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Richmond Housing Partnership Limited (201909899)

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REPORT

COMPLAINT 201909899

Richmond Housing Partnership Limited

28 June 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. The leaseholder has complained about:
    1. the landlord’s handling of major works related to the roof, the flooring in the communal area, and the proposed re-surfacing of the car park; and the costs of these works and its impact on the service charge; 
    2. the landlord’s handling of his request for audited accounts for the service charges from 2016 onwards. 

Jurisdiction

  1. What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme. When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.
  2. After carefully considering all the evidence, in accordance with paragraphs 39(g) and 39(i) of the Housing Ombudsman Scheme (the ‘Scheme’) the following aspects of the complaint are outside of the Ombudsman’s jurisdiction:
    1. the landlord’s handling of major works related to the roof, the flooring in the communal area, and the proposed re-surfacing of the car park; and the costs of these works and its impact on the service charge.
  3. The leaseholder complains that the major works carried out by the landlord, and the proposed work to the car park, were unnecessary and the costs were unreasonably incurred. The leaseholder has disputed the overall cost of the completed and proposed works and questioned whether they were necessary.
  4. This complaint is, ultimately, about the leaseholder’s concerns about the reasonableness of the service charges, which he believes is due to poor management by the landlord. The leaseholder has said that the roof repair costs were unnecessarily incurred as the landlord should have claimed under the roof guarantee that was already in place. Similarly, he says that the potholes in the car park could have been filled and it did not need to be resurfaced in its entirety.
  5. In effect, while the leaseholder has complained about the works that have been carried out by the landlord, his concerns relate to the amount he has been charged in particular the increase in his service charges.
  6. It is also noted that the resolution the leaseholder is seeking is for the Ombudsman to make a determination on whether the increased service charges ought to be refunded by the landlord.
  7. Paragraph 39(g) of the Ombudsman’s Scheme states that:
    1. “The Ombudsman will not investigate 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’
  8. In addition, paragraph 39(i) of the Ombudsman’s Scheme also states that:
    1. “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”.
  9. The Ombudsman does not have the jurisdiction to investigate this complaint because, firstly, it is about the level and/or increase of the service charges, and secondly, the appropriate body that has jurisdiction to consider such complaints is the First-Tier Tribunal (Property Chamber).
  10. The First-Tier Tribunal can determine the appropriate level and amount of service charges recoverable by a landlord. In addition, it can make a determination on matters such as, whether the requirements on consultation for major works were complied with, and whether the works were necessary. It can look at the landlord’s procedures for costing the works and its arrangements for controlling the costs. In considering liability for the service charges, the Tribunal can take into account whether the costs for the major works were reasonable, and if so, whether the standard of the works for which the costs were charged were reasonable. It would therefore be more effective for the leaseholder to seek a determination on this aspect of his complaint from the Tribunal. 
  11. The complaint about the landlord’s handling of his request for audited accounts in relation to the service charges from 2016 onwards has been considered below.

Background and summary of events

  1. The leaseholder owns a flat in a block that is owned and managed by the landlord.

Policies, procedures, and agreements

Lease:

  1. The lease sets out the general obligations and responsibilities for both the landlord and the leaseholder. It states that the landlord is entitled to levy service charges in relation to the management of the block and the leaseholder is required to pay the said service charges in relation to such costs.
  2. The Fourth Schedule of the Lease sets out the obligation on the landlord to maintain audited accounts of the service charge expenditure for each year. It also states that a leaseholder can request to see copies of the audited accounts if they provide at least 14 days’ written notice. 

Compensation policy:

  1. This sets out the landlord’s consideration of when compensation may be appropriate. For example, when a customer has had a poor experience due to the landlord’s mistakes and where the landlord has failed to keep its promises. Compensation should also be considered in recognition of the unnecessary time and effort a customer has had to expend to get their issue resolved.
  2. The policy also allows the landlord discretion to pay compensation where it has identified service failures ‘where our mistakes cause customers unnecessary distress’. This could be, for example, not following a policy or procedure or not keeping a customer updated.

Summary of events

  1. The leaseholder has said that he purchased the flat in March 2016. Sometime after this, in late 2016 (the records are not clear on this point) the landlord took over the freehold of the building from the original freeholder. According to his submissions (which have not been disputed by the landlord) he originally requested a copy of the accounts for year ending September 2016 in January 2017. Since then he has been requesting sight of the accounts periodically throughout 2017, 2018 and 2019 without having received the accounts. He continued to pay the service charges but said this was ‘under protest’ as he disputed the level and reasonableness of the service charges.  
  2. Following his request in May 2017, the leaseholder says he was told by the landlord that the accounts would be ready by October 2017. He chased this up again in June 2018 and also requested the accounts for the year ending September 2017. He says he was promised that the accounts would be provided in September 2018.
  3. The leaseholder says he chased the landlord again in January and February 2019 as he had still not received the accounts he had requested. Following further correspondence between the parties in March and April 2019, the leaseholder was told that the matter had been referred to the Finance Team. After further correspondence with the Finance Team in May and June 2019 the requested accounts had still not been provided by the landlord.
  4. The leaseholder submitted a formal complaint to the landlord on 2 August 2019. He said that, since purchasing the flat in March 2016, he had not received copies of the audited accounts despite his numerous requests since 2017. He said that at this time he was still waiting for the accounts for year ending September 2016, September 2017, and September 2018.
  5. The landlord issued its complaint response on 14 August 2019:
    1. It said that it was reviewing the income and expenditure for 2016/17 and 2017/18, and once the actual accounts for this year had been finalised (in September 2019) the historic accounts going back to 2016 would then be provided. It said it hoped to provide the historic accounts by the end of 2019.
    2. It accepted that it had made a mistake in not providing the accounts when it should have. It apologised for this and also said that, in recognition of the delay and as a resolution, if it was found that there had been an overspend in 2016/17 and 2017/18, it would not be looking to recover the overspend; and if the records showed there had been an underspend, it would credit the leaseholder’s account accordingly.
    3. The complaint response went on to address issues relating to the major works process and it explained its position on this. 
  6. On 25 September 2019 the landlord had a public meeting with all the residents in the block to discuss the major works and the service charges. One of the issues discussed at this meeting was about the historic accounts. The meeting minutes provided by the landlord reiterated its apology for the delay in providing the accounts and reiterated that it was working on this. It also repeated its assurance that if the accounts showed an underspend, it would refund the difference; and if there was an overspend, it would not charge the residents for this.
  7. As the leaseholder remained unhappy with the delay in providing the accounts, he contacted this Service for assistance in October 2019. There then followed further correspondence between this Service, the landlord and the leaseholder about the progress of the complaint. At this point the leaseholder was in discussions with the landlord about the major works and associated complaint.
  8. In February 2020 the leaseholder advised this Service that his original complaint was about the lack of accounts since 2016. It was noted that there was an associated complaint about the major works and the resulting impact on the service charges and the leaseholder was disputing the service charges increase.
  9. In June 2020 it was confirmed by the leaseholder that he had two complaint issues; namely the landlord’s failure to provide the accounts since 2016 and also the increase in the service charges due to the major works.
  10. The landlord considered both issues in one complaint and it agreed to deal with it as an appeal to its initial complaint response in August 2019. It issued a further complaint response on 6 July 2020 and stated that it hoped to be able to provide the historic accounts by the end of the month. It again apologised for the ongoing delays with this.
  11. There followed further correspondence between the landlord and the leaseholder in July and August 2020 with both parties reiterating their respective positions on the accounts and the increase in the service charges due to the major works. The landlord explained that the main reason for the delay with the accounts was because it was still having some issues collecting the actual spend from back in 2016/17 and 2017/18. The landlord issued its final complaint response on 14 October 2020 stating that it had now reached an impasse with the leaseholder and it could not provide any further explanations in relation to his concerns about the service charges. It agreed that it would now wait for the Ombudsman’s involvement.
  12. On 2 November 2020 the leaseholder contacted this Service and set out his complaint issues. He asked that the Ombudsman consider a finding of malpractice and maladministration on the part of the landlord in respect of the service charges and he requested a refund of a substantial portion of the service charges.
  13. As far as this Service is aware, the landlord has still not provided the leaseholder with the 2016/17 and 2017/18 accounts he had requested.

Assessment and findings

  1. As explained above in the jurisdiction section of this report, the leaseholder’s recourse for complaints about the reasonableness of a service charge is to the First-Tier Tribunal. However, while the Ombudsman may not be able to decide on the service charges themselves, or determine their validity or reasonableness, it may look at complaints that relate to the landlord’s administration of the service charges account.
  2. Sections 21 and 22 of the Landlord and Tenant Act 1985 set out the legal obligations on the landlord in respect of providing accounting information with regards to the service charges. Generally speaking, landlords must account for all spending during the year by providing a summary of relevant costs when this is requested in writing. Leaseholders have the right to request a summary of the costs relating to their service charge account and are entitled to inspect the accounts, receipts, and other relevant documents. Within six months of receiving the summary, a leaseholder is entitled to inspect the relevant documents relating to the service charge and inspect the audited accounts. Landlords must provide facilities for inspecting the documents within one month of the leaseholder’s request, and these facilities must be available for two months.
  3. In this case, the leaseholder has said that he made the initial request for copies of the audited accounts in January 2017 and he continued to make repeated requests in 2018 and 2019 which culminated in his formal complaint. At the time of writing this report, the Ombudsman understands that the requested accounts have yet to be supplied to the leaseholder, some four years after the leaseholder says he made the original request – which is far in excess of the landlord’s legal obligations and its obligations under the lease. 
  4. The Ombudsman’s ‘Spotlight’ Report on leaseholder complaints was issued in September 2020 which sets out the expectations on landlords when dealing with such complaints. One of the recommendations in this report was that information about service charges should be made available to residents upon request.
  5. In this case it has taken the leaseholder more than four years of repeated requests for sight of the accounts and the landlord has yet to provide them. It can be seen from the available evidence that the landlord has repeatedly acknowledged the leaseholder’s request and has said that the accounts will be made available to him. The landlord initially said that these would be available by October 2017, however, following ongoing correspondence over the next two years with various different landlord staff members, the leaseholder lodged a formal complaint in August 2019. It was at this point that the landlord acknowledged that there had been a delay in sending out the accounts. In its initial complaint response, the landlord acknowledged its mistake and apologised for this. It also assured the leaseholder that the requested accounts would be provided to him by the end of the year.
  6. In its subsequent complaint response in July 2020 the landlord again apologised for the failure to provide the requested accounts and promised that this would be provided by the end of July 2020. At the time of its final complaint response in October 2020 the accounts had still not been provided.
  7. The landlord has rightly acknowledged and apologised for the delay in providing the accounts, and it has confirmed in its complaint responses that once the accounts are finalised it will not seek to recover any overspend, and any underspend will be issued as a credit to the leaseholder’s service charge account. This is reasonable and shows that the landlord is trying to resolve the complaint in a practical way.
  8. However, while the landlord has rightly apologised for the delay, and has referred to its mistakes, it has failed to provide any meaningful explanation either in response to the repeated requests, or within the complaints process, as to the exact reason(s) for the delay and the failure to abide by its legal obligations. It has not provided any reasonable explanation for the failure to provide the requested accounts.  
  9. Given the length of the delay, the landlord did not consider if compensation was warranted for this service failure in accordance with its compensation policy. The landlord has acted appropriately by recognising its delay and apologising for it, but it has failed to consider appropriate compensation. Looking at the facts of this case, the Ombudsman considers that there was a significant delay in meeting the leaseholder’s request for sight of the accounts. The landlord’s acknowledgement of service failure and its apology, on its own, is not proportionate redress for this service failure, and compensation is warranted for the leaseholder’s time and trouble spent pursuing this matter.  

Determination (decision)

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was maladministration in the landlord’s handling of the leaseholder’s request for audited accounts for the service charges from 2016 onwards.

Reasons

  1. The landlord has acknowledged the leaseholder’s concerns about the delay in providing the accounts and it has accepted that there was service failure in its handling of this matter. It has apologised for the delay and it has accepted responsibility for this. However, the Ombudsman is of the view that the landlord has failed to act in accordance with its legal obligation to provide the requested accounts. It has failed to act in accordance with its compensation policy and it did not consider whether compensation was appropriate for the identified service failure. It failed to act appropriately and take into account not only the significant delay, but also the impact on the leaseholder in pursuing this matter for so long.

Orders and recommendations

Orders

  1. The landlord should, within four weeks of the date of this report:
    1. Pay the leaseholder £300 compensation in recognition of the time and trouble he has been put through in pursuing this matter.
    2. In light of the maladministration noted in this case, the Ombudsman orders that the landlord carry out a review of its processes for responding to requests for audited accounts.
    3. The landlord should also write to the leaseholder (and all other affected leaseholders) within four weeks of the date of this report setting out its plan for when the requested accounts will be ready and made available to the leaseholders.
  2. Evidence of compliance with the above orders to be provided to this Service within four weeks of the date of this report.