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Peabody Trust (202214402)

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REPORT

COMPLAINT 202214402

Peabody Trust

29 August 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

  1. The complaint is about the landlord’s handling of:
    1. The resident’s requests for information about service charges.
    2. The associated complaint.

Background

  1. The resident was a shared ownership leaseholder of the property. The property is a 1-bedroom flat. The landlord is a housing association and the head leaseholder, but not the freeholder of the building. The service charges for the building are managed by a managing agent on behalf of the freeholder.
  2. On 15 July 2021 residents of the block wrote to the landlord requesting a summary of service charge costs incurred. On 17 August 2022 the landlord wrote to the resident about his request for inspection of invoices, receipts and other documents related to the service charges.
  3. The resident contacted this Service on 4 October 2022 about his dissatisfaction regarding the landlord’s inactions regarding service charge information. The service charge estimates kept increasing but actuals were not provided, he wanted justification for these increases. He said that it had been over 6 months since the landlord told him it would provide evidence. He wanted the landlord to take the following actions to put things right:
    1. Correct the calculation error which had caused residents to pay more at the end of the year.
    2. Provide evidence to residents of actual spend.
    3. The landlord to benchmark itself against other affordable housing developments, to manage the levels of any increase.
    4. To have an independent party certify the landlord’s actions related to service charges were fair.
  4. This Service put forward the resident’s complaint to the landlord on 10 October 2022. The landlord sent its stage 1 complaint response on 4 November 2022. The landlord apologised for its delay in providing the requested information, but it was reliant on receiving information from the managing agent. It recently provided its year end 2019 accounts, with credit due to the resident. It also asked the managing agent to provide a transaction list to provide clarity on the service charges, as well as the budget used for the estate and heating. The 2020 accounts were still under review.
  5. Additionally, in the landlord’s stage 1 complaint response it told the resident that it did not make a profit on service charges. All services were provided by the managing agent. It would consider feedback from its residents and was looking to improve the information on the accounts. It also said future responses would be provided in a timely manner. To put things right, it offered £50 for time and trouble, inconvenience, and poor complaint handling.
  6. On 22 November 2022 the resident requested escalation of his complaint to stage 2 of the landlord’s internal complaints process. He remained dissatisfied as he felt the landlord had not tried to address issues with the service charges until involvement of this Service. He said he wanted the landlord to provide proof for all charges. He also said the document provided to him by the landlord which contained service costs was not clear. He felt that all year on year increases in the budget should be reversed until actuals could be verified. He further added that the landlord was not acting in the interests of residents, which is why benchmarking was required.
  7. The landlord issued its stage 2 complaint response on 18 January 2023. It told the resident that it was not the freeholder, and the managing agent was appointed by the freeholder. It remained reliant on timely provision of information from the managing agent. There was a difference in accounting years between it and the managing agent. The landlord also told the resident the following:
    1. It had requested receipts and supporting accounts from the managing agent. Residents would be able to ask to inspect invoices within 6 months of the year end.
    2. As a social landlord, it had certain standards to comply with and residents could access the complaints process. However, it had asked for clarity on calculations from the managing agent and was awaiting a response. This includes looking at new allocations.
    3. Inflation, communal electricity costs, and changes in fire safety regulations resulted in increased service charges. It said the resident could approach the First-Tier Tribunal (FTT) about unjustified charges.
    4. The managing agent was not breaching the Landlord and Tenant Act as publication can be delayed, since it takes time to collate invoices and reconcile accounts.
  8. The landlord increased its offer of compensation to a total of £100 in its final response. This was in recognition of its communication, time, trouble, and inconvenience.
  9. The resident remained dissatisfied with the landlord’s response on the matter. He contacted this Service again on 3 March 2023 and confirmed he wanted us to investigate. He stated his desired outcomes were for the landlord to take the following actions:
    1. The landlord to fix its calculation errors and go back to the service charges stated when he bought the property.
    2. Credit back the incorrectly charged amounts, and reverse charges to estate, block, and flat apportionment since January 2019.
    3. Provide invoices for all charges, and justification for increases in service charges.
    4. Provide independent benchmarking for each item in the service charges budget compared to affordable housing properties, so they do not exceed expected levels.
    5. For the landlord to supply information to residents that make comparisons possible between years and the period recorded is between April to March.

Assessment and findings

Scope of investigation

  1. Paragraph 42.d. of the Scheme states that the Ombudsman may not consider complaints which concern the level of rent or service charge or the amount of the rent or service charge increase.
  2. As such, this Service cannot consider elements of the resident’s complaint which relate to the level, reasonableness, or liability to pay rent or service charges. These complaints are within the jurisdiction of the FTT. The resident may seek independent advice if he wishes to pursue this aspect of his complaint. Instead, this report will focus on the landlord’s communication around the service charges and whether it correctly followed its relevant policies and procedures.

Landlord’s policies and obligations

  1. Section 22 of the Landlord and Tenant Act 1985 says residents have the right to request certain information about service charges. Residents may inspect accounts, receipts, and any other documents that are relevant to the service charge.
  2. The landlord’s service charge policy states that following a request to inspect documentation, it will comply with Section 22 of the Landlord and Tenant Act 1985, to accommodate access to the required information, including from third party managing agents.
  3. The landlord’s service charge policy also explains that the landlord will carry out the following actions where appropriate and applicable:
    1. Provide residents with a statement of actual service charge expenditure within 6 months of the year-end, or if the agreement states, earlier where possible.
    2. Provide clear and transparent supporting information to explain any larger or unusual increases in service charges.
  4. The landlord’s complaints policy sets out 2 stages to its complaints process. At stage 1 it would acknowledge complaints in 5 working days and respond within 10 working days. Residents would have 10 working days to escalate the complaint from the date of its stage 1 complaint response. At stage 2, it would respond in 20 working days, however an extension could be agreed.

The resident’s requests for information about service charges.

  1. Within the landlord’s complaint responses, the landlord acknowledged a delay in providing the information requested about service charges to the resident. Where there are admitted failings by a landlord, this Service considers whether the landlord’s offer of redress was in line with the Ombudsman’s dispute resolution principles of being fair, putting things right, and learning from outcomes.
  2. This Service acknowledges that the landlord was not the freeholder of the property and that the freeholder had employed a managing agent to manage the service charges. Therefore, the landlord could only provide its residents with a response to service charge queries after it had received the relevant information from the managing agent. However, the landlord still had a responsibility to the resident to provide an accurate summary of his service charges. The Ombudsman would have expected the landlord to clearly communicate with the managing agent.
  3. There was no evidence provided to this Service that after the resident’s initial enquiry in July 2021, it had proactively communicated with the managing agent until August 2022. This meant 13 months had elapsed since the resident’s enquiry which was an unreasonable delay.
  4. The Housing Ombudsman’s spotlight report on managing agents says that landlords should ensure that they are proactive in pursuing managing agents account information regarding service charges. This is to ensure it is provided in a timely manner. From the information provided by the landlord, prior to January 2023 there is no evidence that the landlord was proactive in communicating with the managing agent.
  5. The spotlight report on managing agents also recommends that landlords clearly outline their approach when it comes to escalating concerns with managing agents, and to freeholders. It explains that landlords should be clear at what point they would consider legal enforcement of contract or lease terms and ensure they openly and transparently communicate this to all relevant parties, including its residents.
  6. It was clear from the evidence that the resident was without transparent service charges and supporting documents. He was distressed by not having the information available to him. The first instance of the resident being provided some of his requested information (2019 accounts) was in November 2022. This was 16 months after his initial enquiry, which was unreasonable.
  7. Ultimately, the landlord should have been open and transparent with the resident and communicated what actions it was taking to meet its obligations, but it had not done so until November 2022. Additionally, despite receiving the 2019 accounts, the resident said it was not in a clear format, this was unreasonable and inconvenient in the circumstances. He expended more time and effort to request escalation of his complaint as he was without further details about service charges, as well as accounts for 2020.
  8. The landlord had identified learning from the resident’s complaint. The landlord accepted that there was a delay in providing the requested information and said it could have done more. Following its final response to the resident, it had demonstrated it proactively chased the managing agent for information regarding service charges, which was appropriate and in line with its service charge policy.
  9. Additionally, the landlord said it was considering the residents’ feedback and working with the managing agent to provide more transparent communication regarding service charges. It also committed to providing more timely responses to the resident going forward. It advised the resident that he could request service charge information 6 months after year end. This was appropriate and in line with its obligations under Section 22 of the Landlord and Tenant Act. Additionally, it reasonably advised the resident that he may wish to approach the FTT for unjustified charges and communicated to him why there were increases in some service charges.
  10. Under this Service’s remedies guidance, consideration is given for distress and inconvenience caused to a resident by a particular service failure, considering the severity of the situation and the length of time involved as well as other relevant factors.
  11. The landlord made an offer of compensation totalling £100 in its final response. It was unclear how much of this £100 was apportioned to complaint handling. Despite this, the Ombudsman considers the offer of redress was not in line with the remedies guidance, considering the time elapsed since the resident first enquired in July 2021. It was clear the resident expended time and trouble, and he stated that the landlord was not treating his concerns seriously until this Service’s intervention.
  12. Overall, the landlord failed to effectively communicate the delay to the resident and manage his expectations from the outset. There is no evidence that (aside from a letter dated 17 August 2022) the resident was updated about the status of his service charge queries. This was unreasonable. Although the landlord acknowledged some of its failings and apologised, it had not done enough to put things right. The landlord had also failed to demonstrate to this Service and the resident, that it was proactive in pursuing the managing agent for the information on service charges.
  13. As such, the Ombudsman finds maladministration in the landlord’s handling of the resident’s requests for information about service charges. Orders have been made which take into account the resident’s time expended, as well as the inconvenience experienced.

Handling of the associated complaint

  1. There is no evidence that the resident had made a formal complaint prior to contacting this Service on 4 October 2022. Although the resident said he complained to the landlord in July 2022, this Service has not been provided a copy of this from either party. It is evident that the resident expended time and trouble contacting this Service, for assistance to progress through the landlord’s internal complaints process.
  2. This Service first contacted the landlord on 10 October 2022, with a deadline to provide the resident a stage 1 complaint response of 24 October 2022. The landlord did not provide its stage 1 complaint response until 4 November 2022. This was 9 working days in excess of its complaints policy and 8 working days longer than the date given by the Ombudsman. There was no evidence provided it acknowledged the resident’s complaint at stage 1 of its internal complaints procedure. There was no evidence it had agreed an extension to its 10-working days commitment to a response. This was inappropriate action by the landlord.
  3. The resident escalated his complaint on 22 November 2022. The landlord acknowledged his complaint escalation on 14 December 2022. Within the stage 2 complaint acknowledgement, the landlord did notify the resident that a stage 2 complaint response would be provided on 18 January 2023. It also provided justification that the extension was due to the holiday period and staff shortages. There is no evidence that the resident opposed this extension. Therefore, this was in line with the Ombudsman’s complaint handling code (the Code).
  4. Under the Code, the landlord is expected to provide the details of any remedy offered to put things right in clear, plain language. As mentioned in this report, it was unclear how much of the £100 offer of compensation was apportioned to its complaint handling. Although it apologised for its poor complaint handling, this Service cannot determine how much of the £100 was apportioned to its complaint handling. As such, it is the Ombudsman’s opinion that the landlord has not done enough to put things right.
  5. Overall, we find service failure in the landlord’s handling of the associated complaint. The Code is now statutory, orders made take into consideration compensation for the time and trouble experienced by the resident during his complaint journey.

Determination

  1. In accordance with paragraph 52 of the Scheme, there was maladministration in the landlord’s handling of the resident’s requests for information about service charges.
  2. In accordance with paragraph 52 of the Scheme, there was service failure in the landlord’s handling of the associated complaint.

Orders

  1. Within 4 weeks of the date of this report, the landlord is ordered to pay directly to the resident’s bank account, total compensation of £450, comprised of:
    1. £400 for its delays in providing service charge information to the resident and the inconvenience, time, and trouble experienced.
    2. £50 for its complaint handling failings identified in this report.
    3. If any of the £100 previously offered in its stage 2 complaint response had been paid, it can be deducted from the total amount of £450.
  2. The landlord is to provide evidence of compliance with the above orders to this Service.