Clarion Housing Association Limited (202005632)

REPORT

202005632

Clarion Housing Association

26 April 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 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 regarding:
1. An increase in the resident’s service charges.
2. The landlord’s administration of the resident’s service charge account.
3. The landlord’s handling of the resident’s requests for information regarding his service charges.
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 will not be investigated.
After carefully considering all the evidence, in accordance with paragraph 39(g) of the Housing Ombudsman Scheme, the following aspects of the complaint are outside of the Ombudsman’s jurisdiction:
1. An increase in the resident’s service charges.
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’.
The appropriate body that has jurisdiction to consider complaints about the level of the service charge is the First-Tier Tribunal (Property Chamber – Residential Property), which can determine the appropriate level and amount of service charges recoverable by a landlord; decide if the charges were reasonably incurred; by whom they are payable, and when.

Background and summary of events

Background

The resident is a leaseholder in a shared ownership 2-bedroom house. He has resided there since December 2019.
The resident’s lease states that ‘the Leasehold covenants with the Landlord to pay the Service Charge…in advance at the same time and in the same manner in which the Specified Rent is payable under this Lease’.
Point 7.5 of the lease also states that ‘as soon as practicable after the end of each Account Year the Landlord shall determine and certify the amount by which the estimate…shall have exceeded or fallen short of the actual expenditure in the Account Year and shall supply the Leaseholder with a copy of the certificate’.
The landlord operates a two-stage complaint policy. The policy notes that Stage One complaints should be responded to within 10 working days and its Peer Review (Stage Two) responses should be issued within 20 working days.
The landlord has a compensation policy. Section 4.1 of the policy notes that amounts of between £50 and £250 may be offered as a remedy in cases where the impact on a resident has included ‘distress and inconvenience, time and trouble…and delays in getting matters resolved’.

Summary of Events

On 4 June 2020 the resident contacted the landlord to request a month-by-month breakdown of his service charges. The landlord responded the following day and provided confirmation of the estimated service charges for 2020/21.
On or around 30 June 2020 the resident submitted a formal complaint to the landlord by phone. Within his complaint, the resident stated that:
1. He did not receive any letter from the landlord informing him of the rent and service charges he was liable for.
2. The service charges included charges for services which he believed he had not received, including for communal lighting and ground maintenance.
3. He had received a poor service when calling the landlord and would like his calls listened to.
4. He was unhappy that the service charge was higher than was advertised in the landlord’s memorandum of sale.
On 8 July 2020, the landlord acknowledged receipt of the resident’s complaint.
On 10 July 2020, the landlord responded to a further call from the resident and discussed his complaint further, clarifying his concerns. It then followed this up with an email outlining the actions it would take to investigate the complaint.
On 20 July 2020, the landlord sent the resident a holding response and advised him it was still gathering information regarding his complaint.
On 4 August 2020, the landlord emailed the resident ahead of issuing its formal response and provided him with information regarding his queries regarding ground maintenance and street lighting on his estate. It also clarified the service charge which covered services provided by a managing agent and what those services were.
Regarding ground maintenance, the landlord advised:
1. Which parts of the site its managing agent was responsible for.
2. That it had brought the resident’s claim that no maintenance work had been done to the relevant teams and that this will be ‘rectified’.
3. That any surplus charge would be reflected in the resident’s actual end of year statement for his service charges.
Regarding street lighting, the landlord advised:
1. According to its plans, the lights on the site around the resident’s property should already be in place. If they were not, the landlord stated it ‘suspects they will be erected if not already’.
2. While lighting may not be on the resident’s street yet, it was ‘aware that there is street lighting on the estate, you would be liable for a portion of the costs to run this as per your lease’.
3. That any surplus charge would be reflected in the resident’s actual end of year statement for his service charges.
On 7 August 2020, the landlord issued its formal Stage One response. In its response, the landlord noted that as the resident’s property was on a ‘relatively new development’, it was not possible for the landlord to generate an estimated service charge based on actual accounts and previous expenditures. It also acknowledged that the resident had asked for a monthly breakdown of the service charges ‘on many occasions’ and apologised that he had not been provided with the information until then. It also provided the resident with a map of the estate and associated streetlight layout.
On 16 August 2020, the resident responded to the landlord and requested that his complaint be escalated. In his escalation request, he asked that:
1. He receive a breakdown of the £2,060.49 service charge arrears that the landlord had advised he owed in a letter dated 22 May 2020.
2. Any charges for street lighting and maintenance be deducted from his arrears as they were not ‘up and running’ and he had effectively been paying for 8 months’ worth of a service he had not received.
The resident subsequently chased this escalation request on 8 September and 29 September 2020. The request was acknowledged by the landlord on 30 September 2020.
On 8 October 2020, the landlord contacted the resident to discuss the complaint. It advised it would conduct a peer review as requested and clarified his complaint as being about the lack of an explanation concerning his arrears balance of £2,060, a further breakdown of his service charges and an explanation of the ‘discrepancy between shared owners and private buyers’.
On 2 November 2020, the landlord issued its Peer Review (Stage Two) response. The landlord advised that it had reviewed the resident’s service charge account and noted that the resident should have been sent ‘a statement of actual expenditure for 2019/20’ and explained that this statement, sent out 6 months after the end of each financial year, outlines the ‘difference between what we estimated and what the actual charge had been’. The landlord provided a breakdown of the charges it had estimated and actually charged for its grounds maintenance contract, communal lighting, managing agent services, buildings insurance and an administration fee for the year 2019/2020. It noted that there had been no actual expenditure between 16 December 2019, the date the resident moved in, and 31 March 2020 and that he would therefore be credited with £194.23. It apologized that this had not been done in September 2020.
Responding to the resident’s complaint about being charged for services he was not yet receiving, the landlord advised that it was ‘reluctant to make any changes to your current 2020/21 charges, effective from April 2020’. It noted that, although the resident stated some services had either only started over the summer of 2020, or were yet to start, ‘they may well start within this financial year and therefore we could see an actual cost in next year’s statement’. The landlord advised that removing any estimated costs now could ‘leave you with a large deficit to pay next September (2021)’ and noted that, if there were to be an underspend, the resident would receive a refund or credit back onto this account at that time. The landlord also provided a breakdown of the resident’s service charge arrears, summarising ‘all transactions on your account from 16/12/2019 – today’ and clarifying the current amount owed.
In response to the resident’s query regarding his belief that there was a ‘discrepancy between shared owners and private buyers’, the landlord advised that it could not comment on charges applied to private owners and renters and noted that it was not necessarily privy to different management arrangements. However, it reiterated that if the resident’s actual service charge cost was lower for the year 2020/21, he would be credited when the landlord compiled its statement of actual expenditure.
The landlord also responded to the resident’s complaints about poor communication and the handling of his account. Although it stated all the resident’s enquiries were responded to within 10 working days, it acknowledged that the information it provided did not necessarily satisfy his queries and it apologized for this. It advised that this had been raised with the members of staff responsible and stated that additional training would be provided.
On 8 February 2021, after the period covered by this complaint, the landlord sent the resident his new service charges for the year ahead (2021/2022).

Assessment and Findings

As noted above, the issue of whether the service charges charged to the resident, or the level of any increase, are reasonable is outside of the Ombudsman’s jurisdiction and would be better dealt with by another organisation (the Tribunal). However, the Ombudsman can investigate whether the landlord has reasonably handled and responded to the resident’s enquiries regarding the issue and his other requests for information regarding his service charge account.

The landlord’s administration of the resident’s service charge account

It is noted that, within his original complaint, the resident noted he had been advised on signing his lease that the estimated service charges would be around £25. However, they had been subsequently raised and he had not received any notification regarding this. The landlord has not disputed this. While in its response the landlord reasonably advised that the initial figure was only an estimate and therefore subject to change, and that there were no previous accounts on which to base its estimate, it did not respond to the resident’s specific complaint that it had not corresponded with him and advised him that his service charges had subsequently been set at a higher amount. The resident was only made aware that his actual service charges were higher when the landlord sent him an arrears statement in May 2020. In its response, the landlord did not acknowledge this point and it was not appropriate that it did not provide the resident with a response regarding that part of his complaint.
In its Peer Review response, the landlord did however acknowledge it should have sent the resident a statement of actual expenditure for the financial year 2019/2020 in September 2020 and has not provided any evidence to suggest that it did so. Although it did note that this did not appear to have been done, the landlord did not apologize for this error or acknowledge any inconvenience this may have caused the resident. This was not appropriate. The landlord did subsequently note it had not added a credit of £194.23 to the resident’s service charge account in September 2020 following the publication of its statement of actual expenditure. It apologized that this had not happened and confirmed the credit had now been processed. This was an appropriate response.
Regarding the resident’s concern that he had been charged for services that he had not received, the landlord advised that its position was that it had credited the service charge account for 2019/20 and advised that it was reluctant to make changes to the estimated charges for 2020/21. It noted that, were it to do so, it may have left the resident with a larger service charge bill at the end of the financial year and that, should there be an underspend in the actual charges for 2020/21, this would be credited to his account as had happened for 2019/20. Having stated it was ‘reluctant’ to make any alterations to the estimated charges, the landlord could have been clearer as to whether the resident had a choice in the matter. However, overall, the landlord’s response regarding how it intended to administer the account was reasonable.
In response to the resident’s query about there being a discrepancy in the service charges between shared owners and private buyers, the landlord advised that it could not comment on charges applied to other residents which it was not necessarily in charge of. This was a reasonable position for the landlord to take.

The landlord’s handling of the resident’s requests for information regarding his service charges

Regarding the resident’s contact regarding his service charge account, the landlord advised that it believed all enquiries had been responded to within 10 working days. It did acknowledge that not all the responses it had given had answered the resident’s queries. Although in its records the landlord noted the resident had referred to five phone calls he made regarding his service charge account, this Service has not seen any evidence provided by either party regarding when these calls were said to have taken place. However, while not noting any specific instances, the landlord did apologize for the way in which the resident had been responded to and advised the matter had been raised with the members of staff involved and it would be providing additional staff training. Although more specific details of the failures it identified would have been useful, the landlord’s overall response was proportionate and offered redress (an apology) that the Ombudsman considers to have been appropriate in the circumstances. Its response indicated that it had learned from the matter and its commitment to further staff training is in line with what the Ombudsman would expect to see in such circumstances.
In its Stage One response the landlord provided further information regarding ground maintenance and street lighting on the estate. It also provided further information regarding the services covered by its managing agent and what those services were. It also provided further information regarding the breakdown of his service charges. This was an appropriate response.

The landlord’s complaint handling

The resident made his initial complaint to the landlord around 30 June 2020. The landlord’s complaints policy indicates that it will respond to Stage One complaints within 10 working days. However, the landlord did not acknowledge receipt of the complaint until 8 July 2020. It then sent a holding response to the resident on 10 July 2020 and provided further information ahead of its formal response on 4 August 2020. The formal Stage One response was issued on 7 August 2020, 18 working days outside of the target response time within its Complaints Policy. Although the landlord had issued a holding response and communicated with the resident during the complaint process, it had not given any amended target dates and did not apologize for the complaint response being issued well outside of the target time. This was not appropriate.
Although a timeframe is not referred to in the landlord’s complaints policy, in its Stage One response the landlord advised the resident he had 20 working days in which to request the escalation of his complaint to the next stage of its complaints procedure. He duly contacted the landlord on 16 August 2020 to request this and provided reasons why he was unhappy with the response. However, despite noting the resident’s request on its internal records, the landlord did not action this and the resident had to chase it for a response on at least two occasions. The landlord finally acknowledged his request on 30 September 2020, 32 working days later. This was an unreasonable delay. In its Stage Two response, the landlord then erroneously noted that the escalation request was not received until 29 September 2020, meaning it did not acknowledge the fact it had not responded to the request for over a month and therefore did not apologize for this failure. This was unreasonable and meant the landlord missed an opportunity to put things right, in accordance with the Ombudsman’s Dispute Resolution Principles.
The landlord’s complaints policy states that it will respond to Peer Review (Stage Two) complaints within 20 working days. Having acknowledged the resident’s escalation request on 30 September 2020, it issued its Peer Review response on 2 November 2020, 3 working days outside of the target time stated in its complaint policy. However, as noted in paragraph 36, the landlord’s records confirm it first received the resident’s escalation request on 16 August 2020, meaning it was 55 working days (not including a Bank Holiday) until it issued its Peer Review response. The landlord did not acknowledge this or issue an apology. This was an unreasonable length of time for it to take and caused the resident to expend time and effort in chasing a response.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its administration of the resident’s service charge account.
In accordance with paragraph 55 of the Housing Ombudsman Scheme there was reasonable redress by the landlord in respect of the resident’s requests for information regarding his service charges.
In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure in respect of the landlord’s complaint handling.

Reasons

The landlord’s administration of the resident’s service charge account

In its response, the landlord reasonably advised the resident that the £25 service charge referred to when he signed the lease was an estimated amount only and therefore subject to change. However, although it was not obliged to do so under the terms of the lease, it could have notified him that it had subsequently set the charges at a higher amount before it sent him an arrears letter in May 2020. The resident’s lease states he must pay the service charge in advance. It would therefore have been helpful if the landlord had advised him that that the charges had been set at a higher level or confirmed the estimated charge for the account year 2020/21 in a timely fashion, as it did in February 2021 ahead of the account year 2021/22.
The landlord did not send the resident his statement of actual expenditure for the financial year 2019/20 and did not appropriately acknowledge this. It also did not process a credit he was due in September 2020 until two months later, although it did apologize for this delay.

The landlord’s handling of the resident’s requests for information regarding his service charges

The landlord offered reasonable redress to the resident by apologizing for the fact that it had not responded appropriately to some of his enquiries. It also indicated that it would be taking reasonable actions by way of highlighting the issues to the members of staff involved and by initiating further staff training.

The landlord’s complaint handling

The landlord’s Stage One response was issued outside of its target time. While it communicated with the resident during this stage of the process and issued a holding response, it did not provide an amended target date and did not acknowledge its delayed response once it was issued.
The landlord also did not identify its failure to escalate the resident’s complaint, despite having noted his initial request on its records, and did not acknowledge the resultant significant delay in providing its final response. In its response, the landlord therefore did not acknowledge any inconvenience this may have caused the resident.

Orders

The landlord is ordered to pay £100 compensation to the resident within four weeks of the date of this letter, consisting of:
1. £50 for its failure to issue him with his statement of actual expenditure and for the delay in processing credit due to his account.
2. £50 for the resident’s time and trouble in chasing up his complaint escalation request and for the unreasonable delay in issuing its final response.