London & Quadrant Housing Trust (L&Q) (202209957)

REPORT

COMPLAINT 202209957

London & Quadrant Housing Trust (L&Q)

7 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 response to the resident’s concerns about:
1. Paying the same service charge for a concierge service as other blocks when not receiving the same value from the service.
2. The night concierge service being commissioned without consulting the residents in advance.
The Ombudsman has also considered the landlord’s handling of:
1. The resident’s enquiries and requests for information about the night concierge service.
2. The resident’s complaint.

Jurisdiction

What we can and cannot consider is called the Ombudsman’s Jurisdiction. This is governed by 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.
Paragraph 42(f) of the Scheme says that the Ombudsman may not consider complaints which, in its opinion, 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.
In relation to point 1(b) above, the resident submits that the landlord failed to consult with him and other residents about implementing a night concierge service, as required under Section 20 of the Landlord and Tenant Act 1985. The landlord has said there was no obligation on it to consult with the resident, as the concierge staff were being provided by the management company, so there was no requirement for formal consultation to take place.
The First Tier Tribunal (FTT) has powers to determine Section 20 matters. It can also determine whether service charges are reasonable, and whether a landlord has followed the correct procedure to be entitled to recover service charges. Given the difference in the parties’ positions on this point, this dispute requires a legally binding decision, which would confirm the position for both parties. For this reason, the complaint about the commissioning of the night concierge is better suited to the FTT and is outside the Ombudsman’s jurisdiction, in accordance with paragraph 42(f).
The Ombudsman can consider the landlord’s handling of the resident’s more general enquiries and requests for information about the delivery of service by the night concierge. As a result, the summary of events below is not a record of all events and correspondence between the parties, but only those pertinent to the matters under investigation.

Background

The resident purchased the property, a 2 bedroom second floor flat, in January 2020 on a shared ownership basis and is a leaseholder. There are 3 blocks of flats on site (A,B and C), and the resident lives in block A. The landlord is a housing association. On 2 April 2019, the resident signed a reservation form which confirmed he had been provided with a service charge breakdown for the property.

Summary of events

The landlord sent the resident a breakdown of his rent and service charge for the 2022/23 financial year, on 14 February 2022. It explained that in 2021/22 he had paid £615.53 rent and £357.46 service charge; meaning a total payment of £972.99 per month. From April 2022 he would be paying £662.31 rent and £401.45 service charge, totalling £1,063.76 per month.
The resident queried the increase in service charges on 14 and 15 March 2022 and said he wanted a breakdown. The landlord sent an email response the same day and referred him to its 14 February 2022 letter. It said:
1. Some of the services provided were not provided by itself but by the management company, which set the budget for all anticipated expenditure and reconciled their accounts.
2. It tried to ensure invoices were accurate and payments made on time but there may be unforeseen circumstances in the management company invoicing that it could not anticipate or control. These could not be predicted when estimates are set.
3. He had a credit balance but the increase for the 2022/2023 financial year, was due to the current levels of inflation. It wanted to reduce the likelihood of a deficit at the end of each year and the last final statement highlighted a deficit balance. By adding an inflationary uplift, it was trying to limit the potential of that happening again.
4. As he was a variable service charge payer, if the increase was estimated inaccurately, he would receive a credit at the end of the year as he had before.
On 11 April 2022, the landlord provided the resident with a breakdown of how the service charge had been calculated. His contribution was 5.3877% of the entire property which amounted to £3,901.70 and a 1% uplift was then added to that amount. The resident replied the same day and said he was unhappy with the increase in service charges, especially when his building did not have its own concierge.
In its response of 21 April 2022, the landlord explained that it based its estimated service charge on information from the management company. It provided a copy of its budget which set out the services provided and said the property manager would be best to address the resident’s concerns. The resident responded the same day and said it ought to be something it could address and he felt “fobbed off”.
The landlord replied to the resident on 25 April 2022, and said that as the property manager would have the best understanding about the service charge, it had asked the management company to address his concern.
After being chased for a response by the resident on 6 and 10 May 2022, on 12 May 2022 the landlord explained that the concierge service was a service provided to the whole development. The most recent increase to the estimated service charge was due to an increase in the estimated staff costs at both estate and block level. It reiterated how the resident’s service charge was calculated, why the costs were variable year on year and how the charges were reconciled against actual costs.
The landlord said that a night concierge to oversee the development from 7pm until 7am was added in response to reports of burglaries on the development. However, it was in the process of cancelling the additional concierge service, so it anticipated a reduction in the service charge. It was not able to confirm the end date of the concierge service but it requested that the Housing Management Team communicate this information to the resident when it had it.
The resident responded the following day to say he was not happy that residents were not consulted about the night concierge. The landlord advised on 13 May 2022, that his query had been passed to the property management team to respond to. The resident then chased the landlord for a substantive response on 20, 26 and 31 May 2022.
On 31 May 2022, the landlord advised the resident that the management company put its budgets/estimates together and it used those calculations to pass on the anticipated expenditure to the resident. The concierge service was charged at estate level. This meant there was a concierge service on the development which the resident had access to and therefore benefitted from. The charge was not at block level because it was not stationed in his block.
On the same day, the resident emailed the landlord saying he was “astonished” he was paying for a concierge he had no access to and he had not been provided with a sufficient explanation as to why it was unilaterally decided to increase night staff and increase the service charge.
The landlord explained on 7 June 2022 that the concierge service was something all residents had access to. The estate paid for the concierge and then charged it back and each block paid different amounts. The staffing was paid for by residents at estate and block level covered their wages, office costs, the internet, the package system, training, uniform, and more. The physical element of having a member of staff be able to open the doors/buzz people in was not included. Regarding packages, although the concierge desk was located inside another block, the residents in that block still had to walk down to the desk to receive their packages, the same way the other blocks had to walk to the desk.
The landlord has said that having received queries over the service charge from the resident, it spoke with him at some time in June 2022. As he was unhappy with its explanation it recorded his concerns as a stage 1 complaint.
On 23 June 2022, the landlord reiterated that the resident’s block received the same service as other blocks despite the concierge desk being located in block B. It set out the services all blocks received the benefit of and said each block was charged for the staffing services at an estate level, however each resident was also charged at block level. The cost difference between block B and C was much higher than block A (the resident’s building), due to the size of the building, how many floors etc. A night concierge service had been put in place due to complaints about theft, but a survey would be sent to residents to obtain input on the future of that service.
The resident responded the same day and confirmed the concierge service was of value, but in his view his block did not have the same benefit, as he had to collect post from another building and could not buzz people in. Therefore, he felt he should not be paying the same service charge as those in other buildings.
The landlord replied on 24 June 2022 and said it would speak with the property manager about the matter, but having looked at the budget, all blocks paid for the concierge office. It reiterated its previous explanations about how the service charge was calculated and why the benefits of the concierge service were not block-specific.
On 5 July 2022, the landlord explained it had had a meeting with the property manager and raised the resident’s concerns, but it would be best for him to speak with the property manager directly. The resident then chased the landlord on 7, 11 and 13 July 2022 and said he wanted the landlord to provide a response to the issues he had raised.
The landlord apologised for the delay on 13 July 2022 and said all blocks received similar services, so there was no way of putting a quantifiable amount on the exact amount of service each individual block received. It confirmed that the resident had use of the parcel rooms and assistance from the concierge.
The resident thanked the landlord on 1 August 2022 for its efforts trying to address his concerns. However, he remained unhappy with what he considered to be the “arbitrary” service charge increase and not being consulted about the night concierge. He chased for a response on 9 August 2022 and the landlord responded the same day explaining that he could complain to the Ombudsman once he had made a complaint to it. It also said the accounts for 2021/22 were being reconciled which would include some corrections to reflect a recently identified issue with plot numbers. That had been rectified and it would aim to send the statements to all residents by the end of September 2022 at the latest.
On 5 September 2022, the landlord wrote to the resident and informed him he was £146.36 in credit in relation to the last financial year’s service charge.
The landlord issued its stage 1 response on 26 October 2022, when it:
1. Confirmed that the resident received the same service as other blocks and reiterated its previous explanations regarding the cost distribution across the blocks.
2. Provided specific details of what the charges covered, including 6 on-site staff, and explained how the resident could make use of the concierge service (specifically with regard to buzzing people in).
3. Explained that the night concierge service was not a qualifying long-term agreement and a decision had been made to extend the service to 24 hours due to various reported issues but this was under review.
4. Offered further up to date information on the status of the resident’s service charge account.
The resident escalated his complaint on 3 November 2022 and the landlord issued its stage 2 response on 22 December 2022, as follows:
1. It reiterated its previous assertions regarding the equal level of service received by the resident and the associated distribution of costs.
2. Residents of certain named blocks purchased their properties knowing: they did not have a concierge within their block; they were obliged to contribute to the concierge service which served the whole estate; and how their intercom system worked.
3. It provided a breakdown of the costs contributed by the various different blocks and explained the variations.
4. It explained the reasons behind the 24-hour concierge service and the benefits to the residents. It advised that residents were being given the chance to vote on whether the service remained in place.
The landlord uploaded the resident’s survey regarding the night concierge service on to a portal on 13 January 2023.
On 13 February 2023, the landlord advised the resident the rent charge had increased. From 1 April 2023 he would need to pay £1,170.58 per month (£708.67 rent and £461.91 service charge). It explained the lease said the net rent could increase each year by the Retail Price Index (RPI) plus 0.5% from November of the previous year. The RPI in November 2022 was 14%, so the increase would be 14.5%. However, due to the cost of living crisis it was capping shared ownership rents at 7%.

The landlord’s obligations, policies and procedures.

The lease dated 30 January 2020 provided details of the gross rent. It said that with shared ownership properties, typically the rent would be reviewed annually and would be increased in line with the RPI. It would be reviewed on an ‘upwards only’ basis so would not go down. It would be “capped at a figure representing the RPI increase plus 0.5%”.
The Summary of Tenant’s Rights and Obligations explained the lease set out the resident’s obligations in terms of paying a service charge, and he could write to the landlord and request a written summary of the costs that make up the service charge.
The landlord’s Complaints Policy says if it cannot resolve a complaint “there and then”, it will deal with it at stage 1 and acknowledge it within 5 working days and provide a response within 10 working days from the complaint being received. If it cannot meet that timescale, it will explain why and write again within a further 10 working days. If a complaint is escalated to stage 2 it will make contact within two working days and provide a response within 20 working days from the request to escalate. If we cannot do that, it will explain why and write again within a further 10 working days.
The landlord’s Standard Operating Procedure for Complaint Compensation says if someone suffers distress it would pay £10-£20 if it had low impact, £20-£40 for medium impact and £40-£60 for high impact. The same is true for inconvenience. For someone to be compensated for time and effort, compensation of £10-£50 may be paid if low impact, £50-£100 for medium impact and £100-£200 for high impact. The same figures are recommended for acknowledging poor complaint handling.
The landlord’s Service Charge Policy says service charge payers will be consulted when there is going to be a change in services provided that will affect their charges, such as:
1. Informal consultation will take place with residents when neighbourhoods wish to introduce or remove a service.
2. For residents on variable service charges, prior to the commencement of any long-term contract agreement (deemed to be more than 365 days) for the provision of service included in service charges. Where this cost is likely to exceed £100 a year for any one unit, it would carry out Section 20 Consultation with those applicable residents. “A copy of the S20 notice will be sent to any relevant registered tenants’ association. The S20 consultation is only carried out at the start of the contract and lasts the length of the contract. It does not need to be repeated each financial year. The consultation is done so that residents are informed of the future changes and additional cost to them, to give them opportunity to comment and so that [the landlord] can be reimbursed for the full cost of the service. Where reactive repairs are expected to exceed £250 including VAT per home, section 20 consultation will also apply.”
Variable service charges are determined by the lease and are assessed based on the actual costs incurred for the most recent financial year against the previous estimated costs of that year to set the coming year’s charge. If the actual cost exceeds the estimated cost, it can recover that additional cost from the residents. Conversely, if the actual costs were less than the estimates, it will refund the difference to the residents.

Assessment and findings

Paying the same service charge as other buildings for a concierge service.

The crux of this part of the resident’s complaint is that he is unhappy with the amount he has had to pay in service charges because in his view his block did not have the same benefits as other blocks in the development, such as the concierge service.
It is important to explain from the outset that the Ombudsman cannot investigate complaints solely about the level of service charge or how the landlord calculates the service charge (in accordance with paragraph 42(d) of the Scheme). If the resident feels the service charge he is paying is too high because he does not receive as much of a service as other residents in nearby blocks, he can make an application to the FTT. Alternatively, the resident can seek his own independent legal advice. This Service can however, investigate complaints where a resident has not received a statement or breakdown of service charges that they have requested, or if a resident has been charged incorrectly.
The evidence shows that the landlord explained to the resident how the service charges had been calculated and what services were included. The resident is of the view that the landlord has not done enough to address certain issues in the development, but the formal complaint focuses on his concern over the concierge service in particular.
The concierge is not based in the resident’s block, and he has made the point that he is not able to buzz people in to the building and has to collect parcels from another block. The landlord has explained that the resident’s block does have access to concierge services and is not at a disadvantage; but in any event, contributes the least towards the service charge budget.
The resident acknowledges in correspondence that the concierge service is of value and he does not claim to have not known when he purchased the property, that it was based in another block. It is not possible for the Ombudsman to know whether the resident knew he could not buzz people in to the building when he purchased the property. However, the onus was on the resident to satisfy himself with the facilities his property, his block and the development had, prior to committing to the purchase.
As explained, although the resident feels the service charges are too high, the Ombudsman is not able to assess whether the amount charged is reasonable or proportionate to the facilities available. It has though, considered the information the resident has been provided with and it is evident he was given a copy of the lease and details of the service charges when he purchased the property. The lease explains that rent including service charges, would be reviewed annually and would be increased in line with the RPI plus 0.5% and it would not go down.
Since moving to the property, every year the rent including service charges has increased as allowed for under the terms of the lease. However, for the 2023/24 financial year, the landlord chose not to increase the rent and service charges by 14.5% as it could have done. It increased it by 7% as it was mindful of the cost of living crisis; so the resident had the benefit of that.
In advance of the new financial year the resident was provided with details of the rent and service charges for the coming year based on costs from the previous year and estimated costs for the forthcoming year, as he should have been. The landlord also explained that the accounts would then be reconciled at the end of the financial year, and the resident would either be in debit or credit. This is normal practice and there is no indication the landlord has failed to do that.
There were occasions when the resident chased the landlord for a response to correspondence; notably in May and July 2022. In May it took the landlord just over 2 weeks to reply to correspondence, but it had referred the resident’s query to the management company. In July, although the resident followed up with the landlord, there was no significant delay in its response.
Overall the landlord’s communication was reasonable. It addressed the resident’s queries as they were raised. It explained it was the management company that dealt with the service charges and set out how they were apportioned for his property. It also explained that an uplift was applied in order to minimise the risk of a significant deficit which was sensible in case there were unforeseen expenses. Although the resident was concerned the service charges increase was “arbitrary”, the evidence does not support that. While the Ombudsman understands the resident’s concern over the annual increase, they have been in line with, or less than the amount set out in the terms of the lease. As such, its service in respect of this issue was reasonable.

Resident’s enquiries about the night concierge service.

The Ombudsman has not considered whether the landlord should have consulted with the resident by issuing a Section 20 notice, but it has considered whether the landlord responded reasonably to enquiries from the resident on this point.
The resident told the landlord on 13 May 2022, he was concerned about not having been consulted about the night concierge and the landlord advised it had referred the matter to the Property Management team. While the landlord went on to address the resident’s general concerns over the concierge service, it had to be chased for a response to this specific point on 31 May and 1 August 2022, which is unacceptable. Having referred the enquiry/complaint to a specific team to deal with, the landlord should have monitored the situation to ensure a response was sent promptly. It should not have taken the resident to chase for a response on 2 occasions, in order to get a reply. Although the landlord did ultimately address this point on 5 September 2022, this was nearly 4 months after the point was first raised.
The resident having to wait that long for information about the night concierge, amounts to unacceptable delay. It is acknowledged that the landlord did go on to develop a survey in January 2023 for residents to feedback their thoughts on the night concierge service, as it said it would. However, the landlord took too long to address this point and provide the resident with an explanation about how and why the decision was made to introduce a night concierge without consultation.
To acknowledge the delay and to recognise the inconvenience the resident suffered having to chase, as well as the frustration caused by the delay, the landlord should pay the resident £200 compensation. This is in line with this Service’s remedies guidance where there has been maladministration, but it had no permanent or long-term effect.

Complaint handling.

The landlord’s Complaints Policy says it initially tries to deal with a complaint “there and then”. In this case the exact date the resident complained to the landlord is not known, but it seems to be accepted by both parties, that it was sometime in June 2022. The landlord did then enter in to correspondence with the resident about his concerns and emails were exchanged on the matter for some time. However it was apparent by 1 August 2022, that the resident remained unhappy, so this should have prompted the landlord to deal with the complaint at stage 1, as per its policy, and it failed to do that.
This meant that the landlord did not issue its stage 1 response until around 4 months after the complaint was made, which is unacceptable. While it addressed the issues raised by the resident, its response failed to acknowledge that it had not adhered to its Complaints Policy or considered making an offer of compensation by way of remedy.
The landlord then exacerbated the situation because, having escalated his complaint on 3 November 2022, the resident did not receive an acknowledgement for 28 working days. The Ombudsman appreciates he was told he would receive a response by 12 January 2023 and one was sent on 22 December 2022 but this was still 35 working days after the complaint was escalated. This shows the landlord failed to learn from its mistake at stage 1 and again failed to consider whether it ought to pay the resident compensation to recognise its failures.
Having identified failures in its complaint handling at both stages 1 and 2, it is appropriate for the landlord to recognise the frustration caused to the resident as a result of this. Its Standard Operating Procedure for Complaint Compensation says compensation of £100-£200 is recommended where there has been poor complaint handling with high impact, but this Service is not bound by the landlord’s processes and procedures. The Ombudsman’s remedies guidance says where there has been maladministration and the landlord failed to attempt to put things right, as is the case here, compensation of £100 – £600 should be considered.
The resident had to chase the landlord in July 2022, for a response to his issues; however, the landlord did address the issues raised, and the effect of the maladministration was not permanent or damaging in the long term. It is important to recognise though that having delayed responding at stage 1, it would inevitably have been frustrating to experience a further delay in the complaint being escalated at stage 2. At both stages, no compensation was considered to acknowledge the delays. Taking all that in to account, a payment of £300 compensation is appropriate.

Determination (decision)

In accordance with paragraph 42(f) of the Scheme, whether the night concierge service should have been commissioned without consulting the residents in advance is outside of this service’s jurisdiction.
In accordance with paragraph 52 of the Scheme, there was no maladministration in relation the landlord’s response to the resident’s concern about paying the same service charge for a concierge service as other blocks when not receiving the same value from the service.
In accordance with paragraph 52 of the Scheme, there was maladministration in relation the landlord’s handling of the:
1. Resident’s enquiries and requests for information about the night concierge service.
2. Resident’s complaint.

Reasons

The FTT is best placed to make a legally binding decision, about whether the landlord should have served a Section 20 notice before commissioning the night concierge.
The landlord responded to the resident’s queries about service charges and in particular his concern that he was overpaying for the concierge service. It explained how the concierge was paid for and provided a breakdown of its service charges and billed in line with the terms of the lease.
The was a delay of nearly 4 months in the landlord responding to the resident’s concern about the implementation of the night concierge, which led to him having to chase for a response on 2 occasions.
There were delays at both stage 1 and stage 2 of the complaints process and no consideration was given to paying compensation to recognise the impact that had on the resident.

Orders and recommendations

Orders

Within four weeks of the date of determination, the landlord should:
1. Apologise to the resident for the failures identified within this report.
2. Pay the resident £500 compensation made up of:
  1. £200 for the frustration and inconvenience caused as result of delays responding to a night concierge enquiry.
  2. £300 for poor complaint handling.