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Hyde Housing Association Limited (202126628)

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REPORT

COMPLAINT 202126628

Hyde Housing Association Limited

29 August 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

1.     The complaint is about the landlord’s response to the resident’s queries regarding the service charges for his property.

2.     The landlord’s complaints handling has also been investigated.

Background and summary of events

Background

3.     The resident is an assured tenant of the landlord with a tenancy start date of 10 September 2012. The property is a one bedroom flat.

4.     The landlord has provided this Service with its policies and procedures relevant to this complaint.

5.     The landlord’s service charge policy statement states that, for variable service charges, it will base future year’s charges on the previous audited expenditure statements, applying any known budgeted costs. It states that in March/April each year, residents will receive estimates of the charges. Six months after the end of the financial year, for a variable service charge, a statement is sent showing the actual costs of providing services.

6.     The policy states that, in respect of tenants, any surplus is rolled forward and deducted from the service charge that tenants are required to pay in the following year. Any deficit is carried over and used to increase the charge in the following year.

7.     The landlord has also supplied this Service with copies of the estimated service charge statements relating to the resident’s property for the financial years beginning 1 April 2020, 1 April 2021 and 1 April 2022 and the actual service charge statements for the resident’s property for the financial years beginning 1 April 2019 and 1 April 2020. 

8.     The estimated service charge statements provide a breakdown of the estimated service charges for the forthcoming financial year. The actual service charge statements provide a reconciliation of the estimated and actual costs for the financial year and show whether this has resulted in a deficit or a surplus.

9.     The accompanying letter explains that any difference between estimated and actual expenditure will be rolled into the estimate received for the next financial year. It explains that if the landlord has charged the tenant less than was spent, it may increase the charges for the next year. If the landlord has charged more than it spent, it may reduce the charges for the next year. This explanation reflects the landlord’s policy.

10. The service charge statements are accompanied by a summary of a tenant’s rights and obligations in relation to the service charges with signposting to further information about them. The summary explains, amongst other things, that a tenant has the right to request that the landlord provide a written summary of the costs which make up the service charges for the last closed financial year and to inspect the accounts, receipts and other documents supporting the summary.  This reflects the statutory position under the Landlord & Tenant Act 1985 section 22.

11. The landlord operates a two stage complaints procedure. At Stage 1, the landlord aims to respond to a complaint as soon as is reasonably possible and not later than twenty working days (four weeks). If the resident is not satisfied with the landlord’s response at Stage 1, a manager more senior than the person who made the Stage 1 response will review the case to determine if it warrants a review at Stage 2.

12. If a complaint proceeds to Stage 2, the landlord aims to respond as soon as possible and not later than twenty working days from the complaint escalation date. The policy provides that this is the final stage of its complaints process and at its conclusion, the resident will be advised of the options open to them should they remain dissatisfied, including referring their complaint to the Housing Ombudsman Service.

Scope of investigation

13. What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme (the 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.

14. Part of the resident’s complaint referred to this Service concerns the landlord’s maintenance of the communal areas at his property. The resident has also expressed concerns to this Service that since taking over the tenancy from his previous landlord in July 2015, the landlord has not properly inspected his block and updated its records.

15. These aspects of the resident’s complaint have not been considered by the landlord under its formal complaints process. Under paragraph 42(a) of the Scheme, the Ombudsman may not consider complaints which, in the Ombudsman’s opinion, are made prior to having exhausted a member’s complaints procedure. This is because the landlord has not had an opportunity to investigate and respond to them.

16. These aspects of the resident’s complaint will therefore not be considered as part of this investigation. Any issues that have not been subject to a formal complaint can be addressed by the resident directly with the landlord and progressed as a new formal complaint if required.

17. The Ombudsman will not generally investigate complaints which are about the level of a service charge. This is because under paragraph 42(e) of the Scheme, the Ombudsman may not consider complaints which, in the Ombudsman’s opinion, concern the level of rent or service charge or the amount of the rent or service charge increase. Such matters can be determined by the First Tier Tribunal (Property Chamber – Residential Property) (FTT). The FTT has the power to make decisions that are binding on the parties.

18. However, the Ombudsman will consider complaints concerning the landlord’s handling of enquiries relating to service charges.

19. Therefore, this investigation report will not investigate the amount of the service charges requested by the landlord or whether any reimbursement of the service charge is due to the resident. Nevertheless, it will investigate whether the landlord responded appropriately to the resident’s queries regarding the service charges. 

Summary of events

20. On 22 February 2021, the resident received a letter from the landlord setting out the new weekly gross rent charges and estimated service charges for the financial year beginning 1 April 2021. 

21. On 8 March 2021, the resident sent an email to the landlord querying the new estimated weekly service charge rate. He asked for clarification on three items within the “Block Services” charge shown on the estimate, namely:

  1. Under “Cleaning: bins and rubbish”, the resident queried if he was being charged for rubbish bin collection. He stated that he was already paying the local council for the collection of his rubbish bin.
  2. Under “Cleaning: contracted cleaning service”, the resident asked what cleaning services were covered for his block.
  3. Under “Controlled Door Entry”, the resident stated that his block did not have controlled door entry and asked why he was being charged for it in the service charge.

22. On 7 April 2021, the resident chased the landlord for a response.

23. On 13 May 2021, the landlord acknowledged receipt of the resident’s query and apologised for the delay. It stated that it would update the resident in the next 21 days.

24. The resident sent a further chaser to the landlord on 7 June 2021.

25. On 28 June 2021, the resident raised a formal complaint with the landlord. The resident complained that the service charge team had not responded to the issues he had raised on 8 March 2021 regarding the service charges breakdown and costs. He asked for a full investigation into the matter and a response with an explanation of the incorrect service charge breakdown.

26. On 28 June 2021, the landlord acknowledged the complaint and confirmed that a Stage 1 investigation had been raised. It indicated that due to a high amount of contact from customers, the resident may experience a delay of 6-8 weeks before a member of the complaints team contacted him.

27. On 15 September 2021, the landlord’s Resolution Officer (RO) provided a Stage 1 response to the resident’s complaint:

  1. The response apologised for the delay in providing the Stage 1 response.  
  2. It identified a service failure in relation to the delay in providing a resolution, apologised and offered £50 compensation for the delay.
  3. The landlord’s RO confirmed that she had spoken to the relevant team members, contractors and had double checked the landlord’s policy.
  4. The landlord’s RO reported that the landlord’s Service Charge Team Manager (SCTM) had provided the following breakdown:
    1. Cleaning: Bins and Rubbish: this service was for the collection of bulk waste items left within the landlord’s schemes or estates as opposed to the emptying of the refuse bins which the local council was responsible for.
    2. Cleaning: Contracted Cleaning Service: this service was for the cleaning of the communal areas within the block.
    3. Controlled Door Entry: this was for the various different types of door entry systems that the landlord had across its stock.
  5. The response explained that the controlled door entry and bulk waste costs were a provision towards potential expenditure within these service areas and that if works were not completed or costs incurred then there would be a surplus on the 2021/22 statement issued in September 2022.
  6. The letter explained that due to the 18 month cycle of a service charge it would take time for updates and corrections to be seen on service charge statements.
  7. Further information was provided regarding the steps required if the resident remained dissatisfied and it stated that the complaint would be reviewed by the landlord to determine if it would be investigated at Stage 2 or not.
  8. If the resident wished to accept the compensation offer, he was asked to do so by 1 October 2021.

28. It is noted that the landlord’s response letter also stated that its service charge team had provided the resident with information in respect of the service charges by email on 28/29 June 2021. This email has not been produced to this Service.

29. The landlord and resident apparently exchanged further communications as to whether or not there was a controlled door entry at the resident’s block. These communications have not been produced to this Service but are referred to in the resident’s email of 1 October 2021.

30. On 1 October 2021, the resident sent an email to the landlord confirming that he was not satisfied with the Stage 1 response and wished for it to be reviewed at Stage 2 of the complaints process. The points raised by the resident included:

  1. With regard to controlled door entry, the landlord had stated that it was checking and confirming whether a controlled door entry was installed at the property or not. The resident complained that the landlord had not told him when that was going to happen.
  2. With regard to the landlord’s statement that if there was no controlled door entry, it would show as a surplus, the resident stated that the issue was not whether there would be a surplus or deficit on the actual service charge account in September 2022. There was no controlled door entry installed at the resident’s block and never had been. However, the landlord had continued to charge for it in the weekly service charge since 1 April 2021. The resident believed that he should not have paid for this item in the weekly service charges and had reason to believe that the landlord owed him money for overpayment.
  3. The resident was also paying for bulk waste services in his weekly service charge since 1 April 2021 and had reason to believe that the landlord owed him money for overpayment.

31. On 4 October 2021, the landlord confirmed that the resident’s email had been forwarded to the SCTM to review and decide whether it would be investigated at Stage 2.

32. On 28 October 2021, the landlord’s Corporate Complaints Manager (CCM) provided a response to the resident. The response stated:

  1. It had reviewed the resident’s email and confirmed that it would not be changing its decision.
  2. The landlord had made its decision about the resident’s complaint based on information from the resident, its conversations with the people involved and its relevant policies and procedures. It had checked all the details of the complaint thoroughly, responded to all the points he had made as well as further emails. There was no new information in the resident’s latest email about the complaint which was why it would not be escalating it to Stage 2.
  3. The SCTM had confirmed that there was no controlled door entry in place at the resident’s block. Given the low value of the charge and that these were variable service charges, the landlord would not be removing the costs from the estimate. There would be a surplus for this cost area in the statement due out in September 2022 which would be applied towards the overall costs for the financial year.
  4. With respect to the provision for removal of bulk waste items, this was a provision and if the service was not used there would be a surplus.  However, the SCTM had seen the statement for the area for 2020/21 and noted that there was a large spend on the removal of bulk waste items so it was likely that there would be again this year. With this information in mind, the landlord would not be removing these costs from the estimate for 2021/22.

33. Between October 2021 and February 2022, the resident communicated with the landlord’s property manager for his block regarding various issues experienced at his property: that the landlord’s contracted cleaners had failed to clean the communal areas; that rubbish had been found dumped in the communal areas inside the block; and the failure of the landlord’s grounds maintenance staff to attend and clean the communal grounds areas. 

34. On 2 March 2022, the resident referred a complaint to this Service via his MP. The resident’s complaint was:

  1. He had waited a very long time (6 months) from when he had first written to his landlord to raise an enquiry and for clarification regarding overcharging him for his service charge payments.
  2. The landlord had responded but had repeatedly failed to address the key issue which was the overpayment of certain services which he should not be paying for as they were not installed at his residential block.
  3. The landlord claimed that any overpayments were adjusted on their system every year based on a deficit and surplus system. However, the resident was still making overpayments from his own pocket and not getting reimbursements.

35. On 9 March 2022, this Service contacted the landlord to ascertain whether its response of 28 October 2021 was its final response as the letter had not referred to the resident’s rights of referral to this Service as required under the Housing Ombudsman’s Complaint Handling Code. 

36. On 25 March 2022, the landlord replied to this Service and said that it had confirmed its position to the resident and that its letter of 28 October 2021 was its final response.

37. On 6 April 2022, the resident provided further information to this Service as to the reasons he remained dissatisfied and the outcome he was seeking, namely: 

  1. The landlord had failed to address and explain whether he would be reimbursed for overpayment of service charges. The landlord had stated that there was a deficit and surplus service charge account system and that the service charge would be calculated after the actual service charge statement was issued in September and that if his service charge account was in surplus, he would be credited back to his rent account. This had not happened once over the last 7 years.
  2. The landlord did not clarify and state why they had started charging the resident incorrectly for services which he should not be paying for. The resident referred to the controlled door entry system which was not installed at his property and general waste collection which was the local council’s responsibility. 
  3. The resident was seeking a calculation of the overpayment for services he should not be paying for and reimbursement of the correct amount to his bank account or rent account.
  4. The resident queried why, since the landlord had taken over the tenancy from his previous landlord in July 2015, it had not properly inspected his block and updated its records to confirm exactly which services he should be paying for in his service charges.
  5. The resident queried why he was paying for service charges when there had been repeated occurrences over the past few years of missed appointments for grounds maintenance and cleaning of communal areas.
  6. The landlord had taken almost 7 years and still could not confirm whether his block had a controlled door entry system. The resident wanted to know when the landlord was going to confirm to him that the block did not have a controlled door entry system.

38. For the reasons stated in paragraphs 14 to 16 above, this investigation report will not investigate that part of the resident’s complaint that the landlord had failed to maintain the communal areas at his property or inspect the resident’s block and update its records.

Assessment and findings

The landlord’s response to the resident’s queries regarding service charges

39. On 8 March 2021, the resident first raised a request of the landlord for further information regarding items included in the estimate of service charges for the financial year beginning 1 April 2021. The landlord could be expected to respond to these queries within a reasonable time. For context and by comparison, the landlord’s summary of tenants’ rights and obligations states that where a tenant makes a written request for a summary of costs making up the service charges for a closed year, the landlord would be expected to provide it within 1 month of the request, or 6 months from the end of the period to which the summary relates, whichever is later. 

40. It appears from the information provided by the landlord to this Service that the landlord did not provide a substantive response to the resident’s queries until it did so in its Stage 1 response of 15 September 2021. This was a period in excess of 6 months after the resident’s request which was an unreasonable length of time for the resident to wait for a response to his queries. This caused detriment to the resident in that he went to unnecessary time and trouble in chasing a response from the landlord and in pursuing a complaint in order to receive information about the charges.

41. When responding to the resident’s queries in relation to the service charges, the landlord described the services provided for each of the cost items queried. The landlord also explained that where a provision had been made in the estimate but those costs were not incurred, a surplus would be shown on the actual financial statement for the financial year. This was a reasonable response by the landlord to address the resident’s concerns that he may have overpaid and be owed money by the landlord. It also reflected the landlord’s policy in respect of any service charge surplus or deficit, as explained to tenants in the information accompanying service charge statements.

42. However, the landlord did not directly address the issue raised by the resident in respect of the item in the estimate for controlled door entry. The essence of the resident’s concern, as stated in his email of 8 March 2021, was that there was no controlled door entry at his block. There is no dispute on this factual issue, the landlord having confirmed in its letter of 28 October 2021 that there was no controlled door entry.

43. The landlord’s policy explains that it will base future year’s charges (in other words, the estimated charges) on the previous audited expenditure statements, applying any known budgeted costs. As referenced above, the resident had a right to request information from the landlord on the costs which make up the service charges for the last closed financial year and on which the future year’s charges would be based. In these circumstances, it would have been reasonable for the landlord to explain why it was necessary to make a provision for this cost in the service charge estimate and what the provision was based on, if not the cost of a controlled door entry system.

44. The landlord did not address this either in its Stage 1 response or in its letter of 28 October 2021. The landlord’s failure to fully address this point caused concern for the resident that he was paying in advance for services which were not provided to his block.

45. The resident raised similar concerns with this Service with regard to the provision in the service charge statement for the cost of general waste collection. The resident was concerned that he was being charged for a service which was the local council’s responsibility. However, this issue was appropriately addressed by the landlord in its Stage 1 response. The landlord explained that this item related to the collection of bulk waste items and not the emptying of refuse bins which the council was responsible for.  

46. In summary, there was a service failure by the landlord in respect of the unreasonable delay in it responding to the resident’s queries regarding the service charges and in failing to address the resident’s query in relation to the controlled door entry cost. The resident was caused time and trouble in pursuing answers to his queries, one of which remains unresolved.

The landlord’s complaint handling

47. The resident logged his complaint with the landlord on 28 June 2021. Under the landlord’s complaints policy, the landlord should have responded to the complaint within four weeks, i.e. by 26 July 2021. When acknowledging the complaint, the landlord indicated that the resident may experience a delay of between 6-8 weeks before a member of the complaints team contacted him.

48. In the event, the resident did not receive a Stage 1 response until 15 September 2021. This was 11 weeks after logging the formal complaint with the landlord and 7 weeks after the timescales set out in the landlord’s complaints policy. This was an excessive delay beyond the landlord’s own policy and reasonable timescales. It was also beyond the period of delay anticipated by the landlord and advised to the resident. 

49. In the landlord’s Stage 1 response of 15 September 2021, it acknowledged that there had been delay. It identified a service failure in relation to the delay in providing the resolution and offered compensation of £50. However, it was not clear from the landlord’s response whether the service failure identified, and for which compensation was offered, was in respect of the delay in responding to the resident’s queries or the delay in responding to the complaint, which was itself delayed, or both – this likely caused confusion to the resident.

50. The resident requested by his email of 1 October 2021 that the complaint be reviewed at Stage 2 of the complaints process. In its letter of 28 October 2021, the landlord declined to escalate the matter to Stage 2.

51. Although the landlord’s complaints policy sets out that it may reject escalation of a complaint, its letter did not state that it was the final stage of the landlord’s complaints process or how to refer the complaint to the Ombudsman, as required under the Ombudsman’s Complaint Handling Code and by the landlord’s own complaints policy. This was inappropriate and meant that this Service was required to intervene to obtain clarification.

52. There was service failure by the landlord in the handling of the resident’s complaint in the above respects. The landlord’s compensation award of £50 did not offer sufficient redress given the length of the delay and the likely impact on the resident. Under the circumstances, an award of compensation of £150 would be appropriate.

Determination (decision)

53. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in respect of its response to the resident’s queries regarding the service charges for his property.

54. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in respect of its complaints handling.

Reasons

55. The landlord failed to address the resident’s queries regarding the service charges in a timely manner. Further, it did not fully address the resident’s query in relation to the controlled door entry cost item on his service charge statement.

56. The landlord failed to provide a response to the resident’s complaint within the timescales provided in its complaints policy or within a reasonable time. The landlord’s Stage 1 response was unclear with regard to the outcome of the complaint. The landlord’s review response did not inform the resident that it was the final stage of the complaints process and of his rights of referral to the Ombudsman as required by the landlord’s complaints policy and the Ombudsman’s Complaint Handling Code.  

Orders

57. Within 4 weeks of this report, the landlord is ordered to write to the resident to:

  1. Apologise for the service failures identified in this report;
  2. Provide a full explanation of why the resident’s service charge statement provides for the cost of a controlled door entry system when there is none at his property;
  3. State whether or not any 2021-22 surplus for this item will be reimbursed and if a charge for this service will appear on future bills (if so, it should clearly explain why).

58. Within 4 weeks of this report, the landlord is ordered to pay £400 to the resident, made up of:

  1. £250 for the time and trouble caused to him by its failure to respond in a timely manner to his queries in relation to the service charges for his property (inclusive of the £50 awarded through its complaints process if this had not already been paid).
  2. £150 for the failings identified in its complaint handling.

59. The landlord should contact this Service within 4 weeks of the date of this determination to evidence its compliance with the above orders.