The Ombudsman's final decision
Summary: The Council failed to follow its allocations scheme when it suspended Ms X from bidding for properties. This was fault. I have recommended a remedy for the injustice caused.
The complaint
Ms X complained that the Council wrongly suspended her from bidding for social housing through its allocations scheme.
As a result, Ms X says she could not access opportunities to resolve her homelessness.
The Ombudsman’s role and powers
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) 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)
How I considered this complaint
I considered information provided by the Council and Ms X’s representative.
I referred to the Ombudsman’s Guidance on Remedies, a copy of which can be found on our website.
Ms X and the organisation had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.
What I found
Individual Voluntary Arrangement An Individual Voluntary Arrangement (IVA) is a formal agreement between a debtor and their creditors approved by the court. It is an alternative to bankruptcy.
An IVA is an agreement to pay back debts over a set period, usually five or six years. During that time, the debtor makes payments, usually monthly, to a qualified insolvency practitioner. After recovering their own fees, the practitioner divides the money among the creditors.
Housing allocations Every local housing authority must publish an allocations scheme that sets out how it prioritises applicants, and its procedures for allocating housing. All allocations must be made in strict accordance with the published scheme. (Housing Act 1996, section 166A(1) & (14)) The Council operates a choice-based lettings scheme. This means housing applicants can express an interest in available properties. This is called bidding.
The Council awards priority under its allocations scheme using points. The higher the number of points, the greater the priority.
The allocations scheme says the Council may suspend the applications of certain applicants. This means that although they are eligible to join the housing register, they cannot bid for properties. So far as is relevant to this complaint, the Council suspends applicants who: Have rent arrears or other debts to the Council Have a Debt Relief Order or are bankrupt and who had debts to the Council before the relevant order was issued.
So far as is relevant to this complaint, the Council lifts suspension when: The debt is paid in full Those subject to a Debt Relief Order or are bankrupt have repaid their debt or two years have passed since the date of the relevant order The Council can also exercise its discretion to lift a suspension when an applicant has made and kept to a repayment agreement. It will consider the applicant’s individual circumstances when deciding whether to exercise discretion.
What happened Ms X has a debt to the Council from a loan it paid to help her secure a private tenancy in 2015. Ms X entered an IVA in June 2019. The outstanding balance of the loan is included in the agreement.
Ms X has an application to the Council’s housing register. She qualified to join the register, however, the Council suspended her from bidding for properties.
The Council says this is because she has an outstanding debt to the Council. Internal emails say that Ms X can ask to review this once her debt is less than £1,000.
The IVA started paying towards Ms X’s debt in April 2021. Before this, Ms X’s payments were used to meet the IVA fees.
My findings
The Council’s scheme says it will lift suspensions when those subject to a Debt Relief Order or bankrupt have repaid their debt or two years have passed since the date of the relevant order.
As an alternative bankruptcy, and absent any separate policy in the scheme, I consider this also applies to IVAs.
In this case, the ‘date of the relevant order’ is June 2019. Under the Council’s scheme, it should therefore have lifted Ms X’s suspension in June 2021.
In continuing to suspend Ms X from bidding beyond June 2021, the Council failed to follow its allocations scheme. This was fault.
Ms X has been unable to bid for properties. She may have missed offers as a result. This is a significant injustice to Ms X.
I note that internal emails refer to a ‘threshold’ of £1,000 after which the Council could reconsider lifting Ms X’s suspension. This is not an approach which follows the published allocations scheme, which says it will consider each case individually. I am concerned that the Council appears to be applying an informal, blanket policy of not allowing those with debts over £1,000 to bid for properties. This is fault.
This may have caused injustice to other applicants who have not complained.
Agreed action
To remedy the injustice to Ms X from the fault I have identified the Council has agreed to: Lift Ms X’s suspension and backdate her priority to reflect the 18 months she has wrongly been suspended from bidding.
Pay Ms X £250 in recognition of her avoidable distress.
The Council should take this action within four weeks of my final decision.
The Council should also take the following action to improve its services: Remind relevant staff of the circumstances in which the Council’s allocations policy says it will lift suspensions for applicants with Debt Relief Orders or who are bankrupt.
Remind relevant staff that all requests to lift a suspension from bidding for social housing must be decided in line with the allocations policy and considering individual circumstances. The Council should not apply blanket ‘thresholds’ of debt above which requests are not considered.
The Council should tell the Ombudsman about the action it has taken within eight weeks of my final decision.
Final decision
I have completed my investigation. There was fault by the Council. The action I have recommended is a suitable remedy for the injustice caused.
Investigator's decision on behalf of the Ombudsman