London Borough of Havering Council (202321122)

Background

1. The resident raised concerns with the landlord about the amount it invoiced him for major estate works it had completed. He said this exceeded the landlord’s estimated costs. He also said the landlord had not considered the limit on what it could charge under a section 125 Notice.

What the complaint is about

2. The resident’s complaint is about:
   1. The landlord’s administration of a service charge for major work.
   2. The landlord’s handling of the complaint.

Our decision (determination)

3. We found:
   1. Maladministration in the landlord’s administration of the service charge for major work.
   2. Reasonable redress in the landlord’s handling of the complaint.

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

Summary of reasons

The administration of the service charge

4. The landlord did not respond to the resident’s requests for information within a reasonable timescale. It failed to consider the terms of a Section 125 Notice. It instructed solicitors to recover money before the deadline in its revised invoice had passed.

The handling of the complaint

5. The landlord delayed responding to the stage 2 complaint. It apologised, which was reasonable redress in the circumstances.

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.

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.

6. The resident purchased the property under the Right to Buy scheme in 2017. As a part of this process, the resident and landlord agreed to the terms of a Section 125 Notice dated 13 March 2017. The Section 125 Notice puts a cap on major works being charged to the resident. The Section 125 Notice set out what works the landlord planned to complete in the next 5 years. It capped works at £12,554.16.
7. In February 2020 the landlord informed the resident it intended to enter into an agreement to carry out major estate work. The landlord set out its plan for the works in June 2021. It estimated a cost per property of £10,312.77. The landlord completed the works in August 2022. It sent the resident an invoice for £18,861.72 on 9 December 2022.
8. The resident contacted the landlord on 16 February 2023 to query the amount it had invoiced him. However, the landlord has said it did not respond until 29 June 2023.
9. On 30 June 2023 the landlord suggested the resident set up a 5-year payment plan of £351.71 per month. The resident did not agree to this, as he said the charge was incorrect.
10. On 28 July 2023 the resident asked the landlord to explain the purpose of the Section 125 Notice. The landlord did so. It also stated that because it had invoiced the resident after the 5-year period set out in the Section 125 Notice the cap did not apply.
11. The resident disputed this. The landlord reconsidered and agreed the Section 125 Notice applied. The landlord sent a revised invoice for £6,385.78 on 11 August 2023. On 16 August 2023 the landlord queried if the resident wished to set up a payment plan based on the revised invoice. By 23 August 2023 the landlord had referred the matter to its solicitors, who wrote to the resident to recover the money owed.
12. The landlord said it took enforcement action because the resident was in breach of his lease. It also said he had the opportunity to set up a payment plan for about 8 months prior, but he had not done so.
13. Under the terms of the resident’s lease the landlord may take enforcement action to recover money owed. However, in this case the amount owed was in dispute because the landlord failed to consider the terms of the Section 125 Notice. The landlord also delayed any opportunity to resolve matters sooner by failing to respond to the resident between February and June 2023.
14. Additionally, the revised August invoice states the resident had 21 days to pay the money owed. However, within only 12 days of the invoice, the landlord instructed its solicitors to recover the money. This was not fair and reasonable. In the circumstances, the landlord ought to have waited until the 21-day deadline had passed before considering any further action.
15. The landlord advised the resident of his payment options, including the option to apply for a Mandatory Service Charge Loan. This is an option available to some leaseholders. It was established in The Housing (Service Charge Loans) Regulations 1992. In effect, if certain conditions are met, a leaseholder has the right to request a loan towards the cost of service charges for major repairs. It was appropriate for the landlord to inform the resident of the options available to him.
16. Overall, the landlord’s administration of the service charges was poor. While it has apologised for a delay, it has not recognised the full extent of the failures identified in this report. This has led to our finding of maladministration for the landlord’s administration of the service charges.
17. We are not satisfied an apology alone is proportionate redress for the failures we have identified. The landlord’s delay in responding clearly exacerbated the resident’s concerns about the December 2022 invoice. The resident had to spend time disputing the charge and challenging the landlord’s understanding of the Section 125 Notice. He also experienced further worry when the landlord referred the matter to its solicitor prior to the due date on the August 2023 invoice.
18. Taking the above into account, we have ordered the landlord to pay the resident £250 compensation. This aligns with our compensation guidance and recognises the distress, inconvenience, time and trouble the landlord caused the resident.
19. The resident has recently told us that while he has settled most of the money invoiced, around £100 remains in dispute. We would not usually consider complaints about the amount or reasonableness of a service charge. This would be a matter for the First Tier Tribunal. However, we have recommended the landlord provide the resident a breakdown of what remains outstanding and explain why it considers this is due.

20. The Housing Ombudsman’s Complaint Handling Code says landlords must address all complaint points and provide clear reasons for any decisions. While we recognise the resident did not agree with the landlord’s outcome, we are satisfied it addressed all points he raised.
21. The landlord has a 2-stage complaint process. It will respond to stage 1 complaints within 10-working days and stage 2 complaints within 20-working days. The landlord responded to the stage 1 complaint within its timescales. The landlord responded to the stage 2 complaint just over 2 weeks outside of its timescale.
22. The landlord has apologised for the delay. As this was a short delay which did not affect the overall outcome for the resident, we are satisfied the landlord’s apology is appropriate. This led to our finding of reasonable redress for the landlord’s handling of the complaint.

Learning

23. The landlord’s handling of the administration of the service charge for major works was poor. The landlord may wish to review the findings and recommendations of our Spotlight Report on leasehold, shared ownership and new builds, published in September 2020.
24. The landlord’s communication was poor. The landlord may wish to review our guidance and landlord expectations for leaseholder complaints, available on our website.