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Notting Hill Genesis (201909973)

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REPORT

COMPLAINT 201909973

Notting Hill Genesis

22 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 concerns the landlord’s:
  1. response to the resident’s complaint about an increase in their service charges.
  2. handling of the rent and service charge account.
  3. complaint handling.

Jurisdiction

  1. What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the 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.
  2. Paragraph 39 (i) of the Scheme states that this service will not investigate complaints that 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. After carefully considering all the evidence, in accordance with paragraph 39 (i), the following aspect of the complaint is outside of the Ombudsman’s jurisdiction:
  3. the resident’s complaint about an increase in the service charges.
  4. On 17 February 2020, the landlord wrote to the resident advising of the rent increase for 2020 to 2021 of £17.40 per week to £156.21. This increase comprised of a £3.01 rent increase and a £14.39 service charge increase. The new charges were to take effect in April 2020.
  5. On 19 March 2020, the resident contacted the landlord asking to appeal the  proposed annual increase to the weekly rent/service charges. On 26 March 2020, the landlord advised in a reply that the increase in rent of £3.01 per week was CPI+1% which was in line with regulatory standards set down by the government (from £111.30 per week to £114.31 per week). The landlord advised it was still awaiting an explanation for the increase in service charge element but said this would have been set and signed off based on actual expenditure in the previous financial year.
  6. In her reply of 27 March 2020, the resident clarified that it was the service charge element of the rent increase that she was concerned about as the amount of the increase “did not seem right”.
  7. It is not the role of the Ombudsman to consider complaints about the level of the rent or service charge including any yearly increases. These disputes are matters for a more appropriate body to consider such as the First Tier Tribunal (FTT), as it is within its remit to consider disputes about rent and service charge increases. For this reason, this aspect of the resident’s complaint is outside of the Ombudsman’s jurisdiction. The resident has also confirmed to the Ombudsman she understands this is a complaint for the FTT.

Background and summary of events

  1. The property is a one-bedroom flat on the fourth floor of the block. The resident’s mother’s tenancy started on 2010.  The resident succeeded the tenancy on 18 November 2019.
  2. Following her mother’s death, the resident contacted the landlord in May 2019  requesting to succeed her mother’s tenancy.
  3. On 15 November 2019, the landlord wrote to the resident advising the succession date would be 18 November 2019 from which point she would be responsible for the rent and all other obligations under the tenancy agreement. Around the same time the landlord agreed that arrears on the rent account would be written off as part of the succession process.
  4. The resident contacted the landlord on 27 January 2020 asking about when the debt would be written off. On 31 January 2020, the resident’s Housing Officer (HO) advised her that the paperwork had been sent to a manager for approval and they were waiting for this to be signed off. They apologised for the matter still being outstanding and advised an update would be provided shortly.
  5. On 26 March 2020, the resident advised she had just registered with an online account and could see arrears of £4000. She said that she had been told the arrears would be removed and asked why it was still showing on the rent account. In a response by the landlord on the same date, the landlord’s HO repeated that they were waiting for managers to complete the paperwork for a write off.
  6. In her reply dated 27 March 2020 the resident advised it was difficult to ascertain the arrears on the account due to the debt that was there prior to her succession on 18 November 2019, hence she had not made any payment in addition to the monthly rent amount due of £555.24. The resident also raised a concern about charges that made up the overall service charge querying costs for maintenance and repairs to the property building.
  7. Following contact from the Ombudsman, the landlord wrote to the resident on 11 May 2020 responding to the resident’s complaint about the rent account. It said that the service charge was variable and could increase or decrease depending on actual costs. It set out the service charge for 2019-20 and 2020-21 and advised as well as the weekly increase of £17.40 including the service charges increase of £14.39 per week from £17.51 to £31.90, she also had to pay an additional £10 weekly charge which related to a previous year balance (PYB) due to “historic under budgeting for services at the scheme for some years”. The PYB with the increase of £17.40 meant her new weekly amount due was £156.21 and increase from £138.81.
  8. On 14 May 2020, the resident replied to the landlord advising her complaint related to:
  1. Her request for a breakdown in the service charge.
  2. No formal rent statement had been sent causing a negative balance. She asked for a monthly statement to be sent to her.
  3. The rent account was still showing arrears of circa £4000 even though she believed the debt had been written off 6 months ago.
  4. A large unauthorised payment came out of her bank account causing her financial difficulty and upheaval.
  1. On 20 May 2020, the landlord replied advising:
  1. Her request for a breakdown of the service charge had been raised with its service charges team but they had not been able to provide an update.
  2. Regarding her request for a monthly rent statement to be sent to her, its Finance Department did not issue monthly rent statements. However, she could register online and have access to her rent account and rent statement at any time. It provided a web link to information on how to do this.
  3. In regard to her rent account showing arrears, it had requested that £2966.41 was removed from her account as this was the amount of arrears on the account prior to the property being transferred into her name. It was still waiting for this to be signed off by senior management. It apologised for the delay in this process. It said as of that date, the “true” debt i.e. arrears minus £2966.41 on the account, was £1371.09 debt. It warned her that if the arrears on the account remained, it would serve her a notice seeking possession.
  4. The issue of £677.97 being debited from her account without her permission- Its rent team had confirmed that its I.T department were instructed to amend all direct debits (DDs) that year to the new rent charges from April. It was not sure if this had anything to do with her complaint but it was still investigating and advised it would update her shortly on the findings.
  1. On 21 May 2020, the resident set out the rent payments she had made from 6 January 2020 to 21 May 2020 which totalled £3345.36 (6 months’ rent at £555.24 per month). She explained as the rent account had not been put in her name, she had had to contact the HO to make the payments. She advised she had not paid the full amount of the service charge as she in the process of disputing this. 
  2. On 21 May 2020, the landlord reiterated that it had agreed £2966.41 would be removed and that this left arrears of £1371.09. It said a query had been raised with its finance department about allocating the payments she made between 4 November 2019 to 6 January 2019 to her account. It confirmed that her monthly rent amount from 1 April 2020 was £676.91 based on £156.21 per week – previously £138.81 per week.
  3. The landlord’s internal communications dated 1 June 2020 referred to the weekly £10 PYB having been agreed to be removed from the 2019-2020 service charge, commenting that it might be the case again for 2020-2021 estimate.
  4. The Ombudsman wrote to the landlord on 22 June 2020 following further contact from the resident advising she had not received a response to her escalation request.
  5. The landlord provided a complaint response to the resident on 23 July 2020. It advised regarding:
  1. The removal of rent arrears on her account- it still waiting for the agreed arrears of £2966.41 to be signed off by senior management. It apologised for the delay in this process.
  2. The issue of rent being debited from her account without her permission-Its rent team had instructed its I.T department to amend all DDs to reflect the new rent charges from April 2020.  It was unsure if this related to the resident’s complaint, but said it was still investigating this aspect of her complaint and it would provide an update shortly.
  3. Her request for monthly rent statements to be sent- it reiterated that its Finance Department did not issue 4 weekly rent statements but that she could register online and have access to her rent account and rent statement at any time. It provided a web link to information on how to do this.
  4. Her request for a breakdown of the service charges- It had been informed by the service charge team it was agreed that the PYB amount would be removed. It would chase this up with its service charge/finance team and provide an update.
  1. In her reply dated 24 July 2020, the resident said its response was not clear and her concerns remained outstanding. She was unhappy about receiving the same response from it about waiting for senior managers to approve the write off, for ten months. To have debt on her account was causing her significant distress and anxiety. She reiterated her request for it to send her a paper copy of the rent account. She also advised regarding:
  1. The issue of rent being debited from her account without her permission -she did not have a DD set up so asked how its I.T team could amend the amount when a DD was not set up. She was appealing the increase in service charges and rent so it did not have the right to take any payment let alone a “big payment” without her knowledge or agreement. She suggested this was fraud rather than a simple error.
  2. Her request for a breakdown in service charges – this had not been provided and it had not explained the costs for repairs and maintenance to the building. She referred to its advice that the PYB amount would be removed but said it had not been clear about this. She asked how much this reversal was and when would it be removed. She asked if she would receive a clearer breakdown of costs from it.
  1. The Ombudsman contacted the landlord on 27 July 2020 asking it to clarify where in its procedure the resident’s complaint was. On 27 July 2020 the landlord advised it had provided its stage one response and would escalate the resident’s complaint to stage two if it could not resolve the outstanding points.
  2. Following further contact from the resident, the Ombudsman contacted the landlord on 22 September 2020 asking it for an update on how it was progressing the resident’s complaint. The landlord advised her complaint had been passed to stage two of its complaint procedure.
  3. On 4 November 2020, the landlord provided its final response to the resident. It acknowledged this had not been provided within the timescale stated in its complaints procedure. It apologised for this delay and offered the resident £125 in compensation in recognition of this. Within its response it also said:
  1. Removal of charges of £2966.41 – This figure had been approved as a write off. The delay with removing this amount from her rent account had been partly due to the merging of organisations and the change in systems being used. Its stage one reviewer had followed the correct channels to have this removed but due to the process it was repeatedly delayed. This was clearly a service failure for which it apologised.
  2. Regarding withdrawal of money from her account for service charges-  it reiterated that its I.T department was instructed to amend all DDs to reflect the new rent charges from April 2020. When rents were set in April, all residents’ payments who pay by DD were increased / decreased automatically to take into account the change in rent charge. DDs could be altered without prior knowledge, unlike standing orders. It had checked the rent increase letters sent to customers in February and under the section, ‘What to do now’, it advised; “If you already pay by direct debit, you do not need to complete another form – we will change your payment automatically. If you wish to pay by direct debit, please contact us on the number below. If you are paying by Standing Order, please contact your bank to get your payment amount updated.”
  3. Monthly rent statements to be sent – It reiterated that its finance team did not send out monthly rent statements automatically to residents. It had moved towards a more digital self- service approach which meant residents could access their rent information whenever they want via a laptop or mobile phone, once they had registered to the secure site. This was to reduce printing and posting documents were possible in accordance with its commitment to reducing its carbon foot- print. However, if a paper rent statement was required, she could request this from her HO or the customer service centre.
  4. Her request for a breakdown in service charges -Her HO had provided a letter with the breakdown of her rent and service charge as provided from the service charge team. She would have also received a rent increase letter direct from the service charge team. This was usually the information used for the tribunal forms. It had enclosed a copy of the service charge estimated cost, which would have been received as part of the rent increase letter. If there was any specific information that she required, she could let it know so it could arrange for this to be sent to her.
  1. To conclude, the landlord said its service failed to meet required standards in dealing with the removal of £2966.41 from her rent account. The issue clearly took longer than expected to be resolved and caused the resident undue stress. To acknowledge this failing, it was offering her £150 in compensation, in addition to £125 offered for the time delay.
  2. The resident responded on 5 November 2020 disputing aspects of its response. She questioned the accuracy of the write off figure and advised that as a result of the arrears, she was regularly sent Eviction Notices and Seeking Possession Orders which caused her a great deal of anxiety and distress. She reiterated that she had not set up a DD. Regarding monthly rent statements, she had made several requests for these to be sent by post including to her HO but had only received these once in the post. She complained that the breakdown of the service charges provided by the landlord was insufficient and reiterated her concern about maintenance and repair costs included in the service charge. She again asked the landlord to provide clarification on the amount of the service charge she should now be paying as it had agreed to remove the £10 PYB.
  3. On 13 July 2021, the landlord told the Ombudsman that:
  1. the ‘write off’ was completed on 25 November 2020 allowing £2966.41 to be taken off the resident’s rent account.
  2. regarding the resident’s service charges, this issue was still being investigated.
  3. regarding funds taken out of the resident’s account in April 2020, after carrying out an investigation through the contact centre, chat transcripts between it and the resident showed there was no evidence of this. The landlord provided a call transcript of a Livechat conversation it had with the resident dated 26 March 2020. This shows the resident asked about how to set up a DD for her rent payments to which the landlord advised she could set this up through her online account and it provided her with a weblink.

Assessment and findings

The landlord’s handling of the rent and service account – removal of write-off amount

  1. When the resident succeeded the tenancy on 18 November 2019, the landlord confirmed that all the rent charges that had been applied prior to this date would be removed from the rent account. The Ombudsman has not been told of details surrounding this decision however having agreed to the write-off, it is reasonable to expect the landlord to have removed the charges within a reasonable timeframe of it making this undertaking.  
  2. On 31 January 2020, the landlord advised the resident that the write-off had been passed to the relevant managers to approve. It reiterated this position when the resident queried the progress of the write off on 26 March 2020. In response to the resident’s subsequent complaint, the landlord advised on 20 May 2020 that the write off amount of £2966.41 was still waiting to be signed off by senior management.
  3. It repeated this position in it stage one response to the resident dated 23 July 2020 and also in its final response of 4 November 2020 before removing this amount from the resident’s rent account on 25 November 2020. The timeframe taken of approximately one year to remove this amount was unreasonable. However, in its final response the landlord acknowledged its service failure when handling the write-off and removal from the resident’s rent account, and in recognition of this offered the resident compensation of £275 comprising £125 for the delay and £150 for the distress caused. On balance the compensation figure offered by the landlord was reasonable in the circumstances.
  4. The resident raised a concern regarding the accuracy of the write off figure of £2966.41, suggesting she may be entitled to further charges being written off. Having considered the rent account provided by the landlord covering the timeframe 4 November 2019 to 14 June 2021, it is clear that the resident’s rent account started at a zero balance at the date of her succession on 18 November 2019. Apart from the amount removed of £2966.41 which included all charges applied prior to her succession date, all charges applied thereafter by the landlord were monthly rent charges. As such, there is no evidence to establish any error with the amount of the write-off figure applied.

Monthly rent statements

  1. The landlord explained throughout its communications and complaint responses that its finance team did not issue monthly rent statements to residents because as an organisation it was moving towards a more digital “self service approach” and was committed to reducing its carbon footprint. It however advised the resident that she could register online and have access to her rent statement at any time and it provided a web link to information on how to do this. It also said whilst its finance team did not automatically send out rent statements, she could request this via her HO or its Customer service centre. 
  2. As there is no evidence to show the landlord is under any obligation to provide rent statements in a particular format, the landlord had discretion to agree to the resident’s request to provide rent statements in a paper format. As its responses clearly explained its position in relation to the resident’s request, making clear that as they were not sent out automatically, she would need to request for these to be sent out on each occasion she needed them, overall, its response was reasonable.

Requests for a breakdown of the service charges

  1. The landlord’s Service Charge policy gives examples of service charges including grounds maintenance, cleaning, lighting and repairs for communal areas, lift maintenance, building funds for future major works and management fee.
  2. Its policy also says it will send residents who pay a variable service charges a summary of accounts showing expenditure for the previous financial year (final/year-end account) reconciled with the estimated budget that shows where there is a surplus or deficit balance. It will be transparent in providing these details and addressing any queries about service charges.
  3. Regarding disputes, its policy says in the first instance it will aim to resolve all service charge issue and disputes via the local officer -it will provide residents with clear and concise records. When all other avenues have been exhausted, such as mediation, stage one and review stage of the complaint’s procedure, it will. encourage residents to explore other means in order to seek a resolution, such as FTT.
  4. In response to the resident’s request for a breakdown in the service charge first raised in March 2020, the landlord’s internal communications show it took steps internally to obtain a breakdown of the resident’s service charge. This was reasonable however the information received was limited and this is reflected in its response to the resident dated 11 May 2020; the landlord did not explain what type of service charges the £31.90 were made up of which would have been reasonable in the circumstances. It did confirm however that the resident’s weekly rent amount included a £10 PYB which it said was due to “historic under budgeting for services at the scheme for some years”.
  5. Following further communications from the resident, in its stage one response, the landlord advised the resident that as her appeal had been successful, it would remove the PYB for 2019-2020. It explained this had not yet been removed from her rent account but said that it would chase this up with the service charge/finance teams and provide an update. Despite the resident then asking for clarification about how much would be refunded and when, there is no evidence of the landlord providing any further explanation about this in its final response or of it reversing the PYB as suggested.
  6. Therefore, whilst on the face of it the landlord’s agreement to remove the PYB element from the resident’s service charge appears reasonable, its failure to fully explain this or follow through with this action is evidence of the landlord failing to do what it said it would do.
  7. Regarding the service charge, following its stage one response, the resident advised the landlord on 24 July 2020 she was unhappy with the information it had provided and requested a clearer breakdown. There is no evidence of the landlord providing any updates to the resident until its final response which it issued to the resident more than three months later. Even then the only additional information it provided to the resident regarding what made up the service charge was its ’Service Charge estimated costs 2020/21’. This only showed that £1.52 of the resident’s weekly service charge of £31.90 was for a ‘management fee’. It did not provide any further breakdown of the service charge or attempt to explain the charges further.
  8. Therefore, the landlord failed to provide the resident with sufficient information when responding to her request for a breakdown of the service fee, particularly in relation to building and maintenance costs which the resident had repeatedly raised concerns about. This is evidence of the landlord failing to follow its policy. The landlord did not identify or acknowledge failings in how it responded to her request for her service charge breakdown or in regards to removing the PYB and it did not provide any compensation for the stress and inconvenience caused by these failures. As such the landlord did not sufficiently resolve this aspect of her complaint. There is also no evidence to suggest the landlord sent the resident the summary of accounts as required by its policy.

Deduction from the resident’s bank account

  1. The landlord deducted £677.97 by DD from the resident’s bank account on 27 April 2020. This amount appears to equate to the resident’s monthly rent payment of £676.91 – based on £156.21 per week -which it had confirmed to the resident during the complaints process was the monthly amount due from 1 April 2020. It is clear from the rent statement that prior to this, the resident had been paying each month via telephone banking since 6 January 2020 after the property account was changed to her name on 5 January 2020.
  2. In response to the resident’s complaint about its deduction of £677.97 via DD  without her authorisation, in its May 2020 response, the landlord advised that residents DDs had been changed to reflect the new rent charges from April 2020. It also said that it was unsure if the resident’s complaint related to this. It reiterated this in its stage one complaint response. In its final response the landlord said DDs were increased / decreased automatically to take into account the change in rent charge and referred to its February 2020 rent increase letter which it said explained this.
  3. As the landlord did not respond to her specific complaint about her not having authorised any DD payment, these responses did not fully address the complaint raised. Therefore, the landlord did not take sufficient steps to understand or investigate this complaint.
  4. The landlord told the Ombudsman that after carrying out an investigation through its contact centre it found no evidence to support this. The landlord provided a call transcript which shows the resident enquired with it on 26 March 2020 about how to set up a DD and that in response it told her to do this via her online account for which it provided a weblink.  In order for DDs to be set up, a payee must give an instruction to their bank; this can be done online. Therefore, it appears the resident may have given an instruction to her bank to set the DD in favour of the landlord based on its advice given to her during this call.
  5. Therefore, whilst the landlord did not sufficiently investigate her concern raised about this issue during the complaints process despite advising that it would, there is a lack of evidence to establish the landlord deducted monies via DD without the resident’s authorisation.

Complaint handling

  1. The landlord operates a two stage complaints process and its Complaints and Compliments policy states it will investigate and provide a formal written response to stage one complaints within 10 working days. Further it says it will provide formal written response to stage two review requests within 20 working days.
  2. The landlord did not always make clear under which stage of its complaints process it was providing responses to the resident’s concerns raised. This was the case with its complaint responses of 11 May 2020 and 23 July 2020 which made no reference to this or its complaint escalation process. This caused confusion meaning the resident had to seek clarification for this via the Ombudsman who then contacted the landlord  on her behalf.
  3. The landlord confirmed to the Ombudsman on 27 July 2020 that its 23 July 2020 complaint response was not in fact its final response and advised that it would escalate the resident’s complaint to stage two if it was unable to resolve the outstanding points raised in her 24 July 2020 communication. There is no evidence of it doing this and the landlord only provided its final response on 4 November 2020 after further contact from the Ombudsman on 22 September 2020 chasing it for a response.
  4. This is evidence of the landlord failing to issue its stage two response within the timescale stated in its policy. Within its final response the landlord acknowledged and apologised for this delay and offered the resident £125 in compensation in recognition of this.
  5. However, as the landlord failed to acknowledge other service failures when handling the resident’s complaints including the lack of clarity around which stage of its complaints process it was responding to her concerns, and because this resulted in more than two complaint responses and a protracted complaints process, the landlord did not reasonably resolve this aspect of the complaint during its complaints process.

Determination (decision)

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was maladministration by the landlord when handling the resident’s rent and service charge account.
  2. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure by the landlord when handling the resident’s complaints.

Reasons

  1. The landlord failed to remove a write-off amount from the resident’s rent account for approximately twelve months despite repeated promises to do so. This was an unreasonable delay and meant it was difficult for the resident to ascertain if she owed the landlord rent and had to seek clarification about this from the landlord. The landlord did offer reasonable compensation during the complaints process to address this issue. However, the landlord did not acknowledge that it failed to act in accordance with its policy by failing to provide clear and transparent information in relation to the resident’s service charges. It also did not follow up on its undertaking to remove the PYB from the resident’s service charge or sufficiently investigate the resident’s complaint about unauthorised monies being deducted by DD during its complaints process despite promises to do so.
  2. The landlord was not clear about where in its complaints procedure the resident’s complaint was and it did not provide details of its escalation process to the resident. This led to at least three complaint responses and delays meant the complaints process was extended over at least six months. The landlord offered compensation for the delay with providing its final response however it did not acknowledge other failures in service whilst handling the resident’s complaint. As such it did not reasonably resolve this complaint.

Orders and recommendations

  1. The Ombudsman orders that the landlord:
  1. Pay the resident total compensation of £400 comprising of:
    1. £300 for the failures to provide a detailed breakdown of the service charge and removing the PYB as promised.
    2. An additional £100 for failing to follow its complaints process when handling the resident’s complaints.
  2. Provide the resident with a detailed breakdown of the service charges for 2020-2021 if it has not already done so and provide evidence that it has removed the resident’s PYB as referred to in its 23 July 2020 complaint response.
  3. Comply with the above orders within 4 weeks.