Overcharged council tenants will get compensation

Residents who overpaid by more than £101 will get payouts

Residents who have been overcharged rent by their Devon council landlord will get compensation on top of refunds.

Around 1,200 tenants of Mid Devon District Council have been overcharged rent due to an error that occurred more than two decades ago and led to incorrect rent being erroneously charged.

Roughly 1,600 tenants were also undercharged due to the mistake, which was identified last year by the council’s new auditor. However, the council is not asking those tenants to make good the shortfall.

Legal advice the council says it has received from the King’s Counsel suggests it only needs to pay back a maximum of six years of overpaid rent to tenants.

Earlier this year, it had been considering whether to pay residents compensation as well, and now the details of that have been confirmed.

“While there is no legal requirement to pay compensation, in February 2025, the council decided it was the right thing to do for our tenants,” a spokesperson for Mid Devon District Council said.

“Compensation is available to tenants who have overpaid rent and who have a rent overpayment balance above £101.00, once any adjustments have been made taking into account any housing benefit or Universal Credit.

“Compensation is worked out using the total overpayment, not individual years, and is based on Mid Devon Housing’s compensation policy.”

The error looks like it could fall under ‘discretionary payments’ within the council’s compensation policy, although this has not been confirmed by the authority.

A table within that section shows that compensation for errors that are the full responsibility of Mid Devon Housing range from £10 to £500 depending on the severity of impact the issue is deemed to have had on tenants.

Some campaigners have queried whether the council should in fact be paying tenants back the entire rent they are owed.

The council said it had started contacting tenants by letter when their refund had been calculated. The letter will include instructions on providing bank details and timescales regarding the refund process.

It stressed it would not cold call tenants to ask for bank details over the phone, and would never ask for a tenant to make a payment of any amount to receive a refund.

The process of calculating refunds has proved complex because of whether each tenant has had part of their rent paid via benefits. 

As such, the first tenants to receive refunds, and compensation if they qualify, are likely to be those who have paid their rent without any benefit support towards it.

It said it was in the final stages of working out refunds for those on housing benefit, but it was still in contact with the Department for Work and Pensions about how to calculate refunds to tenants on Universal Credit.

For tenants who have underpaid rent, their rent will only be moved to the current level if they move to another council-owned property but annual increases could still occur.