One Housing Group Limited (202123874)

REPORT

COMPLAINT 202123874

One Housing Group Limited

17 May 2023

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 relates to:
1. The landlord’s response to the resident’s concerns over its handling of service charges.
2. The landlord’s handling of the resident’s complaint.

Background and summary of events

The resident has occupied the property, a flat, since November 2015. He lives alone and bought the property as shared ownership. In January 2020 he purchased it outright. Management company C maintained the property until May 2019; then, management company V took over.
An email sent to all leaseholders, including the resident, by management company V on 17 September 2019, attached a service charge budget for the period of 30 September 2019 to 29 September 2020. The budget apportioned service charge per property, but also provided a breakdown of how the service charge was likely to be spent. It recorded the resident’s property as being 102m2 rather than 82.5m2.
On 9 January 2020, the resident submitted an enquiry to the landlord about his service charge/rent account statement; in particular, that the year-end adjustment was high. It is unclear whether the landlord responded.
An email sent to all leaseholders in the building by management company V, on 14 February 2020, said an agreement had been made with a third party company to service flats once a year, “to ensure consistency for efficient heating and hot water”. This would be paid for by the service charge.
From July 2020, the resident began to make general enquiries about the service charge.On 7 April 2021, the resident messaged the landlord on a few occasions andthanked it for some information it had sent, butsought clarity on other matters.He mentioned his service charge in 2015 had been £230 per month, and it had since increased to £500 per month. He highlighted what he considered to be discrepancies in payments, queried a communal heating charge and asked for a clear breakdown of the charges, so he could see what he was being charged for.
The landlord replied the same day, and said it would send his request for a breakdown of service charges, to the relevant team. The landlord added that it was going to look at the management company contract in relation to the servicing of the heating unit. The resident then responded saying he wanted a detailed breakdown of charges for the last two years as well as the current year, and despite paying for a service of the heating unit, he had not received one.
The resident chased the landlord for a response on 19 April 2021. He chased the landlord again on 3 June 2021, which was acknowledged on 10 June, and he was advised he would be contacted shortly. It is also noted that a conversation took place between the resident and landlord staff on 8 June. During this conversation the resident advised that he wished to make a complaint as things were “taking too long”. The resident sent a follow up email to the landlord, on 17 June 2021 stating he was unhappy at having waited two months for a reply.
On 17 June 2021, the landlord told management company V that the resident had requested a breakdown of his service charge for the past three financial years. It asked for final accounts for those years, or estimates if not available.
On 18 June 2021, the landlord asked management company V to explain why its records did not correlate with the information provided by the resident. The same day, an internal email from the landlord noted it had service charge estimates for:
1. 1 April 2018 – 31st March 2019;
2. 1 April 2019 – 31st March 2020;
3. 1 April 2020 – 31st March 2021.
An email sent from management company V to the landlord on 21 June 2021, acknowledged the floor area in the resident’s property had been recorded incorrectly by them. As a result, the resident had been overcharged. It said it had liaised with the resident and said the error would be corrected and it would refund the difference in its next service charge budget. In terms of the heating, it said the building, “operates central heating system, there is a central plant room with 3 X large boilers which supplies hot heating water/heating to the whole building. Each apartment has a HIU (heat interface unit) which then transfers the communal heating water from plant room to each flat for hot water or heating water (to heat the rads). There is a metering system inside the HIU in each flat which works out how much energy the HIU has drawn from the communal heating and then residents are billed quarterly by [the energy company] according to their consumption”.
It explained the service charge financial period ran from 30 September to 29 September for each year. It attached the service charge account for 2016/2017 and said the financial account for 2017/2018 was being prepared by accountants, and it expected this to be completed by the end of the month. The delay was due to handover challenges from management company C. It said the 2018/2019 service charge account would follow once 2027/2018 had been completed. It enclosed the service charge budget for 2018/2019, 2019/2020 and 2020/2021.
The landlord sent emails to management company V on 21 June and 28 July 2021, asking for an explanation for a £5,000 charge for gas, when the residents in the building were paying directly for their energy. It is not clear whether the landlord received a response.
The landlord issued a stage one response to the complaint, on 22 June 2021. It noted a complaint was made (by telephone) on 8 June and the issues raised were:
1. The resident had been waiting for several months for replies to his service charge queries raised on 7 April 2021.
2. The outstanding queries were:
  1. He had not received a detailed breakdown of the service charge and he believed the costs had risen excessively.
  2. He was charged for his heating usage by a third-party but believed he was also billed for communal heating via the service charge.
  3. The 2021/2022 booklet stated a monthly charge of £500 but he had been billed £540 in April, followed by £520 in the following months.
  4. The property schedule used to calculate service charge apportionment listed the resident’s property as being 102m2 when other documentation showed it be 82.5m2.
The landlord upheld the complaint. It said:
1. There had been a change in management company and delays in it receiving the end of year service charge accounts. It said it had been told the 2017/2018 end of year accounts were being prepared and should be made available by the end of the month, with the 2018/2019 accounts, shortly after. Once received it would review them, pass them to its auditors for certification and provide the resident with the accounts as soon as possible. It did though, enclose the latest three years estimated service charges from the agents covering the years 2018/2019 to 2020/2021.
2. The managing agent’s service charge year was 29 September to 28 September whereas the landlord’s service charge year was 1 April to 31 March. This meant the estimated amounts may vary as it did not have all the information about the cost of services, at the time of the estimate.
3. In terms of heating charges, it apologised if it had not been clear about how the different elements of the heating were recharged. It said the cost of maintaining and servicing the three boilers in the central plant room formed part of the service charge. The cost of the gas used in the heating and hot water system was billed to residents directly by a third party. So, the service charge did not include the gas supply.
4. It had found that since April 2020 it had added £17.70 each month to its service charges. The resident was to be reimbursed £265.50; that being the 15 monthly payments of £17.70 between April 2020 and June 2021 by the 13 July 2021.
5. It wished to apologise for not getting the direct debit billing correct in April of that year. It said the amount taken was £539.99, and it should have been £519.78; so, £20.21 was refunded and the monthly charge changed to £519.78 from May 2021 onwards. It then explained, “However, we will amend this to reflect the removal of the £17.70 relating to the personal gas charge so that your payments will be £502.08 per month. We will write to you to let you know when these amendments have been completed.”
6. The proportion of service charge payable by the resident was based on the size of his property compared to the others in the building. It acknowledged there had been a discrepancy and that the resident’s property should be 82 m2, the management company had been advised of that, and it should be revising its details and accounts.
7. It had reviewed its procedures, in order to learn from feedback.
The landlord subsequently sent a separate email, offering the resident £100 compensation.
The resident acknowledged the landlord’s response, on 6 July 2021. In his email, he explained he remained dissatisfied and made the following points:
1. Although the management company changed in 2019, the landlord had been taking payment; therefore, it should have records of what he had paid over the years.
2. Information he had been sent, was not what he wanted; he wanted a breakdown of what he was paying for and why the service charge had gone up as much as it had.
3. In terms of heating charges, he explained the service charge for July had already left his account a few days ago billed at the incorrect amount; therefore, he should receive a refund for 16 months, amounting to £283.20.
4. He said, his service charge demand generally differed to the amount taken each year. That the last two years related to the overcharge of the heating mentioned above, but he didn’t understand why it took more in previous years.
5. He wanted a full statement of accounts from when he took over the property in 2015, as he thought there were errors on the accounts to date.
6. He wanted a minimum of £1,000 compensation to recognise the issues, the number of times he had had to chase and the length of time the issues had been ongoing.
On 12 July 2021, the landlord emailed the resident and explained he was due a refund of “ineligible charges”. It had hoped to complete that by 13 July 2021, but an extension was needed. It apologised and reassured him a refund was being processed and he would be kept updated.
On 29 July 2021, the landlord asked management company V for timescales for when the final actual accounts for 2018-19, 2019-20 and 2020- 21 would be completed. Management company V responded the same day and said it hoped the accounts for 2018/19 would be ready by 22 August; and those for 2019/20 by 15 November. It added that the 2020/21 service charge year was not yet completed, and as such it could not confirm the date for when those accounts would be ready.
Management company V sent the landlord the service charge account for 2017/2018 on 29 July 2021. It confirmed the resident would receive a credit in his September service charge statement for its error with the floor area of the property.
On 3 August 2021, the landlord sent a stage two response to the complaint. It acknowledged the resident had asked for a review of the complaint on 6 July, noting the issues raised were:
1. He had not received a full cost breakdown for previous year.
2. His direct debit had not been amended following removal of ineligible heating charge.
3. Credits were due because of the incorrect floor area used to apportion charges.
4. The amount of time he had spent investigating the issues.
5. The lack of response from staff.
To resolve the complaint, the landlord noted the resident wanted:
1. Confirmation that 16 monthly heating charges would be reimbursed, rather than 15.
2. His direct debit to be revised to account for the reduced monthly charge.
3. Full breakdowns of actual costs for previous financial years.
4. It to be a priority for the reimbursement of monies due as a result of the incorrect apportionment.
5. A full statement of account since 2015.
6. Compensation of at least £1,000 for the time spent in dealing with the issue.
In its findings, the landlord apologised for not identifying issues with its service previously, despite the resident having raised these points “a number of times”. It said it had also reorganised its service charge team and was reviewing its relationships with managing agents. It said:
1. The heating charge had been ended and would not be billed in future. It credited 16 instalments of £17.70, a total of £283.20 to the resident’s account and apologised that the July instalment of £17.70 was billed before it could stop the charge.
2. Following the removal of the heating charge, the revised monthly charge was £502.08. It apologised that the 1 August direct debit could not be changed, but it would be changed from September, to take into account the amounts the resident had paid that year.
3. Management company V was employed by the freeholder to carry out the management and maintenance of the building. It explained it billed the landlord for its services, and that cost was passed on to the residents. It said management company V had provided its estimated costs, but had not yet provided a detailed breakdown and the actual amount spent in each year. It said management company V had confirmed the apportionment of costs was not accurate, being based on the wrong square meterage of the units of the building, and had acknowledged the resident was due a refund. A revised end of year account was due by 15 November 2021 and once received, the landlord would ensure it checked the details and advised the resident of the amount he should have been charged and the adjustment to be made.
4. The resident was to provide a calculation of what he believed he had been overcharged based on the incorrect size of the property. Once checked, it would apply a refund to his account to ensure that he had paid the correct or near correct estimated charges for each year. This would be completed before the October direct debit was set up.
5. It enclosed a statement of account back to 2015, but said it would send the resident a revised copy once the necessary adjustments were made.
6. It offered £250 compensation to the resident.
Around October 2021, the landlord issued a year end service charge booklet and explained that following the issuing of the 2019/2020 end of year accounts in September 2020, it identified that errors had been made and the accounts were inaccurate. The information was reviewed and passed to auditors and revised end of year accounts were produced for 2019/2020. It apologised for the length of time it had taken to complete the review and get the revised accounts ready. It said it would send the invoices and supporting documents to his email address in the next few days. An additional amount of £2,108.05 would be added to the resident’s service charge account in November.
On 7 November 2021, the resident emailed the landlord, and said he wanted the complaint left open. He added that he still had not received a breakdown of any of the years requested, the direct debit had not been amended in relation to the heating charge, credits were due as a result of the incorrect floor area being recorded and he had spent a long time dealing with the issues. The email was acknowledged on 10 November and it was noted the resident wanted £1,000 compensation. On 12 November, the resident was told a response would be sent by 22 November, and the landlord took steps internally to consider the matter further.
On 23 November 2021, management company V explained to the landlord that the error in relation to the incorrect floor area, “happened in 2019/2020 service charge budget when we took over management so the error can only be corrected from 20219/2020 service charge which we have done.” The landlord then made some internal enquiries in relation to the financial position.
The landlord emailed the resident on 15 February 2022, and noted he remained unhappy. It said a decision had been made to reimburse the resident for the 2021/22 credit at that time, rather than waiting for the year end. It added that an amount of £939 was being processed and would be credited to the rent account by the end of the following week.
The resident emailed the landlord on 13 March 2022 and said that some of his concerns remained unaddressed. He said he had asked for:
1. An adjustment of his service charge as a result of errors made.
2. His direct debit to be adjusted as a result of being overcharged for heating. This was supposed to take place from October 2021.
3. A full breakdown of service charges from when he owned the property (since 2015).
4. Compensation for having money he was owed, withheld.
The landlord acknowledged that the resident remained unhappy, on 16 March 2022. He was told the relevant department would be in touch to advise him on the next steps. The landlord took steps to then consider the matter internally.
The resident chased the landlord for a reply to his last email, on 30 March 2022.
The landlord sent a response to the resident’s complaint on 1 April 2022. It apologised for the delay in responding to his email and commented as follows:
1. It apologised for not revising the estimated service charges. It then set out a table showing his estimated charges each year and those for a property of 82.5m2:

Table

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It said, “Looking at this the amount we billed to you in 2020/2021 as an estimate is comparable to the amount the managing agent estimated should be billed to a property of your size. Regrettable in 2021/2022 the amount we billed you as an estimate was considerably higher than the amount that it should have been for a property of your size.”
It went on to say, “With this in mind we will apply a one-off credit to your account to reduce the estimate by £1340.48 bringing the estimated charges from £6,025.00 to £4684.52. This is the equivalent of the amount for a property of your size plus our management and examination fee. I have asked the team to complete this by the 11 April. In the 2022/2023 year we estimated the charges based on the correct property size. When we complete the end of year accounts for each of these years, we will do so taking into account these estimates and the correct size of your home.”
In relation to double charging for heating, it said it had acknowledged in June 2021 that an error had been made from April 2020, and it promised to reverse 15 monthly payments of £17.70; however, when the adjustment happened, a further charge had been taken. Therefore, it credited the resident’s account 16 monthly payments.
It apologised for not supplying a breakdown of service charges since the resident lived at the property. It said it would provide him with copies of its end of year accounts and the documents that support them for the past 6 years, by 11 April 2022. These would include the invoices it received from the management companies and any of the supporting documents that they provide at that time.
It explained its offer of £250 compensation was still open for acceptance.

On 12 April, management company V confirmed that all of the required corrections had been made to the service charge account. It also confirmed the size of property had been updated. The landlord noted that the square footage was incorrect when management company V took over management of the site, so it had only had to correct the service charge for the duration of its management. The landlord also noted that there should be no further service charge refunds based on the information provided, but it asked for the 2022/2023 service charge budget.
The resident emailed the landlord on 15 May 2022, and said he did not agree with its response, stating the main reasons to be:
1. He had been overcharged since 2015 in relation to the service charge, as the square footage for his property had always been wrong. This needed addressing.
2. He had been double charged for heating from April 2020 all the way through to February 2022, at £17.70 a month. This needed to be refunded.
3. He was told he would have a full breakdown of service charges by 11 April 2022, but had not received them. He noted an apology was made, but the problem continued.
4. He did not feel £250 compensation was reasonable as he had spent two and a half years dealing with this issue and had been out of pocket for a long time, due to being overcharged.
5. He was sent a booklet which said his new service charge would be £401.91, but he then received a direct debit statement saying the charge would be £422.12. He said the service booklet amount was correct as he was still being charged based on incorrect square footage.
A Service Charge Statement of Account issued on 31 May 2022, showed arrears as of 31 May 2022, in the amount of £164.18.
On 1 June 2022, the landlord wrote to the resident, stating it had reviewed his concerns further. It said:
1. In terms of apportionment, the resident was not overcharged. From 2015 to 2019, the resident was not charged based upon the apportionment of the floor area of the flat; therefore, the fact the incorrect floor area was recorded, did not affect the charge. His share was 4.167% of the building cost (1/24) which was in line with the charges of other properties of a similar size. The estate charge was set at 3.92% which was the same as the revised amount once the floor space was reduced to 82.5m2.
2. £939.05 was reimbursed to the resident’s rent account on 30 September 2020, based on the reduction in the 2019/2020 estimate from the originally held floor area figure (102m2) and the corrected figure (82.5m2).
3. Service charge estimates for 2020/2021 were based on the 2018/2019 spend, as the 2019/2020 data would not have been available at the time. The estimate for the 2020/2021 year of around £4,500 was broadly in line with the figures summarised in an email sent to the resident on 1 April 2022, which were based on the correct floor area. The 2020/2021-year end account would be provided to the resident in the coming months, and it would ensure that this was based on the corrected apportionment data, based on the size of the resident’s home.
4. In terms of service charge estimates for 2021/2022, it applied a further credit to the resident’s account of £1,340.48 on 31 March 2022. It apologised for the resident having been overcharged and said it was committed to ensuring that the correct figures were applied moving forward. The original managing agent charge for the year was set at £5,776.00 as it was based on the old floor area data. When factoring in the corrected floor area, the apportionment dropped to £4,435.52.
5. The sinking fund charge had been combined with the overall estate management charge on the annual estimate. As such, there should not have been an additional charge for the current year. The landlord apologised for this happening, and confirmed the £20.21 charge taken on both 1 April and 1 May 2022 had been reimbursed to the resident’s account.
6. The landlord increased its offer of compensation from £250 to £500, to recognise the issues and the length of time it had taken to resolve matters.
On 5 May 2023, the landlord told this Service that it had not heard from the resident since its 1 June 2022 letter. It said its Service Charge team had confirmed that the direct debit was amended to match the monthly charge of £401.91 for the last financial year, remedying the issue with the sinking fund element. It also said the 2020/2021 year end accounts were still pending, but should be going out no later than July 2023.
The resident has told this Service that he does not accept the landlord’s explanation for not being overcharged, and he says service charge credits have not been made and he is missing years of reimbursements.

The landlord’s obligations, policies and procedures

The lease agreement and relevant statute

The lease at section 7, sets out the Service Charge Provisions and says the service charge will be calculated before the beginning of the account year. That it will consist of a sum comprising the expenditure estimated as likely to be incurred in the account year by the landlord and an appropriate amount as a reserve for or towards other costs, as specified in the shared ownership lease.
The lease at paragraph 7.5 also says that as soon as practicable after the end of each account year, the landlord should determine and certify the amount by which the estimate shall have exceeded or fallen short of, the actual expenditure in the account year, and supply the leaseholder with a copy of the certificate. The leaseholder shall be allowed/shall pay immediately following receipt of the certificate, the specified proportion of the excess or the deficiency.
At paragraph 7.8.1 of the lease, it says, if “it shall at any time be necessary or equitable to do so the landlord may increase or vary the Specified Proportion”.
Section 21 of the Landlord and Tenant Act 1985, says the landlord must provide the tenant with details of the service charges, any associated service charges and relevant costs relating to service charges.
Section 22 of the Landlord and Tenant Act 1985, says a tenant may within six months of obtaining a summary (of relevant costs), require the landlord in writing, to afford him reasonable facilities to inspect the accounts, receipts and other documents supporting the summary. The landlord should make these facilities available to the tenant for two months beginning not later than one month after the request was made.

The landlord’s policies and procedures

The landlord’s Rent and Service Charge Policy says, “Residents are sent a further actual account either a bill or credit, depending on whether the actual costs of services were higher or lower than originally estimated. For tenants this will be carried over into the following year’s charge. [The landlord] will make all demands for payment in writing, setting out how the costs being claimed for whether estimated or actual, have been arrived at. In line with legislation, the calculations for actual service charge costs will be signed off by independent accountants where required by law (s.21 Landlord & Tenant Act 1985).”
It states further – “Queries or complaints about the level of service charge or its reasonableness in the first instance should be directed to our Customer Service Centre. A response to the enquiry will be provided within 10 working days. If a resident remains unsatisfied with the information provided, this will be reviewed by a Manager. A final response on the matter will be given within 10 working days of receiving confirmation from the customer that they remain dissatisfied. The queries and complaints process does not prevent tenants and leaseholders (who pay a variable service charge) from exercising their statutory rights contained within Sections 18 -30 of the Landlord and Tenant Act 1985 which will be dealt with in line with legislation.”
The resident’s annual service charge review document sets out how the service charge was estimated. For example, the annual service charge review document from 1 April 2021 until 31 March 2022 said the monthly service charge would be £502.08, with a total amount due for services as £6,025. It said it attempted “to set as accurate an estimated service charge as possible. This year we have looked at the estimates we sent to you in February 2020 for the 2020/2021 year and increased our estimates for services by 1.5%, a blend of the CPI figure in October and the Bank of England, Monetary Policy Report, November 2020 anticipated CPI figure for the end of 2021, and Buildings Insurance by 6% based on the costs we received from our insurer.”
It went on to explain, “You will have to pay this estimated service charge as stated in your lease/ tenancy agreement. The payments are known as ‘variable service charges’, as the amount you have to pay varies if the cost of providing the services changes within the year, or is different to the original estimate.” It also said, “Each year we will check the ACTUAL cost of the services and compare this to the ESTIMATED amount we collected through the year. There is normally a difference and this is called “balancing charges” which means we may owe you money, or that you may owe us. When we write to you in September we’ll let you know how any balancing charge “underpayment or “overpayment“ can be settled between us and we will make this as easy as we can for you”.
Point nine of the resident’s annual service charge review document says, “You have the right to write to your landlord to request a written summary of the costs which make up the service charges. The summary must— cover the last 12 month period used for making up the accounts relating to the service charge ending no later than the date of your request, where the accounts are made up for 12 month periods; or cover the 12 month period ending with the date of your request, where the accounts are not made up for 12 month periods. The summary must be given to you within 1 month of your request or 6 months of the end of the period to which the summary relates whichever is the later.”
The landlord’s Complaints Policy says a formal complaint will be acknowledged within two working days and it will aim to respond at stage one, within 10 working days of receipt of the complaint. If the complaint proceeds to stage two, it will be acknowledged within two working days and a senior manager will be assigned the complaint. They should then contact the complainant within three working days from the date of it being assigned at stage two. It aims to complete the stage two review, within 20 working days.
The Complaints Policy says it can consider discretionary compensation, and it categorises this as follows:
1. Minor impact – up to £50: Complaint has been upheld and there has been minor inconvenience or distress caused. Impact has been no more than a reasonable person could be expected to accept and the compensation is a token in acknowledgement of our responsibility. This type of payment would generally be recorded as a gesture of goodwill;.
2. Medium impact – £50 – £250: Inconvenience and/or distress has clearly been caused as a result of a failure in service. Failure to follow the Complaints Policy, to investigate the complaint or poor handling of the complaint. A repeated failure of a low impact event could result in the impact being increased to a medium impact.
3. High impact – £250 – £500: A serious failure in service has taken place. This could either be due to the severity of the event or a persistent failure has occurred over a prolonged period of time or an unacceptable number of attempts to resolve the complaint.

Assessment and findings

The landlord’s response to the resident’s concerns over its handling of service charges.

The evidence shows the resident had made enquiries with the landlord about its service charges, in 2020. Things then progressed, and it was on 7 April 2021 that emails were exchanged with the landlord, and the resident set out what information he wanted; including, a full breakdown of his service charges for the last two years and answers to queries regarding specific charges.
In accordance with the resident’s annual service charge review document, the resident had the right to request a written summary of the costs which made up the service charges. That summary should have covered the last 12 month period used for making up the accounts relating to the service charge ending no later than the date of the request. That summary should have been given to the resident within one month of his request or six months of the end of the period to which the summary related, whichever was the later.
It is evident the landlord did not comply with that. The landlord did, in its complaint responses, acknowledge there were delays in providing the breakdowns the resident had requested.
In accordance with the lease, the landlord was, as soon as practicable after the end of each account year, to determine and certify the amount by which the estimate exceeded or fell short of, the actual expenditure in the account year. The resident was sent an estimate each year, of the forthcoming service charge amount, and then later, a statement showing the actual amount incurred. However, as a result of a change in management company, the landlord accepted there had been delays receiving the end of year service charge accounts. There were delays issuing the end of year accounts and the landlord has confirmed that the 2020/2021 accounts are still outstanding. The 2021/2022 accounts should also have been prepared by now.
It is important to appreciate that from 2021, the landlord has accepted that not only were there delays in providing service charge information, but there were issues with the service charges in general, in the resident’s case. It is noted the landlord took steps to try and resolve the resident’s concerns; however, it did not always respond to queries within ten working days, as per the resident’s enquiry of 7 April 2021. In addition, having said certain points, such as the direct debit charge being amended, would be corrected, this did not happen promptly. Given that the landlord had already identified shortcomings in its handling of the service charge, it would have been reasonable to ensure that it was committed to ensuring that the situation was resolved, and that the resident was not caused further inconvenience.
The landlord accepted the resident’s property had been incorrectly recorded as being 102m2 rather than 82.5m2. An internal email dated 12 November 2021, shows the landlord acknowledged the resident leaseholder had been overcharged for years. It said the management company had accepted an error caused by an incorrect floor area, and had promised to provide revised accounts in September 2021. However, on 1 June 2022, the landlord then explained to the resident that he had not been overcharged from 2015 to 2019 and explained its reasons why that was the case.
The landlord accepted an error had been made with the accounts, and that would be corrected. The resident later received a credit in the amount of £939.05 in relation to the 2019/2020 overcharge. However, the landlord then noted that in 2021/2022 the amount the resident was billed as an estimate, was considerably higher than it should have been. This was as a result of the size of his property, not being correctly recorded by the management company. It corrected this by applying a credit to his account to reduce the estimate by £1,340.48 bringing the estimated charges from £6,025.00 to £4,684.52.It is noted the landlord appropriately apologised to the resident for this overcharging.
In terms of other charges, the landlord explained the service charge did not include gas supply charges, and it accepted since April 2020 it had added £17.70 each month to its service charges, and the resident was to be reimbursed £265.50; that being the 15 monthly payments of £17.70 between April 2020 and June 2021 by the 13 July 2021. A further payment was later taken, so the resident was refunded 16 monthly payments instead. This was appropriate in the circumstances.
In June 2022, the landlord also accepted the sinking fund charge had been combined with the overall estate management charge on the annual estimate. As such, there should not have been an additional charge for the current year. It apologised for this happening, and confirmed the £20.21 charge taken on both 1 April and 1 May 2022 had been reimbursed to the resident’s account.The landlord’s actions were appropriate. However, it is acknowledged that this would have been the cause of further frustration and inconvenience for the resident.
The resident says the landlord has not provided a complete breakdown of his service charges, since he has lived at the property. It did not adjust his direct debit following an issue with a heating charge, and it has not provided a refund of service charges due as a result of the floor area of his flat being incorrectly recorded.
The evidence shows that while the landlord did liaise with the management company V and it tried to resolve the resident’s concerns over the service charges, there were delays in ensuring his direct debit was altered, and the resident was overcharged. The landlord has now credited the resident where there was an overcharge. The direct debit seems to have now been corrected; however, this took longer than it reasonably should have. The evidence does not suggest that the delay was unavoidable. This led to the resident being inconvenienced, having to continue to raise these points, and clearly led to him becoming frustrated with how long things were taking to sort out.
The resident has been provided with a refund of service charges due as a result of the floor area of his flat being incorrectly recorded, and the landlord has explained why a refund is not due from 2015 to 2019. The landlord has attempted to deal with the resident’s concerns. However, until the end of year accounts have all been sent to the resident, and he has had a chance to review them, along with the breakdowns he has been asking for, it is understandable that he is not convinced the figures quoted by the landlord are correct.
Overall, there has been maladministration in relation to the way the landlord responded to the resident’s concerns over its handling of service charges. It did attempt to resolve some of the resident’s concerns and as a result of issues remaining outstanding, it increased the compensation offered, to £500.
The Ombudsman is not bound by the compensation guidance produced by the landlord, but it is reasonable to take that in to account, when considering whether compensation should be paid, and if so, how much. Although the resident’s concerns went on for about two to three years, the evidence shows the landlord did liaise with the resident and the management company, in order to try and get things resolved. Some of the delays were as a result of the management company’s actions, but ultimately the landlord is responsible for the information provided to the resident, and it should ensure the resident receives a summary of accounts from 2016/2017 onwards. In addition, as the resident has been asking for a breakdown (further detail on the accounts) since 2021, the landlord should ensure that information is also provided to the resident.
While the Ombudsman notes the length of time it took the landlord to address all the resident’s concerns, it did correct issues along the way, by applying credits to the resident’s account, where appropriate. It also apologised for its errors and it did say in its stage two complaint response, that it was reviewing its relationships with managing agents as a result of the complaint, which is a positive approach.
The resident has said from the start, that he wants at least £1,000 compensation from the landlord. The strength of feeling he has over what has happened, has been noted. There were shortfalls in the landlord’s service, and this had some impact on the resident, which while not permanent, did cause him frustration for an extended period of time. It is important to take into account that the resident still has not been provided with the latest service charge accounts or the breakdowns he requested.
Compensation should therefore be paid to the resident, to reflect the inconvenience he suffered, and to acknowledge that the issues remain unresolved. The landlord has taken steps throughout to try and put things right and apologised. However, although it says it was implementing changes to the relationship with the management company, this does not seem to have resulted in service charge accounts being issued promptly, or the breakdowns requested, being provided. As matters remain outstanding, the compensation offered of £500, is not sufficient to recognise the landlord’s continued failings here, over an extensive period. Therefore, a more appropriate amount of compensation for the landlord to pay the resident is £750.

The landlord’s handling of the resident’s complaint.

The resident complained to the landlord on 8 June 2021, and it provided its stage one response on 22 June 2021. It replied within the 10 working days expected as per its Complaints Policy and it dealt substantively with the resident’s concerns.
On 6 July 2021, the resident made it clear he remained unhappy with the stage one response. The evidence that is available does not demonstrate that the landlord acknowledged the resident’s request, or confirmed that the complaint would be escalated. However, the landlord issued a stage two response on 3 August 2021, 20 working days later. Therefore, the landlord did comply with its Complaints Policy, in terms of timescales.
It is noted the resident does not feel the landlord fully addressed his concerns when it dealt with the complaint, but in the Ombudsman’s opinion, it did attempt to provide a comprehensive response, by addressing the points raised. The resident’s concern that service charges issues remained unresolved and over the amount of compensation offered, is addressed within the first part of this investigation.
As well as complying with the timescales for dealing with complaints, the landlord made offers of compensation in line with its Complaints Policy. It also offered apologies when it identified there were issues with the service provided. Although it took the landlord a year to make the final offer to resolve the complaint, as well as trying to put things right, the complaint evolved; therefore, it was appropriate for the landlord to reconsider its response and the offer to resolve the complaint, as time went on. Taking everything in to account, the Ombudsman is satisfied the landlord’s handling of the complaint was reasonable.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in relation to landlord’s response to the resident’s concerns over its handling of its service charges.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration in relation to the landlord’s handling of the resident’s complaint.

Reasons

The landlord delayed dealing with the resident’s concerns about his service charges and the resident had to chase the landlord in order to try and get issues with the service charge, fully addressed. While the landlord took steps to try to put things right, the amount of compensation was not proportionate in the circumstances.
The landlord has not provided the resident with all the service charge accounts, including breakdowns, that he has requested since 2021.
The landlord complied with its Complaints Policy and took reasonable steps to try and resolve the complaint.

Orders and recommendations

Orders

The landlord to pay the resident £750 compensation, to recognise delays and inconvenience caused to the resident. This includes the £500 previously offered. The compensation should be paid to the resident directly, and not offset against any service charges.
If it has not done so already, the landlord to send the resident a summary of his service charge accounts from 2016/2017 to 2021/2022.
If it has not done so already, the landlord to send the resident a breakdown of his service charges accounts since 2016/2017.
The landlord to evidence compliance with the above orders to this Service within 28 days of this investigation report.

Recommendations

The landlord to review the arrangement with the current managing agent, in order to ensure it complies with its obligations to provide prompt issuing of service charge accounts.
The landlord should contact the resident once the 2020/2021 year end accounts are available, to discuss any remaining concerns he may have.