Peabody Trust (202208235)

REPORT

COMPLAINT 202208235

Peabody Trust

5 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:
1. Response to concerns about the information provided when the residents purchased the property.
1. Reasonableness of service charges for repair works.
2. Complaint handling.

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 the Service, the Ombudsman must consider all the circumstances of the case, as there are sometimes reasons why a complaint will not be investigated.
The residents have raised concerns about the landlord increasing the level of service charge to pay for roof repair work. They have alleged that the landlord had acted negligently in its handling of the roof repair under its building insurance policy and it is not reasonable for it to charge the repair as a service charge.
Throughout the complaint the residents have repeatedly said the complaint involves the mis-selling of the property and alleged negligence in the landlord’s handling of roof repair work.
After carefully considering all the evidence, in accordance with paragraph 42 (d) of the Housing Ombudsman Scheme, the following aspects of the complaint are outside of the Ombudsman’s jurisdiction:
1. Reasonableness of service charges for repair works.
Paragraph 42 the Scheme says “the Ombudsman 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.”

In this case the residents complaint relates to the reasonableness of the roof repair charges, the liability of the charges and the increase of service charges in relation to the repair. As such this aspect of the complaint would be most effectively decided upon by the First-tier Tribunal (Property Chamber), which could potentially make a legally binding decision about the service charge liability, increase and reasonableness.

Background and summary of events

The residents were both leaseholders of a shared owned flat within a building managed and owned by the landlord. They purchased the lease in June 2019 and sold it in June 2022.

Policy framework

The lease confirms the landlord’s responsibility to maintain the roof and building structure.
The landlord’s tenants’ rights and obligations guidance sets out the rights and obligations to variable service charges. It explains the right to ask the First-tier Tribunal to determine whether a resident is liable to pay service charges for service, repairs, maintenance, improvement, insurance or management.
The landlord’s complaints policy says that when an expression of dissatisfaction is received it would first look to resolve the matter locally through its initial stage process called ‘expression of dissatisfaction’. It says it operates a 2 stage complaints process after this stage.
The landlord’s compensation policy sets out a compensation scale for complaint handling. With minor failings being awarded compensation between £1 to £25, moderate failings between £26 to £75 and severe failings between £76 to £100.

Summary of events

On 17 January 2019 the landlord issued the previous resident with a notice of intention for it to carry out qualifying works under Schedule 3 of the Service Charges (consultation requirements) (England) Regulations 2003. Here the landlord provided a description of the proposed works to include:
1. erect scaffolding to remove and refix metal flashing to the roof
2. rake out and repoint verge and brickwork
3. remove, replace broken and refix tiles
4. erect temporary tarpaulin cover over brickwork during curing prior to reinstating metal flashing.

Within its letter the landlord explained the reasons for the works. It estimated the total spend as £2,122.26 and said it would use the reserve funds available. Written observations were requested at that time.
At the time of the purchase a management information pack dated 25 April 2019 was provided for the property. The leasehold property enquiries completed by the landlord confirmed the service charge at that time. Within this the landlord confirmed section 20 works were due and described them as “roof works, section 20 enclosed.” It is understood that this work was completed by the landlord.
The residents purchase of the property completed in June 2019.
On 11 May 2021 the landlord was provided with a copy of a roof survey its contractor completed on 7 May 2021. The report found:
1. concrete tiles were in fair condition
2. roof fixings were adhoc and not present
3. underfelt was in a very poor condition and brittle to touch
4. verge was damaged and loose slates
5. roof ventilation was limited.

The roof survey recommended a complete roof replacement to provide a wind and watertight barrier for the fabric of the building, in accordance with standards and to conform to good building practise.

On 19 January 2022 the landlord wrote to the residents about the proposed roof replacement works. It said it had suspended the section 20 notice issued previously while it worked out the best way to take works forward. It enclosed a new section 20 notice and said the resident could submit observations. It said it was doing the best it could to rectify the issue with the roof. Its section 20 notice said that there were reports of an active leak from the main roof and the works would need to be carried out quickly to prevent damage to the fabric of the building.
On 25 February 2022 the landlord provided the residents with notice of estimates for the works.
1. It said the consultation ended on 21 February 2022 and it had obtained 3 estimates.
2. It described the proposed works as: erect scaffolding and replace existing shallow pitched roof covering with a britmet slate 2000 roof system.
3. It detailed a list of tenders and said it intended to accept the lowest quote.
4. It told the resident of a right to make observations and explained how the costs would be divided.
5. It explained that the building was inherited by it from another landlord who took over the management from the original landlord. It explained that it did not have full information on why claims on new build warranty were not explored and whether repairs could have been managed better. But said the terms of the lease meant it was required to maintain the structure of the building and said the lease allowed for it to recharge costs to leaseholders.
6. It said building insurance would not cover the cost of replacement. There were reserve funds which it intended to use for part of the works.
On 17 March 2022 the residents contacted the landlord to make enquires about the roof. They said:
1. They were alarmed at the landlord’s handling of the roof works.
2. At the time of buying the only information received about the roof was the notice of intention from 17 January 2019. But that did not indicate the scale of the roof damage.
3. It had been grossly negligent given that the issue was “downplayed” and had been purchased under false information.
4. The situation had affected their current sale and they needed to know why the roof issue was not mentioned at the time of purchase, why during the tenancy they were not told about the issue and why the building insurance was not covering the cost of roof work. They said that given the landlord’s actions, it should be fully liable for roof repairs.
On 21 March 2022 the landlord acknowledged the residents email. It said:
1. At the time of purchase in 2019 the landlord was not aware that a full replacement roof was needed. It attached a report from 2021 to confirm the roof replacement.
2. It issued section 20 notices in September 2021 advising of the roof replacement and said an indication of costs was issued in February 2021. It said works were planned to start in April 2022 after it received planning permission.
3. It said it was unable to fund the cost of the works and the reserve fund would be used to offset the cost. It said the estimated reserve was £4,200 at that time.
4. The building insurance did not cover the roof replacement.
5. The process for prospective sales whilst works were ongoing and the possibility of a buyer asking for a retention amount.
6. It intended to invoice for the works when it had fully completed.
On 21 March 2022 the residents emailed the landlord:
1. They asked why it had taken it so long to inform them of the seriousness of the issue.
2. Why had the issue escalated in 2 years to the point where a full roof replacement was needed. They asked if the contractor hired was competent to do the role and asked if the landlord was negligent in hiring in the circumstances.
3. They said it should be the landlord’s responsibility to cover the costs not residents.
4. They quoted the insurance documents and asked for reasons why the work would not be covered by the policy.
On 22 March 2022 the landlord wrote to the resident about roofing renewal at the building. It told the resident of its intended contractor, that scaffolding would be erected on 4 April 2022 and provided contact details for its site team.
On 23 March 2022 the landlord emailed the resident and explained that:
1. the repairs consulted in 2019 were carried out successfully at that time
2. subsequent leaks were reported in other areas of the roof over 2 years. It said it commissioned a report and a full replacement was recommended
3. it was in communication with leaseholders directly affected by the leak
4. the history of ownership of the building. It accepted that the records it had indicated that the roofing issues were identified previously but said it did not have details explaining why the original owner did not pursue the roof guarantees or new build claims. It said that would have been the correct course of action and that due to this its current building insurer would not entertain any claims
5. it did not believe it had been negligent and said it was trying its best to resolve the issue. It said the new roof would come with a 40 year guarantee
6. it told the resident of the right to formally dispute any bill received about the roof replacement works and said an application could be made to the First-tier Tribunal to determine the reasonableness of the works and costs associated with it.
On 1 April 2022 the residents raised their complaint. They said they were submitting a formal letter of complaint in relation to the landlord’s management of the shared ownership property, what they said was associated negligence and lack of transparency. The letter of complaint said:
1. The landlord was “negligent” in its handling of maintenance and repair works at the property. They explained that the original owner of the building would have indicated roofing issues at the time of the landlord’s ownership. They said the landlord merged with the second owner of the building in 2016 they said this meant the landlord was aware of the roof issue at the time of its merger.
  1. In response to the landlord’s position that it did not understand why a claim was not issued under roof guarantees or a new build by the previous owner. The residents said the merger meant the landlord had acquired responsibility to ensure guarantees for buildings were pursued.
  2. The landlord was aware that they were making tenants pay for an insurance policy that was not valid for repairs to the roof.
1. The landlord lacked transparency about the condition of the roof and duration of the issue. The residents said when they purchased the property they were given the impression that the roof issues were minor. They said the scale of the issue was downplayed by the landlord.
  1. The 2017/2018 service charge quoted £101.54 for a roof leak. They said this was the first indicator of an issue with the roof but due to the costs it was listed as a minor issue. Their understanding was that the issue was resolved.
  2. The landlord wrote to the previous resident in January 2019 about proposed works. The resident explained the costs of this work was estimated as £353.71 for the property which was to be covered from the reserve funds and no extra costs to the previous owner or her at the time of purchase.
  3. It came to light after a letter from the landlord’s contractor on 23 March 2022 that the issue was longstanding and was known to the landlord at the time of the purchase of the property. They said the landlord did not make this clear during the conveyancing process and had they had known of the issues it was unlikely they would have purchased the property.
2. The landlord’s lack of timely communication. They said they rarely received communication about actions relating to the upkeep or maintenance of the building.
  1. After completion the landlord did not communicate its plans about the work. The next indication was when scaffolding was put up on 10 October 2019, but they were not told what this work related to.
  2. On 21 March 2022 they were told an additional survey was completed in May 2021 indicating the extent of the damage. They said the landlord accepted it did not share this information with all leaseholders and decided to only share it with those directly affected by the leak. The resident said all resident’s should have been told about the roof works and updates.
3. The resident said the roof damage escalated from a minor repair in 2017/2018 to replacing the entire roof covering in 2022 with an estimate cost of £13,952.20.
  1. They said the contractor hired were not fit to do their job as the roof damage escalated.
  2. It failed to tell them that its insurance would not cover any repair works on the roof.
  3. The costs for the roof repairs were not reasonable costs.
4. To resolve the complaint they told the landlord that, amongst other things, it should bear the costs of the roof works and future costs arising from the issue. It should also reimburse resident’s for past patch roof repairs.
The landlord responded to the complaint on 11 April 2022. It thanked the residents for emails from March 2022 and said the email from 1 April 2022 was asking for a response as part of its complaints process. It confirmed it had logged this as an expression of dissatisfaction. The landlord also said:
1. It understood the resident’s frustration about the roof works but said the scale of the roof issue and the report recommending a full replacement was in 2021. It said it was impossible to have advised in 2019, at the time of purchase, that a significant item of work was coming up.
2. It repeated its position on not having historic information on why roof guarantees, or warranties were not pursued by previous owners.
3. The increase in the 2022/2023 building insurance was not due to the roof repair. It explained its leasehold portfolio was not insured based on individual blocks but as an entire leasehold property portfolio. It referred the resident to an FAQ document explaining the rise in premiums.
4. It was legally required to consult leaseholders were cost to individual leaseholders was £250 or more. It explained the residents right to formally dispute the bill received and explained how to do this.
On 11 April 2022 the residents told the landlord that it had not understood the issues raised. The residents asked it to escalate their formal complaint to the next stage of the complaints process.
On 5 May 2022 the resident told the landlord that it had been 15 days since they last wrote to it to escalate the complaint to stage 2 of its complaints process. They said they had not heard from the landlord and would escalate the case to the Service. The landlord responded the same day apologising for the delay and said the complaint had been formally logged and it would follow up.
In a further email from 5 May 2022 the residents said they had spoken to the landlord that day and said that despite raising a formal complaint on 1 April 2022 as per its guidance, this was not considered as a formal complaint. The resident said the landlord had not followed its complaints process and treated the contact of 1 April 2022 as another expression of dissatisfaction. They said 15 days had since passed with no such contact. They said that they should have been told what the investigation would cover and whether it would go to a complaints panel.
On 11 May 2022 the landlord issued its stage 1 response. It apologised for the delay in responding and said:
1. It was not possible for it to comment on what happened in 2016. It said it was not forceable that a roof repair in 2016 would lead to a roof needing replacing.
2. Before the purchase the residents would have needed to do their own due diligence and the landlord can not be responsible if they did not.
3. In response to the resident’s question about whether the previous landlord was aware of structural issues and if it had mis sold the property. It said this falls outside the scope of its investigation due to the length of time passed and said it would fall as part of the principles that the resident needs to satisfy before purchase.
4. The roof repair was a legitimate costs and the resident and other leaseholders would be responsible for associated cost.
5. The increase in building insurance was not related to the roof works.
6. The resident had a right to review charges within 6 months of the statement. It said it was not a legal requirement for it to issue rolling statement instead of annual statements. It said the costs of this would outweigh any benefit.

If the resident feels they were mis sold the property they would need to seek legal advice.

On the same day, the residents told the landlord that they were dissatisfied with its response. They explained that the complaint was not about whether the issue was foreseeable but whether it was acknowledged that the issue was structural and whether it had been disclosed to buyers.
1. The resident said the negligence claim also covers the insurance that they say was invalidated. The resident said the landlord had not considered this aspect of the complaint.
2. The residents told the landlord that it had not adhered to its own complaint process. They said it responded on 21 March 2022 but this was not treated as a formal response. The resident said they did not receive a response within 15 working days, as per its policy and when asked for an update they were told the complaint had been de-escalated back to stage 1.
The landlord confirmed it had escalated the residents’ complaint on 17 May 2022 and said it would respond by 9 June 2022, within 15 working days. The residents responded the same day and said they were not satisfied with any of the issues and said they were particularly concerned that the case had not been handled as per its complaints procedure.
The landlord completed its review of the complaint on 20 May 2022. Here it said:
1. If the resident or their advisor had concerns about information provided at the time of purchase, it should have been raised prior to signing the lease.
2. It repeated its previous position on seeking legal advice if the resident felt the lease was mis-sold.
3. It was for a court to decide on negligence and it couldn’t decide this.
4. It understood the resident’s point, but said it was being made with the benefit of hindsight. It explained the decisions made to repair the roof were made with the information it had at that time.
5. It repeated its view that the costs were valid costs to the building for the roof repair.
6. It apologised for the delay in logging and responding to the complaint. It explained it was in the process of removing its expression of dissatisfaction process to make its complaints process clear. It offered £15 compensation in recognition of the delay.
7. It explained what was agreed prior to signing the lease falls outside the scope of the complaint process.
8. The residents may want to take legal advice if they felt the property was mis sold.
The residents have told the Service that the sale of the property completed on 6 June 2022.

Assessment and findings

Scope of investigation

Throughout the complaint the residents have referred to the lease being mis-sold, the validity of a contract and made claims of alleged negligence. The residents have said that unless there was negligence to invalidate the lease, the landlord’s insurance should have covered the roof repairs.
It is clear that this was a difficult time for the residents, they purchased a property and after some years were told the roof needed repair. It is important to explain that it is not the role of the Service to determine if an act or omission amounts to negligence. The Service cannot say whether a legal contract was mis sold or whether an insurance policy was made invalid. These are legal decisions which are not within the Ombudsman’s authority to make. If the residents would like to pursue this further, they should obtain independent legal advice and/or contact the Leasehold Advisory Service.
However the Ombudsman can consider how the landlord responded to concerns about the information it provided when the property was purchased.

Response to concerns about the information provided when the residents purchased the property

The residents purchased the property in June 2019. It is not disputed that at that time the residents were provided with a management information pack in April 2019 which included information about roof works and a copy of the section 20 notice that was sent to the previous resident in January 2019.
The Service has not been provided with evidence to show the queries that were raised about the proposed roof work at that time. However the purchase of the leasehold property was a legal transaction and as the purchase continued it is reasonable to conclude that the residents and their legal representatives were satisfied with the information provided.
The landlord sent the resident notice of estimate for the works on 25 February 2022. Following this the resident made enquiries about the works and told it how situation had affected their sale. The landlord responded within a reasonable timeframe on 21 March 2022 explaining it was not aware that a full replacement roof was needed at the time of the residents purchase in June 2019. The landlord acted reasonably in providing the resident with a copy of the roof inspection from May 2021 and explaining the process for prospective buyers.
As mentioned previously within this report, it is not for the Service to determine whether a property was ‘mis sold’. The landlord acted appropriately in telling the resident that was a legal matter and to seek legal advice.
It follows that there was no maladministration in relation to the landlord’s response to concerns about information provided at the time the resident purchased the property.

Complaint handling

The residents raised their complaint on 1 April 2022, stating they were submitting a formal letter of complaint. However on 11 April 2022 the landlord said it had logged this contact as an ‘expression of dissatisfaction’. The landlord’s failure to log a formal complaint at that time was not appropriate or in line with the Ombudsman’s complaint handling code, applicable at that time.
It is noted that the residents asked the landlord to escalate the complaint on 11 April 2022 and repeated this on 5 May 2022. At that time the landlord informed the resident the contact from 1 April 2022 was not treated as a formal complaint. It then issued a stage 1 response on 11 May 2022. The timeframe of 26 working days to issue the stage 1 response was not appropriate.
The residents said they were dissatisfied with the response on 11 May 2022 and on 17 May 2022 the landlord confirmed the complaint had been escalated. The landlord provided its stage 2 response on 20 May 2022. The stage 2 response was issued in the appropriate timeframe.
Within the stage 2 response the landlord appropriately apologised for the delay in logging and responding to the complaint. It explained it was amending its complaints policy to remove its expression of dissatisfaction to make its complaints process clearer. The Service has seen the landlord’s updated complaints policy, this has removed the expression of dissatisfaction stage, demonstrating it learnt from its failings.
It is acknowledged that within its stage 2 response the landlord offered the resident £15 in recognition of its complaint handling delay. In light of the landlord’s insight into its failings, its apology and its change of policy its complaint handling failings have been lessened, amounting to a service failure.
However in light of the timeframe taken to issue the stage 1 response and the confusion caused by the landlord’s complaints policy applicable at that time, a greater compensation amount would be more appropriate in the circumstances. The Ombudsman has made a further order for compensation.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration in the landlord response to concerns about information provided when the resident purchased the property.
In accordance with paragraph 42 (d) of the Housing Ombudsman Scheme, the complaint about the reasonableness of service charges for repair works is outside of the Ombudsman’s jurisdiction.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in respect of the landlord’s complaint handling.

Reasons

The landlord appropriately responded to the residents’ concerns about information provided when they purchased the property. It explained its planned approach, responded to queries promptly and explained the avenues available to the residents if they remained unhappy.

The residents’ complaint about the reasonableness of the roof repair charges, the liability of the charges and the increase of service charges in relation to the roof repair work is outside the Ombudsman’s jurisdiction.

The landlord delayed in issuing its stage 1 response. It appropriately accepted the delay and confusion caused by its policy at that time and showed insight into changing its complaints policy. Whilst it offered the resident £15 compensation, a higher amount would be more proportionate to reflect the impact of its service failing.

Orders

It is Ordered that within 4 weeks of the date of this report, the landlord pays the residents £75 compensation in recognition of its complaint handling failings. This is to include the £15 it previously offered if it has not paid this already.