London & Quadrant Housing Trust (L&Q) (202220537)

REPORT

COMPLAINT 202220537

London & Quadrant Housing Trust (L&Q)

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 the landlord’s:
1. Response to the resident’s concerns over its handling of service charges.
2. Complaint handling.

Background

The resident is a leaseholder of the landlord. The property is a 2 bedroom ground floor flat. He has lived at the property since August 2009. The landlord does not have any vulnerabilities registered for the resident.
On 5 September 2022 the landlord sent the resident a statement. The statement stated there was a deficit balance of £78.50 and this was being applied to the account within 30 days from the date of the letter. The statement provided a breakdown of the costs. The landlord said if the resident was unable to pay the balance in full then he could contact it to discuss payment options.
The resident raised a complaint with the landlord on 8 November 2022. He said:
1. The landlord had added the annual deficit charge to his service charge account as an arrear. In previous years any arrears were added to the next service charge amount.
2. He was unhappy that the process had changed without notice.
On 9 November 2022 the landlord acknowledged the resident’s complaint at stage 1. The landlord said if complaints are complex it could take longer to gather all information and provide a response.
The landlord issued its stage 1 complaint response on 12 December 2022. This was around 23 working days after the initial complaint. The landlord said:
1. As outlined under clause 7 of the lease, the resident was required to pay following receipt of the reconciliation statement.
2. In previous years it split charges over a number of months. It said the standard procedure changed and it would apply the charge to the account within 30 days of the date of the letter.
3. It offered advice to the resident about how he could pay the balance if he was unable to pay the charge in full. This included contacting its revenue department.
4. It had arranged for its revenue department to assist the resident in setting up a payment arrangement.
On 14 December 2022, the landlord asked the resident to clear the outstanding balance over 3 instalments. This meant the account would be clear before April 2023.
The resident contacted the landlord on 16 February 2023 to escalate his complaint. The resident He said:
1. The landlord chose to deviate from clause 7 by spreading the outstanding final reconciliation amount over the following years rent/service charges.
2. He wanted the landlord to acknowledge its service charge recovery process had changes from previous years.
3. He did not receive notice in advance of the service charge instead he received an arrears notice.
4. The landlord was insensitive to the financial strain it was putting residents in.
5. The landlord had failed to provide its complaint response in a timely way.
The resident contacted the Ombudsman on 8 April 2023 to say that he had no response from his request for a stage 2 response. We asked the landlord to issue its final response by 17 April 2023.
The landlord issued its stage 2 complaint response on 14 April 2023. It said:
1. It had sent notice of the change in its handling of service charges in its 2021/2022 final charge statement. Also, in its statement dated 13 February 2023.
2. It referred to clause 7 of the lease which did not specify the nature of payments. The landlord said it reserves the right to alter its processes with due notice to residents.
3. It noted that the resident was experiencing financial difficulties due to the change in service charges policies. It said tenant wellbeing was a top priority and it was committed to supporting resident’s during unprecedented economic periods.
4. It confirmed it was unable to cap its service charges and they were adjusted in line with inflation.
5. It referred the resident to its revenue department to discuss potential payment plan options.
6. It apologised for the delay in responding to the resident’s complaint. It agreed it fell short of its own complaint timescales.
7. It offered the resident £20 in compensation made up of:
  1. £10 for complaint delays.
  2. £10 for the resident’s time and effort.
The resident contacted the Ombudsman on 26 April 2023. He said that he remained unhappy with the landlord’s final response. He disputed the statement that the service charge and rent increase letters received in 2021/22 referred to ending the instalments of the final service charge. He did not believe the landlord gave him any notice of the change to its process.
On 8 September 2023 the landlord emailed the resident. It confirmed the outstanding balance on his account. A payment agreement was made between the parties to clear the balance over 6 months.

Assessment and findings

Policy and procedures

Section 7(2) of the lease states that the resident must pay the service charge during the term by equal payments in advance. The sums paid to the reserve fund are held in trust by the landlord.
Section 7(6) of the lease states that the landlord shall determine the costs that have exceeded or fallen short of the expenditure over the year. It will supply the resident with a copy of the costs and he shall pay forthwith the specified proportion of the excess or deficiency.
The landlord’s service charge policy states that:
1. It will issue statements of actual service charge expenditure and balancing charges to residents following the close of each financial year. If the actual cost exceeds the estimated cost, then the landlord can recover that additional cost from the residents.
2. If the landlord has undercharged a resident because the costs are higher than expected, a deficit charge will be applied the following financial year. It will spread the balance over 52 weekly instalments.
The landlord’s compensation policy said that it offered fixed awards for service failure. It offered £10 for a failure to respond to a query within 10 working days. It offered £10 for a failure to respond to a formal complaint within the published timescales.

Handling of service charges

The Ombudsman’s role is to consider whether the landlord responded appropriately to the resident’s concerns by adhering to relevant legislation, its policies and procedures. That the landlord acted reasonably, taking account of what is fair in all the circumstances of the case.
When the landlord issued its stage 1 complaint response on 12 December 2022 it said in previous years it split charges over a number of months. It said the standard procedure moving forward was for it to apply the charge to the account within 30 days of the date of the letter. This was not reflective of the landlord’s service charge policy in place at that time. The policy stated that a deficit charge would be applied in the following financial year, spreading the balance over 52 weekly instalments.
There was no evidence available to the Ombudsman that shows the landlord gave notice regarding changes to the way it collected service charges. The service charge letters from 2020 and 2021 both state that the final balance would be divided into 12 monthly instalments. The service charge letter from 14 February 2022 did not set out the 12 month instalment process. However, it was not clear about any changes to its process or procedure. It should have been clear with the resident if there had been a decision to change it process or procedure.
The landlord’s final service charge balance letter from 5 September 2022 states that it would apply the deficit balance to the service charge account within 30 days. It asked the resident to pay the balance in full, and if he was unable then it provided contact details for its revenue services to discuss payment options. It was reasonable to direct the resident to support to pay the charges. The landlord also had the right to alter its procedures.
However, the changes to its procedures were not reflected in its service charge policy. The Ombudsman has not seen any evidence of changes to the landlord’s service charge policy. The policy was still set out as above, that it would spread the balance over 52 weeks. It was unfair to make this change without notice to the resident. It should have updated its service charge policy to reflect the changes.
By making the change without notice, there was an increase in the residents time and trouble to contact the landlord and set up agreements. The change to the collection of the charges would have caused some distress and inconvenience to the resident.
The Ombudsman finds maladministration in the landlord’s handling of the resident’s concerns over service charges. There was no evidence available that showed the resident was informed of the changes prior to the letter on 5 September 2023. The changes made were not reflective of the landlord’s service charge policy. It was unfair to the resident by saying it had given notice of the changes. It should pay the resident £200 for the distress and inconvenience it caused. It should review its service charge policy to ensure that it is in line with its current practices.

Complaint handling

The landlord did not comply with its policy and procedures in its handling of the resident’s complaint. It is important for the landlord to ensure that it maintains its complaint handling commitments, and that it complies with the timeframes set out in its policy. Its responses to both stage 1 and 2 were outside those timeframes.
The landlord took around 23 working days to respond at stage 1. In its acknowledgement letter on 9 November 2022 it noted that it may take longer to respond due to the complexity of the enquiry. It is reasonable for the landlord to request additional time to consider complex complaints, however this was above the 10 working days set out in its policy.
The stage 1 response did not acknowledge the delay or the additional inconvenience the situation had on the resident. Although the resultant detriment was reasonably low, there was no reflection of any additional time and trouble taken by the resident.
There was a delay of around 40 working days to respond to the stage 2 complaint. This too was above the timescales set out in the landlord’s policy. The resident had to seek the assistance of the Ombudsman to progress his complaint. The delay was unreasonable and continued to cause the resident time and trouble seeking assistance from representatives. The resident said he felt ignored by the landlord and treated unfairly.
The landlord’s stage 2 response reflected on the delays in its handling of the residents stage 1 complaint. It apologised to the resident and accepted that it had not complied with the timescales set out in its policy. It was reasonable to recognise the delay. Its offer of £10 compensation for the complaint handling delay and £10 for the time and trouble was reflective of its compensation policy.
The Ombudsman’s dispute resolution principles are to be fair, put things right and learn from outcomes. The landlord sought to address its complaint handling failures in its stage 2 response. It recognised that there had been delays in responding at stage 1. The response was detailed and sought to address residents substantive complaint. However, it did not consider the additional delays to respond at stage 2. It did not reflect on the resident’s additional time and trouble taken in involving the Ombudsman. The landlord it not put things right in the circumstances. Its offer of compensation was not reflective of the detriment caused.
The Ombudsman finds that there was service failure in the landlord’s complaint handling. The responses were provided outside of the timescales set out in its policy. Its offer of £20 compensation was not reflective of the overall detriment caused. It did not recognise its complaint handling failures. It should pay the resident additional compensation of £30 to reflect his time and trouble pursing his complaint.

Determination

In accordance with paragraph 52 of the Scheme, there was:
1. Maladministration in the landlord’s response to the resident’s concerns over its handling of service charges.
2. Service failure in the landlord’s complaint handling.

Orders

Within 4 weeks of the date of the report, the landlord must:
1. Pay the resident £250 in compensation, including the £20 already offered. This is comprised of:
  1. £200 for the distress and inconvenience caused in its handling of service charges.
  2. £50 for its complaint handling failures.
2. Review its service charge policy to ensure that it is reflective of its current practices.
3. Provide evidence of compliance to the Ombudsman.