Clarion Housing Association Limited (202306996)

REPORT

COMPLAINT 202306996

Clarion Housing Association Limited

25 February 2025

Our approach

The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme (the Scheme). The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

The complaint is about:
1. The landlord’s handling of the resident’s requests for information about the service charge.
2. The landlord’s response to the resident’s concerns about the accuracy of the actual service charge and requests for reimbursement.

Background

The resident was a leaseholder of the property at the time of the complaint. The resident vacated the property in March 2024. The property is a flat.
The resident raised the stage 1 complaint on 28 March 2023. The resident expressed dissatisfaction with the accuracy of the actual service charges for the financial year ending March 2022 and how long it was taking for the landlord to resolve this.
The landlord issued the stage 1 response on 25 May 2023. The landlord upheld the complaint. The landlord apologised for the time it had taken to provide him with the information he was seeking, for inadequacies in its communications, and for any inconvenience this had caused. The landlord offered £100 compensation in redress. This compensation was broken down as follows:
1. £50 compensation, in recognition of the lack of communication, repeated chasing, and time taken to resolve the substantive matter of complaint.
2. £50 compensation, in recognition of complaint handling delay.
The resident asked the landlord to escalate the complaint to stage 2 on 29 May 2023. In summary, the resident:
1. Remained unhappy with the length of time it had taken for the landlord to respond to his service charge queries. The resident said he was still unclear how some of the invoices related to the block.
2. Expressed dissatisfaction with the accuracy of the service charges being collected. The resident said that his service charges were inaccurate every year, which was both tiring and frustrating. He suggested that the landlord should conduct a full and independent review of how it dealt with service charges.
3. Suggested that the landlord was charging for some services that had not been received or had not previously been charged for. He expressed concern about the reasonableness of some of the charges levied. He asked the landlord to clarify the details of service charges in the neighbouring block.
The landlord issued the stage 2 response on 4 August 2023. The landlord:
1. Recognised that there had been some inconsistences in its expenditure “where job lines had been incorrectly allocated”. It explained that it was continuing to work with service areas, to ensure any costs passed onto residents were accurate.
2. Apologised for the time it had taken to respond to the resident’s questions regarding his service charge breakdown. It explained the reason for the delay and suggested that it was continuously looking for ways to improve its management of enquiries and keeping residents informed.
3. Explained that invoices received from its suppliers often reflected the total amount invoiced to the landlord. But said along with that invoice, there would be a breakdown of jobs. The landlord said that it had provided the resident with a spreadsheet, itemising all of the jobs applicable to the block.
4. Responded to the resident’s concerns about new charges and the reasonableness of some of the costs.
5. Noted that it had not provided the stage 2 complaint response within expected timescales, for which it apologised and offered £50 compensation. But said it had not identified any failure of service in relation to the substantive matter of complaint.
The resident told the Ombudsman on 12 February 2025, that the landlord should:
1. Carry out a thorough and comprehensive review of all service charges over the previous 5 years.
2. Conduct an internal review to establish why it consistently fails to deliver value and does not provide service charge information within statutory deadlines.
3. Pay compensation for not providing service charge information within the statutory deadline and refund any service charges that could not be adequately evidenced.
The Ombudsman has determined similar complaints from the resident about the landlord’s handling of service charge enquiries (case reference 202105446 and 202127738, refers).

Assessment and findings

Scope of the investigation

What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case. There are sometimes reasons why a complaint or parts of a complaint will not be investigated.
Paragraph 42.f of the Scheme states that, the Ombudsman may not consider “complaints which concern the level of rent or service charge or the amount of the rent or service charge increase”. Complaints concerning the level of a rent or service charge are best suited for consideration by the First Tier Tribunal (Property Chamber), who can make a bind decision on whether service charges are reasonable or payable.
Accordingly, this report will not consider whether the resident’s service charges were reasonable or payable, or whether any reimbursement of the service charge was due. But this investigation may consider the landlord’s communication with the resident and whether its response was reasonable in all of the circumstances of the case.

Obligations, policies and procedures

The lease stated that the resident must contribute towards the landlord’s costs through the service charge. The charge broadly covers the costs associated with management, and communal maintenance and repairs.
According to the lease, the resident and the landlord agree to comply with the provisions contained in sections 18 to 30B of the Landlord and Tenant Act (1985), in respect of the charges. From here on in this report, the Landlord and Tenant Act will be referred to as “the Act”.
Section 21 of the Act gives leaseholders the right to ask their landlord to supply a summary of the relevant costs, which make up their service charges, for the last accounting period. A resident’s request must be submitted to the landlord in writing.
Section 22 of the Act gives leaseholders the right to inspect any receipts or invoices which support the landlord’s service charge figures. The request must be made within 6 months of receiving the summary, in writing. The landlord must provide facilities for inspecting the information within 1 month of the request.
The landlord had an information sheet, which it made available to its tenants and leaseholders. This set out a summary of a tenant’s rights and obligations in respect of service charges, including the right for a tenant to “ask an accountant or surveyor to carry out an audit of the financial management of the premises containing his dwelling, to establish the obligations of the landlord, and the extent to which the service charges he paid were being used efficiently”. The information sheet clarified that it would depend on a resident’s circumstances “whether this right could be exercised alone or only with the support of others living in the premises”. It suggested that residents should obtain independent advice before exercising this right.
The landlord’s compensation policy sets out the circumstances under which it may consider making an offer of compensation. In instances of service failure resulting in some impact on the resident, the landlord may offer between £50 and £250. Examples include, failure to meet service standards for actions and responses but where the failure had no significant impact. In instances where there had been considerable failure but no permanent impact on a resident, the landlord may offer between £250 and £700. Examples include, a resident repeatedly having to chase for the landlord for responses and to correct mistakes, necessitating an unreasonable level of involvement by that resident.

The landlord’s handling of the resident’s request for information about the service charge.

For context, the landlord was subject to a cyber-security incident in June 2022, which created significant disruption to the landlord’s IT systems, which in turn impacted the delivery of the landlord’s services to its residents. In this case, the cyber-security incident impacted the landlord’s ability to produce a final breakdown of the actual costs incurred for the financial year ending March 2022, and from accessing copies of receipts and invoices.
The landlord issued the resident with a notice of costs incurred on 23 September 2022, in accordance with Section 20B (2) of the Act. The landlord said that it was not in a position at that time, to provide the resident with a statement of actual service charges for the financial year ending March 2022, due to the cyber-security incident. But it provided the resident with a monetary figure of the likely costs that had been incurred over this period. From this it was able to calculate the total costs incurred for the property. The landlord included a frequently asked questions page with the notice of costs. This explained that the resident was not required to make any further payment at that time, in respect of those costs. It said the final accounts would be prepared and issued once it had been able to confirm the full costs.
The resident emailed the landlord on 1 October 2022. The resident asked the landlord to provide him with copies of invoices and receipts for the financial year ending March 2022. The resident said that he was requesting this information under Section 22 of the Act.
The landlord responded to the resident in a timely manner on 5 October 2022, by email. It reiterated that it was unable to finalise the full breakdown of costs for the year ending March 2022, or provide him with invoices and receipts, due to the cyber-security incident. It said that it was working hard to restore its IT systems and would get back to the resident as soon as these were operating again. The Ombudsman accepts the landlord may not have known at this stage when this was likely to have been. But it could have committed to making contact the resident within a reasonable timescale to provide him with an update.
The resident emailed the landlord later the same day, dissatisfied with the landlord’s response. He repeated his request for copies of receipts and invoices for the financial year ending March 2022, under Section 22 of the Act. He also asked the landlord to provide him with a summary of the costs, which he said he was requesting in accordance with Section 21 of the Act.
The landlord did not respond to the resident’s email until 12 working day later. However, it did apologise for its delayed response, which was fair. The landlord explained that there was no legal requirement to provide the resident with a breakdown of the costs, as it had not yet issued a demand for payment. It explained that its finance team had now regained access to its data, which would enable it to analyse and check the actual expenditure. It committed to sending the statement of actual service charges to the resident before April 2023.
It is not for the Ombudsman to provide a legal opinion on the landlord’s stated position, in regard to its obligations under Section 21 and Section 22 of the Act. But it was understandable that the landlord was limited in the information that it was able to provide, until access to its IT systems had been restored. It was positive that the landlord committed to a date by when it would issue the statement of actual service charges, to manage the resident’s expectations.
The resident emailed the landlord on 15 November 2022, asking the landlord to treat his email as a formal request for copies of receipts to be provided on the same day as it issued the finalised statement of service charges. The resident emailed the landlord again on 26 November 2022, asking it to confirm that his request had been noted and that would be actioned. It was unhelpful that the resident had to chase the landlord for a response on 17 December 2022.
The landlord emailed the resident on 19 December 2022, apologising again for its delayed response. The landlord clarified that it would issue the resident with copies of receipts but it could not guarantee that these would be provided on the same day as the statement of actual charges was issued. The landlord explained that its notices would be sent out by an external printer throughout February 2023, so it could not be sure which batch of letters the resident’s notice would be in. But it committed to sending the resident copies of the receipts before 31 March 2023, which was reasonable.
The landlord wrote to the resident on 23 February 2023, notifying him of the service charge he would need to pay from 1 April 2023. Accompanying the notice was a statement of the actual expenditure for the financial year ending March 2022.
The resident emailed the landlord on 1 March 2023, asking it to provide him with a copy of all receipts related to his service charge for the financial year ending March 2022. The resident said that the landlord must provide this information to him with the next 30 days, in accordance with Section 22 of the Act.
The landlord emailed the resident on 9 March 2023, with a breakdown of the actual expenditure, which within the statutory prescribed timescale. It is understood that the landlord provided the resident with some receipts and a breakdown of jobs where services had been provided under a contract. The Ombudsman accepts that the landlord was endeavouring to make things simpler for the resident by presenting the charges in this way, given the confusion noted by the Ombudsman in an earlier determination, in the way that information and invoices were provided to the resident (case 202127738, refers).
But the landlord should have provided the resident with copies of all of the receipts and invoices that it had relied upon, to inform its final accounts. If the landlord was concerned about how this information would be interpreted by the resident, it could have offered to provide a suitable facility for him to view this information, with support from an appropriate member of its staff.
The resident emailed the landlord on 9 March 2023, reattaching the landlord’s spreadsheet, alongside which he raised several comments, queries, and requests for further information. The resident asked the landlord to respond to his comments within the next 10 days and to provide him with the remaining invoices.
The landlord did not reply to the resident in a timely manner, leaving him unclear of its intentions. The resident was put to unnecessary inconvenience, having to chase the landlord for the remaining invoices on 23 March 2023 and 27 March 2023.
According to the stage 1 complaint response, the landlord sent the remaining receipts and invoices to the resident in April 2023. It is reasonable to conclude from this, that the landlord did not provide the resident with all of the information that he was entitled to see under Section 22 of the Act, within the expected statutory timescale. This was inappropriate.
The landlord may have been dealing with an increase in service charges queries around the time of the resident’s Section 22 request, at the beginning of March 2023. But it was incumbent on the landlord to ensure that information requests with statutory timescales were identified promptly and were monitored until completion, to ensure compliance with the relevant deadlines. The Ombudsman made a similar recommendation to the landlord on 18 March 2022 (case 202105446, refers), in relation to this.
The landlord addressed the comments, queries, and requests for further information raised by the resident on 9 March 2023, within the stage 1 complaint on 25 May 2023. The Ombudsman would have expected the landlord to have provided this information in a timelier manner. If it was unable to do so, it ought to have explained its reasons and set out a timescale for providing this.
Ultimately, the landlord did recognise during the complaint process that there had been occasions when the resident had had to chase for responses. It accepted that there had been delays providing the information the resident was seeking. It sincerely apologised for this and offered compensation to try to put things right. This was encouraging and shows that the landlord was taking responsibility for the failings it itself had identified.
The landlord also mentioned that it had fed back the findings from its complaint investigation to the service area. This was positive and shows that the landlord was trying to learn from complaint outcomes.
However, in the Ombudsman’s opinion, the landlord’s offer of compensation does not quite reflect the likely inconvenience experienced by the resident, by the failings the landlord did itself identify. Therefore, on balance, the Ombudsman finds service failure in the landlord’s handling of the resident’s requests for information about the service charge.
The Ombudsman makes an order for compensation later, which has been calculated in line with the Ombudsman’s remedies guidance and the landlord’s own compensation policy.

The landlord’s response to the resident’s concerns about the accuracy of the actual service charge and requests for reimbursement.

It was incumbent on the landlord to produce an accurate statement of actual expenditure, from which it could calculate the service charge payable by the resident in a given year.
The landlord wrote to the resident on 23 February 2023, notifying him of the service charge payable from 1 April 2023. Accompanying this notice was a statement of the actual expenditure for the financial year ending March 2022. The resident emailed the landlord on 1 March 2023, formally disputing the actual service charge.
The landlord emailed a spreadsheet to the resident on 9 March 2023, showing a breakdown of the actual expenditure for the property, for the financial year ending March 2022. The resident responded the same day, querying the accuracy of some of the charges. He explained that he had highlighted the charges of concern on the landlord’s spreadsheet.
When the landlord issued the stage 1 complaint response on 25 May 2023, it provided a list of responses to the resident’s service charge queries. It was not possible to verify that the landlord responded to all of the resident’s service charge enquiries, as the Ombudsman has not seen a copy of the spreadsheet that the resident returned to landlord.
But it was evident from the stage 1 response, that the landlord had reviewed the resident’s service charges for the financial year ending March 2022 and its responses were comprehensive. It explained that it had identified some errors, which it appropriately committed to putting this right, by reducing the service charge. This is evidence that the landlord was treating the resident’s concerns with the attention they deserved
It is noted that the resident raised more service charge queries in the stage 2 complaint on 29 May 2023, which were investigated by the landlord and addressed in a similar way, within the stage 2 response. It was encouraging that the landlord did not identify any further errors.
The resident was particularly concerned during the landlord’s internal complaint process and in conversation with the Ombudsman, about repeated inaccuracies in the landlord’s statement of actual expenditure, across several years. The resident said this was frustrating and needed to be addressed.
It is noted from the previous complaints determined by the Ombudsman, that the resident had also complained about inaccurate service charges for the financial year ending March 2020 (case 202127738, refers). The landlord had to make adjustments to the resident’s service charge for the financial year ending and March 2021 (case 202127738, refers). This is a concern and may suggest there was a wider issue with the landlord’s internal processes.
The landlord endeavoured to reassure the resident at stage 2, that its service charge team were continuing to work with relevant business areas who managed its contracts and allocated its expenditure, so that costs sent to its residents were accurate. However, it did not address the resident’s suggestion that it carry out an independent review of service charges. It is noted that this was not the first time the resident has suggested this.
The landlord was not obliged to carry out an independent service charge review at the resident’s suggestion. But it would have been reasonable for the landlord to have explained its position on this, so the resident was able to consider his next steps, as may have been appropriate.
It was unclear from the evidence seen, if the resident might have exercised any of the rights described at paragraphs 16 of this report. But the landlord should have, as a minimum, included the contact details of the First Tier Tribunal within its complaint responses, so the resident could seek independent advice if he remained dissatisfied about the level or reasonableness of his service charge. The Ombudsman made a similar recommendation to the landlord in March 2022 (case 202105446, refers), about including details of the First Tier Tribunal within any complaint responses relating to service charges. The landlord should give some further consideration to this.
The Ombudsman has seen a copy of the “residents’ annual report” for the landlord, for the financial year ending March 2024. This report references a new regional scrutiny committee that was set up by the landlord to consider service charge errors, alongside its resident representatives. It is understood that this committee was formed in response to complaints that had been received in this area. This suggests that the landlord was proactively monitoring trends in complaints and had taken some decisive action for improvement. The Ombudsman was particularly encouraged that residents were involved in this scrutiny process.
Overall, the landlord investigated the resident’s concerns about inaccuracies in the costs associated with his service charge. It accepted that there were some errors on its actual statement of expenditure. It put this right by reducing the amount of service charge payable by the resident. It provided comprehensive responses to the resident’s queries about why charges had been applied. It explained that it was continuing to work with the service areas to ensure that costs sent to its residents were accurate. It was not obliged to carry out an independent review of service charges upon the resident’s request, although the landlord might have explained its position regarding this. It would have been helpful had the landlord provided the resident with the contact details of the First Tier Tribunal within its complaint responses.
Therefore, on balance, the Ombudsman finds no maladministration in the landlord’s response to the resident’s concerns about the accuracy of the actual service charge and requests for reimbursement. But several recommendations are made later for the landlord’s further consideration.

Determination

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was:
1. Service failure in the landlord’s handling of the resident’s requests for information about the service charge.
2. No maladministration in the landlord’s response to the resident’s concerns about the accuracy of the actual service charge and requests for reimbursement.

Orders and recommendations

Orders

The landlord must pay compensation of £250 directly to the resident, which is reduced to £200, if the landlord has already paid the compensation that it previously offered. This compensation has been determined in line with Ombudsman’s remedies guidance and the landlord’s compensation policy. This compensation is broken down as follows:
1. £100 compensation, which reflects the inconvenience caused to the resident by inadequacies in the landlord’s communications.
2. £150 compensation, which reflects the inconvenience caused to the resident, arising from delays in the landlord providing the information requested by the resident in connection with his service charges.
The landlord must provide evidence to the Ombudsman that it has complied with the above orders, within 4 weeks of the date of this decision.

Recommendations

The landlord should provide the resident and the Ombudsman with a summary of the action that it may have taken since issue of the stage 2 complaint, or may be planning to take, to minimise errors occurring when producing final statements of actual expenditure.
The landlord should consider including the details of the First Tier Tribunal in any complaint responses which relate to service charges.