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Peabody Trust (202316568)

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REPORT

COMPLAINT 202316568

Peabody Trust

28 February 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 concerns about its service charges including cost of communal lighting being connected to his utility meter.

Background

  1. The resident is a leaseholder of the property, and the landlord is the freeholder. He has stated his property is on the ground floor within a converted terraced house with 1 neighbour above him.
  2. The resident complained to the landlord about the amount of service charges for his property. He was also dissatisfied with its handling of his reports that the communal lighting at the building was connected to his personal utility meter. He was seeking reimbursement of the charges. A copy of the complaint was not provided to the Ombudsman. The nature of the complaint has been determined from the landlord’s stage 1 response.
  3. The landlord issued its stage 1 response on 5 June 2023. It stated the electricity charges would remain in the service charge. It would however contact the resident to arrange reimbursement of the charge once it confirmed supply arrangements. It also provided an explanation for the service charges for its management fee and the reserve fund and said it would not be amending them. It offered £45 compensation for his time and trouble and its complaint handling failings.
  4. The resident requested the escalation of the complaint on 14 June 2023. He disagreed with the landlord’s findings at stage 1 regarding the electricity supply and its reasoning for the level of service charges.
  5. The landlord issued its stage 2 response on 17 July 2023. It provided an update regarding the status of its investigation into the electricity supply including a refund option. It said would need to complete an inspection at the property to make the refund. It reiterated the reasoning for the service charges and that they were not excessive. It increased its offer of compensation to £175 for the resident’s time and trouble and its complaint handling failings.
  6. In bringing the complaint to the Ombudsman the resident has said he wants the landlord to refund the communal lighting charges from March 2023, to review the management fee and explain the reserve fund methodology.

Assessment and findings

Scope of the Investigation

  1. Paragraph 42.d. of the Housing Ombudsman Scheme says the Ombudsman may not consider complaints which concern the level of rent or service charge, or the amount of the rent or service charge increases. Part of the resident’s complaint relates to the reasonableness of service charges, and his request for a reduction or removal of some of the charges. The Ombudsman can consider how the landlord handled the resident’s complaint about service charges. The consideration of the reasonableness of the charges would be a matter for the First Tier Tribunal. This aspect of the resident’s complaint has therefore not been investigated in this report.

Charges including cost of communal lighting

  1. As part of this investigation the landlord was asked to provide documents, correspondence, and any other evidence relevant to the resident’s complaint. Although this Service was still able to determine this case using the information that was available, the resident’s initial complaint was not provided nor was his correspondence which the landlord referred to in its stage 2 response. It is vital that landlords keep clear, accurate and easily accessible records to provide an audit trail. If we investigate a complaint, we will ask for the landlord’s records. If there is disputed evidence and no audit trail, we may not be able to conclude that an action took place or that the landlord followed its own policies and procedures.
  2. Based on the landlord’s complaint responses to the resident, he contacted it on 2 March 2023 requesting a breakdown of the service charge that he had paid for the year ending 31 March 2023. In those responses it stated that it replied to him on 7 March 2023. It has not provided copies of this correspondence to the Ombudsman. It wrote to the resident on 16 March 2023, providing details of the annual service charge for the year 1 April 2023 to 31 March 2024.
  3. In its stage 1 response of 5 June 2023, the landlord apologised for its delay in responding to the resident. It explained that the service charge for the property was a variable charge, estimated at the beginning of each year and reconciled at the year end. Regarding specific elements of the service charge it provided the following responses:
    1. Electricity – It had raised with its residential service department the resident’s concerns that the communal lighting at the property was connected to his personal utility meter. It had asked the department to contact him to set up a regular reimbursement of the charge once they had confirmed the supply arrangements. For that reason, the electricity charge would remain in the service charge. This was because, although it would reimburse him regularly for the lighting used in the communal areas, the service charge was set to ensure all who benefited from it contributed their fair and reasonable proportion. It clarified that it provided estimates and would reconcile the actual charges incurred (in this case the reimbursements) after the year end had passed.
    2. Management Fee – It explained that the management fee covered the proportion of costs, directly attributable to leaseholders and freeholders, incurred by the landlord in the management of the resident’s property. There was a flat rate fee applicable to his property.
    3. Reserve Fund – The reserve fund was set aside to cover the cost of major works or other significant items of expenditure expected in the foreseeable future, usually a period of 10 to 20 years. Costs such as replacing the roof, windows or communal doors came at a high cost and the landlord aimed for those monies to be available to cover the resident’s share of such works when needed to reduce the need for large balancing charges. The amount was determined as an appropriate contribution, and it could not reduce it.
  4. The landlord offered the resident £45 in compensation. This consisted of £20 for time, trouble, and inconvenience and £25 for complaint handling.
  5. In the absence of the resident’s complaint, it is difficult for the Ombudsman to determine the accuracy of the landlord’s response or timescales for its response. However, it provided clear and appropriate explanations for the service charges. Its commitment to investigate the electricity usage was also appropriate.
  6. The next day, the landlord internally enquired about the connection of the communal electricity supply at the property to the resident’s own personal supply. It noted it could not see there was any reimbursements taking place and the property had not been set up for a refund. Its internal communications show that it was seeking clarification on payment for communal electricity at the property. It also asked a neighbourhood officer to contact the resident.
  7. The landlord has provided its policy regarding communal electricity refunds. Regarding tenants whose electricity meters run the lights in communal areas, a neighbourhood manager will visit the property. They would test if the communal electrical item switches on and off when the power is cut to the tenant’s electricity meter. The tenant may be entitled to 47p per light bulb per week if their claim relates to communal lighting running off their electricity meter. The policy also states it can backdate payments. A regional manager must approve payments for a period beyond 18 months. The landlord failed to inform the resident of this in its complaint response. There is also no evidence it informed the resident of its refund policy prior to him making his complaint.
  8. In his response to the stage 1 response, the resident mentioned that he had previously had no real communication from the landlord’s accounts team. He requested to escalate the complaint to stage 2 as he did not agree with its stage 1 findings. In escalating the complaint, the resident stated as follows:
    1. If there was a landlord electricity supply, it would have a meter registered that it would pay for and recover costs from the leaseholders. It could visit the property and ascertain the lack of a landlord meter and the supply connection from his meter. He had paid for electricity in March 2023 and subsequently every month of the year 2023 to 2024. He wanted that amount reimbursed and any future payments stopped. There was hardly any use of the communal hallway light. What usage it did get, he was happy to pay for through his utility supplier. He was not suggesting it put in a landlord meter for 1 bulb as he did not trust it to charge a fair or reasonable amount or get value for money.
    2. He had already stated the service charge had been set up using arbitrary methods or just a template. That was not fair or suitable for his type of property and the landlord was profiteering from him.
    3. The management fee was unjustifiable for the services provided to his property. As such it should reduce the service charge to reflect that.
    4. He would like to know what methodology the landlord used to arrive at the set amount for the reserve fund.
  9. The landlord’s internal communications show that it found on 12 July 2023 that it had contacted the wrong neighbourhood manager investigating the matter. Its energy team also confirmed the same day that the electrical meter was not within its remit. When communal areas are connected to a resident’s personal meter it was a ‘neighbourhoods and IT’ process. They stated that if the landlord installed a new meter it would need to go to the electrical team to raise.
  10. On 13 July 2023, the landlord began to arrange to visit the property regarding the electric meter.
  11. In its stage 2 response on 17 July 2023, it provided details of the cases it logged since March 2023 in response to the resident’s queries about his service charge. It said it had responded within the timeframes required but acknowledged not responding to his latest case until his complaint was raised. It considered that to be a service failure. It also acknowledged that its stage 2 decision was 5 days late.
  12. The landlord stated that it was aware some of its residents’ electricity meters were connected to communal areas and may be charged for the electricity used. It confirmed to him the terms of its communal electricity refunds policy including backdating payments. For it to work out if his property was eligible, it required its neighbourhood manager to arrange a visit to assess the switches. It noted it had committed to do so in its stage 1 response, but it had not been progressed. It apologised for this service failure.
  13. With respect to the management fee, the landlord said the size of the development was not necessarily proportionate to the charge. Landlords have overheads that apply to managing their developments and whilst some services would not be involved within that, it would still need to provide essential services. It provided a list of the services. It did not agree that the management fee was excessive, however the resident could escalate the matter to the First Tier Tribunal.
  14. The landlord explained that the level for the reserve fund was set based on its stock for properties of comparable size, location, and specification. The fund functioned as a buffer for leaseholders in the event of unexpected costs for essential works. The fund also helped it manage the difference between estimates and actuals. As the reserve fund was essential for estate management it was a reasonable cost to incur.
  15. The landlord apologised for the identified service failures which led to an escalation of the resident’s complaint and recognised it had taken some time to obtain the explanations that he requested. It increased its offer of compensation to £175 consisting of £150 for time, trouble, and inconvenience and £25 for its complaint handling due to the delay with the stage 2 escalation. It also stated his neighbourhood manager would contact him to investigate the communal electricity.
  16. As with the stage 1 response the landlord provided a full explanation of the reasons for the service charges to the resident. It was also appropriate that it advised him about approaching the First Tier Tribunal if he remained unhappy with its explanation. It acknowledged its failings regarding its delayed response to his latest service charge case including not conducting an inspection of the electric meter. It is not clear from the evidence if the inspection took place following the stage 2 response. A recommendation has therefore been made for the landlord to consider in that regard.
  17. The landlord’s offer of additional compensation at stage 2 of its complaints process included the further delays since the stage 1 response was issued. The total amount offered was sufficient to recognise the delays. The compensation offer is also in line with the Ombudsman’s remedies guidance. It proportionately reflects the impact of the delay on the resident and amounts to reasonable redress in this case.

Determination

  1. In accordance with paragraph 53.b. of the Housing Ombudsman Scheme, the landlord made an offer of redress which, in the Ombudsman’s opinion, satisfactorily resolves the matter of the landlord’s handling of the resident’s concerns about its service charges including cost of communal lighting being connected to his utility meter.

Recommendations

  1. If it has not already done so the landlord should contact the resident to arrange inspection of the communal lighting in relation to his personal utility meter. It should provide him with a report of its findings including if any further work is required, or payments are to be made.