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Vivid Housing Limited (202211330)

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REPORT

COMPLAINT 202211330

Vivid Housing Limited

21 December 2023


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 complaint is about the landlord’s handling of the resident’s concerns about the service management charge.
  2. The Ombudsman has also considered the landlord’s complaints handling.

Background

  1. The resident has been an assured tenant of the landlord since 8 November 2018. The landlord is a housing association. The property is a one-bedroom flat in a retirement complex, and the resident lives on his own.
  2. On 4 March 2022, the resident contacted the landlord to enquire about the scheme staff costs element of his service charge. He stated that there had been no-one on site providing a service since 2019 and questioned why he was still required to pay this amount. The landlord acknowledged the email on 7 March 2022 and advised it would respond. On 23 May 2022, the resident complained to the landlord as he had not received a response to his enquiries. In his complaint, he stated that no-one had been working in the office at the scheme since April 2019, and therefore the landlord had been overcharging residents in relation to this.
  3. In its stage 1 response, on 7 June 2022, the landlord agreed to review the staff cost element of the charges in the coming July and would provide the resident with the outcome. In communication with the resident on 4 August 2022, the landlord told the resident that when staff were removed from the scheme, a consultation was carried out and a letter sent to residents informing them of the changes. In stating that the charge was justifiable, the landlord said there was no reduction in headcount and it was still providing the same service as before just in other ways. The landlord acknowledged that the title of the charge was misleading. It advised the resident that it would do a full review of its service charge for its 2023/24 estimates, to ensure that it would be transparent and easy for residents to understand.
  4. The letter sent to residents in relation to the scheme staff element stated that a coordinator would no longer be based permanently at the site. Instead, different teams with specific expertise would ensure tenancy support needs would be met. The letter explained the changes, stated that refunds were not expected and that costs may be changed during the annual calculation taking into account costs from the previous year.
  5. The resident told the landlord that he was unhappy with its response, and that without a member of staff it was providing a ‘virtual service.’ He stated that if the headcount had remained the same, the overheads should sit with the department that the member of staff came under. The landlord arranged a face-to-face meeting with the resident; this took place on 6 October 2022. At this stage, the review promised in the stage 1 response had not yet been conducted.
  6. In its stage 2 response, on 10 October 2022, the landlord acknowledged it could have done better; the charges were not transparent, and it would undertake a “root and branch” review of charges. It advised this would be completed intime for the new financial year. The landlord offered the resident £60 for taking the time to meet the landlord, and to apologise for the delay in completing the review.
  7. The landlord confirmed the outcome of the review on 28 February 2023. It had reviewed all charges from 2019-2022 and had paid particular attention to the scheme management charge. The landlord agreed that it had not provided the level of service it said it would and recalculated the scheme management element to be £4.04 per week. It said it had overcharged the residents by £247.71 overall, however would not issue a refund. The landlord advised it had paid £9,195.73 for a laundry upgrade in 2022, which therefore offset the higher charges. It confirmed it would reinstate a member of staff at the scheme 2 days a week.
  8. In response, the resident stated that he felt that the figures had been manipulated to ensure that no refund was due. Following the review, the landlord and resident met to discuss the issue further. In referring to this Service, the resident stated he believed he had paid for a service that he had not received and was dissatisfied with the landlord’s response.

 

Assessment and findings

Scope of investigation

  1. While the Ombudsman can consider how a landlord responds to service charge queries or provides service charge information, actual disputes about the level of service charges are more appropriately considered by the First-tier Tribunal (Property Chamber). In line with paragraph 42(d) of the Housing Ombudsman Scheme, this investigation will consider the landlord’s responses to the resident’s queries but will not seek to determine the reasonableness of any service charge costs.

Scheme management charge

  1. The resident’s occupancy agreement in relation to the service charge, stated that it is a fixed charge that is set yearly based on estimates and costs. It said that if the estimate was too low, the landlord would bear the deficit. It said that if the estimate was too high, it would keep the surplus. The agreement further stated that the landlord will give 28 days’ notice in writing of any change and revised charges.
  2. The resident first raised his issues to the landlord regarding the scheme staff costs on 4 March 2022. It was appropriate for the landlord to acknowledge the resident’s concerns in a timely manner and to advise him it would respond.
  3. Internal emails showed that when the landlord investigated the issue, it felt that it had provided an appropriate service, and that the charge was still applicable. The internal emails further stated that it had not been asked to remove the charge, and that the resident had been informed of the change at the time. In an internal email on 11 April 2022 the landlord admitted the charge should have been frozen at £10.27, but that this must have been missed or not fed through internally; this was communicated to the resident on 12 April 2022 which was reasonable.
  4. In the resident’s formal complaint on 23 May 2022, he stated he was unhappy with the landlord’s response to date. He reiterated that no member of staff had worked onsite since 2019. On the same date, it advised a review of the scheme costs was due in July, therefore it could not respond fully to the complaint until that had been done. It is reasonable that the landlord intended to conduct a review of the scheme charge and therefore could not comment on the query at that stage. The delay in responding and not doing so until a complaint was raised was unacceptable.
  5. In its stage 1 response, on 7 June 2022, the landlord reiterated its intention to complete a review of the staff costs in July and would provide the resident with an update. Agreeing to conduct a review is fair in all the circumstances, and it was appropriate for the landlord to manage the resident’s expectations in terms of timescale.
  6. The landlord communicated the outcome of the review to the resident on 4 August 2022. It stated that when the change to the service at the site was made, the landlord wrote to residents and held a meeting to discuss the implications. It is important to note that the resident has stated that he never received these letters, and the letter provided to this service is undated. The tenancy agreement states that any change to the service charge would be given in writing with at least 28 days’ notice, and this service cannot determine from the evidence provided if this was followed.
  7. The landlord advised that as a service was still being provided, the charge was justifiable. However, the Ombudsman would expect the landlord in these circumstances to provide the resident a full breakdown of the services it had provided. This would have helped the resident to understand where and how the service was being provided, and why the landlord considered that the charge was justified. The landlord’s failure to do this was therefore unreasonable.
  8. The landlord advised it would conduct a full review for the 2023/24 financial year to ensure the service charge would be transparent and easy for residents to understand. This is reasonable and shows that the landlord was fully exploring the concerns of the resident and was prepared to act on the learning from the complaint.
  9. It was appropriate for the landlord to arrange a face-to-face meeting with the resident to discuss his complaint. This meeting was arranged for 13 September 2022; however, this service has not been provided with any evidence to establish if the meeting went ahead.
  10. A meeting took place on 6 October 2022 during which the resident expressed dissatisfaction that the review was yet to be completed, and that he had lost trust in the landlord. Evidence seen by the Ombudsman shows that the landlord did not give the resident a clear timescale as to when the review would take place and how long it would take. While it is acknowledged it is hard to predict exactly how long the review would last, it would have been reasonable for the landlord to have kept the resident updated on the progress to better manage his expectations. Good communication here would have gone someway to supporting rebuilding the trust between the landlord and the resident.
  11. In its stage 2 response, on 10 October 2022, the landlord acknowledged it could have done better in relation to ensuring the charges were more transparent. It was therefore going to undertake a full “root and branch” review of the charges. This would be completed by the end of February 2023. While this is reasonable, it is unclear why it took the landlord so long to come to the conclusion that a full review was required or why it did not do this as part of its previous review. This was an unacceptable delay.
  12. The review was not completed until 28 February 2023, 5 months after the landlord informed the resident it was going to undertake one. This Service has seen no evidence to explain why the review took so long, nor that it communicated with the resident during that time to keep him updated with any progress. An order has been made in relation to this unreasonable delay.
  13. In its review, the landlord had gone back through its charges between 2019 and 2022 and evaluated the service it had given. It gave the resident a breakdown of where over and under charges had occurred and explained why it would not issue a refund. It was appropriate for the landlord to admit that the service it had charged for, through the staff costs element had cost less than estimated and explained it had adjusted this charge to reflect its finding.
  14. It further found that due to other costs, including a £9,195.73 spend on laundry facilities in 2022, the service charge was cost neutral. In the tenancy agreement, it stated that the landlord was not obliged to issue refunds and, that where a surplus occurs it would keep it. The landlord provided a clear breakdown of both over and under spends. In not issuing a refund, the landlord acted in line with its policy.
  15. The landlord offered the resident £60 for taking the time to meet the landlord and to apologise for the delay in the review. It is the view of the Ombudsman that the level of compensation does not reflect the impact on the resident, nor the distress caused to him in chasing a response.
  16. Following its review, the resident was dissatisfied with the response and a further meeting took place to go through the review and the outcome. This is reasonable and demonstrated that the landlord was empathetic towards the resident and the ongoing situation.
  17. Overall, the response given by the landlord was reasonable in terms of the steps taken in investigating the complaint. It completed an initial review of the charges and, in acknowledging that it had not been transparent and clear in its handling of the scheme staff charge, decided to conduct a more in-depth review.
  18. The communication with the resident in terms of explaining the review, including holding face-to-face meetings was appropriate. However, the time taken to complete the review and the reasons for this delay were not communicated effectively. Good communication with residents is important, and better communication in this case would have managed the expectations of the resident.
  19. The Ombudsman would expect the landlord to ensure its service charge is transparent and easy for a resident to understand and provide a clear breakdown of the services it provides for the charges it makes. This was not apparent in this case and lessons should be learnt in relation to this.
  20. The Ombudsman has therefore found a service failure with the landlord’s handling of the residents’ concerns about the service charge.

Complaint handling

  1. The landlord has a two-stage complaints procedure. At stage 1, the landlord should respond within 10 working days. If the resident remains dissatisfied, they may escalate their complaint to stage 2. At stage 2, the landlord should respond within 20 working days. This is in line with the Housing Ombudsman’s Complaint Handling Code (the Code). If there are likely to be any delays, the landlord would be expected to contact the resident, explain the reason for the delay, and provide a new complaint response timescale at the earliest opportunity.
  2. The resident complained on 23 May 2022, and it was appropriate for the landlord to acknowledge his complaint the same day. This is in line with the Complaint Handling Code. However, the landlord’s own policy states that it will issue a stage 1 response within 10 working days, the landlord was 2 days outside of that in this case. While this delay is minor, it added to the resident’s frustrations with the landlord.
  3. Further, the landlord did not communicate to the resident that the response would be delayed. A landlord should, in accordance with the Code, ensure any delays are discussed with the resident, and new timelines should be agreed with the resident to manage expectations.
  4. Following the stage 1 response, the landlord agreed to undertake a review of the staff charge element of the service, which was done by 4 August 2022. On the 11 August 2022, the resident asked the landlord to relook at the situation. It is reasonable to conclude that this is the date the complaint was escalated to stage 2. The Ombudsman expects a landlord to be open in its communication with residents to ensure it is clear the stage a complaint is at. It failed to do so in this case which is unreasonable and not in line with the Code.
  5. A complaint response must be sent to the resident when the answer to the complaint is known, not when the outstanding actions required to address the issue are completed. Outstanding actions must still be tracked and actioned expeditiously with regular updates provided to the resident.
  6. Although the landlord communicated with the resident during this time, it did not provide its stage 2 response until 10 October 2022. The landlord’s complaint handling policy states that it should respond to a stage 2 complaint within 20 working days. It was unreasonable that the landlord took 41 days to respond. Furthermore, it failed to acknowledge this delay within its response.
  7. The landlord’s failure to act in accordance with its own policy resulted in extra efforts from the resident to progress his complaint. The time, trouble and distress caused to the resident in pursing this complaint is unreasonable and therefore the Ombudsman has found a service failure in the landlord’s handling of the resident’s complaint.

Determination

  1. In accordance with section 52 of the Housing Ombudsman Scheme, there was service failure in respect of the landlord’s handling of:
    1. The resident’s concerns about the service management charge.
    2. The resident’s associated complaint.

Orders and Recommendations

Orders

  1. Within 4 weeks of the date of this determination the landlord must:
    1. Pay compensation to the resident of £300, made up of the following:
      1. £150 for the time taken and inconvenience caused.
      2. £150 for the complaint handling.
    2. This amount replaces the landlord’s own compensation offer of £60 (if this award was paid to the resident, it should be deducted from the £300).
    3. Review its staff training needs regarding complaint handling and write to this Service with its findings.
  2. The landlord should evidence compliance with these orders to this Service within 4 weeks of the date of this determination.

Recommendations

The landlord should consider the Ombudsman’s “Insight on service charges and the Ombudsman’s Jurisdiction” and use it as an opportunity to focus on what good complaint handling looks like in relation to service charges.