London & Quadrant Housing Trust (202002423)

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REPORT

COMPLAINT 202002423

London & Quadrant Housing Trust

4 October 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 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 the landlord’s:
1. Response to the resident’s concerns regarding service charges applied to her account.
2. Complaint handling.

Background and summary of events

Background

The resident is the tenant of the property which the complaint concerns. The landlord owns the property.
The property is a flat.

Summary of events

In early February 2020, exact date not known, the resident contacted the landlord to query the service charge for mobile caretaking, water testing and electrical testing following receipt of the annual rent statement for the property.
On 5 February 2020 the landlord responded to the resident. In summary the landlord said:
1. Mobile caretaker. The cost was for a mobilised caretaker who would attend the site at the request of the property manager. The landlord explained that the mobile caretaker was “multi-skilled” and could undertake various caretaking duties at short notice and to cover emergencies. The landlord noted that a mobile caretaker was different from a full-time caretaker.
2. Water testing. The charge had been included to cover the cost of statutory testing of shared water supplies and storage tanks to detect and eliminate issues such as legionella. The landlord stated that the charge was mandatory.
3. Electrical testing. This was a new service which it had introduced for 2020/21. The landlord noted that while the resident had previously been liable to pay the charge it had not charged her for the service. The landlord explained that the charge covered the cost of statutory testing of all electrical intake points, regardless of whether there was a separate landlord supply.
On 12 March 2020 the resident responded to the landlord. In summary the resident said:
1. The landlord’s reasons for the service charges were “unnecessary and unjustifiable”.
2. The landlord’s response was generic and had been provided without investigating the situation.
3. The tenancy agreement for the property did not include any service charges.
4. Mobile caretaking. There had never been a mobile caretaker designated to the property. The resident noted that the property was a flat situated in a converted building, comprising one other property. The resident explained that the grounds of the building were maintained by the residents.
5. Water testing. It was not clear why the charge was only being introduced for 2020/21 if it was mandatory. The resident stated that if testing was a requirement it should have been carried out regularly. The resident explained that the property’s water supply was not shared. The resident asked the landlord to confirm the name of the company who would be undertaking the test and how the test would be completed.
6. Electrical testing. The property’s electrics had only been tested twice she the start of her tenancy. The resident asked the landlord to confirm the “significance” of the charge now.
On the same day the landlord replied setting out that it had investigated the service charge for mobile caretaking and found that it was not applicable to the property. The landlord confirmed that a credit of £9.53 had been added to her account.
In response the resident contacted the landlord advising that not all queries raised in her most recent correspondence had been addressed.
On 8 July 2020 the landlord wrote to the resident regarding her service charges. In summary the landlord said:
1. It was sorry that its response to the resident’s outstanding queries was delayed.
2. Mobile caretaking. It had applied a credit to the resident’s account to “counteract” the incorrect charge.
3. Water testing. Separate meters did not necessarily mean the absence of shared water services. The landlord explained that the testing to be undertaken was to test the water intake points of the external building which was shared between the two properties. The landlord set out that, while the charge had not previously been applied, the property’s tenancy agreement permitted it to alter service charges provided that 28 days’ notice was given. The landlord confirmed that notice had been given.
4. Electrical testing. As it was responsible for providing a safe supply of electricity, electrical testing was a mandatory check it was required to undertake in respect of its properties. The landlord noted that the frequency of testing between properties depended on factors such as environment, operation and use. The landlord confirmed that the testing would check the rising and lateral mains which were responsible for transporting electricity from the single point of connection to the building to the individual outlets. The landlord provided the name of the company which was due to carry out the test. The landlord confirmed that it was able to make the charge in accordance with the property’s tenancy agreement.
In late July 2020 the resident contacted this Service regarding her service charge concerns as she was not satisfied with the landlord’s response. On receipt of the resident’s referral this Service contacted the landlord and requested that it provide the resident with a formal response to her concerns, as it did not appear that it had already done so.
On 28 July 2020 the landlord wrote to the resident, advising that it had been contacted by this Service, setting out that it had no active complaints open in her name. The landlord therefore asked the resident to confirm her complaint, and the outcome which she was seeking, in order for it to investigate the matter.
On 31 July 2020 the resident responded to the landlord providing details of her complaint. The resident reiterated the concerns which she had raised within her correspondence dated 12 March 2020 and stated that she believed that the service charges were “erroneous and [had] no justification”.
On 3 August 2020 the landlord replied to the resident setting out that its response dated 8 July 2020 addressed the resident’s concerns.
On 12 August 2020 the resident responded setting out that the landlord’s response dated 8 July 2020 did not address the concerns which she had raised regarding the service charges. Within her response the resident noted:
1. The charges were in relation to the exterior of the building and not internal. The resident said that she should not be charged for costs associated to the exterior of the property.
2. The landlord had charged for the “labour and service” of a mobile caretaker which did not exist for the property.
3. The landlord’s explanation for the electrical testing was “erroneous and [provided] no justification”. The resident stated that as it was the landlord’s responsibility to provide safe electrics it should pay for electrical testing. The resident also advised that it was not clear why the charge would now be applied on a yearly basis if it was only to be carried out “every five years or so”.
4. It was not clear where in the property’s tenancy agreement it set out that the landlord could introduce new charges.
On 17 August 2020 the landlord acknowledged the resident’s correspondence confirming that it had been logged at stage one of its complaint procedure.
On 28 August 2020 the landlord wrote to the resident providing “clarification on the points” which she had raised in relation to service charges. In summary the landlord said:
1. The charges for 2020/21 estimated for electrical and water testing were set at a fixed rate across its stock. The landlord noted that the estimated cost was a forecast of what it anticipated the cost to be for the coming year.
2. The charge for water testing had been included in error as an inspection had identified that the water supply to the building and property was mains fed. The landlord confirmed that it would arrange a credit to be reimbursed to the resident in respect of water testing.
3. The electrical testing related to the supply as it entered into the building before being split into individual homes, and therefore at that point the electricity was “a communal facility”. The landlord confirmed that communal services were recoverable from tenants who benefited from them.
4. A refund had already been made for mobile caretaking.
The landlord concluded by confirming that the resident may come back to it if she required any further assistance, and her case would remain open until 11 September 2020.
On 9 September 2020 the resident responded to the landlord setting out that its response did “not answer any of [her] questions”. In summary the resident said:
1. The service charges were in relation to the exterior of the property which she had no affiliation with.
2. As the landlord was responsible for providing a safe supply of electricity it should pay for testing. The resident noted that it was not clear how the testing was supposed to be carried out.
3. The landlord was charging her for services which did not exist.
4. It was not clear how she benefitted from a communal area within the property.
5. It was not clear why the charges were now being introduced “after all these years”.
6. The landlord had admitted that it had incorrectly charged her for a mobile caretaking and water testing.
7. Currently she had only received a refund for mobile caretaking. The resident stated that it was unsatisfactory that the refund had been applied to her rent account rather than her bank account as it appeared that it was “paying [itself]”.
On 22 September 2020 the landlord replied to the resident setting out that service charges were recoverable by way of 28 days’ notice. The landlord confirmed that notice of the service charges was given on 3 February 2020 in advance of the charges taking effect on 1 April 2020. The landlord added that electrical testing was a compliance requirement in accordance with Health and Safety legislation and because the testing related to the electrical supply as it entered the building, and before it split into individual properties, it could be recovered in line with the property’s tenancy agreement.
On 2 October 2020 the resident replied to the landlord setting out that its latest response “once again” did not address her concerns in relation to service charges. Within her correspondence the resident noted that from the start of her tenancy she had never been charged for services. The resident added that a clause at the “back of [the property’s] tenancy agreement” stated that no services were provided by the landlord in relation to the property.
On 20 October 2020 the landlord responded setting out that, as previously advised, the tenancy agreement included a clause which allowed it to make changes to service charges with the appropriate notice. The landlord explained that as the electrical testing was for the supply of electricity to the building it was a charge she was required to pay.
On 30 October 2020 the resident replied stating that the landlord had failed to provide a “justifiable” reason for electrical testing as it did “not supply [her] electrics or carry out electrical testing”. The resident advised that the electrics were “not shared in the communal area… [however were] directly split between two meters located in the communal area. The resident added that she had still only received a refund for mobile caretaking. The resident concluded by requesting to escalate her complaint to the next stage of the landlord’s complaint procedure.
On 13 November 2020 the landlord wrote to the resident confirming that it would respond to the resident’s complaint at stage two of its complaints procedure.
On 17 November 2020 the landlord provided its stage two, final, response. In summary the landlord said:
1. It understood that in order to resolve the complaint the resident was seeking clarification explaining why it was charging for electrical testing when it was never carried out previously.
2. In respect of the other charges subject of the complaint, mobile caretaking and water testing, a credit had been issued as it was identified that these charges were erroneous.
3. In order to investigate the resident’s concerns in relation to electrical testing it had spoken with its Building Services Team. The landlord set out that it had been identified that there was “no landlord electrical supply” and therefore the charge would be removed from future service charge statements. The landlord confirmed that a credit for electrical charges would be applied to the resident’s rent account. The landlord acknowledged that its earlier responses had been incorrect, explaining that the responses were “based on information [it] received at the time”.
4. As the resident was “a fixed service charge payer” it was not required to issue refunds for any charges which incurred no actual costs as she did not benefit from a reconciliation at the end of the financial year. The landlord explained that where there were changes to charges after the year had started they would be taken into account for future statements. The landlord confirmed that the refunds were being provided as a goodwill gesture and to demonstrate that it was committed to resolving the resident’s concerns.
The landlord concluded by confirming that the service which the resident had received “was not reflective of the high standards [it aimed] to provide” as the service charges were not calculated correctly. The landlord confirmed that it had learnt from the complaint and feedback on the issues had been provided to the relevant staff involved. The landlord advised that the resident may refer her complaint to this Service if she remained unhappy with its response.
As the resident was not satisfied with the landlord’s response she referred her complaint to this Service for adjudication. Within an update to this Service, and on 1 June 2021, the resident noted that the landlord had not yet applied the refund in respect of electrical testing to her rent account.

Assessment and findings

The landlord’s response to the resident’s concerns regarding service charges applied to her account

The tenancy agreement for the property sets out the following in relation to rent and service charges payable:
1. The word rent refers to the total of the tenant’s rent and “other charges”.
2. The landlord may increase or decrease the rent after giving the resident at least 28 days’ notice in writing.
3. Any increase or decrease will normally date from the first Monday in April.
4. The landlord will let the tenant know in writing about any change to the service charge at last 28 days’ notice.
5. If the landlord cannot be sure of the exact cost of providing a service to the property when it issues the notice, it will use an estimate, and if necessary, it will make an adjustment next time it changes the service charge to take the actual costs into account.
The tenancy agreement further set out that no services would be provided by the landlord at the start of the resident’s tenancy however this was subject to change in the future.
The landlord set out in a statement to the First Tier Tribunal Property Chamber (FTT) dated 8 June 2021, in relation to a different service charge query raised by the resident, that it treats the resident’s “tenancy as being subject to a fixed service charge”. The landlord notes that this is despite the tenancy agreement referring to sending an annual statement of expenditure “which could imply a variable service charge”. The Ombudsman notes that the FTT did not comment on whether the service charge was fixed or variable as part of its determination on the resident’s other service charge query.
The Ombudsman is unable to determine whether the landlord’s position that the resident’s service charge is fixed is correct as this would require interpretation of the tenancy agreement which the Ombudsman is not able to do. This because the landlord has said that it treats the tenancy as being subject to fixed service charges but also notes itself that the tenancy agreement wording could imply a variable service charge. An assessment of the landlord’s position on this would require interpretation of the tenancy agreement and a binding decision to be made, which would require the judgment of a court. However, the Ombudsman is satisfied that it was reasonable for the landlord to inform the resident that it was able to vary her service charge, including by introducing new services, where at least 28 days’ notice was given as this is clearly stipulated within the tenancy agreement, as set out in paragraph 27.
Within the landlord’s final response it acknowledged, following internal investigation between February 2020 and November 2020, that the service charges for the financial year 2020/21 were not correct as they had been calculated/ applied incorrectly. The landlord therefore confirmed that it would credit the resident’s rent account the annual cost for the services. In the Ombudsman’s opinion this was appropriate, as it identified that it had made an error and therefore put the resident back in the position she would have been were it not for the error.
The resident raised concern with the landlord’s approach that it would apply the service charge refunds to her rent account rather than her bank account. In the Ombudsman’s opinion it would have been best practice for the landlord to have applied the refund to the resident’s bank account, upon her request, as no arrears had been identified and the error was its own, rather than an omission by the resident. However, alone it does not amount to a service failure as the Ombudsman has seen that on 28 August 2020 the landlord explained to the resident that once the refund was added to her rent account, she may request the money back via its Revenue Team.
The Ombudsman notes that by June 2021 the landlord had not taken steps to apply a credit in respect of electrical testing to the resident’s rent account. This is unsatisfactory as it was an action it had committed to doing to resolve the complaint.
While it was appropriate that the landlord took steps to put right the errors it had identified in relation to the resident’s service charge, in the Ombudsman’s opinion the time taken to identify that service charges for water testing and electrical testing were applied incorrectly was protracted. The evidence shows that despite raising her service charges concerns in February 2020 it was not until August 2020 that the landlord identified that the water testing charge was incorrect and not until November 2020 that it identified that the electrical testing charge was incorrect. In the Ombudsman’s opinion this demonstrates that appropriate enquires were not made at the point which the resident initially raised her query. This is unsatisfactory and will have resulted in time, trouble, inconvenience, and distress to the resident, which was not recognised by the landlord within its final complaint response.

The landlord’s complaint handling.

Overall, the Ombudsman is not satisfied with the landlord’s complaint handling. Firstly, the landlord failed to confirm if its correspondence dated 28 August 2020 was its formal stage one response. This is unsatisfactory as a landlord should clearly set out whether its response is given under its complaint procedure or not, in order to provide clarity and to manage the resident’s expectations.
Secondly, while the resident did not specifically request to escalate her complaint until 30 October 2020, the Ombudsman considers that it would have been appropriate for the landlord to have use her ongoing expressions of dissatisfaction between September and October 2020 to escalate the complaint. In not doing so, it was a missed opportunity to formally address the resident’s outstanding issues at an earlier time and to carry out a review of its previous response to determine if it was correct or not.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was:
1. Service failure by the landlord in respect of its response to the resident’s concerns regarding service charges applied to her account.
2. Service failure by the landlord in respect of its complaint handling.

Reasons

The landlord’s response to the resident’s concerns regarding service charges applied to her account

It was reasonable for the landlord to inform the resident that it was able to vary her service charge, including by introducing new services, where at least 28 days’ notice was given as this is clearly stipulated with the property’s tenancy agreement.
While it was appropriate that the landlord took steps to put right the errors it had identified in relation to the resident’s service charge, by crediting the resident’s rent account, the time taken to identify that service charges for water testing and electrical testing were applied incorrectly was protracted. This demonstrates that appropriate enquires were not made by the landlord at the point which the resident initially raised her query.
The landlord significantly delayed in applying a credit to the resident’s rent account in respect of the electrical testing.

The landlord’s complaint handling

The landlord’s complaint handling was unsatisfactory as:
1. It failed to confirm if its correspondence dated 28 August 2020 was its formal stage one response.
2. It failed to escalate the resident’s complaint to stage two of its process promptly and on receipt of her on-going expressions of dissatisfaction.

Orders and recommendations

Orders

The landlord should pay the resident the following compensation within four weeks of the date of this report:
1. £100 for the time taken to identify that the service charges for water testing and electrical testing were applied incorrectly.
2. £100 for complaint handling.

Recommendations

The landlord should make checks to ensure that the service charge refunds it committed to making have been correctly applied to the resident’s rent account. Where a refund has not been applied the landlord should arrange for the refund to be made within the next four weeks, in addition to considering whether any compensation is due for the delay in making the payment.
The Ombudsman notes that the resident’s property is one of two in a converted building. The landlord should therefore check that no incorrect service charges have been applied to the other resident’s account and make any adjustments as required.
The landlord should share the Ombudsman’s Complaint Handling Code with its staff who deal with complaints to ensure that complaints are responded to in line with best practice.