A2Dominion Housing Group Limited (202201569)

REPORT

COMPLAINT 202201569

A2Dominion Housing Group Limited

20 October 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 the landlord’s handling of the resident’s:
1. request for information about the actual service charges for 2020-21;
2. concerns about the amount he was being charged for services, and the consultation process for non-essential services;
3. associated complaint.

Jurisdiction

What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to this Service, the Ombudsman must consider all the circumstances of the case, as there are sometimes reasons why a complaint will not be investigated.
After carefully considering all of the evidence, in accordance with paragraph 42 of the Scheme, the following aspect of the complaint is outside the Ombudsman’s jurisdiction:
1. The landlord’s handling of the resident’s concerns about the amount he was being charged for services, and the consultation process for non-essential services.
Under paragraph 42(a), (e) and (g) of the Scheme, the Ombudsman may not consider complaints which are made prior to having exhausted a member landlord’s complaints process; which concern the level of rent or service charge or the amount of the rent or service charge increase; or which concern matters where the Ombudsman considers it quicker, fairer, more reasonable or more effective to seek a remedy through the courts, other tribunal or procedure. The resident’s concerns about the amount he was being charged for services (such as lift repairs) and the consultation process for non-essential services (such as Sky TV) were not addressed by the landlord within its complaints process. He may choose to make a further complaint to the landlord, which he may subsequently refer to this Service if he is dissatisfied with its response. He has also been advised by the landlord and this Service to contact the First-tier Tribunal (Property Chamber) regarding these matters.

Background and summary of events

Background

The resident and his partner are joint leaseholders of the landlord. They have resided at the property, a 2-bedroom second floor flat in a block of flats, since 2014.
The lease sets out the obligations of the landlord and leaseholder. The landlord’s obligations include inspecting, maintaining, repairing and renewing the common parts of the building and estate. It has the power, at its discretion, to alter the arrangement of the common parts of the building and estate, provided that this does not make access or amenities substantially less convenient. The leaseholder’s obligations include paying the service charge in accordance with certain provisions. The service charge consists of a sum estimated by the landlord as likely to be incurred, and may be adjusted if it calculates that additional sums are required to be collected. The service charge includes “all expenditure reasonably incurred by the landlord” in connection with its obligations.
The landlord states in its service charge policy that it has developed clear, transparent and accurate service charges that reflect the costs of managing the services provided on each estate. The policy notes that deficits arising from year-end accounts will be charged and collected from leaseholders in the year in which they are calculated (ie in 2021 for the service charge year 2020-21), where possible. It also confirms that all service charge payers will receive a detailed summary of costs in their estimated service charge, with service charge actuals to be issued to leaseholders by the end of November of the following financial year. Service charge headings will be fully itemised on summaries provided to customers. The landlord publishes performance figures on the basis of responding to service charge queries within 20 days of receipt.
The landlord operates a 2-stage complaints process, and will acknowledge or ‘scope’ a complaint within 2 working days. Complaints are responded to at stage 1 (‘investigation and focus on resolution’) by a complaints and resolution caseworker, and at stage 2 (‘independent internal review’) by a head of service or director. While no response timeframes are set out in the complaints policy, the landlord’s performance measures include the percentage of complaints responded to at stage 1 within 10 working days, and stage 2 complaints which include an optional review panel are decided within 25 working days. The complaints policy states that the landlord will not treat service charge disputes as complaints and will not process such communications through its complaints procedure. The complaints procedure clarifies that where a service charge is disputed, this is either resolved internally or referred directly to the First-tier Tribunal (Property Chamber).
If a complaint is upheld or partially upheld, the landlord will consider awarding compensation in line with its compensation policy. This states that compensation may be paid when, through its own omission or fault, it fails to deliver the appropriate and agreed level of service. Its compensation matrix states that payments of between £50 and £100 may be due for ‘detriment’, including stress and inconvenience, and between £25 and £240 for time and trouble (both calculated according to the level of impact). Alongside financial compensation, other remedies the landlord may offer include an apology, an explanation, an assurance that the same thing will not happen again, and action to put things right.

Summary of events

On 7 September 2021 the landlord issued a formal demand requiring the resident to pay a balance of £1,106.93 for service charges relating to the financial year 2020-21. It explained that the payment was due within 30 days, and enclosed information about how the balance had been calculated.
After receiving the demand notice on 15 September 2021, the resident contacted the landlord by email. He noted that it was asking him to make good a shortfall in the annual service charge amount, which was largely due to an overspend of approximately £38,500 on communal repairs. He said that an overspend of this size required explanation, and requested a written summary of the costs that comprised it. He also requested assurance that none of the individual works contributing to the overspend resulted in costs to residents of over £250, as the landlord had a duty to notify individual leaseholders in advance of works whose costs exceeded £250 per leaseholder.
The landlord contacted the resident in reply to his email on 22 September 2021; however, there was a typo in the resident’s email address which meant that he did not receive the message. The landlord’s reply acknowledged the resident’s concerns about the large increase in communal repair costs for the block, and confirmed that a summary of costs would be sent to all residents. It accepted that the costs were above the anticipated amount and explained that, while it tried to estimate likely costs, repair costs were reactive. It advised that the costs for 2020-21 had been affected by a number of large expenses, including:
1. Upgrading the satellite system to receive Sky Q at a cost of £8,081;
2. An emergency duration light test at a cost of £3,322;
3. Gas meter replacement at a cost of £7,200;
4. Lift works at a cost of £7,200;
5. Electrical lights work at a cost of £2,106.
On 7 October 2021 the resident emailed the landlord again, informing it that he had received an automated reply to his email on 15 September 2021 but no further response. The automated reply stated that the landlord would respond within 20 working days, but he had received no response 22 working days later. He said he believed it was his right to obtain further information regarding the service charges, and if he did not receive a reply by 11 October 2021 he would make a complaint.
The landlord replied to the resident the following day (8 October 2021) and forwarded its earlier response from 22 September 2021, saying it hoped this addressed the issues raised. However, it again used an incorrect email address for the resident (omitting a digit), so he did not receive the reply.
On 20 October 2021 the resident and his partner complained to the landlord. The complaint stated that they believed the landlord’s reasons for the “considerable overspend” were poorly explained in the document provided in September 2021. It also stated that the resident had not received replies to his emails of 15 September 2021 and 7 October 2021, which was unacceptable. The resident and his partner said that they expected a response to the resident’s request for a summary of costs, and a commitment from the landlord to respond to leaseholders’ queries in a timely manner.
The landlord’s records state that it phoned the resident the same day (20 October 2021) to “scope his complaint”, but received no answer. It therefore acknowledged the complaint by email, noting that it understood the complaint to be about a lack of communication from its leasehold management team and its failure to respond to a request for information relating to an additional service charge amount. It said it intended to respond within 10 working days. This email was sent to the resident’s partner, and was therefore presumably received.
On 28 October 2021 the resident informed the landlord, via email, that he had attempted to make a complaint via its website but was unable to submit the form. He suggested that this may be a technical fault that needed fixing urgently. The landlord emailed the resident in reply on 1 November 2021, providing a phone number for its contract centre which would be able to either resolve the technical fault or escalate it to its IT department. It also advised how he could make a complaint by email. Once again, this email was sent to the incorrect email address, and was not received by the resident.
The landlord issued its stage 1 response to the resident’s complaint on 25 November 2021. This stated that:
1. According to its records, it replied to the resident’s email of 15 September 2021 within 5 working days and to his email of 7 October 2021 within 1 working day. It enclosed with both replies a breakdown of “the variance of communal repairs which contributed to the large deficit”.
2. It then said it would provide a more detailed breakdown of the service charge by 29 October 2021. Since this date had passed, it assumed this had been done and the resident was now aware of the reasons for the service charge increase.
3. It had recently introduced a new team called ‘the hub’ whose staff would respond to calls in the absence of its property manager. In the case of complex queries that the hub could not respond to, its property manager would conduct a callback within 24 hours.
4. It had appointed its property manager to oversee the resident’s query and ensure it was answered to a good standard within the required timeframe. Its property manager would act as the resident’s point of contact. It provided their direct contact details.
5. It upheld the complaint, and apologised for the delays and inconvenience caused to the resident.
6. It offered him £35 in compensation for the length of time it had taken to resolve his complaint.
7. It would consider the complaint closed “on satisfactory completion of the promised works”. However, if the resident felt the matter remained unresolved, he could escalate his complaint to the next stage of its complaints process within 20 working days.
On 1 December 2021, the landlord forwarded its previous email dated 7 October 2021 to the resident. On this occasion it used the resident’s correct email address, and also sent the email to the resident’s partner.
On 12 December 2021 the resident informed the landlord that he was not satisfied with its response to his complaint and the level of detail provided. He asked the landlord to treat his email as a formal complaint, and also said he wished to “escalate this issue”. In response to the information originally provided by the landlord on 22 September 2021, which he did not receive until 1 December 2021 due to the email address error, he stated that:
1. He was not a user of Sky Q and had never requested its installation. He had not been consulted or informed of the landlord’s intention to carry out the installation and incur the associated cost. He therefore requested that the cost was removed from his service charge. He also asked who requested the installation and why it was approved without informing other residents.
2. The lifts in the building had constantly malfunctioned since the development was built in 2014. He estimated there had been dozens of repair callouts each year. He felt the lift was not fit for purpose. He and other residents would not accept the state of disrepair, or the inflated cost of servicing. He asked the landlord to investigate whether the lift installation was faulty from the outset, and explore either making a claim against the manufacturer or replacing it under warranty. He requested:
  1. Information regarding the number of lift repair callouts since 2014;
  2. Maintenance logs detailing what the problems were when reported;
  3. Details of how the landlord would rectify the issue without imposing undue costs on leaseholders.
3. He would like additional information regarding why the grounds maintenance cost had increased from £5,195 to £12,355. It was his impression that the appearance of the grounds and maintenance of flowerbeds had substantially deteriorated.
4. He would like to exercise his right to inspect the landlord’s accounts, receipts and other documentation supporting the summary, and to take copies and extracts. He reserved the right to raise additional issues once he had seen the accounts. He asked the landlord to contact him to arrange an appointment, or alternatively to make the documents available to him online.
The landlord discussed the resident’s email internally on 22 and 23 December 2021, and concluded that it should be treated as an escalation request rather than a new stage 1 complaint. It went on to issue its stage 2 response on 18 January 2022, stating that:
1. In reviewing the complaint, it had spoken to relevant staff and read the correspondence and other available documentation it had on file.
2. It had responded to the resident’s initial query in line with its service standards. However, it appeared that its response was sent to an older email address it had on file for him, and not the one he had sent his query from. It apologised for this. It had asked its property manager to ensure the resident’s contact details were updated on its systems to prevent the issue reoccurring in future.
3. It was sorry to hear that it had not provided the information requested. It had reviewed its response of 22 September 2021 (reissued on 1 December 2021) and agreed that it was inadequate. It had discussed this with its property manager and asked them to provide a full response by 28 January 2022. It had also reminded staff that when it received complex service charge queries, it should call the customer to discuss these and ensure it fully understood their requirements before providing a written response.
4. It had asked its property manager to contact the resident to arrange for him to review the invoices as he requested. As its offices were closed to the public due to Covid-19 restrictions, it could provide copies of invoices by email or hand deliver physical copies. In the circumstances, it would waive its usual fee for providing these documents.
5. It upheld the complaint, and reiterated its offer of £35 in compensation.

Post complaint

On 22 January 2022 the resident contacted the landlord regarding its stage 2 complaint response. He noted that the incorrect email address that was used was not an “old” one, but contained a typo; he had discovered this when reporting a repair to the landlord on 20 January 2022, and found that the incorrect email address was still in the system used by its call taker. While the call taker had updated their system, the resident asked the landlord to ensure all its systems contained his correct email address. He also said that he would prefer to receive electronic copies of invoices relating to the service charges, and that he awaited a response to his request for detailed information about the expenditures that led to the additional service charge.
The landlord confirmed receipt of the resident’s email on 26 January 2022 and said it would contact him by 28 January 2022 regarding the information he requested. It then sent a further email on 28 January 2022, confirming that the resident’s email address had now been corrected on its systems. It apologised for the previous error and for its delayed responses due to the error. It also advised that it had reviewed its accounts and put together a document to provide residents with an in-depth breakdown of the service charge costs. Prior to issuing the document, there were a few charges it needed to verify. It had not yet completed this due to “some technical issues”, so would be unable to send the document that day. It would ensure the resident received a full response to his service charge enquiry by 31 January 2022.
On 31 January 2022 the resident told the landlord that he had not yet received an in-depth breakdown of the costs that led to the additional service charge, which it initially said it would provide by 28 January 2022, then by 31 January 2022. The landlord replied on 1 February 2022 and apologised for its delay in providing the document. It explained that this was due to its property manager being on leave. It attached a document detailing the service charges for 2020-21, noting that it would share this with all residents the following day. The document included the following points:
1. During the previous financial year, there were several unexpected repairs which contributed to the deficit applied to customers’ accounts. The works carried out were essential repairs which were required for continuity of services within the building.
2. It appreciated that deficits at the end of the year were “not pleasant for our customers” and aimed to improve its budgeting year on year. As part of this work, it had implemented changes to the way it reviewed accounts.
3. It had identified a number of errors in the accounts, including:
  1. An error in its budget for maintenance of the car park gate, which resulted in actual costs being almost double the budgeted cost.
  2. One of the lift repairs had wrongly been charged at estate level. It had raised an adjustment to remove this charge from residents’ service charge accounts.
  3. It accepted that replanting works costing £7,160 were planned, and it should have factored in these costs when budgeting or postponed the works to the next financial year. It apologised that this did not happen. It had since changed its grounds maintenance contractor.
  4. There was no budget assigned to sewerage works in error. This resulted in an unbudgeted cost of £216 for a servicing visit. It apologised for this.
  5. There was also no budget assigned to electrical and lighting testing. This was missed in error, resulting in unbudgeted costs for servicing visits.
  6. A communal repair relating to installation of padlocks was wrongly charged at block level when it should have been charged at estate level.
  7. Some elements of fire safety costs, relating to a “smart folder” and fire risk assessment, were not sufficiently budgeted for, resulting in actual costs being higher than expected.
  8. There was no budget set for pest control at block level, but it had 4 unforeseen pest control visits throughout the year.
On 23 March 2022 the landlord informed all residents of the resident’s block that, following a review of service charges, an adjustment had been applied to their accounts.
On 24 April 2022 the resident contacted the landlord regarding its detailed list of costs. He noted that he and other residents had queried several items on the list, and that it had subsequently revised its accounts and reimbursed residents where costs had been charged incorrectly. He maintained that residents should have been consulted before the landlord decided to proceed with the Sky TV installation, and that the costs for lift repairs were unacceptably large. He said that he believed its management of the lifts should be reviewed. He concluded that he could not accept its offer of resolution to his complaint, and that he would instead refer his complaint to this Service.
On 25 April 2022 the landlord replied to the resident’s email, saying it was sorry that he did not feel the matters were resolved and offering a meeting to discuss them. It also suggested that he considered contacting the First-tier Tribunal (Property Chamber). The resident later accepted the landlord’s offer of a meeting, and this took place on 27 May 2022 (with another affected resident also in attendance). The Ombudsman has seen both the landlord’s contemporaneous record of this meeting, and a record produced by the resident which he sent to the landlord on 31 May 2022. On 12 June 2022 the resident contacted the landlord to say that he had not yet received copies of invoices relating to lift repairs in the block, or a review of the lift maintenance log since the start of the development, which he understood to be actions arising from the meeting.
The Ombudsman understands that the resident has since made a further complaint to the landlord. He has been advised that he may refer his more recent complaint to this Service for investigation if he is dissatisfied with the landlord’s response.

Assessment and findings

Request for information about actual service charges for 2020-21

In the Ombudsman’s opinion, the landlord responded promptly and with an appropriate level of detail to the resident’s initial enquiry about his service charge on 15 September 2021. It is unfortunate that the email address used was incorrect. Since the incorrect email address was used repeatedly, it is reasonable to conclude that this was an isolated human error when updating the resident’s contact details on the landlord’s system, resulting in multiple communications being sent to the wrong address. Presumably the emails sent to the incorrect address did not fail to send, and no reply was received from any unintended recipient, which meant that the landlord was unaware of the error for several weeks. While double-checking correct contact information is good practice, the error was a simple and understandable one, and a proportionate approach is required.
When the resident contacted the landlord for a second time on 7 October 2021, the landlord missed an opportunity to investigate and potentially identify the cause of the email issue. However, it had no reason to suspect that the contact details held on its system were inaccurate, and took appropriate action by re-sending the information it had sent previously.
The level of detail in the landlord’s communications regarding service charge items was not addressed in the landlord’s stage 1 complaint response, but at stage 2 it agreed that its responses had been inadequate. While the Ombudsman accepts the landlord’s assessment of its own responses, it is possible that it was assessing the responses in light of the resident’s request for more detailed information on 12 December 2021, whereas the initial information was provided in response to a relatively brief and straightforward query in September/October 2021. It is positive that, in view of the landlord’s conclusion that the information was insufficient, it arranged for a more detailed breakdown to be provided. Though this was delayed at least twice, plausible explanations were given and the overall period of delay was only 2 working days. The 10-page document that was ultimately provided – though it contained some concerning information about unbudgeted and incorrectly charged items – was clearly laid out and included a useful level of detail.
Taking the full circumstances into account, a finding of service failure has been made in relation to the landlord’s handling of the resident’s request for information about service charges. This is because of the email address error, delay in rectifying it, inadequacy admitted by the landlord, and further slight delays in providing more detailed information. The Ombudsman appreciates that the resident has expressed additional concerns relating to suspected errors in calculating charges and whether he should have been charged for some items; while his distress and frustration as a result of these concerns is not underestimated, the amount and composition of the service charge regrettably falls outside the scope of this investigation.

Complaint handling

When the resident complained to the landlord, it acted in accordance with its policy by contacting him by phone and acknowledging his complaint within 2 working days. It was appropriate for it to confirm its understanding of his complaint and advise when it intended to respond. However, when it became aware that it would be unable to respond within its expected timeframe of 10 working days, it should have informed the resident of this and provided an explanation along with a revised target date. Though the eventual response time of 26 working days was not excessive and did not cause significant additional detriment to the resident, keeping him updated would have provided reassurance that it was dealing with his complaint and working to improve its communication. This was particularly important given the communication issues that gave rise to the complaint.
At the time of issuing its stage 1 response, the landlord had not identified the typo in the resident’s email address (or, if it had, it did not refer to this). It is therefore unclear why it upheld the stage 1 complaint, as it believed the resident had received responses to his emails of 15 September 2021 and 7 October 2021 within its target timeframe of 5 working days. The Ombudsman has not had sight of any correspondence between the landlord and resident relating to a commitment to provide a more detailed breakdown of the service charge by 29 October 2021; however, if the landlord had made this commitment, it would have been good practice for it to follow up with the relevant team as part of its complaint response and confirm whether the information had been provided. Its assumption that it had done what it said it would, together with its reference to closing the complaint “on satisfactory completion of the promised works”, made the response feel generic and unsympathetic to the resident’s concerns. While its introduction of a new ‘hub’ team to manage queries was positive, this was incidental to the complaint and unrelated to the resident’s unanswered correspondence.
The resident’s email dated 12 December 2021 stated both that he was unhappy with the landlord’s response to his complaint, and that he wished the landlord to treat his email as a (potentially new) complaint. In the Ombudsman’s opinion, the landlord was right to escalate the existing complaint to stage 2, and to treat the resident’s further requests as a service request rather than a new complaint. For clarity, it should have explained its decision making to the resident, so that he knew which matters would be addressed in the stage 2 complaint response. It should also have acknowledged the escalation request and provided an anticipated response date. Since it had apparently decided that the complaint was not suitable for a panel review, it would have been helpful for it to confirm and set out its reasoning for this too.
The stage 2 response was issued 24 working days after the resident’s escalation request, and 15 working days after the landlord decided how to address the various issues raised. Had it updated the resident regarding its intentions on 23 December 2021, and provided a target response date which it subsequently kept to, the resident’s feeling of being disregarded may have been avoided or reduced. Since the landlord’s complaints policy at the time did not set out a clear timeframe for stage 2 responses (where there was no panel review), and the actual response time was over a month due to the Christmas period, good communication was particularly key.
The stage 2 response evidenced a more thorough review of the case than had been carried out at stage 1. This had led the email address error to be identified, although it was misleading of the landlord to portray this as a failure to update its records as opposed to a failure to enter accurate information into its system. There was again a sense of incompleteness with some aspects of the response: in the interests of rebuilding the resident’s confidence, it would have been preferable for the landlord to state conclusively that the email address had been corrected, instead of merely asking for it to be corrected. Nevertheless, it offered an apt apology, took reasonable steps to ensure provision of more detailed service charge information, and exercised appropriate discretion in waiving its usual fee for providing copy invoices.
An overall finding of service failure has been made in relation to complaint handling, as while the landlord did some things well, it delayed in responding to the complaint at both stages, did not keep the resident adequately updated, did not always satisfy itself that remedial actions had been completed, and did not acknowledge or offer redress for its complaint handling failures. Its offer of £35 in compensation, though consistent with the award set out in its matrix for ‘time and trouble’ (low/medium impact), was disproportionately low and no breakdown or calculation was provided.
The Ombudsman notes that the landlord’s website now clearly states it will acknowledge all online/email enquiries within 1 working day, respond to complaints within 10 working days, and respond to service charge queries within 30 working days. Because of this, no order has been made in relation to a policy/procedure review.

Determination (decision)

In accordance with paragraph 42 of the Scheme, the following complaint is outside the Ombudsman’s jurisdiction:
1. The landlord’s handling of the resident’s concerns about the amount he was being charged, and the consultation process for non-essential services.
In accordance with paragraph 52 of the Scheme, there was:
1. service failure by the landlord in its handling of the resident’s request for information about the actual service charges for 2020-21;
2. service failure by the landlord in its handling of the resident’s complaint.

Reasons

The landlord’s handling of the resident’s concerns about the amount he was being charged, and the consultation process for non-essential services, is outside the Ombudsman’s jurisdiction.
The landlord repeatedly used an incorrect email address when responding to the resident’s initial enquiries about service charges, and delayed in rectifying this error. It accepted that its original response to the resident’s enquiry was inadequate. It then delayed further in providing a more detailed response.
The landlord delayed in responding to the resident’s stage 1 and 2 complaints and did not update him regarding its anticipated response date. Its responses were at times unsympathetic, did not demonstrate a full understanding of his circumstances and concerns, and did not always confirm that actions had been completed. Its offer of compensation was low and did not reflect its complaint handling failures.

Orders and recommendations

Orders

The landlord is ordered to do the following within 4 weeks of the date of this report:
1. Reiterate its apology to the resident for its error regarding his email address and delays in responding to his requests and complaint.
2. Pay the resident £200, comprising:
  1. £100 for its communication issues and delays in responding to his request for information about the service charges;
  2. £100 for its complaint handling service failure.

If the landlord has already paid the resident the £35 offered in its stage 1 and 2 complaint responses, this should be deducted from the amount above, meaning that the difference of £165 is now due.

Provide evidence of compliance with the above to this Service.