Metropolitan Thames Valley Housing (MTV) (202107757)

REPORT

COMPLAINT 202107757

Thames Valley Housing Association Limited

15 November 2022

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 landlord’s response to the resident’s queries regarding service and management charges, including its communication on upcoming costs.
2. The landlord’s handling of the resident’s request to deal directly with the freeholder/managing agent.
3. Its handling of the associated complaint on the issues.

Background

The resident is the leaseholder of the property which is owned by the landlord. Services on the estate are delivered by the managing agency but charged via the landlord, who includes an additional management charge. A head lease agreement sets out the rights and responsibilities of the freeholder (a private company), the landlord and the managing agency.
In her complaint to the landlord, the resident stated that there was a lack of detail; no clear information as to what the landlord’s bill covered and how its fee was calculated. Inaccurate information was sent to residents, an example being two letters citing different service charge amounts, and a further letter giving inaccurate address details. There was a lack of warning regarding upcoming works and associated costs. She also expressed dissatisfaction with level of communication from the landlord, in that there were significant delays in obtaining responses to queries relating to a rent arrears letter and a request to deal directly with the managing agency and freeholder. In addition, there were delays and omissions in its complaint handling.
In its response, the landlord detailed the section 20 process and the specific role of the freeholder and managing agent. It stated that it was taking steps to improve its processes so that noted mistakes will not reoccur. It made an offer of £180 in compensation and a further £95 was offered after the complaints process was completed.
The resident has explained that she is seeking a commitment from the landlord to improve its service provision and communication with residents, including providing details on billing for service charges and improvement works. She also seeking an increased offer of compensation.

Assessment and findings

Service charge account

The lease between the resident and the landlord sets out the respective obligations in relation to services and payment, with reference to roles and responsibilities set out in the head-lease. There is no dispute about obligations, the complaint focus is the information provided in the invoice. Discussion and negotiation between the resident, the landlord and the managing agents has been ongoing for a number of years and have continued since the final complaint decision was issued. A previous complaint was raised in 2018 regarding the management of the service charge account and the information sent to residents.
The block is managed by the managing agent who invoices the landlord for services provided and payment. The landlord then sends its own bill to its leaseholders, including additional items relating to its management costs, audit fees, ground rent and communal heating charges.
Both the resident and the landlord have provided a copy of bills sent by the managing agents. One of these includes details as to the breakdown of the service charges, whereas the other simply itemizes ‘Service charge’ and ‘internal redecoration and carpet.’ The landlord has confirmed it receives the simple version, and that the detailed version is only provided if requested. The resident appears to be mistaken in her belief that detailed invoices are provided to the landlord by the managing agent as a matter of course. This information can be provided if requested by a resident.
To some extent this mirrors the legislation (s.21 Landlord & Tenant Act 1985) which sets out that leaseholders have the right to ask their landlord 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. Should a resident make such a request the landlord must provide the information within one month.
The resident has gone to some lengths to improve the information provided to residents and this is to her credit. She has explained that other residents on the block with different leases were provided with the detailed version of the service charge account. This is provided direct by the managing agents. This allows those residents to make an assessment as to whether the charges are reasonable and aids understanding as to how the charges arose.
Under the Landlord & Tenant Act 1985 Service, charges must be reasonably incurred and for works carried out to a reasonable standard. Without the detailed breakdown of costs, it will be difficult for either the resident or the landlord to make an assessment of reasonableness. In addition, the landlord has stated that its management fee covers ‘estimating service charges and account reconciliation for the service charge year’, again, it is difficult to see how this can be undertaken with any accuracy, without a detailed breakdown of the costs.
It is further noted that other residents on the estate who have a direct relationship with the freeholder can access the detailed version of their accounts via a portal provided by the managing agent. This does not appear possible for residents who have the registered provider as their landlord.
Whilst the landlord is not acting unlawfully in forwarding the undetailed amount to residents, it is difficult to see how this is fair in all the circumstances, given that other residents on the estate are provided with a detailed breakdown. The resident pays the landlord a management fee in part to cover its liaison with the managing agent. It cannot be fair that this puts her at a disadvantage.
The resident has also requested a breakdown of the landlord’s invoice and raised concern about the lack of annual accounts for the development. The landlord’s response to the complaint has concerned itself with explaining the different accounting timeframes used by the managing agents and itself and how this impacts the accounts. The landlord’s ‘Frequently asked questions’ leaflet includes a generic list of what is included within the management fee, it has not however provided a specific answer to these elements of the residents’ complaints. This omission has not been acknowledged or addressed through the complaints process. This was not appropriate.
This Service finds that the landlord’s approach to the service charge accounts does not allow residents to fairly assess the reasonableness of the service provided and related costs. In addition, it places its residents at a disadvantage compared to other at the development.

Inaccurate information

The initial complaint included correspondence showing discrepancies in the service charge correspondence sent to the resident. Initially, the resident accepted the assurances given by the landlord that it had put processes in place to improve its quality control and as a result this element of her complaint was not considered in the landlord’s final response. However, in March 2022, (after completion of the complaints process) she received two letters regarding the service charge showing two different amounts were due; £328.17 and £361.44. A further letter was also received addressed to the previous owner who had sold the flat to the resident 8 years ago. The resident is understandably concerned that the checks put in place to improve the quality of its correspondence do not appear to be working.
Whilst this element of the complaint was resolved, it is of concern that the errors were repeated, and this will have added to the resident’s general dissatisfaction with the landlord.

Lack of warning regarding upcoming works

The resident’s complaint concerned the lack of information provided by the landlord following receipt of a request for payment in advance sent by the managing agents in October 2020. She sought information as to the specifics of the additional charges in relation to her property and asked why the landlord did not provide its residents with advanced warning that these charges were coming, given the gap between its receipt of the bill from the managing agent, and its billing of residents. She pointed out that this had not happened and asked for reassurance that in future a warning was given, allowing residents time to budget and plan.
The managing agent sent an invoice to the landlord detailing the resident’s contribution of £597.56 on 7 October 2020. This is the information that the resident is referring to. Her point is that the landlord was aware of this charge from this date and could have advised her of this.
The landlord’s response to the complaint detailed the section 20 process and the specific role of the freeholder and managing agent. It confirmed that the managing agent was responsible for serving notices of intention to undertake works to all residents. The managing agent had advised that these notices were sent to residents detailing their individual contribution. The landlord explained that the managing agent had confirmed that these notices considered the amount available in the sinking fund.
The landlord does not appear to have understood the resident’s complaint or recognized that it was the information it was already in receipt of that the resident was seeking. Instead, it requested that the managing agent resend the notice. This action would not resolve the resident’s complaint, particularly as the first notice gives no detail of the costs, and the second referred to costs for internal redecoration and associated works at £247.85. The landlord has also provided copies of letters sent to residents forwarding notices in 2016. Whilst it is not clear how these letters relate to the landlord’s handling of the complaint, it is noted that no letter addressed to the resident, or her property, was included.
The landlord has further explained that the charges that were sent to customers for the major works were missing costs from records due to a system error. Therefore, for ease of time and the avoidance of financial distress for residents, it made the decision to not recover the service charge year end adjustment figure of £633.08 relating to these works as the invoices relating to these could not be investigated fully. There does not appear to be any correspondence explaining this to the resident.
The resident continued to emphasise that what she was seeking was the specific figures for her flat for the levy paid by the landlord for the internal decorations and carpet, and a response to her request that the landlord would advise residents about additional costs as it became aware of them. The landlord has failed to address this.

Communication – Rent arrears letter

An email was received by the resident on 3 November 2020 from a firm of solicitors in relation to rent arrears on her property of £4685.09 and a notice of intention to commence legal proceedings. Upon contacting the solicitors, she was advised that this action was not against herself, but rather was against the landlord. Her complaint to the landlord explains that she contacted the landlord immediately, and although she received a response informing her that her email had been forwarded to the relevant department, she was still waiting for a response some 4 months later. She requested both an explanation and an apology for the distress caused to her and sought reassurance on how communications with residents would be improved.
The landlord confirmed that the letters were sent in error, that the invoice had now been paid and it apologised for any distress caused. It indicated that it was arranging regular resident meetings to improve communication going forward and referred to the first meeting being held on 16 August 2021.
The resident was particularly dissatisfied with this response, as the meeting in question had been arranged by the resident and other members of the resident association, due to the difficulties they had in obtaining responses from the landlord. The resident also pointed out that the commitments made by the landlord at this meeting in relation to the recruitment of a new property manager had not taken place. She also provided further details relating to communications regarding fire safety at her property where the landlord appeared unaware that inspections had taken place and a EWS1 form had been provided. She remained dissatisfied with the landlord’s apology as there had been ‘no tangible improvement’ in its communication with residents and liaison with the managing agents.
The landlord’s communication with the resident has been poor and this has exacerbated and prolonged this complaint. There appears to be a lack of ownership of decisions and record keeping in relation to the property and the resident has had to function as the driving force in obtaining the information she requires, often having to liaise with the managing agent directly to achieve this. The resident pays a management fee to the landlord and is entitled to a level of service that has not always been provided. The landlord has acknowledged this and apologised but there has been no marked improvement and, as a result, errors are repeated, increasing the resident’s dissatisfaction. The landlord has not taken sufficient steps to ensure that its communication with the resident is accurate and timely.

Dealing directly with managing agents

The resident requested that she be allowed to deal directly with the freeholder and managing agent, given that she owned 100% of the leasehold. This would resolve the issues with the service charges and improvement costs detailed above, by removing the role of the landlord. This reflects the level of dissatisfaction she was experiencing. She has complained and remains dissatisfied as she has received conflicting information from different staff members as to the process for such a transfer, who she needed to contact etc., and the query remains outstanding. The resident also points out that until this is resolved she continues to pay the landlord’s management fee, despite owning 100% of the leasehold.
The landlord has explained that it has sought permission from the freeholder in relation to the resident’s request. Evidence has been provided to show that it contacted the freeholder in September 2021 and has chased for responses on a number of occasions. Other than confirmation that the matter was being considered, no substantive response has been received.
The landlord’s solicitors have advised that no transfer can take place without the consent of the freeholder. The landlord accepts that it’s communication with residents regarding this matter could have been better whilst the deed of covenant was being discussed with the managing agents, but it cannot take any further action in relation to this until the freeholder gives consent.
The resident’s lease agreement is with the landlord. This makes no provision for a different approach for 100% leaseholders and provides no guidance on how such a request for transfer should be managed. The landlord’s approach in seeking the consent and cooperation of the freeholder has been reasonable in the circumstances. The landlord cannot unilaterally transfer the covenant to the freeholder/managing agent. It has acknowledged that it should have done more to keep the resident updated and has offered compensation of £125. The landlord has therefore taken appropriate steps in its handling of this element of the complaint.

Complaint handling

The resident has pointed out that it took the landlord almost 15 weeks to respond to her complaint at stage two, and this was only sent after she had referred the matter to the Ombudsman. The landlord has accepted that there were failings and delays in its complaint handling. It offered the resident £55 for poor complaint handling.
The landlord has indicated to the Ombudsman that it increased its offer for its failure in complaint handling to £150. It is not clear whether this offer has been put to the resident.
This Service considers the landlord’s acknowledgement of the delays in its complaint handling and its offer of redress as having adequately compensated the resident for this aspect of the case. There is no need for any further intervention by the Ombudsman.

Determination

In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was maladministration by the landlord in relation to its response to the resident’s queries regarding service charges and management costs, including its communication on upcoming costs.
In accordance with paragraph 53(b) of the Housing Ombudsman Scheme, the member has made an offer of redress prior to investigation which, in the Ombudsman’s opinion, resolves the complaint satisfactorily in relation to the following complaints:
1. The resident’s request to deal directly with the freeholder/managing agent.
2. Its handling of the associated complaint on the issues.

Orders

That the landlord pay compensation of £275 previously offered to the resident (unless already paid) as this recognised genuine elements of service failure and the sufficient redress finding is made on that basis.
That the landlord pays the additional total sum of £150 in compensation to the resident, comprising £100 for its failure to answer the complaint regarding payment in advance and an additional £50 for poor communication.
That the landlord writes to the resident detailing the improvements it has made to ensure that its residents are able to access the same service charge information as other residents on the development.
The landlord should confirm its compliance with the orders in this case to this Service within four weeks of the date of this report.

Recommendations

That as part of the planned service charge review the landlord ensures a process in place to enable residents get full details of accounts and takes steps to prevent any detriment to residents who hold a lease agreement with landlord. This review should also consider how the landlord will provide information to residents upon receipt of invoices from the managing agents for levies for forthcoming works.
That the landlord enters into a service level agreement with residents, setting out its response times to queries and detailing the level of service that residents can expect under the management fee.