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Cambridge City Council to refund council tenants who were overcharged rent for up to two decades




Council tenants who have been overcharged rent by Cambridge City Council for up to two decades have received letters about the mistake.

But the affected tenants will not find out until the summer how much they have are due to receive back as a refund.

Cambridge Guildhall. Picture Keith Heppell
Cambridge Guildhall. Picture Keith Heppell

The council has identified an error dating back to when the government told local authorities in April 2002 to show service charges – such as for cleaning in communal areas or grounds maintenance – separately from rent, to show how housing costs were being calculated.

From April 2004, the council included gas maintenance and electrical and mechanical maintenance charges as separate charges, as not all homes were being charged for these. However, it has now learned it should have included them within the amount charged for rent.

In subsequent years, as rents rose, some tenants may have been overcharged if the amount of the service charge or charges and rent combined took them over their ‘formula rent’, or if the charge was added after 2004 and in the middle of a tenancy.

The council has not said how much tenants may have been overcharged on average, and said it will take months to work it out, as each individual account needs to be examined.

While 2004 is the earliest date someone could be affected, the council said it is “more likely” that tenants’ formula rent was breached in more recent years following rent rises.

Tenants are also being sent letters about their new rental payments from April, which will be correct, the council said. Despite the correction, a 7.7 per cent rise in rental payments for the coming year means tenants affected by the error may still find themselves paying more than last year.

Council house tenants face a rise in their rent from April – but some will eventually get a refund for historic overpayments
Council house tenants face a rise in their rent from April – but some will eventually get a refund for historic overpayments

Repayments will be made as a lump sum, but the council will need to consider how much of a tenant’s payments would have been paid by housing benefit or Universal Credit, and if an affected tenant’s account is in arrears, any refund would be reduced by the amount owed.

The council is beginning by contacting current tenants and will then attempt to contact previous tenants where they have contact details. Former tenants can also fill out a form at cambridge.gov.uk/rent-corrections asking to be contacted.

Meanwhile, the council also identified a separate issue affecting a “small number” of tenants with ‘affordable rent’ tenancies, who were first told about it in January. They are due to receive two letters this week - the standard rent notification letter being sent to all tenants, plus a letter explaining corrections to their accounts from April onwards.

The Cambridge Independent understands the city council has set aside £1.15million to correct the affordable rent error, as a “worse case scenario”.

This error arose because the council misinterpreted government guidance on decreasing rents by one per cent per year between 2016 and 2019. Instead of setting rents higher, then reducing them by one per cent per year, it set them at around 50 to 55 per cent of market rents, as it wanted them to be as low as possible, then increased them over time. Legal advice has now shown that policy was non-compliant.

Cllr Gerri Bird, executive councillor for housing and homelessness, said: “We sincerely apologise for these errors and any concern they may cause. Our intention has always been to set rents as low as possible for tenants and to be transparent in what tenants were paying for. These errors were both made due to misinterpreting government guidance on setting rents.

Cllr Gerri Bird
Cllr Gerri Bird

“We identified both errors through our own internal checks and have been working around the clock to make sure we could correct tenants’ rent accounts in time for the annual rent notification letters that have gone out this week informing tenants how much their rent will be from April onwards.

“I would like to reassure affected tenants that correcting these errors will not cause your rent to increase. However, your corrected rent for the coming year may not be lower than your current rent, because once we corrected and reduced your rent we also added the annual rent increase on top for April onwards. It will be lower than it otherwise would have been from April.

“We ask for tenants’ patience while we work through the next phase of work to calculate refunds, which may take some months.

“Please be aware that we will not ‘cold call’ tenants to request any financial information and we will never ask you to make a payment of any amount in order to receive your refund.”

South Cambridgeshire District Council said 88 of its 5,500 council homes were also affected by the affordable rent error.

Its lead cabinet member for housing, Cllr John Batchelor, said: “We’re sorry about this error, which happened because we misinterpreted some legislation back in 2016. It is however important to know that this mistake affects fewer than 90 out of our 5,500 Council homes. We’ve written to every tenant affected and will be reimbursing them.”

South Cambridgeshire tenants were not affected, however, by the service charge issue.

Visit cambridge.gov.uk/rent-corrections for more details about the errors are available on the city council’s website.



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