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Paragon Asra Housing Limited (202328623)

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REPORT

COMPLAINT 202328623

Paragon Asra Housing Limited

6 May 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 handling of the resident’s request for information about the reserve fund and increases to her service charge.
  2. We have also considered the landlord’s complaint handling.

Background

  1. The resident is a shared owner of a flat within a block. The landlord, a housing association, is the head leaseholder. A third-party company is the freeholder with a managing agent providing services and maintenance to the block. The resident contributes a variable charge for these services.
  2. The resident’s initial complaint was made to the landlord as a group along with other residents of the block. It was later brought to us as an individual complaint. Unless it is necessary to do otherwise, we have referred to “the resident” throughout, even when referring to communication sent by others in the group.
  3. In February 2023 the landlord sent the resident a notice about an increase to her service charge for 2023/24. The resident contacted the landlord in March 2023 questioning the 52% increase. She asked for invoices and receipts over the last 3 years under Section 22 of the Landlord and Tenant Act 1985 (the Act). She also said there was a “clerical error” in the landlord’s notice as 2 different figures had been quoted for the service charge increase.
  4. Later in March 2023 the resident contacted the landlord again. She said she was making a complaint to the First-Tier Tribunal (FTT) about the increase to her service charge. She said the landlord’s lack of response to her communication earlier in the month was “utterly despicable”. She also raised concerns about missing sums from the reserve fund. The landlord contacted the resident in early April 2023. It apologised for the delay responding and said it would do so as soon as it could.
  5. Following contact by us, the landlord provided the resident with a stage 1 complaint response on 8 August 2023. It apologised for its delayed response and for not making regular contact during its investigation.  It said:
    1. the service charge had increased for 2023/24 as a cap it previously used was no longer being applied.
    2. it had confirmed to residents on 21 June 2023 that the charge was in line with the managing agent’s charge.
    3. it had requested information about the reserve fund from the managing agent and would share this once received.
    4. it offered the resident £50 for not responding to her complaint in line with its target response times.
  6. In mid-August 2023, the landlord escalated the resident’s complaint after she expressed her dissatisfaction. It provided a stage 2 complaint response on 13 October 2023. It said:
    1. the resident’s service charge was correct and in line with what the managing agent had charged.
    2. it had attached a copy of the managing agent’s budget and accounts from a previous managing agent.
    3. it had previously capped the service charge for several years.
    4. the service charge increase had been applied correctly.
    5. it directed the resident to contact its income team if she was having difficulty making payments.
  7. The landlord set out its response to the resident’s concerns about the reserve fund. It said:
    1. it had worked with the managing agent to obtain data about the reserve fund going back to 2015, and it attached a summary of this information.
    2. this summary showed that the reserve fund became ‘nil’ on 31 December 2020, as the balance transferred to 2 new funds – reserve fund (block) and reserve fund (estate).
    3. from then on, the contributions to these funds were based on the surplus for each year.
    4. it upheld the resident’s complaint about the reserve fund as it had not provided information to her in a reasonable time.
  8. The landlord apologised for its delayed complaint response and awarded £20 to the resident.
  9. Following the stage 2 complaint response, the resident sent a further email to the landlord requesting receipts in respect of the managing agent’s charge. In response the landlord said that it did not have the 2023 accounts yet due to the managing agent working on a calendar year. It said it would send this information once it had it.
  10. The resident told us that she had requested invoices and receipts for the last 3 years from the landlord, but had received nothing other than a summary. She said that the landlord had not responded to her question about the error on the service charge notice.

Assessment and findings

Policies and procedures

  1. The resident’s lease sets out that the landlord will determine and certify the actual service charge expenditure “as soon as practicable” after the end of the account year (31 March).
  2. Under the Act, the landlord is required to provide information, where requested, within specific timeframes. Within 1 month of a request or 6 months of the end of the relevant period, the landlord is required to provide a summary of the costs that make up the service charge. When a resident requests to view evidence to support the service charge costs, the landlord should make facilities to allow this within 1 month.
  3. The landlord introduced a service charge policy in April 2024. This says it will be “fully transparent” about how charges have been calculated and will provide responses to enquiries about this in line with its service level agreement.
  4. The landlord operates a 2-stage complaints process. It aims to acknowledge stage 1 complaints within 5 working days and respond to these within 10 working days of acknowledgement. It aims to respond to stage 2 complaints within 20 working days of its acknowledgement. It says that if it needs more time to respond to the complaint, it will keep the resident informed about the reasons for the delay through regular updates.

 

Scope of the investigation

  1. The resident has since raised further concerns with the landlord about services provided to the block. This matter is not part of this investigation. We have explained to the resident separately how she can pursue her complaint about services provided to the block should she wish to do so.
  2. We acknowledge the resident’s concerns about the increase in her service charge. The Ombudsman cannot investigate complaints about the level of service charge or the amount of service charge increase. Concerns about the level or reasonableness of service charges are more appropriately dealt with by the FTT.
  3. The resident raised concerns about the landlord’s supporting evidence not meeting the requirements of the Act. This would be better raised at a Tribunal or in court. This is because a failure to comply with sections 21-23 of the Act can result in a conviction and a fine. However, we have considered how the landlord responded to the resident’s enquiries and concerns about increases to her service charge.

Handling of the resident’s request for information about the reserve fund and increases to her service charge

Reserve fund

  1. The landlord addressed the resident’s concerns about the reserve fund in its stage 1 complaint response of August 2023. It explained that it had requested information from the managing agent, which it would then share with her. But the landlord provided no timescale for when it expected to receive this information from the managing agent. It should have done so. Instead, the resident was left with no indication of when she would hear from the landlord about this matter. Alternatively, the landlord could have agreed regular updates until the information was available. That it did neither was a failing.
  2. The landlord provided information about the reserve fund in its stage 2 complaint response of 13 October 2023, which was approximately 3 months after she had requested it. We cannot say how proactive the landlord was in pursuing this because we have not seen records of its contact with the managing agent. However, it was appropriate that it acknowledged and apologised for this delay. It provided information it had received from the managing agent about the reserve fund going back to 2015 and explained how the balance from the reserve fund had transferred to 2 separate funds. While delayed, the landlord’s response to the resident’s query about the reserve fund was reasonable and appropriately addressed the concern she had raised.

Request for information about increases to her service charge

  1. The notice the landlord sent to the resident in February 2023 included clear information about its estimate of service charge costs for 2023/24. It also included details about the resident’s rights. This included how she could request a written summary of the service charges and to inspect accounts, receipts, or other documents. These reflected the resident’s rights and the landlord’s obligations under sections 21 and 22 of the Act.
  2. After receiving notice of the increase to her service charge, the resident told the landlord of her concerns around this increase. She requested invoices and receipts relating to the managing agent’s costs dating back to 2020. The landlord told her in April 2023 that it would respond to her request as soon as possible.
  3. The landlord’s stage 1 complaint response in August 2023 appropriately explained how the level of increase to the resident’s service charge was affected by its decision to remove a cap in place in previous years. It also said that service charge costs for 2023/24 were correct.
  4. Although we were not provided with a copy of its response, other evidence supports that the landlord had already given some of this information in June 2023. It provided information, as it was obligated to do. However, the time it took, at around 3 months was inappropriate and it did not acknowledge any failings in its handling of this.
  5. In December 2023, the Ombudsman published an insight report on service charges. While this is after events complained about, it reflects the landlord’s obligations and best practice. It outlines that the Ombudsman expects landlords to comply with the Act when residents request additional information such as invoices. Where there is a separate freeholder or managing agent, landlords should make requests for invoices to those parties, in addition to providing the contacts details for the freeholder/managing agent to the resident so they can make their own requests.
  6. The landlord had confirmed the service charge costs for 2023/24 had been checked by it and were correct. However, its initial complaint response did not address the resident’s request to see supporting evidence/invoices. We have also seen no reference in any of the earlier communications with the resident. As outlined earlier, the landlord had a duty to respond to the resident’s request for this evidence.
  7. The landlord provided further information to the resident in its stage 2 complaint response. At this time it provided a summary of charges over the last 5 years and the managing agent’s budget of 2023. It is apparent the landlord was attempting to provide further information and explanation about the increased service charge. However, it did not specifically set out how or whether it considered this information addressed the resident’s request to see receipts/invoices. Doing so would have provided clarity to her. The landlord should reasonably have also provided details of how the resident could make her own enquires to the managing agent, should she wish to. However, other evidence we have seen shows the landlord has since provided this information to her.
  8. Following its stage 2 complaint response the resident sent the landlord further communication repeating her request to see invoices and receipts from the managing agent. In response the landlord said that it did not have accounts for 2023 as these were yet to be finalised. It had also sent the resident a notice in September 2023 setting out that actual service charge accounts for 2022/23 were delayed and yet to be finalised. The landlord should have explained this earlier.
  9. It would have been appropriate for the landlord to clearly set out in its complaint responses when information relating to actual service charges for previous years would be available. In addition, if it considered the information it had attached to the stage 2 complaint response addressed the resident’s request to see evidence for earlier years, then it should have clearly explained this. Not doing so caused the resident frustration and meant she spent more time and trouble chasing this information.
  10. It is clear the resident was left feeling the landlord was not being open with her. In her email of November 2023, she said the landlord appeared “evasive”. It should have provided her with a clear response at an earlier stage about how it would or had addressed her request to review service charge invoices/receipts. We have seen no evidence it has done so. As a result, it is unclear if it believes that the certified account statement it previously provided satisfies its obligations under section 22 of the Act. If that is the case, the landlord should state this.
  11. The resident’s concern that the landlord’s service charge notice of February 2023 contained a factual error remained unanswered. She had questioned this in her initial contact with the landlord in March 2023. At the time she said the notice contained 2 different figures for the new service charge. That there is no evidence the landlord appropriately responded to this point is a failing. We have ordered that it contact her to confirm whether she still requires clarification of this point.
  12. Overall, we have found maladministration in the landlord’s handling of the resident’s request for information about the reserve fund and her service charge. We have found that it:
    1. failed to communicate effectively with her about the timescales for providing information about the reserve fund.
    2. delayed responding to her request to see invoices/receipts.
    3. failed to be clear about the information it provided.
  13. So far, the landlord has awarded £70 in respect of delayed complaint responses, it has not made any award in recognition of the impact of failings and delays in its provision of information about the reserve fund and service charges. With consideration to the circumstances, and with reference to the Ombudsman’s remedies guidance, we have ordered an award aimed at recognising the impact of these failings.

Complaint handling

  1. The landlord’s complaints policy distinguishes between a service request and an expression of dissatisfaction. It was clear from the resident’s communication to the landlord in early March 2023 that she was concerned about the increase to her service charge and wanted further information to help her to understand this. It was reasonable for the landlord to consider this as a service request, rather than as a formal complaint.
  2. Between 20 and 24 March 2023 the resident sent emails to the landlord about its lack of response. By 24 March 2023 she clearly set out her dissatisfaction that it had failed to provide any response to her request. She said she found this “utterly despicable”. It would have been reasonable for the landlord to have raised this as a formal complaint or at least check with the resident whether she now wished to do so. That it did neither was a failure to act in line with its own complaints policy and the Ombudsman’s Complaint Handling Code (the Code). The landlord missed an early opportunity to appropriately address the resident’s dissatisfaction with its service.
  3. The landlord did not raise the resident’s concerns as a complaint until 17 July 2023, and only after contact from us. Even after doing so, its response fell outside the timescale set out in its complaints policy. It told the resident it would respond by 31 July 2023 but did not do so until 8 August 2023. We have also seen that the landlord failed to be clear to the resident that the £50 it awarded at this time, for the delayed response, also applied to her. Its stage 1 complaint was addressed to another member of the group, but the landlord has told us that its £50 award also applied to the resident. However, while it forwarded the response to the resident at the time, it did not make its award clear. It should reasonably have done so as the compensation award could not have been apparent to her otherwise.
  4. The landlord confirmed it had escalated the resident’s complaint on 16 August 2023, in line with her request. But it did not provide its stage 2 complaint response until 13 October 2023. That was nearly a month outside targets set out in its complaints policy. Yet there is no evidence the landlord communicated with the resident about this delay. In line with its policy and the Code, it should have done so in advance of any delay. Instead, it acted to do so only after the resident chased it for a response. That was a failing in its communication and complaint handling, which caused the resident additional time and trouble.
  5. Overall, we have found service failure in the landlord’s complaint handling. So far it has awarded the resident £70 in recognition of its delayed complaint responses. With consideration to the circumstances, and with reference to the Ombudsman’s remedies guidance, we have ordered an increased award aimed at fully recognising the impact of complaint handling failings.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was:
    1. maladministration in the landlord’s handling of the resident’s request for information about the reserve fund and increases in her service charge.
    2. service failure in the landlord’s complaint handling.

Orders

Orders

  1. Within 4 weeks of the date of this report the landlord should:
    1. write to apologise to the resident for the failings identified in this report.
    2. pay the resident £300 compensation, made up of:
      1. £200 for the failings and delays in its communication about the service charge and reserve fund.
      2. £100 for the delays in its handling of the complaint.
      3. if the landlord has paid any of the £70 previously awarded, this should be deducted from the total.
    3. provide a clear response to the resident’s request to see invoice/receipts. If it believes any information it has provided meets its obligations under the Act, it should clearly explain this.
    4. contact the resident to confirm whether she requires clarification about service charge figures stated in its notice of February 2023.