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Peabody Trust (202317719)

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REPORT

COMPLAINT 202317719

Peabody Trust

17 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

  1. The resident’s complaint is about the landlord’s handling of concerns about its buildings insurance tender process and residents being overcharged for their annual insurance premium.

Determination (jurisdictional decision)

  1. When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.
  2. After carefully considering all the evidence, I have determined that the complaint, as set out above, is not within the Ombudsman’s jurisdiction.

Summary of events

  1. The resident is a leaseholder of the landlord, a housing association.
  2. On 6 July 2023, she emailed a complaint to the landlord. She raised the following concerns:
    1. The complaint was “based on the way buildings insurance is provided” by the landlord. While she understood a “single insurance policy” helped with admin, the amount she was being charged was “4 times the market rate” for her property type (1 of 2 flats in a split, semi-detached house).
    2. She provided a quote which she said would insure the whole house for £200. She said charging each leaseholder the same amount meant she, and other residents, were “paying for increases to insurance premiums in other estates/blocks”. This included blocks affected by cladding issues.
    3. She was “not responsible for other blocks” as per her leaseholder contract.
    4. The landlord should “consider a different way of insuring different types of properties”, such as providing “separate policies for estates vs houses”. She said this would be “more aligned with market rates”. At present, the landlord was “overcharging leaseholders to facilitate admin”.   
  3. The landlord responded on 14 July 2023. Its email did not make clear that it was a formal complaint response. It made the following comments:
    1. It had sent a Section 20 letter to the resident. It clarified it had gone to tender and “invited the whole of the insurance market to…express their interest in bidding”. It explained more about the bidding process and how it vetted bids received.
    2. The insurance market had “seen significant (price) rises” recently and “reinstatement values (had) increased dramatically”. Some of the factors causing this increase included Britain leaving the European Union and the impact of the COVID-19 pandemic on the cost of labour and materials.
    3. If it “looked to ensure (the resident’s) block separately, the costs incurred…would still far exceed the costs of insuring under a singular block policy” as it currently arranged. Most insurers would not “place insurance on a block by block basis”. Any insurance policy also needed to include “Property Owners and Public Liability and Terrorism” and to cover “the whole building and grounds…not just the demised leasehold spaces”.
    4. It said internet search engines which generate quotes would do so for individual flats, but it could not “just insure the flat on its own, not just the building”. A landlord’s building policy was needed, which “details the true value of the building and all the demised spaces of all the leaseholders and tenanted spaces”. It would also include the “communal areas and external elements of the building such as the walls and roof”.
    5. It had a “mixture of houses and flats” across its portfolio of properties. It said when procuring a contract for insurance, it had to “look at how (it) can obtain best value for the entire portfolio, not individual properties”. If it “insured per block, estate or individual properties”, the insurance premium would be “significantly higher”. It said administration costs would also be higher and “most insurers may not want to ensure on this basis either”.
  4. The resident replied the following day. She “remained dissatisfied” with the landlord’s service and asked for her complaint to be escalated to stage 2. She noted the following:
    1. The fact the landlord only received one quote during the tender process showed it needed to “seek alternative ways to seek to insure (its) portfolio rather than having a single quote for all properties regardless of type”.
    2. It had not shown that it had looked at insuring properties in a different way.
    3. She had not suggested (insuring) “per block or estate or individual property” but instead by property type.
    4. She disagreed with paying a “significantly higher than market rate insurance premium” for her property.
  5. On 24 July 2023, the landlord acknowledged the complaint escalation request. It said it would aim to provide its response within 20 working days.
  6. The landlord provided a stage 2 complaint response on 11 August 2023. It noted the resident wanted to “only be charged an insurance premium for (her) property”. Its comments and findings included:
    1. It was sorry she was unhappy with its tender process and how it insured its property stock.
    2. It reiterated the reasons for the increase in insurance premiums it had outlined in its stage 1 response.
    3. The insurance tendering process “went through the Section 20 process”. It was satisfied affected leaseholders had been appropriately consulted.
    4. It said it “appreciated” the resident’s concerns. However, it was satisfied it had explained why it was unable to insure individual properties. It had also explained the tender process. It did not consider the “fact that only one quote was received (during the tender process) has a bearing on whether it’s a reasonable or a thorough process”. It said the quote received was “the only one that met (its) criteria”, which it had explained.
    5. There was no obligation for it to amend its processes and it had explained its reasons for operating the way it did. It therefore said there was no evidence of service failure, and it did not uphold the complaint.
  7. The resident referred her complaint to the Ombudsman on 13 September 2023. She reiterated her concerns. To resolve the complaint, she wanted the landlord to “look at other ways of insuring…(its) portfolio”, change the way it tenders insurance and refund the previous 3 years’ worth of insurance premiums.

Reasons

  1. Paragraph 42.d. of the Housing Ombudsman Scheme (“the Scheme”) says we may not investigate complaints which concern the level of rent or service charge or the amount of the rent or service charge increase.
  2. Paragraph 42.f. of the Scheme says we may not investigate complaints where we consider it “quicker, fairer, more reasonable or more effective to seek a remedy through the courts, other tribunal or procedure”.
  3. Section 3.1 of the landlord’s Service Charges policy states that “homeowners pay buildings insurance in their service charge”.
  4. Having reviewed the complaints the resident raised, it is clear she remains unhappy with the charges being levied by the landlord relating to her annual buildings insurance. She has queried whether the landlord should an alternative way of tendering insurance. She has also suggested it should provide separate insurance policies for residents who live in different property types.
  5. The resident has said the landlord’s current arrangements mean she is being overcharged. She has requested that previous years’ payments for buildings insurance be refunded as a result.
  6. In response, the landlord provided explanations for why buildings insurance costs had increased in recent years. It also explained why adopting different policies for different property types would not be feasible. It also said implementing separate policies may end up costing more than current arrangements due to an increase in administrative costs.
  7. It clarified that the current tender process had been carried out following a Section 20 consultation with residents. As a result, it did not consider there was any obligation for it to change its approach or current procedures.
  8. We have considered the information provided. This includes the resident’s complaint and correspondence in which she set out her desired outcomes and expectations. In line with the paragraphs of the Housing Ombudsman Scheme referred to above, we consider the complaint falls outside of our jurisdiction.
  9. The landlord addressed the concerns the resident raised in a reasonable way. It set out its positions, which it was entitled to adopt. However, we are unable to issue binding decisions on whether its arrangements for procuring buildings insurance for its properties are reasonable, or whether its policy of charging one rate for all property types is appropriate. As per the landlord’s Service Charge policy, buildings insurance costs form part of the overall service charge bill to leaseholders. As such, the resident’s concern about being overcharged means this is essentially a dispute about the level of service charges.
  10. Therefore, this is a matter that would be more relevant for either a Court to decide on, or to be referred to the First Tier Tribunal (Property Chamber) for consideration. The First Tier Tribunal (‘FTT’) can issue a binding decision on the level and reasonableness of service charges.
  11. The resident may therefore wish to refer her complaint to either the FTT or seek further independent advice on the issues she has raised.