Brighton and Hove City Council (202427879)

Background

1. The property is a 3-bedroom maisonette in a block and the resident has been a joint leaseholder of the property since 2021. In his complaints, the resident advised the landlord that it had failed to set up a monthly direct debit in 2022 to pay the service charges, even though it was asked to do so. He said that as a result, the service charge account had fallen into arrears. He requested the landlord to write-off part of the arrears because he considered the landlord had been at fault for not setting up the direct debit.
2. The evidence shows that both the resident and his sister communicated with the landlord. For brevity we have referred to both of them in this report as ‘the resident’.

What the complaint is about

3. The complaint is about:
   1. The landlord’s administration of the resident’s service charge account, including not setting up a direct debit when requested to do so and not advising the resident that the account was in arrears.
   2. The landlord’s handling of the associated complaints.

Our decision (determination)

4. There was service failure in the landlord’s administration of the resident’s service charge account, including not setting up a direct debit when requested to do so and not advising the resident that the account was in arrears.
5. There was service failure in the landlord’s handling of the associated complaints.

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

Summary of reasons

6. The landlord acknowledged its error in not setting up the direct debit on its new system, apologised, explained how the error had occurred and agreed that the resident could repay the arrears through a repayment plan. However, there was an unreasonable delay in notifying the resident that his account was in arrears.
7. The landlord did not respond to the resident’s stage 1 complaint within an appropriate timescale and it did not apologise for the delay in responding.

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.

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.

8. The resident’s lease states:
   1. The leaseholder agrees to pay the interim charge by equal monthly payments in advance on the first day of every month.
9. The landlord’s leaseholders service charge collection procedure states:
   1. It will send an interim charge demand in March each year.
   2. It will send service charge demands (certificates of expenditure) at the end of September each year.
10. The resident has requested the landlord to write off part of the service charge arrears and included this in his referral to us on 20 October 2024. As our decisions are not legally binding, we consider that a court or tribunal would be better placed to make a legally binding decision on whether the landlord should write off part of the arrears due to its error in relation to the direct debit. We have therefore not assessed whether the landlord should write off part of the arrears. The resident may wish to seek independent legal advice if he is considering an application to the courts or tribunal for a ruling on this matter.
11. The landlord advised the resident on 7 August 2024 that it had not received any service charge payments for 2022/23 or 2023/24. It said that there were now arrears of £1,256 that had to be paid. It said there may have been an issue with the direct debit and suggested that the resident check with his bank. It apologised for not making the resident aware of the arrears sooner and said it was happy to arrange for the sum to be paid through a payment plan, for example, over 24 or 36 months.
12. As the landlord believed there had been an issue with the resident’s direct debit, it was reasonable for it to suggest to the resident that he check with his bank whether payments had been taken. It was also reasonable at that stage for the landlord to advise the resident that it was happy to consider a payment plan. This would provide some initial reassurance to the resident that it was not seeking to recover the full arrears at once.
13. The resident wrote to the landlord on the same day and said he was contesting the arrears as he had requested the landlord to set up a direct debit in March 2022. He asked for the service charges to be waived as some were now over 18 months old. He added that the landlord had not mentioned the arrears before, despite him having had multiple communications with the landlord. The landlord sent a response on 12 August 2024 and confirmed it had set up the direct debit to start from 1 April 2022 but the payments did not begin due to a switchover to a new accounts system. It apologised for this. The landlord had therefore responded promptly to the resident’s email, which was appropriate given that he was distressed about the arrears. It was reasonable that the landlord had acknowledged its error, apologised and given an explanation of why the error had occurred.
14. In its email, the landlord apologised that when the resident had made contact about other matters, its staff had not advised him of the arrears. It said the leasehold team covered a wide range of activities and not all members of the team had immediate access to the resident’s accounts. It was reasonable that the landlord had apologised for not bringing the arrears to his attention previously and had explained the reason for this. However, in our view it was unreasonable that the landlord had not written to the resident about the arrears given that it had not received any service charge payments from the resident for over 2 years.
15. The landlord’s service charge collection procedure makes it clear that if payments are not received within certain timescales, it will send a series of recovery letters. For example, if payment is not received within 28 days of sending the certificate of expenditure, the landlord will send a final demand. Whilst we understand that the landlord thought the resident was paying the service charges by direct debit, we would nevertheless expect the landlord to have safeguards in place to ensure it was receiving direct debit payments.
16. We have taken into account that the certificates of expenditure sent to the resident in September 2023 and September 2024 showed that the resident had not paid any money towards the interim service charge. However, in our view this did not show the resident clearly enough that he was in arrears.
17. In its stage 1 reply, the landlord said that it was taking steps to address the problem that not all staff in the leasehold team had access to the resident’s accounts. It was reasonable that the landlord had recognised this problem and was using the resident’s complaint to address this.
18. Part of the resident’s complaint was that the landlord should write off part of the service charges because some of the arrears were over 18 months old and had not been billed. He cited the Landlord and Tenant Act 1985 and said the Act prevented the landlord from collecting any service charges that had not been billed within 18 months of being incurred. The landlord stated in its stage 1 and 2 complaint responses that it had fulfilled its billing requirements by issuing the interim charges in March of each year and the certificate of expenditure (in September).
19. The evidence shows that the landlord sent the interim service charges for 2022/23 on 18 March 2022 and for 2023/24 on 6 March 2023. It then sent the certificate of expenditure for 2022/23 on 16 September 2023 and for 2023/24 on 16 September 2024. It was therefore reasonable for the landlord to advise the resident that in its view it had fulfilled the requirements of the Landlord and Tenant Act by correctly billing the resident.
20. The landlord used its stage 1 and stage 2 replies to again explain the reason for its error in not setting up the direct debit, to apologise, to confirm it would not charge interest on the arrears and to offer the option of the resident setting up a repayment plan. It was reasonable that it had formally acknowledged its error, apologised, confirmed that it would not be charging interest and would give the resident time to pay off the arrears. As stated earlier, we have not assessed whether it was appropriate for the landlord to write off part of the arrears.
21. As part of our investigations, we look at whether landlords have identified learning as part of the complaints process. In this case, the landlord said in its stage 1 response that it would be working on sending an account statement with the annual certificate of expenditure. The landlord has advised us that it has not yet introduced this, however, it does now have an online system in place that allows leaseholders to check their account balance. This is reasonable as it offers a way for leaseholders to check whether payments (including direct debits) have been received by the landlord.
22. Overall, we have found that the landlord acknowledged its error, apologised, explained how the error had occurred and agreed that the resident could repay the arrears through a repayment plan. These actions were reasonable, however, we have found there was service failure because of the long delay in notifying the resident that his account was in arrears. We have ordered the landlord to pay compensation of £100 to put things right in terms of the distress and inconvenience caused by this failure. The amount is within the range of awards shown in our remedies guidance where we have found service failure.

23. The landlord operates a 2-stage complaints process. At both stages it will acknowledge the complaint within 5 working days. It will then reply to stage 1 complaints within 10 working days of the complaint being acknowledged and to stage 2 complaints within 20 working days of the complaint being escalated. The landlord may extend these timescales for responding. However, the extensions will not exceed a further 10 working days at stage 1 or 20 working days at stage 2 without good reason. The landlord will explain the reason to the resident and inform them of the expected timescale of the response.
24. The resident made an online complaint on 22 August 2024 and the landlord acknowledged the complaint within an appropriate timescale on the same day. It sent its stage 1 reply on 16 September 2024, which was 17 working days after acknowledging the complaint. This was not in line with the 10-working day timescale stipulated in its policy nor the timescale shown in our complaint handling code. The time taken to respond was therefore inappropriate as we have seen no evidence that the landlord wrote to the resident to extend the deadline. Furthermore, we have not seen any evidence that the landlord apologised for the delay in responding.
25. The resident wrote to the landlord on 3 October 2024 to say he was dissatisfied with the stage 1 response. The landlord acknowledged the complaint within an appropriate timescale on 4 October 2024. It then sent its stage 2 response on 16 October 2024, which was 9 working days after receiving the complaint. The landlord therefore responded to the stage 2 complaint within an appropriate timescale in line with its policy.
26. Overall, we have found there was service failure in the landlord’s handling of the resident’s complaint because it did not respond to the stage 1 complaint within an appropriate timescale and did not apologise for the delay in responding. This meant the resident had to wait longer for a response, which was inconvenient as he was seeking an answer about whether the landlord would write off part of the arrears. We have ordered the landlord to pay compensation of £50 to put things right in terms of the delay in responding to the resident’s complaint. The amount is within the range of awards shown in our remedies guidance where we have found service failure.