7. The scheme is intended to encourage private landlords to let their properties, through the Council, to families and individuals in need of immediate re-housing. The scheme information provided by the Council says:
1. It is free for landlords and offers everything they would expect from a professional service; and
2. For each prospective tenant it completes or obtains:

• Reference checks from the previous landlord;
• Affordability check and proof of income;
• Checks for anti-social behaviour and existing rent arrears;
• Right to rent and immigration check; and
• Confirmation of housing benefit entitlement.
3. In the “landlords’ leaflet” about its scheme, it would:
• find a suitable tenant for the property in accordance with the landlord’s requirements;
• provide a deposit guarantee up to £700 for the term of the tenancy to cover any damage or cleaning, or rent arrears; and
• pay two months rent in advance for all applicants.

Good Administrative Practice

8. Our published guidance sets out the standards of administrative practice we expect from councils when we investigate their actions.
9. We expect a council to be open and accountable. This includes:

• ensuring any information provided is accurate;
• keeping proper and appropriate records; and
• maintaining transparency.

What happened

Background

10. I have set out a summary of the key events below. It is not meant to show everything that happened.
11. Mr X is a landlord. His rental property is usually let to students. It was empty in 2020 because of the pandemic and Mr X contacted the Council about its private landlord scheme.
12. The Council told Mr X its role was to select suitable tenants from their many applicants, check references, affordability etc, and make sure the tenancy was set up from the outset. It also sent him its landlord’s leaflet.
13. Mr X decided to use the scheme and asked the Council to find a suitable tenant for the property.
14. The Council arranged viewings. It told Mr X an applicant had asked to rent the property. It advised him the prospective tenant had had to leave their partner’s mortgaged property. They received universal credit, and the Council could arrange for the rental element to be paid directly to Mr X.
15. Mr X agreed to let the property to this prospective tenant. They entered into a six-month tenancy agreement. The tenant and their family moved into the property.
16. The Council’s housing benefits team arranged payment of the first month’s rent directly to Mr X.
17. The tenant did not pay the monthly rent. When Mr X contacted the Council about this it said:

• It had carried out all the usual checks before it put forward the tenant;
• It had obtained evidence of the tenant’s substantial benefit income and payment of their previous rent through universal credit; and
• As rent payments were now two months in arrears, Mr X could apply for the rental element of the tenant’s universal credit to be paid directly to him.

18. This was arranged by Mr X. But the rental element of tenant’s universal credit did not cover the full rent. The tenant was required to make monthly payments to cover the shortfall but did not do this.
19. Mr X terminated the tenancy at the end of the six-month term. The tenant did not move out. Because of government restrictions on evictions, Mr X was unable to take legal action to recover possession of the property until March 2022. By this time the rent arrears were in the region of £3,000. Mr X also incurred the costs of the court action.
20. When Mr X inspected the property after the tenant’s eviction, he found there had been substantial damage and that items, including a washing machine, tumble drier and microwave, had been removed.

Mr X’s complaint to the Council

21. Mr X said the Council had failed to carry out proper checks on the tenant and that:

• It had wrongly told him the tenant had previously lived in a mortgaged property;
• He accepted the Council was not a managing agent or responsible for the tenant’s actions. But he had expected it to make the basic checks and filter applicants put forward to him as prospective tenants;
• He had trusted the Council to be transparent with him when it said it had completed the usual financial checks and checked the tenant’s references; and
• It did not arrange for the rent to be paid directly to him, as it said it would. He could not do this until the rent was two months in arrears.

22. In response the Council said:

• It did not tell him the tenant had previously lived in a mortgaged property;
• It only introduced prospective tenants and did not manage the property. This was made clear in the rent deposit scheme;
• Any issues regarding non-payment of rent or damage were between the landlord and the tenant;
• It had carried out affordability checks on the tenant and was satisfied they could afford the rent for Mr X’s property. This was not the same as a credit check; and
• It was the landlord’s responsibility to undertake any due diligence before accepting a prospective tenant.

23. The Council paid the £700 due under the rent deposit scheme, and a further £1,250 towards the cost of cleaning the property and other costs.
24. Mr X was not satisfied with this response. He felt the Council should pay financial redress for the full extent of their costs and losses, which were more than £5,000, including rent arrears, court costs, damage and lost income.

The Council’s response to our enquiries

25. I asked the Council for records of the checks it had carried out and information obtained about the tenant. This showed:

• The tenant had lived in a property rented in their partner’s sole name before moving to temporary rented accommodation. The Council had not been provided with any references for the tenant;
• The evidence about the tenant’s income was confirmation of a joint universal credit award with their former partner;
• The tenant had made an application for housing benefit for the rent at their temporary accommodation;
• The tenant had told the Council the rent at the previous property had been covered in full by universal credit/housing benefit; and
• The tenant had historic rent arrears relating to their council tenancy some years ago.

My analysis – was there fault by the Council causing injustice?

Failure to complete proper checks

26. The Council told Mr X it would find him a suitable tenant in accordance with his requirements, obtain references, check for previous rent arrears and anti-social behaviour and complete an affordability assessment.
27. I consider the evidence seen shows the Council did not:
1. obtain a landlord’s reference from the tenant’s current accommodation provider or check their rent payments were up-to-date;
2. make any enquiries about the historic rent arrears;
3. complete any anti-social behaviour checks;
4. complete a proper affordability assessment of the tenant’s ability to pay the rent for Mr X’s property. The only information I have seen about the tenant’s benefit income is the joint award of universal credit based on their circumstances when living with their former partner. This information was clearly out of date; or
5. confirm the amount of housing benefit or rental element of universal credit the tenant would receive if they rented Mr X’s property. The Council sent me a copy of the tenant’s housing benefit application, but this was for the rent at their temporary accommodation.
28. I also consider the evidence I have seen shows the Council knew the tenant had been living with their former partner in a rented property but wrongly told Mr X they had left their partner’s mortgaged property.
29. In my view, the Council failed to carry out, or properly carry out all the checks it said it would complete under the scheme and this was fault.

Failure to be open and transparent

30. Mr X says he understood the Council had completed the checks and trusted it to be transparent with him. I consider, as good administrative practice in accordance with our expected standards, the Council should have been open with Mr X about the extent of the references and checks it had completed for the tenant.
31. In my view the Council failed to do this. It was not open with Mr X about the information it had obtained, it wrongly led him to believe it had completed a proper affordability assessment (for which I have seen no evidence) and misled him about the tenant’s previous accommodation.
32. I consider the Council acted with a lack of transparency and openness and this was fault. This may have affected Mr X’s decision to let his property to the tenant.
33. And I have not seen any evidence the Council has a procedure or system for recording the checks and assessments completed, and information received for a prospective tenant. I cannot see how the Council is able to monitor the checks it says it will complete for landlords under its scheme. In my view, this is a failure to keep proper and appropriate records, and fault.

Impact of the Council’s faults

34. Mr X says he would not have agreed to let his property to the tenant had the Council been open with him about the extent of the checks and information it had obtained. Because of these failures, he rented the property to an unsuitable tenant who did not pay the rent and caused substantial damage.
35. I understand why Mr X feels this way. But it was the tenant’s actions which directly caused his costs and losses was the tenant, and the Council was not responsible for the tenant’s actions.
36. And while I appreciate Mr X trusted the Council to complete the checks it said it carry out, in my view, it was ultimately for him to consider any other action he should take to protect his position, such as asking for the outcome of the Council’s checks or arranging appropriate insurance, before deciding to let his property to the tenant.
37. Further, we do not make recommendations for the payment of financial redress in the same way as a court might award damages for breach of contract or negligence. Mr X has the option of taking legal action against the tenant (although it’s unlikely they could pay anything) to recover the unpaid rent and cost of the damage, or against the Council, if he considers it is in breach of its agreement or duty to him.
38. I consider the Council’s failures caused Mr X worry and uncertainty about the tenant’s suitability and ability to pay the rent.
39. But, for the reasons set out above, I have not asked the Council to pay Mr X any further financial redress (over and above the £700 under the deposit guarantee and £1,250 towards the cost of clearing the property and other costs it has already paid) for the costs and losses directly caused by the tenant.

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Agreed action

40. To remedy the injustice caused by the above faults and, within four weeks from the date of our final decision, the Council has agreed to:
1. apologise to Mr X for its failure to carry out the checks it said it would complete under its private landlord scheme and act with openness and transparency regarding the information it had obtained. The apology should reflect the principles about making an effective apology set out here Guidance on remedies - Local Government and Social Care Ombudsman in in our published Guidance on Remedies; and
2. pay Mr X £200 to reflect the worry and uncertainty caused by these failures. This is a symbolic amount based on our published Guidance on Remedies.
41. Within three months from the date of our final decision, the Council has agreed to review its procedures under its private landlord scheme for:
1. Recording the checks it has completed for prospective tenants and information obtained;
2. Completing accurate affordability assessments for tenants; and
3. Reporting to landlords about the outcome of its checks and assessments.
42. The Council should provide us with evidence it has complied with the above actions.

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Final decision

43. I have found fault by the Council causing injustice. I have completed my investigation on the basis with Council will remedy this injustice by carrying out the above actions.

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Investigator's decision on behalf of the Ombudsman