Hyde Housing Association Limited (201914260)

REPORT

COMPLAINT 201914260

Hyde Housing Association Limited

14 December 2020

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 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 service charges in particular relating to block charges and a play area; and
   2. complaint handling.

Background and summary of events

Background

2. The resident has shared ownership of a flat over a garage since summer 2017. The resident is the first owner of this new property; the development is made up of two flats over garages and houses.
3. In relation to service charges, the lease says that an amount known as the ‘Service Provision’ shall consist of a sum comprising the expenditure estimated by the landlord as likely to be incurred in the account year as well as a contribution towards a reserve. The service provision shall comprise all expenditure reasonably incurred by the landlord in connection with the repair, management, maintenance and provision of services for the building.
4. As soon as practicable after the end of each account year the landlord shall determine and certify the amount by which the estimate has exceeded or fallen short of the actual expenditure in the account year and shall supply the leaseholder with a copy of the certificate. The leaseholder shall pay immediately following receipt of the certificate the specified proportion of the excess or the deficiency (if any). If there is any excess this shall be applied by the landlord towards the leaseholder’s service charge for the following year.
5. Schedule 1 of the lease defines the premises; Schedule 1(3) sets out what is not included as premises which includes the roof, foundations and external walls.
6. The sales pack issued to the resident included details of the service charge budget. This included service charges for the play area. These were annual charges and to be divided amongst 96 contributory units:

Landscaping £10,250: which was the sum for the landscaped areas, litter picking, bin emptying and routine play area maintenance, maintenance of the semi-natural green space and areas around the play area. 22 visits per annum.

Bi-weekly play equipment inspection £1,560: the play area must be inspected and documented every two weeks to comply with insurer’s requirements of continued cover.

Liability signage for play area £350: it will be a condition of the insurer’s cover that liability notices are placed around the play area.

Sinking fund £500: the play area equipment has a life of 15 years and provision must be made for items to be replaced at the end of their life.

7. Leaseholders have a legal right to ask the landlord for a summary of the service charge account[1]. The request must be in writing and can be sent directly to the landlord or to the managing agent. It can ask for a summary of the relevant costs relating to the service charges for the last accounting year or, if accounts are not kept by accounting years, the past 12 months.
8. Leaseholders also have the right to inspect documents relating to the service charge to provide more detail on the summary. Within six months of receiving the summary, leaseholders can write to the landlord to ask if they can access and inspect the accounts, receipts and any other documents that are relevant to the service charge information in the summary and to ask them to provide facilities to copy these.
9. The landlord has a two-stage complaints process. It aims to respond within twenty working days at both stages
10. The landlord’s compensation policy says that it may offer a discretionary payment to maintain good relations between it and a resident where any inconvenience has been caused by its actions or failure to act such as delay in resolving a complaint, any inconvenience suffered to the household and a recognition of any failure to follow process. The policy says that, for consistency, it will offer compensation of £100 a year for each service failure.

Summary of events

11. On 22 September 2018 the landlord provided the resident with the actual service charge account breakdown for the period from 1 April 2017 to 31 March 2018. This showed that there were service charges of £238.00 made up of building insurance of £100, block charges (relating to fire safety inspections and servicing) of £120 and a management fee of £18.
12. On 25 February 2019, after receiving an estimate service charge bill, the resident made a complaint to the landlord saying the service charge statement included “block charges”. She said she did not live in a block and wanted those charges removing.
13. On 27 March 2019 the landlord told the resident it would remove the block charges and issue a revised service charge bill.
14. On 14, 25 and 30 April and 14 and 24 May 2019 the resident chased the landlord for this revised bill.
15. On 28 June 2019, following contact with the landlord from a local councillor (the councillor) the landlord wrote to the resident in response to a query about the managing agent costs for 2018/19. It attached a breakdown of the anticipated service charges for 1 January to 31 December 2019 which included expenditure on inspections and risk assessments for a play area.
16. The landlord explained that the block cost category was used simply to distinguish costs for the building which were not covered by the premises, as defined in the lease at Schedule 1(3) (paragraph 5). The landlord confirmed that no other property belonged to that block so there was no danger of any block costs being applied which should belong to someone else’s property.
17. At about this time the landlord provided the resident with the actual service charge account breakdown for the period from 1 April 2018 to 31 March 2019. This showed that there were service charges of £338.63 made up of buildings insurance of £100, management agent costs of £227.25 (no further detail given), management fees of £11.33 and a management charge of £0.05. There were no block charges.
18. On 8 October 2019 the landlord responded to the councillor following contact from the resident. The landlord said that the play area would be installed in 2020 and the charges applied to date for that would be carried forward pending its completion. It added that the service delivery by, and responsiveness of, the managing agent was making it difficult to provide assurances to customers about the accuracy and reasonableness of charges. It added that communication with residents needed to be improved and it intended to take a robust stance on behalf of the residents.
19. On 3 November 2019 the resident made a complaint to the landlord about defects in the property; there was no mention of service charges. The landlord responded to this complaint at stage one of its formal complaints procedure on 14 November 2019.
20. On 20 December 2019 the resident asked the landlord for a response to her complaint about her service charges that she had made in February 2019 (paragraph 12). She said the service charges were inaccurate and that she was paying for checks to a playground that did not exist. She added she had requested evidence to support the service charges but this had not been provided.
21. On 6 April 2020 the landlord responded to the resident at stage two of its formal complaints procedure. The main points it made were:

• the resident had experienced excessive delays and apologised for that.
• it had been in contact with the managing agent asking for details of the actual costs for both 2018 and 2019. It explained that the delay in its response was because it was hoping to include them as part of that response.
• It expected a zero charge for the play area as it was still to be built and any costs that had been charged to the resident would be credited to the account as part of the 2019/20 reconciliation process. It said it had asked the managing agent about the anticipated costs for the play area and, once it had heard back from them, would let her know.
• It recognised it had taken a long time to respond to the resident and failed to provide her with this information at stage one. It added it did not meet the response times it set itself.

22. The landlord offered the resident compensation of £250 (made up of £50 for the time and trouble to make the complaint, £100 for delays; and £100 for the distress and inconvenience caused to her). The landlord signposted the resident to the Ombudsman.
23. The resident approached the Ombudsman and the landlord agreed to try early resolution to try to resolve matters. It wrote to the resident on 10 July 2020 increasing its offer of compensation to the resident to £350. (It did not explain what the additional £100 was for.) It said it anticipated the play area would be completed within two months. It apologised for the lack of communication during the complaints process. It acknowledged it had not maintained contact with her and the negative impact this had had on her complaints experience. It added that it had addressed the reasons behind that failure. The landlord confirmed there were no refunds due to the resident at that time
24. When the resident approached the Ombudsman, she said she was paying for a play area that had still not been built and the block charges had still not been refunded to her, as the landlord had promised. The resident said she wanted a refund of the service charges she had paid for the play area and block charges.

Assessment and findings

Block charges

25. The block charges for 2017/18 related to fire safety (paragraph 11); there were no block charges for 2018/19 (paragraph 17).
26. When the resident first asked the landlord about the block charges, it said it would remove these charges and issue a revised service charge bill (paragraph 13). However some months later, and after several attempts by the resident to chase the revised service charge bill (paragraph 14), the landlord explained to the resident that these block charges were for the building that did not form part of the premises as defined in the lease which relate to charges for the roof, foundations and external walls (paragraph 16).
27. The landlord’s response to the resident was not appropriate because it gave conflicting accounts about the block charges and did not explain if it had made a mistake with its first response in which it said it would remove these charges. The evidence suggests that this was an error because there is no “block” in the development, which is made up of houses of various sizes (paragraph 2). It would have been appropriate for the landlord to have clarified that in its correspondence with the resident.

Play area

28. In June 2019 the landlord gave details of the anticipated service charges relating to the playground for 2019 (paragraph 15). These service charges, in part, reflect the service charges included in the sales pack (paragraph 6) and amount to £22.60 for the resident for 2019.
29. In its final complaint response, the landlord said the play area was yet to be built so it was expecting there to be a zero charge for these costs. It explained that, if that was the case, any play area costs that had been charged to the resident, would be credited to the account as part of the 2019/20 reconciliation process (paragraph 21). That was an appropriate response to this matter because it set out the position on the service charges for the play area and reassured the resident that it did not expect her to pay for an amenity that did not exist.
30. The landlord did not provide a breakdown of the management agent costs for 2019/20 to this Service. We have therefore been unable to ascertain if any charges relating to the play area were credited to the resident’s account for 2019/20; there is no evidence to suggest that this information was provided to the resident either as it is obliged to do under section 21 of the Landlord and Tenant Act 1985 (paragraph 7).
31. The landlord acknowledged in its correspondence with the councillor that communication from its managing agent had not been of a good standard and this had meant it had been unable to reassure residents about the reasonableness and accuracy of the service charges (paragraph 18). This is concerning. While the landlord noted it would take a robust stance with the managing agent in October 2018 (paragraph 18), the evidence suggests that that its actions had not been successful because, in April 2019, it had been unable to obtain information from them to provide as part of the final complaint response (paragraph 21).

Complaint handling

32. The resident first complained about the service charges in February 2019 (paragraph 12). While the landlord responded to enquiries from the councillor about these charges, it did not respond to the resident about this matter under its formal complaint procedures until April 2020 – over one year later. That was outside the landlord’s timescales for dealing with complaints (paragraph 9). In that response the landlord recognised that this delay was excessive.
33. The landlord also did not act appropriately because it omitted to include the issue of service charges in the stage one response. By including the issue of service charges only in the final response, it did not allow the complainant to respond to the landlord’s position.
34. The landlord offered compensation to the resident amounting to £350 for the delays in responding to the service charge issues as well as its delay in issuing a complaint response (paragraph 23). In relation to the failures identified, the Ombudsman’s role is to consider whether the redress offered by the landlord put things right and resolved the complainant’s complaint satisfactorily in the circumstances. In considering this the Ombudsman takes into account whether the landlord’s offer of redress was in line with the Ombudsman’s Dispute Resolution Principles: Be Fair, Put Things Right and Learn from Outcomes as well as our own guidance on remedies.
35. It is evident that the landlord’s delays in responding to the resident about the revised service charge bill as well as its complaint handling failures caused inconvenience and frustration to the resident and it meant that she had to involve a third party, the councillor, to try to help resolve matters. This Service considers that the amount of compensation offered to the resident is reasonable redress for the detriment she experienced. It is also within the range of amounts that the Ombudsman can order when he has found evidence of considerable service failure or maladministration. This includes cases where there have been lengthy delays in responding to complaints and communication failings.
36. While the compensation offered to the resident is reasonable, this Service considers that there are outstanding concerns raised by the resident that the landlord has not addressed through its correspondence and complaint handling. I have therefore made orders, below.

Determination (the decision)

37. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was maladministration by the landlord in respect of its response to the resident’s concerns about service charges in particular relating to block charges and a play area.
38. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the Ombudsman considers that the landlord has made redress to the resident which, in the Ombudsman’s opinion, resolves the complaint about its complaint handling.

Reasons

39. The landlord delayed in responding to the resident’s enquiries about the service charges. It gave her contradictory information about the block charges and was unable to provide details of the actual service charges relating to the play area. While the compensation offered was reasonable the information given to the resident was not complete and that is a service failing.
40. There was a lengthy delay by landlord in responding to the resident’s complaint and it did not follow its complaint procedure by including this matter only in a final response, rather than allowing a review of the decision. The landlord has offered proportionate compensation for those failings.

Orders

41. The landlord shall within the next four weeks write to the resident and include the following:

• clarification of the position about block charges (and what charges she could expect to pay under this category) and apologise for giving her conflicting information relating to them.
• an explanation of how any estimated service charges for the play area were reconciled at the end of the year. If any of these charges were not credited as part of this process in line with previous assurances, give an explanation for that.
• a breakdown of the actual management agent charges for 2018/19 and 2019/20.

 

Recommendations

42. It is recommended that the landlord take the following action:

• After taking appropriate advice, if required, write to the managing agent setting out the communication it requires from it regarding service charges and by when each year.

 

 

 

[1] Section 21 of the Tenant and Landlord Act 1985