By Richard Blakeway, the Housing Ombudsman

Compensation is an emotive topic. It’s also a cultural issue. When times are hard and budgets tight this can drive the wrong behaviours. It can result in residents expecting unrealistic redress for failings. Or organisations being reluctant to compensate. Compensation can also be hard to calculate. How do you monetise someone’s distress?

Most of our orders are non-financial and other remedies, like apologies, matter greatly. But getting compensation right could go a way towards restoring trust amongst residents and prevent complaints escalating to us.

But some landlords have some way to go on this. We’ve seen internal communication where a landlord acknowledges it should pay more compensation but offers less. Last year I heard at a public meeting how a resident had lost belongings because of failings the landlord accepted. But when presented with the receipts for new clothes, it apparently asked the resident why they hadn’t gone to a cheaper shop.

Such behaviours can derive from adopted practice. At least one landlord we encountered had taken a stance of not paying compensation. Another’s policy said it would compensate for incorrect service charges only from the point the resident complained, not from when it overcharged.

Central to compensation is fairness. There should be a single vision of fair compensation.

To help embed a fairer culture for compensation, we’ve updated our guidance. This is still based on these core principles:

Recognition that compensation isn’t punitive but seeks to put the resident back in the position they would’ve been had the service failings not happened

In righting those wrongs, compensation ought to distinguish between loss of service and impact. This means accounting for distress and inconvenience, time and trouble, as well as transactional costs

Impact requires recognition of individual circumstances, both aggravating factors, such as physical or mental needs or the presence of children. This could increase compensation. Mitigating factors which could reduce it, such as unreasonably refusing access to the property, should also be considered

These differences mean caution should be exercised when comparing cases

Nor is compensation always the most appropriate remedy; an apology, repair or learning may be more effective.

Our updated guidance is another step towards a ‘compensation calculator’ to foster a shared understanding both within the sector and with us. It’s also another step towards the complaints procedure offering a genuine alternative to legal claims, with 100% of compensation going to the resident without the need for legal costs for either landlord or resident. I know many landlords have proactively sought to align their approach to redress with ours, which is positive.

Embedding this culture will see more complaints resolved locally, and earlier. We sometimes see compensation paid very late in the process. Inevitably, where opportunities are missed or time lapses taking action, compensation can increase.

This shift should also see us making more findings of ‘reasonable redress’, where landlords put right service failings. We’ve seen progress here and I’d like to see fewer cases where small additional payments are being awarded by us.

Every pound spent on compensating for service failings is unavailable for service improvements.

I know some landlords are concerned about a ‘compensation culture’.   

Overall, we’ve seen little evidence of it in our casework. That 40% of our compensation in 2024-25 relates to leaks, damp and mould underscores the systemic failings in this area.   

This shows how important it is for landlords to improve complaint handling and proactively learn to prevent complaints and reduce compensation.