Hyde Housing Association Limited (202221220)

REPORT

COMPLAINT 202221220

Hyde Housing Association Limited

17 January 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

1. The complaint is about the landlord’s:

1. response to the resident’s concerns relating to service charges for a concierge service;
2. complaint handling.

Background

2. The resident is a shared owner of a flat within a block. A superior landlord is the freeholder of this block. The resident holds a lease with the landlord, a housing association, who is not the superior landlord. The lease commenced on 7 June 2018. Throughout this report, the resident’s housing association will be referred to as ‘the landlord’.
3. The landlord provides or manages the common services of the block or estate, or they are provided on the landlord’s behalf by a managing agent (the ‘agent’). The agent acts on behalf of the superior landlord. The resident pays for these services through a variable service charge administered by the landlord.
4. On 4 March 2022 the resident queried why his service charge estimate for 2022/2023 had increased by 120%. The landlord responded on 23 June 2022. It explained how the estimates were calculated and provided the resident with a managing agent invoice. In response, the resident questioned the cost of the concierge service. He stated that he was told that concierge service was not included with his property and that it was only a service for ‘private tenants’.
5. On 11 July 2022 the resident raised a formal complaint with the landlord. He said that he had raised a service charge query with it more than 3 months ago but had not heard anything back. He said that the landlord was trying to raise his service charge which he viewed as an excessive amount and considered was a breach of his lease agreement. He added that he had requested a full breakdown of costs which was not provided. As a resolution to his complaint, he wanted his service charge to be put back to its original amount and an explanation as to where the money was being spent.
6. On 1 August 2022 the landlord informed the resident that it had investigated the eligibility of the concierge service and it concluded that it was providing a service that he was liable to pay for as per the terms of his lease. These services included patrols of the building, reporting repairs and letting in visitors and contractors through the main gate. In response, the resident asked why this was the first year he was being charged for this. He stated that the concierge service should not have been included in the service charge estimates and asked the landlord to investigate this. He added that if the landlord was not prepared to do so he wanted his complaint raised to a ‘level 1 tribunal’. The landlord declined to investigate the matter further. The resident continued to raise queries about the costs of the concierge service which the landlord responded to. However, the resident remained unhappy with the answers provided.
7. On 8 November 2022 the resident asked for an update on his complaint. The next day, the landlord informed him that his ‘service charge enquiry’ would not be investigated as a complaint as he had already been provided with the information he had asked for. In response, the resident stated that he had raised 2 separate complaints regarding this issue via its website. Subsequently, the landlord formally acknowledged his complaint on 11 November 2022.
8. On 23 November 2022 the landlord repeated its position, stating that it would not raise a formal complaint regarding his service charge enquiry as he had already been in communication with its service charge team, and it provided him with his referral rights to our Service.
9. In the resident’s complaint to the Ombudsman, he said that the landlord refused to ‘push back’ against the managing agent who had decided to start charging shared owners for a concierge service which had caused his service charge to double in cost. He added that when he bought his property, he was told that he would not have to pay for the concierge service. Further, he stated he had not been charged for the concierge service from 2018 to 2021 and that the charge should only be applied to private (non-Hyde) residents.

Assessment and findings

Scope of investigation

10. The Housing Ombudsman will not investigate complaints about the level of a service charge. Paragraph 42(d) of the Housing Ombudsman Scheme says: ‘The Ombudsman will not investigate 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.’
11. However, the Ombudsman will consider complaints in the context of a member landlord’s management of service charge accounts and handling of enquiries relating to service charges. Concerns about the level of service charges may be more appropriately dealt with by the First Tier Tribunal for arbitration of the reasonableness or level of the charges.
12. Therefore, this investigation is not about the level of the service charge billed by the landlord. It is about whether the landlord dealt with the resident’s concerns and whether it responded to his queries about the costs associated with the concierge service appropriately.

The landlord’s response to the resident’s concerns relating to service charges for a concierge service

13. When investigating a complaint, the Ombudsman applies its Dispute Resolution Principles. This is high-level good practice guidance developed from the Ombudsman’s experience of resolving disputes, for use by everyone involved in the complaints process. There are three principles driving effective dispute resolution: 

1.    Be fair – treat people fairly and follow fair processes. 

2.    Put things right.
3.    Learn from outcomes. 

14. The Ombudsman must first consider whether a failing on the part of the landlord occurred, and if so, whether this led to any adverse effect or detriment to the resident. If it is found that a failing did lead to an adverse effect, the investigation will then consider whether the landlord has taken enough action to ‘put things right’ and ‘learn from outcomes’.
15. Under the terms of the lease, the landlord is to provide services for which leaseholders are obliged to pay by way of a variable service charge. The lease requires the resident to pay service charges in respect of services provided by the landlord and for services provided by the agent on behalf of the freeholder.
16. The landlord’s service charge policy states that it will always investigate service charge enquiries professionally and respectfully and that findings will be communicated clearly with residents, providing supporting evidence where necessary. It adds that it will provide clarity to residents on how it deals with service charge enquiries and routes for challenge and redress. Furthermore, it states that it will provide explanations of any cost increase as well as invoices or receipts and works orders if relevant to do so.
17. The resident raised initial concerns over an increased estimated service charge in March 2022. Although it is unclear why it took the landlord over 3 months to respond to his query, it apologised for this and provided a detailed explanation of why the estimated figure was higher than usual. In summary, it stated that the estimate had been set at the increased figure to avoid a large deficit as in previous years the managing agent bills were received late. In addition, it provided the resident with a managing agent invoice to support its explanation. The landlord’s initial response was professional, it communicated clearly and it took steps to clarify and explain its position, in line with its service charge policy.
18. On receipt of the invoice, the resident raised concerns about the costs of the concierge service, which he said was one of the largest costs. He added that he was told that the concierge service would not be included in his service charge and queried whether this charge was included in previous years’ invoices. The landlord responded promptly, stating that the charges were for services provided as per the terms of his lease. While this was an accurate response, it failed to answer if this was a charge that had been applied in previous years. In response, the resident understandably stated that he felt that his email had been ignored and subsequently asked the landlord to investigate the issue directly with the managing agent.
19. The landlord’s email to the resident on 1 August 2022 indicated that it did, in part, investigate this matter with the managing agent. It found that there was an eligible concierge service that carried out jobs on site which included patrols of the building and the reporting of repairs. However, it failed to explain why this charge was not included in the previous years’ estimates and actuals. This led to the resident asking the landlord again why this was the first year he was being charged for the concierge service.
20. The landlord’s response on 13 September 2022 was unsatisfactory. It stated that as this was an estimate, the individual cost components were not important and that it simply passed on the managing agent’s costs for the services provided. Yet it failed to clearly explain why this charge had not been applied in previous years. Further, there was no evidence that the landlord had raised this query directly with the managing agent. This would have likely caused frustration to the resident as he would have felt that his concerns were being ignored.
21. The resident again requested an explanation as to why the concierge service was not included in previous years’ statements. Although the landlord responded promptly to this query, its response was unclear. It stated that the managing agent’s initial charges were estimates, which did not go into any detail, but as these moved into actual costs incurred, far more details were provided. Its response did not adequately answer the resident’s question. This led to him repeating it and raising additional queries. The landlord responded stating that while it understood that he believed he was only now being charged for certain services, this was not strictly true. However, the explanation it provided did not support this statement and it failed to provide a clear answer to the resident’s question.
22. While it was appropriate for the landlord to explain throughout that the resident was only being charged for services provided as per the terms of his lease, it appeared to be unable to adequately answer why the concierge charge was not included in previous years’ charges. Although the landlord’s responses were respectful, polite, and reasonably detailed, they were often unclear and at times confusing. It is therefore considered that the landlord failed to communicate its findings clearly with the resident.
23. Furthermore, the landlord failed to explain how the resident could challenge its findings despite him clearly stating that he wanted his ‘complaint raised to a level 1 tribunal’. This was a missed opportunity for the landlord to provide the resident with his routes to challenge and claim redress as outlined in its service charge policy. This would have caused further frustration to the resident. Overall, it is the Ombudsman’s opinion that failures identified in this report amount to service failure, and orders are made below for remedy.

Complaint handling

24. The landlord’s complaint policy states the following:

1. Some service requests are often confused with complaints. For example, requests to review a service charge or rent increase, or a report of anti-social behaviour. It says it will always investigate and pay close attention to what a customer wishes it to do and explain carefully if it is not able to agree. However, these requests will follow a different procedure initially, and do not get treated as a complaint unless it fails to deal with them appropriately.

2. Enquiries about the level of rent or service charge, or the amount of rent or service charges increase, will not be treated as a complaint unless there is evidence of service failure, like an error, delay, or poor communication. Enquiries will be investigated fully through the rent and service charge enquiry process.

25. The resident first raised a formal complaint with the landlord on 11 July 2022. In this, he mentioned that there had been a 3-month delay in responding to his original service charge query. This should have prompted the landlord to raise and respond to his complaint through its internal complaints process, yet it failed to do so. This was inappropriate. In addition, the landlord failed to explain to him at the earliest stage that it would not be responding formally to his complaint. This would have caused distress and inconvenience to the resident who was entitled to believe that his complaint would be dealt with through its formal process.
26. While it was appropriate for the landlord’s service charge team to initially investigate and respond to his service charge enquiries, it was clear that the resident was becoming increasingly unhappy with its responses and that he believed his concerns were being ignored. Furthermore, he indicated that he felt the responses he received were unclear or unsatisfactory. Overall, the landlord missed multiple opportunities to respond to his concerns formally through its complaints process.
27. The landlord’s failure to formally respond to the resident’s complaint led to him chasing it for an update on 8 November 2022. It was only at this stage that the landlord informed him that his concerns would not be dealt with through its internal complaint process. This was over 4 months after his initial complaint. This was an unreasonable and avoidable delay that would have caused further distress and inconvenience to the resident.
28. Moreover, having spoken to the resident on the phone, the landlord decided it would deal with his concerns through its internal complaint process and formally acknowledged his complaint on 11 November 2022. However, its internal records showed that it believed this decision was a mistake. It therefore wrote to the resident on 23 November 2022, confirming that it would not raise a formal complaint and provided him with his referral rights to our Service. This would have caused confusion and frustration to the resident. Further, the landlord failed to acknowledge or apologise for this error.
29. In any case, the Ombudsman considers that the landlord’s decision to not respond to the resident through its internal complaints process was incorrect. Had the landlord paid close attention to the resident’s concerns, it would have identified that his complaints were not solely about the level or amount of service charge but also concerned issues including delays in responses, communication, clarity and a lack of investigation about the concierge service.
30. Therefore, the landlord did not act in line with its policy or in the resident’s best interests by refusing to respond to his complaint through its internal complaints process. Furthermore, its failure to raise a complaint demonstrated that it had not carefully considered the issues. Had it done so, it is likely it would have concluded that this matter needed formal investigation. Overall, the complaint handling failures identified in this report amount to maladministration and orders are made below for remedy.

Determination

31. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in respect of its response to the resident’s concerns relating to service charges for a concierge service.
32. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in respect of its complaint handling.

Orders

33. The landlord must do the following within the next four weeks:

1. Provide a written apology to the resident for the failures identified in this report.

2. Pay the resident compensation of £300 comprised of:
   1. £100 for the frustration caused by the landlord’s response to his concerns relating to service charges for a concierge service.
   2. £200 for the distress and inconvenience caused by the failures in its complaint handling.
3. Investigate why the concierge service was not included in previous years’ service charges and provide a clear written explanation to the resident on its findings. This investigation should seek to clarify if this is a charge the resident is liable for.
4. Address any errors and process any amendments. It should note any errors found so this does not happen again in the future. Should any errors be found, the landlord must communicate these to the resident and explain the steps to be taken and by what date.
5. Review the complaint handling in this case, with reference to the failings identified in this report, to determine what action has been/will be taken to prevent a recurrence of these. The landlord should write to the Ombudsman with the outcome of this review with particular reference to how it will ensure it is able to identify service charge disputes that are appropriate for investigation through its complaints process.

34. The landlord should provide this Service with evidence of compliance with these orders within the timescale set out above.