Peabody Trust (202427718)

Background

1. The resident occupies a 2-bedroom flat under a shared ownership lease. The resident had raised complaints regarding the level of service charges. We understand those complaints had not, at the time of this complaint, reached Stage 2 of the landlord’s internal complaints procedure. We have investigated the resident’s complaint that the landlord requested payment of her outstanding service charges from her mortgage provider.

What the complaint is about

2. How the landlord managed the resident’s arrears.
3. The landlord’s complaint handling.

Our decision (determination)

4. There was reasonable redress for the complaint about how the landlord managed the resident’s arrears.
5. There was reasonable redress for the landlord’s complaint handling.

We have not made any orders.

Summary of reasons

6. It was distressing for the resident that the landlord requested her mortgage company to cover her service charges. However, it was entitled to apply for payment. We found the landlord’s communication was poor. The landlord recognised this and offered reasonable compensation.
7. There were significant delays to the landlord’s complaint responses. The landlord recognised this and offered reasonable compensation.

Putting things right

Where we find service failure, maladministration or severe maladministration we can make orders for the landlord to put things right. We have the discretion to make recommendations in all other cases within our jurisdiction.

Recommendations

Our recommendations are not binding, and a landlord may decide not to follow them.

Our investigation

The complaint procedure

What we found and why

The circumstances of this complaint are well known by the parties involved, so it is not necessary to detail everything that’s happened or comment on all the information we’ve reviewed. We’ve only included the key information that forms the basis of our decision of whether the landlord is responsible for maladministration.

9. On 26 May 2023 the resident contacted the landlord after receiving a letter from her mortgage company. The letter stated that the landlord had requested payment of outstanding service charges. The resident said her payments were up to date and that the account was in dispute. She also said that she intended to submit her Stage 2 complaint to her previous complaint about the level of service changes themselves that weekend but did not do so. She followed up with the landlord on 5 June 2023 to request a response. At that time, the arrears on the resident’s account were £2,299.99. Although she was making payments, the arrears fluctuated as she made payments.
10. On 1 August 2023, the landlord received a payment of £2,299.99 from the mortgage company. On that date, the arrears were £2,299.99. The resident chased a response to her complaint of 29 August 2023 on several occasions.
11. We understand the resident’s concern that the payment added to her arrears may have increased her interest charges. However, the landlord was entitled to request the outstanding amount from the mortgage company. The resident was obliged under her lease to pay for the service charges. The service charge statement showed that the account had been in arrears for a significant period and the balance was increasing. Service charges are necessary to fund the services provided. There is no evidence that the landlord told the resident she would not need to make payments while her complaint was being considered. In fact, the landlord’s policy states that payments should continue even when charges are disputed. The landlord therefore acted in line with its policy.
12. Mortgage providers may pay service charges on behalf of their customer (the resident) to prevent landlords from starting forfeiture proceedings. However, under Section 81 of the Housing Act 1996, landlords cannot apply for forfeiture unless the charges have been agreed or determined by a court or similar. The alternative option for the landlord would have been to pursue the debt through the County Court. The landlord had shown patience over several years. At that stage, there was no evidence that the charges were incorrect. It was reasonable for the landlord to consider that requesting payment from the mortgage company was the most cost-effective and reasonable option to address the arrears.
13. As a social landlord with financial obligations as well as responsibilities for public funds, it was entitled to decide not to give what would effectively be an interest free loan.
14. Although the resident’s account went into credit, the resident chose not to transfer the credit from her service charge account to her mortgage account, which would have reduced her interest payments due to the mortgage company. She continued to make payments. The credit on 29 August 2023 was £1773.69. The account was into credit until January 2024.
15. While it acted according to its policy, the landlord’s communication was poor. There is no evidence that it explained the meaning of the “dispute period” or warned the resident of its intention to contact the mortgage company. According to the resident, the landlord did not provide a timeframe for submitting her Stage 2 complaint. She also said she was experiencing difficult personal circumstances. Although the resident was aware that the landlord had contacted the mortgage company in May 2023, the landlord did not respond to her enquiries. We consider her email of 26 May 2023 to have been sufficiently clear. If the arrears officer had been in contact with the resident, there is no evidence that they explained the situation to her.
16. The landlord acknowledged that its communication was poor. This will have contributed to the resident’s distress and frustration. However, we consider the landlord’s offer of £200, its proposal to refund the credit, and its apology to be a reasonable response to the shortcomings identified. In the circumstances, we find that this represents reasonable redress.

17. It was unreasonable that the landlord did not treat the resident’s email of 26 May 2023 as a complaint. Under both the Housing Ombudsman’s Complaint Handling Code and the landlord’s own complaints policy, a complaint is defined as an expression of dissatisfaction about a service or action by the landlord. Moreover. the resident’s email stated that she intended to include the issue in her Stage 2 complaint. It was a failing that the landlord did not identify this email as a complaint.
18. The resident found it frustrating that the landlord advised her to contact the mortgage company, while they directed her back to the landlord. However, it was not unreasonable for the landlord to suggest that she contact the mortgage company as it was ultimately their decision to release the funds.
19. The Stage 1 complaint response was unclear. It stated that the landlord had contacted the mortgage company outside the “dispute period” but did not explain the relevance of this, given its position was that the resident should pay the charges in any event. In any case, contrary to what it had said in its Stage 1 response, the landlord had contacted the mortgage company in May 2023, which was during the dispute period. The inaccuracy and lack of clarity in the response contributed to the resident’s frustration. This did not, however, change the position that the service charges were due.
20. There was an unreasonable delay in the landlord’s complaint responses. This caused further frustration for the resident and added to her distress, as she had to chase the landlord on several occasions. This also delayed the landlord finalising the matter.
21. The landlord acknowledged the delays and offered compensation. The offer of compensation at Stage 2 was not expressed clearly.
    1. The subtotals added up to £500 not £550. We assume that was a typographical error.
    2. The Stage 1 letter had apologised that “you were not notified of this”. While this statement was not entirely clear, we have assumed that £200 was for the resident’s time, trouble and inconvenience, in recognition of its poor communication. This is also given that the Stage 2 said it was increasing its original offer. Moreover, it allocated the remaining £350 for elements of complaint handling.
22. We consider that £350 was reasonable redress for the landlord’s complaint handling. This amount exceeded the maximum compensation set out in the landlord’s own compensation policy. We consider the amount was proportionate in the circumstances.

Learning

Knowledge information management (record keeping)

23. We have no concerns about the landlord’s record keeping in this case.

Communication

24. This investigation has highlighted a number of instances where the landlord’s communication was poor. It did not respond to the resident’s emails or complaint.
25. The resident told us that there was a further period of limited response from the landlord between April and October 2024. This period was not included in the scope of the complaint, so we are not making any findings. We do note that the landlord was entitled to conclude the complaint process. However, it should have communicated more promptly and clearly during this time. The landlord had acknowledged its earlier communication failures but this lack of communication did not demonstrate that it had learnt from this complaint.