Lambeth Council (202222640)

REPORT

COMPLAINT 202222640

Lambeth Council

22 February 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 the resident’s:
1. Queries about her service charges.
2. Formal complaint.

Background and summary of events

The resident is the leaseholder of the property. The property is a 2 bedroom third floor flat within a residential block. The landlord is the freeholder of the block and wider estate.
Under section 20 of the Landlord and Tenant Act 1985 (the Act), the landlord must consult with leaseholders before carrying out any works which will cost any of them in excess of £250. This consultation begins with the landlord serving a ‘section 20 notice’.
Section 20b of the Act says that the landlord must notify leaseholders of service charge costs, or demand payment of them, within 18 months of them being incurred. Where the landlord is not able to calculate final costs within this period it must serve a ‘section 20b notice’. This notifies the leaseholder of costs incurred to date and that they will be required to contribute towards these. If a landlord fails to comply with the requirements of section 20b then it is unable to reclaim costs from the leaseholder.
The landlord provides leaseholders with a ‘day to day’ service charge estimate at the beginning of each financial year, which establishes their monthly service charge payment. The estimates for repairs and maintenance are calculated based upon the actual expenditure in the previous 3 available years.
At the end of the financial year, the landlord calculates actual expenditure (referred to as ‘actuals’) and sends leaseholders details of this the following September. If expenditure exceeds the estimate, leaseholders must pay the deficit within 30 days. If expenditure is below the estimate, leaseholders have a ‘credit’ added to their service charge account.
On 15 December 2016, the landlord sent the resident a section 20 notice regarding major works to be carried out to the roof and windows of the block and repair and decoration of the fabric of the building (hereafter referred to as ‘external works’).
On 28 March 2017, the landlord sent the resident her service charge estimate for the year 2017/18 and a separate estimate invoice for the external works. The landlord offered several payment options for the external works which included interest free instalments over a 2 year period.
On 31 May 2017, the landlord sent the resident a section 20 notice regarding works to be carried out to the roads and pathways on the estate (hereafter referred to as ‘roadworks’).
On 21 September 2018, the landlord sent the resident her service charge actuals for 2017/18. This included costs of the roadworks within the repairs and maintenance section of the ‘day to day’ service charge. The landlord also enclosed a section 20b notice in relation to the external works.
The resident wrote to the landlord on 12 December 2018 expressing dissatisfaction that the landlord had included the roadworks within the day to day service charges despite the fact that they were major works. She said the landlord had not provided an estimate for, or given fair notice of, these costs and it was unreasonable for it to demand payment of such a large sum within 30 days. She asked it to consider offering the same payment terms as it had for other major works such as the external works.
On 6 March 2019, after further correspondence on the matter, the landlord offered to allow the resident to pay the cost of the road works over 12 months backdated from 1 January 2019.
On 29 April 2019, the landlord wrote to the resident explaining that the road works were “responsive repairs” which formed part of her day to day service charge estimate. The landlord said that it had followed the correct procedure in accordance with the terms of the resident’s lease and asked her to contact it to arrange payment of the outstanding amount.
On 11 June 2019, the resident emailed the landlord. She expressed dissatisfaction that the landlord had still not provided her with a final bill for the external works or sent a section 20b notice. The resident also said she had not received any invoice, request to pay or section 20b notice for the roadworks and this had been inappropriately included in the ‘day to day’ service charge actuals. Due to this she disputed the fact that she was required to pay costs for both sets of works.
The resident also expressed concerns that the landlord including the roadworks within her day to day service charge had “artificially” increased the repairs and maintenance estimate for 2019/20 which was significantly higher than the previous year’s. She asked the landlord to recalculate this excluding the roadworks.
The landlord responded on 25 June 2019, it said it had still not received the ‘final account’ for the external works and so was unable to calculate the resident’s final bill, but that a section 20b notice had been included with her 2017/18 service charge actuals. The landlord said that whilst section 20 works could be billed by way of a separate invoice, in some instances they may be included within day to day service charges as the roadworks had been. It said it had met consultation requirements for the roadworks, billed the resident in accordance with her lease and signposted her to the First Tier Tribunal (FTT) should she wish to dispute this further.
The landlord agreed to offer the resident a 24 month interest free repayment plan for the roadworks but noted that this was discretionary and “very much above and beyond the normal payment terms stipulated by your lease agreement”. The landlord said that when calculating service charge estimates it would factor out any costs which were “not normal annual expenditure, such as the estate road replacement works” but acknowledged that this had not been done in this case. As a result it agreed to reduce the resident’s estimated charge for repairs and maintenance in 2019/20 to the same level as 2018/19.
The resident responded on 11 July 2019. She:
1. Asked the landlord to provide a version of the invoice for the external works which was broken down by the separate service charge areas of the estate.
2. Queried why the landlord was still awaiting the final bill for the external works, in order to charge leaseholders, over a year after receiving the invoices and what it had done to chase this up.
3. Expressed dissatisfaction with the way the section 20b notice for the external works had been written, stating her opinion that it had not been clear what this related to and therefore it was not correctly served or payable.
4. Queried how the landlord had decided that the road works formed part of the day to day service charge for billing purposes, but that the external works had not.
5. Disputed that the landlord had made a “valid demand” for payment by “sneaking” the roadworks into the day to day service charge. She said that she also disputed the 2017/18 service charge actuals due to this.
6. Asked for a new version of her 2019/20 service charge estimate to be provided with the agreed amendment to the repairs and maintenance costs.
On 1 October 2019, the landlord sent the resident a section 20 notice for electrical works.
On 18 October 2019, the resident emailed the landlord after receiving her service charge actuals for 2018/19. She advised that she was still in dispute with it over service charges, awaiting a response to her email of 11 July 2019 and would not be making any payment until her queries had been resolved.
On 18 March 2020, the landlord provided the resident with her service charge estimate for 2020/2021. This included a separate estimated invoice for the electrical works.
The resident wrote to the landlord on 2 June 2020 advising it that she remained in dispute over service charges and continued to await a response to her email of 11 July 2019. She queried the figures used in the 2020/2021 estimate and said she believed that the landlord had again inappropriately included the roadworks in its calculations. She also requested details of the landlord’s procurement process for the electrical works and steps it had taken to ensure “good value for money”.
On 2 August 2020, the resident wrote to the landlord to say she had been made aware it had contacted her mortgage lender about monies owed for the roadworks. She described this as “wholly inappropriate” as she was in dispute over these charges and had not received any responses to her letter of 11 July 2019. She asked the landlord to write to her lender withdrawing its letter, apologise to her and respond to the points raised in her letter of 11 July 2019.
The landlord wrote to the resident on 11 February 2021 regarding outstanding monies owed for the electrical works. The resident responded pointing out that she had not received a response to her letter of 2 June 2020 in which she raised queries about the electrical work. She asked the landlord to respond to this and her letter of 11 July 2019.
On 11 March 2021, the landlord wrote to the resident chasing the outstanding monies for the electrical and external works. It asked her to make full payment within 10 working days or it would begin pursuing the debt under the legal pre-action protocol.
The resident wrote to the landlord on 25 March 2021. She said that she had disputed the charges for the external works with the landlord and had not received a response to her letter of 19 July 2019 – despite resending this in August 2020 and February 2021. She claimed she was also in dispute over the electrical works as the landlord had not provided the information she had requested in her letter of 2 June 2020. She asked the landlord to provide responses to both letters within 21 days or she would log a complaint.
On 10 May 2021, the resident submitted a complaint to the landlord as it had not provided the requested responses. She asked the landlord to ensure it did not continue to send “threatening letters” over outstanding charges which were in dispute.
The resident emailed the landlord on 24 November 2021 as she had not received a response to her complaint. The landlord responded on 26 November 2021. It apologised for the delay and said it aimed to respond to her complaint by 22 December 2021 and would keep her informed of any further delays.
On 23 January 2022, the resident emailed the landlord stating she had still not received her complaint response or any notification of delays in providing this.
The landlord sent its stage 1 complaint response on 21 February 2022 and apologised for the “inordinate delay” in responding. It said that the terms of the resident’s lease did not allow her to withhold service charges and that she was able to make payment “without prejudice” to her right to challenge the charges. The landlord advised that it did not adjust service charge estimates or hold them in dispute due to their variable nature. It said it considered the estimates for the property to be reasonable and charged in accordance with the lease.
The resident replied to the landlord’s stage 1 complaint response on 7 August 2022. She said that the landlord had not provided adequate responses to all of the queries raised in her previous letter and as such she remained in dispute. She requested for it to provide copies of invoices and/or payment certificates for the external, road and electrical works.
The landlord provided its stage 2 complaint response on 27 September 2022 which included copies of the payment certificates for the external and electrical works. It said that it could not identify where the resident had been charged for roadworks and asked her to provide more details regarding this. The landlord said the resident had now exhausted its complaints process and referred her to the Local Government and Social Care Ombudsman (LGSCO) if she remained dissatisfied.
On 31 October 2022, the resident emailed the landlord expressing her dissatisfaction with its stage 2 complaint response and the fact that it had failed to identify that she had been charged for the roadworks within her day to day service charges – which was one of her main areas of complaint. The landlord responded on 1 November 2022 advising the resident that she had exhausted its complaints procedure and signposting her to the LGSCO.
The resident subsequently approached the LGSCO about her complaint, which redirected her to this Service.

Assessment and findings

Queries about service charges

The Scheme states that this Service may not investigate complaints which concern matters where the Ombudsman considers it quicker, fairer, more reasonable, or more effective to seek a remedy through the courts, other tribunal or procedure. The FTT is the appropriate authority to settle leasehold disputes of the nature raised in the resident’s correspondence with the landlord. For this reason, this Service will not assess the landlord’s position on these matters but will instead consider whether its communication with the resident about them was appropriate and reasonable.
If the resident wishes to further pursue her disputes about the landlord’s compliance with section 20b or calculation of her day to day service charges she may wish to seek independent legal advice on these matters.
The resident first raised concerns about the roadworks being included within her day to day service charge actuals, and thus denying her the payment options that had been available for the external works, on 12 December 2018. The landlord used its discretion to offer her a payment arrangement to clear the balance, initially over 6 months and later over 12. Eventually, within its email of 25 June 2019, the landlord reasonably agreed to offer the full 24 month payment option that had been available for the external works.
After the resident continued to dispute the manner in which the estimated costs of the roadworks had been provided and the fact they had been charged through the day to day service charge, the landlord wrote to her on 29 April 2019. In this email it appropriately clarified its position that the roadworks were responsive repairs, which sat within the day to day service charge, and it had followed the correct procedure in accordance with the terms of the lease.
The resident next emailed the landlord on 11 June 2019. Within this email she raised numerous queries about both the roadworks and external works, disputed the fact that the requirements of section 20b had been met in both cases and expressed a belief that she was not liable for costs as a result. The landlord replied on 25 June 2019 providing a point by point response which appropriately addressed each query raised.
It is noteworthy that the landlord acknowledged in this response that the 2019/20 estimate for repairs and maintenance had been inappropriately inflated due to the inclusion of the roadworks. As a result it agreed to reduce the resident’s contribution to this from £721.49 down to just £105.58 in line with the previous year’s estimate. This “oversight” is likely to have damaged the resident’s confidence in the landlord and reinforced her opinion that it was not correctly managing her service charge account.
The resident reverted to the landlord on 11 July 2019, providing comments on its responses and raising additional queries. The resident has stated that she never received a response to this email and the landlord has not provided any evidence to dispute this – supplying only an internal email seeking responses to the resident’s comments.
On 18 October 2019, after receiving her service charge actuals for 2018/19, the resident made clear to the landlord that she was still in dispute over the relevant charges and awaiting a response to her email before she would make payment. The landlord has provided no evidence that it responded to this.
The resident next emailed the landlord on 2 June 2020, requesting information relating to the electric works and raising concerns about the calculation of its 2020/21 service charge estimates. Within this letter she also repeated that she was in dispute over service charges dating back to 2017 and awaiting a response to her email of 11 July 2019. Again, the landlord has provided no evidence that it responded to this.
Despite the landlord having not responded to the resident’s past 3 emails regarding her dispute over charges, it continued to follow its arrears collection process writing to the resident’s mortgage lender and threatening to begin the pre-action protocol for legal proceedings.
As per the landlord’s stage 1 complaint response, the resident was still obliged to make payment of the charges under the terms of her lease, and the landlord had the right to pursue this. However, it was unreasonable for it to do so having repeatedly failed to respond to her legitimate concerns about whether it had followed due process in relation to section 20b and had repeated the previously identified error in its service charge estimates.
After being informed by her mortgage lender that the landlord had contacted it, the resident wrote to the landlord expressing her dissatisfaction at its actions. She asked for it to apologise for the distress caused and provide a response to her email of 11 July 2019. Once again, the landlord failed to respond.
On both 11 February 2021 and 25 March 2021, the resident contacted the landlord again regarding the fact that she had not received responses to her emails of 11 July 2019 and 2 June 2020. This meant that by the time the resident asked to log her complaint she had contacted the landlord on at least 6 occasions regarding her service charge dispute without response.
The landlord’s stage 1 complaint response failed to address the fact that it had not appropriately responded to the resident’s queries for over 2 years or offer any redress for this – instead focusing on providing responses to the disputes raised.
However, as described by the resident in her subsequent request to escalate her complaint, the landlord “alluded to only three of the vast number of queries laid out in my letter…of 11 July 2019” causing her to feel the dispute remained unresolved.
The landlord also took the position that it did not adjust estimated service charges or hold them in dispute. This was not consistent with its email of 25 June 2019 where it had agreed to adjust the resident’s estimate due to its “oversight” – an oversight that she was contesting had been repeated and would potentially lead to the landlord receiving significantly more funds from her than it should have. It would have been reasonable for the landlord to investigate and fully respond to an issue with such financial ramifications, which would extend beyond just the resident affecting other leaseholders within the block also.
The stage 2 response failed to address the substance of the resident’s dispute whatsoever, serving only to provide documents that she had requested as part of her escalation request. It also evidenced a lack of appropriate understanding of the resident’s complaint by asking her for details of where she had been charged for the roadworks – when the fact that these had been included within her service charge actuals for 2017/18 was one of the main areas of dispute leading to the complaint.
In summary, the landlord failed to appropriately respond to the resident’s queries about service charges from 11 July 2019 onwards and unreasonably continued its arrears process, despite her repeatedly making it aware that she was in dispute and awaiting a response. The landlord’s complaint responses did not acknowledge its failure to respond or offer any redress for this and failed to appropriately investigate or respond to the resident’s original queries. This represents maladministration.

Complaint handling

The resident first submitted her complaint to the landlord on 10 May 2021, receiving an automated acknowledgement email in response. Despite this there is no evidence that the landlord logged her complaint until she sent a chaser email on 24 November 2021.
Whilst the landlord appeared to acknowledge this, offering an apology for “the delay in your complaint” in its acknowledgement email sent on 26 November 2021, this extensive delay was not addressed in its stage 1 complaint response and no redress was offered.
Within the same acknowledgement email the landlord advised that it aimed to provide the resident with its stage 1 complaint response by 22 December 2021 and that “if there are any delays in providing you with a response we will let you know”. The resident emailed the landlord on 23 January 2022 advising that she had received no response and not been notified by it of any delays. The landlord has provided no evidence to the contrary.
It took until 21 February 2022 for the landlord to provide its stage 1 complaint response – 89 working days from her email of 24 November 2021. This was well in excess of the 20 working days its complaints policy allows. Whilst the landlord acknowledged and apologised for the “inordinate delay” which “falls far below the level of service we expect”, it did not offer any reasonable explanation for this, nor any redress for the service failure.
The stage 1 complaint response defined the resident’s complaint as “the fact that you have not received responses to the service charge and major works queries you have been raising with Home Ownership Services (HOS) since 2019”. However, as mentioned above, the response failed to address this matter at all – attempting to respond to the queries themselves rather than the service failure in its communication.
The landlord’s stage 2 complaint response failed to provide any definition of the resident’s complaint – which is a requirement of the Ombudsman’s ‘Complaint Handling Code’ (the Code). It also incorrectly signposted the resident to the LGSCO, causing her time and trouble in referring her complaint to that service only to be redirected to this Service as the appropriate body.
As mentioned above, the stage 2 response asked the resident to “provide further details” of where she had been charged for the road works. The Code instructs that “If any aspect of the complaint is unclear, the resident must be asked for clarification and the full definition agreed between both parties”. As such it would have been appropriate for the landlord to seek clarification from the resident on this matter as part of its complaint investigation before issuing its response.
Despite the landlord requesting further details in this way, when the resident provided these, in her email of 1 November 2022, the landlord stated that she had exhausted its complaint procedure. This was unreasonable and not in keeping with the principle of fair dispute resolution by refusing to consider information that it had requested as part of the complaints procedure.
In summary, the landlord failed to log the resident’s complaint until she sent a chaser email several months later. Its complaint responses were poor, with stage 1 not addressing the complaint as defined and stage 2 evidencing a lack of appropriate investigation. The stage 2 response requested further information from the resident, which the landlord then unreasonably refused to consider. The landlord then inappropriately directed the resident to the LGSCO. These failures combined represents maladministration.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in its handling of the resident’s:
1. Queries about her service charges.
2. Formal complaint.

Reasons

The landlord failed to appropriately respond to the resident’s queries about service charges from 11 July 2019 onwards and unreasonably continued its arrears process, despite her repeatedly making it aware that she was in dispute and awaiting a response. The landlord’s complaint responses did not acknowledge its failure to respond or offer any redress for this and failed to appropriately investigate or respond to the resident’s original queries.
The landlord failed to log the resident’s complaint until she sent a chaser email several months later. Its complaint responses were poor, with stage 1 not addressing the complaint as defined and stage 2 evidencing a lack of appropriate investigation. The stage 2 response requested further information from the resident, which the landlord then unreasonably refused to consider. The landlord then inappropriately directed the resident to the LGSCO.

Orders and recommendations

Within 4 weeks of the date of this determination, the landlord is ordered to:
1. Pay the resident compensation of £900 composed of:
  1. £600 for the distress and inconvenience caused by its handling of her service charge queries.
  2. £300 for the time and trouble caused by its handling of her formal complaint.
2. Write to the resident:
  1. Apologising for its failure to appropriately respond to her emails of 11 July 2019 and 2 June 2020.
  2. Requesting details of any outstanding dispute over her service charges for financial years 2017/18 – 2020/21.
3. Review its processes for communicating with leaseholders about section 20 works to ensure it is made clear in advance whether these will be charged via day to day service charges or invoiced separately as major works – and the payment options that will be available as a result.
4. Remind complaint handling staff of the jurisdictions of the Housing Ombudsman Service and the LGSCO and to ensure complainants are signposted to the correct ombudsman during its complaint processes.
The landlord should provide evidence of compliance with these orders to this Service.