Amplius Living (202422243)

Background

1. The resident purchased his property in March 2024 and has complained that the landlord was not transparent about all service charges he would be liable for before completion. He raised a formal complaint as he was dissatisfied with the landlord’s response to his queries. As he was unable to resolve this with the landlord, he asked us to investigate.

What the complaint is about

2. The complaint is about the landlord’s:
   1. Handling of the resident’s service charge queries and the information it provided.
   2. Complaint handling.

Our decision (determination)

3. We have found:
   1. The landlord made an offer of redress in recognition of its handling of the resident’s service charges queries, which, in our opinion, resolved the complaint satisfactorily.
   2. The landlord is responsible for service failure in its complaint handling.

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

Reasons

4. 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.

The landlord’s handling of the resident’s service charge queries and the information it provided

5. The resident has said he was not told about the management charge before he bought the property and there were unexpected additional charges. To address this, we have reviewed the offer letter, memorandum of sale, lease and key information documents. These documents stated that he would have to pay rent, a service charge, a management charge and buildings insurance. The resident signed to confirm he received the key information documents on 16 January 2024. The lease explained that the management charge relates to administration fees and these can change from time to time.
6. The summary of costs explained that the examples and figures were accurate at the time of issue and would change over time. It also said the monthly payments to the landlord would be reviewed annually and the figures applied only to the first year of the lease.  This showed that the documents made clear that the charges could change.
7. After completion, the landlord wrote to the resident on 28 March 2024 to confirm the payment dates and amounts for his service charge from 1 May 2024 to 1 March 2025. It set the monthly amount at £657.50. On 9 May 2024, the landlord issued a new letter, confirming a revised monthly amount of £714.81. This included a monthly rent and service charge of £706.70 and an additional £81.17 spread over 10 months. The landlord has since confirmed that it failed to include the management fee in the original figures, which explained the extra £81.17. It collected one incorrect payment on 1 May 2024 but acknowledged the error promptly and corrected the service charge, which was reasonable.
8. After receiving the revised amount, the resident requested a breakdown of the service charge. The breakdown included a management fee, an estate management charge, a service charge managing agent fee, a homeowner audit fee and building insurance. The landlord explained that the management charge was originally quoted as £27.32 in the memorandum of sale and offer letter, and this covered the managing agent’s role in managing the tenancy on its behalf. It explained that the estate management charge had increased from the previous year, and the service charge reflected the amount it had been charged. From 2025, it would review the charges and base them on actual costs. The landlord acted reasonably by giving the resident a prompt breakdown and clear explanations when asked.
9. We have compared the information the resident received before completion with the service charges amounts he was asked to pay on 9 May 2024. The lease states that he must pay the rent and the management charge, which includes the landlord’s administration fees relating to the lease. It was for the resident and his conveyancer to understand what these fees could include and to decide whether they were happy proceeding. The lease also states that the resident must pay a fair share of any costs the landlord pays for building or estate-wide services, which indicated that further charges were possible in the future.
10. The lease therefore stated that the resident could be liable for additional costs and that the landlord had the right to reclaim them from the resident. We note that the resident completed his purchase just before the new financial year in April 2024. While the landlord did not have to share the likely estimates for the coming year, it would have been helpful to do so if it already knew them. The resident’s conveyancer also had a role to play in advising the resident that the service charges could go up or down each year.
11. Since the resident raised his complaint with us, the landlord has accepted that it was delayed in notifying the resident of the increase in his service charge. It also recognised that it did not properly address the resident’s concerns, which delayed it resolving the matter. The landlord has reviewed its processes and confirmed all residents will be informed of any service charge increases at least 1 month before the point of sale. This demonstrates that the landlord has learnt from the feedback and it is positive that it has recognised its failing.
12. The landlord has also confirmed that it will refund the resident £416.52, which reflects the annual service charge increase it applied without notice. It also offered £150 compensation for the delay in advising of the increase and for the inconvenience caused. As the landlord has recognised its failings, we have considered whether the redress offered puts things right. The combined refund and £150 compensation are in line with what we would typically award for the failings identified. We therefore think the landlord has taken reasonable steps to put things right and made an offer of redress which resolves this element of the complaint satisfactorily.

Complaint handling

13. The resident raised his complaint on 31 May 2024. The landlord acknowledged it on 25 June 2024, which was 12 working days late under the Service’s Complaint Handling Code (“the Code”). It said it would respond within 10 working days, and it issued its stage 1 response on 5 July 2024, which met this.
14. The resident replied on 5 July 2024, stating he remained dissatisfied and explained why. The landlord acknowledged this on 9 July 2024 and said it would refer his concerns to its service charges team. However, because the resident had already started the complaints process and had clearly expressed dissatisfaction, the landlord should have escalated the complaint to stage 2 at that point. Instead, the resident had to seek to escalate the complaint again on 13 September 2024. The landlord acknowledged this on 16 September 2024 and issued its stage 2 response on 11 October 2024. The resident could have been given a response much sooner if the landlord had followed the right process.
15. The landlord should have escalated the complaint to stage 2 on 5 July 2024, when the resident expressed dissatisfaction. Since its complaints process, the landlord has recognised that it acknowledged the complaint late and offered £50 for the delay. However, the additional inconvenience caused by the failure to escalate warrants further redress. We have therefore found service failure in the landlord’s complaint handling and have ordered it to pay the resident a further £50 compensation. The total compensation of £100 is in line with our remedies guidance where there has been a failure by the landlord and it has not proportionately acknowledged it.

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.