Optivo (202010922)

REPORT

COMPLAINT 202010922

Optivo

13 August 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

The complaint is about the landlord’s response to the resident’s reports about:
1. the tenancy agreement containing additional terms to a draft tenancy agreement provided during the application process.
2. his consequent dispute of an obligation to make payments for heating and hot water.
3. loss of heating and water compensation.
The Ombudsman has also considered the landlord’s complaint handling in this case.

Background and summary of events

Background

The resident is an assured tenant of the landlord, a housing association. The property is a flat in a block. The tenancy commenced in 2019.
The landlord does not own the block and is a leaseholder of a superior landlord. The block is served by a district heating supply and the freeholder’s managing agent uses a billing agent which invoices residents for their metered usage.
The landlord’s responsive repairs policy advises that issues such as total heating loss between October and April are classed as emergency repairs which it aims to resolve within six hours. The policy confirms this is in line with best practice such as the ‘Right to Repair’ legislation (that mainly applies to local authority landlords), which sets out that total heating/water loss between 31 October and 1 May should be resolved within one day, and in three days between 30 April and 1 November. Where it is not, the legislation advises that a tenant should be paid £10, plus £2 each day that exceeds the timeframe the repair should have been resolved in.
The landlord operates a two stage complaints procedure, after an initial informal stage. At stage one, the landlord aims to respond in ten working days. At a final review panel stage, for which escalation depends on manager agreement, the landlord aims to respond in ten to 15 working days. Complaints are expected to be made within six months of an issue happening, although discretion is exercised in some cases.
The landlord’s compensation policy confirms that it considers compensation for loss of amenities such as heating/water, as well as on a discretionary basis.

Summary of events

On 20 May 2019, prior to commencement of tenancy, the landlord sent the resident a draft tenancy agreement via an email, in which the word “draft” was underlined. Page three of the draft agreement advises that, “if special terms and conditions apply to this Tenancy these are also attached to these Particulars in Schedule 2.” The draft agreement includes a blank ‘Special Terms and Conditions of Tenancy’ page and some other fields/sections within the draft agreement are also blank.
On 22 May 2019, the resident signed a final tenancy agreement which includes a completed ‘Special Terms and Conditions of Tenancy’ section. This advises the property is served by a communal heat and water system which is the responsibility of the freeholder, whose energy supplier manages the service. It advises the property is fitted with a meter to measure consumption; signing of the agreement constitutes agreement to pay the heating and water charge; and an agent may be used to bill and collect charges. It advises it is not possible to opt out of the service or have a say in who the freeholder chooses to supply the service.
On 2 March 2020, the resident received bills from the billing agent for heating and water usage since the start of tenancy, following which he complained to the billing agent about abnormal consumption readings and high charges, and also engaged in correspondence with the landlord. He explained to the landlord that he had vulnerabilities which required warm surroundings; that prior to the utility bills he was ‘rationing’ usage; and that he had now ceased using the supply, due to financial reasons. The landlord recommended that he reconsider this and advised it had asked its financial inclusion team to see if it could provide support. The resident requested assistance with issues raised to the billing agent and also raised dissatisfaction about 17 occasions where engineers had been arranged to attend for loss of heating service, which comprised:
1. One day in July 2019.
2. One day in August 2019.
3. Three days in October 2019, including two consecutive days.
4. Three days in November 2019, including two consecutive days.
5. One day in December 2019.
6. Six days in January 2020, including two instances where this was on consecutive days.
7. Two days in February 2020.
The information provided shows that, in prior correspondence, the landlord informed residents some outages occurred when fire alarms were set off by smoking in communal areas and the system cut off gas as a precaution. It advised that the system required manual reset when this occurred and it was working with the managing agent to improve response times and reduce delays. The landlord also offered to supply residents with portable heaters if required.
On 23 April 2020, the resident complained to the landlord. He complained the tenancy was missold, as the signed agreement was not the same as a draft he was told he would be signing. He explained the draft had omitted terms about supply of heating and water, which resulted in him having to pay excessive charges, which he only became aware of after bills on 2 March 2020. He explained that he was vulnerable and had stopped using the supply. He restated concerns about abnormal readings and high charges, which had been responded to by the billing agent. He referred to written comments from the landlord in May 2019, that it was trying to find out if residents could pay the managing agents weekly or monthly, to demonstrate there was uncertainty at the time about how tenants would be billed. The information provided advises this refers to a document which states that there is a communal boiler for which residents are separately metered and billed for usage. The resident asked the landlord to investigate matters, including how the heating and water supply arrangement got ‘foisted’ on him via the tenancy agreement, and to resolve the situation.
Following this, there is no information provided to show the landlord responded to this complaint.
On 14 September 2020, the resident complained to the landlord about a lack of reply to correspondence about being missold the tenancy contract, excessive invoices, and requests for refunds for loss of heating and hot water.
On 21 October 2020, the landlord issued its stage one response. It advised it recognised the process of billing and payments to its utility supplier was not made clear at sign up for the tenancy, and offered a goodwill gesture of £50. It also advised it was in discussions with relevant parties on how to improve the heating service, which included cost comparisons with other networks and heating systems and a review of tariff and payment options, and promised to update the resident.
On 27 October 2020, the resident requested escalation of the complaint.
1. He restated that the landlord misrepresented the original terms and omitted key information about supply of heating and water and consequent heat charges. He advised it was aware he would not have agreed to the changes if they been brought to his attention in good time. He stated it manipulated events so that the first opportunity he would be aware of the changes was at the signing of the agreement.
2. He advised that the landlord should revert the tenancy back to the terms in the draft tenancy agreement, which he was asked to read and understand as the basis of the contract he signed.
3. He advised the landlord should take over outstanding/future charges and confirm he was not responsible for these in accordance with the draft agreement.
4. He advised he should be reimbursed for self-disconnecting from the heating and hot water services for the past eight months, compensated for being missold the tenancy agreement, and compensated for poor heat supply service from 2019 to 2020, for which requests had been ignored.
On 5 November 2020, the landlord issued an update to its stage one response. It advised that the supplier had agreed to reduce the tariff by 60% from April 2021, and to offer payment plans of three to nine months for bills. It added that it was also discussing whether the tariff reduction could be applied retrospectively and whether pre-pay meters were a possibility.
On 12 November 2020, the landlord issued its final response.
1. It explained it had decided not to escalate the complaint to a review panel.
2. It explained the draft tenancy agreement was a standard document, and although it specified address and rent it did not include other specific details. It advised that at sign up staff went through the final tenancy agreement, and this included the special terms and conditions about agreement to pay heating and water costs to it or its agent. It acknowledged the resident felt this was not made clear, and offered £150 for the lack of clarity and frustration caused.
3. It advised it was unable to offer reimbursement for heat and hot water charges, as the resident was responsible for payment of these, but it confirmed it was liaising with the energy supplier on behalf of residents and had arranged a tariff reduction for the following year.
4. It advised its records showed there were 17 reports of heating and water outages and offered £75.48 for this loss of service. It explained this was in line with its compensation policy, and based on 10% of the daily rent, £2.22 a day.
In further correspondence to the landlord, the resident advised that by supplying the draft agreement, the contract came into effect prematurely and demonstrated an intention to create legal relations. He advised the landlord could not legally enforce the misrepresented and missold signed agreement, and advised that if the landlord attempted to enforce the terms of the signed contact, he would ask the courts to intervene. He advised the landlord’s responses ignored issues and its approach to compensation for loss of service varied to other social housing tenants in the building.
On 15 November 2020, the resident also made a further complaint about a new report of loss of service, which does not appear to have exhausted the landlord’s complaints procedure. In this the resident expressed dissatisfaction with the calculation of £2.22 a day for his 17 recorded instances of loss of service the previous year, and stated that other utility companies offered £75 per occurrence for similar circumstances.
The resident subsequently contacted this Service and stated that as the signed tenancy agreement substantially differed to the draft tenancy, he was misled on the terms of the contract and missold the property, which has resulted in financial penalties from having to pay £565 pay heating and water supply charges and threats of legal action over these. He has stated that the landlord failed to consider requests for it to absorb the heating and water charges, failed to consistently provide the heating and water service, and ignored the complaint for seven months.
He has stated his desired outcomes are:
1. he should not be liable to pay heating and hot water charges as these were not included in the ‘legally binding’ draft tenancy agreement.
2. he should be compensated for charges paid in the interim and for 17 incidences of loss of service.
3. the landlord should cancel the missold tenancy agreement and allow sign–up to the draft terms, which exclude communal heating system charges; take financial responsibility for the charges; and acknowledge unfair practices such as unnecessarily short deadlines to complete sign-up.

Assessment and findings

The Ombudsman’s remit in relation to complaints are limited by the Housing Ombudsman Scheme (‘the Scheme’), which sets out the type of complaints which the Ombudsman will and may not investigate.
Paragraph 39(g) of the Scheme sets out that the Ombudsman will not investigate complaints which in its opinion “concern the level of rent or service charge or the amount of the rent or service charge increase.” The appropriate body that has jurisdiction to consider complaints about the level of the rent/service charge is the First-Tier Tribunal (Property Chamber), which can determine the appropriate level and amount of rent/service charges recoverable by a landlord; decide if the rent/charges were reasonably incurred; by whom they are payable, and when.
Paragraph 39(i) of the Scheme also 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.”
This means that it is not within the Ombudsman’s authority or expertise to decide on matters such as rent/service charges, or to decide on matters such as claims a contract was missold in the same way as the courts, but it can assess whether the landlord has followed proper procedure, followed good practice, and behaved reasonably, taking account of all the circumstances of the case. While the Ombudsman can take a view on the position, if this is disputed, only a tribunal or court can offer a definitive and legally binding decision.

The landlord’s response to the resident’s reports about the tenancy agreement containing additional terms to a draft tenancy agreement provided during the application process.

The Ombudsman’s recent spotlight report on complaints about heating and hot water confirms that heating networks can have positive impacts on residents in a number of ways. However, it also identifies residents can face problems such as poor information prior to letting, and confirms that it is important for them to be provided clear information about the heating arrangements before the start of the tenancy, so that they know their rights and obligations and costs of the service.
This Service notes the resident’s contentions, which include that the draft constituted a legally binding document and that the landlord misled him. As set out above, it is not within the Ombudsman’s authority or expertise to decide on such matters in the same way as the courts, particularly if this is disputed between the parties involved, or to decide what the resident was verbally advised prior to/at sign up.
The evidence shows that prior to sign up, the resident was sent a copy of the tenancy agreement, which in the accompanying email was underlined as a ‘draft’ copy. This Service notes the draft is incomplete and contains placeholders for the special terms and conditions as well as service charges. Consequently, in the Ombudsman’s opinion, it is not unreasonable to expect it may not be a final version. This Service is not aware of any obligations for a landlord to provide a draft tenancy agreement prior to sign up, and this appears to have been a positive step by the landlord to be transparent about its own terms and conditions. Nevertheless, it would have been apparent from the landlord’s own records that the property in this case was freeholder owned and had a communal heating supply, and therefore it would have been helpful if the draft tenancy agreement, or accompanying cover letter, had included some property specific information about the special terms and conditions for that property.
The landlord’s response set out its position that the draft was only a standard document and acknowledged the resident felt this was not made clear by offering £150. In the Ombudsman’s opinion, the landlord’s response to the resident’s contentions in respect of the difference between the draft and signed tenancy agreement, and to his feeling this was not made clear, was reasonable.
While the resident feels the draft copy provided misled him, it does not appear disputed that he had opportunity to read the final tenancy agreement before signing it, even if he disputes the landlord’s statement that staff went through it with him and if he feels this was an unnecessarily short timeframe. In the Ombudsman’s opinion, it is not unreasonable to expect a contract to be read before it is signed, particularly if a previously supplied copy is marked as a draft and is incomplete, and there are differences between them. This Service notes one difference is an index at the start of the final signed tenancy agreement, in which special terms and conditions are included. While the resident may not have been made aware of the specific costs of the service, there was therefore some opportunity to become aware of the heating and billing arrangements and obligations in relation to these at the start of tenancy.
This Service notes the resident feels the landlord did not consider a number of aspects of his complaint. The Ombudsman does not consider it is always necessary or reasonable for a landlord to respond to all issues and questions raised by a complainant, depending on the circumstances, volume of queries, extent of these and whether the level of explanation requested is reasonable. In the Ombudsman’s opinion, the landlord’s response demonstrates it reviewed the resident’s concerns and contentions and provided a reasonable response in the circumstances, also given the complaints procedure is not a legal procedure in which definitive judgements may be made on the resident’s contentions as to whether a contract is legally binding.

The landlord’s response to the resident’s dispute of an obligation to make payments for heating and hot water.

A signed tenancy agreement is a legal contract between a landlord and tenant and as such is generally held to be legally binding. In this case the resident argues that the draft tenancy agreement should be the legally binding document, rather than the tenancy agreement that both parties signed.
The Ombudsman is not able to determine that the resident is not subject to the terms and conditions as set out in the signed tenancy agreement. This is because such a decision would require a legally binding decision, which could only be made by the courts. However, the Ombudsman can offer an opinion on the matter of whether the tenancy agreement is legally binding and therefore whether the resident is obliged to pay the heating and hot water charges as set out in this document. In the Ombudsman’s opinion, and for the reasons set out above, the signed tenancy agreement is the contractual agreement between the parties and, as such, the resident is required to comply with the obligations as set out in this document.
The landlord’s response set out its position that the resident was responsible for the payment of heating and hot water charges, but that it had taken steps to discuss matters with the managing/billing agent which had resulted in an agreed tariff reduction the following year.
The landlord’s response demonstrates it reviewed the resident’s concerns and contentions and provided a reasonable response in the circumstances, given that the signed tenancy agreement indicates a written acceptance of a responsibility to pay heating and hot water charges. It also demonstrates the landlord was not unsympathetic to the financial circumstances of its social housing residents, and took positive steps to lessen the financial impact of the district heating service.

The landlord’s response to the resident’s reports about loss of heating and water compensation.

The landlord’s response does not dispute reports from the resident that he recorded 17 occasions on which there was a loss of service, and it offered compensation for this based on £2.22 for 34 days, to reflect two services being affected. This Service notes the resident’s dissatisfaction with the amount, including that he does not feel it reflects compensation awarded to other residents or reflect what other utility companies pay.
As outlined at Paragraph 7 of this report, the ‘Right to Repair’ legislation advises that £2 per day is an amount that is considered reasonable for such loss of service. This advises this applies from each day that exceeds the timeframe the issue should have been resolved, rather than being inclusive of the day the issue started.
The landlord’s approach to compensate for the loss of heating and water is to compensate £2.22 for each affected day based on 10% of the rent, inclusive of all days affected. This approach does not appear unreasonable, particularly as it is line with the amounts indicated in legislation as being appropriate for such loss of service. This Service can see no basis for further compensation, as the acknowledged cumulative affected period reported by the resident is 17 occasions spread out over an eight month period; and the service was charged on usage rather than through a set fee.
The landlord’s response demonstrates it reviewed the resident’s reports and in the circumstances provided reasonable compensation. This is generally in line with the type of amounts that may be considered reasonable in the social housing sector for loss of service in the circumstances the resident experienced.

The landlord’s complaint handling.

As the landlord provided reasonable responses to the substantive issues, this Service goes on to consider its specific complaint handling.
The resident complained on 23 April 2020 about the substantive issue in his complaint about the tenancy agreement, however no evidence has been provided that the landlord provided a formal written response to this, and the resident has stated that he felt the landlord had ignored the complaint for seven months.
As the resident complained in April 2020 and did not receive a more detailed response to the issues until November 2020, the evidence shows the landlord took six to seven months to respond to this complaint. This Service recognises the challenges landlords may have had due to Covid-19, however this timeframe is not entirely reasonable, and it is understandable this will have caused frustration to the resident, led him to feel the issues he raised were being ignored and unaddressed, and undermined confidence in the landlord. Furthermore, this delay was not acknowledged by the landlord, when consideration of an apology and compensation may have been appropriate to repair the tenant and landlord relationship.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in its response to the resident’s reports about the tenancy agreement containing additional terms to a draft tenancy agreement provided during the application process.
In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in its response to the resident’s dispute of an obligation to make payments for heating and hot water.
In accordance with paragraph 55(b) of the Housing Ombudsman Scheme there was reasonable redress by the landlord in its response to the resident’s reports about loss of heating and water compensation.
In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in its complaint handling.

Reasons

In the Ombudsman’s opinion, the landlord’s response to the resident’s contentions in respect of the difference between the draft and signed tenancy agreement, and to his feeling this was not made clear, was reasonable. This is because the landlord’s response set out its position that the draft was only a standard document and acknowledged the resident felt this was not made clear by offering £150.
In the Ombudsman’s opinion, the landlord’s response to the resident’s dispute of payments for heating and hot water was reasonable. This is because it set out its position that he was responsible for the payments, and the signed tenancy agreement indicates a written acceptance of a responsibility to pay heating and hot water charges.
In the Ombudsman’s opinion, the landlord’s response to the resident’s request for heating and water compensation was reasonable, as it has offered compensation which is generally in line with the type of amounts that may be considered reasonable in the social housing sector.
The evidence shows the landlord took six to seven months to respond to this complaint, which it has not acknowledged.

Orders and recommendations

Orders

The landlord to pay the resident £100 for the service failure in its complaint handling.
The landlord to update this Service within four weeks of this decision to confirm it has complied with the above.

Recommendations

The landlord to re-offer the previous compensation that it offered following its own investigation of the complaint.
The landlord to take appropriate action to ensure staff are reminded on what to do when complaints are received, to ensure these are logged promptly and responded to in line with the landlord’s complaints policy.
The landlord to review the Ombudsman’s recent spotlight report on complaints about heating and hot water and ensure the information it provides prior to signing of the tenancy agreement is in line with this.
The Ombudsman recognises that the landlord’s provision of a draft tenancy agreement is good practice and gives a prospective resident the opportunity to consider the agreement and raise any questions, prior to signing the final tenancy agreement. However, the landlord should consider including draft ‘Special Terms and Conditions’ in draft tenancy agreements, where it is aware that it is not the freeholder of a property and / or there is a communal heating system which incurs additional charges.