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Lewisham Council (201916011)

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REPORT

COMPLAINT 201916011

Lewisham Council

26 February 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:
    1. the consultation process for major works, the amount of the service charges and liability to pay them.
    2. the administration of the service charge account and issues surrounding a Section 20 notice.

Jurisdiction

  1. 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.
  2. After carefully considering all the evidence, in accordance with paragraphs 39(g) and 39(i) of the Housing Ombudsman Scheme, the following aspects of the complaint are outside of the Ombudsman’s jurisdiction.
    1. the consultation process for major works, the amount of the service charges and liability to pay them
  3. The resident complains she has not been properly consulted on major works and is being mischarged and wrongly made liable for them. She contends that charges are invalid as work has not been carried out, she did not receive Section 20 Notices prior to works, and one of the Section 20 Notices contains a date error. She is unhappy with additional costs such as professional fees, VAT and management charges not included in estimates.
  4. Paragraph 39(g) of the Scheme states that 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”
  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. The Ombudsman does not have the jurisdiction to investigate complaints about the level of the service charge, as the appropriate body that has jurisdiction to consider such complaints is the First-Tier Tribunal (Property Chamber). The First-tier Tribunal can determine the appropriate level and amount of service charges recoverable by a landlord; decide if the charges were reasonably incurred; by whom they are payable, and when. It would therefore be more reasonable and effective for the resident to seek a determination on the consultation process, and reasonableness of the service charges, from the Tribunal.
  7. The complaint about the administration of the service charge account and issues surrounding a Section 20 notice has been considered below.

Background and summary of events

Background

  1. The resident is a leaseholder of a first floor flat in a house. The landlord is a local authority and the property is managed by its contractor under a Private Finance Initiative contract. In this report, the term ‘the landlord’ refers to the contractor until the final response to the complaint.
  2. Under the lease, the resident covenants with the landlord to pay service charges. The Landlord and Tenant Act 1985, The Commonhold and Leasehold Reform Act 2002 and The Service Charges (Consultation Requirements) (England) Regulations 2003 set out consultation requirements for major works. If leaseholders wish to challenge service charges, they are able to apply to the First-Tier Tribunal to decide the reasonableness of the charges.
  3. The landlord operates a three stage formal complaints procedure, which its contractor follows. It normally investigates complaints about issues that have happened within the last 12 months unless previously brought to its attention, and does not consider complaints about matters that can be appealed to an outside body or procedure. At stage one, a service manager responds within 20 working days; at stage two, a corporate complaints team responds within 25 working days; and at stage three, an independent adjudicator responds within 20 working days.

Summary of events

  1. The landlord advises that in September 2017, it issued two Section 20 Notices, ‘Section 20 A’ and ‘Section 20 B,’ which the resident disputes receiving:
    1. ‘Section 20 A,’ dated 12 September 2017, notified of an intention to repoint a rear boundary wall, carry out works to a front path, and to ease and adjust a gate. The resident’s contribution was estimated to be £331.15. The notice invited written observations within 30 days from the date of the notice. It stated observations must be returned no later than “12 September 2017.”
    2. ‘Section 20 B,’ dated 29 September 2017, notified of an intention to remove and replace a front communal path, repair a front step, re-render and remove weeds, and make good concrete around a front basement gully. The resident’s contribution was estimated to be £372.33. The notice invited written observations within 30 days from the date of the notice. It stated observations must be returned no later than 30 October 2017.
  2. On 5 June 2018 the landlord sent a bill for work described in ‘Section 20 B,’ to remove and replace a front communal path, repair a front step and re-render and remove weeds, and make good concrete around a front basement gully. It stated the resident’s proportion of the cost was £445.53.
  3. On 1 and 11 November 2018 the resident contacted the landlord to request information about major works after receiving a letter to clear the balance of £445.53 for ‘Section 20 B’. On 13 November 2018 the landlord responded that the works were “to repoint various areas to the rear boundary wall, repairs to the front path, gate to be eased and adjusted,” described in ‘Section 20 A.’ From the resident’s account, the landlord provided the resident with the following information behind the bill for ‘Section 20 B’:
    1. A copy of ‘Section 20 A’, to repoint a rear boundary wall, carry out works to a front path, and to ease and adjust a gate.
    2. A document labelled ‘Final account of works undertaken’ which described works in ‘Section 20 B’ that were completed on 12 January 2018, for a front communal path, a basement gully and weed removal. These works totalled £1,241.10, or £1,456.31 including overheads.
    3. A document labelled ‘Actual Costs’ that broke down the charge of £445.53 in the bill for ‘Section 20 B’ as being for “Front entrance; Scaffolding; Elevation; Fascia and soffits; Garden – weed shrubs; Wall fences; Rainwater goods and rains; Renew flat roof; Flat Roof repairs; Walkways, Asp. External Staircases.” These works totalled £1,113.48, or £1,782.14 including overheads.
  4. On 28 January 2019 the resident raised that the invoices were “very different” and that works on the ‘Actual Costs’ invoice had not been consulted on or done. She stated that correspondence about the works had not been received until a bill was sent and queried the observations deadline in ‘Section 20 A’ being the day it was dated.
  5. On 25 February 2019 the landlord sent a bill for work described in ‘Section 20 A,’ to repoint a rear boundary wall, carry out works to a front path, and to ease and adjust a gate. It stated the resident’s proportion of the cost was £344.33. The resident interpreted the bill of £344.33 for ‘Section 20 A’ to be confirmation of a reduction in the bill of £445.53 for ‘Section 20 B,’ rather than an additional bill. Consequently, in emails to the landlord on 4 and 5 March 2019, the resident acknowledged receipt of “an amended bill” but queried the lack of reply to her enquiry on 28 January 2019.
  6. On 5 March 2019, the landlord explained that the resident had been sent two Section 20 Notices, on 12 September 2017 and 29 September 2017. It apologised for a date error in ‘Section 20 A’ due to an oversight. It referred to its response on 13 November 2018 that had provided “clear” explanation and information about the Section 20 Notice and why £445.53 was being charged, and asked the resident to explain why the charges were not accepted. It referred the resident to information about liability for service charges and advised she could apply to the First-Tier Tribunal to challenge the service charge.
  7. On 22 March 2019, the landlord emailed the resident and explained a surveyor’s inspection confirmed work for the front path, area concrete, boundary wall and re-pointing had been carried out, and work to ease and adjust the gate had not been carried out. The landlord advised it would remove a cost of £6.73 for the gate.
  8. On 17 March 2020 the resident contacted the landlord about a statement she had received which advised her major works balance was £783.13. She requested itemised statements and invoices for the works. From the resident’s account, the landlord provided a copy of the bill for £344.33 it issued on 25 February 2019, which she queried did not explain the £783.13. She suggested the landlord had charged twice for major works by adding a higher “fabricated” major works fee to a lower adjusted fee. She stated a major works statement sent the previous year was in dispute, as she had not been consulted beforehand.
  9. On 18 March 2020 the landlord responded that the resident had queried how her major works balance was made up. It explained it had emailed the invoices of £344.33 and £445.53 which made up the balance and advised that these remained outstanding.
  10. On 18 March 2020 the resident contacted the Ombudsman to complain that major works were being levied with incorrect invoices and on 20 April 2020, the resident reported that she had received no response from complaining to the landlord on 19 March 2020.
  11. On 31 July 2020 the landlord wrote to the resident, following contact from this Service in May and July 2020. It explained it had responded to all her complaints and queries and there were no outstanding matters. It enclosed information that included:
    1. The Notices for ‘Section 20 A’ and ‘Section 20 B.’
    2. The bill dated 5 June 2018 confirming that the resident’s proportion of the actual cost for works described in ‘Section 20 B’ was £445.53.
    3. A statement which showed the outstanding Major Works charge of £783.13, broken down as charges of £445.53 and £344.33 and an adjustment credit of £6.73 applied in March 2019.
    4. A document labelled ‘Actual Costs’ providing a “breakdown of actual cost” on which the £344.33 bill for ‘Section 20 A’ is based, listing items described in ‘Section 20 A’: “Re-point various areas to the boundary wall at the rear; Carry out works to the front path; Ease and adjust gate.”
  12. Between 31 July 2020 and 17 August 2020, the resident restated previous concerns to the landlord and raised dissatisfaction at not being ever sent a copy of ‘Section 20 B’ until 31 July 2020.
  13. The landlord clarified it had removed charges for items that had not been done and advised it had responded to all her queries over the years, but if she believed work had not been carried out, it asked her to be specific to raise with its repairs partner.
  14. The resident queried if deductions had been made for “scaffolding, elevation, fascia and soffits, garden – weed shrubs, wall fences, rainwater goods and rains, renew flat roof, flat roof repairs, walkways, asp. external staircases, basement gully,” referencing information provided in Paragraph 14c of this report. The landlord clarified that the resident was being charged for two separate sets of works in relation to the two final account bills for ‘Section 20 A’ and ‘Section 20 B.’ It attached a major works statement showing a refund for the gate item that it had removed after its surveyor had identified this was not done. The landlord also advised that if the resident disputed the cost of works she should take her dispute to the First Tier Tribunal which decides if a service charge payment is correctly charged or not.
  15. On 14 August 2020 this Service asked the landlord to escalate the complaint to stage three of its complaints procedure, and on 17 August 2020 the landlord issued its final response.
  16. It advised that as a leaseholder the resident had the right to apply to the First-tier Tribunal, which can decide by whom, to whom, how much and when a charge is payable. It explained a charge is only payable insofar as it is reasonable which the Tribunal decides. It advised the right to make this application excludes consideration of any part of the complaint about charges. It advised investigation of the complaint about the consultation process for the major works is similarly excluded because this is also for the Tribunal.
  17. It confirmed that if a landlord fails to follow a correct process or is not given dispensation, it will be unable to recover costs beyond a statutory limit of £250. It advised that the resident may be able to argue only a limited amount should be charged because of what she considers to be a lack of consultation.
  18. The resident subsequently contacted this Service to investigate, following advice she says she received from the Leasehold Advisory Service and the First–Tier Tribunal.

Assessment and findings

  1. A resident’s recourse about charges are to the First-Tier Tribunal and where only limited aspects of the complaint can be considered by the Ombudsman, it may be decided that the whole complaint can be better dealt with by the First Tier Tribunal, for example if the complaint relates to the reasonableness of the charges.
  2. However while the Ombudsman may not be able to decide on charges themselves, this Service may look at complaints that relate to their calculation or how information was communicated. In the Ombudsman’s Spotlight Report on Leasehold Complaints, recommendations are made for landlords to provide explanation and accurate information about charges and calculation methods.
  3. Therefore when complaints are received that major works are being levied with incorrect invoices, there is a resultant obligation and opportunity for a complaints procedure to review if there are any service issues that have led to them, rather than to refer them to the Tribunal’s jurisdiction automatically.
  4. On 13 November 2018, in response to her enquiry about the bill of £445.53 for ‘Section 20 B,’ the landlord provided the resident with the unrelated Notice for ‘Section 20 A.’ It provided a ‘Final account of works undertaken’ for the works described in Section 20B. Finally, as outlined in Paragraph 14c of this report, it provided an ‘Actual Costs’ breakdown of the £445.53 charge for the ‘Section 20 B’ bill, which include items such as roofs not described in either ‘Section 20 A’ and ‘Section 20 B.’
  5. The landlord would not be expected to be aware either of the two Section 20 Notices may not have been received by the resident. However, in its response to the enquiry about the bill of £445.53 for ‘Section 20 B,’ it would have been expected for the landlord to provide the Notice for ‘Section 20 B,’ not ‘Section 20 A,’ if not both.
  6. The Ombudsman would also have expected clear and accurate information to be provided in relation to the Section 20 Notice and bill. However, the ‘Actual Costs’ and ‘Final account of works undertaken’ documents had different work descriptions and costs to each other, and in the case of the ‘Actual Costs’ document, appeared to bear no relation to the Section 20 Notice and bill.
  7. The landlord’s response to the resident’s enquiry about the bill of £445.53 for ‘Section 20 B’ therefore had the potential to cause confusion and to lead to further enquiries.
  8. When the resident then queried on 28 January 2019 that the invoices supplied were “very different” and referred to the ‘Actual Costs’ invoice in particular, it would have been expected for the landlord to review and provide clarification on the information it had provided. However, in its reply on 5 March 2019 the landlord advised the resident that its previous response on 13 November 2018 had been “clear,” and did not address the cause for the confusion the resident expressed.
  9. The landlord then took some steps to investigate the resident’s dispute in March 2019, communicated its surveyor’s assessment on works specified in Section 20 Notices and bills, and removed a charge for gate work it identified was not done. However there is no evidence the landlord addressed the work in the ‘Actual Costs’ document it had provided to the resident, which broke down the bill of £445.53 for ‘Section 20 B’ and included works not mentioned elsewhere in its Section 20 Notices and bills.
  10. The resident’s ultimate recourse to dispute charges themselves is to the First-Tier Tribunal, however it is reasonable for queries and expressions of doubt about how charges have been incurred and calculated to be answered in a local context, particularly if they arise from information the landlord has provided.
  11. Whilst it is not clear the resident has always been specific about her concerns, the landlord would be expected to have a full record of major works information previously provided to the resident, and to review such information when the resident submitted a formal complaint. The resident also listed items she was concerned about on 11 August 2020, prior to the landlord’s final response, in response to its invitation to be more specific. Consequently, it would have been reasonable for the landlord to review any service issues in relation to these.
  12. The resident would have benefited from a clear and accurate explanation of the landlord’s charges and calculation methods, to properly understand her liability for the charges and her appropriate recourse. As there is no evidence the landlord has addressed differences between the Section 20 Notices and the ‘Actual Costs’ document outlined in Paragraph 14c of this report, there is no evidence it has responded reasonably to the resident’s concerns about its administration of the service charge account and issues surrounding a Section 20 notice. Although it is possible the landlord has carried out the works set out in its Section 20 Notice estimates and bills, this will have led to ongoing and unnecessary concern on the part of the resident about the works and charges. This is not conducive to maintain a landlord and resident relationship, or to identify issues for future service improvement, and demonstrates a failure to meaningfully engage with the complaint.

Determination (decision)

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was a service failure in the landlord’s response to the resident’s reports about the administration of the service charge account and issues surrounding a Section 20 notice.

Reasons

  1. The landlord provided information to the resident that caused her to raise concerns about the works it is billing for, which there is no evidence it has taken sufficient steps to acknowledge or address. There is no evidence the landlord acknowledged and addressed issues with information it provided to the resident in November 2018. There is no evidence it explained why the ‘Actual Costs’ breakdown for the £445.53 in the bill for ‘Section 20 B’ includes items such as roof works which are not described in its Notices and bills. This is unreasonable.

Orders and recommendations

Orders

  1. The landlord to:
    1. Apologise to the resident and pay her £200 for not answering her concerns, in recognition of the time and trouble she has spent pursuing the matter.
    2. Write to the resident within four weeks, to provide explanation to the resident about the relevancy of the works and charges in the ‘Actual Costs’ document referred to in Paragraph 14c of the report, and confirm its position on the bills for the Section 20 Notices dated 12 and 29 September 2017 in light of this.

Recommendations

  1. The landlord to review service needs in relation to the issues identified, to ensure it responds effectively to service charge queries and to complaints about service charges.