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Stonewater Limited (202318054)

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REPORT

COMPLAINT 202318054

Stonewater Limited

16 June 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

  1. The complaint is about the landlord’s response to the resident’s:
    1. Service charge enquiries.
    2. Reports of communal repairs.
  2. We have also investigated the landlord’s complaint handling.

Background

  1. The resident was a leaseholder of the landlord, a housing association, until June 2024, when she passed away. The property is a 2-bedroom flat in a block, and is accommodation for people aged 55 and over.
  2. Due to the resident’s age, her son acted as her representative. For the purposes of this report, unless it is otherwise necessary to distinguish between them, all communications from both the resident and the representative are referred to as coming from the resident.
  3. On 22 July 2022 the resident made an enquiry about the service charge, following receipt of a recent service charge bill. This included questions about fire safety costs, central costs, energy costs and the reserve fund. Between October 2022 and January 2023, the landlord and resident exchanged emails regarding the service charge. As part of these, the resident raised queries about audit and payment arrangements.
  4. The resident made a complaint on 27 February 2023. She said the landlord had not adequately answered her questions about the service charge, despite a number of contacts over the last 5 months. In the landlord’s stage 1 response of 30 March 2023, it provided information about the reserve fund. It acknowledged the resident had not received the expected level of service regarding this issue, as she had to chase for answers to her queries. It apologised and offered £50 compensation for poor communication.
  5. On 6 April 2023 the resident escalated her complaint. She said the landlord had not provided detailed responses to her questions about the reserve fund, central costs, energy costs and payment arrangements. She also reported outstanding communal repairs to external lighting and the communal front door.
  6. The landlord sent its stage 2 response on 14 June 2023, which provided answers to the individual queries raised. It said it had raised the repairs with its surveyor and asked them to investigate and update the resident within 7 days. It acknowledged there had been further poor communication regarding the service charge and delays in its complaint handling. It apologised and offered £225 compensation (£150 for the communication failures, inclusive of the £50 offered at stage 1, and £75 for complaint handling).
  7. The resident asked us to investigate her complaint in August 2023. She said the landlord had not adequately answered her questions and delayed in responding. She reported the communal repairs were still outstanding and she had not received any updates from the landlord as promised. Following the resident’s death in June 2024, the executor of her estate has asked us to go ahead with this investigation.

Assessment and findings

Service charge enquiries

  1. The resident’s lease agreement confirmed the landlord could charge her for sums reasonably paid for the repair, maintenance, lighting and running of the building. It also said the landlord would establish and maintain a reserve fund to make provision for future substantial capital expenditure. It confirmed it could charge for sums it determined as reasonable to make provision for this.
  2. When the resident first made enquiries about the service charge in July 2022, it was over a month before the landlord responded, on 31 August 2022. While the landlord apologised for the delay, it would have been sensible for it to acknowledge the enquiry and provide an estimated deadline for when it would respond. This would have reassured the resident it was taking her concerns seriously.
  3. When the resident made a follow up enquiry on 22 September 2022, the landlord did not respond until nearly 4 months later, on 11 January 2023, despite the resident chasing on 18 October 2022. When the landlord did respond, it did not address all of the queries, which resulted in the resident chasing again, on 13 January 2023. When she did not receive a reply, she raised this as a formal complaint the following month.
  4. The resident raised queries about central costs and energy costs in July 2022. While the landlord addressed these in its response of 31 August 2022, the answers given were not specific or detailed. Despite the resident following up and raising these issues as part of the formal complaint submitted in February 2023, the landlord did not provide detailed answers to these queries until the stage 2 response, in June 2023. This meant the resident was left for 11 months with unanswered questions. This was frustrating for her and caused her to lose faith in the landlord.
  5. When the resident asked the landlord to explain the purpose of the reserve fund, it said this was for the cost of planned works or improvements to the scheme. This was reasonable and in line with the lease agreement. When there was an overspend in the service charge in 2021/22, the resident suggested this amount should be taken from the reserve fund. As the lease agreement specifies that the reserve fund is for future substantial capital expenditure, it would not be appropriate for the landlord to use this to cover an overspend in the budget. Therefore, it was reasonable the landlord did not use the reserve fund for this purpose.
  6. The resident raised concerns about the amount of money being collected, and pointed out there were tens of thousands of pounds in the fund. She said the residents of the building were pensioners on fixed incomes and the landlord should be mindful of this when increasing the service charge, so as to avoid financial hardship. The landlord advised there was no cap on the amount it could collect for the reserve fund and the collections had been made in line with the lease agreement.
  7. While this was correct, it would have been helpful if the landlord gave some further explanation about why it needed to collect such large sums, to reassure the resident this was not being unnecessarily collected. As the reserve fund can be for large scale planned or improvement works, this could include expensive works, such as replacement of the roof. This type of work could also be needed unexpectedly due to damage. In this circumstance, the landlord would need tens of thousands of pounds to cover this cost. Therefore, it is reasonable that there may be large sums in the fund at times, to ensure it has enough money to cover this type of work, if needed.
  8. The landlord confirmed the purpose of the reserve fund was to collect money ahead of large scale works to lessen the burden on leaseholders in the year they took place. This is an accurate explanation and it was sensible for the landlord to explain this to the resident. It also said if residents were struggling to pay the charges, they could contact it to arrange a payment plan over a longer period. This was appropriate and showed it wanted to help if residents were struggling.
  9. The resident asked what happened when someone sold their property, as they may have contributed to the fund, but not benefited from the money being spent while they had lived there. The landlord replied that if a resident sold their property, any money contributed to the reserve fund would not be refunded. It said the balance of the reserve fund and lease obligations were disclosed to potential buyers, and a well-managed reserve fund would enhance the value of the property, as prospective buyers would see this as an advantage over leasehold blocks without a reserve fund.
  10. It acknowledged this may seem unfair to anyone who had not seen the direct benefit of the fund during their term of ownership but this was in line with the lease agreement and common practice. While an understandable concern for the resident, the landlord’s response to this query was reasonable and in line with the lease agreement.
  11. The resident has said she wanted the landlord to cease collection of the fund and/or refund residents some of the money collected. For reasons set out above, it is reasonable that the landlord continued collecting money into the fund, even when there was a large amount built up. In addition, there is no requirement for the landlord to refund residents, or cease collection under the terms of the lease. Therefore, it is reasonable that the landlord did not stop collecting money and did not refund any moneys already collected.
  12. The resident asked the landlord if the fund was accruing interest, the landlord confirmed it was. We have seen the amount of interest accrued is set out in the annual reserve fund statements provided to residents. This is a reasonable way for the landlord to share this information.
  13. As part of its stage 1 response, the landlord said it had shared details of the reserve fund with the delivery manager for the block to discuss with residents. The resident asked when and how these discussions happened. The landlord said it had shared information about the reserve fund so the member of staff could answer any questions, if approached by residents, but that no scheduled meetings had taken place.
  14. It was sensible of the landlord to share details of the service charge, including the reserve fund, with the delivery manger so they could respond to any queries as the first point of contact. While the resident had specific queries about the service charge, not all residents would have. Therefore, it was reasonable that residents needed to approach the landlord with their queries, rather than the landlord arranging to discuss this matter with all residents, when some may not have wished to do so. We acknowledge the landlord’s wording of the stage 1 letter was not clear and this could have been improved to avoid confusion for the resident. 
  15. The resident asked the landlord to explain the reason for a large increase in communal electricity charges. As part of the stage 2 response it said there had been a substantial increase in the cost of energy in the past 2 years, which meant electricity and gas costs had increased by over 400%. While a reasonable explanation, this was not specifically tailored to the resident, as it made reference to gas costs, which the resident had not enquired about. Her enquiry was about communal electricity costs only and so the landlord should have ensured its response was specific to the enquiry. Its failure to do this meant the resident was left concerned that she was being incorrectly charged for gas costs, when there was no communal gas supply.
  16. As part of the complaint, the resident asked for copies of the electricity bills to evidence the charges. The landlord said its energy was provided via a commercial communal supply and it was not able to provide a copy of the contract due to data protection reasons. While understandable that it could not provide a copy of the contract, this was not what the resident had asked to see. She had asked to see the specific bills for her block. This was another example of the landlord not providing a specific response to the resident’s individual query. This caused her to lose trust in the landlord.
  17. In October 2022 the resident raised concerns about a change in payment arrangements for the service charges. She said she had received a notification of the charges in June 2022, which spread payments over 10 months. She then received a statement in September 2022, which spread payments over 12 months. She said this was not made clear and meant the payment amount appeared to have reduced, but this was only due to the change in the payment arrangements.
  18. The landlord acknowledged this change lead to confusion and a misunderstanding of the total cost. It said its decision to spread payments over a longer period was made to make costs more affordable for residents. The landlord’s explanation for why it changed the payment arrangements was reasonable. However, as it said, it should have been upfront with the resident about this and explained the change clearly so she was aware of what was happening and why. Its failure to do this made her feel it was not being transparent with her.
  19. The resident told the landlord in October 2022 that she had received 2 different direct debit notifications, but no explanation was given as to why, which had caused confusion. The landlord explained why this happened in January 2023, but it did not address the impact of this until the stage 2 response, 5 months later. At that point it acknowledged this caused confusion and apologised. It explained these were sent by an outside company and, in future, if more than one change was made, it would write to her confirming this and explain why. This was sensible, particularly considering the resident’s age and to ensure she was not left confused.
  20. The resident asked about audit arrangements for the service charges. In its stage 2 response, the landlord said it completed auditing each year for all business areas, including service charges. It confirmed this was conducted independently. It said if there was a specific area she was concerned about and would like reviewed, she could let it know and it could check this. This was a reasonable response and the offer to look into further concerns suggested the landlord was taking the matter seriously and wanted to address any outstanding issues.
  21. Despite making this offer, when the resident did raise further queries on 23 June 2023, in reply to the stage 2 response, there is no record the landlord responded. This left the resident feeling ignored and let down that it had not looked into her concerns, as it said it would. This ultimately resulted in the resident escalating the complaint to us and, had the landlord done more to respond, this may have been avoided.
  22. In September 2022 and June 2023 the resident asked the landlord to arrange personal contact via video call and face to face meeting, to discuss the service charge concerns. Considering the nature of the enquiries and the number of concerns raised, this was a sensible suggestion to allow the parties to properly discuss and resolve the issues. There is no record the landlord responded to these requests or made any attempts to arrange personal contact with the resident. This was frustrating for her as she wanted answers to her concerns, which were not forthcoming.
  23. The landlord acknowledged there were communication failures in its handling of this matter. It apologised and offered £150 compensation. It is positive the landlord independently identified failures in its handling of this issue and offered redress to the resident. This shows it was prepared to take accountability for its actions and wanted to put things right.
  24. However, in consultation with our remedies guidance, the redress offered is not quite proportionate to the failings identified by our investigation. This is due to the length of the delay (11 months) in the landlord providing detailed responses to some of the queries, its failure to provide specific responses to some queries and the time and trouble incurred by the resident in pursuing this matter. Balancing the landlord’s failures with the steps it has already taken to put things right; a finding of service failure is appropriate. We have made an order for the landlord to pay the resident’s estate £250 compensation, inclusive of the £150 already offered if not done so.

Communal repairs

  1. The landlord is responsible for communal repairs in line with the resident’s lease. This says it will keep common parts in a proper state of repair and condition.
  2. The resident first complained about the communal repairs within her stage 2 escalation request. As these were not raised within the stage 1 complaint, the landlord was not obliged to investigate or address them as part of the stage 2; and could have raised this as a new stage 1 complaint. The landlord chose not to do this and did address the communal repairs within the stage 2 response, albeit briefly. Therefore, we are satisfied the landlord had the opportunity to assess its handling of these issues as part of its internal complaints process and we have done the same.
  3. In the stage 2 response the landlord said it would update the resident within 7 days about the outstanding communal repairs. Despite this, there is no evidence it did. The resident chased an update on 23 June 2023 but, again, there is no evidence the landlord provided any update. This amounts to maladministration and made the resident feel the landlord was not taking the repairs seriously.
  4. When the resident escalated her complaint to us on 17 August 2023 she said the communal repairs were still outstanding and no update had been provided. This was more than 4 months after she had raised them as part of the stage 2 complaint. This delay and lack of contact amounts to maladministration and was disappointing for the resident.
  5. The landlord has provided evidence that the communal front door was repaired on 7 May 2024. When the resident raised this as part of her escalation request in April 2023, she confirmed the door was secure. Therefore, it was reasonable the landlord categorised this as a routine repair, which its repairs policy says it will complete within 28 days. However, the landlord did not complete the repair until 13 months after the escalation request, which was significantly over the committed response time for routine repairs. This amounts to maladministration.
  6. The landlord has not provided any records to show when, or if, the communal lighting repair was completed. Therefore, we are unable to make an assessment of this timescale. As we have seen no evidence that this repair was completed, we have made an order for the landlord to inspect the block to confirm that all communal lighting is working. If not, the landlord to order a repair to fix this, in line with the relevant timescale set out in its repairs policy.
  7. Overall, there was maladministration in the landlord’s response to the resident’s reports of communal repairs. We have ordered the landlord to pay the resident’s estate £200 compensation. This is reflective of a failure which adversely affected the resident, but is on the lower end of the scale. This is because the repairs were communal and so the impact of these being delayed was not as significant as had they been repairs to the resident’s individual property.

Complaint handling

  1. The landlord acknowledged the stage 1 complaint on 15 March 2023. This was 12 working days after the complaint was submitted, which was over the 5 working day committed timescale, set out in its complaints policy.
  2. The landlord’s complaints policy said it would respond to stage 1 complaints within 10 working days. In this case, it sent the stage 1 response 23 working days after the complaint was raised. This was more than double the committed timescale. Despite this, the landlord did not acknowledge this failure or provide any redress as part of its formal response.
  3. When the resident asked to escalate the complaint on 6 April 2023, the landlord responded 7 working days later, on 19 April 2023, and said it had done so. The landlord’s complaints policy said it would usually respond to escalation requests within 2 working days. It did not do that in this case or explain why it had been unable to do so.
  4. Despite the landlord confirming the complaint had been escalated, it did not formally acknowledge the stage 2 complaint until 31 May 2023, and only after the resident chased this on 22 May 2023. This suggests the landlord had not escalated the complaint, as it said it had on 19 April 2023. By this time, it was 34 working days since the escalation request was submitted.
  5. The landlord’s complaints policy said it would usually reply to stage 2 complaints within 10 working days of the complaint being escalated. In this case, the landlord sent the response 10 working days after it formally acknowledged the stage 2 complaint, which was in line with the target timescale.
  6. However, the response was sent 37 working days after the landlord told the resident it had escalated the complaint, on 19 April 2023. Whether it did escalate the complaint on this date or not, it was reasonable that the resident believed it had and expected the response to be provided within 10 working days of that day. Therefore, the landlord did not respond in line with its committed timescale.
  7. Overall, the complaint journey was delayed by 45 working days, which equates to around 6 weeks. This was frustrating for the resident and caused her to lose faith in the landlord’s complaints process.
  8. The landlord acknowledged there was a delay in it escalating the complaint to stage 2. It apologised and offered £75 compensation, which was reasonable. However, there were also delays at stage 1, which contributed to the overall delay in the complaint journey. The landlord failed to acknowledge these or offer redress. Therefore, in consultation with our remedies guidance, the redress offered is not quite proportionate to the failings identified by our investigation.
  9. Balancing the landlord’s failures with the steps it has already taken to put things right; a finding of service failure is appropriate. We have made an order for the landlord to pay the resident’s estate £125 compensation, inclusive of the £75 already offered, if not done so.

Determination

  1. In accordance with paragraph 52 of the Scheme, there was:
    1. Service failure in the landlord’s response to the resident’s:
      1. Service charge enquiries.
      2. Formal complaint
    2. Maladministration in the landlord’s response to the resident’s reports of communal repairs.

Order

  1. Within 4 weeks the landlord is ordered to provide evidence that it has:
    1. Paid the resident’s estate £575 compensation, made up of:
      1. £250 for its response to her service charge enquiries (inclusive of the £150 already offered, if not done so).
      2. £200 for its response to her reports of communal repairs.
      3. £125 for its complaint handling (inclusive of the £75 already offered, if not done so).
    2. Inspected the block to confirm that all communal lighting is working. If not, order a repair to fix this, in line with the relevant timescale set out in its repairs policy.