A2Dominion Housing Group Limited (202232693)

REPORT

COMPLAINT 202232693

A2Dominion Housing Group Limited

30 August 2024

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:
1. The resident’s queries about service charges.
2. The resident’s complaint.

Background

The resident was the shared ownership leaseholder of the property from 13 December 2013 to 10 May 2024. The property is a one-bedroom second floor flat. There were no vulnerabilities recorded for the household.
On 5 July 2021 an accountant’s report of factual findings regarding service charges was completed for the managing agents (managing agent A) of the property. This was to be issued with the service charge accounts. It showed a detailed income and expenditure account for the year up to 29 February 2020 and also contained a breakdown of actual and estimated budgets for 2019 and 2020. The balance sheet showed that there was a deficit in 2019 and 2020. It noted that these should be recovered from the affected leaseholders in accordance with the terms contained within their leasehold agreements.
On 30 September 2021 the landlord sent the resident a formal demand for £311.45. The demand was for an additional service charge for the property for the period 1 April 2020 to 31 March 2021. It provided a breakdown of the charge under 4 headings. The main reason for the increase was an “external agents charge”.
On 4 October 2021 the resident asked the landlord for a full breakdown of actual service charges relating to the £311.45 increase.
On 26 October 2021 the landlord emailed the resident. It attached an invoice it had received from managing agent A for the property for financial year 2020-2021 but said that it was unable “to find an actual budget” on its system to match it. It did, however, send the resident some spreadsheets which it said “may be the draft budget calculations” from managing agent A. It said that it usually received invoices for service charges from it in September. However, managing agent A had not issued these until July 2021 so any “balancing charge” would form part of its 2021-2022 year end accounts. It added the resident would receive this in September 2022. It said that it would ask its managing agent team to locate the actual budget for 2020-2021 and the invoice for the year end account 2019-2020 so the resident would be aware of how much was outstanding.
The resident responded on 26 October 2021. He raised the following queries:
1. He was now concerned that another adjustment would be made for the service charge accounts for financial year 2019-2020.
2. He asked the landlord if he should pay the outstanding balance of £311.45 as the landlord was now investigating this.
3. The managing agent had also recently changed and the new managing agent (managing agent B) had promised residents a refund for a separate matter in September 2021. The resident asked the landlord when he would receive this refund.
The resident emailed the landlord again on 31 October 2021. He told it that he had received an email from managing agent B who told him that it had issued a refund to the landlord the previous week. He asked when the landlord would pass this refund onto the leaseholders.
The resident emailed the landlord again on 3, 14 and 21 November 2021. He asked it if it was now processing refunds to leaseholders. He said that he had not received a response from the landlord since 26 October 2021.
The landlord emailed the resident on 24 November 2021. It said that:
1. It had asked managing agent A to provide invoices for 2019-2020 and would contact the resident again once it had received these.
2. That he should continue to pay service charges in accordance with the terms in his lease.
3. It had attached a copy of the budget for 2020-2021 as requested.
4. That the recent refund from managing agent B would be refunded to shared ownership leaseholders at the end of the year. However, residents who owned100% of their property would receive refunds straight away because they dealt directly with the managing agent.
The resident responded and also complained on 24 November 2021. He said that the level of service he had received from the landlord was “abominable” with unacceptable delays in responses to queries. He said that he had first emailed to ask for a breakdown of the extra charge on 4 October 2021 but had still not received this. He said that he had still not received the actual costs for 2020-2021 to explain the increase which was promised on 26 October 2021. He also said that it was unacceptable that the landlord had received a refund from managing agent B but had not transferred this to its leaseholders when other residents had received it.
The landlord acknowledged receipt of the complaint on 25 November 2021. It clarified the complaint and said that it intended to provide a response within 20 working days.
The resident chased a response to the complaint on 2, 5, and 11 January 2022; 13 and 14 February 2022; 7 and 21 March 2022; 12 and 19 April 2022 and 26 May 2022. There is evidence that the landlord responded on 9 occasions. It said that it had a backlog but the complaint would be responded to.
The landlord issued a stage 1 complaint response on 6 July 2022. It said that it had reviewed the correspondence and noted that it was due to provide a breakdown of the actual service charge costs which had not yet been actioned. It apologised and said that it would send out a full breakdown by the end of July. It said that, as previously advised, residents that had staircased to full ownership dealt directly with the managing agent and therefore may receive refunds more quickly than the landlords’ customers. It said that the credit would be included in that year’s (April 2021-March 2022) accounts and issued in September. It apologised for the lack of communication and said that it had been reported to management. It offered £240 compensation for the delay in responding to the complaint and £100 for poor communication. A total of £340 compensation.
The resident called the landlord on 22 July 2022 and asked for the complaint to be escalated to stage 2 of the complaints process.
The resident emailed the landlord on 10 September 2022. He told it that he was “incredibly disappointed and frustrated” not to have received a response to the stage 2 complaint. The landlord responded on 12 September 2022, it apologised and said that the investigation was on-going. The resident chased the stage 2 response again on 20 September 2022
The landlord provided a stage 2 complaint response on 30 September 2022. It said that it noted that the resident was going to inform it if he was happy with the breakdown of the service charge and it was happy to work through any questions he had. It apologised that the refund had not yet been credited to his account and advised that this was because it had not received the full amount that it had expected from managing agent B and it was currently liaising with them. It said that it had asked for processes to be reviewed regarding this and that the review should be complete by the end of October. It said that the refund would also be credited back to the resident by the end of October. It agreed with the stage 1 complaint response that its communications were not up to its usual standards. It offered a further £35 in compensation for the delayed stage 2 complaint response.
The resident responded on 2 October 2022. He said that he had not received a breakdown of the actual service charge yet, despite the landlord promising to supply it by the end of July 2021. He therefore did not think that the complaint had been resolved.

Assessment and findings

The landlord’s handling of the resident’s queries about service charges.

The landlord’s service charge policy states that it has “developed clear, transparent and accurate service charges that reflect the costs of managing the services provided on each estate”.
The policy also confirms that all service charge payers will receive a detailed summary of estimated service charge costs, with service charge actuals to be issued to leaseholders by the end of November of the following financial year. It says that 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 resident first asked for a breakdown of actual service charge expenditure on 4 October 2021. This was because he had received a demand for an extra payment for this period without a full explanation and breakdown of the reasons for the increase. The landlord initially responded within a reasonable timeframe and in accordance with its target but could not answer the resident’s query and promised to find out information. This response was confusing and led to the resident asking further questions. He therefore sent a further 5 emails asking for clarification and chasing the promised information. This Service has seen no evidence that the landlord responded to these emails at all. This poor communication cost the resident considerable time and trouble. It also led to frustration due to the lack of response for over a month which also caused him distress.
The Housing Ombudsman’s spotlight report on leasehold, shared ownership and new builds recommended that landlords provide a comprehensive narrative explaining the charges and calculation methods. It further states that “this narrative should accurately reflect the charges that are being made and should accompany the invoice providing greater transparency for residents. Information on service provision and charges should be made available to residents upon request.”
The landlord failed to provide full details regarding the reason for the increase in charges with the invoice for £311.45. This failure meant that the resident had to take time and trouble to ask what the charge was for.
The landlord’s service charge policy also states that “deficits arising from year-end accounts will be charged and collected from leaseholders in the year in which they are calculated”. Therefore, it is likely that the additional £311.45 charge related to the invoice received with the accountant’s report which provided a breakdown of the deficits. However, the landlord was unable to fully explain what the extra charge was for. It did not therefore act in accordance with its policy to provide “clear, accurate and transparent” service charges. This caused the resident further distress and led to a breakdown in the relationship between the landlord and leaseholder.
The landlord’s service charge policy states that surpluses will be credited to leaseholders’ accounts in line with the terms of the lease. However, the resident’s lease did not contain any detail regarding how this would be dealt with.
Managing agent B provided a refund to the landlord during the 2021-2022 financial year. The landlord initially said that it would pass this refund onto shared owners at the end of that financial year and gave a reasonable explanation why other householders may have received the refund sooner. However, after the end of the financial year had passed it said that the refund would be issued in September 2022 and it eventually provided the refund in October 2022. It is reasonable that it waited until the end of the financial year before issuing the refund. However, the reason for the further delay was unclear and its communication in relation to it was poor.
Due to long delays in communication and lack of clarity in the landlord’s responses there was maladministration in the landlord’s handling of the resident’s queries about service charges.

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

The landlord’s complaints policy said that it would issue a response within 10 working days of a stage 1 complaint being logged or within 20 working days if agreed with the customer. It said that it would issue a response to stage 2 complaints within 20 working days of escalation or within 30 working days if agreed with the customer.
The landlord took 152 working days to respond to the stage 1 complaint and a further 49 working days to respond to the stage 2 complaint. This was significant departure from the timescales set out in the landlord’s policy and the Ombudsman’s Complaint Handling Code (the Code). The evidence does not demonstrate that it agreed an extension with the resident either – a further departure from the Code. This lengthy and unacceptable delay was the cause of significant inconvenience to the resident because he chased the response on numerous occasions. It also caused him distress because he was waiting for answers to his queries and did not know when he would receive them. It also meant that there was a delay in his access to an investigation by this Service.
Despite taking over 7 months to respond to the stage 1 complaint the landlord failed to give a breakdown of the extra service charge or to give a reason why it could not provide it. It promised to provide it again by the end of the month but did not do so. The landlord did not use the complaints process to resolve the resident’s query and then when it offered a remedy did not follow this through. This meant that the resident was still dissatisfied.
The Code also states that the complaint handler must “consider all information and evidence carefully”.
In its stage 2 complaint response the landlord said that the resident had now received a copy of the breakdown of actual service charges when he had not. This error and failure to follow the code frustrated the resident further because he had been waiting for this information for many months. It cost him further time and trouble because he had to ask for the information again.
Due to the failings identified there has been maladministration in the landlord’s handling of the resident’s complaint.

Determination

In accordance with paragraph 52 of the Scheme, there was maladministration in the landlord’s handling of the resident’s queries about service charges.
In accordance with paragraph 52 of the Scheme, there was maladministration in the landlord’s handling of the resident’s complaint.

Orders

Within 4 weeks of the date of this report the landlord must:
1. Pay the resident directly a total of £600 in compensation. A breakdown of this is provided below. Any compensation already paid should be deducted from this amount.
  1. £300 for the distress and inconvenience caused by the failure to respond to his service charge query in an appropriate and timely manner.
  2. £300 for the distress and inconvenience caused by the complaint handling failures identified by this investigation.
2. Apologise in writing to the resident for the delays and errors made in its handling of this case.
Within 8 weeks of the date of this report, the landlord should provide the resident with a copy of the review of processes promised in the stage 2 complaint response.