Kingston upon Hull City Council (202013144)

A picture containing logo

Description automatically generated

REPORT

COMPLAINT 202013144

Kingston upon Hull City Council

21 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:
1. The level and reasonableness of service charges for the financial year 2019/20.
2. The landlord’s response to the resident’s concerns regarding service charges for the financial year 2019/20.
3. 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, or aspects of a complaint, will not be investigated.
Paragraph 39(g) of the Housing Ombudsman Scheme sets out that the Ombudsman will not consider complaints which, in the Ombudsman’s opinion, concern the level of rent or service charge or the amount of the rent of service charge increase.
Paragraph 39(i) of the Housing Ombudsman Scheme sets out that the Ombudsman will not consider 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.
As part of the resident’s complaint she raised concerns regarding the level and reasonableness of service charges for financial year 2019/20. The resident suggested that the service charges were extortionate and did not represent value for money, or service received.
The First Tier Tribunal Property Chamber (the FTT) deals with residential leasehold disputes between leaseholders and their landlords. The FTT can make determinations on all aspects of liability to pay a service charge and/ or administration charge, including by whom, to who, how much and when a service charge is payable. In order to decide liability the FTT also decides whether service charge costs have been reasonably incurred and if so whether the standard of any services or works for which the costs are charged is reasonable.
In accordance with paragraphs 39(g) and 39(i) of the Housing Ombudsman Scheme the Ombudsman will not consider the complaint about the reasonableness of the service charges for financial year 2019/20. This is because the Ombudsman cannot consider such complaints and furthermore considers that the FTT may be able to provide a binding decision on the matter.

Background and summary of events

Background

The resident is the leaseholder of the property (the property) which the complaint concerns. The landlord is the freeholder.
The property is a flat situated in a purpose-built block (the building).
The complaint which was made to the landlord was submitted as a group complaint by the resident on behalf of several other leasehold owners (the leaseholders). The complaint set out that the matters complained of concerned all the leaseholders and impacted on them in the same way.
From the landlord’s internal correspondence the Ombudsman can see that the landlord treated the complaint made by the resident as a group complaint, providing duplicate complaint responses to all leaseholders. [Note – the Ombudsman has only been provided with a copy of the landlord’s responses addressed to the resident].
Paragraph 25 of the Housing Ombudsman Scheme sets out who can bring a complaint to the Ombudsman. There is no provision under paragraph 25 for the Ombudsman to consider complaints from groups of residents. However, paragraph 47 of the Housing Ombudsman Scheme states that the Ombudsman may accept an individual’s complaint as a test case if its facts affect others in the same way. The Ombudsman can therefore determine this complaint as a group complaint using the lead resident as the test case. The conclusions made may then be applied to the leaseholders.

Summary of events

On or around 28 September 2020 the resident submitted a complaint to the landlord raising concerns regarding “an additional service charge bill for works carried out in the financial year 2019/20 of over £500”. The resident noted that she was making the complaint on behalf of a number of leaseholders (the leaseholders) who lived within the building. In summary the resident said:
1. The bill was “unaffordable”.
2. The cost for caretaking was unreasonable as the caretaker was “hardly ever on site”.
3. The cleaning costs were too high.
4. The cost for external painting was “extortionate”.
5. Not all works billed for had been undertaken.
Within the complaint the resident also noted another tenant was causing anti-social behaviour (ASB).
On 1 October 2020 the landlord wrote to each of the leaseholders to acknowledge that their group complaint had been received, confirming that a full response would be provided within 10 working days.
On 2 October 2020 the landlord provided its stage one response. In summary the landlord said:
1. The property the resident owned was leasehold. The landlord explained that this meant that it retained “ownership” of the “physical building and land [which it was situated on]”.
2. The property’s lease agreement detailed the parties’ (the landlord and leaseholder) rights and obligations in relation to the management and maintenance of the building.
3. One of the obligations under the lease set out that it was its responsibility to “make all necessary decisions” in respect of the services provided and what maintenance was required to the building.
4. One of the resident’s obligations was to pay an annual service charge equal to 1/112th of its expense in providing services and for the upkeep of the building.
5. The service charge payable by the resident was “variable” and was based on “actual expenditure” meaning the charge may go up or down each year.
6. A leaseholder’s obligation to pay for works over £250 was limited by statute, and where appropriate notification was not provided their contribution was capped at £250.
7. In accordance with the property’s lease the service charge was levied quarterly in advance on an estimated basis. The landlord explained that once accounts had been finalised at the end of a financial year, and the actual expenditure was known, it was obliged to raise an additional bill for underpayment or a refund for overpayment.
8. It had enclosed a document detailing the breakdown of all repairs and renewals which were carried out to the building in 2019/20. The landlord noted that from direct comparison with the annual statement of service charge the resident’s contribution for external painting had been significantly reduced as it was unable to consult with leaseholders due to the procurement method undertaken.
9. The variable service charge leaseholders paid for cleaning, caretaking and communal electricity was based on actual staff costs associated with looking after and cleaning the building in addition to utility bills paid for electricity consumed.
10. It acknowledged that the additional request for payment was a considerable sum to fund in one payment and it was therefore happy to arrange a payment plan with the resident if necessary.
11. In respect of the charge for cleaning and servicing of the ventilation grilles in the resident’s property this charge had been removed as no works had been undertaken.
12. It was currently investigating allegations of ASB by another resident.
An internal record by the landlord on 13 October 2020 noted that the resident had contacted it to advise that the leaseholders were not happy with its stage one response. The record set out that the leaseholders would like to escalate their complaint, on the following grounds:
1. They were not prepared to pay the full charge for the caretaker or for cleaning.
2. They would like the charge for external painting reduced as they did not feel that had benefitted from it.
3. They would like the charge for the new entrance door reduced as it “took ages to open” and was “substandard compared to the previous door”.
4. They were not happy with the charge for lighting.
5. They would like further information on the gate repair.
On 14 October 2020 the resident wrote to the landlord providing further details to support the leaseholders’ complaint about service charges. In summary the resident said:
1. Grounds maintenance was poor.
2. The caretaker was hardly present in the building.
3. The standard of cleaning within the building was poor.
4. All leaseholders did not benefit from external painting.
5. The new entrance door was not fit for purpose. The resident noted that the leaseholders were not consulted on the door and it had already been subject to multiple repairs.
6. Leaseholders should only be charged for repairs carried out on the floor where their property was located.
7. The building had no security.
8. The smoke alarms within leasehold properties were not maintained by the landlord.
9. The additional charges proposed by the landlord were not “fair or reasonable”. The resident stated that leaseholders considered that their individual service charge bills should be reduced by at least £350.
On 10 November the landlord provided its stage two response. In summary the landlord said:
1. In respect of caretaking:
  1. The caretake spent 80% of their time in the building, with the remaining 20% completing duties in neighbouring blocks. The landlord explained that the caretaker service included daily fire, health and safety checks, supporting residents with repair issues, removing items left in the communal areas and litter picking.
  2. When the caretaker was on annual leave another caretaker was on call to attend to any issues.
  3. The caretaking charges was based on its expense in providing a caretaking service to the building, which included a percentage of “wages, superannuation and National Insurance contributions”. The landlord explained that leaseholders paid a variable service charge whereas tenants paid a fixed service charge. The landlord noted that for the whole period leaseholders had been charged £90.75 for caretaking whereas tenants had pay £255.
2. In respect of grounds maintenance:
  1. It did not consider the charge for grounds maintenance was excessive.
  2. It had not received any complaints stating that the grounds were not being tended to satisfactorily.
  3. The charge was £8 per annum per resident which included tending of the green areas, grass cutting and shrub trimming.
1. In respect of cleaning:
  1. The cleaner was on site for 20 hours per week.
  2. The charge for cleaning included “staffing and admin costs” in addition to materials and maintenance of cleaning equipment.
  3. The UK national minimum charge for a commercial cleaner was £20 per hour. The landlord noted that the hourly clearing charge for the building was £16.20 demonstrating that the cost was reasonable.
1. In respect of external painting:
  1. As set out in its stage one response the cost of external painting was £250 as it had not been able to consult with leaseholders as required by legislation.
1. In respect of the new entrance door:
  1. It held two resident meetings in 2018 where the new entrance door was discussed.
  2. The way the door opened now complied with the Government’s Disability Discrimination Act.
  3. It was only the physical door which was replaced rather than the operating system.
  4. As a gesture of goodwill it would deduct the cost of recent repairs to the door following replacement.
1. In respect of landing repairs:
  1. The lease required it to recharge the resident 1/112th of the cost of work carried out to the building.
  2. It was not possible to break down the cost of on-demand repairs to floor level detail.
  3. The cost to leaseholders was £5.63 per year.
1. In respect of security:
  1. The charge for security was for CCTV installed within the building. The landlord noted that CCTV was used to take action against people who disrespected the building.
  2. It noted that there were some concerns regarding alleged ASB from another resident which its ASB team were investigating.
1. In respect of smoke alarms:
  1. The repair recharged to the leaseholders was for the supply and installation of a sealed battery smoke alarm in the caretaker’s office, not to tenanted flats.
  2. While it provided leaseholders with smoke alarms internal to their properties it was not responsible for maintaining them. The landlord explained in accordance with a leaseholder’s lease agreement, they were responsible for “ensuring fire safety within their individual flats”.
1. In respect of the gate repair:
  1. The gate which was repaired provided access to the sheds located on the ground floor of the building and therefore served all flats.
1. In respect of lighting:
  1. The additional charge was for “lightning equipment” not communal lighting, to protect the building in the event of a lightning strike.
1. While it acknowledged leaseholders’ disquiet at receiving an extra service charge bill for 2019/20 the cost was necessary to manage and maintain the building. The landlord confirmed that it was not looking to overcharge leaseholders, it was only recovering monies which were due as per the terms of a property’s lease.
2. It was not within leaseholders’ remit to advise it how much they were willing to pay for services or works. The landlord confirmed that it had a fiduciary duty to ensure that a fair proportion of the costs were recovered from leaseholders.

On 14 November 2020 the resident wrote to the landlord requesting to escalate the complaint as the leaseholders were not satisfied with its response. In summary the resident said:
1. Leaseholders disagreed that the caretaker spent 80% of their time in the building. The resident stated that leaseholders frequently spent “all day” looking for the caretaker.
2. Leaseholders disagreed that no complaints had been made in respect of the standard of grounds maintenance. The resident stated that the grounds were untidy, including that the grass was not cut frequently in the summer.
3. Leaseholders were not happy with the level of cleanliness of the building. The resident stated that the building was very large and the cleaner did not have enough time to do a proper job.
4. Leaseholders disagreed that external painting was value for money.
5. Leaseholders were not informed of the residents’ meeting where the new entrance door was discussed. The resident stated that the door was not fit for purpose, was difficult to access on a mobility scooter and frequently broke down.
6. Leaseholders were not satisfied with the upkeep of landings as they looked a “mess”, had not been completely redecorated and were painted in different colours.
7. Leaseholders did not consider that CCTV deterred ASB in the building. The resident noted that there was frequently a “strong aroma of drugs” present in the building and people hung around in the communal areas.
8. Leaseholders were concerned that the landlord had not informed them of their responsibility to maintain the smoke alarms within their properties.
9. Leaseholders disputed that the gate which was repaired provided access to sheds accessible by all residents.
10. Leaseholders believed that they should have a say on how their money was spent. The resident noted that she had heard that the landlord did not check service charge invoices prior to issuing which was concerning.
Within the escalation, the resident noted that the landlord had incorrectly invoiced her for service charges owed by the previous owner of the property which was unsatisfactory.
On 25 November 2020 the landlord provided its final response. The landlord said following a review of the leaseholders’ submissions it had concluded that the escalation request did not meet any of the criteria to consider the complaint further, as detailed in its complaint procedure. The landlord confirmed that leaseholders could contact the FTT for a decision on the reasonableness of the service charges levied if they were not satisfied with its position. The landlord also set out that as the complaint had exhausted its complaint procedure they may refer the matter to this Service for adjudication.

Assessment and findings

The landlord’s response to the resident’s concerns regarding service charges for financial year 2019/20

The Ombudsman understands that the leaseholders’ complaint dated 28 September 2020, in which they raised queries and concerns regarding the additional service charges payable under the property’s lease, was in response to the individual “statement of actual service charge expenditure… for the final year 1 April 2019 to 31 March 2020” they each received. The statement provided a detailed breakdown of the services charged for and itemised costs. The Ombudsman notes that the resident’s estimated service charge statement, issued in March 2019, for financial year 2019/20, set out a total service charge of £834.00 which was approximately £555 less that the actual charge due.
In the Ombudsman’s opinion the landlord’s overall response to the leaseholders’ concerns regarding their total contribution for financial year 2019/20 was appropriate. This is because the landlord:
1. Explained that the service charge for each property was based on actual expenditure and therefore the charge may go up or down each year. This is in accordance with the terms of the resident’s property’s lease which sets that the amount of service charge shall be ascertained by the actual expenses and outgoings incurred by the landlord in relation to the maintenance and upkeep of the building for the year in question.
2. Explained that the leaseholders were required to contribute to the upkeep and maintenance of the building in accordance with the terms of their properties lease. This is in accordance with the terms of the resident’s property’s lease which sets out that the service charge will include a sum for “the expense of maintaining, repairing, redecorating, renewing, amending, cleaning, repointing, painting, graining, varnishing, whitening or colouring the said building and all parts thereof”.
3. Explained that the service charge for each property was calculated as 1/112th of its expense in providing services and upkeep of the building. This is in accordance with the landlord’s Leaseholder Handbook which states that the service charge for a property is calculated on the number of flats in the building. The Ombudsman notes that the building contains 112 flats.
4. Provided a specific response to each element of the service charge which the leaseholders disputed, providing a reason and explanation to support the application of the charge and why it was deemed it reasonable.
5. Confirmed that it had refunded the service charge for cleaning ventilation grills as no works of this nature had occurred in leasehold properties. Where the landlord identified an overcharge it was obliged to make a refund.
6. Confirmed that its ASB team were investigating reports of possible ASB by another tenant. As it is an obligation of a tenant and leaseholder to not cause a nuisance the landlord was required to follow up on the report.
7. Provided details on the leaseholders’ right to refer their concerns to the FTT for consideration as it had made its position clear.
The Ombudsman notes that as part of the complaint the leaseholders raised concerns that the standard of grounds maintenance, cleaning and landing decoration was below the level expected. In response, it would have been best practice for the landlord to have committed to arranging an inspection of the areas with the leaseholders in attendance, to either confirm no shortfall in delivery of service or to capture any areas needing addressing. However, alone this omission does not amount to a service failure as the concerns raised did not directly impact on any leaseholders’ occupation of their property, the landlord had provided evidence that it satisfied itself of the level of cleaning by undertaking regular audits and it confirmed that it had received no previous complaints about each issue.

The landlord’s complaint handling

As part of the resident’s contact to escalate the leaseholders’ complaint to stage three, the resident raised an individual concern relating to service charges on purchasing the property. This concern was not addressed by the landlord within its final response. In the Ombudsman’s opinion this was reasonable as:
1. The resident’s concern did not affect other leaseholders and therefore it would not be appropriate to address them as part of the group complaint.
2. The resident’s concern was a new issue which did not form part of the original complaint dated September 2020. The purpose of a review response is to address the outstanding issues from a landlord’s earlier response and not to expand the scope of the original complaint.
3. In internal correspondence dated 17 November 2020 the landlord confirmed that it would respond to these issues separately.
In the Ombudsman’s opinion it was also reasonable for the landlord to decline to consider the leaseholders’ complaint at stage three on the grounds that it considered that a review would not change the outcome. This is because the landlord had determined that it had acted in accordance with the leasehold agreements in relation to the service charge bill. It was also in accordance with the landlord’s complaint policy which sets out that a stage three panel may be declined where there is no evidence that a policy has not been properly or fairly applied and which has not been corrected.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of its:
1. Response to the resident’s concerns regarding service charges for financial year 2019/20.
2. Complaint handling.

Reasons

The landlord’s response to the resident’s concerns regarding service charges for financial year 2019/20

The landlord’s overall response to the leaseholders’ concerns regarding their total contribution for financial year 2019/20 was appropriate as it demonstrated that the increase in charge on leaseholders’ actual statement was in line with terms of their property’s lease. In addition the landlord provided a specific response to each element of the service charge which the leaseholders disputed. It was also appropriate that the landlord provided the leaseholders with information detailing their right to refer their concerns regarding the level and reasonableness of the service charges to the FTT, as the FTT make determinations on all aspects of liability to pay a service charge and/ or administration charge, including by whom, to who, how much and when a service charge is payable.

The landlord’s complaint handling

It was appropriate that the landlord did not provide a response to the individual concern which the resident raised within the leaseholders’ stage three escalation request, as the issue did not affect all leaseholders and the concern did not form part of the original complaint dated September 2020.
It was reasonable for the landlord to decline to consider the leaseholders’ complaint at stage three as it had determined that a review would not change the outcome as it had identified that it had acted in accordance with the leasehold agreements in relation to the service charge bill.

Recommendations

The landlord should carry out an inspection of the communal areas and grounds of the building to confirm no shortfall of delivery of service or to capture any areas needing addressing. The landlord should invite the leaseholders to attend the inspection.
The landlord should write to the leaseholders to provide an update on the status and/ or outcome of its ASB investigation.
The landlord should write to the resident to address her individual concerns regarding service charges levied on purchasing the property if it has not already done so.
The landlord should carry out the recommendations within four weeks of the date of this determination.