Barking and Dagenham Council has been ordered to apologise and pay costs after letting a beleaguered landlord face the prospect of prosecution for 18 months.

The local authority was told by the Local Government Ombudsman to pay £3,000 for the “aggravation, distress and exceptional time and trouble” it caused the man, whose house in the borough had become overrun with unofficial tenants.

Ruling in his favour, an investigator found the council had failed to properly look into an alleged illegal eviction on the premises, and “made unfounded and unproved accusations against the landlord”. They also reprimanded the council for poor record-keeping and “extreme delays” dealing with his concerns.

But the council has refused to accept all of the findings, saying it still believes he committed an offence.

The man, referred to as Mr X in the report, had put his house up for sale in March 2016.

Before then, it had been leased to a firm providing temporary accommodation to homeless families.

When Mr X moved two friends into the property in July, they discovered a man was already living there who had signed a ‘tenancy agreement’ in April and been given keys by a bogus landlord, who had told him to rent out the whole house.

The man, who a court later ruled was a trespasser, was removed by police. He complained to the council and said another six people were living inside.

Enforcement officers visited with police in August to find another woman in the house. They told Mr X he had potentially committed two criminal offences: illegally evicting a residential occupier and running a house in multiple occupation (HMO) without a licence.

But the council did nothing to investigate further until October, and did not try to contact the false landlord.

In November, officers entered the property with a warrant and found several more people living there, of whom most either “were not clear who they paid rent to” or would not say.

The council issued Mr X a fixed penalty notice for littering because of the black bin bags stacked up outside, but sent the notice to the house, not his address outside the borough.

Then in January 2016 officers threatened him with legal action for not applying for a selective licence for the house instead, when he had in fact applied in December.

Selective licensing rules for rental properties had themselves come in in 2014 - during the time when the property was being run on the council’s behalf. And at the time the council had said it was exempt.

In their summary, the Ombudsman investigator said: “The council’s failure to investigate... and its failure to tell Mr X it was not going to prosecute left this threat hanging over him for longer than necessary.

“On the other hand, it still presumes Mr X is guilty to justify its actions. This is unfair and unreasonable. The council has no right to presume someone guilty of a crime.”

They added that the council had left an “incredible delay” dealing with Mr X’s concerns over the selective licence application, adding: “The council has apologised for the delay in dealing with Mr X’s complaints but this is not a sufficient remedy.

“The failure to respond in a timely manner and the deficiencies in those responses caused significant injustice to Mr X.”

A spokesman for Barking and Dagenham Council said: ““We are still of the opinion that an offence was committed and that the property was being used as a House in Multiple Occupation (HMO).

“The learning from this is to ensure that when offences are investigated and a decision not to prosecute or take any legal action is made, that we write to the alleged perpetrator notifying them that we are not progressing a prosecution against them. This is now the practice.”