Council's social rent error sparks outrage

Hundreds overcharged

A government regulator has criticised a Devon council for “serious failings” after it overcharged its social housing tenants for more than two decades to the tune of £7.5 million.

Mid Devon District Council reported itself to the Regulator for Social Housing (RSH) last year when an audit unearthed an issue with how it had calculated, and therefore charged, rent to its tenants.

The council, which has roughly 3,000 social housing homes, has overcharged more than 1,200 tenants a combined £7.5 million since 2002.

However, it has sought legal advice which it has said means it will only need to repay six years’ worth of overpaid rent to individual tenants, which it has estimated would total up to around £1.8 million.

Some have questioned whether the council should be paying back the full amount owed to tenants, but the RSH has said the amount the council decides to refund “is a question for the council itself” and that such aspects are “not covered by our remit”.

Besides overcharging some tenants, it has undercharged more than 1,600 others an estimated £8 million over the same period – meaning it has lost out on this income.

The council is not seeking to recoup the underpaid rent.

“There have been serious failings in how Mid Devon District Council is delivering the outcomes of the Rent Standard,” a judgement by the RSH said.

“Mid Devon has overcharged around 40 per cent of its tenants and undercharged around 60 per cent of its tenants as a result of errors that it has made in setting rents over a prolonged period.”

The RSH said the council had failed to apply the correct property valuations as the basis for the formula that dictates what rent has to be paid by individual tenants. This error began in 2002 but was only identified last year.

The regulator said Mid Devon continued to “engage constructively with us”, and that this would include ongoing monitoring of how the council is rectifying the situation.

“Our engagement with the landlord will be intensive and we will seek evidence to give us the assurance that sufficient change and improvement is being made,” the judgement said.

“Our priority will be that any relevant risks to tenants are adequately managed and mitigated, and that affected tenants have appropriate redress.”

Simon Newcombe, head of housing & health at Mid Devon District Council, said the judgement was expected given it had raised the issue following an audit last year.

“While the sums of money are significant, I would like to reassure our tenants that anyone who was overcharged has already been put on their correct rent and that any refunds owed to them are currently being calculated, on an individual basis,” he said.

“I would also like to reiterate that anyone undercharged will remain in this position until a change in tenancy.

“We welcome recognition from the regulator that the council has been fully transparent in its approach whilst communicating with all our tenants and taking steps to correct the error as quickly as possible.”