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London & Quadrant Housing Trust (L&Q) (202311723)

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REPORT

COMPLAINT 202311723

London & Quadrant Housing Trust (L&Q)

27 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 leaseholder 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 handling of the leaseholder’s:
    1. Reports of errors made on the service charge account.
    2. Concerns about the level of the management fee charged.

Background

  1. The complainant is the leaseholder of 4 flats, within 3 blocks in the same estate. The housing association landlord is the freeholder of all the blocks. The leaseholder sub-lets the properties.
  2. The landlord sent the leaseholder a statement showing the estimated service charges for the financial year 2023 to 2024 on 6 February 2023. The leaseholder queried the increase in charges on 10 February 2023. The landlord responded explaining how it calculated estimated service charges. It reminded the leaseholder that the charges are only estimates and it would issue the final charges at the end of the year. On 16 February 2023 the landlord sent the leaseholder a breakdown of the expenditure for the flat which had the highest increase. The leaseholder responded with some questions on 23 February 2023.
  3. The landlord did not respond to the leaseholder’s questions and the leaseholder complained to the landlord on 11 April 2023. She said the landlord hadn’t responded fully to her queries raised in February 2023 and she felt she had been overcharged for some services.
  4. The landlord responded at stage 1 on 17 May 2023. It apologised for the delayed response and explained it was still waiting on the relevant information regarding the fire protection costs. It provided a commentary against the other items raised by the leaseholder. The leaseholder remained dissatisfied and she told the landlord it had not answered all her queries. She also wanted compensation as she thought the landlord had overcharged her for the communal gate within one of the flat’s service charge accounts since 2005.
  5. The landlord sent the leaseholder its stage 2 response on 16 August 2023. It confirmed that the costs for communal cleaning, mobile caretaking, fire protection maintenance and servicing, and door entry system maintenance and servicing were correct. In terms of her request for a backdated refund to 2005, it clarified that it could only consider 6 years’ worth of accounts due to the limitation act. It had reviewed the last 6 years’ accounts for the communal gate maintenance and servicing and confirmed it had incorrectly charged for this service in 2019 to 2020. However, due to an undercharge in 2021 to 2022, no refunds were due. The landlord also clarified how it calculated the management fee. It offered £300 compensation comprising:
    1. £100 for distress and inconvenience.
    2. £100 for the delay in complaint handling.
    3. £50 for the error in the charging of the communal gates maintenance.
    4. £50 for providing incorrect information in the past about mobile caretaking.
  6. The leaseholder was unhappy with the landlord’s response and referred the matter to this Service in September 2023. She wanted reassurance that all the errors had been corrected and she wanted to see further evidence of the costs incurred resulting in the service charges. She also wanted her management fee for one of the properties reduced in line with the other 3 properties.

Jurisdiction

  1. What the Ombudsman can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to this Service, the Ombudsman must consider all the circumstances of the case, as there are sometimes reasons why a complaint will not be investigated.
  2. Paragraph 42.d of the Scheme says that “The Ombudsman may not consider complaints which, in the Ombudsman’s opinion… concern the level of rent or service charge or the amount of the rent or service charge increase.”
  3. The leaseholder has raised concerns about the level of management fee charged within the service charges and she has requested a partial refund of this fee. This Service does not consider complaints about the level or reasonableness of rent or service charges.  The First Tier Tribunal (Property Chamber) is the appropriate body to consider the level of rent and service charges as they can make a binding decision.
  4. This part of the complaint is therefore outside the Ombudsman’s jurisdiction to consider in accordance with paragraph 42.d of the Scheme. However, we have investigated the remaining complaint about the landlord’s handling of the leaseholder’s reports of errors made on the service charge account.

Assessment and findings

Scope of the investigation

  1. The leaseholder raised a new complaint to the landlord on 2 October 2023. This was about poor quality communal repairs and requesting further information on the charges applied to 2 previous years’ service charge accounts. The landlord responded to the new complaint at stage 1 in April 2024 and the leaseholder has informed us that she has since received a stage 2 response. For the avoidance of doubt, this investigation has only assessed the matters raised in the leaseholder’s complaint of 11 April 2023 and that were the subject of the landlord’s final response of 16 August 2023. If the leaseholder remains dissatisfied with the landlord’s response to her complaint of October 2023, or any further complaints, she may refer the matter to this Service for investigation.

Reports of errors made on the service charge account.

  1. The leaseholder owns 4 flats in 3 blocks within the same estate. She noticed some variances in the estimated charges applied across the 3 blocks for the year 2023 to 2024. In her complaint the leaseholder provided the landlord with a list of the areas of the service charge account she was querying. These were as follows:
    1. What the difference between servicing and maintenance was in terms of charges.
    2. There were no charges for communal electricity consumption in 1 of the blocks.
    3. There were no charges for light bulb replacements in 2 of the blocks.
    4. There was a higher charge for communal cleaning in 1 of the blocks when the same service was provided across all 3 blocks.
    5. There was a higher charge for fire protection equipment maintenance in 1 of the blocks.
    6. There was a higher charge for fire protection equipment servicing in 1 of the blocks.
    7. Only 1 block had been charged for communal TV equipment maintenance and servicing.
    8. Only 1 block had been charged for communal gate maintenance and servicing when all 3 blocks benefitted from use of the gate and the car park behind it.
    9. The charges for emergency lighting maintenance were the same across all 3 blocks which she didn’t understand if this related to breakdowns or maintenance call outs.
    10. The management fee was higher for 1 of the flats.
  2. The landlord responded on 17 May 2023 and provided some information against each of the points. However it failed to answer all the leaseholder’s questions. In its stage 2 response of 16 August 2023 it apologised for this and provided a response to the remaining points. The response to each point, provided in either the stage 1 or 2 response, were as follows:
    1. Servicing and maintenance was separated across all charges for transparency. The landlord confirmed servicing charges were for scheduled regular servicing such as emergency light flick tests. It explained maintenance charges were for remedial works, usually found during scheduled servicing. The cost of maintenance therefore varied as it reflected non-planned work.
    2. The estimated costs of communal electricity had been based on previous expenditure. The landlord had discovered it had not been paying invoices for 1 of the blocks. It confirmed it had corrected the error and future estimates and final statements will reflect this.
    3. Charges for communal light bulbs are based on a review of the previous 3 years hence why there may have been no charge if none had been replaced. It confirmed that if it was called out to any replacements then these would be reflected in the final service charge account and factored into future estimates.
    4. The charges for communal cleaning in 1 block were only split between 7 flats as 2 of the flats had their own external doors and did not require access to the communal area. This was why the cost in this block was higher.
    5. It had spent more on fire equipment maintenance in 1 block than the others hence why the charge was higher for 1 block.
    6. It had spent more, on average across the last 3 years, on fire protection equipment servicing in 1 block than the others. This was taken into account when calculating the estimated charges for the coming year. When the final accounts were issued the leaseholder could ask to see supporting documents and invoices to demonstrate the actual spend.
    7. The charge for communal TV equipment was based on works in previous years that had been carried over.
    8. The landlord confirmed the charges for the communal gate should be split amongst all residents of the estate. It had reviewed the last 6 years’ charges and confirmed it had incorrectly charged only 1 block for these costs in the financial year 2019 to 2020. However it had also failed to charge at all for the gate in the financial year 2021 to 2022 and therefore overall it had undercharged. It demonstrated its calculations. It confirmed that going forward all estimated and final service charge statements would be split across all blocks.
    9. The landlord confirmed there was a mobile caretaker facility to supplement the estate services delivered across all of its stock. It confirmed the caretaking staff did not have a fixed rota. It confirmed this facility had been removed in 2018, however it was reinstated in 2020. It apologised for any incorrect information which it may have shared previously about this.
    10. The charges for emergency lighting maintenance were based on an average of the costs incurred in the past 3 years, they were not actual costs and were not based on a number of call outs. The provision has been made in the likely event it would need to attend and maintain the system.
    11. The management fees were set based on the level of services provided. The overall cost of services at 1 of the blocks was higher therefore the management fee was higher. It confirmed the way this was calculated and that it regularly benchmarked its fees and found them to be lower than other housing providers.
  3. All of the above were reasonable responses to the leaseholder’s queries. It was also positive that the landlord recognised it had taken too long to respond to the leaseholder’s concerns and was open that it had made some errors in its calculations. Where landlords acknowledge failures, as is the case here, we look to see if the steps taken to put things right are proportionate to the failures identified.
  4. In this case, the landlord apologised, offered £300 compensation and provided assurance that the errors had been put right for future years. It also explained how the leaseholder could request further evidence once the final accounts for the year had been issued to back up the actual charges incurred. The amount of compensation offered is within the range of awards set out in this Service’s remedies guidance for significant service failures where the landlord has made attempts to put things right and was therefore proportionate to these failures.
  5. However, the landlord failed to identify all its failures in handling this case. The landlord’s internal emails show it had identified an error where it had charged 1 block for 2 blocks worth of communal electricity usage. The landlord failed to share this with the leaseholder, despite her specific query around communal electricity usage. Instead, it simply said it had not been paying invoices for 1 of the blocks and that this error had now been corrected.
  6. This Service has not seen evidence to conclude whether this error was a one-off or occurred over a number of years. Therefore we have ordered the landlord to share the breakdown of communal electricity charges against each block for the past 6 years with the leaseholder. This is in line with the approach it took when it identified it had incorrectly charged for the communal gate across the blocks. It should then confirm to the leaseholder in writing if any refund is due across any of her service charge accounts for her 4 properties.
  7. It is also relevant to note that throughout this time the landlord was repeatedly chasing the leaseholder for payment of service charges when the complaint was still open and remained unanswered. This was unreasonable, especially given the leaseholder told the landlord on a number of occasions that she would be happy to pay once it had responded to her complaint. This would have understandably caused the leaseholder some distress and we have ordered the landlord to apologise to the leaseholder for this.
  8. The leaseholder was understandably concerned that the landlord might repeat these errors in future. She asked the landlord in her stage 2 escalation request to confirm how it could assure her this would not be the case. The landlord failed to demonstrate to the resident any tangible actions it had taken to prevent similar issues occurring in future, despite its internal emails showing it has taken steps to amend its systems accordingly. We have therefore ordered the landlord to share with the leaseholder the steps it has taken to ensure it will charge appropriately in future.
  9. In conclusion, the landlord acknowledged its failures in providing a full response to the leaseholder’s concerns in a timely manner. Through its complaint responses, it apologised, gave an explanation against each point raised and offered compensation for these failures. Although this was positive, the landlord failed to be completely transparent with the leaseholder regarding the communal electricity charges and did not have a process in place to prevent repeat chases for payment while the complaint was in progress. This investigation has therefore found service failure in the landlord’s handling of the leaseholder’s reports of errors on the service charge account and we have made orders below.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in the landlord’s handling of the leaseholder’s reports of errors made on the service charge account.
  2. In accordance with paragraph 42.d of the Housing Ombudsman Scheme, the leaseholder’s concerns about the level of management fee charged is outside of this Service’s jurisdiction.

Orders

  1. Within 4 weeks, the landlord is ordered to:
    1. Apologise to the leaseholder for the additional failures identified in this report.
    2. Share a breakdown of communal electricity charges across each of the leaseholder’s 4 properties covering the last 6 years. It should confirm whether any refunds are due as a result of this.
    3. Share with the leaseholder the steps it has taken, or will be taking, to ensure similar failures do not occur in future.