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Peabody Trust (202232832)

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REPORT

COMPLAINT 202232832

Peabody Trust

11 September 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 queries about the service charge for 2021-22 including her request for a breakdown of the actual costs.
    2. the resident’s complaint.

Background and summary of events

The legal and policy context

  1. The resident is a shared owner of the landlord. Her lease commenced on 1 January 2018 and her property is a flat.  An external managing agent provides services for block. The resident’s service charge is based on the cost of invoices the landlord receives from the managing agent. The managing agent’s accounting year is January to December whereas the landlord’s accounting year is April to March. The managing agent sends invoices to the landlord for 6 months periods. The Ombudsman understands that actual statements sent to the resident can be based on anticipated expenditure from the managing agent, as stated in invoices sent to the landlord. This is due to the overlap in accounting periods.
  2. The landlord has a two stage complaints procedure.  It should log new complaints within 5 days and send a response within 10 working days unless an extension is agreed with the resident. At stage 2 there is an independent review of the complaint.  If a complaint is escalated the landlord will provide the stage 2 response within 20 working days of the complaint being escalated.
  3. The landlord’s compensation policy states the following scales apply to Time, Trouble and Inconvenience:
    1. £1-£200 – Minor Disruption
    2. £201-£400 – Moderate Disruption
    3. £401-£600 – Extensive Disruption
  4. The following scales apply to poor complaint handling:
    1. £1-£50 – Minor Failure
    2. £51-£150 – Moderate Failure
    3. £151-£250 – Severe Failure
  5. Section 21 of the Landlord and Tenant Act 1985 gives tenants the right to request a summary of the service charge account from their landlord. This allows tenants to see a breakdown of the costs a landlord has incurred over the previous accounting period and permits them to verify the fairness of any charges the landlord asked them to pay. Section 22 of the Act gives tenants the right to inspect further information regarding the summary of the service of accounts, including related documents, receipts, invoices, and contracts.
  6. The landlord’s service charge policy states:
    1. “We will consult and inform customers in line with legislation, best practice and tenancy and lease agreements, for the provision of additional and changes to existing services and therefore service charges. We will facilitate our customers’ ability to scrutinise relevant information.”
    2. “If there is a matter that prevents us from completing account statements and finalising surplus and deficit balances, in accordance with best practice and legislation, we will ensure customers are informed of the reason for the delay.”
    3. “We will, where appropriate and applicable, provide clear and transparent supporting information to explain any larger or anomalous increases in service charges.”
  7. In November 2021 the landlord sent a service charge booklet to the resident. It confirmed the actual service charge for the period 1 April 2020 to 31 March 2021 was £1,225.61. There was a credit on her 2020-21 service charge of £1,298.47 representing the difference between the estimated costs and actual costs.
  8. In October 2022 the landlord sent a service charge booklet to the resident. It confirmed the actual service charge for the period 1 April 2021 to 31 March 2022 was £2,595.25, and that the resident needed to pay £235.21.
  9. The resident contacted the service charge team by phone and email on 8 November 2022 stating that her service charge had doubled without an explanation or a breakdown of costs in the service charge booklet. The resident noted that her the 2020-21 service charge was £1,225.61 and the 2021-22 service charge was £2,545.25. She asked for an explanation before paying the outstanding amount. The landlord raised an enquiry under the reference CAS-958894-K3M8G1.
  10. After further contact by the resident on 25 November 2022, the landlord raised a new complaint about the responsiveness of the service charge team under reference CAS-965867-X1N2T6.
  11. The resident sent an email on 9 December 2022 reminding the landlord that it had still not responded formally to her concerns, in particular that it had not provided a clear breakdown of the service charges and an explanation for charges doubling in the last 12 months. On 10 December 2022 the resident made a request under section 21 of the Landlord and Tenant Act 1985 for a summary of the service charges for both 1 April 2020 to 31 March 2021 and 1 April 2021 to 31 March 2022.
  12. The landlord on 21 December 2021 advised that it was chasing a response to both her query and complaint but as the resident did not receive a response, she wrote further on 30 January 2023.
  13. On 3 March 2023 the landlord sent a service charge breakdown under the reference CAS-958894-K3M8G1. It advised:
    1. “For the year 2020-21 the cost to your unit was £2,436.40. This amount was reduced due to a credit for previous period of £1,265.78.”
    2. “For the year 2021-22 the cost to your unit was £2,545.25. Peabody`s 2021/22 accounts: Actual cost are based on invoices received from the agent which is based on their budgeted cost to be finalised at a later date.”
  14. The landlord provided a breakdown of invoices which was used to calculate the cost for 2021-22 and the invoices received for 2021-22.
  15. On 3 March 2023 the resident responded seeking clarification on the information provided. This included stating:
    1. her service charge booklet had a total of £2,595 while the “Recharged” amount below for the same period was £2,545.
    2. the landlord had referred to a credit of £1,265.78 but she only received a credit into her account on 29 December 2021 of £707.55.
    3. the landlord had listed service charges for period that did not align with the service charge booklet.
  16. The resident forwarded her email of 3 March 2023 to the complaint handler on 20 March 2023. On 21 March 2023 the landlord sent the stage 1 response to the complaint CAS-965867-X1N2T6. It stated it was attaching:
    1. 2021-22 service charge actuals.
    2. 2020-21 service charge actuals.
    3. Property statement of account.
  17. In the letter the landlord described the apportionment methodology; however, this related to a different block.
  18. In light of the delays experienced (time, trouble and inconvenience & poor complaint management) the landlord offered compensation of £75.
  19. On 30 March 2023 the resident asked to escalate complaint CAS-965867-X1N2T6 stating that the landlord had not answered the questions she submitted on 3 March 2023 and re-sent on 20 March 2023. On 31 March 2023 she highlighted:
    1. the discrepancy in the service charge booklet for 1 April 2020 to 31 March 2021 which stated that she was £1,298.47 in credit. However, that year she only received a credit of £707.55
    2. there was a miscalculation in the 1 April 2021 to 31 March 2022 actuals.  For 2021-22 the landlord had stated that the cost to her unit was £2,545.25 while the service charge booklet mentioned a charge of £2,995.25.
  20. On 31 March 2023 the landlord responded stating that it would respond further but on 13 April 2023 and 21 April 2023 the resident asked to escalate the complaint to Stage 2.
  21. On 10 May 2023 the Service wrote to the landlord stating that the resident had informed us that it had not escalated her complaint after receiving her response of 30 March 2023. With regards to the substantive issue the Service noted that the resident had raised concerns about the service charge for building maintenance and being charged for a concierge which she did not have. On 24 May 2023 the landlord escalated the complaint creating a new reference CAS-1023730-L0F5Y4.
  22. On 25 May 2023 the landlord issued to the resident an amended stage one response due to the original response addressing the wrong development. The resident advised the landlord on receipt that the revised letter omitted the apportionment methodology.
  23. On 26 May 2023 the landlord responded to the further queries raised in the resident’s email of 3 March 2023:
    1. It recharged only for the amounts that related to the period commencing 1 April 2021 and ending 31 March 2022. The service charge (exclusive of other costs such as the management fee) for the period 2021-2022 was £2,545.25.
    2. It received a recharge from the managing agent for £1,441.60 for the period 1 January 2022 to 30 June 2022.  It apportioned the charge £720.90 for 1 January 2022 to 31 March 2022 and £720.70 for 1 April 2022 to 30 June 2022.
    3. Her service charge account year-end 2020-21 had a credit balancing charge £1,298.47 and a refund of £707.55 was made back to her bank account.
  24. On 30 May 2023 the landlord sent the Stage 2 response to the complaint under the reference CAS-1023730-L0F5Y4.
    1. It accepted that it did not send a detailed explanation to the resident until 3 March 2023. Given that an enquiry should be dealt within ten working days, it regarded this as a service failure.
    2. It offered compensation of £950 which comprised:
      1. £100 – Time, trouble, and inconvenience
      2. £850 – Complaint Handling

(1)  Delays with response for CAS-958894-K3M8G1 (8 November 2022 – 6 March 2023): £250.00

(2)  Delays with response for queries following on from CAS-958894-K3M8G1 (3 March – 25 May 2023): £150.00

(3)  Delays with Stage One response for CAS-965867- X1N2T6 (25 November 2022 – 21 March 2023): £250.00

(4)  Poor quality of Stage One response for CAS-965867-X1N2T6: £50.00

(5)  Delay in escalating CAS-965867-X1N2T6 to Stage Two (30 March 2023 – 30 May 2023): £150.00

  1. On 2 June 2023 the resident responded to the landlord’s email of 26 May 2023. She raised further queries but stated that main issue was that the landlord had not provided an itemised list of costs, so she was unclear why the service charge for 2021-22 was double the charge for the previous year. The resident stated that she understood from the landlord that the managing agent had not provided an invoice for the period 1 January 2021 to 30 June 2021 which it had recharged for. She stated that she was still unclear whether the managing agent had reviewed the budgeted versus actual costs yet for 2021-22 and, if not, what was causing the delay.
  2. The resident stated that she had worked out herself that the landlord had not taken the Direct Debit of £590.92 for January 2022 which was why the refund was £707.55, but that the landlord’s response had not explained this.
  3. On 19 June 2023 the resident confirmed that she wanted the Service to consider her complaint about the landlord’s handling of her request for a breakdown of service charges for building maintenance for the year between April 2021 and March 2022. She advised that while she was happy with the compensation offered, she had not been provided evidence of the charge such as receipts and invoices.
  4. On 16 June 2023 and 10 July 2023, the resident wrote to the landlord stating she had not received a further response to her email of 2 June 2023.
    She asked to raise a complaint.
  5. On 7 November 2023 the landlord received a request from the resident under section 22 of the Landlord and Tenant Act 1985 to view the 2022-23 actuals. On 11 November 2023 the resident stated that she still wanted to understand why the 2021-22 service charge was double the previous year (and why the 2022-23 charge was higher still). She reiterated that she wanted a detailed breakdown of accounts/receipts and she was “specifically after the itemised amounts that made up the total invoice amounts”. On 26 January 2024 she noted that the landlord had sent the anticipated/estimated breakdown of accounts, but she wanted the actual accounts/receipts. The landlord advised that the 2021-22 actual final accounts from the managing agents had not been finalised yet. The resident queried why the landlord had not yet received the actuals. In response, the landlord advised that managing agents had 18 months from the start of their accounting period in which to reconcile their accounts, but they could issue a section 20b notice which allowed them more time.

Assessment and findings

Scope of the Investigation

  1. The resident requested a breakdown of actual service charges and an explanation of the increase from the estimated service charges. When investigating this complaint, the Service has not sought to determine whether the service charges have been reasonably incurred or if the resident is liable for the service charges.  The First-Tier Tribunal (Property Chamber) can make determinations on all aspects of the liability to pay a service charge, including by whom, to who, how much and when a service charge is payable. The investigation has focussed on the landlord’s communication including the content and timeliness of information provided. The Service has also considered the methodology used to calculate the charge.

The resident’s request for a breakdown of the actual service charges for building maintenance for the April 2021 – March 2022

  1. As confirmed by the resident’s contact of 8 November 2022, the resident was essentially concerned that her service charge for 2021-22 had doubled without explanation or a breakdown of costs in the service charge booklet.
  2. It was not until 3 March 2023 that the landlord provided a response which was a considerable delay well outside its timeframe for responding to enquiries.  The landlord did not provide updates to the resident during this period which exacerbated her distress and inconvenience.  Within this period the resident made a complaint on 25 November 2022 and made a formal request for a summary of charges in accordance with section 21 of the Landlord and Tenant Act 1985. This demonstrates that the time and trouble she expended in order to receive a response was unreasonable.
  3. In its response of 3 March 2023, the landlord evidently sought to explain the resident’s service charge by providing a breakdown of the invoices received. However, the resident raised further queries by reply and when pursuing her formal complaint. The landlord did not provide a substantive response until 26 May 2023.  Therefore, again, the landlord significantly delayed in responding to the resident which exacerbated her distress and inconvenience. In responding to the resident’s complaint, the landlord acknowledged both its delay in responding to her initial query of 8 November 2022 and her follow-on queries of 3 March 2023. It offered reasonable redress for these delays by awarding compensation in line with its Compensation Policy, specifically the maximum award for poor complaint handling as well as an award for Time, Trouble and Inconvenience.
  4. However, the resident’s further email of 2 June 2023 confirms that she was not satisfied with the landlord’s response as she wanted more granular information. In particular, she wanted an itemised list of costs which made up summary invoices. She also asked for confirmation whether the managing agent had reviewed the budgeted versus actual costs yet for 2021-22 and if not, what was causing the delay.  As this query followed on from the earlier correspondence and complaint about the increase in the 2021-22 service charge, it was necessary for the landlord to respond.  In fact, the landlord’s service charge policy states it will “provide clear and transparent supporting information to explain any larger or anomalous increases in service charge”. However, it neither responded nor raised a new formal complaint after the resident complained about not receiving a reply.  As a result, the resident’s queries about the 2021-22 service charge remained unanswered and the landlord did not take all the necessary action to resolve the resident’s complaint. 
  5. The service charge policy states that “If there is a matter that prevents the landlord from completing account statements and finalising surplus and deficit balances, it should inform customers of the delay”. In this case, the landlord needs to receive the actual final accounts and supporting documents such as receipts from the managing agent; however, it has not received this for 2021-22.  It did not make this clear to the resident until responding to further correspondence in January 2024. Also, the landlord noted that the managing agent could extend the time to reconcile its accounts.  However, it did not make clear if it had been informed when the accounts may be reconciled or if it had asked the managing agent for a timeframe.  As a result, it missed an opportunity to, at least in part, alleviate the resident’s uncertainty as to when she might receive the information she wanted relating to the 2021-22 service charge.

Complaint handling

  1. The resident raised a stage 1 complaint due to the delay by the landlord in responding to her original request of 8 November 2024. She raised a stage 2 complaint due to the delay in responding to her further query of 3 March 2023.  At both stages the landlord did not respond within the timeframe within its complaints procedure or agree revised timeframes.  The landlord acknowledged the delays in the stage 2 response of 30 May 2023 and offered compensation. It offered reasonable redress for these delays by awarding compensation in line with its compensation policy. Specifically, it awarded the maximum award for poor complaint handling for the stage 1 delay and an award for moderate failure for the stage 2 delay.
  2. There was an error in the stage 1 response as it referred to a different block. Although the landlord corrected this, it did not make clear the apportionment methodology for the resident’s block which may have helped the resident understand her service charge better. The landlord identified and offered redress for these errors by offering compensation in its stage 2 response.
  3. The Service will not make a finding of maladministration where the landlord has fully acknowledged any failings and taken reasonable steps to resolve them. In this case the landlord has identified and offered reasonable redress which reasonably resolved the resident’s complaint about the failings in its complaint handling. This finding does not mean the Service thinks the landlord’s handling of this issue or impact on the resident was ‘reasonable’. The finding reflects that there were failings by the landlord, which its compensation offer acknowledges and compensated for in line with the Ombudsman’s approach.

Determination (decision)

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in its handling of the resident’s queries about the service charge for 2021-22 including her request for a breakdown of the actual costs.
  2. In accordance with paragraph 53(b) of the Housing Ombudsman Scheme, the landlord offered reasonable redress to the resident in respect of its complaint handling.

Reasons

  1. The landlord neither responded nor raised a new formal complaint after the resident, following on from her earlier queries and complaint, requested further information in June 2023. Furthermore, the landlord did not make clear if it had been informed when the accounts may be reconciled or if it had asked the managing agent for a timeframe.
  2. The landlord identified and offered reasonable redress which satisfactorily resolved the resident’s complaint about the failings in its complaint handling.

Orders

  1. Within the next 4 weeks the landlord is ordered to:
    1. arrange for a senior member of staff to send an apology to the resident in respect of its handling of her queries about the service charge for 2021-22 including her request for a breakdown of the actual costs.
    2. pay the resident £100 for distress and inconvenience arising from the delay in responding to her follow-on information request of 2 June 2023.
    3. provide the resident with the requested actual, itemised breakdown of costs that made up the 2021-22 service charge.  If it is not able to provide such a breakdown it should advise when it anticipates being able to do so.  It should outline any steps taken to obtain relevant information from the managing agent.  The landlord should also make clear whether it is dealing with this request under section 22 of the Landlord and Tenant Act 1985 and what other options the resident has.