East Midlands Housing Group Limited (202308841)

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REPORT

COMPLAINT 202308841

East Midlands Housing Group Limited

24 April 2025

 

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

  1. The complaint is about:
    1. The landlord’s handling of the resident’s service charge administration.
    2.  The level and reasonableness of the resident’s service charges.
    3. The landlord’s complaint handling.

Background

  1. The resident holds an assured tenancy for a flat in a converted house owned by the landlord. The tenancy agreement began in 1998.
  2. On 19 November 2021, we investigated a complaint from the resident about errors in service charges (case #202109071). The landlord acknowledged repeated errors in the resident’s service charge account and refunded the charges prior to our investigation. We found a service failure because the landlord did not explain the errors or the actions it planned to take to prevent recurrence. The landlord assured the resident and the Service that by April 2022, its service charge team would carry out a comprehensive review of the account to ensure it was correct.
  3. In March 2022, the resident complained to the landlord about delays in reviewing his account. He said he would not pay his service charges until his account was verified. He continued to seek a landlord’s formal complaint response, but due to a lack of progress, he approached the Service for advice in June 2023.
  4. The landlord wrote to the resident on 14 July 2023, saying that the resident’s service charges are fixed. Therefore, it said it was under no obligation to share the actual costs with the resident. It reaffirmed this message in its September 2023 formal complaint response. In recognition of the delay in responding to the resident’s complaint, it offered £100 in compensation.
  5. In his October 2023 escalation request, the resident said the landlord had been uncooperative. He repeated his request to see the invoices for the cost incurred. The landlord conducted a full review on 1 November 2023 and sent a cost analysis to the resident, but it did not share the invoices the resident had requested. It said that during its review of the charges, it had identified and corrected an additional error. It also said that the compensation offer of £100 was still available.
  6. The resident remained dissatisfied and asked us to investigate his complaint. He said that each time the account was checked, more errors were discovered. Therefore, he believed the account remained incorrect. He wanted the landlord to provide him with invoices showing the actual costs incurred and remove the arrears that had accumulated in his account since March 2022.

Jurisdiction

  1. 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.

Level and reasonableness of the resident’s service charges

  1. Under paragraph 42.d. of the Housing Ombudsman Scheme, the Ombudsman will not consider complaints which concern the level of rent or service charge or the amount of the rent or service charge increase.
  2. In line with his tenancy agreement, the resident pays fixed service charges along with his rent. Throughout his complaint, the resident explained his dissatisfaction with the level of his service charges. Complaints that relate to the level, reasonableness, or liability to pay fixed service charges are more appropriately dealt with by the Court.
  3. This investigation will not comment on the level of the service charges. Should the resident remain dissatisfied with this aspect of the complaint, he may wish to seek independent legal advice.

Assessment and findings

The landlord’s handling of the resident’s service charge administration

  1. When investigating a complaint, the Ombudsman applies its Dispute Resolution Principles, which include treating people fairly, following fair processes, putting things right, and learning from outcomes. The Ombudsman must first consider whether a failure on the landlord’s part occurred and, if so, whether this adversely affected or caused detriment to the resident. If a failure by the landlord adversely affected the resident, the investigation will then consider whether the landlord took enough action to ‘put things right’ and learn from the outcome.
  2. The tenancy agreement says that the resident must pay service charges for emergency lighting and fire alarms. The landlord must provide a minimum of a month’s notice before any increase or decrease in service charges.
  3. The landlord’s service charge policy says service charges will be calculated accurately and reasonably. Fixed service charges are set by the landlord based on the actual costs incurred in providing the service during the previous year, along with an uplift to account for inflation. The landlord would send a notification each year in February to inform residents of their rent and service charge effective from the next financial year. These charges are fixed, and there is no reconciliation at the end of the financial year.
  4. Following our investigation in November 2021, the landlord committed to conducting a review of the resident’s charges by April 2022. The evidence shows that the resident consistently requestedthat the landlord complete the promised review between March 2022 and June 2023 and respond to his complaint. Despite acknowledging the resident’s complaint in April 2022, it failed to respond to the complaint and did not carry out the review or explain why it would not do so. The landlord’s lack of engagement was inappropriate.
  5. The landlord wrote to the resident 15 months later, in July 2023. It said that the resident’s service charges were fixed and therefore there was no requirement for it to provide an audited account at the end of the financial year. The landlord consulted its solicitor, who confirmed the landlord’s legal position. It was therefore appropriate for the landlord to clarify its position to the resident.
  6. While the landlord was not obliged to provide the resident with a breakdown of the actual costs incurred, it was obligated to ensure that its rent and service charge demands were accurate. There were repeated errors and fluctuations several times a year, without notice or explanation to the resident. In July 2021, the landlord adjusted the weekly charge from £19.32 to £10.55. In October 2021, it was £8.63. In February 2022, the landlord informed the resident that from April 2022, the weekly charge would be £27.93. However, in April 2022, the charge was adjusted to £9.73. Later that month, the charge was changed to £3.71. In February 2023, the landlord wrote to the resident, saying that as of April 2023, the charge would be £12.53. However, the charge was £8.67. According to the evidence, the landlord sent the resident formal increase notices in February 2022 and February 2023, both of which, however, were incorrect and were changed again without explanation to the resident.
  7. Similar to our 2021 findings, in this case, the landlord again failed to explain the errors on the resident’s account and the actions it planned to take to prevent recurrence. In 2021, however, the landlord acknowledged its shortcomings in its complaint responses, while in this case, it failed to recognise its shortcomings, such as its failure to follow its policy, evident by the repeated fluctuations, which adversely affected the resident there is no evidence that it complied with its obligation under the tenancy agreement whereby it required to provide a notice period of a month before any increase or decrease in the resident’s charges. It failed to apologise, failed to recognise the adverse effect on the resident, and failed to outline how it would put things right or learn from the outcome. This was further evident in November 2021, when it reviewed its July 2023 review and found further errors in the account, undermining the resident’s trust in the landlord’s administration of service charges.
  8. However, in its November 2023 final response, the landlord showed an improvement. It carried out a cost analysis of the services provided and the apportionment used to calculate the resident’s share. When it found the error, it explained it, corrected it, credited the resident’s account, and took measures to prevent recurrence. These were reasonable steps when addressing errors. The analysis provided to the resident in November 2023 was also in line with its policy and obligations.
  9. However, the landlord’s formal complaint responses did not acknowledge the excessive delay in completing the review or the confusion that its fluctuating service charges had caused to the resident and the landlord. Nor did it recognise the impact on the resident, his distress and frustration, which he explained throughout the complaint. This amounted to maladministration. Orders have been made below for the landlord to put things right for the resident.

The landlord’s handling of the associated complaint

  1. The resident complained to the landlord in March 2022. The landlord acknowledged the complaint in April 2022 and said it would respond within 10 working days. It provided its stage 1 response 391 working days later, on 15 September 2023, significantly exceeding its complaints policy target of 10 working days.
  2. The landlord acknowledged the delay and offered £100 compensation. It did not provide a specific apology for it, explain how it had occurred, or how it would avoid such a failure in future. In the circumstances of the extreme amount of time taken to issue its response, the remedies it offered were disproportionately low and incomplete. Further orders have been made below for the landlord to put it right and to learn from the outcome.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration with the landlord’s handling of the resident’s service charge administration.
  2. In accordance with paragraph 42.d. of the Housing Ombudsman Scheme, the complaint about the level and reasonableness of the resident’s service charges is outside of the Ombudsman’s jurisdiction.
  3. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration with the landlord’s handling of the associated complaint.

Orders and recommendations

Orders

  1. In light of the failings found in this investigation, the landlord must pay the resident £550 within 4 weeks of this report. This amount is comprised of:
    1. £400 for the distress and inconvenience caused by its administration of the resident’s service charges.
    2. £150 for the distress and inconvenience caused by its handling of the complaint. This includes the £100 it has already offered as part of its internal complaint process.
  2. This investigation has identified that the landlord did not follow through on the commitment it made following the Ombudsman’s 2021 investigation to provide a service charge review for the resident by April 2022. It only did so at the end of 2023 after significant further involvement and complaints by the resident. None of the landlord’s responses to the complaints explained why. Because of that, the landlord must review its handling of the issue through the lens of this report to identify what went wrong and what learning it can take from the resident’s poor experience. It must provide its review to the resident and the Service within 8 weeks of this report.
  3. Evidence of compliance with these orders must be provided to the Service by their respective deadlines.

Recommendation

  1. The landlord should consider whether its service charge policy could benefit from a review in light of the regulator’s consumer standards and the upcoming Social Tenant Access to Information Requirements.