Metropolitan Thames Valley Housing (MTV) (202303298)

REPORT

COMPLAINT 202303298

Metropolitan Thames Valley Housing (MTV)

23 April 2024

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 a refund of credit in respect of service charges on his former property.
2. The landlord’s complaint handling.

Background

The resident was the leaseholder of a ground floor flat within the landlord’s estate. The resident sold the flat on 3 August 2022.
Under the terms of the lease, the leaseholder had an obligation to contribute by way of service charges to the costs reasonably incurred by the landlord in connection with the repair, management, maintenance and provision of services of the building in which the flat was situated, the estate and common parts. The detailed provisions are set out in clause 7 of the lease. This explains that the service charge is paid by the leaseholder by equal monthly payments in advance on the basis of an estimated provision. The actual amount incurred by the landlord is determined as soon as practicable at the end of each account year, being 31 March.
The resident’s complaint concerns his claim to a refund of service charges in respect of the property. There are two aspects to the resident’s claim.
The first is in respect of a credit arising on the resident’s service charge account of which he was advised by the landlord at the time of the sale of his flat. On 22 July 2022, prior to completion, the landlord provided to the resident’s solicitors, and copied to the resident, a statement of account which showed that the resident was in credit of £117.78. In the covering email, the landlord explained that it could not transfer the credit to the new owner on completion and referred to its refund process under which funds in credit on the account of the seller would be refunded to them.
After completion of the sale on 3 August 2022, the resident complied with the landlord’s refund process and became concerned when the landlord did not make the refund in accordance with his requests.
The second aspect of the resident’s claim to a refund concerns a credit arising on the resident’s service charge account following the determination of the service charges for the year ending 31 March 2022. On 29 September 2022 the resident received a copy of the final service charge financial statements for the year ending 31 March 2022. This showed that the actual expenditure for the year amounted to less than that estimated and so resulted in a credit of £137.80. The landlord’s covering letter addressed to the resident explained that this amount (referred to as a balancing charge) would be applied to the resident’s estimated charges from April 2023 to March 2024 as a brought forward balance over 12 monthly payments.
It is understood that the resident requested a refund in respect of this credit in October 2022 but the landlord did not respond.
On 22 November 2022 the resident made a stage 1 complaint to the landlord. He complained that the landlord had ignored his request to refund the £117.78 credit on his service charge account. He also complained that the audited accounts for the year ending March 2022 showed a refund of £137.80 was owed. He had sent an email to the service charge team to which he had not received a response. The resident sought payment of the total sum of £255.58. He complained that the landlord made it difficult to obtain refunds which were due and that trying to contact the landlord by phone was near impossible and emails took weeks, if not over a month, to respond to which was not acceptable.
The landlord provided a stage 1 response to the resident’s complaint on 19 December 2022. The landlord apologised for the delay in responding and upheld the resident’s complaint:
1. It explained that the resident’s query related to an account adjustment which it aimed to action by 23 December 2022. The landlord stated that the delay in adjusting the account stemmed from a backlog and measures had been put in place to reduce it. When the account had been adjusted to the new owner’s name, the landlord would be in a position to refund any credit left on the account.
2. A member of the relevant team had been asked to prioritise and expedite the account adjustment. Following that, the landlord would raise a refund request for any amount duly owed to the resident and a payment link would be sent to him. The landlord did not imagine that the resident should be waiting any longer than 14 working days to receive the refund link.
3. The landlord acknowledged service failures had led to the backlog of work to adjust the account and offered an apology and £150 compensation. This was broken down as £10 for poor complaint handling, £70 failure of service and £70 in respect of time and trouble.
On 21 December 2022 the resident emailed the landlord querying the amount the landlord would be refunding as this was unclear from the stage 1 response. The resident chased several times for a response to his email by telephone between 9 and 19 January 2023 and email on 6 January 2023. The resident did not receive a response to his communications nor did he receive the refund link which the landlord’s stage 1 response had led him to expect within 14 working days.
On 19 January 2023 the resident escalated his complaint because the actions which the landlord had agreed at stage 1 had not been completed and the landlord had not responded to his communications.
The landlord acknowledged the resident’s request for escalation on 19 January 2023. In a subsequent email to the resident on 16 February 2023, it acknowledged that it had failed to escalate the complaint to stage 2 due to an oversight and stated that it would consider compensation for the delay in escalation. The resident’s complaint was escalated on 16 February 2023.
The landlord provided a stage 2 response on 11 March 2023. The landlord partially upheld the resident’s complaint:
1. On the substantive issue of the service charge refund claimed by the resident, the landlord explained that there were no outstanding payments due to him.
2. The resident’s service charge account had been in a rolling credit of £117.78. If he had paid the service charge for the month of August 2022, his account would have remained in credit by the same amount. As the instalment of £132.52 for August was not made, his £117.78 credit was absorbed, leaving £14.74 left for the resident to pay.
3. The landlord enclosed and referred to an extract of the Home Ownership Management Pack (“the Pack”) which had been provided to the resident’s solicitor at the time of the sale of the flat. The extract, entitled Sale Information and Fees, confirmed that the resident was liable for the full month of service charges even if the sale completed during the month. It was expected that both parties’ solicitors would calculate and agree the apportionments between each other as part of the conveyance.
4. The landlord acknowledged that when the resident contacted it, he may have been informed of the credit balance on the account at the time.
5. The resident’s solicitors had advised that £14.74 had been paid which the landlord was trying to trace. If this had been paid the resident’s account would have a zero balance. If not, then he would have a deficit of £14.74 on his account.
6. The credit sum of £137.80 shown on the final 2021/22 service charge accounts reconciliation would normally be issued to the leaseholder at the time i.e. the leaseholder of the property as of 30 September 2022. This was the new incoming leaseholder as the sale completed on 3 August 2022. The resident was not entitled to this balancing charge credit as a refund. The landlord referred again to the extract from the Pack which advised his solicitor to hold a retention in the event of a credit from the reconciled accounts. The landlord apologised if this was not clarified in the stage 1 complaint response.
7. The landlord had investigated the way the resident’s concerns had been managed at stage 1 as part of the stage 2 review. The landlord did not uphold this part of the complaint. It stated that it was reassured that the complaint coordinator had contacted the relevant stakeholders responsible for resolving the resident’s concerns and that this evidenced that it had followed procedure and did what was required to provide him with the appropriate outcome at the time. The landlord was satisfied with the way that the complaint was managed and did not feel that there was any poor complaint handling. Although the resident was unhappy with the outcome, the landlord did not identify any actual failure of service throughout this part of the stage 1 process.
8. The landlord partially upheld the resident’s complaint escalation because he had tried to contact it a number of times prior to escalating his complaint. The landlord apologised that he had not been able to make contact and that he had got the incorrect information at stage 1.
9. The landlord had reviewed the redress offered at stage 1 of the complaints process and stated that the amount of £150 still stood. This was broken down as at stage 1.
The resident sought to accept the compensation offered in the stage 2 response. It is noted from the evidence provided to this Service that an automated response from the landlord’s website dated 26 March 2023 confirmed to the resident that it had received his acceptance of compensation and would be in touch with regard to payment by 31 March 2023. However, it is understood that the resident did not receive the payment.
On 25 April 2023 the resident referred his complaint to this Service. Among other things, the resident felt it was unacceptable for the stage 2 response to dismiss his original complaint on the basis of a different document to the one sent to his solicitor. The resident had been awarded £150 for poor service at stage 1 but felt that with further delays during stage 2 and the landlord’s failure to meet procedure this should be increased.
The landlord has made mention of an increased compensation offer after the complaints process but this Service has not been provided with evidence that this has been paid to the resident.

Assessment and findings

The landlord’s handling of the resident’s request for a refund of credit in respect of service charges on his former property

As noted above, as part of the transaction for the sale of the resident’s flat, the landlord provided information to the resident (and/or his solicitors) in respect of the service charge account.
On 8 March 2022 the landlord provided the resident’s solicitors with the Pack, consisting of various items of information relating to the property, including in relation to the service charges.
The section of the Pack entitled Sale Information and Fees set out the arrangements in respect of service charges upon sale of a property. It explained:
1. The seller must clear all arrears for the month of completion.
2. The landlord would charge the new owner from the first day following the month of completion.
3. The landlord would not apportion service charges.
4. Apportionments for the month of completion should be calculated by the acting solicitors and directly dealt with between them and reflected in the completion statement.
5. The landlord advised that a suitable retention amount be agreed between seller and purchaser. It was unable to advise on specific amounts relating to retention. Accounts for prior financial years were provided with the Pack and were referred to by the landlord for confirmation of previous expenditure and end of year deficits/credits.
6. The landlord provided its contact details if an up to date statement of account was required prior to completion and advised it required 2 days’ notice to provide a response.
On 19 July 2022 the resident’s solicitors emailed the landlord stating that they now had a date for completion (although the completion date was not given) and asked it to provide an up to date statement to enable them to work out any relevant apportionments.
The landlord responded on 22 July 2022 in an email copied to the resident. The email attached a statement of account for the property as of 22 July 2022 which showed that the resident was in credit of £117.78. The front page of the statement recorded that it only included payments received and processed up to the statement date. The entries on the statement itself showed that on 7 July 2022 the resident had made the monthly service charge payment due for July and that the credit of £117.78 reflected the balance after credit for that payment had been given.
In its covering email, the landlord noted that the statement of account showed that the resident was in credit of £117.78. The email referred to the landlord’s Property Sales Process document which it attached to the email and which outlined its refunds process. The landlord stated that due to system administrative implications, it was unable to agree to transfer the credit to the new owner on completion and therefore the resident must not make any such arrangements when agreeing completion. The refunds process as outlined in Stage 9 of the landlord’s Property Sales Document stated that if the seller’s service account was in credit the funds would be refunded to the former owner within 15 working days upon receiving bank details and ID.
The landlord’s email was open ended in its terms. Whilst the information provided by the landlord was accurate and relevant for a completion date occurring in July, that position may have changed if completion occurred in a later month. Under the circumstances, it would have been helpful for the landlord to caveat its email accordingly and draw attention to the information it had previously provided to the resident’s solicitor on 8 March 2022 as to the arrangements for payment of service charges in the month of completion.
As matters turned out, completion did not take place until 3 August 2022.The resident did not make a payment in respect of the service charge for that month. As a result, the resident’s service charge was put in arrears of £14.74 for the month of completion and so no credit in favour of the resident arose to be refunded.
However, based on the landlord’s email of 22 July 2022, the resident remained under the impression that he was in credit of £117.78 and pursued a refund of this sum following completion:
1. In email exchanges between the resident and the landlord between 9 and 17 August 2022, the resident sought a refund. The landlord advised that once the notice of transfer had been received and the landlord had amended the leaseholder account, the credit balance would be refunded to him as former owner within 15 working days upon receiving bank details and ID. The resident accordingly supplied his bank details and ID to the landlord on 17 August 2022.
2. On 6 September 2022 the resident chased the landlord for payment of the refund. He also complained that he was being chased for August and September service charges despite ceasing to be the legal owner from 3 August 2022.
3. On 26 September 2022 the landlord responded and explained that in order to amend its system with the new owner’s information, it required a notice of transfer from the buyer’s solicitors. Until it was received, it was unable to remove the resident’s name from the system as the resident was still registered as the legal proprietor with HM Land Registry. The landlord offered to write directly to the buyer’s solicitors to request the notice. The resident stated in a reply email that he had been advised that the notice of transfer had been sent at the beginning of August and provided the landlord with the contact email address for the buyer’s solicitor.
It is convenient to note here that the buyer’s solicitor had served the notice of transfer on the landlord by email on 25 August 2022 and also by post on 9 September 2022 (which the landlord received on 11 September 2022). On 29 September 2022 the landlord wrote to the buyer’s solicitor, confirming receipt of the notice and advising that as of 3 August 2022 the account was in arrears of £14.74 and that it was unable to receipt the notice until the arrears were cleared.
In light of this, it would be reasonable to expect the landlord to convey to the resident in a timely manner that his account was in arrears at the date of completion and that as a consequence he was not entitled to the refund he was claiming. It seems that the landlord was unaware of, or in any event did not address, the state of the resident’s service charge account at the time of the email exchanges referred to in paragraph 26 above. It is unclear from the evidence provided by the landlord what steps it took to ascertain it. As a result, the resident remained in the dark that he was not entitled to the refund which he had been led to expect from the landlord’s email of 22 July 2022.
On 29 September 2022 the resident received from the landlord a copy of the final service charge financial statements for the year ending 31 March 2022 and associated demand. The accounts showed that the actual expenditure for the year amounted to less than that estimated and so resulted in a credit of £137.80. The landlord’s covering letter in standard form explained that this amount (referred to as a balancing charge) would be applied to the resident’s estimated charges from April 2023 to March 2024 as a brought forward balance over 12 monthly payments.
The accounts and covering letter were addressed to the resident albeit the property to which it related had by this time been sold. According to the resident, in October 2022, he requested a refund in respect of this credit using the contact details provided in the landlord’s covering letter but he received no response.
As set out in the information in the landlord’s Pack, and in the landlord’s Property Sales Process document, any end of year credit arising in favour of the resident should have been accounted for by a suitable retention amount being agreed between solicitors for the seller and the buyer.
Again, it would have been reasonable for the landlord to respond to the resident’s query by explaining this and that he was not entitled to any credit arising by way of a balancing charge. However, the landlord did not do so in response to the resident’s query.
On 22 November 2022 the resident pursued his claim for a refund of service charges by way of a stage 1 complaint to the landlord seeking payment of £255.58 i.e. the combined amounts of £117.78 and £137.80 which he understood from information provided by the landlord was due to him.
The landlord should have explained in its stage 1 response, if not before, that the resident was not entitled to a refund of either £117.78 or £137.80. However, the landlord’s stage 1 response did not address the substantive issue of whether the resident was entitled to a refund or not. Instead, it explained that the resident’s query related to an account adjustment which it aimed to action by the 23 December 2022; that the delay in the adjustment arose from a backlog which measures had been put in place to reduce; and that when the account had been adjusted to the new owner’s name, the landlord would be in a position to refund any credit left on the account which would be payable via a refund link which the resident could expect to receive within14 days. The landlord’s response failed to explain the actual position in relation to the service charges on the resident’s account and did nothing to dispel the impression that a refund would be forthcoming.
It was not until the landlord’s stage 2 response of 11 March 2023 that it informed the resident that there were no outstanding payments due to him and setting out the reasons why, in the way outlined in paragraph 14.
In short, the landlord failed, before and during the complaints process, to respond appropriately to the resident’s claim to a refund for the service charge balance he believed was owed to him. The landlord’s failure to do so until the stage 2 response of 11 March 2023 caused detriment to the resident in that over a period of 6 months he had expectations that he was entitled to a refund and concerns that he was not being refunded money which he was due. The resident was likely caused distress, inconvenience and time and trouble in pursuing the matter with the landlord.
There was maladministration by the landlord in this regard. Given the extended period of time involved, the landlord’s compensation offer of £70 for service failure and £70 for the resident’s time and trouble did not offer sufficient redress. The Ombudsman would not be able to make a finding of reasonable redress for any later compensation award that was not made through the landlord’s complaints process. Under the circumstances, a compensation award of £400 would be appropriate.

The landlord’s complaint handling

The landlord operates a two-stage complaint process. At stage 1, the landlord will investigate and provide a resolution within 10 working days. If a resident is dissatisfied with the stage 1 response, the complaint is escalated to stage 2. At stage 2, the landlord will investigate and provide a resolution within 20 working days. If the landlord is unable to respond within the given timeframes, it will keep the resident informed and agree new response times.
The resident logged a formal complaint via the landlord’s website on 22 November 2022. A stage 1 response was provided to the resident on 19 December 2022, a period of 9 working days outside the required timescales. No extended response time had been agreed. It is noted that the landlord acknowledged and apologised for the delay in its stage 1 response, which was appropriate.
At stage 1, the landlord upheld the resident’s complaint and offered redress on the basis that service failures had led to a backlog of work to adjust the accounts. Part of the resolution offered by the landlord was an undertaking to prioritise and expedite the account adjustment and provide a payment link for any amount duly owed to the respondent.
In accordance with the Housing Ombudsman’s Complaint Handling Code, the remedy to the complaint as proposed by the landlord should have been followed through to its completion. It would have been reasonable to expect that the landlord would have taken steps to monitor the position and update the resident regarding his claim for a refund, being the substance of his complaint. However, no evidence has been produced to this Service to show that this was done.
Further, the resident’s own efforts to obtain clarity on the stage 1 response by his email of 21 December 2022 and by his several attempts to contact the landlord in January 2023 were not responded to. This meant that the outcome of the resident’s stage 1 complaint and status of his claim for a refund remained unclear. This led to the resident’s request for escalation and prolonged the resolution of the complaint.
The resident’s request for escalation was made on 19 January 2023. Under its policy timescales, the landlord should have provided a stage 2 response by 16 February 2023. On that day, the landlord notified the resident that it had failed to escalate the complaint due to an oversight and would consider compensation for the delay. This was an appropriate acknowledgement by the landlord of the delay for which redress would have been appropriate. However, the stage 2 response, when issued on 11 March 2023, did not mention the delay in escalation nor indicate that consideration had been given by the landlord to an award of compensation for it, which it should have addressed.
The stage 2 response correctly addressed the substance of the resident’s claim to a refund, as noted above. It also appropriately acknowledged that the resident had been provided with the incorrect information at stage 1 and his difficulties in making contact with the landlord. However, the landlord concluded that there had been no failure in complaint handling at stage 1. This was inconsistent with its finding that the resident had been given the wrong information at stage 1 and a contradiction in its response which was likely to cause confusion.
The landlord made an offer of compensation of £150 in its stage 1 response which was repeated in its stage 2 response. The resident sought to accept the compensation offered and received an automated receipt of the acceptance on 26 March 2023. For reasons which are unclear, there appears to have been a failure of process in that the payment request was rejected.
There was maladministration by the landlord in its handling of the resident’s complaint in the above respects. The landlord’s compensation award of £10 for poor complaint handling did not offer sufficient redress given the extent of the landlord’s failings and likely impact on the resident. Under the circumstances, an award of compensation of £300 would be appropriate.

Determination

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in its handling of the resident’s requests for a refund of credit in respect of service charges on his former property.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in respect of its complaint handling.

Orders

Within 4 weeks of this report, the landlord is ordered to write to the resident to apologise for the service failures identified in this report.
Within 4 weeks of this report, the landlord is ordered to pay £700 to the resident made up of:
1. £400 for the distress, inconvenience and time and trouble caused to him by its failings in handling his requests for a service charge refund.
2. £300 for the failings identified in its complaint handling.

The above sums are inclusive of the £150 awarded through the landlord’s complaints process, if this has not already been paid.

The landlord should contact this Service within 4 weeks of the date of this determination to evidence its compliance with the above orders.