London & Quadrant Housing Trust (L&Q) (202111468)

REPORT

COMPLAINT 202111468

London & Quadrant Housing Trust

27 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 level of service charges.
2. The landlord’s handling of the resident’s service charge queries.
3. The landlord’s complaint handling.

Jurisdiction

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 at times there are reasons why a complaint will not be investigated.
After carefully considering all the evidence, in accordance with paragraph 42(e) of the Housing Ombudsman Scheme (the Scheme), the following aspect of the complaint is outside of the Ombudsman’s jurisdiction:
1. The level of service charges.
Paragraph 42(e) of the Scheme says that “the Ombudsman may not consider complaints, which in the Ombudsman’s opinion concern the level of rent or service charge or the amount of the rent or service charge increase.”
The resident has said there are inconsistencies in service charges compared to other properties. The resident has given specific examples of what he considers as inconsistencies.
The Ombudsman can not determine whether service charges are reasonable in themselves or when compared with charges for other properties. Complaints about the reasonableness of specific service charges are therefore outside the jurisdiction of this Service.
The First Tier Tribunal (Property Chamber) is better placed to consider issues relating to the setting of service charges. Whilst we are unable to consider this aspect of the complaint, we can assess the landlord’s response to the resident’s queries concerning the charges and the other aspects of the complaint are considered below.

Background and summary of events

Background

The resident is a leaseholder of a three bedroom maisonette. The developer owns the freehold and the building is managed by the landlord. The landlord has no recorded vulnerabilities for the resident.
The lease explains that the tenant agrees to pay the service charges to the landlord as per the terms set out in schedule 3 of the lease. It explains the tenant’s obligation to pay the service charge by equal payments in advance on the first day of each month. The lease further explains how service charges are calculated, how they are used and provides detail of the reserve fund.
The landlord’s service charge policy details the service charges that are covered and charged for. It explains how service charges are calculated, estimated and apportioned.
The landlord’s complaints policy sets out its two stage complaints process. A stage one complaints will be responded to within 10 working days. A stage two complaint will be responded to within 20 working days. The complaints policy explains if the landlord cannot meet either of these timeframes, it will explain why and write again within a further 10 working days.
The landlord’s compensation policy says it offers a fixed award for service failure of £10 for a failure to respond to a query within 10 working days.

Summary of events

The resident has said that an independent service charge consultant report was completed in February 2019. Whilst this Service has not been provided with a copy of this, it is noted that this has not been disputed and as such it is reasonable to assume that the landlord commissioned the consultant report.
Throughout 2019 the resident and landlord were in communication about the 2018/19 service charges. On 6 August 2020 and 14 September 2020 the landlord apologised for its delay in responding to queries about the 2018/19 service charges.
On 7 January 2021 the landlord provided the resident with an invoice pack relating to 2019/20 service charges and again apologised for the delay in providing this.
Following a review of the invoices, on 10 February 2021 the resident asked the landlord why certain items were being charged, what they were and when they had been used under estate charges. He also asked further questions on items under the scheme charges.
On 8 March 2021 the landlord apologised for the delay in its response and provided a detailed explanation about its service charges. It explained:
1. The role of the caretaker, how costs and contributions were calculated.
2. What certain items mentioned on invoices related to and clarified where portfolio costs were being confused with that of the block.
3. The purpose of sinking funds. It said it was to spread the cost of major works over a number of years to aim to avoid a shortfall in the sinking fund. It said payments for sinking funds were calculated when the property was built. It told the resident that sinking fund contributions were to increase by 2% for 2020/21 and said this was following the recommendation of an independent consultation. It further added that it did not issue refunds on sinking fund contributions because they were on-going.
4. The management fee it calculated and how it had moved to a fixed amount payment to make it fairer.
5. It was exploring new insurance providers and that it sent a notice of intention under section 20 of the Landlord and Tenant Act (1985). It said in the interim the insurance costs had increased by an estimated 5%.
6. It referred the resident to his lease for further information and said he could contact it to raise any further concerns.
On 10 March 2021, the resident sent a collective letter to the landlord about the 2019/20 service charges and included the names of ten other residents. The resident said:
1. He wanted an update on the actions that were due as part of an independent service charge consultant report completed in February 2019. He said he was told the actions from the report would be represented in the 2019/2020 bill but this did not happen.
2. The resident reminded the landlord that on 1 February 2019 it told him it would plan to consult with residents in spring/summer 2019 about whether a reduction in the amount collected for the sinking fund was supported. The resident told the landlord that a consultation had not happened and requested a revised timeframe and action plan.
3. The resident told the landlord of inconsistencies of charges on service charge bills with other properties. He said there was a difference in estate, phase/scheme and block service charges and asked why some properties were included in the charges and others not.
4. The resident told the landlord that he wanted it to conduct an independent audit of the 2019/20 service charge and to issue “correct” bills. He also requested the landlord complete an independent review of the 2020/2021 service charge before issuing them to avoid further inconsistencies.
On 18 August 2021, following contact from the resident, this Service wrote to the landlord and encouraged it to resolve the resident’s complaint dated 10 March 2021 via its internal complaint’s procedure.
On 8 September 2021 the landlord responded to the resident’s queries about the 2019/20 service charge account. Here the landlord detailed the charges that applied and provided the resident with an excel sheet responding to his queries. This has been treated as the landlord’s stage one response.
On 22 September 2021 this Service contacted the landlord again and acknowledged that it had emailed the resident but asked it to provide a formal response to the resident’s complaint by 13 October 2021.
On 30 September 2021 the landlord acknowledged the resident’s stage two complaint. It confirmed the issues as:
1. The service charge review from two years ago remained unresolved.
2. The landlord had not conducted a consultation for the sinking fund.
3. Errors on the 2019/20 service charge bill had not been responded to.
On 7 October 2021 the landlord issued its stage two response. It said:
1. It apologised for the delay in providing a stage two response.
2. In response to the service charge review request. It said the resident raised concerns on 29 April 2019 which were responded to. It said further queries were raised on 1 October 2019 which were responded by it and a face-to-face meeting took place with some residents.
3. In terms of the sinking fund consultation the landlord said it was starting a programme of surveys to assess the condition of its properties which would start with oldest blocks first. It told the resident that as the block he was in was relatively new it would not be surveyed that year and said that any adjustments made to the sinking fund would not result in a refund of previous payments.
4. It had responded to concerns about the 2019/2020 service charge queries on 8 September 2021 and said the relevant data was available on its website.
5. In response to the request for a new bill or an independent review the landlord told the resident there was no such requirement under the terms of the lease and directed him to a website for him to consider further. It also said it had conducted a review of the 2020/2021 charges and would not fund a further review.
6. The landlord told the resident who he could contact for independent advice and said that if he felt the service charges were unreasonable or incorrect the appropriate forum to approach would be the first-tier tribunal in such circumstances.
7. In compensation the landlord offered the resident £175 in total. This was made up of:
  1. £40 for four late responses to service charge enquires.
  2. £50 for time and effort and a further £50 for inconvenience.
  3. £25 for a delay in its stage one decision.
  4. £10 for a delay in responding to a query raised on 1 September 2021.
It is unclear from the evidence whether the £40 offered by the landlord for late responses to service charge enquiries relates to queries about the 2019/20 service charge. However, the evidence shows the landlord apologised to the resident for late responses on 6 August 2020, 14 September 2020, 7 January 2021 and 8 March 2021 and as such it is reasonable to assume this is what the £40 payment relates to.
On 18 October 2021 the resident sent a further email to the landlord and said:
1. He wanted a copy of the response which addressed the questions he raised about the service charge review for 2019/2020. He asked for further details on the face-to-face meeting which included the minutes and details of when it took place. He told the landlord again that the recommendations from the review were outstanding.
2. In terms of the sinking fund consultation, the resident asked what happened to its previous promise. He asked the landlord to provide assurance that it would complete the survey this time and asked it to confirm what it would do.
3. In response to the alleged errors on the 2019/2020 service charge bill relating to the block, the resident said whilst a response was received, he was still seeing errors. The resident provided a spreadsheet detailing the errors and asked the landlord to confirm how these would be addressed.
4. The resident asked the landlord how it would address the bills being incorrect.
On 17 November 2021 the landlord told the resident that the costs associated with each service were apportioned between the properties that benefitted from the service. It said that some units did not benefit and gave an example of how communal cleaning would apply to those with internal access to the block.
On 18 November 2021 the resident contacted this Service and said the service charges were incorrect and that he wanted them to be audited and corrected.
In December 2021 the resident raised queries about the 2020/21 service charges. Following this, the resident and landlord were in communication about 2020/21 service charge queries.
During the course of this investigation the resident has told this Service of concerns about the 2020/21 service charges. It is noted that the resident requested invoices for the 2020/21 service charges and that he raised queries about these invoices in January 2022. The Ombudsman’s role is to investigate complaints brought to it that have exhausted a landlord’s complaints process. This investigation report therefore concerns the matters which were subject to the resident’s formal complaint and the landlord’s final response dated 7 October 2021 which were mainly about queries relating to the 2019/20 service charges. Any new issues would need to be raised as a new complaint with the landlord.
It is also important to note that whilst the resident initially raised his complaint as a collective issue, he has told this Service that the complaint is his alone. As such this determination relates to the resident’s complaint and issues relating to other residents have not been considered.

Assessment and findings

In reaching a decision we consider whether the landlord has kept to the law, followed proper procedure and good practice, and acted in a reasonable way. Our duty is to determine complaints by reference to what is, in this Service’s opinion, fair in all the circumstances of the case.

The landlord’s handling of the resident’s service charge queries

The pre-complaint correspondence, between January and March 2021, show the landlord was responsive to the resident’s queries about service charges. The landlord provided the resident with appropriate information about how certain fees were calculated and what was included within these.
On 10 March 2021, the resident raised several queries about service charges. This letter has been treated as the resident’s complaint. Here he raised the following service charge queries with the landlord:
1. He wanted an update on the actions that were due as part of an independent service charge consultant report completed in February 2019. He said he was told the actions from the report would be represented in the 2019/2020 bill and said this did not happen.
2. He said that on 1 February 2019 the landlord told him it would plan to consult with residents in spring/summer 2019 about whether a reduction in the amount collected for the sinking fund was supported. He told the landlord this had not happened and requested a revised timeframe and action plan.
3. The resident told the landlord that he wanted it to conduct an independent audit of the 2019/20 service charge and to issue correct bills. He also requested the landlord complete an independent review of the 2020/2021 service charge before issuing them to avoid further inconsistencies.
It is not clear what the landlord previously committed to in 2019. However, the lease does explain how the landlord calculates its service provision which includes an “appropriate” amount to be held on reserve. Whilst the lease says the block provision could be reduced by any unexpended reserve already made it does not say the landlord is obliged to refund the amount to the resident or provide a timeframe for taking such steps.
In its stage two response, the landlord told the resident of its approach to surveying conditions of blocks. It said that the resident’s block was relatively new and so it would not be surveyed that year. Here the landlord explained the initial steps it would take to assess the block and it also told the resident that if there were any sinking fund adjustments it would not result in a refund of previous payments. As such the landlord’s response to the sinking fund issue here was appropriate.
The landlord’s response to the resident’s request for it to conduct an independent audit was also appropriate. Whilst the lease does not detail an obligation for an audit, the service charge policy confirms that the landlord will validate service charges by external auditors. However, there is no information to show an obligation for the landlord to conduct a further audit.
As such, it was appropriate for the landlord to remind the resident of the terms of his lease and the steps available to him if he wished to receive impartial advice about service charges. It was also appropriate for the landlord to have referred the resident to lease advice and to the First Tier Tribunal in the circumstances.
It is noted that within his complaint the resident said there were inconsistencies in service charges, he detailed what he felt were inconsistencies including some charges that did not relate to his property. Whilst the evidence shows the landlord responded to the resident’s queries, this Service is unable to determine whether the service charges are reasonable in themselves or when compared with other properties. As mentioned previously, the First Tier Tribunal (Property Chamber) may be better placed to consider such issues.
In terms of the landlord’s response to the resident’s query about the service charge consultant report from February 2019. Whilst it is unclear what the landlord committed to in 2019, its response to the resident’s query here was unreasonable. In its response the landlord told the resident of the dates it had previously responded to him, which pre-dated his complaint and it also referred the resident to a face to face meeting that it knew he did not attend.
It would have demonstrated good practice if the landlord addressed the concerns about the outstanding service charge review from February 2019 at the complaint stage in an attempt to resolve matters. This was a missed opportunity by the landlord and meant the resident had to contact it again about this and the evidence suggests this issue is still outstanding. This amounts to a service failure.
It is acknowledged that within its stage two response the landlord refers to £40 compensation for four late responses to service charge enquires. Whilst it is unclear what the £40 relates to, the evidence shows four occasions the landlord apologised for late responses. All four occasions pre-date the resident’s complaint. However, the evidence shows the landlord acted appropriately in showing insight into its failings and offering compensation in line with its policy.
Overall, there was a service failure in the landlord’s complaint response not sufficiently addressing the resident’s query about the outstanding issue from February 2019. It is acknowledged that the resident would have been caused some impact by this failing especially as he had to contact the landlord again about the same issue.

The landlord’s complaint handling

The resident raised queries as part of the pre-complaints process on 10 February 2021. The landlord provided a detailed response on 8 March 2021. On 10 March 2021 the resident raised further queries and expressed dissatisfaction. This has been treated as the resident’s complaint.
However, it took the landlord 127 working days to issue its stage one response on 8 September 2021, this was 117 working days more than the timeframe set in its policy. This was not appropriate.
On 22 September 2021 the resident contacted this Service and said the landlord had not provided a response via its formal complaint procedure and had not addressed the points raised. This Service contacted the landlord the same day and asked it to issue a formal response by 13 October 2021. It is acknowledged that there is no evidence to show the resident tried to escalate his complaint directly with the landlord at that time.
However, following contact from this Service, the landlord issued its stage two response on 7 October 2021, this was within the timeframe set out in its complaints policy. In its stage two response the landlord apologised for the delay in issuing its stage one response and offered the resident £135 compensation in recognition of this. The landlord provided a break down and said:
1. £100 was for time, effort and inconvenience.
2. £25 for delay in issuing its stage one response.
3. £10 for delay in responding to query raised on 1 September.
When there are failings by a landlord, as is the case here, the Ombudsman will consider whether the redress offered by the landlord put things right and resolved the resident’s complaint satisfactory in the circumstances. In considering this the Ombudsman takes into account whether the landlord’s offer of redress was in line with the Ombudsman’s Dispute Resolution Principles: be fair, put things right and learn from outcomes.
The landlord acted fairly by acknowledging and apologising for its failings. The landlord attempted to put things right in recognising its failing and offering compensation to the resident. Whilst no evidence has been provided to show it did this, the landlord explained it had talked to the members of staff involved, provided training and said it referred the details of the complaint to its learning group to help improve its services.
The landlord has offered compensation that was proportionate to the time and trouble incurred by the resident as a result of its delay in issuing its stage one response. The redress offered to the resident was proportionate to the impact caused and was enough to put things right in the circumstances. As such it resolves the complaint satisfactory.

Determination (decision)

In accordance with paragraph 42(g) of the Housing Ombudsman Scheme, the complaint about the level of service charge is outside of jurisdiction.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in relation to the landlord’s response to the resident’s queries about service charges.
In accordance with paragraph 53(b) of the Housing Ombudsman Scheme, there was reasonable redress in the landlord’s complaint handling.

Reasons

The Ombudsman cannot assess the level of service charges as it is not within the jurisdiction of the Scheme.
There was service failure in the landlord’s response to the resident’s queries about service charges. The landlord’s complaint response did not sufficiently address the resident’s query about the outstanding issue from February 2019. It is acknowledged that the resident would have been caused some impact by this failing especially as he had to contact the landlord again about the same issue.
The landlord apologised for its delay in issuing its stage one response. It attempted to put things right with its apology and offer of compensation.

Orders

The Ombudsman orders the landlord to pay the resident a total of £235 within four weeks of this report. Compensation should be paid directly to the resident and not offset against any arrears. The compensation compromises:
1. £100 for the distress and inconvenience caused by the landlord’s failure to respond to all the resident’s queries about service charge in its response from 7 October 2021.
2. The landlord to pay the resident £135 it previously offered in recognition of the delay in issuing its stage one response if it has not already done so.
The Ombudsman orders that within four weeks of this report, the landlord review its response to the resident’s query about outstanding items from the consultant report in February 2019 and provide him with its response, if it has not already done so. If there are no outstanding actions it would be appropriate for the landlord to confirm this.
Within six weeks of this report the landlord should provide this Service with evidence of the learning it had taken from the resident’s complaint as detailed in its stage two response from 7 October 2021.