London Borough of Lambeth (202321970)

REPORT

COMPLAINT 202321970

Lambeth Council

17 April 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 the landlord’s handling of the resident’s service charge enquiries.
We have also investigated the landlord’s complaint handling.

Background

The resident is the leaseholder of a 2 bedroom ground floor flat. The landlord is the freeholder of the property.
The resident’s father is acting as an advocate on behalf of the resident in this case. For the purposes of this report, both the resident and the advocate will be referred to as ‘the resident’.
The resident contacted the landlord on 29 September 2022 following receipt of the service charge year end accounts. The resident raised several queries with the landlord relating to the costs.
The resident raised a formal complaint with the landlord on 8 March 2023. This was because they felt that the landlord had not provided a satisfactory response to the queries raised.
The landlord sent the resident a stage 1 complaint response on 20 March 2023. It said it understood the relevant department had already provided a response. However, it did not make a decision on the complaint or provide an outcome for the resident.
Following escalation to stage 2 of the complaints process, the landlord sent the resident a stage 2 response on 15 August 2023. It re-iterated the responses already given to the resident by the team responsible for service charges. It also said it had asked its cleaning contractor to carry out a review of the costs of each block. It did not find any evidence of service failure.
The resident was dissatisfied with the landlord’s response, so referred their complaint to the Ombudsman.

Assessment and findings

Scope of investigation

Part of the resident’s complaint is about the reasonableness and level of increase in the service charge costs. We cannot investigate complaints that concern the level of service charge or the amount of service charge increase. However, we can assess whether the landlord’s overall communication with the resident was fair and reasonable. Complaints that relate to the level, reasonableness, or liability to pay variable service charges are within the jurisdiction of the First-Tier Tribunal (Property Chamber). Disputes about fixed service charges are often decided upon by the courts as they relate to a contractual obligation between the landlord and resident or leaseholder.

The resident’s service charge enquiries

The landlord sent the resident the year end service charge accounts on or around 27 September 2022. The accounts covered the service charge costs from 1 April 2021 to 31 March 2022. The landlord told the resident they must pay an additional £781 in service charges due to the actual cost of the services provided.
The resident contacted the landlord by email on 29 September 2022 as they had several queries relating to the costs. The resident asked the landlord to explain:
1. Why the cleaning cost was double the original estimate and what work it had undertaken to justify the £8784 spend.
2. What the block cleaning cost of £1337 covered.
3. What work it had carried out to individual properties under specific job numbers.
4. Why the overhead charge had increased from 6.77% in 2020/21 to 19.28% in 2021/22. How it had calculated the percentage and under what authority.
5. Whether it had included costs for scaffolding erected to remedy water ingress.
6. Why it had not given residents advance warning of the increased costs.
The resident said they would not be willing to pay the amount due until they were satisfied that the costs were correct.
The landlord sent the resident a response on 10 October 2022. It said it had sent the resident’s queries about the block and estate cleaning services to the relevant team for further investigation. It said the specific job numbers were for window replacements. It also explained what the overhead charge covered and explained that it charged a percentage rate rather than a flat rate. It told the resident that if they believed the charge was unreasonable, they could seek their own legal advice and/or apply to the First Tier Tribunal (FTT) for a decision. This was in line with the guidance given to leaseholders in the landlord’s homeowner’s handbook.
The landlord asked the resident to provide the job number for the scaffolding issue so that it could investigate further. It also explained that it was not possible to know how much the charges would be in advance. It said it estimated the charges based on the average amount spent in the previous financial year plus inflation. It said, at the end of the financial year, it provided a list of the actual repairs carried out to the block/estate and the amount the resident had to contribute.
The landlord’s actions were consistent with standard sector practice for year-end accounts and were in line with the terms of the resident’s lease. However, it is unclear as to why the landlord could not identify which job required scaffolding from its own records without asking the resident to provide the job number.
The resident responded to the landlord on 11/10/2022. They said they were already in dispute with the landlord in relation to their liability for window replacement costs. They said the response relating to the overhead charge did not sufficiently answer their query.
The landlord contacted the resident again on 28 October 2022. It said it was still waiting for the relevant team to provide a response to the cleaning cost queries. It said it had asked for more information on the overhead charges. It also said it had not been able to find any outstanding disputes relating to window repairs/replacements.
The landlord contacted the resident by email on 24 November 2022. It said it was still investigating the cleaning costs. However, it had received further information relating to the overhead charges. It said the charge “formed part of the cost of providing services to residents and they were included within each relevant head of charge as a percentage”. It explained that overheads included “staff costs to provide and manage services to residents, related IT costs, and all relevant central overheads. It said it had calculated the percentage using the staff time allocations and relevant IT costs. It said the percentage of staff time allocations had risen, which had driven the percentages up.
The resident responded and said they did not accept the increase in the charges. They asked for a full breakdown and comparison with the previous year’s charges.
The landlord provided the resident with a further response to their queries on 12 December 2022. It said it was now paying the living wage and because of this, the hourly rate of all cleaning staff had increased. It said it had followed its procurement processes and it believed the costs were “best value”. It also confirmed the block cleaning consisted of the following:
1. Cleaning of internal communal areas (areas inside the boundaries of buildings) and welfare areas on estates.
2. Low level flat roofs and gullies (excluding all those on highways and adjacent to refuse/bin chambers), drains, downpipes and gutters.
3. Window Cleaning, graffiti removal, and ad hoc deep cleans including refuse/bin chambers.
4. Ad hoc pressurised water cleaning, including the cleaning of refuse chutes.
It also said all services within the council were subject to overhead costs. It said the overhead fee was a “percentage on top of each appropriate category”. It said the fee represented the costs of managing services. It said staff time was the main cost driver in the overhead’s calculation. It said where staff time for a service had increased, the associated overhead cost would also increase. It said, as staff time ultimately related to salaries, it could not disclose those details.
It was reasonable for the landlord not to show individual staff salaries within its explanation of rising costs. However, it is unclear from the evidence provided why the landlord could not have given the resident more general information as to which areas of the overheads had the most significant increases and why.
The landlord’s homeowner’s handbook says residents can raise a query if they think their service charge invoice is incorrect. It also says it will aim to send a response within 10 working days. Although the landlord provided some of the information within this timeframe, it took just over 9 weeks to give the resident a response to the cleaning cost queries. This was inappropriate and unfair to the resident as they had to repeatedly chase the landlord for a response.
Leaseholders also have a right under s22 of the Landlord and Tenant Act 1985 to inspect documents relating to the service charge summary to provide more detail. However, a leaseholder must specifically request this in writing and there is no evidence to suggest that the resident did this. Therefore, there is no additional failure as such on the part of the landlord in relation to the provision of information.
However, it is not unreasonable to expect the landlord to have a process in place to signpost residents to an organisation such as the Leasehold Advisory Service (LEASE), who can provide appropriate advice on leaseholder’s rights. Had the landlord done this, the resident would have had the opportunity to obtain the relevant advice and information at an earlier stage, without the need to escalate the matter through the complaints process.
The resident responded to the landlord on 13 December 2022. They said its response did not answer the questions raised. The landlord told the resident on 28 December 2022 it had no further comments to make in relation to the overhead charges. It advised the resident to refer the matter to the FTT. It also suggested that the resident escalate their concerns to the complaints team. The landlord also informed the resident on 8 February 2023 that it had no further comment to make in relation to the increased cleaning costs.
The resident responded to the landlord on 9 February 2023. They said they wanted to “formally complain” that it had not given any explanation for the increased costs. However, there is no evidence to suggest the landlord logged a formal complaint at this point. This issue has been addressed in the complaint handling section of this report below.
The resident sent a further email to the landlord on 8 March 2023. They asked the landlord to raise a formal complaint. They said they had not received answers to the queries raised on 29 September 2022. They said they were unhappy that the landlord had directed them to the FTT.
The landlord sent the resident a stage 1 response on 20 March 2023. It said it understood the relevant team had already responded. However, there is no evidence to suggest the landlord investigated the resident’s concerns as it provided no outcome to the complaint. The resident escalated his complaint to stage 2 on 10 July 2023.
The landlord sent the resident a stage 2 response on 15 August 2023. It re-iterated the information already given to the resident by the relevant team. It asked the resident to confirm who they had discussed their liability to contribute to the replacement of windows with. It said, following a number of queries, it had approached its cleaning contractor and asked it to carry out a review of the costs attached to each block. It said it hoped the review would be completed by the end of July. It said, following the review, it would make any required changes to the 2021/22 accounts. It also said it would address any significant variances in the 2023/24 estimates.
It also said it reviewed the percentage overhead annually. It said it calculated the percentage by taking the total staff and administration costs and dividing it by the total value of works orders paid for in that year. It said this meant the percentage varied annually. It said in 2021/22 the amount of works orders paid for had decreased, which affected the percentage rate. It said, under s18 of the Landlord and Tenant Act 1985, overheads were a relevant charge. It said the resident could seek their own legal advice or make an application to the FTT if they believed the charge was unreasonable.
In the circumstances, it was reasonable of the landlord to have asked its cleaning contractor to carry out a review of the cleaning costs, given the costs and the number of queries received. However, it did not recognise, in the stage 2 response, its delay in providing the resident with a response to their cleaning cost enquiries. The landlord did not respond to the resident’s query about the scaffolding costs or the window replacement costs through the complaints process. However, the evidence shows the dispute relating to the window replacement costs were part of a separate discussion/query. The landlord did ask the resident for further information in an attempt to advance the issues, but there is no evidence to suggest that the resident responded or provided any further information. The landlord’s signposting to the FTT, given that the resident remained in dispute about the reasonableness of the service charges, was appropriate in the circumstances.
In summary, there were delays in the landlord providing the resident with responses to queries about the block cleaning service charge. As a result of these failings and the distress and inconvenience caused to the resident, the Ombudsman finds that there was service failure by the landlord in this case.

Complaint handling

At the time of this complaint the landlord operated a 2 stage complaints process. Its policy said it would respond to stage 1 complaints within 20 working days. The policy was unclear as to when it would respond to stage 2 complaints. The landlord has since updated its policy in line with the Housing Ombudsman’s Complaint Handling Code (the Code) which became a statutory requirement on 1 April 2024.
Under the provisions of the Code in place at the time of the complaint, landlords were expected to respond to a complaint within 10 working days and provide a final response within 20 working days of the date of escalation.
The resident first tried to raise a formal complaint with the landlord on 9 February 2023 in an email. They said they “wished to formally complain” that they had not been given any explanation of the service charge costs. There is no evidence to suggest that the landlord logged a formal complaint at this point. The resident contacted the landlord again on 6 March 2023 to ask whether it had raised the formal complaint. However, the evidence shows that the landlord did not log the complaint until the resident sent a further email on 8 March 2023. This was almost 4 weeks from the original date of complaint.
Paragraph 4.1 of the Code says “when a complaint is made, it must be acknowledged and logged at stage 1 of the complaint’s procedure within 5 days of receipt. The resident clearly set out they were dissatisfied and wished to complain in their email dated 9 February 2023. It was therefore inappropriate of the landlord not to log the resident’s complaint when they first made the request.
The landlord sent the resident a stage 1 response on 20 March 2023. This was within the timeframe of 10 working days from the date the complaint was logged, set within the Code. However, the response only said the relevant team had already responded to the resident. There was no evidence of a formal investigation and the response did not give a decision on the complaint. This was inappropriate and not in line with paragraph 5.6 of the Code which says, “landlords must address all points raised in the complaint and provide clear reasons for any decisions, referencing the relevant policy, law and good practice where appropriate”.
The evidence shows the resident was not satisfied with the stage 1 response much earlier than the date the landlord escalated the matter to stage 2 of its complaints process on 10 July 2023. This was not in line with paragraph 5.9 of the Code which says if all or part of the complaint is not resolved at stage 1, it must be progressed to stage 2.
The landlord sent the resident a stage 2 response on 15 August 2023. This was 26 days from the date of escalation and outside of the timeframe of 20 working days set within the Code. The landlord did not acknowledge the delay or its complaint handling failures within the stage 2 response.
In summary, there were failures in the way the landlord handled the resident’s complaint. It did not comply with the requirements of the Code when it:
1. Delayed in logging the resident’s complaint.
2. Did not give a decision on the complaint at stage 1.
3. Did not escalate the resident’s complaint when they first expressed dissatisfaction with the stage 1 response.
4. Delayed in sending the stage 2 complaint response.
These failings unreasonably delayed a resolution for the resident and caused distress and inconvenience as a result. The Ombudsman finds that there was maladministration by the landlord in its handling of the resident’s complaint.

Determination

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in its handling of the resident’s service charge enquiries.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in its complaint handling.

Orders and recommendations

Orders

Within four weeks from the date of the report, the landlord must:
1. Apologise to the resident, in writing, for the failings identified in this report.
2. Pay the resident total compensation of £325. This is made up of:
  1. £125 in recognition of the distress and inconvenience caused by the landlord’s handling of the resident’s service charge enquiries.
  2. £200 in recognition of the distress and inconvenience caused by the landlord’s complaint handling.
3. Pay the compensation directly to the resident.
4. Provide this Service, and the resident if it has not already done so, with the outcome of the block cleaning costs review.
The landlord should reply to this Service with evidence of compliance with these orders within the timescales set out above.

Recommendations

It is recommended that the landlord consider implementing a policy or process which refers leaseholders to the Leasehold Advisory Service (LEASE) when it receives queries relating to service charge costs.
The landlord should reply to this Service within four weeks of the date of this report to advise of its intentions regarding the above recommendations.