Aster Group Limited (202112898)

REPORT

COMPLAINT 202112898

Aster Group Limited

30 August 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

The complaint is about: –
1. The landlord’s administration of the resident’s service charge account.
2. The landlord’s handling of the resident’s concerns about grounds maintenance carried out on her estate.
3. The landlord’s handling of the resident’s complaint.

Background

The resident occupies a four bedroomed house under the terms of a Shared Ownership Lease dated 30 January 2015. The landlord has an obligation to manage and maintain the estate and communal facilities where the property is located. In return, the resident is obliged to pay service charges. These charges are estimated ahead of the financial year in question and then actual figures are calculated at the end of that period. Adjustments can then be made.
On 17 August 2020 the landlord wrote to the resident setting out the actual figures for the financial year 2019/20. This detailed that the resident had paid nothing for “Management Company Costs” but in fact the actual monthly cost was £21.87, and adjustments would now need to be made to recoup these monies. The resident questioned this charge with the landlord and was informed the charge remained payable under the terms of the lease. She then submitted a complaint that she should not have to pay the charge due to the landlord’s error and because no service was being provided.
The landlord confirmed in its stage one response (11 February 2021) that it had set up the grounds maintenance contract in August 2018 but that its contractor had not then attended again until January 2021, for which it agreed to refund the resident £32.63. The landlord also acknowledged that it had not apportioned maintenance costs for car parks correctly and would correct this error, though it pointed out that this might in fact increase costs. Regarding the management fees, the landlord said that the lease provided for costs to be added in this way as it allowed for ‘variable’ service charges. This enabled the landlord to recover unforeseen costs such as this to be included in the final figures once costs were known. The landlord offered compensation of £100 for the time taken to resolve the resident’s queries.
The resident requested escalation of her complaint. She requested calculations of the management fee and the £32.63 that had been offered as a refund. She requested evidence of the car park having been maintained as well as clarification about maintenance charges. She reiterated that she did not believe she should be charged for a landlord error relating to the service charge. She also raised a repair issue in the car park, asked whether neighbours pay the same as her, questioned the role of a separate service supplier and requested assurance that similar issues would not recur year on year. The landlord said that some of these were new issues, but agreed to respond to them in its final response.
The landlord sent its final response on 8 March 2021. It responded to each of the specific points she had raised in her escalation request. It, clarified how the management fee and refund figure were calculated, confirmed attendance dates for maintenance works, confirmed the repair had been raised, clarified what was included in grounds maintenance services, clarified why costs for the car park may now increase, confirmed that all residents using the parking area are charged and explained the role of the other service supplier. In addition, the landlord said that the issue identified with the grounds maintenance contract was a standalone issue and that it was not aware of other corrections having been required previously. It reiterated that the management fee charge was in accordance with the lease and also said that the £100 compensation was for the time taken to resolve the grounds maintenance contract issue.
The resident remained dissatisfied. She considered that the landlord erred in failing to budget for the management fees and she should not have to pay them as a result. She maintained the grounds were not being managed, either to an acceptable standard or in fact, at all, and she wanted reimbursement for monies she had spent maintaining the area. The resident said that she has little confidence in the landlord’s abilities to manage the situation effectively as she had to challenge errors in the service charges on a yearly basis as they were set and then later adjusted. She said that she wanted some reassurance that moving forward this would not be repeated.

Assessment and findings

Before assessing this complaint, it is necessary to clarify this Service’s jurisdiction. We cannot consider complaints about the level of service charges, the amount of any increase in them or, indeed, responsibility for paying them in the first place. Such issues can be referred to the First Tier Tribunal (Property Chamber). However, we can consider the way in which a landlord has administered the resident’s service charge account. This would include looking at the quality of the information provided to the resident; whether the accounts contain errors; delays in providing information about charges; how they have been calculated and so on. This Service can also consider how landlords have handled the delivery of the services charged for.

The landlord’s administration of the resident’s service charge account.

At some point between the resident receiving her 2019/20 actual service charge notice in mid-August 2020 and mid-September 2020 the resident contacted the landlord to query a charge for “Management Company Costs” (the exact date and wording of the query is not evidenced). As indicated above, these had not appeared in the budget at the beginning of the financial year.
On 17 September 2020 the landlord responded explaining that the cost being charged related to “…..the cost for the managing agent where you live. This is the costs invoiced to us by (the agents) who manage some parts of the estate. The reason that this seems quite substantial is because you did not contribute by way of a budget throughout 2019/20”. The resident responded on 28 October 2020 that she was not prepared to pay for something that the landlord had forgotten to budget for as the error was theirs. She explained that the work was not being done anyway, commenting “you wouldn’t carry on paying a window cleaner if they didn’t bother to clean your windows”.
At this point the landlord might reasonably have been expected to explain why it had failed to budget for this cost in advance. However, on 4 November 2020 the landlord responded, stating that whilst it had not set a budget for the costs, the lease provided for a variable service charge meaning the costs could be claimed at the end of the year. The landlord did not respond to the question of whether the failure had been an error or whether the item of expenditure had simply not been reasonably foreseeable at the time the budget was set.
The focus of communications between landlord and resident then turned to whether the service was being provided but following an email on 11 November 2020 the matter stalled. On 1 February 2021 the resident chased the landlord, once again stating she would not pay for its error in failing to budget for the costs in question and as a result of its lack of response, she wanted the matter to be treated as a formal complaint. The question of performance of the service will be considered below but it is reasonable to conclude that between 4 November 2020 and 1 February 2021 the landlord was under the impression it had satisfied the resident on the issue of the management company costs because the communications do not demonstrate it being raised further in between these dates.
The landlord gave its initial Stage One complaint response on 11 February 2021. It did not deal with the question of why the Management Company Costs had not been budgeted for at the start of the 2019/20 financial year and this was inappropriate on the landlord’s part. Whilst the resident did not phrase the point in an exact way – “why were the Management Company Costs not budgeted for/not reasonably foreseeable at the start of the year – this appears to be an error on the landlord’s behalf – why should I therefore have to pay for it”, her repeated reference to the landlord making an error did, in the Ombudsman’s view, reflect that this was what the resident was trying to get at. Indeed, the resident repeated this point in her escalation request on 19 February 2021. The landlord might reasonably have been expected to recognise the nature of this query.
In its Stage Two complaint response (17 March 2021) the landlord referred to the issue as “you feel you should not pay charges which are now due as a result of (our) error”. It explained that “Where insufficient budgets are set the actual costs are recoverable through the prior year adjustment. This is simply how a variable service charge works and you are liable to pay this as per the terms of your lease. Although budgets are based on our best estimate at the time, during any year there may additional works (sic) due to unforeseen circumstances… all of which can contribute to higher than predicted service charges”.
In the Ombudsman’s view the resident was entitled to understand from this that the landlord’s was stating it could not have foreseen these charges when it set the budget and that is why they were not included. Indeed, on 19 March 2021 in an internal email, the landlord noted the resident’s response that this was not a situation where the Management Company Costs had been unexpected because they represented “extra work” but rather the situation was that the landlord had “forgotten” to include them and now she was having to pay double during the current financial year to make up for it (namely the charge for the current year and the charge for the previous year when it was not included).
The resident chased for updates on the issue on 25 and 29 March 2021 and on 7 April 2021 she emailed the landlord and referred to a conversation between her and its staff member when it was going to consider whether it would forego the Management Company Costs if she waived the £100 compensation it had offered her. The resident chased this on 14 April 2021, and it was only later that day that the landlord offered an explanation as to why no estimate had been included for the charges.
The landlord stated that managing agents did not typically start to make charges until they had taken over management of a development once the last “unit” was sold and/or the defects period had ended. In the case of the resident’s estate, it stated the properties were completed in 2017/18 and invoices did not start to come through until November 2018. However, the budget for 2019/20 had been set a month prior to this so did not include any provision for this cost. The landlord maintained that it was not that it had forgotten to include the cost but rather that it was not able to do so. The landlord was not prepared to forego the charges in exchange for the resident waiving the £100 compensation, but it would stand by the offer to pay her that sum.
The sequence of communications between landlord and resident about this issue speak for themselves in terms of there being a delay in providing an explanation for why the landlord could not have budgeted for this expense. As set out above a query was raised in late August/early September 2020. An inadequate response was provided on 4 November 2020, but the landlord was entitled to believe the resident was satisfied with its explanation until February 2021 when the issue was raised again. It took the landlord a further 2 ½ months after this to properly grasp and respond to the resident’s point. This delay in responding to this request for clarity was inappropriate and represented a service failing on the landlord’s behalf.
The landlord has acknowledged that it did not provide information in a timely way which was an appropriate admission to make. However, in the Ombudsman’s view, it has still not offered the resident a proper explanation. Whilst the landlord was one month too late in including these costs in the 2019/20 budget, it started receiving invoices in November 2018 and there is no evidence of the resident being warned that these costs were being incurred until late August 2020 when actual costs for the financial year were settled and a demand for them was made. In the Ombudsman’s view, the landlord might reasonably have been expected to contact the resident during this extended period to prepare her for this expenditure.
Furthermore, it is reasonable to conclude that the landlord was aware that a managing agent would be taking over management of the estate as it would have been involved in that contractual process. It is also reasonable to conclude that it would have been aware of when the final ‘unit’ was sold and/or the defect period was concluded and when services (and costs) were therefore likely to commence. The landlord has failed to explain why it was unable to foresee the need to budget for these costs until after invoices started to be received.
The quality of the information provided to the resident was (and still is) inadequate and this represents a further failing in the service offered. The landlord will be ordered to explain to the resident why it did not warn her of this expenditure between November 2018 and August 2020 and why it could not have anticipated when charges would start given it was involved in commissioning the managing agent’s involvement.
As set out at the start of this report, this Service cannot determine whether the amounts being claimed for this service charge item are reasonable or whether the resident is liable for them. It cannot order the landlord to forego this claim or barter these costs against any offer of compensation, but the reasonableness of the proposed £100 will be considered below.
Finally, for the sake of completeness, the resident questioned with the landlord why the Management Company Costs could not have been included for 2019/20 when they were included in previous years budgets and actual costs. The Ombudsman is satisfied that this was not actually the case.

The landlord’s handling of the resident’s concerns about grounds maintenance carried out on her estate.

On 1 February 2021 the resident complained to the landlord about a lack of grounds maintenance at the property. In October 2020 she had reported having to carry out works herself and in November 2020 she had requested proof of the contractor’s attendances on site.
The landlord admitted a number of service failings. It had set up a grounds maintenance contract in August 2018 but the contractor had not attended until January 2021; the contract it had organised had been incorrectly drafted and needed amendment to only reflect the area included in the resident’s lease; and it had received invoices from the contractor and passed the costs on to the resident even though the work had not been done. The landlord calculated that the resident was now entitled to a refund of £32.63 for the period during which the work had not been carried out – which it agreed to credit to her service charge account.
It was appropriate that the landlord make these admissions. However, the resident had reported that the situation was continuing, and the landlord might reasonably have been expected to address how it was going to monitor performance of the contract moving forward. The resident had been maintaining the area herself and whilst it is reasonable to conclude she had the best of intentions in doing so, it had prevented the landlord from monitoring its contractor’s performance on its estate inspections and possibly noting the lack of delivery earlier.
The landlord provided some evidence of site visits by the contractor post January, which included “before and after” photos but the resident was not persuaded, and the landlord agreed to a site visit on 1 April 2021. On 7 April 2021 the resident emailed the landlord, recording the outcome of the visit. She stated it had conceded that the car park area was not up to standard, and a visit was required to achieve the required standard, following which there would then be fortnightly visits to check and maintain it. Given this admission, she invited the landlord to make further refunds on the charges raised for this activity and it responded that she would be contacted directly by a relevant staff member about the removal of these charges.
On 25 August 2021 the resident emailed the landlord again. She had not heard from it further about the refund and the area had still not been dealt with. On 21 September 2021 the landlord denied there had been any further missed visits after the initial period ending in January and no further refund was due. In an internal email dated 24 September 2021 the landlord’s staff member noted “I do not think this is now a service charge complaint – it is a service delivery complaint….” and passed the matter to its estate services team to be dealt with.
In the Ombudsman’s view the complaint about the service not being performed was always a service delivery complaint from the time the subject was first raised in October 2020. The landlord might reasonably have identified this at that point and its failure to do so represents a further service failing on its behalf. Whilst much of the events listed here occurred following the completion of the complaints process under investigation, it has been considered appropriate to continue to assess this issue and provide the Ombudsman’s opinion on this matter as this enables a resolution to be achieved and means that the resident will not be required to go to the trouble of submitting a further complaint.

The landlord’s handling of the resident’s complaint.

Whilst the landlord dealt with the resident’s complaint within an appropriate timescale it has already been identified above that the complaint responses at both stages were inadequate because they did not fully cover the first issue the resident identified – why the Management Company Costs were not estimated in advance. This represented a service failing in the landlord’s complaints handling in addition to having an impact upon the quality and timeliness of the service charge information provided.
However, the resident raised a number of additional queries after receiving the Stage One response which she relied upon by way of escalation. Whilst the landlord considered that some were not necessarily included in the original complaint, it chose to respond to them to try to resolve the situation. This was an appropriate response as it demonstrated a desire on the landlord’s part to find a resolution which resolved all the resident’s concerns.
The identified service failing has been taken into account when setting the compensation level set out below.

Compensation

The landlord offered the resident compensation of £100 and a refund of service charges of £32.63. However, the resident has been put to significant inconvenience in pursuing these issues with the landlord. It is reasonable to conclude that the errors with the contractual arrangements might have been overlooked had the resident not complained. The lack of performance of the grounds maintenance contractor continued after the situation had been brought to the landlord’s attention by way of a complaint and so it had failed to learn from the situation. This was because it failed to recognise that the complaint needed to be brought to the attention of its estate team.
In the Ombudsman’s view compensation of £350 would be more appropriate to reflect the impact on the resident of the failings identified in this report. The resident has claimed the cost of works she undertook herself, but she has not evidenced these. In any event, she did not forewarn the landlord that she was going to take this action and it prevented monitoring of the grounds maintenance contract. Accordingly, it would not be fair and reasonable to expect the landlord to shoulder these costs.
A recommendation will be made, however, for the landlord to consider providing the resident with the dates the grounds maintenance contractor is due to attend the site so that she can satisfy herself that attendances are taking place and work is being carried out. Any further/future complaints of ongoing service failings should complete the landlord’s internal complaints procedure before being referred to this Service for consideration.

Determination

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its administration of the resident’s service charge account.
In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its handling of the resident’s concerns about grounds maintenance carried out on her estate.
In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its handling of the resident’s complaint.

Orders and recommendations

Orders

The landlord to pay compensation to the resident of £350 within the next 28 days (less any sum already paid). Broken down as follows:

£150 for the service failures identified in relation to the administration of the service charge account.
£150 for the service failures identified with its response to the resident’s reports about grounds maintenance.
£50 for the service failures identified with its complaints handling.

The landlord to confirm to the resident that the service charge refund of £32.63 has been credited to her account.
The landlord to provide evidence to this Service that it has complied with the above orders within 28 days of this report.

Recommendations

The landlord to consider providing the resident with the dates the contractor is due to attend the property for grounds maintenance purposes.
The landlord to ensure it has notified all other affected residents of the contractual errors which have been identified and the changes it will make to their service charge provisions if it has not already done so.