Torus62 Limited (202342444)

Background

1. The resident sublet’s his property and pays the landlord variable service charges. The landlord issued the actual service charges for tax year 2022 to 2023 in September 2023 and the resident raised a number of queries following this.

What the complaint is about

2. The complaint is about the landlord’s:
   1. Response to queries about service charges.
   2. Complaint handling.

Our decision (determination)

3. We have found that:
   1. There was service failure in the landlord’s response to queries about the service charges.
   2. There was no maladministration in the landlord’s complaint handling.

We have made orders for the landlord to put things right.

Summary of reasons

4. While the landlord’s service charge account methods were in line with the lease, its communication about changes to accounting could have been better. It also took 2 months to provide the resident with a summary of accounts. Its stage 2 response apologised for its failings but did not put things right. This was a service failure.
5. The landlord’s complaint handling was reasonable.

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.

Orders

Landlords must comply with our orders in the manner and timescales we specify. The landlord must provide documentary evidence of compliance with our orders by the due date set.

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.

6. Between October and November 2023 the resident and landlord were in communication about the actual service charges for tax year 2022 to 2023. The resident complained about the landlord’s communication surrounding its accounting practice, it not consulting on work and the time taken for it to provide information. As the resident’s queries are linked, and to avoid repetition, the issues have been addressed under one complaint.

Communication

7. The lease confirms the resident’s responsibility to pay the landlord service charges. It confirms the resident’s obligation to pay the difference between an estimate and the actual, if the estimate is exceeded for a financial year.
8. Prior to April 2021, the landlord charged the costs of work to the sinking fund creating a deficit. It changed its approach for work completed after April 2021 and applied costs to the service charge account for the financial year. While the lease allows the landlord to charge in this way, it would have been reasonable for it to have told the resident of its changed approach. The landlord’s failure to do this meant the resident had to ask why it had not applied works costing £54 to the sinking fund. The landlord’s communication surrounding its change in accounting method could have been better, it accepted this within its stage 2 response and apologised.
9. When the resident queried the impact of a negative balance and interest, it was reasonable for the landlord to confirm in such circumstances it would offer a payment plan and would not apply interest to sinking fund deficits. The landlord said it would not prejudice leaseholders in the way it collected the sinking fund deficit. Its explanation would have helped to alleviate some of the resident’s concerns.

Consulting on work

10. Section 20 of the Landlord and Tenant Act 1985 requires landlords to consult leaseholders on qualifying work where each contribution exceeds £250 for repairs, maintenance, or improvements. As part of the resident’s complaint he said the landlord should notify him of all work prior to it starting. In the circumstances, it was reasonable for the landlord to have considered the cost implications of meeting the resident’s request. Within both its stage 1 and 2 responses it appropriately explained how it was not practical for it to consult on work not exceeding £250 and the costs implications of this.
11. The resident has told us that as he sublets the property, he is not aware of work until he receives service charge accounts. He feels strongly that the landlord should do more for leaseholders who sublet. It is important to explain that the lease does not alter either parties obligations depending on whether the property is sublet. The resident is free to discuss this further with the landlord or his subtenant.

Providing information

12. Section 21 of the Landlord and Tenant Act 1985 gives leaseholders the right to request a summary of service charge costs. On 4 October 2023 the resident asked the landlord for details of the service charge costs. As the accounting period had ended, the landlord should have provided the summary within one month. However, it took the landlord 2 months, until 5 December 2023 (its stage 1 response), to provide this information. Within the landlord’s stage 1 response it incorrectly said it should provide the information within a reasonable timeframe. While it corrected this within its stage 2 response, it should have communicated the correct information to the resident in the first instance.
13. It is noted that the resident asked further questions about the need for some work, mainly to the paving and guttering. Within the landlord’s stage 2 response, it said it would investigate this further. The landlord did this and on 8 May 2024 it found an overcharge for a gutter repair amounting to a credit of £87.16 per leaseholder. It apologised for the delay and offered £200 compensation to acknowledge the inconvenience caused.
14. The resident has told us that the landlord should provide before and after photos to evidence the work completed. This would help satisfy the resident of the need for work and what was actually done. There is no requirement for the landlord to provide before and after photos of works carried out for service charge purposes. However, it is acknowledged that such evidence (including survey reports and inspection notes) may be useful to reduce such challenges, to demonstrate the need for the works, and therefore the reasonableness of the cost.
15. Our investigation highlights the landlord’s response to the resident’s queries could have been better. While some of its responses were reasonable, the landlord did not notify the resident about a change in the way it applied charges to the service charge account. It also took 2 months to provide the resident with a summary of service charge costs. When considering the combination of the failings mentioned, the landlord’s handling of queries about service charges amounts to a service failure.
16. The landlord’s stage 2 response apologised for the delay and showed insight into the improvements required, however it missed opportunities to put things right within its stage 2 response. While the landlord said it would continue to look into a part of the resident’s query, it took a further 3 months (May 2024) to do this and offered £200 compensation for the inconvenience caused. While the compensation offered reasonably addresses the impact the overall failings would have had on the resident, a finding of service failure has been made for the reasons mentioned. However, we have not ordered further compensation in the circumstances.

17. The landlord operates a 2 stage complaints process. Its complaints procedure from September 2022 says it will issue a stage 1 response within 10 working days and 20 working days for a stage 2 response.
18. The resident raised his complaint on 18 November 2023. The landlord spoke with him within 4 working days and issued its stage 1 response on 5 December 2023. After the resident escalated his complaint on 8 January 2024, it responded broadly in line with the timeframes set within its policy, on 6 February 2024.
19. The landlord’s complaint handling was reasonable in the circumstances and there was no maladministration.

Learning

Communication

20. The landlord’s communication about changes to how it presents its service charge account could have been communicated to the resident in advance. Within its complaint responses it has set out how it will improve this going forward.