Paragon Asra Housing Limited (202329580)

REPORT

COMPLAINTS 202329580 and 202347366

Paragon Asra Housing Limited

21 March 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:
1. Service charges for the 2023 to 2024 and 2024 to 2025 financial years.
2. Formal complaints.

Background

The resident is the assured tenant of the property, which is a 2-bedroom, ground floor, wheelchair adapted flat. The landlord is a housing association. The resident is disabled and has other medical conditions which the landlord has recorded.
On 24 February 2023 the landlord sent the resident a letter about changes to her rent and service charges for the period April 2023 to March 2024. The letter stated the amount of rent, service charge, and management administration fee. The resident emailed the landlord on 7 March 2023 to make a stage 1 complaint (the first complaint), which was about:
1. Not having received a reply about her service charge queries.
2. The service charge letter containing calculation errors. She did not believe the service charge had been based on correct calculations and that she had been charged for costs from the managing agent it should not have passed on to a tenant. It had also included a management administration fee.
3. Not having been communicated with about the service charges or changes to how it charges. She had also received an inappropriate call from it about which benefits she may be entitled to.
The landlord acknowledged the complaint on 13 March 2023. On an unknown date the resident contacted her local MP who emailed the landlord. It replied on 28 March 2023 and said it had raised a new enquiry following his email. On 10 April 2023 the landlord provided its stage 1 response, in which it:
1. Said her complaint was about calculation errors and it not having responded to her within its timeframe.
2. Accepted there was one error which it said was a printing error on the charges letter. It also explained how it had calculated the management administration fee.
3. Explained charges were not apportioned by the number of flats but by the square meterage of the flats. It also set out how it calculated the charges by dividing an invoice it received from the managing agent for a quarter by the number of days, then multiplying this by the number of days in the year, plus an uplift.
4. Apologised it had not responded to her query in time, and that its complaint response had been late. Due to this it upheld her complaint.
On 12 April 2023 the resident asked to escalate the first complaint. She said the landlord had not fully responded to her complaint. She questioned the appropriateness of how it calculated the charges and the costs it passed on to her. She also said its use of square meterage was discriminatory under the Equality Act 2010 as she had a larger, wheelchair adapted, flat. The resident asked for a breakdown of service charges and said she could not challenge the charges without this. She also said there were errors within its stage 1 response letter. The landlord provided its stage 2 response on 26 May 2023, in which it:
1. Said it had included a breakdown of service charges (not provided to the Ombudsman) and confirmed the resident was an assured tenant with a fixed service charge.
2. Confirmed it would not change its use of square meterage for apportioning service charges, and that the charge was “calculated in accordance to the terms of [her] tenancy agreement” (sic).
3. Said it had previously capped the service charge but had not done so this year which explained the increase.
4. Upheld her complaint due to an error in its stage 1 response and offered £20 compensation, but did not uphold the rest of her complaint.
5. Apologised for its delays in providing both its responses and offered £50 compensation for its service failure.
The resident’s MP emailed the landlord between 9 and 29 June 2023 for a response to his email. It replied on 30 June 2023 and said it was reviewing the estimated budgets it had used to calculate the service charge for 2023 to 2024. It replied again on 3 August 2023 and said it was still checking to see whether its charges were correct and that some may need to be adjusted. The resident emailed the landlord on 25 August 2023 and said she had not received a breakdown of service charges or an accurate review of charges letter.
On 24 February 2024 the landlord sent the resident a letter about changes to her rent and service charges for the period April 2024 to March 2025. The letter did not contain a breakdown of the services charged for. The resident made a stage 1 complaint (the second complaint) on 3 March 2024, which was about:
1. Not being provided with breakdowns of the service charges.
2. The landlord not being transparent about how the service charges were calculated and not receiving final accounts from the managing agent.
3. Suffering discrimination from the landlord due to its use of square meterage of properties to apportion service charges.
4. The landlord having only offered one, in person, meeting for residents to discuss service charges which was during working hours.
The landlord acknowledged the complaint on 6 March 2024. It provided an update on 22 March 2024 to say it was awaiting further information. It provided its stage 1 response on 26 March 2024, in which it:
1. Confirmed it would look into providing additional or online meetings for residents to discuss service charges, which were more accessible for all residents. It upheld the complaint on this element alone.
2. Said its director was reviewing the service charges with the managing agent for the previous 2 years. It said current charges were based on rising costs presented by the managing agent.
3. Explained it could only provide confirmation of costs once end of year accounts had been finalised.
On 28 March 2024 the resident asked to escalate the second complaint. She said the landlord had not responded to her complaint about discrimination. She said it had confused her complaint, and she had had to chase for a response. She raised that she had been told if there were errors with the service charges, she would not receive a refund. She also said the landlord had introduced new charges without communication. She emailed it again on 12 April 2024 to chase acknowledgement of her stage 2 complaint, which it provided on 15 April 2024. It provided its stage 2 response on 15 May 2024, in which it:
1. Said it had reduced her service charge based on “the most recent data provided by [the managing agent]”. It also will remove certain costs which it should not have charged to tenants. Once it had done this it would generate a charge schedule breakdown for the 2024 to 2025 charges.
2. Confirmed it would apply a “further discount” as she had an adapted property.
3. Said it was verifying the latest invoice it had received from the managing agent to better understand the 2024 to 2025 charges.
4. Upheld the complaint but said it would not consider compensation as the resident had an open case with this Service.
5. Apologised that its stage 1 response had not fully responded to her complaint. It offered £250 compensation for the distress and inconvenience, time and trouble caused by its complaint handling failing.
The landlord wrote to the resident on 7 November 2024 to set out how it had revised her service charges. It accepted that its budget for 2024 to 2025 had been incorrectly calculated. It said it had recalculated charges and removed named ineligible charges. It confirmed it had credited her account with a refund of £3,990.37.

Assessment and findings

The landlord’s handling of the resident’s service charges for the 2023 to 2024 and 2024 to 2025 financial years

The legal basis for claiming a service charge is found in the tenancy agreement or lease, which is a contract. The basic principle is that, as a matter of fairness, the service charge provisions must set out the service the landlord is providing and what it is charging for that service. Put another way, if the tenancy agreement does not include the charges, the landlord will not be able to claim them, even if it provides the service.
Clause 3.8 of the tenancy agreement states the landlord may charge for the services it provides. The tenancy sets out this will be via a ‘fixed’ or ‘variable’ charge. The tenancy agreement is a ‘social rent – fixed service charge’ agreement. It also states there is a fixed service charge, and “the services [the Landlord] provide are set out in Schedule 1 to this Agreement”. Schedule 1 has not been provided to this Service. The landlord has provided a complete copy of the tenancy agreement, and record of digital creation and signatures.
We asked the landlord to provide Schedule 1 or evidence it had been provided to the resident when she signed the tenancy agreement. The landlord told us that it used to issue a breakdown of service charges but no longer did so. It also said it did not usually issue a document providing a list of services at the start of a tenancy. When we asked for further information, the landlord later said it could not evidence the Schedule 1 breakdown of services, but that it was provided at the start of the tenancy.
Whilst the landlord has included a service charge sum as part of the gross rent in the tenancy agreement, there is no evidence that the landlord provided a list of services in the tenancy agreement for which the charges relate. It has also provided inconsistent responses to us. As such the landlord has not demonstrated clearly its basis for charging a service charge to the resident.
In addition, throughout her complaints and emails to the landlord, the resident has consistently raised that she had not received information to be able to understand the charges. The landlord’s service charge letters have been vague, only listing a service charge total and management administration fee, without itemising the charges. The resident did not know what she was paying for and that was a significant failing. The landlord has provided a copy of its service charge policy in use from 2024. Under this it says it will be fully transparent in all aspects of the charges and how these have been calculated. The landlord failed to follow its policy.
We explained to the landlord it had not demonstrated it could claim the service charge to the resident. The landlord in response stated:
1. It was its understanding it correctly charged the resident as there was a contract for them to contribute to the services.
2. Whilst it could not provide the evidence of the services agreed to, it did not negate the fact that the resident needed to pay the charges.
In accordance with paragraph 52.a of the Scheme, the Ombudsman is concerned with whether the landlord complied with a relevant legal obligation. The legal obligations are that tenancy agreements must include clear service charge provisions that are unambiguous. In Gilje v Charlgrove Securities Ltd [2001], the court said:

“The landlord seeks to recover money from the tenant. On ordinary principles there must be clear terms in the contractual provisions said to entitle him to do so.”

In this case there is such a provision to claim an amount but only for the services listed. If no services are listed, then the landlord cannot reasonably claim the service charge for them.

Even if that is not correct, our approach is to consider what is fair in all the circumstances of a complaint. In the Ombudsman’s view, it would not be fair in all the circumstances for a landlord to omit details of services and their charges from a tenancy agreement at the start of a tenancy. If a landlord cannot show that the tenancy agreement clearly showed what services it was providing and what the resident is and would be paying for them, it would not be fair and reasonable to claim them. Whilst we have carefully considered the landlord’s position, there is no evidence or information for us to agree that it would be fair in all the circumstances for it to claim the service charges. Primarily this is because it cannot show these were ever listed in the tenancy and that it brought them to the resident’s attention.
The resident raised within both the first and second complaints that she had been discriminated against due to her disability. This was because the landlord had apportioned service charges based on the square meterage of properties, and not on the number of flats, or number of bedrooms. She said this was in breach of the Equality Act 2010. Discrimination is a legal finding which the Ombudsman cannot determine like the courts can. However, this Service can consider whether the landlord had due regard to, or considered its obligations under, the Equality Act 2010.
In its stage 2 response to the first complaint the landlord said the use of square meterage for apportioning service charges was in accordance with the terms of the tenancy agreement. This was not correct. The tenancy agreement does not provide any detail on how charges will be apportioned for the resident’s home. Therefore, even if the landlord could show it was permitted to claim the charge for services provided, it was not correct to say it could claim it in the way it alleged as this was outside the scope of the tenancy agreement. Under its policy, in the absence of tenancy clauses, it says it will use a fair, reasonable and consistent approach considering relevant factors and legal requirements.
Within its stage 2 response to the second complaint, the landlord said it would apply a discount so that the resident would be charged the same as if she had a standard size 2-bedroom property. While this would be a reasonable approach, its handling of the issue up to that point was a continuing failing. This is because it misdirected itself on what the tenancy said.
Within an internal email on 5 April 2024 the landlord said that it passed on service charge costs as presented by the managing agent, but that its use of square meterage “could be construed as discriminatory”. In a further internal email on 10 May 2024 the landlord said it would apply a discount to compensate for the resident’s larger adapted flat. The landlord’s initial charging approach and its reluctance to re-consider its approach following the first complaint, along with its use of language when investigating the second complaint, do not show that it had fully considered its obligations under the Equality Act 2010 or answered the resident’s concerns in that regard. While it is positive that it changed its position within its stage 2 response to the second complaint, it did not demonstrate a clear understanding of why this was the correct response.
The landlord’s service charge policy allows it to pass on managing agent charges to tenants. That is not an absolute right, as the ability to pass this on must be set out in the tenancy agreement.
Taken together, the landlord was responsible for maladministration. To reflect the impact on the resident an order has been made that the landlord pay £1,000 compensation, which is in line with our guidance on remedies.

The landlord’s handling of the resident’s formal complaints

When the resident made the first complaint at stage 1 the landlord acknowledged it within 3 working days. This was in line with paragraph 4.1 of the Housing Ombudsman’s Complaint Handling Code (the Code) in use at the time. It provided its response after 23 working days, in breach of its 10-working day policy timeframe and paragraph 5.1 of the Code. Positively it did apologise for this within its response. It also failed to respond to all elements of the complaint, in breach of paragraph 5.6 of the Code.
The landlord has not provided evidence that it acknowledged escalation of the first complaint. It provided its stage 2 response after 30 working days, in breach of its policy and paragraph 5.13 of the Code. If the landlord could not meet the 20-working day timeframe, both its policy and the Code allowed it to request an extension of time, but it failed to do so. Within its response the landlord correctly apologised for its delays in providing complaint responses and offered £50 compensation.
The resident made the second complaint at stage 1 on 3 March 2024 and the landlord promptly acknowledged it. After its response was due it emailed the resident with an update, but did not ask for an extension of time, which it should have. It provided its stage 1 response after 16 working days, in breach of its policy and the Code. It failed to recognise or apologise for this within its response. The resident promptly asked to escalate the second complaint and had to chase the landlord for acknowledgement, which it provided outside of the 5 working day timeframe under the Code. It then said it would respond within 20 working days, which did not take into account its delay.
By the date the landlord provided its stage 2 response 32 working days had passed. This was another breach of its complaints policy timeframe and the Code. Within its response it apologised that its stage 1 response did not fully respond to her complaint and offered £250 compensation, which was positive. However, it failed to recognise, apologise for, or offer any redress for its delayed responses.
In relation to the failures identified, the Ombudsman’s role is to consider whether the redress offered by the landlord put things right and resolved the resident’s complaint satisfactorily in the circumstances. In considering this the Ombudsman takes into account whether the landlord’s offer of redress was in line with the Ombudsman’s Dispute Resolution Principles: be fair, put things right and learn from outcomes, as well as our own guidance on remedies.
Overall, there was service failure. While there were multiple failings across the first and second complaints the landlord did recognise, apologise and compensate for some of these. Its failings caused further inconvenience, time and trouble for the resident. To reflect this impact an order has been made that the landlord pay £75 additional compensation, along with the £320 it previously offered, which is in line with our guidance on remedies.

Determination

In accordance with paragraph 52 of the Scheme, there was maladministration in relation to the landlord’s handling of the resident’s service charges for the 2023 to 2024 and 2024 to 2025 financial years.
In accordance with paragraph 52 of the Scheme, there was service failure in relation to the landlord’s handling of the resident’s formal complaints.

Orders

Within 4 weeks of the date of this report, the landlord must:
1. Provide a written apology to the resident for the failings detailed in this report.
2. Pay directly to the resident £1,075 compensation made up of:
  1. £1,000 for the substantial distress, inconvenience, frustration, time and trouble caused by its maladministration.
  2. £75 for the further inconvenience, time and trouble caused by its complaint handling failing.
The landlord must, within 6 weeks of the date of this determination, review its legal basis for charging a service charge to the resident. It is to cease charging the service charges to the resident until it has completed this review.
1. The landlord’s review must take into account independent legal advice.
2. Where the landlord is not permitted to charge the resident, it must:
  1. refund the service charges together with interest at a rate of 2% simple (which is average RPI) from the date the resident made each payment until the date the landlord repays the resident. This is to recognise that the landlord will have benefitted from the money in its accounts when the resident was not able to. The landlord must produce evidence to the Ombudsman as to how it has worked this out within 28 days of the date of this determination.
  2. stop charging the service charge.
3. The landlord must provide its decision in writing to the resident and this Service within 6 weeks of the date of this determination.
The landlord is ordered to confirm compliance with these orders to this Service within the stated deadlines.