Consultation outcome

Draft guidance note 8: Sections 236-245 – Compensation (enforcement power)

Updated 29 February 2024

Applies to England

	Applicable
PRP (For profit)	yes
PRP (Not for profit)	yes
PRP (Registered charity)	yes
Local authority	no

Type of power: enforcement power 

Scope 

1 - This power enables the regulator to require that a private registered provider (‘PRP’) pays compensation to a tenant or tenants.  

2 - Compensation may be awarded to: 

• a specified tenant of social housing provided by the PRP 

• each member of a specified class of tenants of social housing provided by the PRP; or 

• all social housing tenants of a PRP.  

3 - Compensation may not be awarded to a person in respect of a matter where the Housing Ombudsman has already awarded compensation. 

When the regulator will use this power 

4 - Section 237 sets out the grounds where the regulator can require a PRP to pay compensation, which are: 

• where the PRP has failed to meet a standard under section 193, 194 or 194C 

• where the PRP has given an undertaking under section 125 and failed to comply with it 

• where the PRP has failed to comply with a performance improvement plan notice 

• where the PRP has failed to comply with the duty in section 218B(4) to provide a copy of a performance improvement plan. 

5 - Along with being satisfied that one of the above grounds applies, the regulator will consider whether it is appropriate to use this power. This will involve considering all the circumstances of the case, including the factors under section 241(2)-(4) which are: 

• the financial situation of the PRP; 

• the likely impact of compensation on the PRP’s ability to provide services 

• the regulator must aim to avoid: 
  i) jeopardising the PRP’s financial viability 
  ii) preventing the PRP from honouring financial commitments; and
   iii) preventing the PRP from taking action to remedy the matters on the grounds of which compensation may be awarded

Process for using the power 

6 - If the regulator is satisfied that one or more of the grounds in section 237 of the Act have been met and it is appropriate to use this power, it will consult the Housing Ombudsman in accordance with section 242(2) of the Act. 

7 - The regulator will consider the amount of compensation to be awarded taking into account all circumstances of the case including but not limited to: 

• the seriousness of the issue that gave rise to the grounds for awarding compensation 

• the impact that the issue that gave rise to the grounds for awarding compensation, had on the tenant or tenants 

• the number of tenants affected 

• duration of the issue that gave rise to the grounds for awarding compensation 

• whether reasonable efforts were made to address the issue that gave rise to the grounds for awarding compensation; and 

• the factors under sections 241(2)-(4) of the Act. 

8 - Before issuing a compensation notice, the regulator must give the PRP a pre-compensation warning explaining that the regulator is considering awarding compensation as detailed in section 242 of the Act the pre-compensation warning must set out: 

• that the regulator is considering awarding compensation 

• the grounds on which the regulator believes compensation can be awarded  

• the likely amount of the compensation award

• details about the representations process (set out in section 243 of the Act) including:
   i) the period during which the PRP may make representations to the regulator, which must be at least 28 days and begin on the date the provider receives the pre-compensation warning; and 
  ii) that representations may relate to whether compensation should be awarded, or the amount of the compensation that may be awarded. 

• an indication as to whether or to what extent the regulator would accept a voluntary undertaking instead of, or in mitigation of, awarding compensation (section 242(5) of the Act) 

• details about the enforcement and if compensation is awarded, the statutory right of appeal (as set out at sections 244 and 245 of the Act)

9 - As required by section 242(3) and (4) of the Act, the regulator will inform Homes England, the GLA (where the provider owns land in Greater London) and any other relevant stakeholders including the Housing Ombudsman that a pre-compensation warning has been issued. 

10 - The regulator will consider any representations made by the PRP, provided they comply with the process as set out in the pre-compensation warning.  

11 - After considering any representations made, should the regulator decide to award compensation, it will issue a compensation notice to the PRP and provide a copy to the tenant (or tenants) being compensated. As set out at section 240(2) of the Act, the compensation notice will set out: 

• the grounds on which the compensation is awarded 

• the amount of the compensation 

• the tenant to be compensated 

• the period within which compensation must be paid 

• any interest or additional compensation which is payable in the event of late payment in accordance with section 244(2) of the Act  

• whether the PRP is required to publish information about the compensation and the manner of that publication 

• details about enforcement of the compensation award under section 244 of the Act 

• explain that the PRP has a statutory right of appeal in accordance with section 245 of the Act.  

12 - The regulator will notify the Housing Ombudsman, Homes England and the GLA (where relevant) that it has issued a compensation notice.

Appeal process

13 - There is a statutory right of appeal to the High Court, which must be brought within the period of 28 days beginning with the day on which the PRP is given the compensation notice. The appeal may relate to the award of compensation, the amount or both. 

14 - The requirement to pay the compensation is suspended during the appeal period (as defined in section 245(5) of the Act) and the regulator may not charge interest or award additional compensation during this period.