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Metropolitan Housing Trust Limited (202002912)

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REPORT

COMPLAINT 202002912

Metropolitan Housing Trust Limited

13 July 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:
    1. the resident’s questions about service charges;
    2. the related complaint.

Background and summary of events

Background

  1. The resident is a leaseholder and has advised that she purchased the lease on 14 May 2018. The landlord has described the property as a two-bedroom flat.
  2. The lease requires the resident to pay a ‘proportionate part of the reasonable expenses and outgoings incurred… in the repair maintenance improvement renewal and insurance of the building’.
  3. The lease requires the landlord to:
    1. provide the resident with a service charge ‘certificate’ annually and as soon after the end of the financial year ‘as may be practicable’
    2. include within the certificate ‘a summary of… expenses and outgoings incurred… together with a summary of the relevant details and figures forming the basis of the service charge’ and that the certificate is ‘conclusive evidence… of the matters which it purports to certify other than in the case of manifest error’.
  4. Section 21 of the Landlord and Tenant Act (1985) provides a right for residents to request in writing a summary of the relevant costs making up the service charge in the previous accounting period. The landlord must provide the summary within one month of receiving the request (or within six months of the end of the accounting period, whichever is later).
  5. The landlord has a service charges policy that sets out that it will:
    1. reconcile actual service charge costs within six months of the end of the financial year
    2. ‘provide service charge payers with clear and concise information about service charges we intend to make, how we set those charges, and the actual cost of providing services’.
  6. The landlord has a ‘service charges explained’ document on its website that:
    1. defines statutory testing and servicing as the ‘cost of Ventilation & Lightning Protection Services, Statutory Asbestos Surveys, Testing of Electrical Installations and equipment, Fire Risk Assessments, Servicing and repairs to Fire Detection and Fire Fighting Equipment (including AOV’s), Water Risk Assessments and servicing’
    2. advises that residents can request a breakdown of costs for the end of year statement within six months of receiving the end of year account and that a ‘full breakdown’ will then be offered
    3. allows for residents to report that they have not received a service they have been charged for in which case the leaseholder and services charges team will determine if any changes need to be made to payments.
  7. At the time of this complaint, the landlord had a three stage complaints policy of:
    1. stage one – where a response was due within 10 working days
    2. stage two – where a response was due within 10 working days
    3. stage three – where a head of service or director or panel will review the case and provide a response within 10 working days of a hearing.
  8. The landlord also had a compensation policy that allowed for compensation of between £10-£150 for ‘poor complaints handling’ and up to £500 for distress and inconvenience caused.

Summary of Events

  1. The landlord and resident exchanged emails between 19 October 2018 and November 2018 regarding information the landlord had provided about the 2017/18 service charges. These demonstrate that:
    1. a breakdown of the block service charge elements was offered to the resident on 19 October 2018, in response to an enquiry the landlord advised it had received from the resident on 3 October 2018
    2. the resident asked for a copy of a fire safety testing invoice for £68,026 (listed under the statutory element of the charges) given she felt that the fire safety report had been limited
    3. the landlord said it would seek a copy of the invoice.
  2. The resident wrote to the landlord on 22 March 2019. She asked for a complaint to be logged and for a review of her service charges. She acknowledged that the landlord had deducted the £398.63 she had originally been charged for the fire safety statutory testing (as it had been unable to provide supporting evidence) but said she had also queried multiple items in the 2017/18 bill, including why her share of block expenses was 1.34% and not 1.14%.
  3. The resident chased a response to her complaint on three occasions in April 2019 before the landlord advised her on 1 May 2019 that service charge enquiries are not dealt with through the complaints process.
  4. The resident chased progress on the service charge dispute on 16 May 2019 and the landlord advised her on 24 May 2019 that it was still working on the breakdown and collecting invoices.
  5. The landlord and resident exchanged emails on 12 September 2019 regarding the 2017/18 service charges. These demonstrate that:
    1. the resident had raised concerns about costs for fire safety testing and ‘multiple reallocations’ relating to the fire assessment and she understood the former had been deducted
    2. the landlord explained why the resident was charged a 1.34% apportionment
    3. there were charges allocated to her block that were not accurate such as playground charges (when the block did not have this facility) and window cleaning charges (when she reported that no windows had been cleaned that year).

A spreadsheet was attached to this correspondence with hundreds of lines of entries for individual service charges, many of which the resident disputed on the grounds they were unsupported or not related to her block.

  1. The landlord’s records show that it received a complaint from the resident on 18 September 2019. This was on the grounds that the resident:
    1. said she had asked for a complaint to be logged on 22 March 2019
    2. had raised questions from 19 October 2018 about her service charge account due to ‘unreasonable expenses’ attributed to her flat.
  2. The resident wrote to the landlord on 19 September 2019 – she clarified that her initial service charge query had been raised on 3 October 2018 and the matter was outstanding almost a year later.
  3. The landlord issued a stage one complaint response to the resident on 25 September 2019. It apologised for ‘recent poor customer service’ and advised that feedback had been provided to its leasehold and service charge team and that a colleague would now assist the resident with her service charge concerns.
  4. The resident replied to the landlord on 25 September 2019. She queried the response on the grounds that the service charge was still in dispute and there had been no reply to her latest questions of 12 September 2019. She asked for the complaint to be re-opened as she was seeking an apology and a compensation proposal because the said the landlord had ‘failed to support the fire safety inspections’.
  5. The resident wrote to the landlord on 28 September 2019. She asked for a breakdown of the 2018/19 service charge and the related audit certificate.
  6. The resident chased the landlord on 15 October 2019 and 13 November 2019 for progress on the complaint about the handling of her 2017/18 service charge questions.
  7. The resident wrote to the landlord on 15 November 2019. She raised concerns that:
    1. the queries about the 2017/18 service charge questions remained outstanding
    2. her request for the 2018/19 service charge breakdown was still outstanding.
  8. The resident chased progress again on six occasions between November 2019 and February 2020.
  9. The landlord’s internal records show that it noted receipt of a complaint escalation on 22 February 2020 on the ground that the stage one response did not properly address the matter. The landlord acknowledged the complaint escalation on 25 February 2020.
  10. The resident wrote to the landlord on 31 March 2020. She asked for the 2018/19 breakdown to be provided in the same format as a previous response (sent by the landlord on 19 October 2018 for the 2017/18 year).
  11. The landlord wrote to the resident on 7 April 2020 – it provided the 2018/19 service charge breakdown.
  12. The resident wrote to the landlord on 8 April 2020. She asked for confirmation of the total block expenditure and said she had added some questions about individual charges.
  13. The landlord responded to the resident on 22 April 2020. It confirmed that the total expenditure tallied with what the resident was sent in September 2019. It added that it had commented on the resident’s individual questions and gave information about statutory testing and servicing although some answers were not yet possible as further information had been sought from relevant teams.
  14. The resident wrote to the landlord on 22 April 2020 – she acknowledged the answers to date and advised that there were now eight outstanding questions.
  15. The resident chased a response from the landlord on 1 June 2020.
  16. The landlord replied to the resident on 5 June 2020. It advised that it had not received sufficient information to answer some of the resident’s questions and would send a revised statement with the necessary adjustments.
  17. The resident wrote to the landlord on 15 June 2020 – she chased the revised statement that had been promised.
  18. The landlord also issued a stage two complaint response on 15 June 2020. It concluded that:
    1. the 2018/19 audit report had been provided and a member of staff had assisted the resident with service charge updates
    2. £100 compensation was awarded for complaint handling failure due to its delay at times in offering responses.
  19. The resident replied to the landlord’s final complaint response on 17 June 2020. She advised that she was still liaising with the landlord on potential changes to her service charge due to ‘unsupported items the block was charged for’.
  20. The landlord wrote to the resident on 17 June 2020. It advised that it had obtained detail from its commercial team on outstanding queries but was awaiting confirmation on two more service charge items.
  21. The landlord wrote to the resident again on 25 June 2020 – it said it had attached a spreadsheet with additional comments. The resident wrote to the landlord on the same day. She confirmed that there was only one item left outstanding which was the statutory fire testing information.
  22. The landlord wrote to the resident on 9 July 2020. It advised that it had not received information back from the surveyor about the statutory fire testing but it did not believe it had breached legislation and that expenditure was not removed from bills unless it this was required due to a legal challenge.
  23. The resident replied to the landlord – she claimed that the landlord had failed to provide supporting information within the required timeframe and indicated that she was in favour of the landlord’s approach on the 2017/18 charges when it refunded items that were ‘unsupported’.
  24. The resident wrote to the landlord on 19 October 2020. She reported that the 2018/19 service charge breakdown remained outstanding and asked for the 2019/20 breakdown of costs.
  25. The resident wrote to the landlord on 11 January 2021. She advised that she was yet to receive a ‘reconciling breakdown’ for the 2018/19 service charges and that there had been no response to queries on the expenditure.
  26. The landlord wrote to the resident on 18 January 2021 – it said it had attached the 2019/20 service charge breakdown to that email.
  27. The resident wrote to the landlord on 19 January 2021. She asked for a breakdown for the 2018/19 service charges in the same way as the landlord had done for 2019/20 and she asked for supporting evidence for another £22,000 charge for statutory testing and servicing (she indicated that a similar charge for 2017/18 had been waived).
  28. The landlord wrote to the resident on 10 February 2021. It advised that the £22,000 statutory testing and servicing charge related to replacement of emergency lighting (although it was still waiting for a copy of the invoice) and that the 2018/19 breakdown would be provided. The resident replied the same day – she queried the emergency lighting explanation as she said that this work had not been done.
  29. The landlord wrote to the resident on 12 February 2021. It provided a breakdown for aspects of the 2018/19 service charges but advised there were four areas outstanding, including statutory testing and servicing. It added that the full breakdown would follow.
  30. The resident wrote to the landlord on 9 March 2021. She asked for an update and for the £22,000 statutory testing and servicing charge for 2019/20 to be removed if it could not be ‘supported’. She advised that she would be willing to overlook the outstanding 2018/19 breakdown if the landlord agreed to this.
  31. The resident advised this Service in April 2021 that £22,000 in statutory testing and servicing charges had been added to the service charge accounts in both 2017/18 and 2019/20 but the landlord was ‘unable to say what this relates to or provide an invoice or schedule to support it.’
  32. The landlord wrote to the resident on 12 May 2021. It said it had attached the invoice for the £22,000 charge which was for replacement emergency lighting to the block that it had undertaken without consultation (so had limited the charge to each leaseholder to £250).
  33. The landlord and resident exchanged further emails during 12-13 May 2021. These evidence that:
    1. the landlord told the resident it was able to carry out works without section 20 consultation where they were emergency and the charge to leaseholders had been limited to £250
    2. the resident’s usual block share is 1.34% but it had applied this incorrectly to the capped £22,000 statutory testing and servicing charge so a credit of £44.80 would be applied to the account.

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.

Service charges

  1. This Service has advised the resident that the level of service charges is a matter for the First Tier Tribunal (Property Chamber) to determine rather than the Ombudsman. Instead, this investigation considered the separate issue of the way in which the landlord communicated with the resident about the charges.
  2. It is not disputed that the resident raised questions about her 2017/18 service charge liabilities on 3 October 2018. The landlord provided the resident with a breakdown of the 2017/18 service charges on 19 October 2018 and answered further questions about individual items such as communal gardening during the subsequent two weeks. The only outstanding question the resident continued to raise by early November 2018 was about a charge for fire safety testing. The landlord was obliged to provide the resident with a breakdown of charges within one month of her request – its initial responses to the resident during October-November 2018 were offered within this timescale and were therefore appropriate.
  3. No evidence has been seen by this Service of any further discussions between November 2018 and March 2019 but the resident advised on 22 March 2019 that the landlord had not been able to locate an invoice for the fire safety testing charges. She noted that it had made an adjustment to her service charges accordingly. Whilst it is not clear to this Service how the landlord reached this decision, it was reasonable and resolution-focused for the landlord to carry out an account adjustment for the resident given it had not been able to locate the information she requested about it and the resident later confirmed she was satisfied with this outcome.
  4. The resident referred to further questions about the 2017/18 charges on 22 March 2019. It is unclear from the evidence whether these specific questions had been raised prior to March 2019. Nevertheless, the landlord failed to engage with these questions until mid-September 2019 – for instance, the landlord did not answer the resident’s question on the apportionment percentage for six months. This delay was unreasonable and meant that the resident had to consistently chase a response in this period.
  5. Another series of specific questions about some of the 2017/18 charges were raised by the resident on 12 September 2019, for instance on playground and window cleaning charges. Based on evidence seen by this Service, these questions remain unanswered – this was again unreasonable although there is no evidence that the resident raised them again after November 2019.
  6. The resident requested a breakdown of the 2018/19 service charges on 28 September 2019. There is no evidence that this was provided to the resident until 7 April 2020, despite multiple chasers sent by the resident during the intervening period. This was outside of the timescale the landlord was required to respond within – its legal obligation was to offer the information within one month of the request (or within six months of the end of the accounting period) but it took more than six months to do so and failed to offer any updates to the resident in the meantime – this was inappropriate.
  7. The resident raised additional questions about the 2018/19 service charges in April 2020, in light of the breakdown she received. There were a range of items that the resident queried but by late June 2020, she reported that there was only one question left outstanding. Although it took around two months for the questions to be answered, this was not an unreasonable timescale given the number of queries raised.
  8. The outstanding question for the 2018/19 charge related to statutory fire testing and the landlord acknowledged in July 2020 that it had been unable to obtain information from its contractor on this work. It advised the resident that it was unwilling to waive the related charge and it is not for this Service to decide on the reasonableness or level of a service charge. Nevertheless, it is of concern that the landlord was unable to obtain information about the charge (using its own records and on request from its contractor) for what it said was a statutory function. The landlord therefore failed to offer the ‘clear and concise’ information that its service charges policy obliges it to – this was inappropriate.
  9. The resident raised the matter of the 2018/19 service charge breakdown again in October 2020 when she referred to a request for a ‘reconciling breakdown’. This Service has not been provided with copies of the breakdowns so it is unclear how the ‘reconciling breakdown’ requested differed to the breakdown provided in April 2020. Nevertheless, the landlord failed to respond to this request until February 2021 and even then, it acknowledged that it could not assist with four elements of the service charges. This was unreasonable as it meant that the resident was not offered clarity on some aspects of her service charges and it is again of concern that the landlord’s record-keeping did not allow this information to be readily available.
  10. The resident’s request for the 2019/20 service charge breakdown and questions about a charge for statutory testing and servicing have not been considered through the landlord’s complaints process based on evidence seen by this Service. This is not therefore within the Ombudsman’s jurisdiction but it is of concern that it took the landlord three months to provide the requested 2019/20 breakdown and four months to provide an invoice for the statutory testing and invoicing charge that the resident queried.
  11. The landlord has apologised through the complaints process for poor customer service and said that it had raised the case with the leasehold and service charge team in September 2019 to improve performance. However, the further inappropriate delays in response to questions about the 2018/19 and 2019/20 charges indicate that there are still difficulties in the landlord accessing records to provide the ‘clear and concise’ information it is required to offer. Further, the landlord failed to consider a compensation award in recognition of the time and trouble the resident was put to due to its acknowledged ‘poor customer service’.
  12. In summary, the landlord delayed unreasonably in responding to the resident’s request for a breakdown of her 2018/19 service charges and in answering her questions about the 2017/18 charges. It has also been unable to offer more detailed information about elements of the 2018/19 service charges.

Complaint handling

  1. The resident asked for a complaint to be logged on 22 March 2019 due to delays in the landlord answering her questions about the 2017/18 service charges. The landlord failed to acknowledge the complaint request until 1 May 2019 – this was already outside of the 10-working day timescale it set for stage one complaints in its own complaints policy and when it did respond, it told her that a complaint would not be logged. This represented an unreasonable delay of almost a month.
  2. The landlord’s complaint policy did not set out that it would not consider service charge matters through the complaints process. Its decision to refuse the complaint was therefore inappropriate, particularly as it also failed to address the service charge questions promptly outside of the complaints process.
  3. When the resident raised the delays again on 18 September 2019, the landlord did log a complaint and issued a stage one complaint response on 25 September 2019. This was within the 10-working day period but the response was limited – it simply apologised for the poor service and said the case was closed as a colleague within the service charge team was assisting the resident. This was unreasonable as the landlord failed to demonstrate that it had investigated why the customer service had been poor, offer any explanation to the resident or reassure her that it would follow up to ensure she had received the service charge information she was still seeking.
  4. The resident expressed continued dissatisfaction on the same day she received the stage one complaint response and asked for her complaint to be re-opened. The landlord failed to respond to this request. It did eventually record that the resident had made a stage two complaint escalation in February 2020 but even then it failed to offer a stage two complaint response until 15 June 2020. This was well outside of the 10-working day timescale set out in its complaints policy for a stage two complaint and was therefore inappropriate.
  5. When the landlord issued the stage two complaint response, it apologised and awarded £100 compensation in recognition of the complaint handling failure. However, it again failed to demonstrate it had investigated the substantive matter of the difficulties the resident reported in obtaining service charge information and the response did not signpost the resident to either its stage three complaints panel or this Service (despite the landlord subsequently confirming this represented its final complaint response).
  6. Given it took nine months for the complaint to proceed through the landlord’s complaints process and there was still no explanation at the end of this process as to why the resident had encountered difficulty in obtaining information about her service charges, the landlord should have awarded the resident the maximum £150 compensation for complaint handling failure allowed for within its compensation policy.
  7. In summary, the landlord did not respond at either stage one or stage two of its complaints process within an appropriate timescale, failed to log and escalate the complaint in accordance with its policy and did not demonstrate that it had investigated the resident’s concerns. Its apology and £100 compensation offer failed to offer the resident sufficient redress for these service failures.

Determination

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure by the landlord in its handling of:
    1. the resident’s questions about service charges;
    2. the related complaint.

Reasons

  1. The landlord failed to meet its obligations to answer the resident’s request for a breakdown of her 2018/19 service charges within a month and it delayed unreasonably in answering questions about the 2017/18 and 2018/19 service charges.
  2. The landlord delayed in logging and answering the resident’s complaints at both stages of its complaints process and its compensation award was not sufficient given the circumstances of the case.

Orders

  1. The landlord to write to the resident to:
    1. apologise for the service failures identified in this report
    2. signpost her as to how she can dispute the level of any service charges by recourse to the First Tier Tribunal.
  2. The landlord to pay the resident compensation of £350, comprised of:
    1. £200 in recognition of the inconvenience and time and trouble caused to her by the service failure in its handling of her questions about service charges
    2. £150 in recognition of the inconvenience and time and trouble caused by its complaints handling failure (if it has already paid the £100 it proposed, it can deduct this from the total compensation to now be paid to the resident).

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

Recommendations

  1. The landlord to review its handling of this case and formulate an action plan to ensure it can provide residents with service charge breakdowns and answers to questions about individual charges in a reasonable timescale in future.

The landlord should confirm its intentions in regard to these recommendations to this Service within eight weeks of the date of this report.