Orbit Group Limited (202501033)

REPORT

COMPLAINT 202501033

Orbit Group Limited

24 October 2025

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

This complaint is about:
1. The level and reasonableness of service charges and service charge increases, including a dispute about whether some charges are legally recoverable.
2. The landlord’s response to the resident’s request for information about her service charges, including its communication.
3. The landlord’s decision to pursue payment of a service charge deficit.
We have also considered the landlord’s complaint handling.

Jurisdiction

What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to us, we must consider all the circumstances of the case, as there are sometimes reasons why we will not investigate a complaint.
Paragraph 42(d) of the Scheme says we may not consider complaints about the level of service charges, or the amount of any service charge increases. Paragraph 42(f) of the Scheme says we may not consider complaints where we consider it quicker, fairer, more reasonable, or more effective to seek a remedy through the courts, tribunal, or other procedure.
The resident says the landlord is seeking to charge her for deficits from the 2021-22 and 2022-23 financial years. She believes the landlord is seeking those costs ‘illegally’, and there is a dispute between the parties as to when an 18-month deadline under s20B Landlord and Tenant Act 1985 takes effect. She has also raised concerns about the level of the charges, and of the service charge increases.
The First Tier Tribunal (Property Chamber) deals with disputes about the reasonableness of service charges, and can make binding determinations related to variable service charges. This includes whether a charge is payable, whether costs were reasonably incurred, and whether the charges are reasonable. The First Tier Tribunal (Property Chamber), not the Ombudsman, is therefore the most appropriate body for these parts of the resident’s complaint.
As such, any complaints about the reasonableness of the service charges (including whether or not any specific charges are legally payable), or of any increases, is outside our jurisdiction. Our investigation will only consider whether the landlord appropriately responded to the resident’s requests for information about the charges, and its communication about the charges.

Background

The resident has a shared ownership lease for her property. The property is a 1-bed flat. The landlord is a leaseholder, and there is a separate freeholder for the building.
The freeholder has a managing agent to manage the building on its behalf. The landlord pays a portion of the managing agent’s costs under the terms of its lease. The resident pays a set percentage of the costs to the landlord under the terms of her lease. It’s a variable charge, so can go up or down each year depending on the costs incurred.
The landlord sends the resident a half-yearly service charge estimate for her flat. It then confirms the actual charges at the end of the year, once it has the final accounts from the managing agent. Depending on the actual costs incurred, the landlord would then either refund any surplus (if the actual costs were lower than expected), or issue a deficit notice (if the actual costs were higher than expected).
The landlord sent the resident a service charge demand on 14 February 2024. The resident disputed the landlord’s ability to claim all of the charges in the demand, and asked for various further information about the charges. The landlord then sent a deficit notice on 24 April 2024.
The resident made a complaint on 27 April 2024. She disputed the level of the charges, and said the landlord had not provided the breakdown of costs she had requested.
The landlord issued a stage 1 response on 10 May 2024. It said:
1. It had sent the year end statement to the resident by post.
2. The deficit charge for £1,412.23 was added to her account on 25 April 2024. It did not amend her direct debit, which was why she did not receive notification that her direct debit had changed.
3. It was in the process of requesting evidence from the managing agent to assess why there was a need for additional demands. It would share its findings with her once it had all of the information.
4. It set out its position on whether the costs were recoverable under s20B Landlord and Tenant Act 1985.
The resident made a further complaint on 4 June 2024. She said the landlord was not entitled to claim the deficit from her, and it had failed to send her any of the evidence she had requested about the charges (such as invoices, the amounts spent, and her percentage of the costs).
The landlord issued a further stage 1 response on or around 25 June 2024. It said:
1. It had removed a deficit of £129.30 from the accounts, as those costs were outside of the 18-month time limit. But it said the other costs were within the time limit.
2. It gave information about the £1,412.33 deficit. It said this was for 2021-22 and 2022-23. It provided the following evidence:
  1. 2 invoices for the April 2022-23 service charges, and the budget from the managing agent which set out how the charges were calculated. It said this figure was subject to change, as the managing agents were in the process of completing their review of the year-end accounts.
  2. The 2022-23 year end accounts. It said no invoice was available yet, but provided the draft accounts, which parts of the charges the resident was responsible for, and a calculation for the deficit.
  3. The 2021-22 year end accounts, with the invoice and supporting documentation.
3. It was arranging meetings with the managing agent before it sent out budgets to avoid deficits of this value going forward.
4. It could arrange a 12-month payment plan for the deficit the resident owed.
The resident sought to escalate her complaint on 5 September 2024. She said there had been no conclusion to her complaint, she’d had calls from the collections team, the communication was ‘appalling’, and that she had asked multiple times for receipts to prove the charges were legitimate.
The resident escalated her complaint again on 16 September 2024. She said the landlord had only considered the deficit itself, not its communication. She said there had been poor communication from the landlord, and it had ignored multiple requests for copies of invoices and receipts.
The landlord issued a stage 2 response on 30 September 2024. It said:
1. It had appointed lawyers to challenge the managing agents about the deficits. It would update all affected residents when it knew the outcome.
2. Receipts were part of the legal challenge. It had requested all invoices and evidence of costs from the managing agent, but not received them yet.
3. It provided the breakdown it had of the management costs by financial year, based on the information it held. It also provided the draft accounts from the managing agent. It confirmed it would provide the final accounts once it received them from the managing agent.
4. It confirmed the date it received the invoices for the deficit from the managing agent, and repeated its position on when the 18-month deadline started.
5. It could arrange a payment plan for up to 12 months, depending on the resident’s financial circumstances.
6. It offered £100 compensation for time and trouble.
The landlord issued a further stage 1 response on 23 November 2024. It said the 2021-22 end of year statements were correctly issued, but it should not have applied deficits to the accounts. It said it would send out amended statements with the deficit removed, and offered £50 compensation. This related to a deficit of £129.30, rather than the full deficit.
The resident raised a further complaint on 28 and 31 January 2025. She was unhappy she was being chased for arrears when she believed the deficit was not recoverable. The landlord said it could not investigate the complaint, as it had already gone through the complaints process.
The resident was unhappy with the landlord’s response, so referred her complaint to us. She said:
1. She did not think the deficit was payable or should have been added to the accounts.
2. She had asked for a full and thorough breakdown of these costs, together with copies of receipts and calculations, but the landlord had not provided it.
3. She was being constantly chased for arrears, despite the amounts being challenged at court.
4. She wanted the landlord to admit it was wrong and that it could not charge the deficit.

Assessment and findings

Scope of the investigation

We can only consider complaints which have completed the landlord’s complaints process, unless there has been a complaint handling failing which prevented a complaint going through that process.
In this case, the resident has made a number of different complaints about her service charges and the landlord’s response to her information requests. However, some were raised for the first time in her escalation request (after the stage 1 response). This includes:
1. The landlord not pushing back to the managing agent regarding costs.
2. The landlord offering a 12-month payment plan, rather than a longer plan.
3. A lack of communication about increases between February and April 2024.
As those concerns were only raised as part of the escalation request, they have not completed the landlord’s complaints process. We therefore cannot consider them as part of this investigation.

Requests for information

Section 22 of the Landlord and Tenant Act 1985 says that residents have the right to ask to inspect receipts, accounts, and other documents supporting a summary of costs. This right applies for 6 months from that date they received the summary. The landlord must make the supporting documents available for inspection within 1 month of a request, and should make the information available for a period of 2 months.
The evidence provided shows the resident requested information about the charges on the following occasions:
1. On 16 February 2024 she asked for a full breakdown of the costs incurred for 2023-24, together with a comparison against the 2024-25 budget.
2. On 5 and 11 March 2024 she queried the communal heating charge and what it was for.
3. On 26 April 2024 she asked for a breakdown of the invoices related to the service charge deficit.
4. On 4 June 2024 she asked the landlord for the full invoices, costs, and what her percentage of the costs was. She said she had asked for all of this before.
5. On 5 September 2024 she asked the landlord again to provide receipts for the costs.
The evidence provided shows that the landlord responded to the resident’s questions about the communal heating charge within a reasonable timeframe. It also responded promptly to emails where the resident disputed any ability to recover the deficit from her. However, it has not provided all of the requested information, and it responded selectively to her requests until she made a complaint.
Given the landlord’s legal obligation to provide information about service charges, it should be equipped to respond to such requests. We understand this can be a challenging area, as some freeholders (and their managing agents) may not provide transparent accounts, or may fail to provide them in a timely manner. And the landlord does not have control over the freeholder’s managing agent.
Where a landlord is a leaseholder and the charges and accounts come from a freeholder’s managing agent, we would expect the landlord to proactively seek the necessary information from the managing agents at the earliest opportunity, and chase this information up if there is no response. They should also ensure they are regularly and openly communicating with their residents about the charges.
In this case, the managing agent issued the final audited 2021-22 final accounts to the landlord on 14 February 2024, along with a demand for the deficit. They included the full accounts, and explained why there was a significant deficit. They said all invoices and reports would be available on request, and offered to arrange a meeting with the landlord to go through any queries. The landlord has provided no evidence that it took any steps to get the relevant evidence from the managing agent at that time, or to arrange the offered meeting to discuss the deficit. This meant it was not in a position to meet its legal obligation to provide evidence to the resident on request.
The first evidence of the landlord requesting any evidence from the managing agent was on 29 April 2024. This was more than 2 months after the resident first asked for information on 16 February 2024. This was an unreasonable delay, for which the landlord has provided no satisfactory explanation.
There is no evidence of the landlord contacting the managing agent again until 23 May 2024, almost a month later. However, this was primarily a dispute as to whether the managing agent was legally entitled to recover the deficit from the landlord, rather than to chase up any information the resident had asked for. It has provided no further evidence of requesting the information from the managing agent until after the resident escalated her complaint. Its only communication with the managing agent prior to that had been to dispute its own liability for the deficit.
In its complaint response, the landlord answered a number of the resident’s information requests. It has provided accounts, invoices, a calculation of the deficit, and explained that it was waiting for further evidence from the managing agent. Those were reasonable steps. However, it has not shown that it requested the information within a reasonable timescale from the managing agent, or that it proactively chased that information.
The resident was reliant on the landlord obtaining this information from the management company on her behalf and it failed to do so. It is unclear from the information provided whether it would have been able to provide the remaining information if it had requested it sooner, or proactively chased the managing agent up. This is because the managing agent has still not provided all receipts, and the landlord is in the process of issuing court proceedings against the managing agent. Part of those proceedings relates to the agent not providing receipts.
However, its selective responses to the resident’s information requests meant she had to continually chase up responses and repeatedly request information. This could have been avoided had the landlord been transparent about the information it held and the actions it was taking to get the information she wanted from the managing agents, and provided the information it did hold within a reasonable time. This means its poor communication made things worse.
The landlord has offered £100 compensation in its stage 2 response, and £50 in a subsequent stage 1 response. The latter was for including £129.30 it accepted was not recoverable in the service charge accounts. This is not sufficient for the level of inconvenience its failings caused the resident. We therefore find maladministration in its handling of the resident’s information requests, and have considered what the landlord needs to do to put things right.
In addition to an apology for its failings, the landlord must pay the resident £250 compensation for the distress and inconvenience caused by its poor handling of her information requests. This is in line with our published remedies guidance for failings which adversely affect a resident, but have no permanent impact.
The landlord must also give the resident a written update on the steps it has taken to get the information from the managing agent, and what steps it will take moving forward.

Deficit notice

The resident is unhappy with the landlord’s decision to issue a deficit notice. She believes it is not entitled to seek the relevant sums from her, and that it should not issue the notice when it is disputing the sums.
As set out above, we are not investigating whether or not the deficit is due. That would be a matter for the First Tiet Tribunal (Property Chamber). But we have considered the landlord’s actions around the notice.
The landlord received a service charge demand from the managing agent on 14 April 2024. This included a deficit for the resident’s property. The landlord notified the resident of the deficit the same day, and sent a deficit notice on 24 April 2024.
While the resident disputes the deficit is recoverable, the landlord believes it is. It was reasonable and appropriate for the landlord to notify the resident of a deficit as soon as possible, and the mechanism for doing so is through issuing the deficit notice. This is in line with its service charge procedures.
However, while it was reasonable to issue the notice, the landlord should not actively pursue payment of the charges when it is disputing them with the managing agents through the courts. The landlord says it has now suspended all payment collections for the deficit until the legal action is finished. That would have been a reasonable approach to take. But we have seen no evidence it told the resident this, and in practice it did not happen.
The landlord’s internal notes say it put a hold on collection of the deficit from 9 May 2024, and that hold remains in place. But it has still chased the resident for payment. It offered 12-month payment plans for the deficit on 20 May 2024 and 26 June 2024. The resident told the landlord on 5 September 2024 that the collections team had been chasing her for payment. And on 30 January 2025 it issued a payment demand for the full deficit, and told the resident she had to pay within 7 days.
It is unclear why the landlord has repeatedly sought payment from the resident when it had already decided to put collections on hold. But its actions in chasing payment of the charge despite recognising that it should not do so was unreasonable. We therefore find maladministration with regard to its handling of the deficit notice.
To put things right, the landlord must issue a written apology to the resident. It must also review its systems to determine why it has been chasing her for payment after already deciding not to do so, and write to her to confirm what steps it has taken to ensure she will not be chased for payment while its legal dispute with the managing agent is ongoing.
The landlord’s failings also caused the resident distress and inconvenience. She was being actively pursued for payment when she should not have been. This would inevitably cause frustration, and she had to take the time to repeatedly dispute this with the landlord. The landlord must pay the resident £150 compensation for the distress and inconvenience caused by its failings around the deficit notice. This is in line with our published remedies guidance for failings which adversely affect a resident, but have no permanent impact.

Complaint handling

Under the Ombudsman’s Complaint Handling Code, the landlord must acknowledge a complaint or an escalation request within 5 working days. It must issue a stage 1 response within 10 working days of acknowledging the complaint, and a stage 2 response within 20 working days of acknowledging the escalation request. It must also respond to all parts of the resident’s complaint.
The resident made a complaint on 27 April 2024. The landlord issued a stage 1 response on 10 May 2024, which was within a reasonable timescale. The resident made a further complaint on 4 June 2024. Some of this disputed the landlord’s stage 1 response, while some was a new complaint (about the lack of invoices and receipts). As such, the landlord should have escalated the existing complaint to stage 2, and issued a new stage 1 response for the new complaints.
It did not do so. While it issued a new stage 1 response, it failed to escalate the existing complaint to stage 2. And while its stage 1 response dealt with the deficit, it did not address its communication and responses to the information requests. So it did not consider all of the resident’s complaints.
The resident sought to escalate the new complaint on 25 June 2024, 5 September 2024, and 16 September 2024. But the landlord only escalated it on 18 September 2024, after the resident’s third attempt. This was not in line with either its policies or the Code. And when the landlord issued its stage 2 response, it still did not consider all parts of the resident’s complaint.
Finally, the resident tried to raise a new complaint on 31 January 2025. This was about being chased for arrears, the lack of evidence provided, and the landlord’s communication. The landlord declined to log a complaint, as it said the resident had already received a stage 2 response. But the complaint about being chased for arrears was a new complaint, and it had not considered its communication or information provision in its stage 2. It was therefore unreasonable to refuse to consider this complaint.
Overall, there have been a number of failings in the landlord’s complaint handling. This has cost the resident time and trouble, as she has had to try and repeatedly chase and escalate complaints to get them through the landlord’s complaints process. We therefore find maladministration in the landlord’s complaint handling.
To put things right, the landlord must apologise to the resident, and pay £100 compensation for time and trouble. This is in line with our published remedies guidance for failings which adversely affect a resident, but have no permanent impact.

Determination (decision)

In accordance with paragraph 42(d) and 42(f) of the Scheme, the resident’s complaint about the level and reasonableness of service charges and service charge increases, including a dispute about whether some charges are legally recoverable, is outside of our jurisdiction.
In accordance with paragraph 52 of the Scheme, there has been maladministration with regard to the landlord’s response to the resident’s request for information about her service charges, including its communication.
In accordance with paragraph 52 of the Scheme, there has been maladministration with regard to the landlord’s decision to pursue payment of a service charge deficit.
In accordance with paragraph 52 of the Scheme, there has been maladministration with regard to the landlord’s complaint handling.

Orders

Within 4 weeks of the date of this determination, the landlord must:
1. Issue a written apology to the resident for the failings identified in this determination.
2. Pay the resident £500 compensation for the distress and inconvenience caused by the failings set out above. This is inclusive of the £100 offered in its stage 2 response and the £50 offered in its subsequent stage 1 response, and is broken down as follows:
  1. £250 for its handling of her information requests.
  2. £150 for its handling of the deficit notice and demands for payment.
  3. £100 for its complaint handling.
3. Review its systems to identify why it was chasing the resident for payment despite its decision to place collections of the deficit on hold during its legal action, and rectify the issue.
4. Write to the resident to confirm the following:
  1. That it has placed collection of the disputed deficit on hold while its legal action against the managing agent is ongoing, and what steps it has taken to ensure that it will not continue to chase her for payment.
  2. The current progress of its dispute with the managing agent about the deficit, and a commitment to provide monthly updates on the status of the dispute.
The landlord must provide evidence of compliance with the above orders within the timescale set out above.

Recommendations

We recommend that the landlord take the following actions within 4 weeks of the date of this determination:
1. Provide an update on its dispute with the managing agents to all affected residents. It should also commit to providing monthly updates until the dispute is resolved.
2. Write to all affected residents to confirm that it will not chase payment of the disputed deficit until the dispute with the managing agents is resolved.
The landlord should confirm its intentions regarding the above recommendation within the timescale set out above.