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Peabody Trust (202410207)

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REPORT

COMPLAINT 202410207

Peabody Trust

20 May 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:
    1. the landlord’s response to the resident’s concerns about her rent and service charges for the financial year 2024 to 2025.
    2. the landlord’s complaint handling.

Background

  1. The resident is a shared owner of the property with the landlord, under a lease dated 31 July 2019. The property is a 3-bedroom house and the resident lives with her partner and 2 children. In 2023, the landlord, a housing association, merged with another housing association.
  2. On 1 December 2022 the landlord sent the resident a notice of intention to enter a long-term agreement with a provider for buildings insurance and associated services. It invited the resident to send it any observations before 3 January 2023. On 27 June 2023 the landlord sent the resident an update with a proposal for the provision of services including insurance cover. It invited the resident to send over any observations before the consultation ended on 27 July 2023.
  3. On 14 March 2024 the landlord issued the resident with a letter outlining her updated rent and estimated annual service charges for the period 1 April 2024 to 31 March 2025. The total was £586.70, an increase of £94.65 per month. Throughout April, May and June 2024 there was communication between the resident and the landlord in respect of the increase in charges.
  4. In this period, the resident told the landlord that:
    1. an increase of the amount proposed was unreasonable.
    2. most of the increased cost was due to the price of building insurance. She requested a breakdown of what this insurance included.
    3. she wanted to know if she could opt out of paying building insurance to the landlord and instead pay directly for insurance through a third-party provider. She was already paying for contents and building insurance separately.
    4. her household barely benefited from the communal maintenance services as she lives in a semi-detached property with no communal lifts, bins or entrances. She said her household contribute to the maintenance of the small patch of grass next to her house, because the landlord scarcely tends to it.
    5. she had spoken to her neighbours and some of them were paying less for building insurance. She wanted to know why.
    6. she felt the landlord had been unprofessional, rude and unresponsive to her requests for information.
  5. On 16 June 2024 the landlord asked the resident if she was happy with the information it had provided to her, to enable it to close the complaint. The resident responded that she was under the impression the complaint was going through the landlord’s internal complaints procedure. On 8 July 2024 the landlord accepted the resident’s correspondence as a complaint and sent her a stage 1 acknowledgment letter.
  6. The landlord issued its stage 1 complaint response on 23 July 2024. It said:
    1. it apologised for the delay in providing a response to the resident’s queries.
    2. the rent was increased periodically as dictated by the lease. The lease outlines the calculations, but, in short, the annual rent increase was linked to inflation.
    3. in respect of service charges:
      1. the service charge increases were in part due to the use of contractors and sub-contractors. Though the landlord issues tenders for these, increases are unavoidable.
      2. service charges have increased throughout the sector due to inflation, insurance rises and new government regulation.
      3. it was committed to providing good value for money and good quality services.
      4. the service charge estimates were anticipated costs for the year ahead. After the year, these would be compared to the actual costs. Money would be credited back if there was a surplus. If there was an additional spend, a charge would occur.
      5. it signposted the resident to advice on well-being, the first-tier tribunal and referred her to its service charge policy.
    4. in respect of the buildings insurance, it said:
      1. the resident had requested information in April 2024. On 9 May 2024 the landlord provided the resident with buildings insurance policy documents outlining what policy was covered. The resident was unhappy with this and made a complaint.
      2. the reason for the increase was that the previous long-term insurance contract had ended and the landlord had gone to tender to obtain a new contract.
      3. the market had seen a rise in recent years due to re-instatement values having increased, new regulations and the impact of Brexit. The coronavirus pandemic and associated delays had also increased labour costs and materials.
      4. the landlord operates a block policy whereby it gets the best value for a policy that covered its entire portfolio of properties, rather than individual properties, as this is more cost effective. The premium is calculated as a percentage of the reinstatement value of the property. The landlord has 18,000 leasehold/shared ownership properties, the insurer provides one figure to the landlord and this is apportioned across 18,000 properties.
      5. the insurance must include cover for property owners, public liability, terrorism and, if applicable, engineering.  It must cover the whole of the buildings including communal areas and grounds, not just demised leasehold spaces.
      6. leaseholders were consulted in December 2022 alongside a letter it had sent the resident which included a leasehold ‘frequently asked questions’ document. Leaseholders were updated in June 2023 concerning the tender outcome and invited to feedback within a 30-day period.
      7. any discrepancy between properties’ insurance payment amounts will be because the rebuild values of the properties were different.
      8. it offered the resident £50 for her time and trouble and the delay in providing her with an explanation for the increase in insurance.
    5. In respect of complaint handling, the landlord apologised to the resident for her poor customer experience and offered her £50 compensation in recognition of its delayed response. To learn from this failing, it said it would review and strengthen its procedures, provide training to its staff on the Complaints Handling Code and hold regular meetings within its service areas to review complaints received.
  7. The resident escalated her complaint on 3 August 2024. She said:
    1. she appreciated the response after being “passed around” by the landlord’s employees. Her complaint was not logged until 3 months after it was made. She said she was appalled by the landlord’s lack of communication and compassion.
    2. the landlord had given her a 75-page document regarding the buildings insurance, but the information provided did not justify such a significant increase.
    3. she had her own contents insurance. She wanted to know why she was unable to opt out of the landlord’s building insurance.
    4. prior to the landlord’s merger, the annual increases in rent and service charge were less than £35 per month. This new increase was £94.65 per month which was too high.
    5. there was a national cost of living crisis and the landlord’s aim was to provide affordable housing to customers. There was a conflict of interest in the landlord demanding so much money.
    6. the only benefit for her household from the service charge is the maintenance of a small area of grass outside her property. This was poorly maintained by the landlord.
  8. The landlord issued its stage 2 response on 2 September 2024. It said:
    1. it was sorry the resident was dissatisfied with its response to her concerns and lack of clear justification of the housing costs, specifically the increase in building insurance for the financial year 2024 to 2025.
    2. it acknowledged the difficulties the resident expressed. It said the increases were in accordance with terms outlined in the lease. It could not intervene or provide a different resolution at this stage.
    3. the requirement for building insurance through the landlord was stipulated in the lease agreement. Residents could not opt out or alter the obligation to pay for this. The landlord would cease to insure the property once the shared ownership staircasing was complete.
    4. the resident could review the lease and advised her to seek independent legal advice.
    5. it acknowledged and apologised that the complaint was not logged within 3 working days of her request.
    6. it offered a final compensation award of £125 broken down into:
      1. £75 for her time and trouble spent chasing information in respect of increased charges.
      2. £50 for the complaint handling failures.
  9. The resident approached this service in December 2024. She was unhappy with the landlord’s compensation offer and its explanation of the price increases. She said she was “passed around” the landlord’s departments trying to get answers and was, at one point, told by the landlord that the complaint was closed. She said she wanted a better response to her concerns. She also wanted the landlord to review the insurance and look for a more affordable provider. She wanted a revised offer of compensation.

Assessment and findings

Scope of the investigation

  1. The resident’s complaint concerns the landlord’s handing of, and response to, her request for an explanation for the increase in her rent and service charges. In accordance with paragraph 42(d) of the Scheme, the Ombudsman may not consider complaints which concern the level of service charge or rent, or the amount of rent or service charge increase. We can assess whether the landlord’s overall communication with, and responses to, the resident were appropriate, fair and reasonable.
  2. Complaints that relate to the level, reasonableness, or liability to pay rent or service charges are within the jurisdiction of the First-Tier Tribunal (Property Chamber) and the complainant would be advised to seek free and independent legal advice from the Leasehold Advisory Service (LEASE) ( https://www.lease-advice.org/) in relation to how to proceed with a case.

The landlord’s response to the resident’s concerns regarding service charges and rent for the financial year 2024 to 2025

  1. The rent is determined by the terms of the leasehold agreement. In shared ownership, gross rent refers to the total rent if the tenant owned 100% of the property, whilst the specified rent is the actual amount paid, which is a percentage of the gross rent, reflecting the shared ownership arrangement. The rent review outlined in the leasehold agreement explains that the rent will be increased annually (but not decreased) in accordance with a formula in the lease, referencing the retail price index.
  2. The leasehold agreement states that part of the landlord’s obligation is to keep the premises insured. The agreement states that the leaseholder must refund the landlord the insurance premiums it incurs. The lease states that the resident must pay variable service charges. These charges change based on the costs incurred by the landlord. It says the landlord must act reasonably in determining these costs.
  3. The landlord’s service charge policy states that residents, customers’ associations and other representative groups can raise service charge queries on block, estate or scheme costs and it will respond accordingly. It says it will provide clear and transparent supporting information to explain any large or unusual increases in service charges.
  4. Under section 20 of the Landlord and Tenant Act 1985, the landlord must consult with leaseholders before carrying out any works which will cost in excess of £250. This consultation begins with the landlord serving the resident a ‘section 20 notice’.
  5. Section 20b of the Landlord and Tenant Act 1985 says that the landlord must notify leaseholders of service charge costs, or demand payment of them, within 18 months of them being incurred. Where the landlord is not able to calculate final costs within this period it must serve a ‘section 20b notice’. This notifies the leaseholder of costs and advises them that they will be required to contribute towards these. If a landlord fails to comply with the requirements of section 20b then it is unable to reclaim costs from the leaseholder.
  6. In December 2022 the landlord sent the resident a notice that its building insurance contract was ending in 2023 and it was beginning the process of obtaining tenders for a new contract. It included a factsheet with answers to frequently asked questions regarding the process. It invited the resident to feedback observations within 28 days. This was appropriate and in line with its legal obligations under the Landlord and Tenant Act 1985.
  7. On 27 June 2024 the landlord updated the resident per its legal obligations. This included a formal notice of the landlord’s proposal outlining the estimated expenditure of the insurance. It included information regarding how the cost would be divided, what cover the policy included, reasons the cost was likely to increase and how the tender process worked. This was appropriate and in line with its legal obligations under the Landlord and Tenant Act 1985.
  8. On 14 March 2024 the landlord sent the resident a letter advising her that the specified rent was increased by £41.56 per month and the service charge by £53.09 per month for the following financial year. The letter included a breakdown of the service charge into the following sections:
    1. bulk refuse
    2. gardening scheme
    3. managing agent scheme
    4. administration charge
    5. property insurance
  9. On 19 April 2024 the resident told the landlord she was unhappy. She said she had been trying to contact the appropriate team regarding the service charge increase. The landlord contacted her in response on 23 April 2024 by telephone and then followed up in an email. It provided her a copy of the building insurance summary of cover which included a detailed breakdown of what the insurance covered, between pages 15 and 22. It said she would be removed from the landlord’s insurance cover once she owned the property in full. It signposted her to information on its website which had a frequently asked questions section with questions such as, “why are building insurance costs rising.”
  10. The Ombudsman’s insight report on service charges says that when assessing complaints about service charges, landlords should provide specific responses raised by residents promptly and they should be targeted to the information requested. The landlord’s response to the resident was appropriate.
  11. On 29 April 2024 the resident telephoned the landlord. She said she had received the building insurance cover summary but that she wanted a more in-depth breakdown of the coverage. The landlord’s internal records show that it assigned the resident’s query to its insurance team. It would have been reasonable for the landlord to have communicated to the resident that it had triaged her query and advised her of when she would receive a response. Had it done this, it may have been able to put things right for the resident sooner.
  12. On 30 April 2024 the resident submitted a complaint web form to the landlord to ask for an explanation for why the service charges, particularly the building insurance, had increased. She said she felt the landlord had been rude. On 7 May 2024 the landlord told the resident that she had 2 open queries, and it would respond to her within 30 days. That it provided her with a timeframe for a response was positive.
  13. On 23 July 2024 the landlord issued its stage 1 complaint response. This included detailed reasons for the rent and service charge increases. It explained why she might be paying more than her neighbours. It referenced her leasehold agreement and its service charge policy. It referred to the previous communications it had sent her in respect obtaining a new insurance and service charge provider. It signposted her to its wellbeing web page and the First Tier Tribunal (Property Chamber) who have the expertise and authority to make binding decisions on rent level disputes. The landlord’s response was reasonable and clear. This was in line with its obligations as outlined in its service charge policy.
  14. The resident escalated her complaint on 3 August 2024. She was unhappy with the communication from the landlord and its justification for the cost increase. She wanted to know why she could not opt to insure the building independently. She said the landlord was acting against its ethos of providing affordable housing.
  15. The landlord reiterated its position at stage 2 and explained that, as a shared owner, the requirement for building insurance through the association was stipulated in lease agreement. Until the resident owned the property outright, she would be expected to pay the building insurance. This was a specific and transparent response to the resident’s query regarding building insurance.
  16. At both stage 1 and stage 2 the landlord failed to comment on the resident’s concerns about the service charge in relation to the maintenance of the patch of green space next to her house. Our insight report says that landlords should issue specific responses to the concerns raised by residents. It was a failing that the landlord did not acknowledge or respond to this concern.
  17. In its complaint responses, the landlord acknowledged and apologised for the delay in providing the resident with a detailed explanation for the increase in her rent, service and insurance charges. It offered her £50 in compensation at stage 1 and increased the offer to £75 at stage 2. This was a reasonable attempt by the landlord to put things right for the resident.
  18. Overall, we have found service failure in the landlord’s response to the resident’s concerns regarding service charges and rent for the financial year 2024 to 2025. The landlord acknowledged some of its failings and tried to put things right. However, it failed to respond to the resident’s concerns around the service charges in relation to the patch of green outside her house. This was a minor failure by the landlord in the service it provided but it did not appropriately acknowledge this or fully put it right.
  19. The resident has expressed unhappiness with the landlord’s communication. She said she felt dismissed by the landlord. The £75 compensation offered by the landlord was reasonable and proportionate to the failings identified. We have ordered the landlord to:
    1. apologise for the failures identified in the report.
    2. provide a response to the resident’s concerns around service charge for the green spaces.
    3. re-offer the resident £75 in recognition of the distress and inconvenience caused by its overall failings, if it has not already paid this.

The landlord’s complaint handling

  1. The landlord’s complaints policy says that whenever a resident expresses dissatisfaction about the standard of service, actions or lack of action by the organisation, it will give the resident the choice as to whether they wish to make a complaint. It says that some things will not be dealt with as a complaint in the first instance, such as requests for information or services. Service requests become complaints if the landlord fails to deal with the initial request appropriately.
  2. The complaints policy states that the landlord will respond at stage 1 of its complaints process within 10 working days and at stage 2 within 20 working days. The policy is compliant with the Code.
  3. The resident initially requested information from the landlord on 19 April 2024. On 23 April 2024 the landlord responded to the resident with information she requested. It was in line with the landlord’s complaint policy to have treated the resident’s initial communication as a service request rather than a complaint. This was reasonable.
  4. On 29 April 2024 the resident telephoned the landlord to request further information. On the 30 April 2024 the resident used the landlord’s complaint webform to request information and express dissatisfaction. On 15 May 2024 the resident contacted the landlord again asking to escalate her complaint.
  5. That the landlord did not open a complaint in April 2024 is evidence the landlord operated an unfair and hard to access complaints process. It would have been reasonable for the landlord to have responded to the resident on 29 April 2024 to clarify whether she wanted a complaint raised. In failing to do this, it inconvenienced the resident, and she was cost further time and trouble to get the landlord to open a stage 1 complaint. This was a failing when assessed against its complaints policy.
  6. On 18 June 2024 the landlord contacted asked the resident if she would be happy for it to close the complaint. The resident said she was under the impression she was waiting for a formal complaint response. The landlord’s failure to adhere to its complaint process and lack of clarity provided to the resident caused her frustration and led to a breakdown of trust between the resident and the landlord.
  7. On 15 May 2024 the resident continued to chase the landlord for a formal response to her queries. On 8 July 2024 the landlord told the resident on the telephone that it would open a complaint for her. On 15 July 2024 she chased a response. The landlord sent her a formal complaint acknowledgement on 17 July 2024 and the stage 1 complaint response was issued on 23 July 2024. The stage 1 complaint was issued 59 days after the resident’s expression of dissatisfaction with the landlord’s response to her information request. This was unreasonable. The delays were outside the timescales outlined in the landlord’s complaints policy.
  8. The resident escalated her complaint on 3 August 2024. The landlord acknowledged her escalation on 5 August 2024 and issued its response on 2 September 2024. This was appropriate and in line with the timescales outlined in the complaints policy.
  9. In its complaint responses the landlord acknowledged that it delayed in issuing a stage 1 complaint and apologised that she had to chase the landlord to action the complaint. It offered her £50 compensation for its failings and said it would review its complaint procedures with an increased emphasis on the Code. It said it holds regular meetings to learn from complaints. This was a reasonable effort to put things right for the resident and learn from outcomes. This was in line with the Ombudsman’s dispute resolution principles, which was appropriate.
  10. Though the landlord issued thorough complaint responses, it failed to acknowledge that part of the resident’s dissatisfaction was that she felt she did not benefit from the service charges, as she lived in a semi-detached property with no communal lifts, bins or entrances. She said that her household attend to the green space outside her house, because the landlord does not manage it properly. The landlord did not acknowledge this aspect of her complaint. This was a complaint handling failure in accordance with the Code. Landlords must address all points raised in the complaint and provide clear reasons for any decisions, referencing the relevant policy, law and good practice where appropriate.
  11. In conclusion we have found maladministration in the landlord’s complaint handling. It was reasonable that the landlord acknowledged some of its failings, attempted to put things right and learn from its failings. However, the offer of compensation was not proportionate to the failings identified. The resident told this Service that having to chase the complaint made her feel dismissed and frustrated. To put things right, the landlord is ordered to pay the resident £150 compensation for the distress and inconvenience caused by its complaint handling failures. It must also meet with the resident to discuss her concerns around the upkeep of the communal green space next to her house.

Determination

  1. In accordance with paragraph 52 of the Scheme, the Ombudsman has found service failure in the landlord’s response to the resident’s concerns regarding service charges and rent for the financial year 2024 to 2025.
  2. In accordance with paragraph 52 of the Scheme, the Ombudsman has found maladministration in the landlord’s complaint handling.

Orders and recommendations

  1. Within 28 days of the date of this determination, the landlord is should:
    1. provide a written apology to the resident for the failures identified in this report.
    2. pay the resident compensation of £225. This is comprised of:
      1. £75 for the distress and inconvenience caused by the failings in its response to the resident’s concerns regarding service charges and rent for the financial year 2024 to 2025.
      2. £150 for the distress and inconvenience caused in its complaint handling.
      3. The landlord must pay the compensation directly to the resident. The landlord can reduce the total compensation by the £125 already offered in the complaint procedure, if this has not already been paid
    3. respond to the resident’s concerns around the upkeep of the green space outside her house and, if necessary, provide evidence of its maintenance. It must provide this Service with written evidence of this response.
  2. The landlord must provide evidence of compliance with the above orders within 28 days of the date of this determination.