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The Riverside Group Limited (202013603)

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REPORT

COMPLAINT 202013603

The Riverside Group Limited

19 May 2021


Our approach

What we can and cannot consider is called the Ombudsman’s jurisdiction and is governed by the Housing Ombudsman Scheme. The Ombudsman must determine whether a complaint comes within their jurisdiction. The Ombudsman seeks to resolve disputes wherever possible but cannot investigate complaints that fall outside of this. 

In deciding whether a complaint falls within their jurisdiction, the Ombudsman will carefully consider all the evidence provided by the parties and the circumstances of the case.

The complaint

  1. The complaint is about the landlord’s response to the resident’s reports of mismanagement of their service charge account and cyclical and sinking funds for major works.
  2. The complaint is also about the landlord’s handling of the resident’s reports over a lack of consultation around major works.

Determination (jurisdictional decision)

  1. 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 will not be investigated.
  2. After carefully considering all the evidence, I have determined that the complaint, as set out above, is not within the Ombudsman’s jurisdiction.

Summary of events

  1. The resident is a leaseholder of the landlord and owns a 70% share of the property. They brought a complaint to the landlord due to their concerns that their cyclical and sinking funds had been mismanaged and due to concerns over the consultation for s20 works. The resident believes the landlord should not have taken money out of the deferred sinking fund for what they believe are inappropriate works, such as to the boiler, lift and carpets. The resident believes the landlord failed to appropriately increase the service charges over the last seven years, which has resulted in a £65 increase in service charge in 2021. The resident stated the landlord should have consulted residents about its use of the sinking fund and that the increase in service charge will cause financial hardship.
  2. The landlord issued its final response to the complaint on the 8 December 2020. Within the response, the landlord referred back to a letter sent to all residents, dated 27 November 2020, and advised they did not uphold the resident’s complaint. The landlord explained that some day-to-day repairs had been charged to the sinking fund to keep service charges low. The landlord advised that it had relied on a clause in the resident’s lease which it interpreted as allowing works to be funded by services charges or the sinking fund at the landlord’s discretion. The landlord disagreed that the funds had been mismanaged but agreed to refund £11,970.90 as a ‘without prejudice’ credit to permit works to the boiler to proceed, so that residents were not charged for the items through service charges. The landlord confirmed they had sought legal advice about the terms of the lease and concluded that replacement and renewal costs for the lift and boiler can only be recovered through the deferred sinking fund and not through service charges.
  3. The Housing Ombudsman was provided a copy of the final response on the 8 February 2021. In their contact with service, the resident explained that their complaint concerns the landlord’s management of the sinking and cyclical funds. The resident stated that they believe the shortfall in the sinking fund is due to the mismanagement of the block’s funds for 14 years. The resident disputes the amount of money, £11,970.90, that the landlord will be placing back into their sinking fund, and believes the total taken out of our sinking fund since 2006 is £79,203.58. As a resolution, the resident was seeking for the landlord to put more money into the sinking fund to help pay for the lift works.

Reasons

  1. Paragraph 39(e) of the Scheme states that…

‘The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion, were not brought to the attention of the member as a formal complaint within a reasonable period which would normally be within 6 months of the matters arising;’

  1. Paragraph 39(g) of the Scheme states that…

‘The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion, concern the level of rent or service charge or the amount of the rent or service charge increase;’

  1. Paragraph 39(i) of the Scheme states that…

‘The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion, 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;’

  1. The resident confirmed on 21 March 2021 that their complaint concerned the spending and use of the sinking fund on cyclical works and repairs over the past seven years. The resident raised a complaint with the landlord about these issues on the 9 November 2020. The Service does not consider that this was a reasonable period of time in which to raise a complaint about work that had been undertaken over the past 7 years. Therefore, in accordance with paragraph 39 (e) the Ombudsman will not consider the management on the fund over the past 7 years.
  2. This part of the complaint also relates to the landlord’s interpretation of the terms of the lease. Any assessment of the terms of the lease would require a binding decision which only a court or tribunal, such as the First Tier Tribunal, can provide. Therefore, in accordance with paragraph 39 (i) the Ombudsman will not consider the management on the fund over the past 7 years.

 

  1. The resident confirmed in an email to the Service, dated 23 March 2021, that they believe the service charge increase to be unfair because of the expenditure of the sinking fund over the past seven years. However, as set out above, this Service cannot investigate matters which were not brought to the landlord as a complaint within 6 months of the issue’s occurrence; and, the resident disputes the landlord’s position that the lease allows for this, which is a matter for the First-Tier Tribunal. Disputes about whether an increase in service charge is fair, require a binding decision from the Court or Tribunal. Therefore, in accordance with paragraph 39 (g) the Ombudsman will not consider the management on the fund over the past 7 years.

 

  1. The landlord confirmed on the 27 November 2020 that the section 20 process has been implemented for the replacement of the boiler. This service cannot provide a binding decision over the landlord’s compliance with any section 20 notice. The First-tier Tribunal can consider complaints about compliance with section 20 notices, liability to pay for major works or other service charge items. I am therefore satisfied that, in accordance with paragraph 39 (i) the Ombudsman cannot investigate this complaint as it is better suited for the First-tier Tribunal.

 

  1. The resident may wish to contact the Leasehold Advisory Service for further advice or seek independent legal advice to help them assess and clarify this issue.

 

https://www.lease-advice.org/