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Notting Hill Genesis (202316451)

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REPORT

COMPLAINT 202316451

Notting Hill Genesis (NHG)

31 January 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 request that it refund a surplus in his service charge account.

2.     The Ombudsman has also considered the landlord’s complaints handling.

Background

3.     The resident is a leaseholder of a first floor 3-bedroom flat. The landlord is the freeholder.

4.     On 16 May 2022, the resident received a letter from the landlord which said that there was a surplus in the service charge account and that “any monies…will be refunded”.

5.     On 20 September 2022 the resident received a service charge annual statement for the financial year ending March 2022. The letter said that the “service charge accounts for 2021/2022 have been completed and are enclosed”. It said that there was a surplus in the accounts and the resident was to contact his housing officer in relation to this. The resident contacted his housing officer in October 2022 to enquire about a refund, but the landlord did not process the refund at the time. He chased this up with other departments but received no response.

6.     The landlord’s internal communications from November 2022 acknowledged that the letters of the 16 May and 20 September 2022 included inaccurate information. The accounts had not been certified at that time, and until they were, it was not able to refund the resident the surplus. 

7.     The resident complained to the landlord on 20 December 2022. He said that:

  1. the landlord had sent him a letter telling him that there was a surplus in his service charge for the year
  2. the letter recommended that he contact his Housing Officer for a refund
  3.  he did so but was informed that another team was dealing with this
  4. he has chased different teams but did not receive a response
  5. he was unhappy with the landlord’s communication in relation to this matter

8.     The landlord issued its stage 1 complaint response on 12 January 2023.  It said that:

  1. it accepted that its communication with the resident was poor
  2. this was because it was waiting for a response from another department as to when it could pay the amount
  3. it acknowledged that it could have kept the resident informed that it was chasing this up
  4. it would be sending a letter out to all leaseholders explaining why it had not yet repaid the surplus and when it would do so.

9.     On 16 January 2023, the resident asked the landlord to escalate his complaint to stage 2 as its stage 1 response did not provide him with the answers he had asked for. He said that:

  1. the landlord needed to address its leaseholders concerns and be more transparent and accountable
  2. it should arrange to reimburse the leaseholders without delay, given the current economic situation
  3. he wanted the landlord to work at restoring trust and improving communication

10. On 2 March 2023 the landlord issued its stage 2 complaint response. It said that:

  1. the letters about the surplus should not have been sent out before the accounts had been audited
  2. it was not able to give a timeline of when the accounts would be ready, but once its accountants had certified the accounts, the amounts would be adjusted accordingly
  3. it apologised to the resident and upheld his complaint about its communication, as it accepted this had not been clear and had caused the leaseholder added distress
  4. it offered the resident £100 in compensation for his distress and inconvenience

Post complaint

11. In April 2023, the landlord sent a letter to all leaseholders to explain the reasons for the delay in sending out the final account notices. The landlord arranged a resident’s meeting on 29 June 2023 to provide an update to leaseholders. The landlord offered the resident £300 compensation for the delays and lack of communication which it paid him on 7 August 2023.

12. The accounts were finalised on 23 October 2023 and the final account notices and certificates were issued to all leaseholders. The landlord has recorded that it had adjusted the surpluses by 21 December 2023.

Assessment and findings

13. The resident’s lease agreement will usually outline the terms of the payment of a service charge. This will include what costs the service charge will meet, if the landlord will provide the leaseholder with an estimate of costs for the forthcoming year and when the landlord will need to provide the resident with certified accounts. Many leases will say that final accounts will be provided “as soon as practicable” after the end of each account year.

14. The landlord’s service charge policy says that it will ensure that it sends a summary of accounts to residents who pay a variable service charge detailing expenditure for the previous financial year. It will reconcile this with the estimated budget that shows where there is a surplus or deficit balance. 

15. The policy also says that the terms of the lease will set out how the landlord will manage a surplus or deficit from the annual accounts. A surplus for the year arises where the estimated service charges demanded exceed the costs for the year. The surplus is the difference between the total income received or receivable and the total actual expenditure.

16. Many leases specify that an annual service charge surplus should be credited to the leaseholder against the following years’ service charge liability, some are silent on the whole issue of what to do and some specify that any surplus can be transferred into the reserve or sinking funds.

17. We have asked parties for a copy of the lease but have not received a response. The Ombudsman is therefore unable to investigate whether the landlord complied with the terms of the lease regarding his service charge. The Ombudsman can, instead, consider whether the landlord acted reasonably and in line with its policies, procedures and legislation in its response to the resident’s enquiries.

18. A landlord can provide a summary of the service charge account but, in most cases, this must be certified by a qualified accountant as a fair summary. Therefore, it would have been premature for the landlord to have provided leaseholders with a refund of the surplus before the accounts were approved and certified, in case there was a discrepancy between the summary accounts and approved accounts.

19. Nonetheless, the letter of 20 September 2022 gave incorrect information about the accounts, which would have unreasonably raised the resident’s expectations that he would receive a refund of the surplus at that time. The landlord’s correspondence shows that this was raised internally as an issue in November 2022. However, it did not send a letter to leaseholders clarifying the position until April 2023. This was a significant delay, which caused the resident distress and inconvenience.

20. Landlords must provide clear and transparent information to residents about charges, including the amount, breakdown of costs, and any changes. Better communication would have managed the resident’s expectations and reassured him that matters were in hand.

21. There was poor communication between the landlord’s teams which contributed to the delay in it resolving this issue. Matters that were raised were not addressed promptly, which meant that they had to be chased and escalated for a response. This was unsatisfactory. A landlord should set up good internal communication procedures so that matters are followed up and outcomes recorded with other departments, to facilitate an effective and responsive service to its residents.

22. The Ombudsman also notes that the landlord has not been able to provide a copy of the lease to this Service when requested, which has hindered this investigation. Having robust record keeping systems ensures that a landlord can easily access and retrieve information.

23. The Ombudsman’s spotlight report on Knowledge and Information Management says, “the failings to create and record information accurately results in landlords not taking appropriate and timely action, missing opportunities to identify that actions were wrong or inadequate, and contributing to inadequate communication and redress.”

24. The landlord acknowledged this in its stage 2 complaints response and offered the resident £100 in compensation. The landlord arranged for the resident to meet with its regional head of housing at a leaseholders meeting in June 2023 to discuss any concerns that he had. Following this meeting, the landlord increased the offer of compensation to £300. This was a reasonable response and showed that the landlord recognised the resident’s concerns and was responsive to them.  

25. In deciding whether there has been maladministration the Ombudsman considers both the events which initially prompted a complaint and the landlord’s response to those events through the operation of its complaints procedure.

26. Overall, the landlord’s communication with the resident was lacking, which may have been compounded by its information sharing processes. However, it acknowledged this in its complaints response and offered redress that was fair and in line with the Ombudsman’s remedies guidance. The Ombudsman finds that the landlord has made an offer of redress, prior to this investigation which, in the Ombudsman’s opinion, satisfactorily resolves this complaint.

27. In May 2023 we published our Spotlight on Knowledge and Information Management (KIM). The evidence gathered 
during this investigation shows the landlord’s practice was not in line with that 
recommended in the Spotlight report. We encourage the landlord to consider 
the findings and recommendations of our Spotlight report.

Complaints handling

28. The landlord’s complaints policy says that it will respond to stage 1 complaints within 10 working days. Where a resident is unhappy with the outcome of their complaint, they can ask to escalate it to stage 2. It will respond to stage 2 complaints within 20 working days. It also says that where it cannot make its published timescales, it will agree a response date with the resident.

29. The resident raised his stage 1 complaint on 20 December 2022.The landlord responded on 12 January 2023, which was 14 working days later. This was not appropriate, as it was not consistent with the landlord’s policy.

30. The resident escalated his complaint on 16 January 2023.The landlord issued its stage 2 response on 2 March 2023, which was 33 working days later. Again, this was not appropriate, as it was not consistent with the landlord’s policy.

31. These delays were not extensive and are unlikely to have caused detriment to the resident. However, the landlord’s correspondence does not show that it contacted the resident in advance to let him know of the delays and to agree a new response deadline.

32. A landlord’s complaints procedure provides an opportunity for the landlord to learn, to improve relationships, rebuild trust and confidence. It would have been reasonable for the landlord to have acknowledged the delay and explained the reasons for it. It should have also explained what it looked to do going forward to ensure that it responded within its published response timescales.

33. The Ombudsman therefore finds that there was service failure in the landlord’s complaints handling. The landlord has told this Service that it had undertaken a thorough review of its complaints service in July 2024. As this complaint predates the landlord’s review, the Ombudsman includes no orders with this report in relation to the landlord’s complaints handling processes. However, the landlord is ordered to apologise to the resident for the delays in issuing its complaint responses.  

Determination

34. In accordance with paragraph 53.b. of the Housing Ombudsman Scheme, regarding its response to the resident’s request that it refund a surplus in his service charge account, the landlord has made an offer of redress prior to this investigation which, in the Ombudsman’s view, satisfactorily resolves the complaint.

35. In accordance with paragraph 52 of the Scheme, there was service failure in the landlord’s complaints handling.

Order

36. Within 4 weeks of the date of this report, the landlord is ordered to write to the resident to offer an apology for issuing its complaint responses outside of its published timescales.