Clarion Housing Association Limited (202447436)

Background

1. On 5 June 2024, the resident wrote to the landlord to say she had not received her service charge estimate for the year starting April 2024. The landlord sent the estimate on 6 June 2024. The same day, the resident made a formal complaint. She said she would not pay until the landlord gave clear explanations. She asked what each charge was for and how it was worked out. The resident told us that despite completing the landlord’s internal complaints procedure, she remained dissatisfied with its response.

What the complaint is about

2. This complaint is about the landlord’s response to the resident’s request for further information about her service charges.

Our decision (determination)

3. We have found there was maladministration by the landlord in its response to the resident’s request for further information about her service charges.

Reasons

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.

4. We do not investigate complaints about the level and reasonableness of service charges. Parts of the issues complained about relate to the level and reasonableness of service charges, and as such we will not investigate these. The first-tier tribunal (Property Chamber)(FTT) or court are best placed to consider these matters given their powers and expertise.
5. We do, however, consider complaints about how landlords respond to queries and requests for further information from residents about their service charges. We expect landlords to respond promptly and to provide clear, transparent information about the charges.
6. We noted the resident raised concerns on several occasions about not receiving post and had asked the landlord to send correspondence by email. Although this issue did not form part of the complaint, we have made a recommendation for the landlord to review and address this matter to help prevent similar issues in the future.
7. Having received her 2024 to 2025 estimate charge, the resident asked the landlord to provide thorough explanations and evidence to justify her repairs, building insurance and management fee charges. This investigation considers the landlord’s response to these requests.

Repairs

8. Schedule 6 of the lease allows repair costs to be included within the service charge, which the lease requires the resident to pay.
9. The landlord confirmed the resident was charged £35 half‑yearly (£70 annually) in 2024 to 2025, as an estimated contribution towards repairs. As these were estimated costs, it was reasonable that the landlord could not provide invoices at that stage. However, the landlord should have been able to explain the basis of the estimate.
10. The landlord confirmed the £70 figure was an estimate. The landlord said it would reconcile the estimate against actual expenditure at year end and credit back or recover any over‑ or under‑payment from the resident.
11. In general terms, the landlord’s approach was consistent with the lease: Under clause 5(c), the landlord may require advance payments for anticipated repair costs. Under clause 5(d), the landlord must compare estimated and actual costs at year end and either recover any shortfall or credit any surplus to the resident’s next half‑yearly demand.
12. The landlord stated the reason for the £70 repairs charge was that previous estimates based on historic expenditure had resulted in residents facing significant deficits in years where repair costs increased. This was reasonable, however, it did not explain how it arrived at the figure of £70 in the resident’s case.
13. There were also inconsistencies in the landlord’s explanation of the 2023 to 2024 estimate. In this complaint, the landlord said it had credited back the £250 charge. However, a previous stage 1 response (referred to by the resident in this complaint), stated this had been removed entirely. These inconsistencies reasonably caused confusion for the resident.
14. The landlord further undermined clarity by repeatedly stating that the resident was only charged for building insurance and a management fee. This was inaccurate. While the landlord later credited back or removed the estimated charges for repairs this does not mean the resident was never charged for repairs in the first instance.
15. In light of the significant variation in historical repair estimates, the landlord’s contradictory explanations and its incorrect statements about the charges levied, it was understandable that the resident remained concerned about how her repair charges were calculated.

Building Insurance

16. Schedule 6 of the lease allows for the costs of the landlord insuring the building to be included within the service charge, which the lease requires the resident to pay.
17. When a resident queries their building insurance charge, the landlord should provide a written summary showing, at least:
    • the name of the insurer
    • the sum insured (reinstatement value)
    • the risks covered
18. The landlord provided the insurer’s name and policy number but advised the resident to contact the insurer for further details. This was not reasonable, as the responsibility to provide this information rests with the landlord.
19. In its response, the landlord:
    • made no mention of the total insurance premium
    • said the resident’s insurance charge was based on her property type and number of bedrooms. The landlord noted the resident lived in a 2-bed maisonette
    • said the building’s insurance charge was uplifted by inflation each year
20. While reasonableness is for the FTT, the landlord should have explained the estimate by reference to the total premium, explained how its approach to apportioning the charge complied with Schedule 6, Part 2 of the lease and justified its reliance on inflation uplifts, which it did not do.

Management fee

21. Schedule 6 of the lease explains the service charge is made up of the costs the landlord pays to meet their duties under the lease, including related administrative costs.
22. In its responses the landlord explained how the administration fee was calculated, saying this represented 15% of the repairs and building insurance charges. Whilst 15% is commonly used by landlord’s to calculate their management fee, it is for the FTT and not us, to determine whether 15% was a reasonable percentage for the landlord to charge in this case.
23. It went on to explain that, as with repairs, once it had reconciled the year accounts, it would charge or credit back any difference between the estimate and actual charge.
24. The resident noted the fee reduced when repairs were removed previously. The landlord did not address this, though such a reduction would logically follow.

Conclusion

25. Overall, while the lease permits recovery of repairs, insurance, and administrative costs, the landlord’s responses lacked clarity and consistency.
26. Although the use of estimated charges and year‑end reconciliation was broadly consistent with the lease; the landlord’s conflicting explanations, failure to explain estimates and to provide the relevant insurance information caused avoidable uncertainty.
27. Taken together, these shortcomings understandably contributed to the resident’s overall concern about how her service charges were being calculated. This could have been avoided by the landlord through clearer and more consistent explanations.

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.