Tower Hamlets Homes (202203573)

REPORT

COMPLAINT 202203573

Tower Hamlets Homes

12 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 resident has complained about the landlord’s handling of:
1. Major works to renew the district heating system and install smart meters, together with the works required to rectify issues with the smart meters.
2. Reports that the communal electricity bills do not reflect actual usage.
3. The associated complaint.

Background

The resident is a leaseholder of the property which is a 2 bedroom flat on the ninth floor of a block of flats. The lease agreement began on 30 September 2011. Heating and hot water to all flats within the block is provided through a communal heating system.
The resident is the chair of the resident’s association for his block. Some of the communication between the resident and the landlord has been conducted in his role as chair of the resident’s association. This complaint has been brought on his own behalf.
The landlord acts as a managing agent for the local authority.

Summary of events

Between May and July 2014, the landlord corresponded with the resident about the level of the communal electricity charge for the block. The landlord advised that it was monitoring the level of energy consumption. It further advised that having identified flats that had been attached to the communal system, these had been disconnected in August 2013. It said that leaseholders would be provided with a refund for the overcharge that this had created. The landlord further told the resident that it had raised a query with its provider about the level of charges.
During February and March 2015, the landlord both wrote to and met with residents of the block. It told them that there would be a change to the way that it charged for the communal heating and hot water. At the time charges were based on individual meters within each flat. This charging system had been managed on behalf of the landlord by an external contractor, with whom its contract would be coming to an end.
Residents were told that their existing meters would be disconnected, and interim charging arrangements would be put in place for both tenants and leaseholders. This would be based on the system that the landlord had in place for other blocks within its stock that had a communal heating and hot water system. This was to be a temporary arrangement whilst the landlord identified a new supplier. It said that residents would return to a metered service for heating charges by April 2016.
The landlord advised the resident in April 2015 that its aim was to roll out metering across its wider stock of properties where communal heating was in place. It explained that following the expiry of its current contract it did not have any mechanism in place to continue to charge residents based on individual meter readings. The landlord’s communication shows that the resident’s block was alone in having a metered communal heating system. All other properties within the landlord’s housing stock with a communal heating system had the heating costs based on a set formula that considered the size of the property and the number of radiators.
On 11 June 2015, following a meeting between the landlord and the residents’ association, the landlord provided the resident with further information on its proposals for heat metering. It said that the majority of the individual meters were no longer working and that the heat interface unit (HIU) and meters needed replacement. It needed to apply consistent charges across the block and one which was in line with its policies elsewhere. It said that it was legally obliged to extend heat metering to as many of its properties as practically possible. It intended that any new contract would provide this. It restated its aim that residents would return to a metering system from April 2016. It further addressed the issue of communal electricity consumption and said that it believed that the block was subject to a metering discrepancy which it had raised with its energy supplier. It had made repeated requests over a 10 month period but had received no meaningful response. It now had a meeting scheduled with its energy supplier and it would feedback to residents on the outcome of this.
The landlord issued a section 20 notice to leaseholders of the resident’s block on 8 February 2017. This was headed “major and minor heating replacement works, communal heating refurbishment, replacement of heat interchange units, payment meters and renewal technology works.” This followed its initial notice of intention and consultation which ran between 21 April 2016 and 25 May 2016. This notified residents of the chosen contractor and the estimated cost to each leaseholder.
During 2019 the landlord served 3 separate section 20 notices on leaseholders of the resident’s block. These covered replacement of the door entry system, lift renewal works and replacement of the communal lighting.
The resident wrote to the landlord on 3 November 2019. In this he said that his heating meter had been decommissioned by the major works contractor in October 2017 and made a request for a refund of charges. He also asked why the new individual meters had not been activated. He said that service charges were still based on the boiler fuel proportioned charges that had been put in place as a temporary measure in 2015. He said that this put the landlord in breach of the Heat Metering Act 2014. Residents had been advised by the major works contractor that the final commission was being completed in December 2018. This had not happened, and the landlord had provided no update to residents. The resident also questioned if the works to renew the emergency lighting would reduce the communal electricity consumption. This he said remained several times higher than its sister block.
In its response on 6 November 2019 the landlord said that the metering data for the majority of properties within the block was being collected remotely. This would be retrieved once the remaining systems had been connected. The delays had been caused by its contractors not being able to gain access to all homes within the block to complete works and commission the systems. It was currently taking steps to gain entry to the remaining properties. The landlord did not address the concerns raised by the resident about the communal electricity costs.
There was regular contact between the resident and the landlord between 6 November 2019 and 6 December 2019. On 10 December 2019, the landlord wrote to the resident. It confirmed that it had been charging for boiler fuel through service charges since 2015. It set out the annual charges that had been made for each year. It confirmed the date on which the system had been decommissioned and the date on which the resident’s meter had been removed. It offered a refund for part of the charges made to the resident for the financial year 2015 to 2016. The resident responded on 26 December 2019. In this the resident confirmed credits that had been applied to his account and raised further questions about the communal heating and hot water system. He asked the landlord to investigate charges that had been incurred through service charges for boiler repairs. He highlighted that the major works had been ongoing for 3 years. Furthermore, he raised resident dissatisfaction that the landlord was still unable to confirm when it would return to individual metering for heating and hot water use. He said that the metering had been operational in the communal areas since summer 2018.
On 12 January 2020, having received no response to his enquiry, the resident requested that this be considered a formal complaint. The landlord responded on 14 January 2020. It said that its target was to provide responses within 10 working days. It noted that it had failed to acknowledge the resident’s enquiry and apologised for this. In its reply it said that its contractors were attempting to gain access to the final properties to complete the internal electrical works. This was to be done by the end of January 2020 after which the new metering system would go live. It said that it was awaiting information on the backdating of charges and would provide an update by end of January 2020. At the same time, it would give an update on charges for boiler repairs. A further letter was sent to the resident as a formal complaint response. This apologised that the resident’s enquiry of 26 December 2019 had not been acknowledged and upheld his complaint. It further provided a breakdown of the boiler repair and major works costs for each financial year from 2014.
There was continued email communication between the resident and the landlord’s leasehold service manager. On 10 February 2020, the landlord wrote to the resident. It said that “the meters in any given property began recording on the day the individual HIU was active with the meter having power and heat passing through the meter. Active remote gathering of this data is now being collated through GURU (the company).” This further confirmed that the landlord would be refunding residents a percentage of the cost of the installation of temporary boilers in April 2015, ahead of the major works being carried out. It told the resident the level of refund he would receive.
The landlord met with the residents’ association on 25 February 2020 and on the 29 March 2020 the resident, in his role as chair, emailed the landlord with a list of actions and queries following this meeting. This included concerns raised by residents about the GURU meters that had been installed as part of the major works. The resident said that the internal meters did not show the kilowatt per hour usage. He asked why they had been left in an unusable state and why these had been provided if they could not give an estimated cost of the heating and hot water usage within each flat. He asked the landlord to tell residents what actions it would be taking to ensure that the GURU meters displayed the necessary information. He further asked the landlord to look at the charges made for repairs to the boiler in the 2018 to 2019 service charges.
The resident raised 2 formal complaints with the landlord on 4 January 2022. The first was about “abnormal communal electricity bills” for the block and the second focused on the heat billing and metering.
The landlord provided a stage 1 response on 18 January 2022 about the communal electricity bill. In its response the landlord set out that the complaint raised that there had been abnormalities in the communal electricity charge going back a number of years. The resident was seeking a resolution to this long standing issue and a refund for repairs that had been recharged to leaseholders. In its response the landlord set out answers to the questions raised by the resident and provide him with a link to the local authority’s website if he wished to pursue a freedom of information request. It said:
1. It enclosed a breakdown of the communal electricity charges for the resident’s block from the financial year 2014 to 2015 to the financial year 2020 to 2021. It was unable to share the charges for corresponding blocks managed by the landlord.
2. The resident had asked it to waive its management fee and the overhead charges for the communal electricity from the time that he had first raised this issue. It said that it was waiting for feedback from internal colleagues in its asset and energy teams around the communal electricity usage. Once it received this it would write back to the resident and inform him of any credits that it would apply to leaseholder accounts.
3. That the communal electricity charges had been based on actual readings taken in 2020 to 2021. The local authority energy team were due to carry out an inspection of the meter and the landlord would provide the resident with the outcome of this.
4. That by way of follow up it committed to provide the resident with an update on the communal electricity usage, confirmation of findings of the meter inspection as well as confirmation of any corrections on the charge. These would be overseen by its leasehold services manager who would act as the point of contact until the follow up actions were completed. It anticipated that this would be by the end of March 2022.
The resident remained dissatisfied with the landlord’s response and asked to escalate his complaint on 14 February 2022. The landlord provided a stage 2 response on 10 March 2022. It confirmed that an independent review had been carried out and that its response was based on the outcome of this.
1. It confirmed the fact that the resident had raised concerns that the communal electricity charge for his block was higher that those for neighbouring blocks which had similar characteristics to the resident’s block.
2. The landlord had examined the electricity charges for neighbouring blocks which were similar in make up to the resident’s block. It found that by comparison, both current and historic charges for electricity had been significantly higher for the resident’s block. To provide a basis for what would be a reasonable charge, the local authority’s energy team had requested an annual consumption report from its energy supplier for the previous ten years. Having received this, it would carry out comparisons with the neighbouring blocks and use these to calculate any refunds due to the resident and his neighbours.
3. It set the end of March 2022 as a target to complete this task and to write to residents confirming the amount that will be refunded to them.
4. It further apologised for the confusion caused by its decision to merge 2 complaints, having decided that the substantive issues were the same. It said that it had reminded its officers that it should notify residents of the actions that it is taking.
Through an email to local councillors on 12 March 2022, the resident highlighted that the landlord had not provided a response to his complaint raised on 4 January 2022 about heat billing and metering.
A further stage 2 response was provided on 7 July 2022. This focused on the communal heating and metering system. In this the landlord said that it was responding further to the resident’s stage 2 complaint and after contact it had had with both the Housing Ombudsman Service and the Department for Business Enterprise Innovation and Skills (BEIS). It said:
1. It acknowledged that the system had not been working as had been envisaged when it was installed. It set out its plan to make it fully operational and to ensure that residents were not financially disadvantaged by the system not operating fully.
2. There had been a number of issues with the system following its installation. Principally these had been:
  1. The ability of the units to be switched off within individual flats. This meant that contemporary data was not collected, and it impacted on the signal strength across the building. It understood that this was a common issue with these types of meters. It was putting together a programme to make minor adjustments to the meters to remedy this.
  2. Difficulty in securing access to every property on the system to install the correct technology inside the flats. It was putting together a plan to ensure that the heat meters were installed in the remaining flats by the end of November 2022.
  3. Supporting residents to use the system in the most appropriate way. This was an ongoing issue. It had issued a user manual to residents and was reviewing this to ensure that it was as accessible and easy to follow as possible. Following completion of its review it would make the manual available online.
3. These issues had prevented it from operating the system as it had envisaged. It confirmed that residents had only been charged an apportioned share of the energy used by the blocks communal heating system. There had been no subsidy to or from other schemes.
4. It had been able to collect the historical data from those properties with a complete installation. It would be able to reconcile usage and charges from when the system went live. If it found that residents had been overcharged it would make the necessary adjustments to their accounts. It noted that this would require a considerable amount of work. It stated its aim to have this completed to be included in the leaseholder service charge actuals at the end of September. It would inform residents if this were not possible.
5. It said that through its meeting with BEIS it had agreed to write to residents by the end of July to keep them informed. BEIS would also provide the landlord with examples of good practice in bills. This was to help it ensure that the information was set out as clearly as possible.
The resident remained dissatisfied with the outcome to his complaint. He asked the Service to investigate on 12 July 2022. He said that there had been significant delays in the landlord providing a solution both in respect of accurate heating and hot water charges and in addressing concerns that the communal electricity bills did not reflect the consumption for the block. He expressed a concern about the standard of the service provided by the landlord, which was paid for by way of service charges. The resident said he was seeking completion of the repairs, confirmation of the charges and compensation for the delays that had occurred.

Assessment and findings

The landlord’s handling of the major works to renew the district heating system and install smart meters, together with the works required to rectify issues with the smart meters

Heating and hot water to the resident’s block was provided by a communal boiler, with charging information collected through individual meters located within each flat. The landlord had said that this was a unique situation. For most of its properties, where a communal heating system was in place, heating and hot water charges were set based on an agreed formula. With the ending of its contract and ahead of the installation of a new system, this formula was applied to the resident’s block following the decommissioning of individual meters in 2015. The landlord’s major works to replace the communal heating and metering commenced in late 2017. It is noted that the landlord does not have a policy or procedure setting out time limits for this type of work, and the complexity of such a programme is acknowledged. As such the assessment is based on the reasonableness of the landlord’s actions
The resident contacted the landlord in November 2019 to question why the new meters had not been activated. In its response the landlord explained that it had been unable to commission the system as it still required access to some properties within the block. It advised that it was taking steps to address this. The landlord has said that further delays occurred with the imposition of restrictions because of the COVID-19 pandemic, further delaying final commissioning of the system. The landlord has explained that the installation of the metering and GURU technology was done in two phases. This led to access difficulties with some properties. It said that it was moving towards legal action to enforce access to the remaining properties. It is acknowledged that such action would have been halted by the COVID-19 restrictions. The landlord’s comments are noted. However, it is not clear why the action was not taken in a timelier manner. It also unclear why the landlord did not foresee issues with a two-phase approach, and why it did not take steps to mitigate any delay or inconvenience. In the circumstances it would have been reasonable for the landlord to have considered what measures it could take in the event that the works could not be carried out smoothly, and plan how it would tackle issues that arose.
Through the process of decommissioning the old metering system, renewal of the communal boiler and installation of new HIU and meters, the landlord has made a number of time based commitments to residents. While it is acknowledged that there had been a reliance on a third party to deliver the major works programme, these missed deadlines have compounded the resident’s complaint. Charging for boiler fuel has continued to be based on the formula put in place in 2015, removing the resident’s ability to have direct control over his own energy usage. In its final complaint response, the landlord advised of its plans to complete the installation of the remaining units, to enable the system to be fully commissioned by November 2022. A total of 7 years after first setting in place its interim charging arrangements.
The delays and failed promises amount to maladministration in the landlord’s handling of the major works and the installation of new smart meters. The landlord has recognised the challenges it faced with the new technology that it was installing and that it now has a plan in place to make the system fully operational.
It is not clear if the resident has been financially impacted by these delays. It is not known whether his individual usage charge would have been less or greater than the amount charged by the landlord through this period. The Service would encourage the landlord to engage directly with resident on this issue, reviewing the data collected by his meter to consider any future refund.
The resident has taken significant time and trouble in raising the issues with the landlord, both in his role as chair of the residents’ association, and as an individual leaseholder. There was no acknowledgement by the landlord of the inconvenience to the resident and this was a missed opportunity for it to take steps to put things right. Having considered the landlord’s compensation guidance and the Ombudsman’s guidance on remedies, an order has been made for an appropriate level of compensation to be paid by the landlord.

Reports that the communal electricity bills do not reflect actual usage

Leaseholder charges for communal electricity are calculated based on individual invoices provided by the energy supplier. A breakdown of these have been included within the actual service charge bills issued by the landlord to the resident in September each year.
The evidence that is available shows that this has been an issue that residents had raised with the landlord on a number of occasions since 2014. It was shown that the landlord had made attempts to resolve the issue. It first identified individual flats that had been incorrectly connected to the communal meter and later engaged directly with its bulk energy supplier to carry out checks of the meters. It also sought the support of the local authority’s energy team.
The resident’s challenge that the costs for communal electricity are too high is based on a comparison with neighbouring blocks of a similar make up. Through its complaint responses the landlord has acknowledged this concern. It said that the local authority’s energy team had requested information from the energy supplier and would be reviewing comparisons of energy consumption. It would then use this to calculate any refunds that were due to the resident and his neighbours. This is an appropriate response by the landlord to address the resident’s concern. It has indicated that it has applied credits to leaseholder’s accounts in respect of this. The Ombudsman is therefore satisfied that the landlord has taken proportionate steps to put things right.

The resident’s complaint

The landlord operates a 2 stage complaints procedure. As a managing agent for the local authority the target times set within its policy align with those of the local authority. This sets a target of 20 working days for providing a response at each stage of the process. The policy states that the landlord will aim to complete as many responses as possible within 10 working days, in line with the Housing Ombudsman’s Complaint Handling Code. Stage 2 complaint responses are reviewed and responded to by the local authority. The landlord has adopted the local authority’s policy on redress and compensation.
The resident submitted 2 formal complaints through the landlord’s online complaint form on 4 January 2022. One highlighted the resident’s concerns about abnormal communal electricity charges while the second addressed the ongoing issues around heat metering and billing. The landlord has provided copies of its complaint file to the Service which confirms that it received both of these.
The landlord provided timely responses both at stage 1 and stage 2 to the resident’s complaint about communal electricity charges. In line with its policy the local authority provided the stage 2 response. It further appropriately signposted the resident to the Service to escalate his complaint further.
The landlord did not however provide the resident with a response to his second complaint. This was not referenced within its stage 1 reply on 18 January 2022. It further offered an apology in the stage 2 response that it had merged the 2 complaints without notifying the resident believing the substantive issue to be the same. It did not however go on to address the resident’s complaint and appears not to have recognised that the two complaints were distinct. This was inappropriate and a missed opportunity to respond to the resident’s complaint about heat metering. The resident pursued his complaint directly with local councillors and through the Service. The landlord provided a formal response on 7 July 2022. This was issued by a director of the landlord and headed stage 2 follow up. There was no acknowledgement within this of the significant delay in its response. It had also failed to follow its own procedure, having not considered the resident’s complaint at stage 1 or by referring the complaint to the local authority for review at stage 2. The resident had been left having to chase the landlord for a response and it did not receive the correct external oversight set out within the landlord’s policy. The landlord therefore departed from its policy and this was a failing in the circumstances.
Having considered the landlord’s compensation guidance and the Ombudsman’s guidance on remedies an order has been made for an appropriate level of compensation. This is to be paid by the landlord in recognition of the delay in its response and the effort made by the resident in pursuing his complaint.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in the landlord’s handling of the major works to renew the district heating system and install smart meters, together with the works required to rectify issues with the smart meters.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration in the landlord’s handling of reports that the communal electricity bills do not reflect actual usage.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in the landlord’s handling of the resident’s complaint.

Reasons

The initial advice given to residents was that the removal of individual metering would be a temporary measure. They were advised that charging based on a percentage of total boiler fuel usage would be in place for a year. The associated major works and difficulties experienced by the landlord in formally commissioning the new system of individual meters led to the situation being ongoing for 7 years at the time of the resident’s complaint.
Communal electricity charges passed onto leaseholders through service charges were based on direct invoices received from the energy supplier. A breakdown of the invoices were then provided with the service charge actual statements. The landlord has responded to and taken appropriate steps to address the resident’s concerns, latterly proposing a review of the preceding 10 years on receipt of data from the energy supplier.
The landlord overlooked one of the formal complaints raised by the resident. It mistakenly identified the 2 complaints submitted on the same day as relating to the same issue. When it provided its formal response on the second complaint it failed to acknowledge the significant delay that had occurred and its oversight in not replying earlier.

Orders

Within 4 weeks of the date of this report the landlord must:
1. Apologise to the resident for the failings identified in this case.
2. Pay the resident a total of £500 compensation in recognition of the time and trouble taken by the resident in bring these issues to the landlord’s attention and in pursing a response to his complaint.
3. Confirm that individual heat metering is now in place for each property within the resident’s block. If this is not the case it must provide details of its action plan to ensure that this is put in place, together with details of its ongoing consultation with the resident and the residents’ association.
Within 6 weeks of the date of the report, the landlord should notify the Service of any refunds that have been made to the resident in respect of overcharges for fuel usage through the period in which new meters had been installed but were not fully operational.
The landlord should continue to work with the local authority energy team to ensure the accuracy of electricity meters for the resident’s block. It should complete the comparison with neighbouring blocks over the last 10 years and work with its energy provider to ensure the accuracy of the communal electricity meter. The landlord should present the outcome of this review to the resident and the Service by end March 2024.