The Riverside Group Limited (202407301)

Background

1. The resident has complained about the increased weekly service charges for communal electricity and gardening. She does not feel they are justified, as she lives in a self-contained mid-terrace house with no shared garden. She asked us to investigate after receiving responses from the landlord that she remains dissatisfied with.

What the complaint is about

2. The complaint is about:
   1. The increase in the service charges the resident pays for her property.
   2. How the landlord handled the resident’s queries about the service charge.
   3. How the landlord handled the complaint.

Our decision (determination)

3. We have found:
   1. The complaint about the increase in the service charge is outside of the Housing Ombudsman’s jurisdiction.
   2. The landlord is responsible for maladministration in its response to the resident’s queries about the service charge.
   3. The landlord is responsible for service failure in its complaint handling.

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

Summary of reasons

The increase in service charge

4. The tribunal or court would be better placed to consider the fairness of the increase in the resident’s service charge. This matter is outside of the Ombudsman’s jurisdiction.

The landlord’s response to the resident’s queries about the service charge

5. The landlord provided unclear and conflicting information to the resident about her service charges.

Complaint handling

6. The landlord did not provide its complaint responses within the timescales set out in the Ombudsman’s complaint handling code.

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

7. 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.

8. The Ombudsman does not investigate complaints about the level of service charge. The resident’s complaint included that she had accepted a small charge previously, but the increase from £8.60 to £14.12 per week was unaffordable, and she did not think it was justified. The level of the service charge is therefore the basis of the complaint. The tribunal or court are better placed to consider this matter, given their powers and expertise. The tribunal or court could also consider the resident’s concerns about her liability for any costs.

9. The resident’s tenancy agreement states that residents have the right to see a breakdown of service charges. The Ombudsman expects landlords to provide clear, transparent information about service charges to residents and to explain decisions and actions that affect residents. We have therefore assessed whether the landlord met these expectations.
10. The resident raised her formal complaint on 30 November 2023, stating she had spent several months trying to resolve concerns about her service charges. We have not received evidence showing when she first requested information, so we cannot assess how the landlord responded. However, the fact that she escalated the matter suggests dissatisfaction with the landlord’s handling of her enquiries. It is important for landlords to clearly explain what residents are being charged for.
11. Following the resident’s formal complaint, the landlord acknowledged on 22 January 2024 that it had charged the resident incorrectly. Its internal notes show it intended to explain how this would affect the resident’s charges and ensure they were corrected. We have not seen evidence to suggest the resident raised her concerns about incorrect service charges to the landlord’s attention prior to her formal complaint. However, landlords should hold accurate and correct information about its resident’s service charges. On 22 and 23 January 2024, the landlord was still trying to determine the correct charges internally.
12. In its stage 1 complaint response on 28 February 2024, the landlord admitted it had included incorrect charges on the resident’s service charge statement but did not specify what these were. It said its service charges team had confirmed the charges would be corrected in March, reflected in the year end statement and it would process refunds accordingly. However, it did not specify whether the changes would occur in March 2024 or March 2025. The following day, on 29 February 2024, it recorded that the case had been closed.
13. Due to the lack of clarity, the resident reasonably assumed the corrections would be made in March 2024. On 27 March 2024, she received another direct debit letter, with incorrect calculations, which caused further frustration. It was unreasonable for the landlord to close the case without clearly stating when the corrections would be applied. On 3 and 4 April 2024, the resident continued to chase the landlord, as the service charges had not been amended or refunded, as it stated in its complaint response. The landlord’s lack of transparency likely caused confusion and further distress for the resident. Clear and timely communication is essential when addressing service charge disputes.
14. It would have been reasonable for the landlord to clearly specify what charges it thought were incorrect and why, when the changes would take effect and follow up on the actions outlined in its stage 1 complaint response. On 5 April 2024, the landlord reviewed the service charge for the 2023/24 financial year (which ended in March) and found errors. It then wrote to the resident, confirming it would review the final accounts in September 2024, and any surplus or recovered charges would be factored into the 2025/2026 budget. It would then apply a reduction to future service charges, but the resident would not receive a cash refund.
15. It was reasonable for the landlord to share this information with the resident. However, it should have verified the details before issuing its stage 1 complaint response, as this conflicted with what it said previously. By providing unclear and inaccurate information, the landlord likely increased the resident’s frustration and caused further inconvenience, as she had to chase for updates and corrections to the service charges. If it had either provided accurate information initially or explained that it was awaiting information from its service charges team, this would have been more appropriate and may have prevented the complaint from escalating to stage 2. The lack of clarity misled the resident and likely undermined her trust in the landlord.
16. On 22 April 2024, the landlord issued its stage 2 complaint response. It explained that it had carried out an internal investigation into the breakdown of the shared space services and mapped the area to identify which properties were eligible to contribute to maintenance costs. While it was reasonable for the landlord to review this, it should have already held this information, and it took an unreasonable length of time to confirm this to the resident. The Ombudsman expects landlords to respond to service charge queries within a reasonable timeframe and to present information in a clear, accessible format.
17. The landlord also confirmed in its stage 2 response it had not amended and reduced the service charges applied to the resident’s account. It anticipated that it would send a letter to her in February 2025 with the revised charges. The landlord had confirmed that it needed to wait until it had its final accounts in September 2024, to provide accurate revised information, which was reasonable.
18. On 27 April 2024, the resident continued to ask why she was paying for communal electricity, when there was no lighting outside of the property and nothing to warrant an electricity charge. The Service has not received any evidence to show this was addressed. The landlord should have done so within a reasonable time.
19. The resident also queried the communal gardening charge, and the landlord confirmed this is for hedge cutting. As the resident was stating that she did not believe she needed to pay for communal gardening and landscaping as her property did not benefit from it, the landlord should have explained that the service was an agreed service within her tenancy agreement. The landlord acted reasonably in considering the resident’s concern about the issue with the charges, but it should have gone further to investigate and respond to why she did not feel she benefitted from the charges she was paying.
20. Nevertheless, since the case was referred to the Ombudsman, the landlord has confirmed that the resident is now only being charged for communal gardening. It provided a budget adjustment letter on 4 April 2025, explaining that the previous service charge was incorrect. It confirmed that when the resident took over the property via a deed of assignment in July 2008, she was mistakenly signed up for a power charge. As a result, she was charged for communal electricity from April 2016 to March 2025. The landlord acknowledged this error and refunded £587.01 to the resident’s account.
21. The Ombudsman is pleased to see that the landlord has accepted responsibility for incorrectly charging the resident for communal electricity and issued a refund. The resident was incorrectly charged likely because it did not audit the charges for each property and possibly assumed this was unnecessary.
22. When the resident raised the issue that she was being charged for a service incorrectly, it failed to appropriately investigate and address the issue, which was unreasonable. It would have been reasonable for it to have resolved the issue sooner, possibly in January 2024 when it recognised internally that it had charged the resident incorrectly. Instead, it took over a year to recognise that it had charged the resident incorrectly and this led to the resident overpaying for an extended period, which is unreasonable.
23. By providing unclear and conflicting information, this caused the resident distress and inconvenience. She had to repeatedly chase for clarification and request further information. She also reported that the charges were unaffordable. It is disappointing that after the resident raised concerns about paying service charges she was not liable for, the landlord took over a year to investigate and resolve the error. Although the landlord has now refunded the incorrect charges, it has not offered compensation. Given the distress and inconvenience caused, this would have been reasonable. 
24. The Ombudsman has found maladministration in the landlord’s handling of the resident’s queries about the service charge. Our remedies guidance suggests awards of between £100 and £600 for situations where there was a failure that adversely affected the resident. We therefore order the landlord to pay the resident £350 as compensation for the inconvenience caused while the resident was without the money she was incorrectly charged.
25. The landlord should also check its records and provide any evidence to show the resident was opted in for the communal electricity in 2016. If it is unable to provide this, we can assume that she had been paying it prior to this time. It should therefore offer a refund going back to 2008. It should also provide an explanation for the communal garden charges that the resident is paying, with reference to her tenancy agreement. 

26. The Ombudsman’s complaint handling code (“the Code”) sets out when and how a landlord should respond to complaints. The resident formally complained on 30 November 2023, and the landlord provided written acknowledgement the next day, which was in line with the Code’s timeframe.
27. The landlord provided an update letter on 22 December 2023, stating that the progress of the resident’s complaint may be slightly delayed and the resident would receive a response by 9 January 2024. However, in line with the Code, the landlord should have issued its stage 1 complaint response by 15 December 2023 and the delay in providing any update or explanation was unreasonable. The landlord provided its stage 1 complaint response on 28 February 2024, which was 50 working days beyond the timeframe set out in the Code. This is a significant period, and this delay would have likely caused frustration to the resident, particularly as she was waiting on answers to her queries.
28. The resident escalated her complaint to stage 2 on 11 April 2024, which the landlord acknowledged on 15 April 2024, which was reasonable. It subsequently provided its stage 2 complaint response on 22 April 2024, which was within the 20-working day timeframe set out within the Code.
29. Still, the landlord’s application of its internal complaints process caused delay. It did not provide any compensation for the delay it caused, despite it being a departure from what it should have done. We have found service failure in the landlord’s handling of the complaint and have ordered the landlord to pay the resident £100 compensation. This is in line with our remedies guidance where there has been a minor failure by the landlord and it has not appropriately acknowledged it.  

Learning

Knowledge information management (record keeping)

30. The landlord should ensure it has accurate information readily available relating to the service charges that its residents pay.

Communication

31. The landlord should ensure it provides clear information to its residents and responds to the specific concerns being raised. In this case, it was unreasonable that the resident had to chase for updates and information on when or if her service charges would be amended or refunded.