Metropolitan Thames Valley Housing (MTV) (202202993)

REPORT

COMPLAINT 202202993

Metropolitan Thames Valley Housing

12 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:
1. The landlord’s response to the resident’s concerns regarding her service charge in the financial years 2020/21 and 2021/22.
2. The landlord’s handling of the associated complaint.

Background and summary of events

The resident is an assured tenant of the landlord. The property is a flat within an estate composed of properties housing both tenants and homeowners. The landlord employs a managing agent to deliver services on its behalf.
The complaint was raised by the resident and, at times, by her representative. For clarity, this report will refer to both the resident and her representative as “the resident.”
The resident’s weekly service charge figure from April 2019 was £15.97. The landlord wrote to the resident on 28 February 2020 to notify her that the service charge would be £31.77 a week from 4 April 2020. On 1 September 2020, the landlord wrote to the resident to advise that there had been an error in the amount charged to the resident and the service charge had now been revised to £18.87 each week from 4 April 2020.
The landlord wrote to the resident on 25 February 2021 to inform her that the new weekly service charge figure from 3 April 2021 would be £31.77.
The resident emailed the landlord on 23 March 2021 to query the service charge increase. She noted that the landlord had previously admitted an error and asked whether the figure provided was accurate or a further calculation error.
The Ombudsman has not seen evidence of communication between the landlord and resident between March 2021 and September 2021. However, it is understood that the resident sought support from her MP during this period. The landlord’s records suggest that the resident had asked whether a review of the service charges had taken place, what the outcome was, what had led to the increase of £670.80 that year and for a detailed breakdown of the service charges.
The landlord emailed the resident on 25 October 2021 and apologised for the delay in responding. It explained that an overview of the charges had taken place, but it was waiting for a breakdown of the charges from the managing agent to finalise its review. It had identified that the resident was only charged for six months within the previous period, and it had subsidised the other six months. This was due to an invoicing error that had not been identified by the managing agent. It said that the increase in the service charge appeared to be due to the full 12-month management charge not being passed on to the resident in the previous period. It said that it would provide a more detailed response within ten working days once it had received the correct invoices.
The resident responded on the same day. She expressed concern that it had been difficult to gain a response to her concerns. She was surprised at the reasons provided by the landlord as the service charge had previously decreased due to an overcharge error in September 2020. She said that the increase was unfairly high for social housing tenants and wanted to see the breakdown of costs.
The resident raised a complaint with the landlord on 14 January 2022. She maintained that there had been a significant increase in the service charge from April 2021. Despite numerous emails and intervention by her MP, the resident had not been provided with an explanation for the increase or its calculation. She noted that the landlord had historically admitted to miscalculating the service charges in 2020 and believed that these errors had been repeated. She was dissatisfied with the length of time she had been requesting information and that she had received no communication regarding the issue since October 2021 where she was informed that the landlord’s service charge team would provide an update as soon as possible. She asked for a summary of the costs that formed the basis for the service charge over the last 12 months. She also asked for information about her service charge since her tenancy began in 2013.
The landlord issued its stage one complaint response on 3 February 2022 and advised the following:
1. It apologised for its delayed response.
2. It had contacted the service charge team and asked it to send the resident’s statements to her directly. It explained that it only kept this information for six years due to data protection regulations so it would supply statements from 2015/16 onwards.
3. It advised that the increase of £12.90 per week was to cover managing agent costs and general inflation.
4. It upheld the complaint and acknowledged that the service charge statements, and an explanation of the increase should have been provided when requested. It offered £30 compensation for the time and trouble the resident had spent pursuing her concerns.
The resident asked for her complaint to be escalated to stage two of the landlord’s complaints process on 4 February 2022. She declined the offer of compensation as she did not yet have a full and detailed explanation as to why the service charge had gone from £15.97, to £31.77, to £18.87, and back to £31.77. She noted that the landlord’s explanation did not mention invoicing errors which it had previously admitted to. She also did not feel that the simple explanation was sufficient given the apparent complexity of the case mentioned in October 2021. She was also dissatisfied that it had taken a year to provide the simple explanation. She asked that the landlord shared its calculation of the service charge and the various costs which formed the overall service charge.
Between 18 March 2022 and 1 June 2022, the landlord sent several emails to inform the resident that it needed more time to complete its stage two complaint response. The resident continued to pursue the landlord’s final response during this period.
The landlord issued its stage two complaint response to the resident on 15 June 2022 and explained the following:
1. It explained that the block was a fully managed scheme and that all service charges were charged by the managing agent of the scheme. It did not have authority over the amount charged but was responsible for recharging the costs to the residents of the scheme.
2. The service charges were based on an estimate of costs for the next financial year which involved an analysis of expenditure in the previous financial period, taking into account inflation and government regulations.
3. It did not uphold the complaint as the complaint had been upheld at stage one of the complaint process and it had acknowledged that there had been a delay in providing the resident with information. It reiterated its offer of £30 compensation for the time and trouble experienced by the resident.
4. It confirmed that its service charge team were happy to discuss the service charge in more detail over a video call if the resident had further concerns.
The landlord emailed the resident on 24 June 2022 and apologised that it had not previously attached the service charge breakdowns to its stage two complaint response as agreed. It attached information related to the resident’s service charge between 1 April 2017 and 31 March 2023. The breakdowns showed the resident’s share of the managing agent charge for the property and the management charge along with the total charge payable on a weekly basis.
The resident emailed the landlord on 29 June 2022 as she remained dissatisfied with the lack of detail in the explanation provided by the landlord. She asked that the formula for calculating the service charge was provided along with a breakdown of individual costs and how the service charge was split between gardening, lift maintenance, etc.
The resident referred her complaint to this Service as she was dissatisfied that the landlord’s response did not satisfactorily explain how the service charge increases were calculated in April 2020 and 2021, and why the charge was more than the usual yearly increase of one or two pounds a week. She believed that the landlord had made an error, as previously admitted in September 2020. She wanted a full and detailed explanation of the calculations which led to a £670.80 increase in her service charge in April 2021. She also wanted the landlord to reimburse residents if mistakes were made and ensure that all future service charge calculations and costings were shared with tenants.
The landlord contacted the resident on 16 November 2022 and explained the following:
1. When compiling the information requested by the Ombudsman, it took the opportunity to review the complaint again to identify any failings which may have been missed at stage one and stage two.
2. It acknowledged that there was a significant delay in providing the resident with a stage two complaint response which it had not previously identified.
3. Following further investigation by its service charge team, an error had been identified in the calculation of the service charge for 2020, 2021 and 2022. It confirmed that a refund was due.
4. It offered £500 compensation to the resident, formed of
  1. £150 for its poor complaint handling,
  2. £150 for her time and trouble
  3. £200 in recognition of its service failure.
5. It advised that the service charge team would contact the resident separately about the refund due.
In its communication with this Service in November 2022, the landlord further advised that:
1. Service charges were calculated on the property based on the total expenditure to be incurred by the managing agent. Some costs only related to leaseholders, meaning that these costs needed to be removed from the total estimated cost before recharging costs associated with day-to-day services to tenants.
2. The increase in the resident’s service charge was based on the increase in the managing agent cost between 2020/21 and 2021/22 as it had not received the budget from its managing agent to know which costs, only applicable to leaseholders, needed to be deducted.
3. The landlord provided an itemised breakdown of the budget between 2020 and 2021 which showed that the resident had been undercharged in 2020 but overcharged in 2021 and 2022 due to leaseholder costs being applied to her service charge.
4. It acknowledged that there were issues with the flow of information between it and its managing agent. While it had requested a breakdown from the managing agent on multiple occasions, there was a delay in receiving a response. It acknowledged that it had not kept the resident up to date on its communication with the managing agent and could have done more to hold the managing agent accountable to their contract.
5. It explained that it was in the process of creating a new staff role to manage the relationship between itself and its managing agent to ensure that communication remained open, and services were delivered in a timely way.
6. It was also looking to implement a new system so that all records and information were stored in one integrated system. Relevant records would then be visible to all staff which it hoped would improve its services moving forward.
The resident has advised that the service charge refund was paid into her rent account. She then asked for the credit on her rent account to be returned to her directly and received a payment of £1058.36 on 13 January 2023. She also accepted the offer of £500 compensation from the landlord. She has advised that her weekly service charge from 1 April 2023 would be £28.07 per week but was worried that this may not be accurate due to a lack of trust in the landlord’s calculations. She asked that a detailed breakdown of how the service charge is spread among the services provided by the managing agent be included as part of future annual notification letters.

Assessment and findings

Scope of investigation

It is understood that the resident’s complaint concerns the information she was provided with about the service charges, and the landlord’s response to the queries she raised about the accuracy of the increase and how this had been calculated. She also raised concern that the level of increase was not fair or justifiable. It should be noted that in line with paragraph 42(e) of the Housing Ombudsman Scheme, the Ombudsman may not consider complaints that concern the level of service charge or rent or the increase of service charge or rent. As such, this report will not decide whether service charges are reasonable or payable but focus on the landlord’s communication with the resident and whether its response was reasonable in the circumstances.

The landlord’s response to the resident’s concerns regarding her service charge in the financial years 2020/21 and 2021/22.

The resident’s tenancy agreement states that the resident would need to pay a weekly payment for the property. The total weekly payment for the property is comprised of a rent payment and a service charge payment for services provided. The service charge and rent figure can be varied by the landlord. The landlord would be responsible for writing to the resident, setting out any alterations to the charges and giving the resident information to explain why the changes are being made, what effect they will have, and when they will come into effect. In this case, the property is part of a fully managed scheme and services are provided by a managing agent.
The landlord’s service charge guidance states that the resident has a right to request a written summary of the costs which make up the service charge. A resident would also have a right, within six months of receiving the summary, to require the landlord to provide reasonable facilities to inspect the accounts, receipts and other documents to support the summary and taking copies or extracts from them.
In this case, the landlord has acknowledged that an error had been made in its service charge calculations in 2020, 2021 and 2022. It has also acknowledged that the service charge statements, and an explanation of the increase should have been provided when requested. It acknowledged the time, trouble and inconvenience its failures and communication had on the resident and offered a total of £350 compensation for this aspect of the complaint. This was comprised of £150 for the resident’s time and trouble and £200 for its service failure.
Where a resident raises concerns about the level of a charge, the landlord would be expected to review the service charge figure alongside estimated or actual costs to ensure the amount charged was accurate and fair to its residents. Where service charge costs are passed on from a managing agent, it would have a responsibility to gain further information to ensure that the costs were accurate. It would also be responsible for providing a detailed explanation of any increase alongside the evidence it has used to support its position where appropriate.
It is of concern that following the resident’s initial query about the accuracy of the £31.77 weekly service charge in March 2021, that it took the landlord until November 2022, approximately 20 months, to review the figure and identify its errors from 2020, 2021 and 2022. While the landlord has acknowledged the impact on the resident, this indicates that the landlord’s processes for reviewing the accuracy of the service charge imposed by the managing agent were not working effectively.
It is also unreasonable that the landlord advised that it had “assumed” that the increase charge from its managing agent was due to an increase in managing agent costs, taking into consideration general inflation and government regulations. It confirmed this reasoning within its complaint responses to the resident without scrutinising the relevant service charge estimate breakdown before increasing the charge. In addition, the delay in gaining accurate information led to a lack of, and incorrect, information being provided to the resident.
In line with the Ombudsman’s Spotlight report on Landlords’ engagement with private freeholders and managing agents (March 2022), it would be the landlord’s responsibility to proactively pursue relevant accounts from its managing agent to ensure they are provided in a timely manner. Landlords should also ensure that they are transparently communicating with its residents with respect to service charges and the method of calculation. Late provision of this information causes uncertainty for residents and undermines both their and the landlord’s ability to appropriately scrutinise and challenge the method used to calculate the charges so long after the event. It is the Ombudsman’s opinion that the longer the delay to providing this information, the greater the possibility of unfairness to the resident.
The managing agent was responsible for providing services and passing costs to the landlord so that these could be recharged to residents. It is understood that the landlord required the breakdown of costs associated with the service provided from the managing agent before being able to provide the resident with further details but there was a delay in this information being provided. The landlord has acknowledged that it could have done more to hold its managing agent accountable following a lack of responses to its requests and been clearer with the resident as to the action it was taking. While the landlord had provided documentary evidence of its attempts to gain a breakdown of the service charge costs through its internal service charge team, the Ombudsman would have expected to see evidence that it had proactively sought this information from the managing agent direct. While the landlord has suggested that it did so, it has not provided evidence that it did so in a timely manner following the resident’s initial queries. This meant that the resident was left in the dark for a significant period as to whether the amount charged was accurate.
It is not disputed that the resident spent considerable time and trouble pursuing her concerns and there was a significant delay in admitting errors and providing an adequate explanation to her by the landlord. It would have been appropriate for the landlord to have satisfactorily addressed the resident’s concerns as part of the complaints process, rather than when prompted to review the case following the Ombudsman’s request for information in November 2022. However, the landlord took steps to acknowledge its failings and further explain its position to the resident which was appropriate in the circumstances.
Alongside its offer of £150 for the resident’s time and trouble, the landlord offered £200 for “service failure”. While this is assumed to be related to its failure to identify errors in the service charge calculations for a significant length of time, it would have been appropriate for the landlord to have set out what its service failure consisted of to provide a more complete response to the resident.
Despite this, the landlord’s total offer of £350 for this aspect of the complaint is considered proportionate in view of the impact on the resident in this case. This amount is in line with the Ombudsman’s remedies guidance which states that amounts in this range are considered proportionate in instances of service failure or maladministration which adversely affected the resident but where there was no permanent impact. This offer, alongside the service charge refund, breakdown and explanation for the error provided by the landlord resolves the complaint satisfactorily.
The landlord has also demonstrated that it has taken adequate points of learning from the complaint within its communication in November 2022 by acknowledging that its communication with its managing agent needed to improve to avoid similar situations in the future. Its intentions to employ a staff member responsible for managing its relationship with the managing agent and to introduce an integrated system to ensure information is readily available to staff are reasonable given the failings in this case.
Given the errors that have been made and the breakdown in trust between the resident and the landlord, the landlord would benefit from ensuring that its future communication regarding the service charge is transparent and it proactively provides an explanation or breakdown of how the service charge has been calculated to residents. As such, recommendations have been made below.

The landlord’s handling of the associated complaint.

The landlord’s complaints policy states that it has a two-stage formal complaint process. At stage one, the landlord should respond within ten working days. If the resident is still dissatisfied, they can escalate their complaint to stage two. At stage two, the landlord should respond within 20 working days. If, at any stage, there is likely to be a delay, the landlord would be expected to keep the resident informed and agree a new response time.
The resident initially raised a complaint via her representative on 14 January 2022 and the landlord issued its stage one response on 3 February 2022, which was outside of its timescales by four working days. The landlord acted appropriately by apologising for the delay in responding to the resident’s stage one complaint within its response.
The resident asked for her complaint to be escalated on 4 February 2022 but did not receive a stage two complaint response until 15 June 2022, which was outside of the landlord’s policy timescale by approximately 69 working days. The landlord took steps to say that it needed more time to complete its response and provide a new response date on a number of occasions. However, the resident needed to pursue the landlord for these updates as it had missed the response dates it provided. This resulted in additional time and trouble being spent by the resident in pursuing her complaint and was likely to be inconvenient.
In addition, the landlord did not address the resident’s requests for a breakdown of the service charge within its complaint responses as mentioned previously. While this has since been provided, it would have been appropriate for the landlord to have either provided this information at the time or provided clear reasons as to why it was not able to do so within its complaint responses in order to manage the resident’s expectations. The landlord has acted appropriately by acknowledging its failure to set out the actions it had taken to gain this information within its responses.
While it would have been appropriate for the landlord to have acknowledged its complaint handling delays and failure to address the resident’s concerns fully in its previous responses, it has since taken reasonable steps to acknowledge the delays and the impact this had on the resident. Its offer of £150 compensation for its complaint handling is considered proportionate and in line with the Ombudsman’s own remedies guidance in recognition of the inconvenience and time and trouble caused to the resident because of the failings outlined above. As such, the landlord has made redress to the resident which, in the Ombudsman’s opinion, resolves the complaint satisfactorily.

Determination (decision)

In accordance with paragraph 53 (b) of the Housing Ombudsman Scheme, the landlord has offered reasonable redress for the service failures identified in its response to the resident’s concerns regarding her service charge in the financial years 2020/21 and 2021/22.
In accordance with paragraph 53 (b) of the Housing Ombudsman Scheme, the landlord has offered reasonable redress for the service failures identified in its handling of the associated complaint.

Reasons

There were significant delays in providing the resident with information she had requested in relation to her service charge which caused the resident time and trouble. The landlord did not provide a detailed breakdown of how the service charge had been calculated to the resident or review the service charge to ensure it was accurate from the outset. It has since taken steps to acknowledge its failings and taken satisfactory points of learning from the resident’s complaint. The total level of compensation offered is proportionate in recognition of the impact on the resident.
The landlord acknowledged delays in its complaint handling following the complaint and offered suitable compensation to the resident. The compensation offer is considered proportionate in recognition of the additional filings identified by the Ombudsman.

Recommendations

It is recommended that the landlord:
1. Provides the resident with an itemised breakdown of how her current service charge of £28.07 a week has been calculated. It should ensure that this figure is accurate and confirms its position to the resident given her ongoing concerns.
2. Contacts the resident to confirm its position regarding her request for an itemised breakdown of costs and an explanation of the service charge figure to be provided when the annual notification letters are sent in February each year.
3. Considers carrying out staff training for complaint handlers to ensure that residents are adequately updated where there is likely to be a delayed response, to manage a residents expectations.
The landlord should reply to this Service within four weeks of the date of this report to confirm its intentions regarding these recommendations.