Peabody Trust (202200081)

REPORT

COMPLAINT 202200081

Peabody Trust

6 April 2023

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:

a. The landlord’s administration and communication about the rent and service charges.

b. The landlord’s handling of the associated complaint.

Background

The resident is a shared owner of a house with the landlord since 19 January 2021. She is required to pay service charges in addition to the rent.
The lease agreement states rent will be reviewed on 1 April yearly, and that immediately following each review date, the landlord should serve written notice on the leaseholder. This should state the amount of the reviewed gross rent and specify the monthly rent that then needs to be paid.
It also sets out the requirements of the resident to pay the service charge by monthly payments in advance. The service charge is variable – estimated and charged at the beginning of the financial year. At the end of the financial year, the actual cost is calculated and will result in either a credit to the account, or a deficit which the resident is asked to pay.
On its website, the landlord states that it reviews rent and service charges once a year, usually in April, and that it will write to residents at least a month before it changes. It will send a written statement showing the service charge income and expenditure no later than 30 September each year.

Policies and Procedures

The landlord’s complaints policy defines a complaint as an expression of dissatisfaction, however made, about the standard of service, actions or lack of action by the landlord. An example provided is the action or lack of action in response to a request for service.
It has a two stage process. Stage one is an investigation carried out by a case manager from the relevant service area who will provide a response within ten working days. The customer then has ten days to consider the response and raise any concerns.
If the complaint is escalated to stage two, an independent review will be carried out. It will be acknowledged within five working days and a response provided within 20 working days of receiving the request to escalate. The acknowledgement will confirm the name of the manager handling the case and the remit of the investigation.
The rent and collection policy does not apply to leaseholders or shared owners, however there is a service charge policy and other information on the landlord’s website about service charges. It says what service residents can expect and what will happen if payments are not made. Most of the information about the rent and service charges is found within the lease agreement.
Compensation payments are made when a person has experienced a delay or has incurred additional costs because of a service failure or a failure to carry out a service within published guidelines. This includes a failure to meet agreed standards of service and poor complaint handling.
In assessing compensation claims several factors will be considered. These include failure to follow policies and procedures; the time taken to resolve the matter; and the severity of the time, trouble and inconvenience suffered and whether this was reasonably foreseeable by the landlord.

Summary of Events

The resident completed a direct debit mandate for the monthly rent and service charge. She completed this a few months before moving in, but was asked to complete another in January 2021 as the landlord could not locate the original. She was advised of the total monthly charge before moving into the property. This was £621.48, comprising rent of £561.46 and service charges of £60.02.
On 9 March 2021, the resident received a demand for the rent and service charges for £475.79 which she immediately paid.
A statement was sent to the resident in August 2021. This showed that only the rent of £561.46 was charged until 31 March 2021 and that the rent had increased from 1 April 2021 to £570.63. As the direct debit payment had not been increased the account was showing arrears of £45.85. The service charge is not showing on the statement.
The resident contacted the landlord and was advised that it reviews rent and estimates the service charge every April. It apologised that it had not updated the direct debit and asked the resident for permission to amend the direct debit to the new amount. The resident refused to allow this and said that she had not received a booklet the landlord said she would be sent in April. She also says that after several emails she spoke to someone on the phone who said she was not in arrears and did not owe the money.
It took the landlord just over two months to respond to the email in August 2021 about the booklet. It advised the resident the escalation policy had been suspended until the end of October 2021 as the booklets were late and to wait for a copy.
On 7 February 2022, the resident received a rent and service charge demand for £906.79. She tried to contact the landlord on more than one occasion by phone and could not get through. She sent it an email saying she wanted to discuss what the arrears were for, when there had been an increase, and when she had been informed about it.
The resident emailed the landlord again on 12 February 2022 as she had not heard anything back and asked for an urgent response. She explained that she had not heard anything from the landlord since the last email in October 2021 and had not received the booklet. She asked for a call back to discuss the “awful, unprofessional service, causing unnecessary stress”.
Two days later, the resident contacted the landlord again by email – she had a response from a collections assistant who said sorry she could not get through to an officer and asked the resident what her query was about so it could be passed to the correct person to deal with. The resident provided the letter reference and her mobile telephone number and said she would prefer to speak to someone. The resident said she spoke to someone during this time who she states became aggressive and rude.
The resident then contacted the landlord several times, again by email, throughout February and March 2022 to try to get a response to her queries. From the information provided to this Service, it appears that the landlord did not respond to any of these emails.
In her communications, the resident also said she had recently lost a close family member, and this situation was adding to her stress and anxiety.
In a letter dated 28 March 2022, the resident received a notification of the rent and service charges for the financial year 1 April 2021 to 31 March 2022. It said the rent and service charge was reviewed on 1 April 2021, and apologised that she had not been notified of this in writing. It said the rent charge was £561.46 and the service charge was £60.02, making a total monthly amount of £621.48. This was the same as what the resident was told she would be charged at the start of the occupancy on 19 January 2021 through to 31 March 2021. It also provided a breakdown of the service charges of £60.02, but it is not clear whether this was the estimate, or the actual final amount after it had been calculated at the end of the year.
On 1 April 2022, after being approached by the resident the Ombudsman contacted the landlord asking it to open a complaint. This Service advised the landlord that the resident had said she made a complaint in August 2021 by webform, but had not received a response.
The resident then received a letter dated 4 April 2022 confirming a change to the direct debit instruction with new monthly payments of £661.46 from 3 May 2022. The resident said she spoke to someone to confirm this was the new charge and there would be no further increase.
On 21 April 2022, the resident informed this service she had not received a response to the complaint. Several days later the landlord advised this was due to people being on leave.
The resident received a stage one complaint response from the landlord on 4 May 2022. The landlord said:
1. On the statement sent in August 2021 it showed the resident was only charged for the rent, and this increased on 1 April 2021. It said these amounts were incorrect.
2. The rent and service charge notification for year 2021 to 2022 was sent in error.
3. She was advised of the rent and service charge at the time of sale. The monthly service charge was later added to her account and backdated.
4. It agreed that there were a series of errors and misinformation which contributed to the resident being in arrears.
5. It apologised and offered the resident £150 in recognition of the failures and stress caused.
There were several emails between the resident and landlord in May 2022 about the response, and she asked for the complaint to be escalated to stage two. The landlord acknowledged this twice ten days apart. In its second acknowledgement, it said the resident would receive a response by 21 June 2022.
On 25 May 2022, the resident received another letter from the landlord advising her that she should be paying £675.87 from 1 April 2022, so she spoke to another person on the phone who said the letter with the new amount was incorrect and she should pay £661.46 per month.
The landlord reviewed the complaint and provided its stage two response on 22 June 2022. It said it:
1. Had provided a detailed stage one response and errors had been identified.
1. Acknowledged that the direct debit had not included the service charge element when it was set up.
2. Agreed that the reason for the arrears were not the resident’s fault, but that it could not write these off.
3. Acknowledged that it did not notify the resident of the latest increase in rent from 1 April 2022 until 25 May 2022 due to it being short-staffed but said that £675.87 was the correct amount.
4. Apologised for the latest miscommunication error and offered another £50 for this to bring its compensation offer to a total of £200.
5. Would commence normal collection activity and advised her to start making payments towards the arrears.
The resident was not satisfied with the final response or compensation offer from the landlord. She said it was inappropriate for the landlord to threaten legal action in the response, especially as she had been making payments at the agreed amounts.

Assessment and findings

Scope of the Investigation

The resident’s complaint concerns the information provided about rent and service charges. The Ombudsman cannot assess complaints that relate to the level, reasonableness, or liability to pay rent. This is in accordance with paragraph 42(e) of the Housing Ombudsman Scheme which states that the Ombudsman cannot consider complaints which “concern the level of rent or service charge or the amount of the rent or service charge increase.” We are unable to assess whether the resident is liable to pay this amount but will assess the landlord’s communication about the charges and arrears, and response to the resident’s queries.

The landlord’s administration and communication about the rent and service charges.

As part of this investigation, the landlord was asked to provide rent and service charge account records, including letters and demands sent, and records of calls. It has failed to provide this information, which limited the Ombudsman’s ability to thoroughly investigate and consider whether the redress offered by the landlord was fair. The resident has provided copies of letters, demands and emails she sent and received. This investigation will make a determination on the basis of evidence provided.
The resident was informed of the rent and estimated service charge of £621.48 per month before she moved in. Although the landlord set up the direct debit incorrectly, the resident is responsible for ensuring direct debit payments are leaving her bank for the correct amount.
After 1 April 2021, it seems that the landlord changed the amount due without notifying the resident. It was from this point that communication from the landlord about rent and service charges was confusing and caused inevitable inconvenience and distress to the resident.
The landlord has said it will give one month notice of rent and service charge increases. The resident received a statement in August 2021, where there was a rent increase from April 2021 to £570.63, but did not receive any response to her queries about it. The statement did not show any service charges. It is not known when the landlord realised that it had not applied the service charges to the account and then added them on and it is inappropriate that it offered no clarity on this to the resident.
When the landlord provided a response two months later in October 2021, it said that the escalation policy had been suspended as the booklets had not been sent. From the emails it is not clear what this booklet was, or what that meant for the resident. It is unreasonable that it seems that this booklet was never received and there is no further information about it.
The resident contacted the landlord numerous times in February and March 2022 following the large demand she received for £906.79. There is no supplementary information with the demand to indicate whether this was for rent, service charges or both. It is again unreasonable that there was no helpful response from the landlord to any of these communications despite the resident telling the landlord how stressful she was finding the situation.
The only notification of rent and service charges the resident appears to have received was at the end of March 2022 for the period 1 April 2021 to 31 March 2022. The amount was the same as when the resident started her occupancy of the property in January 2021, suggesting there should have been no change in her payments. The landlord later said the amounts on the letter were incorrect and there was an increase due after all; it therefore failed to act in accordance with the lease agreement and information on its website.
It is not known whether the service charge estimate the resident was given at the beginning of the occupancy reflected the actual cost once the landlord calculated this. The written statement showing the service charge income and expenditure that the landlord says it will send no later than 30 September each year has not been provided – it is inappropriate that that landlord has been unable to evidence that it acted in accordance with the ‘actual cost’ billing arrangements that it publishes on its website.
Despite the failures identified by the landlord in its stage one complaint response, it was also several weeks late to inform the resident of an increase in her charges from 1 April 2022.
The landlord therefore failed to give notice of an increase two years running. It is again unreasonable that it does not appear that the landlord had adequate arrangements in place to ensure it sent out charge increase notifications with a month’s notice as required.
There was a lack of information provided by the landlord in response to the resident’s numerous queries when she received unexpected demands for rent and service charges. When the resident did speak to the landlord, the advice received by email, letter and over the phone was contradictory and confusing. The amount that the resident needed to pay changed without any reason behind it and without her being informed.
It seems that the landlord did not know what would happen or when in its communications. If delays to the service were expected or going on longer than reasonable, there is no information to suggest any updates were provided to the resident. The landlord therefore failed in its handling of the overall communications on this matter.
The landlord has accepted that there were a number of failings in its communications to the resident in the first stage response. However, it does not appear that the landlord has taken steps to learn from the outcome of the complaint, as the resident continued to receive wrong information about what payments were due, and when, following the first complaint response. The landlord has not provided any assurances that it has learned from its errors and will get things right in the future.
The resident does not appear to have received a breakdown of the correct charges in its communications over the course of the occupancy or in the complaint responses. It is unreasonable that it is not clear what the arrears are for, or whether there were any changes to the variable service charge after the actual cost was calculated. It is understandable that the resident is confused about what she should be paying and when from.
The landlord offered compensation totalling £200 through the complaints process. However, given the number of communication failures over the course of the occupancy, the length of time this matter went on for (early 2021 to mid-2022) and the failure of the landlord to put things right by giving clear guidance to the resident, the compensation award was insufficient and the landlord did not act in accordance with the Ombudsman’s Dispute Resolution Principles to ‘put things right’ and ‘learn from outcomes’.

The landlord’s handling of the associated complaint.

The resident stated that she made an online complaint in August 2021 and did not hear anything back, but there is no further evidence provided to indicate the landlord received this, or to be sure what happened at the time.
In her email communications in February 2022, the resident asked for an urgent call back, stating the service of the financial department was awful and unprofessional. The resident spoke to someone during this period who she said was rude and unhelpful. As the policy defines a complaint as “an expression of dissatisfaction, however made” this should have been logged as a complaint at the time.
The complaint was not identified at the first point of contact so that it could be dealt with quickly and effectively. Instead, the resident’s emails appear to have been overlooked. This was inappropriate and meant that the landlord missed an opportunity to review its handling of the rent and service charges.
After it formally acknowledged the complaint, the responses provided to the resident at stage one and two were outside of the timescales of both its policy and the Ombudsman’s Complaint Handling Code. This was inappropriate and likely added to the distress that the resident said she experienced.
The lack of records available from the landlord raises concerns that there is not an adequate system in place for information to be recorded and referred to when reviewing complaints.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in its administration and communication about the rent and service charges.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in the way it handled the associated complaint.

Reasons

The landlord’s offer of compensation did not fully take into account the number of continued failures since the start of the resident’s occupancy. It did not provide adequate notice to the resident about increases in the rent and service charge. It did not respond to her queries, or take into account the adverse effects the failings had on the resident.
The landlord did not respond to the resident when she raised a complaint about its service in February 2022. Responses were not provided within the specified timeframes following the formal complaint request on 1 April 2022.

Orders

The Ombudsman orders the landlord to write to the resident to:
1. Apologise for the failures identified in this report;
2. Provide a full explanation as to how any arrears on her rent and service charge account have been calculated (with an updated rent and service charge statement to cover the period from April 2021 to date).
The Ombudsman orders the landlord to pay the resident a total of £500 compensation, comprising of:
1. £350 for any distress or inconvenience the resident was caused by its delays and failures while handling her requests for information about the increased rent and service charges (instead of the £200 offered in its complaint response);
2. £150 for any distress and inconvenience the resident was caused by delays during its complaints handling.
The landlord should reply to this Service with evidence of compliance within four weeks of this report.

Recommendations

The landlord should provide complaint training to all front line staff to ensure a complaint can be recognised and logged at first point of contact.
The landlord should reply to this Service with its intentions in regard to this recommendation within four weeks of this report.