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Guinness Housing Association Limited (202121926)

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REPORT

COMPLAINT 202121926

Guinness Housing Association Limited

27 June 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

  1. This complaint is about the landlord’s handling of:
    1. The resident’s rent and service charge payments.
    2. The associated complaint.

Background

  1. The resident is a shared ownership leaseholder and the landlord is the freeholder for her property which is a flat in a communal building.
  2. On 18 February 2021, the resident received a letter from the landlord stating that the new charges for her property dating 1 April 2021 to 31 March 2022 would be £502.51 per week. This was later corrected to £502.51 per month. On 1 April 2021 the resident began making payments of £503.
  3. On 4 July 2021, the resident contacted the landlord to discuss her account and was informed that she was in arrears of £152.03. The resident attempted to make a complaint on this day as she had not been informed of the arrears and the landlord had not contacted her to advise that she was inadvertently underpaying over several months.
  4. On 3 August 2021, the resident complained to the landlord. The resident stated that the landlord had given incorrect information to her regarding the payment she should have been making from 1 April 2021, which had led her to having arrears on her account. The resident felt that the landlord had failed in its communication with her regarding the charges and, therefore, she wanted the arrears to be ‘written off’.
  5. The landlord issued its stage complaint response on 24 August 2021. It stated that the letter sent on 18 February 2021, containing the resident’s new payment amount, was incorrect. When the resident contacted the landlord on 4 July 2021, it informed her that she was in arrears of £152.03. However, it stated that it did not contact the resident sooner, as her account was previously in credit meaning that it did not go into arrears until May 2021, so it was not flagged on the landlord’s system until May 2021. The landlord stated it could not ‘write off’ the arrears as the resident is responsible for rent and service charge payments, but it would set up an affordable repayment plan to clear the balance.
  6. The resident remained dissatisfied with this response and attempted to complain to the landlord again on 4 July 2021 and 16 July 2021. The landlord apologised for not dealing with the issues at this stage, during the first point of contact. The landlord offered £50 compensation to the resident. This comprised of £25 for stress and inconvenience, and £25 for poor communication.
  7. On 19 October 2021, the landlord issued its stage two complaint response. It upheld its earlier response and stated that the findings were accurate. However, it increased its compensation offer to £75, with an additional £25 offered for the time taken to deal with the complaint.
  8. The resident referred this matter to this Service on 31 December 2021. The resident felt that the £75 compensation offered was not acceptable. To resolve the complaint the resident is seeking for the arrears to be ‘written off’ as the landlord made the error. She also wants compensation for the mental anguish the situation has caused her.
  9. In January 2022, the resident advised the Ombudsman that she had seen an unusual payment on November 2021 in relation to her account and had not received an explanation from the landlord as to what the payment referred to.
  10. The Ombudsman contacted the landlord on 14 June 2022 requesting further information and clarification on the payments. In its response, the landlord stated that the resident should have been paying £502.51 per month for the period 1 April 2021 to 31 March 2022.

Assessment and findings

Policies and Procedures

  1. The landlord’s complaint handling policy states that:
    1. At stage one of the process, a response will be provided within ten working days. If an extension is necessary, the landlord will not exceed a further ten working days, and an explanation of the delay will be provided to the resident.
    2. At stage two, a response will be provided within twenty working days. If an extension is necessary, it will not exceed a further ten working days, and an explanation will be provided to the resident for the delay.

Scope of investigation

  1. It is important to be aware that it is outside the role of The Ombudsman to review complaints about the increase of service charges and determine whether service charges are reasonable or payable. However, we can review complaints that relate to how information about service charges was communicated by the landlord. This is in line with paragraph 39(g) of the Housing Ombudsman Scheme, which states that the Ombudsman will not consider complaints that concern the level of service charge or rent or the increase of service charge or rent. Complaints that relate to the level, reasonableness, or liability to pay rent or variable service charges are within the jurisdiction of the First-Tier Tribunal (Property Chamber) and the resident would be advised to seek free and independent legal advice from the Leasehold Advisory Service (LEASE) https://www.leaseadvice.org/) in relation to how to proceed with a case if she wishes to pursue this aspect of his complaint further.
  2. There is no evidence that the resident’s concern about the unusual payment in November 2021 has exhausted the landlord’s internal complaint procedure. As this is a separate issue to the complaint originally raised with the Service, this is not something that this Service can adjudicate on at this stage, as the landlord needs to be provided with the opportunity to investigate and respond to this issue through its complaints procedure before the Ombudsman becomes involved. The resident will need to contact the landlord and, if appropriate, raise or escalate a separate complaint if these issues are still outstanding and have not yet been resolved. The resident may be able to refer this new complaint to the Ombudsman if she remains dissatisfied once it has exhausted the landlord’s internal complaints process.

The resident’s rent and service charge payments.

  1. In this case, there has been poor communication regarding the resident’s payments and arrears, which has caused the resident avoidable distress and inconvenience.
  2. When a resident queries the amount of charges they are paying and believe them to be incorrect, the landlord should provide the resident with an explanation of the costs and the reason they have varied. The landlord did not explain to the resident why it had given the incorrect payment amount in its letter of April 2021, what the new charges consisted of and what the correct payment should have been. It remains unclear from the evidence provided to the Ombudsman where the additional charges have come from and what these charges cover; this has not been explained to the resident or this Service. The landlord stated this Service that the reason why the payment amount was not corrected sooner was due to an ‘incorrect estimate of the charges, which was not identified until the resident contacted’ it. This explanation was not provided to the resident during the landlord’s complaint process. The landlord has admitted that it has provided incorrect information to the resident, which has resulted in her paying an incorrect amount. It also remains unclear what amount the resident should have been paying and this was not provided to the resident at any stage of her complaint. The lack of explanation and communication represents a failing by the landlord.
  3. The landlord also seemingly has not fully understood the issues that the resident raised in her complaint. Upon requesting more information, this Service requested the correct amount that the resident should have been paying for the period from April 2021 to July 2021 when the arrears accrued. The landlord responded stating that the payments should have been £502.51, but this is incorrect. Upon reviewing the account, the payments should have been £556.54. The resident was also making payments of £503 to her account, which left her in arrears. If she should have been paying £502.51 per month as the landlord has told the Ombudsman, she would not have been in arrears. Therefore, the landlord had not fully understood the essence of the complaint and this has been demonstrated throughout the complaint handling procedure.
  4. The landlord also informed the resident that she would be liable for any rent arrears, which is why it could not ‘write off’ the arrears. Whilst this is typically acceptable and in line with the terms of the lease, the landlord should have realised that this was not a typical case. The landlord informed the resident of the wrong payment amount and therefore the resident did not have a chance to pay the correct amount. This is different from residents knowingly underpaying or missing payments. The landlord should have tailored its approach in consideration of the evidence provided and the error it made in providing the resident with the wrong payment amount.
  5. This Service also acknowledges the distress caused to the resident by the situation and the landlord’s poor communication. The resident in her communication stated that she began receiving letters and phone calls from the landlord regarding her arrears. From the evidence provided dating back to 2020, the resident had not gone into arrears with the landlord and had received no communication regarding arrears prior to 2021. Whilst generally, sending standard warning letters to residents in arrears would be acceptable,  in this case it was inappropriate as the resident had contacted the landlord to dispute the arrears and the arrears had occurred due to an error by the landlord. Sending warning letters to the resident would have inevitably caused her distress, as she received this communication through no fault of her own having previously maintained her account in credit. Therefore, whilst landlords should typically follow its policies, it also needs to be aware of exceptional cases where it may be necessary to take a different approach.
  6. It is also not clear at what stage the landlord would have contacted the resident to inform her of the arrears on her account. The landlord informed this Service that the resident’s account was in credit up until May 2021 and therefore it did not contact her at this time as its standard arrears contact would only be triggered when the account fell into arrears. However, the landlord did not contact the resident in May or June 2021 to inform her that the account was in arrears. Communication with the resident was only prompted in July 2021, due to the resident contacting the landlord to enquire about her rent account. Therefore, it remains unclear how much arrears the resident would have accumulated if she did not take proactive measure to contact the landlord.
  7. The landlord should pay £300 compensation to the resident in recognition of the inconvenience caused by its poor communication and in consideration that the resident went into arrears, due to no fault of her own. This compensation is in line with the Ombudsman’s Remedies guidance (published on our website). The guidance suggests that the Ombudsman may award between £250 to £700 for cases where the Ombudsman has found considerable service failure or maladministration by the landlord, but there may be no permanent impact on the resident. Examples could include:
    1. Misdirection – giving contradictory, inadequate or incorrect information about a complainant’s rights.
    2. A complainant repeatedly having to chase responses and seek correction of mistakes, necessitating unreasonable level of involvement by that complainant.

Complaint handling

  1. The resident attempted to raise a formal complaint on three separate occasions. The first being on 4 July 2021, the second being on 16 July 2021 and the third being on 3 August 2021. The landlord should have acknowledged and dealt with the complaint on 4 July 2021. It should not take multiple attempts for a complaint to be raised with the landlord. The landlord’s actions were not in line with its own complaints policy as referenced above or industry good practice.
  2. Upon acknowledging the complaint on 4 August 2021 the landlord responded fifteen working-days later, exceeding its policy of ten working days by five working days. Additionally, at stage two of the complaint process, the landlord responded thirty-seven working days after the escalation, exceeding its policy obligation of twenty working days, by an additional seventeen working days.
  3. The landlord’s complaints policy does state that, at both stages, it could exceed its response time by ten working days, but in line with its policy it would need to make the resident aware of the delay and provide an explanation. This did not occur and an explanation of the delay was not provided in either of the complaint responses. It is acknowledged that the landlord apologised for the delay and offered £25. However, this was not sufficient as there were significant delays overall, lack of acknowledgement of the delays and poor communication with the resident, which added to her distress and inconvenience.
  4. The landlord did not meaningfully engage with the resident’s complaint and did not provide detailed responses to the issues raised. The landlord did not address some of the concerns the resident was raising such as the incorrect payment amount being provided and why the payments were increased further. The incomplete responses from the landlord would have caused the resident further distress and inconvenience. The landlord’s responses were also not in line with the Ombudsman’s Complaint Handling Code (published on our website) which sets out guidance for landlords on how to address complaints. The Complaint Handling Code says that landlords should fully address all the key issues raised by residents in complaints.
  5. The landlord should pay the resident £200 compensation in recognition of the inconvenience caused by its poor complaint handling. This is in line with the Ombudsman’s remedies guidance, as set out above which suggests awards of £50 to £250 for cases where the Ombudsman has found that there has been service failure by the landlord but where the failure is not likely to have affected the overall outcome for the complainant. An example of this is repeated failure to meaningfully engage with the substance of the complaint, or failing to address all relevant aspects of complaint, leading to considerable delay in resolving the complaint.

Determination

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was maladministration by the landlord in way the landlord handled the resident’s rent and service charge payments and subsequent arrears.
  2. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was maladministration by the landlord in way the landlord handled the associated complaint.

Orders

  1. This Service order the landlord to pay the resident £500 compensation, comprised of:
    1. £300 in recognition of the poor communication.
    2. £200 in recognition of the poor complaint handling and the inconvenience caused to the resident.

The compensation of £500 includes the landlord’s earlier offer of £75 compensation which can be deducted from this total if it has already been paid.

  1. The Service orders the landlord to review the resident’s rent and service charge account and provide an updated statement to cover the period from April 2021 to date. It should also write a letter to accompany the statement explaining how the arrears came about and what each payment was comprised of.
  2. These actions should be completed within four weeks of this report.

Recommendations

  1. It is recommended that the landlord address the resident’s concerns about an unusual payment in November 2021.