Dudley Metropolitan Borough Council (202015427)

REPORT

COMPLAINT 202015427

Dudley Metropolitan Borough Council

16 December 2021

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

1. The complaint is about the landlord’s response to the resident’s reports about:

a)     His requests for additional information in relation to major works.

b)     The consultation process for the major works.

c)     The level of the service charge.

d)     The time taken to add the actual major works costs to the major works fund.

Jurisdiction

2. 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 there are sometimes reasons why a complaint will not be investigated.
3. After carefully considering all the evidence, in accordance with paragraphs 39 (g) and (i) of the Housing Ombudsman Scheme, the complaints about the level of service charge, the consultation process and the time taken for the major works costs to be added to the major works fund are outside of the Ombudsman’s jurisdiction.
4. Paragraph 39 (i) of the Scheme states that the Ombudsman will not consider complaints which, in his opinion ‘concern the level of rent or service charge or the amount of the rent or service charge increase’.
5. Paragraph 39 (i) of the Scheme states that the Ombudsman will not investigate complaints which, in the Ombudsman’s opinion ‘concern matters where the Ombudsman considers it quicker, fairer, more reasonable or more effective to seek a remedy through the courts, a designated person, other tribunal or procedure’.
6. In his correspondence with the Ombudsman, the resident has confirmed that his preferred outcome is for the landlord to remove the charges in their entirety. Such a decision is not within the Ombudsman’s remit. The First Tier Tribunal (Property Chamber) has the authority to make findings as to the reasonableness of charges, whether the landlord has followed an appropriate consultation process and whether costs were charged in an appropriate manner.
7. In addition to the paragraphs of the Scheme detailed above, it is also relevant that the Ombudsman will not normally consider complaints that were not brought to his attention within a ‘reasonable period’ of the matters that gave rise to the complaint (paragraph 39 (e) of the Scheme). Given that the consultation process for the major works took place in 2017, this presents as an additional factor for ruling this aspect of the complaint outside the Ombudsman’s jurisdiction.
8. The resident has also confirmed that, if the costs are to be charged to him, then he desires that the landlord provide him with the specific information he has requested about the works. The landlord’s response to this aspect of the complaint is within the Ombudsman’s jurisdiction and has been considered below.

Background and summary of events

9. The resident is a leaseholder of the landlord at the property. The lease agreement was not available to the investigation, however it is not disputed that the landlord has a repair/maintenance responsibility to the structure and exterior of the building, plus common areas, for which the resident is liable to pay for proportionate and reasonably incurred costs of any works completed. This is reflected in the landlord’s guidance document for resident leaseholders.
10. This guidance document also confirms that it will consult for works that are estimated to cost more than £250 per leaseholder, with costs payable to be debited from the major works fund after the end of the financial year in which they were completed (normally in April).
11. The landlord sent the resident, on 15 May 2017, a notice of intent under its section 20 consultation obligations regarding proposed major works. This included works to rebuild a wall in a communal area and provided an estimated overall charge of £7,827.20 for the works (£1,956.80 resident contribution). The resident provided comments during the consultation period, in which he objected to the works ‘on the ground of cost and necessity’; the landlord responded to the resident on 13 July 2017, confirming that no works had taken place to the wall for 10 years and providing a breakdown of the works to be completed. One of the issues subsequently raised as part of his complaint was the resident’s dissatisfaction with this response as the breakdown of works consisted of a brief list of the works to be completed.
12. The landlord proceeded with the major works; in the process of which additional works were identified as foundations beneath the wall were found to be no longer suitable. The works completed in 2017, but the landlord has confirmed that it did not add the actual costs to the major works fund until June 2019, when it considered the works as ‘financially complete’.
13. The landlord’s internal email correspondence confirms that, on 28 July 2020, the resident called about the major works charges, questioning the fact that the costs had increased to £9,154.64 (resident contribution £2,288.66). The landlord investigated the resident’s concerns and responded to him on 6 August 2020. It provided the consultation information from 2017 (including the resident’s comments and its response as listed above). The landlord also said it had passed his question over the increase in costs to the relevant department, though there is no evidence of a further response to him in this regard.
14. On 11 November 2020, the landlord issued the resident with an invoice for an underpayment of £1,753.47 in relation to the 2019/20 major repairs fund. The invoice referred the resident to the major repairs statement it had sent to him previously in June 2020 (not available to this investigation).
15. The resident complained to the landlord on 3 December 2020. He said that he had asked for a breakdown of the works on numerous occasions following the 2017 consultation but had never received a satisfactory response. He said that the costs were ‘extremely high for the works that were carried out’ and that he had requested a full scope of works, together with an explanation as to why the wall had needed replacement. The resident said that he had received a request for £2,288.66 last month (in line with the revised figure listed above), though the landlord had now reverted back to the original cost of £7,827.20.
16. The resident said that the invoice had caused him ‘great stress and anxiety’, and that his calls to the landlord had not been productive as he had been passed between departments. He also asked how the landlord could charge for works that were completed 4 years ago and that, if it could not remove the charges completely, that it provide him with a full breakdown of costs, including the cost of each item of works, timescales for each item (including man hours) and all supporting evidence (including QA checks and landlord sign off confirmation).
17. The landlord acknowledged the complaint on 10 December 2020. On the same date, the resident emailed, reiterating that he would like the ‘historical’ costs to be removed, or for the landlord to at least provide him with the detailed breakdown of costs and supporting evidence he had outlined in his complaint.
18. Internal landlord email correspondence, also dated 10 December 2020, confirmed that the work was ‘practically completed’ on 19 September 2017, although it was not ‘financially completed’ until 31 May 2019, the point at which it had received all invoices for materials etc. It then advised the resident, in May/June 2019, that the charge had been taken from the major repair fund, with the end of year statement (April 2020) confirming that the repairs had been added to the 2019/20 financial year accounts.
19. Further internal landlord correspondence, also dated 10 December 2020, said that it had never confirmed that the costs would be reduced to the original amount, though it had made clear that the original figure was an estimate and the May 2019 notification had referred to the actual charge (£9,154.64). The landlord’s emails also referred to its obligations under section 20b of the Landlord and Tenant Act 1985, stating that it was in compliance with the timescales required of the Act as it had acted in a timely manner following the point at which it became financially liable (31 May 2019).
20. The landlord sent its stage one response on 18 December 2020. It confirmed the consultation process for the major works in 2017, with an estimated overall cost at that time of £7,827.20. It also confirmed that it had advised the resident, in June 2019, that the major repair fund had been charged £9,154.64 in relation to these works, with an end of year statement sent in April 2020 reflecting this charge. The landlord confirmed that any queries in relation to the charge would have been required within 30 days of the receipt of the charge, so no later than July 2019.
21. The landlord provided an ‘elemental breakdown’ of the final costings and confirmed the reasons for variance with the original estimate, including the fact that the existing wall had been thicker than anticipated, the need to renew the foundations, the need to use additional brickwork, alternative materials used for the tarmac and the addition of two galvanised steel posts. The landlord noted that the resident had not questioned the workmanship and assumed therefore that he considered the work to have been completed to a reasonable standard.
22. The landlord confirmed that its original section 20 notice had been an estimate of costs and that costs can increase ‘in line with additional materials and labour’. It said that it retained no records of the labour time spent on the works and that it did not charge on that basis, though it offered reassurance that works were inspected whilst in progress and on completion by suitably qualified staff. The landlord also said that it had identified no evidence of the resident having been offered any concession in relation to the costs, as his complaint had alluded to, but that it would review this if the resident was able to provide such evidence.
23. The landlord confirmed that it would not be removing the debt and referred to the repayment options it had available for leaseholders. It confirmed that it was hopeful that it could make an arrangement to pay that would reduce the resident’s immediate financial worries and help to alleviate the stress and anxiety he was experiencing.
24. The resident requested escalation of his complaint on 6 January 2021. He acknowledged that the landlord had consulted at the time of the original works, though the response he had received had been ‘very vague’ and that there must have been an initial survey given the extent of the proposed works. He said that he was ‘surprised’ by the landlord saying that the works had been overseen by a supervisor as the tarmac work had been reinstated using existing mortar, which would break down and require repairs. He said that he understood that section 20 notices can be estimates, with costs increasing, but that common sense dictated that such an increase would be by no more than 10%, or else further consultation would be required.
25. The resident asked why the initial survey was ‘so far out of the actual job’ and whether it had been completed by a competent person. He asked why leaseholders had not been notified when it became clear that there was a lot more work to do than had originally been anticipated and asked why the costs had only been added to the major works fund 4 years later
26. The landlord sent its final response on 15 February 2021. It responded to the specific questions raised by the resident in his escalation request. It confirmed that a suitably qualified member of its maintenance team had completed the initial survey for the work in 2017. It said that the additional works (foundations and a further section of retaining wall requiring works) had been identified only upon commencement of the works and reiterated that the original costs were estimated, with the possibility of their going up or down depending on how the works actually progressed.
27. The landlord referred back to its stage one response in relation to the resident’s question about the delay in charging the major works fund, confirming that it had charged the fund in June 2019 and did not receive any queries within 30 days, as required. The landlord also confirmed that legislation did not require a further section 20 consultation period if the costs of works were identified to have increased, though it acknowledged that it was ‘best practice’ to notify leaseholders where this was identified. It apologised for not having done so on this occasion.
28. The resident brought his complaint to the Ombudsman on 4 March 2021. He reiterated that he wanted the costs to be removed and if not, for the detailed breakdown of costs, together with supporting evidence, to be provided. The Ombudsman discussed the case with both parties, resulting in an offer from the landlord to reduce the costs to the original charge of £7,827.20 in order to resolve the complaint. The resident was not satisfied with this resolution however as he believed that the original charge was around £2,000. The resident said that he would be satisfied to pay the full amount charged if the landlord could provide proof of why the wall required replacement and a breakdown of works including labour and material costs.
29. On 30 July 2021, the landlord explained in an email to the Ombudsman that the inspecting officer who had completed the original survey was no longer in the role and the only information it retained in relation to the inspection was a file note stating ‘inspect retaining wall and rear steps to drying right hand side of block frost blown bricks’. The landlord provided a spreadsheet detailing the works originally consulted in 2017 and the final billed amount, with the figures matching those detailed above (£7,827.20 and £9,154.64 respectively).
30. The Ombudsman confirmed, on 5 August 2021, that the case would progress to a formal investigation. It was also confirmed that it was unlikely that this investigation would include consideration of the original section 20 consultation, nor the reasons why the landlord did not add the costs to the major works fund until 4 years after the works and the reasonableness of the costs. It was explained that such issues would likely be more appropriate for the First Tier Tribunal (Property Chamber) and that the Ombudsman’s more limited investigation would likely focus on the landlord’s response to the resident’s request for additional information.

Assessment and findings

31. In response to the resident’s requests for additional information, the landlord provided its records of the consultation process from 2017. It has confirmed however, that it has not retained any in depth records of the original survey that it completed prior to these works (beyond a casefile note). As such, it was not able to provide the resident with the detailed reasoning for the works having to take place in the first place.
32. The landlord confirmed to the resident that it was not obliged to carry out a further consultation process when it identified that additional (and more costly) works would be required. It nonetheless acknowledged that it would have been good practice to notify the resident of this development, for which it apologised. In the Ombudsman’s experience, it is common for the costs for major works to vary from the original estimate, as was the case in this instance. New issues can be identified and materials/labour may end up costing more than was originally anticipated. Further consultation would have required additional time, with the consequence of ongoing works being delayed; this would have resulted in additional costs, plus additional inconvenience for leaseholders. It was appropriate that the landlord identified its failure to notify the resident about the changes however as, irrespective of its legal obligations, it was essential to keep those most affected by the change updated.
33. The Ombudsman’s remit does not extend to assessing the landlord’s position, from a legal perspective or in terms of a potential breach of the lease, regarding the time taken to add the major works costs to the major works fund. However, for the purposes of the complaint raised by the resident, it was satisfactory that the landlord at least clarified its position. It confirmed that the works completed in September 2017 but did not become ‘financially complete’ until May/June 2019, at which point it added the costs to the major works fund. It also confirmed that, in its considered opinion, it had acted in accordance with its legal obligations here. Should the resident opt to pursue his case with the tribunal, the landlord’s position, with respect to the covenants contained within the lease and the landlord’s legal obligations could be considered in more depth.
34. It is clear that the resident was dissatisfied with the detail contained in the landlord’s responses to his requests for additional information. This dated back to the response he received in 2017 following his comments at the consultation stage, through to the landlord’s responses during the complaints process. The Ombudsman expects landlords to be able to provide a comprehensive narrative explaining any charges, including their calculation methods which reflect the charges being made.
35. In this case, the landlord’s response in 2017 did not provide a great level of detail, although it did list the separate jobs that would be completed. The landlord’s stage one response then provided a further ‘elemental breakdown’, including the final costs for each element and reasoning for the changes to the original estimates it had provided at the consultation stage. It also confirmed that it would not be able to provide specific information that had been requested, such as costings for labour as it did not charge in such a manner. Whilst it is clear that the resident remained dissatisfied with the level of information provided, he had been given an explanation of the works, together with costings for each of the various elements of these works. It would have been helpful for the landlord to back these figures up with actual invoices from suppliers etc however, together with any site information from when the works took place. The absence of this information from the landlord’s responses to the resident indicates a potential record keeping issue here.
36. The Ombudsman attempted to negotiate a mediated settlement between the parties and, during this process, it was identified that the landlord staff member that had completed the original survey was no longer employed, with little detail remaining on record from this survey. The landlord also provided some information regarding the works – a comparison of costs between the original estimates and the actual works – though these reflected the information already provided to the resident.
37. The landlord was satisfied to offer a settlement to the case that would see the charges to the resident reduced to the original estimate figure of £7,827.20, rather than the higher figure that had resulted following the additional works. The resident was not satisfied to accept this offer as he understood the charge to have been much lower originally and still remained dissatisfied with the level of information that had been provided. It is not clear if it was explained to the resident at this stage that he would only be liable for a proportion of the overall cost. The landlord’s offer to reduce the costs to the original estimate would, presumably, entail that the resident was due to pay the same proportion (£1,956.80) originally estimated.
38. The landlord’s offer effectively reduced the resident’s financial liability from £2,288.66 down to this £1,956.80 figure, a saving of £331.86. In the Ombudsman’s opinion, this offer amounted to a reasonable offer of redress. Whilst the Ombudsman is unable to comment upon the reasonableness of the remaining charges, or the charging/consultation processes that took place (as these would be matters better decided by the First Tier Tribunal), it has been identified through the complaints process that there were record keeping concerns with the landlord’s service delivery, together with communication issues and a lack of clarity as to why the works had been required in the first place. Given these failures, the landlord’s apology and offer of compensation (in the form of a reduction in the charges to the resident) is considered a reasonable and proportionate response.

Determination (decision)

39. In accordance with paragraph 55c of the Housing Ombudsman Scheme, the landlord offered, following Ombudsman intervention, a reasonable remedy for the service failures identified with its response to the resident’s request for additional information.
40. In accordance with paragraph 39g of the Scheme, the complaint about the 2017 consultation process is outside the Ombudsman’s jurisdiction.
41. In accordance with paragraph 39i of the Scheme, the complaint about the level of the service charge is outside the Ombudsman’s jurisdiction.
42. In accordance with paragraph 39g of the Scheme, the complaint about the time taken to add the costs of works to the major works fund is outside the Ombudsman’s jurisdiction.

Reasons

43. The landlord acknowledged that it had not notified leaseholders when it became apparent that the major works would result in additional works and costs, for which it apologised. It also confirmed that it had limited information available regarding the requirement to carry out the works in the first place. Whilst the resident was dissatisfied with the extent to which the landlord provided supporting information as to the costs incurred during these works, the Ombudsman’s view is that its offer of compensation, by way of reducing the charges, amounted to reasonable and proportionate redress for the acknowledged failures together with any lack of detail regarding these costs.

Orders and recommendations

Recommendations

44. If it has not already done so, the landlord to reduce the charges to the resident in accordance with its offer to do so at the mediation stage of the Ombudsman’s dispute resolution process.
45. The landlord to review the case to identify where it can improve communication and record keeping with respect to major works carried out at leasehold properties, in particular ensuring that residents are notified of significant changes to plans and that supporting documents are retained for an appropriate length of time.