Torus62 Limited (202402631)

Background

1. The resident purchased the lease in January 2014.

What the complaint is about

2. The complaint is about the landlord’s response to the resident’s:
   1. Concerns about the level, increase, reasonableness and legality of her service charges, including those related to major works.
   2. Queries about her service charges, major works costs and her sinking fund.
3. We have also considered how the landlord handled the complaint.

Our decision (determination)

4. We have found that:
   1. The resident’s complaint about the level, increase, reasonableness and legality of her service charges, including those related to major works is outside of our jurisdiction.
   2. There was no maladministration by the landlord in its response to the resident’s queries about her service charges, major works costs and her sinking fund.
   3. There was no maladministration by the landlord in how it handled the complaint.

We have not made orders for the landlord to put things right.

Summary of reasons

5. The resident’s concerns about the level, increase, reasonableness and legality of her service charges, including those related to major works are ultimately about both the level and amount of increase in her service charge and so we will not investigate it in accordance with our scheme rules.
6. Whilst there was a minor shortfall in the landlord’s response to the resident’s concerns about the apportionment of charges, overall, its response to the resident’s queries was fair and reasonable.
7. The landlord handled the complaint in line with its complaints policy at that time.

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.

8. We do not investigate complaints about the level of rent or service charge or the amount of the rent or service charge increase. As such we will not investigate the following elements of the resident’s complaint: that her service charges were consistently increasing, her charges were not reasonable, different leaseholders were being charged differing amounts for the same works and it was not legal for the landlord to make her pay for major works completed 2 years previously.
9. We will also not investigate whether the service or the costs of works themselves are ‘reasonable’ or whether the service or works provide value for money.
10. It the resident wanted to pursue her concerns about these matters, she may wish to challenge the charges by applying to the First-tier Tribunal (Property Chamber) or the court.

What we have not investigated

11. The resident said the major works that the landlord had carried out since she purchased the property in 2014, the last of which were the new windows which had been installed 2 years previously, were poor and that health and safety had been breached. The landlord reviewed its records and stated the only report it could find about concerns with the major works was in March 2018, prior to the windows being replaced.
12. In order for us to investigate these matters, the resident would have been expected to have raised her concerns with the landlord within 12 months of the matters arising. As the resident did not complain to the landlord until 2 years after the last of these works, the windows, were completed, we have not investigated this element of her complaint. Nevertheless, given the resident has raised concerns about health and safety at her property, a recommendation has been made for the landlord to contact her to establish if there are any current issues that it may be responsible for addressing.
13. Following the landlord’s stage 2 response, the resident requested further information on 16 September 2024 relating to the breakdown of the sinking fund. The resident said she was making this request under sections 21 and 22 of the Landlord and Tenant Act 1985. As this request was not made until after the landlord had issued its stage 2 response we have not considered this matter any further in this report.

What we have investigated

14. Clause 2 of the lease states that the resident is to pay on demand part of the costs incurred, or to be incurred, by the landlord in carrying out repairs to her property and to the building in which her property is situated.
15. On 4 April 2024, the resident complained to the landlord that she had not received her service charge estimate for that year. The same day the landlord sent the resident a copy. On 21 May 2024, the resident contacted the landlord challenging whether it had actually posted the service charge estimate in February 2023 as it said it had.
16. The landlord’s response to the resident’s challenge was reasonable. It checked whether the resident’s letter had been included in the service charge estimate documents sent to its external printer. It also checked with its external printer whether the resident’s service charge estimate had been included in the documents they had sent to the mail out company. The landlord shared what action it had taken with the resident, what the outcome was and confirmed it was satisfied her service charge estimate had been posted to her in February 2024. We are satisfied the landlord demonstrated on balance that it posted the estimate which was reasonable.
17. When a landlord intends to carry out major works that are likely to cost more than £250 per leaseholder, it is required to consult with those leaseholders under Section 20 of the Landlord and Tenant Act 1985. The landlord sent the resident an ‘intention to carry out cyclical maintenance works’ letter on 7 October 2019, which included an estimate of the cost of the proposed works. The schedule that the estimate was based on included the renewal of windows. The landlord provided us with a copy of this correspondence in its evidence submission.
18. In addition to consulting with resident’s, the landlord must also issue a demand for payment within 18 months of incurring the cost. In its response, the landlord explained that it was invoiced for the works on 10 June 2022. This would mean it would need to issue a demand for the costs incurred by 10 December 2023. This it did, the relevant costs being included in the Statement of Accounts, addressed to the resident, of 27 September 2023, a copy of which we have also seen.
19. Clause 1(v) of the lease states that the sinking fund is maintained by the landlord towards the costs of major items. The lease does not state that the sinking fund was maintained to cover the full costs. As the sinking fund was insufficient to cover the full cost of the works, it was reasonable for the landlord to charge any remaining balance via an additional service charge or a one-off payment. This is because the resident’s lease obliges her to pay ‘on demand’ part of the costs incurred or to be incurred by the landlord in carrying out repairs.
20. The landlord also acted fairly by explaining the reason for the current deficit on the sinking fund being due to previous works carried out following a stock transfer. The landlord also provided copies of Actual Service Charge accounts dating back to 2013/2014, when the resident purchased the property, which included details of all payments made to and from, as well as the balance of, the sinking fund.
21. It is important to reiterate that it is not for us to say whether the resident is obliged to pay the amounts demanded by the landlord, as this would be for the First Tier Tribunal or the court to determine. Instead, our role is to see whether the response provided by the landlord to the resident’s concerns was reasonable. In respect of this element of her complaint, we are satisfied that it was.
22. The landlord’s response to the resident’s concerns about the impact on her finances of having to pay the full costs of the major works in 1 year, was also reasonable. This is because it acknowledged the ‘burden’ this placed on the resident and offered her a payment plan ‘to relieve the negative impact this was causing’ her. Whilst it was not legally required to do so, offering flexible payment options represents good practice by the landlord and a recognition of the need to help avoid financial hardship for its residents.
23. In her complaint, the resident also raised concerns that each leasehold property in her block was being charged differing amounts when each property was identical. In respect of this element of the complaint, the landlord’s response was quite vague and lacked detail. Instead of providing the resident with a response that reflected the terms of her lease, it simply stated the resident had been charged a share of the cost of the works to her block. Clause 2(b)(i) of the lease states that the apportionment is ‘to be the same ratio to the whole cost incurred by the Landlord as the rateable value of the demised property is to the rateable value of the main building’. It would therefore have been reasonable for the landlord to have referred to this clause in its response, which it did not do.
24. Whilst this was a shortfall in the landlord’s response to the resident’s queries, given that its response was otherwise fair and reasonable, a finding of no maladministration has been made. Nevertheless, a further recommendation has been made for the landlord to provide the resident with a clearer explanation of how it apportions the costs for her block with specific reference to Clause 2(b)(i) of her lease.

25. The Housing Ombudsman’s Complaint Handling Code (‘the Code) sets out when and how a landlord should respond to complaints. The relevant Code in this case is the 2024 edition (April 2024).
26. The landlord has a complaints policy that is in line with our 2024 Code (April 2024).
27. On 2 April 2024, the resident raised her complaint with the landlord, which it acknowledged within 5 working days (2 April to 8 April 2024). The landlord then provided its stage 1 response within a further 10 working days (8 April to 22 April 2024). This was in line with both the landlord’s complaints policy and the Code.
28. The resident escalated her complaint on 24 May 2024 and the landlord provided its stage 2 response within 20 working days of the resident’s escalation request being received (24 May 2024 to 21 June 2024). Again, the landlord’s response was in line with both the landlord’s complaints policy and the Code.

Learning

29. The landlord may wish to consider what learning it can take from the recommendation made in this report, that it provides the resident with a clearer explanation of how it apportionments the costs for her block with specific reference to her lease, to ensure that it provides clearer and less vague responses going forward.

Knowledge information management (record keeping)

30. No issues with the landlord’s record keeping were identified in this investigation.

Communication

31. No issues with the landlord’s record keeping were identified in this investigation.