Landlord breaches Rent Standard after overcharging tenants £479,000

Following its own investigation, JRHT found it had wrongly classified some of its homes as supported housing and the tenants of these homes were overcharged. 

After a detailed follow-on investigation, the landlord discovered it had previously set rents incorrectly for ‘fair rent’ or social rent tenancies. 

JRHT made self-referrals to the RSH in April 2023 and July 2023 after identifying issues with its rent-setting. 

According to the judgement for JRHT, it had around 400 tenancies registered as fair rents up to 2009. 

The RSH said: “JRHT’s investigations found that fair rents have not been subject to reregistration with the Valuation Office Agency since 2008, leading to the maximum rent breaching the level expected in the standard across at least 183 tenancies. 

“As a result of these issues, JRHT is not compliant with the Rent Standard and the regulator does not have assurance that JRHT was previously compliant with the Welfare Reform and Work Act 2016.” 

At least £479,000 is estimated to have been overcharged by JRHT in respect of these issues.

The regulator said JRHT is working alongside external advisors to resolve these issues. It is carrying out a detailed review of rent-setting across all of the homes it provides and said it will identify and reimburse the tenants who have been overcharged and ensure its rent policies comply with requirements. 

Karen Doran, director of regulatory engagement at RSH, said: “Joseph Rowntree Housing Trust’s failure to set rents correctly has led to tenants being overcharged. 

“It is now working with us to make sure it charges rents correctly and puts things right for the tenants who have been affected.” 

Citizen was downgraded from V1 to V2 for viability and retained its top governance grade. The RSH said the association has an adequately funded business plan, sufficient security and is forecast to continue to meet its financial covenants. 

However, it said that Citizen has “significantly accelerated” the delivery of its energy-efficiency programme, leading to increased investment in its existing homes. 

“Delivering this alongside its ongoing development programme means that the business plan is funded by an increased level of indebtedness,” said the RSH.

Gary Booth, chief financial officer at Citizen, said: “The Regulator for Social Housing has made it clear the driver for our regrade was our conscious decision to accelerate our retrofit improvement works on our existing homes to bring properties up to a minimum EPC [Energy Performance Certificate] C rating. 

“By the end of 2025, we will have carried out energy efficiency improvements to over 2,000 of our homes.

“These works will improve the energy efficiency of our customers’ homes ahead of the government’s 2030 target.”

Peaks and Plains was also downgraded from V1 to V2 and retained its top governance grade.

The RSH said: “Peaks and Plains has an adequately funded business plan, sufficient security in place and is forecast to continue to meet its financial covenants under a reasonable range of scenarios. 

“Peaks and Plains is investing significantly in its existing stock and in developing new homes and, as a result, interest cover is reduced. 

“Additional investment will also be required to ensure continued compliance with fire safety targets.”

Mark Howden, chief executive of Peaks and Plains, said: “Our viability rating, like many others across the sector, reflects the challenging environment we operate in and our clear strategic priority to continue to invest in our homes and services.”

According to the regulatory judgements, both Onward and Irwell Valley have adequately funded business plans, sufficient security in place and are forecast to continue to meet their financial covenants under a reasonable range of scenarios”. 

For Onward, the regulator said: “Onward is investing significantly in its existing stock and in developing new homes and, as a result, interest cover is reduced. 

“Additional investment will also be required to achieve energy efficiency targets. 

“These factors, set in the context of economic pressures including inflation and interest rates, impact on Onward’s capacity to respond to adverse events.”

For Irwell Valley, the RSH said the landlord is investing in its existing homes including building safety and energy efficiency work, while also continuing to develop new homes. 

“These factors weaken its financial performance, and when set in the context of economic pressures including inflation and interest rates, impact on Irwell Valley’s capacity to respond to adverse events,” it concluded. 

A JRHT spokesperson said: “JRHT have recently undertaken a proactive review of all the rents we have charged our residents in recent years. 

“During this review we have discovered that we have incorrectly categorised 89 properties as specialised supported housing which resulted in the 1% rent reduction not being applied between 2016 and 2020. 

“In a separate issue, we also found that as a result of not re-registering fair rents, the maximum fair rent has been exceeded on at least 183 tenancies which means that residents have been overcharged.

“In all cases we will arrange for this money to be paid back, either directly to the resident or, if the rent is paid by Housing Benefit directly to the Local Authority.

“Some residents have already been made aware of this oversight and have had assurance that immediate action is being taken to correct it. We will be communicating with other residents over the coming weeks.”

Bronwen Rapley, chief executive of Onward, said: “The judgement of the regulator confirms that Onward is in a strong position to deliver for our customers. 

“Onward is well governed, financially stable and capable of meeting the objectives set out in our corporate plan.

“Social housing continues to face political, reputational and financial pressures.”

Ms Rapley said she believes Onward is well equipped to meet these challenges.

Sasha Deepwell, chief executive of Irwell Valley, said: “The top G1 rating highlights we are a well-governed organisation, while our V2 grading recognises how we continue to balance our financial viability and security, with plans to improve our existing homes, regenerate communities and build more much-needed new homes.  

“Against the backdrop of an extremely challenging economic climate, with high inflation and soaring interest rates, we are satisfied to have maintained this V2 rating.”

An Aspire Housing spokesperson said: “Aspire Housing has been working proactively with the regulator on our G2 to G1 strategy since January 2023, with a number of changes being implemented over the past nine months."

Ben Denton, chief executive of Legal and General Affordable Homes, said: “The Regulator of Social Housing’s confirmation of our G1/V1 rating reflects Legal and General Affordable Homes’ robust approach. 

“We hold ourselves to high standards, continuously innovating and improving the quality of our homes and customer service, while ensuring we can deliver much-need affordable homes.”