Anchor Hanover Group (202113398)

REPORT

COMPLAINT 202113398

Anchor Hanover Group

15 November 2022

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

The complaint is about
1. The level of service charge for the year 2021/22.
2. Failure to provide a resident warden.
3. The administration of a surplus in the service charge accounts.
4. Complaints handling.

Jurisdiction

What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme. When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.
After carefully considering all the evidence, in accordance with paragraph 42(e) of the Housing Ombudsman Scheme, the following aspect of the complaint is outside of the Ombudsman’s jurisdiction:

a) The level of service charge for the year 2021/22

Paragraph 42e of the Housing Ombudsman scheme states that the ombudsman may not consider complaints which, in the ombudsman’s opinion “concern the level of rent or service charge or the amount of the rent or service charge increase.”
The resident has raised a number of concerns relating to the level of service charge proposed by the landlord for this and other years. These concerns are connected to provision of a resident warden, proposed charges for heating services, the amount charged for repairs and maintenance and other matters detailed in correspondence with the landlord during January 2021.
These matters can be investigated by the First Tier Tribunal and the resident may approach that service if he chooses to do so. Further information is available at First-tier Tribunal (Property Chamber) – GOV.UK (www.gov.uk)

Background and summary of events

The resident is a leaseholder and lives in a small estate of around 25 properties. The landlord describes itself as a not-for-profit charitable organisation specialising in providing housing for older people. Some of the residents within the estate have mobility problems but many are capable of independent living. The resident’s lease agreement includes a clause that states that the landlord will “employ a warden for the general supervision of the estate.”
At the start of the Coronavirus ‘lockdown’ regulations in March 2020, the resident warden returned to their primary home and did not return to the estate.
In a letter from the landlord dated 8 June 2020, residents were asked to vote on whether they wished to retain a resident manager or switch to a visiting manager. The outcome of the vote has not been seen by this service but the resident says the result was ‘overwhelmingly in favour of retaining a resident warden’. A further letter from the landlord on 3 July 2020 proposed a visiting manager shared with another estate of the landlord with reduced hours. The letter said that reducing the hours of the warden to 16 hours per week would ‘represent an annual saving of £2,800 in salary costs for the estate’.
In the period from June to December 2020 the resident continued to correspond with the landlord about replacing the warden as well as other matters relating to estate management.
In a letter dated 4 December 2020, the landlord sent a proposed annual service charge budget for the year 2021/22 to residents and invited them to send in any comments, queries or questions. The resident says due to post delays he did not receive the letter until shortly before Christmas and therefore could not meet the deadline for feedback of 18 December 2020.
On 15 December 2020, the landlord sent an email to the resident in which it said it would “like to address the amount of contact that is being received from you. The amount of time this is taking up cannot be sustained.” The landlord said it would respond to further contact from the resident through its Customer Relations team once per week.
On 4 January 2021, the resident sent a letter to the landlord in response to its proposed budget. The letter contained six questions including subjects such as the management of maintenance contracts, contribution to the repairs fund, the costs of heating equipment, office costs, and the total service charge payable as well as the issue of the costs of a resident warden.
The letter of 4 January 2021 was treated as a stage one complaint by the landlord. However, the resident says it was not his intention to make a complaint at this time. A complaint acknowledgement was sent to the resident saying that the landlord would respond within 14 calendar days as per its complaints procedure.
The landlord sent a stage one complaint response to the resident on 13 January 2021. The response included responses to each of the six questions raised by the resident. The landlord also said that “in terms of costs that have not been incurred due to you not having a residential manager, this will show up as a surplus in the next set of accounts year end 2021. This surplus will be carried forward in to your account 2022/23.” The response gave precise figures relating to the resident’s service charge queries and explained why the landlord had taken the steps it had. The response also gave information about how to escalate the complaint if the resident was not satisfied.
On 29 January 2021, the resident wrote to the landlord. The resident said that he strongly objected to his questions on the budget being treated as a complaint. He also said that not all his questions had been answered fully and he would be sending a number of follow-on queries. The resident expressed concern that these further questions would be treated as an escalation of his complaint. The resident also raised concern about the corporate disclaimer being used by the landlord which said on all of its letters that the opinions of the author of the letter did not represent those of the landlord. The follow-on queries from the resident were included in another letter dated 30 January 2021.
On 19 February 2021, the resident wrote to the landlord and said that since he had received no further response from the landlord, he now wished his previous unresolved correspondence to be treated as a formal complaint. The resident now raised the following issues.
1. The resident objected to the email of 15 December about the amount of contact saying it was a breach of their complaints policy which said complainants would not be treated differently because of making a complaint.
2. The resident was not contacted by phone to discuss his complaint.
3. Some of his questions about the budget remained unanswered.
4. The corporate disclaimer being used on its letters was inappropriate since he needed to know what the actual views of the landlord were.
5. Residents would not receive the surplus paid for a resident warden until March 2023. The resident requested a cash payment at the end of the financial year in March 2021.
In March 2021, the resident repeatedly had to chase the landlord for a response to his complaint. On the 10 March, the resident threatened to withdraw his payment of the service charge if his complaint was not responded to. The landlord initially incorrectly assigned his complaint to an apprentice but on 26 March it was assigned to a District Manager to respond within 14 calendar days.
On 6 April 2021, the landlord sent the resident a stage two complaint response although the resident says it was not received until 19 April. In this response, the landlord
1. Gave further explanation on the level of service charges.
2. Gave further analysis of the service charge increases over time.
3. Provided an explanation of the reimbursement process for service charges.
4. Said it was unwilling to make changes to the lease following consultation with its legal team.
5. Said that the information given in the previous stage one response was correct and accurate.
In emails dated 10 and 26 April 2021 and then on 14 May 2021 the resident expressed his continued dissatisfaction with the landlord’s response to his concerns. The resident said he had not received a satisfactory response from the landlord. He went on to say that that residents on the estate had not had a resident warden since March 2020 but had been charged in full for the whole year of 2020/2021. The resident said that despite being told the employment changes would result in savings for the estate, the charge for a site manager had actually increased. The resident also expressed concern that his request for a complaint review had initially been assigned to an apprentice.
On 17 June 2021, the resident was sent a ‘complaint review response’ by the Customer Relations Manager. In the complaint review, the landlord:
1. Said the corporate disclaimer routinely used was being reviewed by the landlord’s legal team.
2. Apologised that emails directed to specific individuals had not reached their intended recipient.
3. Apologised if the email in December around excessive contact caused concern or upset and that it was intended to ‘draw a line’ under certain queries which the landlord felt it had already answered.
4. Apologised that the resident’s initial questions were incorrectly treated as a complaint.
5. Said that questions about the budget had been answered in the previous complaint responses.
After continued correspondence in June, the resident was informed he had exhausted the landlord’s internal complaints procedure on 9 July 2021. The resident was given advice about making his complaint through the First Tier Tribunal system, contacting the Leasehold Advisory Service (LEASE), contacting this service or requesting his complaint was reviewed by an independent panel of residents.
The resident sent a letter to the landlord’s Chief Executive dated 13 July 2021 again saying that the lease obliged the landlord to employ a warden and that some of the residents on the estate may not live to see the money charged to them for the warden being reimbursed.
On 24 August 2021, an independent panel of residents met to review the handling of the resident’s complaint. The panel concluded that “having reviewed the responses sent to you during the complaints process by the Team Manager and District Manager, we do believe that the information you have been provided covers the points you have raised in a good level of detail.” No further recommendations were made by the panel but advice was given on the First Tier Tribunal and this service if the resident wished to pursue his complaint further.
On 6 September 2021, the resident wrote a letter to the panel querying whether they had considered all the relevant correspondence and saying that the landlord was ‘no longer the charitable not for profit organisation we expected’.
The resident approached this service in September 2021. In a recent email dated 3 Nov 2022, the resident said that for the last few months the residents have had a non-resident estate manager working reduced hours.

Assessment and findings

The resident’s outstanding concerns relate to the landlords failure to provide a resident warden, the method by which the landlord will reimburse the service charge surplus to residents and the overall complaints handling by the landlord. These concerns are in addition to queries relating to the actual level of service charge which as stated above are outside the jurisdiction of this service.

Resident Warden

A copy of the lease has been provided to this service and there are relevant clauses relating to both service charges and the resident warden. Clause 5.1d states that the landlord will (subject to payment of service charge)

i) “employ a warden for the general supervision of the Estate,””

The lease therefore does not explicitly specify that the warden must be resident.
Recent correspondence from the resident has confirmed that the landlord is employing a non-resident estate manager working reduced hours. Therefore, although the resident’s position that residents on his estate have been consistently over-paying for a full time resident warden is justified, there is no evidence that there is currently a breach of the terms of the lease.
There is however, evidence that the landlord struggled to find a replacement warden in the period after March 2020 for several months. During this time, there was a breach of lease due to no warden being present. The exact date that the current warden began employment is not known to this service but the period would be approximately 12 months and no more than 15 months.
Much of this time coincides with the Coronavirus pandemic which is to some extent a mitigating factor in accounting for the temporary breach of lease. Hiring staff was practically more difficult during the pandemic and there was prevailing uncertainty about appropriate safety measures needed for on-site staff.
As part of a process of trying to put things right for the resident, it would be appropriate for the landlord to pay the resident compensation for the distress and inconvenience caused by not having a resident warden available during the gap between the resident warden leaving and the current part-time, non resident warden arrangements being put in place.
An apology and sum of £150 would be reasonable compensation and has been ordered below. This is in line with Ombudsman guidance which recommends payments of between £100 and £600 where there has been a service failure without permanent impact which adversely affected the resident.

Management of Service Charge Surplus and Reimbursement

The resident has argued that it is unreasonable for the landlord to defer payment of the surplus paid in service charges until March 2023. The argument is made on the basis that some of the older people in the estate may not live to receive the reimbursement. The resident has said that it would be fairer for the landlord to pay a cash lump sum now instead of deferring the payment.
The lease states in clause 3.2b that service charges are to be paid each month as follows:
“For each service charge year after the Initial Period the Service Charge Proportion of (the lanldord’s) costs and expenses of providing the said services during the Service Charge to which the same relates. Such estimate will be based on actual costs and expenses of providing the said services for the previous Service Charge Year (with due allowance being made for any excess or shortfall in current Service Charge payable in the previous Service Charge year above or below the costs and expenses of providing the said services in that year) together with provision for any expected increase or decrease of costs for the succeeding year”
Based on the above, there is provision within the lease for the landlord to make a reasonable estimate of its costs and then provide reimbursement of those costs in the following year if appropriate. It is therefore not unreasonable for the landlord to apply this approach to payments made in respect of a warden. The lease goes on to say that the landlord “shall so far as practicable endeavour to equalise the amount from year to year .”
The organisation LEASE, which is a government approved site giving advice and information to leaseholders comments on this type of arrangement on its website. LEASE says
1. “There will often be a final charge due at the end of the year when the actual costs are known, if these are not covered by the payments you (and any other leaseholders) have made. In this situation, the landlord will send you a bill asking for your share of the shortfall. If the total payments leaseholders have already made are more than the actual costs, depending on what it says in the lease the extra money may be:
2. used to reduce next year’s charge;
3. refunded; or
4. paid into a reserve fund.
The decision to defer reimbursement of service charges to residents until March 2023 or when the final costs are known is therefore not unreasonable and is a relatively common practise among landlords.

Complaints Handling

The landlord operates a two stage complaints process with the option of the complainant taking the complaint to a panel of independent residents if unsatisfied with the outcome.
The landlord has acknowledged within its internal complaints process that it should not have taken the residents initial questions in December 2020 to be a complaint. This correspondence was intended by the resident to be part of a consultation process about service charges. The landlord has provided an apology for this mistake but no further redress has been provided. It would be appropriate to add £50 to the compensation offered to the resident for the distress and inconvenience caused by this mistake.
In its “complaints, compliments and suggestions helpsheet” document which acts as the landlords complaints policy, the landlord says that it will acknowledge stage 1 complaints within 2 days by phone and respond within 14 calendar days. The same timescale for response is given for stage two complaints.
At stage 1, the landlord responded to the residents letter of 4 January 2021 on 13 January 2021 and was within the specified timescales. However, as stated above this letter was not intended as a formal complaint. The resident’s actual complaint was initially made on 19 February 2021 and this was not responded to until 6 April 2021 (at stage 2) although the resident says he did not receive the response until 19 April. Taking the former date still means that the landlord significantly exceeded its 14 calendar day target time. The resident has also said he did not receive a telephone acknowledgement of his complaint and this has not been disputed by the landlord. A further compensatory payment of £50 would be appropriate for these service failures in complaints handling.
Given the amount of correspondence generated by the resident in relation to service charges, it was not unreasonable for the landlord to write to the resident in December 2020 and inform him that it would limit its responses to him. Looking at its handling of the complaint overall, the landlord has demonstrated a willingness to listen and respond to the residents’ concerns. This was evident for example in its decision to undertake a complaint review in June 2021 despite the landlord having responded at stage 2 already.
The resident was also appropriately signposted to the option of the resident’s panel although the panel did not deliver the outcome the resident wanted. It was also reasonable for the Customer Relations Manager to respond to the resident rather than the Chief Executive. The decision taken by the landlord to review its standard corporate disclaimer used in its correspondence is also a fair and proportionate step to take in response to the resident’s concerns.
The landlord has however, failed to provide any financial redress at any point during its complaints process for its acknowledged service failures such as for the temporary breach of lease highlighted above or lateness of complaint responses. Relevant orders have therefore been made below to try and put this right.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in the landlords failure to provide a resident warden.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration in the administration of a surplus in the service charge accounts.
In accordance with paragraph 52 of the Housing Ombudsman Scheme there was service failure in the landlord’s handling of the resident’s complaint.

Reasons

The lease does not explicitly state that the landlord must provide a resident warden but the resident had a legitimate expectation that one would be provided and there was a temporary failure to provide any warden for a period of approximately 12 months.
It is reasonable for the landlord to adopt a process of estimating costs and reimbursing residents when those costs are known and this is supported within the lease agreement.
The landlord was late in responding to the residents’ complaints and should not have taken his initial questions about the accounts as a complaint. The landlord has not provided any financial redress for service failures it has acknowledged during its internal complaints process.

Orders and recommendations

It is ordered that the landlord pay the resident a total of £250 within four weeks comprised of £150 for the distress and inconvenience caused by its temporary failure to adhere to the terms of the lease in not providing a warden and £100 for the distress and inconvenience caused by its complaint handling failures.