Hyde Housing Association Limited (202017326)

REPORT

COMPLAINT 202017326

Hyde Housing Association Limited

03 March 2022

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

1. The complaint is about:
   1. The landlord’s response to the resident’s queries about the administration of her service charge account.
   2. The level and reasonableness of the service charge.

Jurisdiction

2. 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.
3. After carefully considering all the evidence, in accordance with the Housing Ombudsman Scheme, the following aspect of the complaint is outside of the Ombudsman’s jurisdiction:

The level and reasonableness of the service charge.

4. Under Paragraph 39(g) of the Housing Ombudsman Scheme, we will not consider complaints that concern the level of service charge or rent or the increase of service charge or rent. Complaints that relate to the level, reasonableness, or liability to pay rent or service charges are within the jurisdiction of the First-Tier Tribunal (Property Chamber). The resident can seek free and independent legal advice from Shelter or the Leaseholder Advisory Service about how to proceed with a case. Whilst the Ombudsman cannot review complaints about the increase or level of service charges, we can review complaints that relate to the collection of service charges and how information about service charges was communicated by the landlord.

Background

5. The resident is a leaseholder of the landlord.
6. During September 2020, the resident asked the landlord for an explanation of the significant difference between the estimated and actual service charge costs for the 2019/20 period. She added that costs associated with the door entry system, grounds maintenance and water hygiene had been estimated at £0 and felt that the landlord should have known that there would be costs associated with these services. She sent a follow-up email to the landlord later in September 2020 and was informed that it was taking the landlord longer to respond due to a high volume of enquiries.
7. Between January and March 2021, the resident asked for a complaint to be raised on several occasions. She expressed dissatisfaction that the landlord had not responded to her initial query. In addition, the landlord had removed costs associated with communal cleaning and electricity bills from her service charge in October 2020 which she believed to be in error as the same costs had been added to the 2021/22 estimated costs. She said that she had received communication which showed that her service charge would be increasing from £5 per week to over £31 a week from April 2021, which would increase her housing costs by around £120 a month. She explained that the unpredictability of the service charge was extremely stressful for all residents and noted that the landlord had not provided accurate estimates historically.
8. The landlord responded informally in March 2021 and explained that the reason for increase in 2021/22 estimated costs was due to a service charge deficit carried over from 2019/20 period. It said there had been costs associated with essential repairs needed to both the door entry system and water hygiene which resulted in additional costs. It apologised that the estimated amount had not been set in advance and said it would provide internal feedback to staff.  Following contact from the resident, the Ombudsman contacted the landlord in April and May 2021 asking it to address the resident’s complaint formally. The resident said that she had received a further letter in April 2021 stating that the communal cleaning charges were being removed from the service charge and wanted this to be addressed.
9. In response to the complaint, the landlord apologised for the level of service the resident had received, its delayed responses and any inconvenience caused. It agreed that it could have provided the resident with an accurate estimated 2019/20 statement and upheld the complaint.  It explained that the 2020/21 estimated costs had been reduced when it identified that cleaning costs were incorrectly charged to all properties on the estate, despite some properties not receiving this service. It acknowledged that this was not the best course of action as some resident’s would be receiving the communal cleaning service and said that it would discuss the layout of the estate to ensure that the charges were applied to the correct accounts. It added that it had created a new service charge team responsible for identifying errors and making necessary corrections, as well as acting as a point of contact for residents. In view of the length of time it had taken to address the resident’s queries, it offered £150 compensation.
10. The resident referred her complaint to this Service as she remained dissatisfied with the landlord’s response. She felt that the offer of £150 compensation was not sufficient given the length of time it had taken the landlord to respond to her concerns. She added that the landlord had not explained why certain costs had been estimated at £0 or why there were no contingency funds in place in cases where emergency repairs were needed. She also noted the impact on all residents financially due to the landlord’s errors and its lack of response on this issue.

Assessment and findings

11. The landlord’s service charge policy states that it would base future year’s charges on the previous audited expenditure statements, applying any known budgeting costs. Where there is a deficit once actual costs are determined, the deficit would be carried over and used to increase the charge in the following year. This is the standard approach to managing a variable service charge.
12. The landlord’s complaints policy states that where a resident first expresses dissatisfaction, this would be handled informally and a response would be issued within 48 hours. Following this, the resident can raise a formal complaint under the landlord’s two-stage complaints process. At each stage, the landlord would be expected to issue a response within a maximum of 20 working days. If, for any reason, there is likely to be a delay, the landlord would be expected to contact the resident, explain the reasons for any delay and provide a new timescale in which they can expect a response.
13. In this case, there were communication failures by the landlord following the resident’s query regarding the underestimated service charges in September 2020. Whilst the landlord advised that it was experiencing a high level of enquiries, there is no evidence to suggest that the landlord provided regular updates or a timescale in which the resident would receive a response. The landlord’s informal response in March 2021 was issued six months after her initial query and only after further follow up contact from the resident. Furthermore, this response failed to acknowledge the delay or the resident’s request for a complaint to be raised in January 2021. This resulted in an unnecessary level of involvement by the resident in pursuing her concerns.
14. The resident raised concerns about the significant difference between estimated and actual service charge costs for 2019/20 and asked for an explanation as to why some elements had been estimated to cost £0 for the period. The landlord took reasonable steps to explain the reason for the significant difference between the estimated and actual costs for the 2019/20 period. It apologised for any inconvenience caused to the resident and explained that there had been additional costs related to repairs needed to the door entry system and water hygiene system which it had not accounted for. Whilst the landlord said that it would provide internal feedback relating to the £0 estimates, it did not explicitly address the question where there had been £0 estimates.
15. The resident also raised concern that communal cleaning charges had been removed from her service charge in October 2020, added to the 2021/22 charge and then removed again in April 2021. The landlord has acknowledged that it should have only removed the charge from accounts for properties that do not receive the service. To put things right it said it would review the estate map to ensure that the charges were applied to the correct account. The complaint process is in place so that residents can identify any concerns and so the landlord can resolve them. The landlord used the process to explain and address this issue.
16. As explained above, the actual level of service charge (based on the landlord’s estimates) and the actual amount then charged (based on the actual costs) is outside the jurisdiction of the Housing Ombudsman. It is also important that a variation between estimated and actual costs is to be expected when part of a variable service charge process. The issue in this case was the time taken by the landlord to respond, and whether the responses addressed all of the questions raised by the resident.
17. Following the resident’s request for a complaint to be raised in January 2021, it would have been appropriate for the landlord to have handled her concerns in line with its formal complaints policy. Despite contact from the resident in February and March 2021 and further correspondence from this Service in April and May 2021, the landlord did not provide its stage one complaint response until 24 May 2021, which was significantly outside of its 20-working day timescale for responding. Whilst the landlord somewhat managed the resident’s expectations by contacting the resident providing a new complaint response timescale at both stage one and two once the complaint was raised, the overall delay was unreasonable.
18. The landlord has acted fairly by acknowledging its failure to respond to the resident’s concerns in a timely manner, apologising and offering £150 compensation in recognition of the inconvenience caused. The compensation award was in line with the Ombudsman’s own remedies guidance, which states that amounts in this range are proportionate where there has been service failure which is unlikely to affect the overall outcome of the complaint.
19. However, the landlord has also failed to address certain aspects of the resident’s complaint in its responses, including her concerns about the lack of contingency (sinking fund), and its position regarding her request for the costs to be spread over a longer period of time to reduce the financial burden on residents. In view of this, the landlord should offer additional compensation to the resident and confirm its position regarding these matters. The landlord may have good reasons for not operating a sinking fund or not being able to extend payment periods, however it is expected to respond to reasonable enquiries from residents in full and in good time.

Determination (decision)

20. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure by the landlord in respect of its response to the resident’s queries about the administration of her service charge account.

Orders

21. The Ombudsman orders that the following actions are taken within four weeks:
    1. The landlord is to pay the resident £100 to acknowledge the inconvenience of not answering all of their questions. This is in addition the offer already during the complaint procedure to acknowledge the delayed response times. It consists of:
       1.  £50 to acknowledge the inconvenience of the incomplete response in March 2021
       2. £50 to acknowledge the incomplete formal complaint responses
    2. The landlord is to write to the resident to explain:
       3. Why certain aspects of the 2019/20 service charge had been estimated at £0.
       4. Why there is no contingency / sinking fund.
       5. Its position on any options to spread any costs over a longer period of time.

Recommendations

22. The landlord is also recommended to pay the resident the £150 it offered during the complaint procedure, if it has not already.