Norwich City Council (202232323)

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REPORT

COMPLAINT 202232323

Norwich City Council

30 August 2024


Our approach

What we can and cannot consider is called the Ombudsman’s jurisdiction and is governed by the Housing Ombudsman Scheme. The Ombudsman must determine whether a complaint comes within their jurisdiction. The Ombudsman seeks to resolve disputes wherever possible but cannot investigate complaints that fall outside of this. 

In deciding whether a complaint falls within their jurisdiction, the Ombudsman will carefully consider all the evidence provided by the parties and the circumstances of the case.

The complaint

The complaint is about the landlord’s response to the resident’s concerns about his service charge.

Determination (jurisdictional decision)

When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.

After carefully considering all the evidence, I have determined that the complaint, as set out above, is not within the Ombudsman’s jurisdiction.

Summary of events

The resident has been a leaseholder of the flat since 1995. The landlord is a local council and is the freeholder for the resident’s building. Under the terms of the lease agreement, the landlord is obligated to maintain and repair the structure of the building. The lease also requires that the resident pay a variable service charge, comprised of apportioned costs of the landlord’s “reasonable expenditure” in fulfilling its obligations.

In September 2022, the landlord sent the resident the 2021/2022 service charge statement. He subsequently requested a breakdown of costs for repairs to his building and management fee, the latter of which he said had trebled from the previous year. In its response, the landlord advised that it had previously charged a set administration fee per repair to costs incurred for specific repairs, but that it continued to apportion the charges to leaseholders. It advised this was changed due to a previous tribunal hearing and was done in consultation with the local leasehold association.

The resident complained in January 2023 that the costs for both the block repairs and management fee were not fair and reasonable. He alleged the profit margins of the contractor were too high and the new approach to calculating the management fee imposed an unfair “tax” on repairs. The resident expressed dissatisfaction that leaseholders were not consulted about the change in its calculation of the management fee.

In the landlord’s stage 1 response, it said the resident had misunderstood how the management fee was calculated and apportioned, and reclarified its calculations and reasons for changing the formula.

In mid-February 2023, the resident escalated his complaint because he said his concerns had not been addressed. He alleged the landlord had hidden its costs under its management fee when it should have been included under the charges for the building repairs, therefore, it did not follow due process in consulting leaseholders about the costs (in accordance with section 20 of the Landlord and Tenant Act 1985). The resident also said the landlord’s contractor had profited twice because it had used a third party to undertake some work. In resolution, the resident said he was seeking for charges not to be included and for the landlord to consult with leaseholders. 

The landlord stated in its stage 2 response in March 2023 that it was satisfied that it had explained its approach to his service charge. It advised that the complaints process was not the appropriate route to resolve the resident’s concerns, and signposted him to the First Tier Tribunal. It also provided details of how to complain to this Service.

Following the complaint, the resident applied to the Tribunal and his case was heard in March 2024. The Judge found that the service charge costs were fair and reasonable. They also determined that the landlord did not breach the tenancy agreement as there was no need to issue a section 20. However, the Judge highlighted that it would have been better for leaseholders if the landlord had explained the change in management fee calculation in the service charge notice. They also considered the resident’s argument that he had not been provided accurate information about the contractor’s profits. These were reasons used to explain the Judge’s order that the resident would not be liable for any litigation costs.

The resident referred his complaint to this Service because he believed the landlord’s responses were not clear or transparent about the calculations and changes to how it calculated the service charge. He advised this meant he had to complain to this Service and apply to the First Tier Tribunal. As an outcome, he said he was seeking for the landlord to adopt a more open and transparent communication style.

Reasons

Paragraph 42.e. of the Scheme states that the Ombudsman may not consider complaints which, in his opinion, concern matters where a complainant has or had the opportunity to raise the subject matter of the complaint as part of legal proceedings.

Jurisdiction can be a complex issue, and in this case a thorough assessment of the facts was needed before reaching a decision.

The resident’s case has been determined by the First-Tier Tribunal. This was the correct forum to investigate his concerns about the reasonableness of the service charge and whether the landlord adhered to the terms of the lease, whereas the Ombudsman lacks the technical expertise to investigate these matters. A Judge has considered the merits of the resident’s substantive complaint. He therefore has had or had the opportunity to raise his concerns about the transparency of the information the landlord provided during the complaints process as part of the proceedings. Because of this, the Ombudsman will not investigate it.