One Housing Group Limited (202218187)

REPORT

COMPLAINT 202218187

One Housing Group Limited

11 October 2023

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 queries about the service charge relating to the building insurance.

Background

2. The resident is a leaseholder of the landlord, living in a one-bedroom flat.
3. The landlord sent a section 20 notice to the resident on 22 April 2022, regarding its intention to enter a long-term agreement for building insurance. The resident queried whether the landlord had completed market testing before renewing the insurance. He also asked the landlord to demonstrate the insurance was a reasonable cost and if there had been any claims in his block which led to an increased premium. 
4. The resident raised a complaint on 16 June 2022 as he was dissatisfied that his insurance premium was expected to triple. He said the landlord had not adequately answered his queries regarding the provisions in place for annual increases in the premium, the building reinstatement value, how the premium was apportioned, and previous insurance claims. He had also requested a copy of the building insurance policy.
5. In the landlord’s stage 1 response, it stated:
   1. Based on the 2022/2023 estimates, the resident’s insurance was expected to be £465.27.
   2. The insurance is obtained by tender process, but the premium rates could not be guaranteed beyond 12 months. The premiums could change due to several factors outside of its control.
   3. It had provided the extract of the insurance policy relating to leaseholders, which should be read in conjunction with the leaseholders’ summary of cover.
   4. It procures insurance on a stock-wide basis and the cover is divided into the relevant schedules. It is then apportioned by notional floor areas based on property type and the number of bedrooms. Spreading insurance costs across all leaseholders and shared owners, based on surface area of individual properties, is considered standard practice across much of the sector.
   5. It would review the approach taken to apportionment. It may find the current method to be the fairest and most practical approach. If the process changed, the leaseholders would be consulted and given executive approval on the decision.
   6. It received no commission for insurance.
   7. It recognised that the resident raised queries on 10 May 2022, which it did not respond to until 16 June 2022. It apologised for the delay and offered £50 compensation for not responding in a timely manner.
6. The resident escalated his complaint on 25 July 2022, as he had raised additional queries on 12 July 2022, which the landlord had not addressed. The queries related to the reasonableness of the premium, whether there had been large numbers of claims in other blocks, and details of the building sum insured. He also disputed the landlord’s explanations of the market conditions and thought it had failed to demonstrate that the premium was reasonable.
7. In the landlord’s stage 2 response on 22 August 2022, it said:
   1. It does not base the insurance recharge on the build value of a specific unit and reiterated its apportionment method. As the freeholder, it is responsible for insuring the building and apportioning costs in a reasonable way.
   2. The current reinstatement value for the resident’s flat has a re-build figure of £109,444.09.
   3. Any insurance claim made in his block would have a relatively low impact on the insurance premium. There had only been 1 claim by a leaseholder in his block, which was in 2017.
   4. The commercial block policy does not operate in the same way as personal insurance, so the resident would be unable to make comparisons.
   5. It could arrange a meeting if the resident wanted to discuss in more detail.
8. In the resident’s complaint to this service, he said his insurance premium had increased by 395% between 2018 and 2022. He remained dissatisfied as the landlord failed to provide clear information about the details of the insurance cover and how the premium is apportioned. He needed details of the current building sum insurance and the claims history for the building. He said without the information, he was unable to obtain comparable quotes to enable him to refer the issue to the FTT. 

Assessment and findings

Scope of investigation

9. In accordance with paragraph 42(e) of the Housing Ombudsman Scheme, this service may not consider 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’. This means the Ombudsman will not investigate the level or reasonableness of the building insurance included in the resident’s service charge. However, this service will investigate how the landlord has handled responses to the resident’s enquiries relating to the building insurance.
10. It is recognised that the resident is dissatisfied with how the landlord apportioned the building insurance charges. He has provided this service with calculations as evidence that the landlord apportioned the charges incorrectly. As his concern ultimately relates to the level of service charge, it will not be considered within the investigation. Nonetheless, consideration will be given to the landlord’s communication with the resident regarding his concerns, including whether its responses were in line with the relevant policies and procedures.

The landlord’s response to the resident’s queries about the service charge relating to the building insurance

11. In accordance with the lease agreement, the landlord is responsible for insuring the building. The reasonable costs incurred by the insurance will be included within the service charge. The lease states that the resident’s proportion of the service charge is calculated on the floor area of the premises as a percentage of the aggregate floor area of the building or estate. The landlord’s rent and service charge policy states that it should respond to queries about the service charge and its reasonableness within 10 working days.
12. It is recognised that the landlord has provided a vast amount of information regarding the building insurance charges. In his complaint to this service, the resident stated he remained dissatisfied with the information provided by the landlord regarding how the building insurance is apportioned, the total building sum insured and previous claims. The report will therefore primarily focus on the landlord’s handling of the issues the resident considers to be outstanding. 
13. The landlord explained that it procures its insurance on a stock-wide basis and then divides it into various schedules. The schedule relevant to the resident includes leasehold and shared ownership units. It said the charges are apportioned by notational floor areas based on property type and number of bedrooms. The explanation is consistent with the landlord’s rent and service charge procedure and the lease agreement. It explained that this method of apportionment was standard practice among the sector. The landlord also provided calculations to demonstrate how it had reached the resident’s estimated building insurance costs for the 2021/2022 period. This was reasonable to give the resident a clearer understanding.
14. As noted above, it is not the role of the Ombudsman to assess whether the landlord has correctly apportioned the building insurance charges, as this relates to the level of service charge. Complaints about the level of service charge fall within the remit of the FTT.
15. The resident requested information regarding the current building sum insured and the claims history for the building to enable him to refer the matter to the FTT. In line with its policy, the landlord should have provided the requested information within 10 working days or provided an appropriate reason why it was unable to.
16. In response to the resident’s query about previous claims, the landlord said there was 1 claim made in his block in 2017, but it would have a relatively low impact on the premium as it would be absorbed across all the units on the policy. It said it was unable to share the specific details of the claim due to GDPR. The resident told this service he was unhappy with the landlord’s response as he had not requested any personal details, just the claim amount and when it was made. Regardless, it was reasonable for the landlord to not share details relating to claims made by other residents.
17. The resident also requested the total building sum insured, which is the maximum amount of money that the insurer would pay to rebuild the property if it was badly damaged or destroyed. The landlord appears to use the terms reinstatement value, total sum insured, and rebuild figure interchangeably. It would have been helpful for the landlord to be consistent with the terminology used to prevent causing unnecessary confusion.
18. In its stage 2 response, the landlord told the resident that the re-build figure for the period of December 2021 to November 2022 was £109,444.09 for his property. However, as the resident requested the total building sum insured for the whole block, this was not a satisfactory response to his query. The resident told this service that the landlord had previously advised him in July 2021 that the rebuild value for the block was £2.144m, so he disputed that it would be unable to provide him with such information.
19. This service requested clarification on what the total building sum insured was. In response, the landlord stated the value at the time of the resident’s original request was £2.187m, which was increased in December 2022 to £2.833m. It was inappropriate that the landlord did not provide the information when initially requested by the resident.
20. The landlord stated the resident requested the information in October 2022: however, the records provided show he originally requested it on 10 March 2022. Given that the landlord should have provided the information within 10 working days, there was a significant delay. This caused the resident additional time and trouble pursuing the request both with the landlord and this service.
21. In correspondence with this service, the landlord maintained that its stage 2 response provided clarity regarding the total building sum insured. As noted above, the landlord provided the sum insured for the resident’s individual property, rather than the block as stipulated in his request. It is of concern that the landlord did not identify its failure to provide the information at an earlier stage when prompted by this service. In line with this service’s remedies guidance, landlords should be fair, learn from outcomes, and take steps to put things right, which it has failed to do.
22. Overall, the landlord has demonstrated reasonable steps to respond to the resident’s queries regarding the apportionment method and previous insurance claims made in the resident’s block. However, it failed to adequately respond to his request for the landlord to provide the total building sum. It is recognised that the requested information has been included within the report. Regardless, the extensive delay between March 2022 and September 2023 in the resident receiving the necessary information amounts to maladministration and compensation is warranted.
23. In line with this service’s remedies guidance, £200 compensation is appropriate as the landlord’s failure has adversely impacted the resident and the landlord has failed to acknowledge its failings or put things right.  

Determination

24. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in the way it handled the resident’s queries about the service charge relating to the building insurance.

Orders

25. As a result of its failure to provide the resident with the requested information regarding the building sum, the landlord is ordered to pay the resident £200. The landlord should provide proof of the payment to this service, within 4 weeks of the date of the report.