Westminster City Council (201904113)

REPORT

COMPLAINT 201904113

Westminster City Council

3 March 2021

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

The complaint is about:
1. The reasonableness of the service charges for the major works.
2. The number of Section 20 notices issued by the landlord in respect of the major works.
3. The landlord’s response to the leaseholder’s concerns that it instructed a bailiff to attend the property.
4. The landlord’s complaint handling.

Jurisdiction

What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme. 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, or aspects of a complaint, will not be investigated.
Paragraph 39(g) of the Housing Ombudsman Scheme sets out that the Ombudsman will not consider complaints with concern the level of rent or service charge of the amount of the rent of service charge increase.
Paragraph 39(i) of the Housing Ombudsman Scheme sets out that the Ombudsman will not consider complaints which concern matters where the Ombudsman considers it quicker, fairer, more reasonable, or more effective to seek a remedy through the courts, a designated person, other tribunal or procedure.
As part of the leaseholder’s complaint he raised concerns regarding the reasonableness and liability of service charges for the major works to the block which the property is situated in. This included the methodology for calculating the leaseholder’s contribution and appropriateness of block charges rather than estates charges.
The First Tier Tribunal Property Chamber (the FTT) deals with residential leasehold disputes between leaseholders and their landlords. The FTT can make determinations on all aspects of liability to pay a service charge and/ or administration charge, including by whom, to who, how much and when a service charge is payable. In order to decide liability the FTT also decides whether service charge costs have been reasonably incurred and if so whether the standard of any services or works for which the costs are charged is reasonable.
In accordance with paragraphs 39(g) and 39(i) of the Housing Ombudsman Scheme the Ombudsman will not consider the complaint about the reasonableness of the service charges for the major works as the matter falls within the jurisdiction of the FTT.
The Ombudsman notes that while the complaint was live the leaseholder did make an application to the FTT in Autumn 2019 regarding the reasonableness of the service charges for the major works and a determination was issued in March 2020. The Ombudsman further notes that the leaseholder was not happy with the outcome of the FTT as he did not consider all issues raised within his application were considered or determined upon. While this may be the case it remains that the Ombudsman is unable to consider this aspect of the complaint for the reasons given above.
While the Ombudsman cannot determine this aspect of the complaint, or comment on the FTT’s determination, both will be referred to within the summary as it provides context to the other matters which the Ombudsman can consider.

Background and summary of events

Background

The complainant is the leaseholder (the leaseholder) of the property which the complaint concerns. The landlord is the freeholder.
The property is a flat situated in a purpose-built block (the block).
As part of his complaint to the landlord, as set out above, the leaseholder raised concerns regarding the landlord’s repair obligations under the lease and its repairs service. The Ombudsman investigated these matters under reference 201904111 and issued the determination in March 2020. The Ombudsman determined:
1. In accordance with paragraph 23(i) of the Housing Ombudsman Scheme, now 39(i) of the updated Scheme, the Ombudsman considers it more appropriate for a remedy to be provided through the First Tier Tribunal in respect of the complaint about who bears responsibility for repairs to the property’s skylight, back wall patio window frames and balcony floor tiles.
2. In accordance with paragraph 42 of the Housing Ombudsman Scheme, now 54 of the updated Scheme, there was a service failure by the landlord, in its handling of the leaseholder’s requests for repairs to the property’s skylight, back wall patio window frames, balcony floor tiles and intercom system, plus, in particular, its decision to close repair requests after three unsuccessful attempts to contact him.
The Ombudsman will therefore not comment on these matters within this report as they have already been dealt with separately to this case. This includes the compensation previously ordered by the Ombudsman.

Summary of events

In summer 2019 the leaseholder wrote to the Ombudsman in relation to case 201904111. Within his correspondence the leaseholder raised concerns regarding the major works project (the works) which were planned for the block following a recent Freedom of Information (FOI) request he had made. The leaseholder said that the estimated costs for the works did not make sense and were very high. The leaseholder stated that “there was no request from any tenant for any major works to be done”. The leaseholder suggested that as the landlord had conceded in its FOI response that it was its “obligation to carry out major works” it should not pass on the charges to leaseholders. The Ombudsman referred the new complaint to the landlord for a response.
On 3 October 2019 the landlord provided its stage one response. In summary the landlord said:
1. It was sorry that its previous correspondence, specifically the Section 20 documents for the works and its FOI response about the works, had not addressed the leaseholder’s concerns.
2. It had billed £330k in 2017-18, £346k in 2018-19 and £182k in 2019-20 at block level. The landlord confirmed that it was currently preparing a revised Section 20 notice for the works “following the completion of more detailed design work”. The landlord said that once this information was available it would provide greater clarity on the costs associated with the works and the relevant recharges. The landlord said that the leaseholder would also have the opportunity to discuss the costs with a member of the project team.
3. The leaseholder’s “day to day service charges” included responsive repairs throughout the year which was different to any planned major works. The landlord said that major works were billed via the leaseholder’s major works account. The landlord confirmed that there was no duplication of costs for responsive repairs and major works.
4. The property’s lease sets out that the leaseholder is required to pay for their share of the work carried out by the freeholder to maintain the block.
On the same day the leaseholder responded. In summary the leaseholder said:
1. He disputed the landlord’s calculations.
2. Provisional costs suggested further spending in the future.
3. The infrastructure of the block was the responsibility of the landlord “at [its] cost”.
4. Costs were duplicated between minor and major repairs.
The leaseholder concluded by confirming that he would like to progress his complaint to stage two.
On 9 October 2019 the landlord provided an addendum to its stage one response following conversations with the leaseholder on 7 and 8 October. In summary the landlord said:
1. The annual bills and actualisation of costs associated with the work were:
  1. In April and October 2017 the leaseholder was issued two invoices totalling £5,643.94 for 2017-18. The landlord explained that the invoices were the estimated costs of the works to be undertaken in that year and represented the leaseholder’s liability of the total costs of works (7.69%). The landlord stated that the actual cost for 2017-18 was £17.52 because the works were delayed and the leaseholder received a credit of £5,626.42 on his account.
  2. In April and October 2018 the leaseholder was issued two invoices totalling £16,906.84 for 2018-19. The landlord explained that these invoices were once again the estimated cost of the works to be undertaken in that year and represented the leaseholder’s liability of the total costs of the works. The landlord stated that the actual costs for 2018-19 was £111.09 because the works were delayed so the leaseholder received a credit of £16,795.75 on his account. The landlord confirmed that the delay was due to the volume of observations received from leaseholders during the Section 20 process and the “retro introduction of wider safety works to the overall project”.
  3. In April and October 2019 the leaseholder was issued two invoices totalling £13,188.88 for 2019-20. The landlord confirmed that the actual costs had not yet been reconciled but this would be done by March 2020, following which the leaseholder’s account would be adjusted.
  4. The actual costs charged for the works up to the end of March 2020 were £128.61.
2. It would “soon” be reissuing the Notice of Estimates now that pricing and design work had been completed by its proposed contractor for the works. The landlord said that the leaseholder should make any formal observations regarding the cost of the works once it had been issued as it was “legally obliged to take due regard of those observations”.
The landlord concluded by setting out that the leaseholder may contact it if he had any further questions.
In Autumn 2019 the leaseholder made an application to the First Tier Tribunal Property Chamber (the FTT) in relation to “the reasonableness and amount of service charges payable by the respondent in respect of certain items of work in service charge years and periods 2017-18 and 2018-19”. A directions hearing was held on 31 October 2019.
The FTT considered the case in January 2020 providing its decision on 18 March 2020. In summary the FTT said:
1. “The Tribunal found that there were no service charge costs levied in respect of any of the specific work items or the forthcoming major works project and which were challenged by the applicant for years 2017-18 and 2018-19. The Tribunal therefore has nothing for which it is required to make a determination as to liability for those works, nor of the reasonableness and/ or payability of costs arising”.
Following the FTT’s hearing the leaseholder contacted the Ombudsman as he remained concerned regarding the works. The leaseholder noted that while he had made a referral to the FTT regarding the works because he “had not followed the correct procedure” none of the issues were addressed. The leaseholder explained that his outstanding concerns were:
1. The landlord had issued five Section 20 notices “quoting [his] estimated contribution for [the works] to be anywhere from £13,000 to £25,000”. The leaseholder said that the “variations” were caused by some items being added and some being withdrawn. The leaseholder stated that the Section 20 notices “supplied to date” were “unreliable and therefore unpayable”.
2. Items invoiced for were not clear.
On 10 February 2020 the leaseholder wrote to the Ombudsman providing a comprehensive summary of his complaint and outstanding concerns. In summary the leaseholder said:
1. As part of the works scaffolding was proposed for the block which carried a builder’s estimate of approximately £18,000 however the Section 20 notice estimate was £40,000. The leaseholder suggested that this was false accounting.
2. In respect of the works “six different Section 20 [notices] had been served that vary [his] contribution from £25,000 to £11,000”. The leaseholder said that items were included or subtracted “at random” across the notices. The leaseholder suggested that none of the Section 20 notices could be relied on. The leaseholder noted that he paid £8,500 towards “an early Section 20 notice” and was concerned that the money had been “taken under false pretences”.
3. The landlord’s method for charges for the works was unreasonable. The leaseholder said that the charges should not be calculated on a block by block basis as many costs were not specific to any one block.
4. He was concerned that the landlord would not contribute towards the works in respect of properties that were tenanted and leaseholders would therefore bear the total cost of the works.
5. He was concerned that major works were scheduled on a 10-year cycle which was unreasonable due to the costs associated. The leaseholder added that due to the 10-year cycle it made the property “unsellable”.
Following enquiries by the Ombudsman regarding the status of the complaint the landlord advised in early March 2020 that the complaint was not escalated in late 2019 as the leaseholder had referred the complaint to the FTT. The landlord notified the leaseholder of its position on 10 March 2020.
On 15 March 2020 the leaseholder raised concerns with the landlord regarding its decision to refuse to consider his complaint at stage two of its complaint procedure.
On 15 May 2020 the landlord confirmed to the Ombudsman that it was willing to respond to the complaint at stage two of the process if the leaseholder confirmed the outstanding issues, and they were not subject to the FTT determination.
In June 2020 the landlord and leaseholder corresponded regarding the complaint. The leaseholder confirmed that the outstanding issues were as detailed in paragraph 14 in addition to:
1. The landlord had “incorrectly” instructed bailiffs to attend the property.
2. The landlord had entered “into a 10–year contract committing leaseholders to £10,000 a year for 10 years” for major works making the property unsaleable.
On 17 July 2020 the landlord provided its stage two (final) response. In summary the landlord said:
1. The issues which the leaseholder had raised were previously investigated and answered within its stage one responses in October 2019. The landlord confirmed that the matters were also reviewed by the FTT in January 2020. The landlord confirmed that the FTT concluded that “a judgement could not be made as to the reasonableness of the service charges, given they were only estimated charges for the planned works”.
2. A reviewed Section 20 consultation process for the works was currently active which contained updated cost estimates which included “some detail as to the composition of the estimated costs”.
3. It “reserved the right” to wait for the FTT’s determination before advancing the complaint to stage two.
4. The estimated liability for the works under the property’s lease was £11,589. The landlord explained that this was advised in the Section 20 notice issued in January 2020.
5. It had refunded the leaseholder a payment of £8,673 as he had requested a refund of the estimated charges for the works.
6. It had issued several cost estimates for the works as it is usual for the estimated costs to be reviewed due to a change in the scope of works or updated costs within the specification. The landlord explained that the most recent cost estimate in the Section 20 notice issued in January 2020 was reduced from the previous estimate issued in July 2018. The landlord noted that the scaffolding costs were included within the preliminary costs of a contract, at estimate, which included other items as well as the scaffolding.
7. It had issued two Section 20 notices in respect of the works – one in July 2018 and one in January 2020. The landlord confirmed that “four six–month invoices were sent between April 2017 and October 2019” which were for estimated charges due under the lease, which included an element for estimated major works charges. The landlord explained that the lease allowed it to issue bills on estimate for anticipated costs for future major work or planned repairs.
8. Charges for certain services were not calculated on a block basis such as gardening and grounds maintenance which were listed as an estate charge.
9. The basis for the proportionate share of each lease was “a methodology based on the number of bed spaces per block”. The landlord confirmed that properties that were tenanted were not subsidised by leaseholders.
10. It had not found any supporting information that the property would be deemed unsellable. The landlord noted that it had identified two properties on the estate that were currently listed for sale.
11. It had found no details that it instructed bailiffs to attend the leaseholder’s property.
12. The ten-year contract for major works was entered into in 2018 and leaseholders were consulted.
As the leaseholder was not happy with the landlord’s response he referred the complaint to the Ombudsman for adjudication. Following the end of the complaint procedure the leaseholder has continued to raise concerns regarding the works and costings with the landlord.

Assessment and findings

The number of Section 20 notices issued by the landlord in respect of the major works

Under the terms of the property’s lease, the leaseholder must pay towards the cost of service or work to the block as part of the service charge.
Under Section 20 of the Landlord and Tenant Act 1985 (the Act) a landlord is required to consult with a leaseholder before it undertakes any work which will cost any leaseholder more than £250, including repairs, maintenance and improvements to the building and estate their property is situated.
The Ombudsman can see that the landlord issued two Section 20 notices to the leaseholder in respect of the works detailing the estimated costs for the project – the first in July 2018 and the second in January 2020. Both notices invited the leaseholder to make written observations. This was appropriate as it was required by the Act. The Ombudsman notes that the notice dated January 2020 clearly set out that it superseded the previous notice dated July 2018.
The landlord has confirmed that the leaseholder did not make any observations in relation to the Section 20 notice dated July 2018. The Ombudsman can see that the landlord responded to the leaseholder’s observations and comments following the Section 20 notice dated January 2020 including on 20 January 2020, 30 January 2020 and 6 February 2020.
As part of his complaint the leaseholder raised concerns regarding the number of Section 20 notices issued in respect of the works, suggesting that they could not be relied on due to the varying costs detailed. While the leaseholder’s concerns are noted, in the Ombudsman’s opinion it was reasonable for the landlord to re-issue the Section 20 notice for the works in January 2020. This is because, as set out in the Section 20 notice dated January 2020, it had revised the scheduled of works to be undertaken following “observations from the previous consultation” and the landlord was required to take due consideration of those observations by the Act.
In responding to the leaseholder’s concerns regarding the ten-year contract for major works the landlord said the contract was entered into in 2018 following consultation. The Ombudsman can see that both Section 20 notices set out that the works were to be undertaken under a long-term agreement which had been previously awarded and consulted on. If the leaseholder was concerned regarding the contract it was open for him to raise his concerns during the associated consultation period.
The Ombudsman can see that between July 2018 and January 2020 the landlord issued several service charge statements which included a payment request for the estimated costs for major works. In the Ombudsman’s opinion it was reasonable for the landlord to include the major works in the service charge statements, as under the terms of the lease agreement the leaseholder agrees to pay the due proportion of the reasonably estimated costs of the freeholder.
In responding to the complaint the landlord provided explanation regarding the number of service charge statements and Section 20 notices which had been issued since 2018. This was appropriate to allay the leaseholder’s concerns that the landlord was being fraudulent or acting inappropriately.

The landlord’s response to the leaseholder’s concerns that it instructed a bailiff to attend the property

The Ombudsman cannot see that the leaseholder provided any evidence to the landlord to demonstrate the bailiff’s attendance at the property on its behalf. In the Ombudsman’s opinion it was therefore reasonable that the landlord denied that it had instructed a bailiff, including as its records did not document the action.

The landlord’s complaint handling

While the Ombudsman is satisfied that the landlord’s responses did address the concerns the leaseholder had raised, the Ombudsman is not satisfied that its handling of the complaint was satisfactory overall. Following notification from the Ombudsman that the leaseholder had outstanding concerns regarding the works following the FTT’s determination the Ombudsman cannot see that the landlord was proactive in engaging with the leaseholder, specifically, to determine the nature of the leaseholder’s outstanding concerns with a view to brining the matter to a close. The evidence shows that the landlord relied on the Ombudsman’s enquiries to determine the outstanding issues and to then issue a final response. This is unsatisfactory as the purpose of a complaint procedure is to address complaints at the earliest stage.
It was reasonable for the landlord to not pursue the complaint under its complaint procedure after its addendum stage one response on 9 October 2019 and following the leaseholder’s application to the FTT. This is in accordance with the landlord’s complaint procedure which sets out that it will not respond to a complaint under its complaint procedure where a customer has started legal proceedings. The Ombudsman has not been provided with evidence of an escalation request after the landlord’s addendum stage one response on 9 October 2019.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was:
1. No maladministration in relation to the number of Section 20 notices issued by the landlord in respect of the major works
2. No maladministration by the landlord in response to the leaseholder’s concerns that it instructed a bailiff to attend the property
3. Service failure by the landlord in respect of its complaint handling

Reasons

The number of Section 20 notices issued by the landlord in respect of the major works

In accordance with the Act the landlord issued two Section 20 notices in respect of the works.
The Section 20 notice dated January 2020 clearly set out that it superseded the previous notice dated July 2018. In the Ombudsman’s opinion it was reasonable for the landlord to re-issue the Section 20 notice for the works in January 2020. This is because, as set out in the Section 20 notice dated January 2020, it had revised the scheduled of works to be undertaken following “observations from the previous consultation”.
The Section 20 notices set out that the works were to be undertaken under a long-term agreement which had been previously awarded and consulted on. If the leaseholder was concerned regarding the contract it was open for him to raise his concerns during the associated consultation period.
Under the terms of the lease agreement the leaseholder agrees to pay the due proportion of the reasonably estimated costs of the freeholder. Therefore it was reasonable for the landlord to include the major works in the service charge statements.

The landlord’s response to the leaseholder’s concerns that it instructed a bailiff to attend the property

It was reasonable that the landlord denied that it had instructed a bailiff as its records did not document the action and the leaseholder did not provide any evidence to it to demonstrate the bailiff’s attendance at the property on its behalf

The landlord’s complaint handling

Following notification from the Ombudsman that the leaseholder had outstanding concerns regarding the works following the FTT’s determination the Ombudsman cannot see that the landlord was proactive in engaging with the leaseholder. Specifically, to determine the nature of the leaseholder’s outstanding concerns with a view to brining the matter to a close. The evidence shows that the landlord relied on the Ombudsman’s enquiries to determine the outstanding issues and to then issue a final response.

Orders and recommendations

Orders

The landlord should pay the leaseholder £100 compensation in respect of its complaint handling within four weeks of the date of this determination.

Recommendations

The landlord should review the Ombudsman’s Complaint Handling Code to ensure that it responds to complaints in line with best practice.