Sovereign Network Homes (202217762)

REPORT

COMPLAINT 202217762

Network Homes Limited

21 September 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

1.     The complaint is about the landlord’s handling of:

1. the resident’s rent and service charge account –specifically, the service charge letters sent to the resident each year;
2. the associated complaint.

Background

2.     The resident is an assured tenant under a tenancy agreement dated 3 May 1993. The tenancy agreement sets out the level of rent. There are no services listed in the tenancy agreement and there is no provision for the landlord to claim service charges.

3.     On 24 April 2022, the resident raised a complaint with the landlord. He said that it had sent him a rent update letter in February 2022, which included service charge costs. The resident went on to explain that:

1. He had contacted the landlord on 6 March 2022 and sent an email on 9 March 2022 to explain that he should not have been asked to pay service charges.
2. As the matter had not been rectified, he had to call the landlord on 16 March and 7 April 2023.
3. He was contacted by the landlord on 8 April 2020 by its income officer and discussed the matter.
4. On 12 April 2022 its income officer called the resident and confirmed that no charges were payable for his property.
5. Despite this the matter had not been resolved and the issues remained outstanding.
6. He has had to go through the same issue each year.
7. His neighbouring properties had not received these demands and the resident wanted to know why that was.

4.     In its final response, the landlord accepted there had been an error. It said this had occurred because the service charge updates were calculated automatically by its system. Also, that it had failed to update its internal records to reflect that the resident’s property was not eligible for the service charges. It said it would update its records to put this right and also offered £50 compensation.

5.     The resident contacted this service for further investigation. He said he was not satisfied with the compensation offered. He explained the error had happened over a number of years and that the same error had occurred again in 2023.

Assessment and findings

6.     The landlord has accepted that it was at fault for failing to adequately update its system. As such, the key issues in this case are whether the landlord has adequately put things right for the resident in terms of the actions it had promised to take and also the compensation that was offered to recognise the distress and inconvenience caused.

7.     The Ombudsman’s dispute resolution principles require landlords to be fair, put things right, and to learn from outcomes.

The resident’s rent and service charge account – and specifically the service charge letters sent to the resident each year.

8.     The resident had stated that the problem was a recurring one that had occurred over a number of years from 2017. The landlord has not acted reasonably and addressed the resident’s concerns regarding this. The landlord does assert though that from 2018 to 2022 the resident was never charged for any service charges. The landlord has stated that it does not have evidence from the years 2018 to 2019 or 2019 to 2020. However, it has provided evidence to this service that shows that in the years 2020 to 2021 and 2021 to 2022 the resident was not charged additional service charges. It stated that the charges were reapplied to the resident’s account from 2022 because it had reconfigured its system.

9.     The landlord’s failure to correctly charge the resident in 2022 caused him distress and inconvenience. The reason for this was that whenever the incorrect service charges were applied to the account, this affected the universal credit payments that he received. He stated that the Department of Work and Pensions (DWP) would change or stop his benefit claim. He would then have to take considerable time and trouble to contact the DWP to update them that the charges were non-applicable. Also, the landlord worsened the problem because its income team would incorrectly confirm to DWP that the service charges were applicable. This was problematic. The landlord should have updated its internal notes to ensure that the correct information was shared to avoid further inconvenience for the resident. 

10. On 10 May 2022, in its stage one response the landlord apologised and stated that it had rectified its error immediately and would send a revised rent increase notification letter to the resident. This was fair and appropriate initial action for it to take to put things right for the resident for that current financial year. Also, the landlord had pledged at this time to learn from the earlier outcomes and put something in place to prevent a recurrence of the problem. In this service’s opinion despite these promises, sufficient redress had not been offered at this stage.

11. Although it had promised to put something in place, the evidence shows that the landlord still had not rectified the problem as it had pledged to do for the new financial year of 2023 to 2024. This was inappropriate given that on 20 June 2022, it promised that it had reconfigured its service charge module so that the same errors would not occur again in the future. It is clear that the landlord had not learned from its previous omission, nor had it appropriately updated its system to ensure that the resident was sent an accurate letter. Also, there was an unreasonable delay in correcting this error, the account was only amended by 12 June 2023. This was unreasonable and led to further distress and inconvenience for the resident, and this has not been taken into account by the landlord.

12. In recognition of its failings, the landlord did take some action to put things right. After being notified by the resident the landlord eventually acted appropriately by issuing revised letters with the correct charges on them, and also it refunded the payments that had been made by the resident for the incorrect service charges.

13. As aforementioned though it was unreasonable of the landlord to not offer further redress, other than an apology and promise to prevent the issue from arising again in the future, at stage 1 of its process. The resident had informed this service on 9 November 2022 that he wanted compensation of £10 a week for a period of 3 months. It is noted that the landlord had not been informed of this request during the complaint process. In its stage 2 response, it had apologised again for the distress and inconvenience it had caused and had offered the resident £50 compensation. In this service’s opinion, this was not suitable as redress for the circumstances of this case.

14. This service’s published ‘Remedies Guidance’, provides guidance on compensation amounts offered. It recognises compensation awards of £100 – £600 as reflective of “considerable service failure or maladministration, but there may be no permanent impact on the complainant”. Some examples of this include where a resident has had to repeatedly chase a landlord, failure over a considerable period of time and serious failures which have been recognised and resolved by the landlord. It is noted that the landlord did recognise its errors and refunded the extra charges to the resident. However, this service is also able to consider aggravating factors, which in this case, include the fact that the landlord had still not resolved the substantive issue discussed here for this financial year.

15. Although, there is no lasting detriment caused to the resident the amount offered does not fully recognise the landlord’s failings. The landlord did not demonstrate adequate learning from past outcomes and implement the promised changes to prevent the same problem from reoccurring again. Also, the time, trouble, and inconvenience the yearly inaccuracies caused to the resident, in their dealings with the DWP were not assessed fully.

16. In light of the above, there was service failure on the part of the landlord in its handling of this matter.

The landlord’s handling of the associated complaint

17. The resident was unhappy with the landlord’s handling of the complaint. He stated that he felt there had been bias. This service has not seen any evidence of bias by the landlord. The stage 1 response was provided by its income team leader, whilst at stage 2 the complaint was reviewed by its central complaints team and overseen by an executive director. This service encourages landlords to ensure that stage 2 investigations are conducted by someone who has no prior knowledge of the complaint, as it helps ensure impartiality and bring a wider perspective to the issues being considered, which can prevent elements of the complaint being overlooked. The landlord had acted appropriately in this instance.

Determination (decision)

18. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in the landlord’s handling of the resident’s rent and service charge account – and specifically the service charge letters that it sent to the resident each year.

19. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration in the landlord’s handling of the associated complaint.

Orders

20. The landlord should increase its previous offer of compensation from £50 to £150 to recognise its failure to adequately manage and rectify the resident’s rent account.

21. The landlord should confirm compliance with the above order within 28 calendar days of the date of this determination.