Peabody Trust (202204160)

REPORT

COMPLAINT 202204160

Peabody Trust

31 January 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:
1. Rent and service charge increases.
2. The landlord’s administration of the resident’s rent and service charge account.
3. The landlord’s handling of the resident’s complaint.

Jurisdiction

What the Ombudsman can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to this Service, the Ombudsman must consider all the circumstances of the case, as there are sometimes reasons why a complaint will not be investigated.
In accordance with paragraph 42(d) of the Scheme, this Service will not investigate the resident’s complaint about the increase in the rent and service charges. This is because the Ombudsman may not consider complaints that ‘concern the level of rent or service charge or the amount of rent or service charge increase.’ It would be more appropriate for the First Tier Tribunal (property chamber) to consider these issues. In this case, however, we have considered the landlord’s administration of the resident’s rent and service charges account and whether its actions were in line with its policies and fair in all the circumstances.

Background

The property is a 3-bedroom house which the resident leases under a shared ownership agreement with the landlord. The resident signed the lease agreement on 8 April 2021.
The resident’s lease agreement says they must pay the rent and all other monies due. Service charges are due monthly and must be paid in advance. Interest is charged if this is not paid within 14 days of being due. Details on the monthly rent and service charges were included in the completion statement. The landlord is responsible for reviewing the rent on the review date. The review date is the 1 April each year.
The landlord’s leaseholder collection and compliance procedure says it will:
1. Take reasonable steps to discuss the cause of the debt and repayment arrangements with the homeowner.
2. Send a system generated letter once an account falls 1 month in arrears. Further letters are sent if no response is received. The landlord also contacts residents by telephone, text and email.
3. Adopt a joint working approach between teams to resolve any arrears accruing on the account or disputes.
4. Investigate and resolve disputes about charges in a timely manner.
The landlord has a 2-stage complaint procedure. This says it will:
1. Acknowledge complaints within 3 working days.
2. Respond to stage 1 complaints within 10 working days.
3. Respond to stage 2 complaints within 15 working days.
The landlord’s compensation policy says it will take into account the time, trouble and inconvenience experienced by residents when considering compensation payments. It also considers whether it failed to follow a policy and the amount of time taken to resolve the matter. Payments up to £400 are made for time, trouble and inconvenience. Up to £100 compensation can be granted for severe complaint handling failures. Compensation payments are offset against any outstanding rent arrears or other debts.
The resident contacted the landlord on 1 December 2021 about her rent. She said the landlord did not set up the direct debit correctly when she moved in and there were arrears on her account as a result. She said she was not willing to pay off the arrears until the matter was resolved.
The landlord sent the resident a rent and service charge notification letter on 25 May 2022. The resident queried why her service charge had been increased by £150 and said the landlord had not informed her of the increase properly. She also said the landlord was at fault for not setting up her direct debit correctly when she moved in. The landlord acknowledged the direct debit was not set up correctly on 30 May 2022. It also said the resident missed a payment in June 2021. It apologised for the short notice that was given for the 2022/23 estimates.
The resident asked the landlord on 8 June 2022 to clarify why she was not notified about the arrears for over a year. She said this had caused her financial difficulties and she was not willing to take responsibility for the landlord’s error. She also said the landlord was required by law to notify her of any changes to her rent.
The landlord issued its stage 1 complaint response on 13 June 2022. It said:
1. The rent was reviewed every year in accordance with the lease agreement.
2. It had sought legal advice about the rent notification letter and the resident’s claim that she should have been notified of the rent increase in April 2022. It concluded ‘‘beyond the usual 6-year limitation period for rents, delay is not an issue where the landlord fails to determine the rents in a timely manner or get it wrong.’’
3. It did not process the direct debit mandate following the completion of the sale.
4. The direct debit was set up following a call from the resident, but this was for the rent element only. It should have also included the service charge. It offered £150 compensation for the error.
The resident refused the offer of compensation. She said the landlord was required to give notice to increase the rent and no one had contacted her about the arrears for over a year. She also said the situation had caused anxiety and stress.
The landlord told the resident on 14 June 2022 that she was liable for the arrears and said it was satisfied she was aware of the charges. It also said it sent her a letter about the arrears in January 2022. It increased its offer of compensation to £250. The resident asked for her complaint to be escalated on the same day. She said she had not received any letters about the rent arrears and the landlord was blaming her. She also said the landlord had not given sufficient notice regarding the rent increase. The complaint was acknowledged and the resident told she would receive a reply by 7 July 2022.
The landlord told the resident on 9 July 2022 it needed more time to respond to her complaint. It issued its final complaint response on 21 July 2022. It apologised to the resident and said:
1. It had referred her complaint about the rent increase to a different team, who would respond in the next couple of days.
2. Its stage 1 complaint response demonstrated a ‘‘fair and reasonable attempt at resolving the case.’’
3. Even if there was an error with accounting, the resident was expected to pay the arrears. It would increase the offer of compensation to £450.
The resident responded the same day and said she would not accept the offer of compensation until all her questions had been answered. She said she wanted to know why her rent was put up twice in one year and why she was not notified about the arrears until May 2022. She continued to ask the landlord to answer her unanswered questions until November 2022.
The resident’s complaint was accepted by this Service on 5 September 2022. She said her landlord failed to answer her questions and the situation was stressful. She believed the landlord should have compensated her directly for the mistakes it made rather than pay the amount on to her account. She wanted an apology and more compensation.
The landlord contacted the resident on 11 November 2022. It said:
1. There had been multiple errors in handling the resident’s complaint and this had led to delays and confusion.
2. Its payment process was not robust and there were IT and human errors. There were also issues with the contractor responsible for printing and posting letters.
3. It had provided technical and complicated answers to the questions raised by the resident.
4. The resident’s rent was reviewed annually and applied in April each year, but the resident was not notified of the rent increase until May 2022.
5. The resident had to pursue her complaint beyond what was reasonable to expect. It would increase the offer of compensation to £750 for the time and trouble caused.
The landlord further increased its offer of compensation on 22 November 2022 to £1,000, which was accepted and paid to the resident.

Assessment and findings

The landlord’s administration of the resident’s rent and service charge account.

Where there are admitted failings by a landlord, the Ombudsman’s role is to consider whether the redress offered by the landlord put things right and resolved the resident’s complaint satisfactorily in the circumstances. In considering this, the Ombudsman takes into account whether the landlord’s offer of redress was in line with this Service’s dispute resolution principles: be fair, put things right and learn from outcomes.
Whilst the resident was made aware of the rent and service charges when she signed the lease agreement, the direct debit was not set up correctly by the landlord. This led to the build-up of arrears. It was appropriate for the landlord to rectify the problem and offer £150 compensation in its stage 1 complaint response for the errors it made. It was also reasonable for the landlord to offer an apology and for it to increase the offer of compensation to £450 after it identified further shortcomings in its final complaint response. It is, however, of concern to note that the landlord did not fully explain what went wrong or set out the steps it was taking to avoid a recurrence until November 2022. This was 5 months after the resident raised her complaint. This delay was not appropriate.
The landlord sent the resident a rent notification letter on 25 May 2022. This was not in accordance with the lease agreement. The explanation given by the landlord for the delay in its stage 1 complaint response was not written in plain English and was difficult to understand. It would have been reasonable for the landlord to have confirmed its position in its final complaint response given the concerns the resident continued to raise. Correctly notifying residents of changes to their rent and service charges is a fundamental aspect of the landlord’s rent collection responsibilities and a requirement of the lease agreement. It is of concern to note it did not provide the resident with a full explanation until November 2022. This delay was not appropriate.
The resident’s lease agreement confirms the resident is responsible for paying the rent and service charges. It was appropriate for the landlord to confirm this and put a repayment plan in place when the arrears were first identified. This was in accordance with its leaseholder collection and compliance procedures. The landlord said it contacted the resident again in January 2022 about the arrears, but the resident said she did not receive the letter. There is no evidence the landlord attempted further contact with the resident about the arrears. This was not appropriate or in accordance with its procedure. Early intervention by landlords is critical once arrears are identified and ensures residents receive advice to prevent debts building up to unmanageable levels.

The landlord acknowledged in November 2022 that the resident had spent significant time and trouble pursuing her complaint and seeking answers to her questions. The landlord also acknowledged there were service failures, including delays and poor communication. It was appropriate for the landlord to acknowledge these mistakes. It also made an improved offer of compensation. Whilst this demonstrated the landlord wanted to put things right for the resident, this was almost 4 months after the resident had exhausted the landlord’s complaints procedure and only after the complaint was accepted by this Service. The landlord’s failure to take action earlier caused the resident distress and inconvenience. The landlord’s decision to pay the compensation into the resident’s rent account was in accordance with its compensation policy.
The landlord’s more recent actions cannot be considered reasonable redress. This is because it did not take action until after the resident had exhausted the landlord’s complaints procedure. The revised financial offer was, however, reasonable and this Service will not be making a further order of compensation.

The landlord’s handling of the resident’s complaint.

The landlord failed to address all of the issues raised by the resident in its stage 1 complaint response. This was not in accordance with its complaints policy or the Ombudsman’s complaint handling code. It would have been appropriate for the landlord to have offered an apology in its stage 1 complaint response given the failures it identified. It would have also been reasonable for the landlord to have used plain English in its response rather than use legal terms to explain its position regarding the rent notification letter. This would have ensured there was no misunderstanding or confusion.
The landlord’s stage 1 complaint response did not demonstrate it had learnt from the complaint. This Service’s dispute resolution principles encourage landlords to not just resolve the immediate complaint, but to learn from outcomes in order to improve its wider service delivery. The overall tone of the landlord’s complaint response also lacked empathy and did not show it understood the impact the situation was having on the resident.
The landlord did not respond to the stage 2 complaint within the timescales set out in its complaints policy. Whilst it told the resident there would be a delay, it did not do this until after the response was due. It was appropriate for the landlord to offer an apology and to identify learning from the complaint. It was also reasonable for the landlord to increase its offer of compensation. It did not, however, fully address the resident’s complaint or put things right for her.
It should not have taken contact from this Service for the landlord to undertake a review of the complaint and revise its offer of compensation in November 2022. It was, however, appropriate for it to acknowledge it could have done more in relation to its handling of the resident’s complaint, particularly in relation to the delays and poor communication. This demonstrated that it had learnt from the complaint and wanted to put things right for the resident.
Whilst the landlord did this, these actions cannot be considered reasonable redress. This is because they took place after the resident had exhausted the landlord’s complaints procedure and only after the involvement of this Service. The revised financial offer was, however, reasonable and this Service will not be making a further order of compensation.

Determination

In accordance with paragraph 42(d) of the Housing Ombudsman Scheme, the resident’s complaint about the increase in rent and service charge is outside the Ombudsman’s jurisdiction.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in the administration of the resident’s rent and service charge account.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in respect of its handling of the resident’s complaint.

Orders and recommendations

Orders

Within four weeks of the date of this report, the landlord is ordered to offer the resident an apology for the failings set out in this report.
Within four weeks of the date of this report, the landlord is ordered to carry out a review of this case to identify learning and improve its working practices. Findings from the review must be shared with the resident and this Service. This review must include:
1. A review of its arrangements for issuing rent and service charge letters to ensure they are received by residents in a timely manner.
2. A review of its payment and arrears recovery processes to ensure they are robust and residents are contacted quickly in accordance with its procedure