London & Quadrant Housing Trust (202002452)

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REPORT

COMPLAINT 202002452

London & Quadrant Housing Trust

7 October 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. This complaint is about the landlord’s handling of the resident’s request for a reimbursement of inaccurate service charges she paid in 2016/17 and 2017/18.

Background and summary of events

Background

  1. The resident is a leaseholder of a property within a communal block. The lease began on 16 November 2007 and the property is a two-bedroom second floor flat.
  2. The lease agreement requires the resident to pay a service charge in respect of ‘all expenditure reasonably incurred by the landlord in connection with the repair, management, maintenance and provision of services for the building, … common parts … and the common parts of the estate’. It states that ‘for the avoidance of doubt it is hereby declared and agreed that the provisions of sections 18 to 30 Landlord and Tenant Act 1985 shall apply’.
  3. Section 22 of the Landlord and Tenant Act 1985 relates to the right of leaseholders to request to inspect accounts supporting a service charge statement. This allows leaseholders to make requests to inspect accounts within six months of receiving a service charge summary. The landlord is then obliged to make such an inspection available for a period of two months (not more than one month after the leaseholder’s request).
  4. The landlord has a service charges policy that sets out that:
    1. if actual costs are higher than the estimated costs for a year, the landlord can recover the additional cost from residents if the relevant documentation has been issued to the resident within 6 months of the end of that year
    2. only services that are provided can be charged for
    3. it charges leaseholders an audit fee for validation of the service charges by external auditors.
  5. The landlord’s complaints policy sets out a two-stage complaints procedure where it is required to respond within 10 working days (at stage one) and 20 working days (at stage two). It adds that the policy will not cover issues which are over 6 months old unless there are exceptional circumstances.
  6. The landlord has a compensation policy that allows for it to award compensation where there has been a service failure (such as failure to respond to a complaint within target times or where there has been failure to provide a service that a resident has paid for) and where an apology alone is not sufficient.

Summary of Events

  1. The landlord issued a final service charge statement on 24 July 2017 for the 2016/17 year. This included a charge of £332.45 for communal electricity consumption and the resident was told she could ask to inspect the accounts within six months of receiving the summary of costs. The statement did not show the difference between the estimated and actual communal electricity costs.
  2. The landlord issued a final service charge statement on 10 September 2018 for the 2017/18 year. This included a charge of £352.97 for communal electricity consumption (previously estimated to be £363.39) and the resident was told she could ask to inspect the accounts within six months of receiving the summary of costs.
  3. The landlord issued a final service charge statement on 12 August 2019 for the 2018/19 year. This included a charge of £385.07 for communal electricity consumption (previously estimated to be £17.44) and the resident was told she could ask to inspect the accounts within six months of receiving the summary of costs.
  4. The resident wrote to the landlord on 19 August 2019. She set out her own calculations based on the number of bulbs in the communal area and estimated that the block charges were more than £6,000 higher than they should have been. She requested an investigation in light of this.
  5. The landlord wrote to the resident on 12 September 2019. It advised that the communal electricity consumption charges were prepared using invoices received from the utility company and it provided a ‘summary of expenditure’.
  6. The resident replied to the landlord on 16 September 2019. She advised that her and other residents of the block were dissatisfied with the answers to date on the justification for the communal electricity charges.
  7. The landlord wrote to the resident on 3 October 2019. It mentioned that there were charges for the block contribution to the energy supply for nearby pumps and offered to provide access to the relevant invoices.
  8. The resident wrote to the landlord on 6 October 2019. She highlighted that the invoices seemed to show that her block had been attributed charges that were actually for two large tower blocks to the rear of her building.
  9. The landlord advised on 15 October 2019 that the property manager would be in contact with the energy supplier to check which blocks the pumps served.
  10. The resident chased an update on 30 October 2019. The landlord replied on 12 November 2019, advising that EDF had attended the relevant site on 1 November 2019 to inspect. The landlord offered a further update on 23 November 2019, explaining that an engineer would need to investigate.
  11. The resident continued to chase an outcome on 17 December 2019 and 15 January 2020.
  12. The landlord wrote to the resident on 16 April 2020. It apologised for the delay and said that:
    1. it had engaged with the relevant property manager following the resident’s query on 15 October 2019 but there had been a delay in obtaining information from an engineer
    2. it had found that the electricity consumption charges for the 2018/19 year had been incorrect and any invoices for the other location would be disregarded
    3. this meant that a credit of £364.49 had been applied to the service charge account as the correct electricity charge was £20.58 not £385.07
    4. it would not backdate any previous charges.
  13. The resident wrote to the landlord on 14 May 2020. She thanked the landlord for the £364.49 credited to her but said she had checked previous years and noted an overpayment of £685.47 had also occurred for the 2016/17 and 2017/18 years.
  14. The landlord wrote to the resident on 29 May 2020. It provided a service charge statement to confirm the £364.49 credit but advised it was unable to revisit the costs for 2016/17 and 2017/18 because the resident had not raised the disputed costs within six months of receiving the charges for those years. It added that this was in accordance with section 22 of the Landlord & Tenant Act (1985).
  15. The resident submitted a complaint on 1 June 2020 – this was on the grounds that she felt the landlord’s decision not to revisit 2016/17 and 2017/18 was unfair and unreasonable. She explained that she had been unable to dispute amounts before because there had been no detailed breakdown of the communal electricity charges and she had been unaware that the electricity supplier had been performing a miscalculation.
  16. The landlord wrote to the resident on 24 June 2020. It reiterated that there was a six-month limit on reviewing costs following the issuing of a final service charge statement and that it could not therefore reconsider the 2016/17 and 2017/18 charges.
  17. This Service wrote to the landlord on 16 August 2020 to enquire about the progress of the resident’s complaint.
  18. The landlord wrote to the resident on 18 August 2020. It asked what aspects of the service charge concerned the resident and what outcome she was seeking so it could provide a complaint response. The resident replied the same day and asked the landlord for a refund of the incorrect charges for 2016/17 and 2017/18. She added that the landlord was hiding behind a time limit and misinterpreting legislation in doing so.
  19. The landlord’s internal records show that it completed a calculation on 26 August 2020 that the resident’s property had incorrectly attracted a total charge of £612.66 for the 2016/17 and 2017/18 years (related to the electricity charges for pumps that served another block).
  20. The landlord sent a stage one complaint review response to the resident on 28 August 2020. This concluded that:
    1. it had undertaken an investigation following the resident’s query about invoices related to the electricity charges for 2018/19
    2. these led to it attending the site and issuing its findings to the resident in April 2020
    3. a refund of £364.49 had been made to the service charge account and the 2019/20 and 2020/21 final charges would be reconciled accordingly
    4. ‘in accordance with the Summary of Rights and Obligations from the Landlord and Tenant Act 1985’ any requests made about financial years prior to 2018/19 were made outside of ‘this six-month period’ and so those years had been ‘closed’.
  21. The resident submitted a complaint escalation to the landlord on 28 October 2020. She raised concerns that:
    1. the stage one complaint response failed to address the 2016/17 and 2017/18 years
    2. there had been no way for the resident to be aware of the miscalculation of the electricity charges in 2016/17 and 2017/18
    3. it was unjust, unfair and unreasonable for the landlord to misuse the six-month time bar
    4. the landlord should compensate her for the stress and inconvenience of chasing this matter since August 2019.
  22. The resident chased the landlord for a complaint response on 13 November 2020 and this Service raised her case with the landlord on 4 January 2021.
  23. The landlord issued a final complaint response to the resident on 21 January 2021. It apologised for the delay and concluded that:
    1. it had liaised with the resident since August 2019
    2. it had explained on 29 May 2020 and 24 June 2020 that section 22 of the Landlord and Tenant Act (1985) meant there was a six-month time limit and the 2016/17 and 2017/18 years were now ‘closed’
    3. it apologised for the original error with the re-charging and the delay in rectifying this
    4. it apologised and awarded £75 compensation for delay in the complaint handling
    5. it signposted the resident to the first-tier tribunal to challenge the reasonableness of charges.
  24. The resident advised this Service in January 2021 that she accepted the compensation for the complaint handling failure but remained dissatisfied that the landlord had failed to rectify the errors with the 2016/17 and 2017/18 charges.

Assessment and findings

  1. In reaching a decision we consider whether the landlord has kept to the law, followed proper procedure and good practice, and acted in a reasonable way. Our duty is to determine complaints by reference to what is, in this Service’s opinion, fair in all the circumstances of the case.
  2. The Ombudsman’s Dispute Resolution Principles are:
  • Be fair
  • Put things right
  • Learn from outcomes

This Service will apply these principles when considering whether any redress is appropriate and proportionate for any maladministration or service failure identified.

  1. It is not disputed that the resident was overcharged for communal electricity consumption costs for the 2018/19 year and that the resident began to dispute this from August 2019 on receipt of the final statement. After an investigation, the landlord eventually apologised for the miscalculation error and credited the resident the value of the incorrect charge – this demonstrated that the landlord was willing to put right its error.
  2. The resident subsequently queried the landlord’s decision not to credit her for the 2016/17 and 2017/18 amounts. In response, the landlord concluded that the resident was not entitled to a reimbursement of these amounts due to section 22 of the Landlord & Tenant Act (1985). However, that legislation relates to the resident’s right to inspect accounts supporting a service charge statement. The resident has not made a request to inspect the 2016/17 and 2017/18 accounts and this legislation is therefore not relevant to this case – it was unreasonable for the landlord to give this as a reason for it not to reimburse the resident.
  3. It is not disputed that the resident was overcharged for communal electricity consumption costs for the 2016/17 and 2017/18 due to the same error that led to the 2018/19 overpayment. Both the resident and landlord have made calculations of the likely overpayment and, although their figures differ, the landlord knows that the resident was overcharged communal electricity costs by more than £600 – given the landlord was aware that the resident was overcharged, has already investigated how this occurred and has already calculated the level of the overpayment, it was unreasonable for it to withhold crediting the resident.
  4. The resident advised the landlord during the complaints process that she had not been able to query the miscalculation error prior to 2018/19. The service charge statements demonstrate that the 2018/19 year was the first statement that showed a significant difference between the estimated and actual communal electricity charges. It was unreasonable that the landlord failed to investigate the resident’s explanation that there was no way for her to have been aware of the 2016/17 and 2017/18 miscalculations. Its stance that these years were ‘closed’ was heavy-handed and meant that it failed to apply discretion to its decision-making.
  5. In accordance with the Ombudsman’s Dispute Resolution Principles, it would have been appropriate for the landlord to redress the error in its charging by putting things right for the resident and learning lessons from the case. Its refusal to refund the incorrectly charged amounts meant that it failed to put things right and there is no evidence that it reviewed why its own service charge audits had failed to recognise the error and how it could avoid incorrect charging in future – this was unreasonable and led to an unfair outcome for the resident.
  6. In summary, the landlord’s decision that the resident could not be refunded 2016/17 and 2017/18 service charges due to section 22 of the Landlord and Tenant Act was unreasonable. The resident had not made a request to inspect accounts and this legislation was therefore irrelevant. The landlord’s decision not to refund the resident the amount that it calculated she had overpaid was not in accordance with the Ombudsman’s Dispute Resolution Principles.

Determination

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was maladministration by the landlord in its handling of the resident’s request for a reimbursement of inaccurate service charges she paid in 2016/17 and 2017/18.

Reasons

  1. The landlord charged the resident an incorrect service charge amount for 2016/17 and 2017/18 and failed to put this right when it refused to reimburse her.

Orders

  1. The landlord to reimburse the resident the amount that it has calculated she was incorrectly charged for the 2016/17 and 2017/18 communal electricity charges.
  2. The landlord to write to the resident to:
    1. apologise for the service failures identified in this report
    2. confirm how it has calculated the 2016/17 and 2017/18 overpayments and when this amount will be credited to her.

The landlord should confirm compliance with the above orders to this Service within four weeks of the date of this report.

  1. The landlord to determine if, and how, the other current and previous leaseholders of this block have been affected by the communal electricity cost miscalculation; it should devise a redress policy of how it will reimburse current and previous leaseholders the amounts that they overpaid in 2016/17, 2017/18 and 2018/19.

The landlord should confirm compliance with this order to this Service within six weeks of the date of this report.