Hyde Housing Association Limited (202116942)

REPORT

COMPLAINT 202116942

Hyde Housing Association Limited

11 July 2023

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 landlord’s response to the resident’s concerns about its management of the sinking fund and repairs at the property.
2. The landlord’s complaint handling.

Background and summary of events

The resident is the leaseholder of a one-bedroom flat on the third floor of a complex for the over 55s. She has complained about the landlord’s management of the sinking fund, in that there have been a variety of major works that, in total will cost more than the amount in the fund. She raised concerns regarding the necessity of some of the works (window replacement) and the quality of others particularly in relation to the door entry system and the lift which, she reported, needed repair for significant periods. She also queried whether there would be reduction in her electricity charge, given that her corridor was without a functioning radiator for three months during the winter.
The lease agreement sets out the obligations of both the landlord and the resident in relation to the delivery of services (the fifth schedule) and payment for this (the sixth schedule). This includes obligations on the landlord to maintain at all times an emergency warden call system, and to keep in proper working order and when necessary, replace the electrical and other equipment and apparatus in respect of the common parts and obligations on the resident to pay the costs relating to this. Part 2, section 11 of the lease allows the landlord to charge a reasonable amount to be set aside in any year towards a reserve fund to make provision for expected future substantial capital expenditure.
In addition to the terms of the lease, the landlord must also comply with the legal requirements of s.151 Common and Leasehold Reform Act 2002 (the Act) which introduced requirements for consulting leaseholders. The Act replaced the previous consultation procedure in section 20 of the Landlord and Tenant Act 1985 although the old name ‘section 20’ is still commonly used. The Act sets out the precise procedures that the landlord must follow for qualifying work such as replacement of the AOV and door entry systems. Although the main purpose of the consultation process is to gather the views of leaseholders on the landlord’s proposals, it also limits the landlord’s ability to recover costs if it does not follow the correct procedure.

Management of the sinking fund

On 10 August 2021 the landlord issued a section 20 notice advising residents that it was to undertake fire detection works, which comprised upgrading the AOV ventilation and smoke detection system, by installing new glazed louvers in place of the existing ones and replacing the entire window unit and controls. This set out a 30-day consultation period for residents to provide observations, which expired on 12 September 2021.
On 2 November 2021 the resident submitted a complaint to the landlord about its management of the sinking fund. In particular this referred to the landlord’s decision to replace the windows for fire safety at the property, despite residents voting against this work on 2 September 2021, as, she explained, the annual fire and safety inspection had not highlighted any issue with the windows. The letter of complaint accepted that some windows and fascia’s needed replacement but not that the entire system needed an upgrade. The letter queried who was responsible for such decisions and what level of say residents had within this decision making.
The landlord provided a stage 1 response on 11 March 2022. It detailed the works to the AOV ventilation system identified in a fire and safety assessment, and said the work was deemed necessary as the system was found not to comply with the current safety standards. In relation to the windows, it said that although they were functioning correctly, the review had identified that the system design and components needed improvement, and a new system had therefore been agreed. It explained that financial control for such decisions sat with the Head of Property Charges and Head of Assets.
The resident remained dissatisfied and concerned about the use of the sinking fund, so the matter progressed to stage 2 of the complaint procedure and a response was provided on 19 August 2022. This reiterated that the decision to replace the AOV system had been made following a condition survey by qualified experts. The landlord said that it could find no evidence of the fire and safety report stating that the old system was fit for purpose as outlined by the resident. It detailed the improvements that had been gained by the new window system but did not address the resident’s point that the works were unnecessary. The letter did however confirm that the property would be visited by the Head of Property Charges on 23 August 2022 to review costs of the assorted major works, and that a full response would be provided following this visit.
The visit took place in September 2022. The notes of the visit recorded that the resident reported that the new AOV system was no better than the old, and that during the heatwave the vents had not opened, resulting in the property being unpleasantly hot.
A number of new issues were raised by the resident regarding the service charge. The landlord addressed these new issues in a letter dated 21 September 2022. This detailed the estimated and actual charges relating to communal electricity, care call monitoring system, grounds maintenance and water charges.
A final response was sent to the resident on 5 October 2022. This set out the following conclusions:
1. AOV system – the landlord apologised that the system had not worked properly during the heat wave and acknowledged that this would have been uncomfortable for residents. In relation to the upgrade, it repeated its earlier findings and gave more detail regarding the improvements.
2. New windows – the landlord explained that the new system operated in zones, rather than on a ‘one open – all open’ basis. It also allowed work to be undertaken by its own engineers rather than requiring a specialist to attend.
3. Sinking fund – details were given regarding the costs for the works to the AOV, the door entry system and the lift along with details of the balance.

Repairs

The resident’s initial letter of complaint also raised concerns regarding a number of repairs:
1. The guttering was considered to be inadequate resulting in damp in some flats (this does not appear to have been an issue for the resident’s flat).
2. The door entry system was not working.
3. The lift had been out of service for 9 weeks.
4. Heating in the corridors had not worked for approximately 3 months during the winter months. Residents had queried whether there would be a refund to the electricity element of their service charge but had received no response from the landlord.
The landlord’s stage 1 response confirmed that the fascias, the downpipe, roof, and corridor heater repairs had been completed.

Door entry system

A further section 20 notice was issued on 16 February 2022 informing residents of works to replace the door entry system. This set out a 30-day consultation period within which residents could provide observations, which expired on 23 March 2022.
At stage 1, the landlord acknowledged that the door entry system had been intermittently faulty since September 2021 and listed the steps it had taken to repair the system. It stated that the works may not be fully completed until 2024. However, in its decision at stage two of the process dated 19 August 2022, it advised that its planning team were returning the following day to fix a programming issue. It acknowledged that it would have been frustrating for residents whilst the system was not functioning correctly.
The landlord visited the property in September 2022 as promised in its stage 2 letter. The door entry system was not working at the time of the visit. The notes of the visit confirmed that while the door entry system was not working the resident reported that carers had difficulty accessing the block, and a fire door had to be wedged open to enable access for residents.
The landlord’s final response on 5 October 2022 stated that the door entry system had been repaired on 26 August 2021 and was currently working. An apology was given for the inconvenience caused. No mention was made of the fact that the system was not functioning on the day of the visit, which took place after this repair had been implemented.

Lift

The landlord’s stage 1 response stated that the lift had been repaired and was now working well. However, this repair was not wholly successful as there was a further period of the lift not functioning which is referred to in the landlord’s stage 2 response. This stated that the lift had been out of order from 2 July to 15 August 2022. It detailed the actions that had been taken to resolve the problem.
During the landlord’s visit in September 2022 the resident explained that access difficulties had occurred during the lift breakdown, as residents on the higher floors were effectively trapped in their flats, unless able to navigate the stairs.
The landlord’s final response on 5 October 2022 provided the resident with an update from the Lift Contract Manager, and explained that the contract had recently been re-procured and explained how the contract cost was calculated and monitored. The letter explained the source of the fault and the actions that had been taken to get the lift back into service. No further out of order reports have been submitted to this Service.

Complaint handling

The complaint was submitted to the landlord on 2 November 2021 with a response sent on 11 March 2022. This offered redress of £175 to the resident for the delays in its complaint handling, the lack of communication and the inconvenience caused. There was no offer of redress for any of the failings in providing a service to residents or refund for any charge paid for the service.
The resident requested that the complaint be escalated in April 2022. She was dissatisfied with the response, the level of compensation and concerned about the level of the charges for major works.
Following the intervention of this Service, a stage 2 response was provided on 19 August 2022. The landlord increased its offer of compensation to £350. This comprised £100 for delays in arranging repairs, £100 for time and trouble, plus £150 for delays in complaint handling. The landlord then reviewed its response on 5 October 2022 and said its offer of £350 as redress was satisfactory.

Assessment and findings

Scope of the investigation

It is clear from the resident’s complaint that she is concerned about the cost of the major works undertaken by the landlord and that these may result in a deficit in the sinking fund. She also raised concerns as to whether the works relating to the windows were necessary. It is not unreasonable for residents to want to know more about how their charges are made up and repairs to their properties. The resident has the right to access information regarding relevant costs and this is generally supplied as part of the annual service charge accounting provisions. This will not necessarily supply sufficient explanation as to why works were deemed necessary.
This investigation notes that under paragraph 42 (g) of the Housing Ombudsman Scheme, the Ombudsman will not investigate complaints which, in the Ombudsman’s opinion concern matters where the Ombudsman considers it quicker, fairer, more reasonable, or more effective to seek a remedy through the courts, a designated person, other tribunal or procedure.
The Ombudsman does not have the jurisdiction to investigate complaints about the level of service charges, including the costs of major works, as the appropriate body to consider such complaints is the First-Tier Tribunal (Property Chamber). The Tribunal can determine the appropriate level and amount of service charges recoverable by a landlord; decide if the charges were reasonably incurred; by whom they are payable, and when. It can also consider the consultation process regarding the major works and whether this was compliant with legislation. If the resident remains dissatisfied that the landlord’s approach is not cost effective, or disputes that it followed proper procedure to recharge residents, this is, in effect a dispute over the reasonableness of the major works charges, which is a matter for the First-Tier Tribunal.
It is unclear if this applies in this case, however section 84 and Schedule 4 of the Housing Act 1996 also allows leaseholders to appoint a surveyor to examine their landlord’s management of the property and its condition, and advise on service charges, if they are part of a recognised tenants association. This requires no less than two-thirds of the residents acting together to instruct.
The Ombudsman’s investigation will not replicate or replace the approaches of other procedures. Should the resident require a forensic assessment of the landlord’s management of the property and the service charge/sinking fund, she would need to pursue one of the options listed above. The Ombudsman will instead focus on how the landlord dealt with the resident’s complaints and assess whether its response was fair in all the circumstances.

The landlord’s response to the resident’s concerns about its management of the sinking fund and repairs at the property

In her original complaint, the resident queried the necessity of the new windows. She stated that residents had voted against this and refers to findings in the Fire Safety report which found that the windows were satisfactory. This information can be found in the Fire Safety Report dated September 2021 which asked two questions (numbers 14 and 15) regarding the windows. The questions and answers stated:
1. Are the stairs and/or lobbies provided with adequate permanent or annually operated ventilation openings for control of smoke (state provision): The stairs and lobbies are provided with adequate manually operated ventilation openings for the control of smoke. OCs provided to the stairways.
2. Are the stairs and/or lobbies provided with an automatic or remotely operated smoke ventilation system (detail provision and adequacy): The lobbies are provided with an adequate automatic operated smoke ventilation system. Automatic opening louvered windows are proved to the accommodation corridors with smoke detectors.
In light of the answers above, the resident queried the decision to replace the window system. The landlord relied upon the fire safety report to establish that the AOV system needed replacement. There is no doubt that fire safety reports did require improvements to be made and, in its decision making, the landlord is entitled to rely on the opinion of its professional staff when considering what is appropriate to address the recommendations and ensure the safety of residents.
The AOV and windows systems were linked together in the section 20 notice and the landlord’s responses. This seems to reflect views that the windows formed part of the overall ventilation system, and also reflects the landlord’s Stock Investment Procedure, which recommends that where possible Section 20s should be issued at the same time to reduce the impact on residents. The landlord’s decision to link the two replacements would therefore appear to be reasonable and in accordance with its policy.
The resident questioned being asked to pay for works whose costs exceeded what was in the sinking fund. While this Service understands the resident’s concerns, the lease obligates the resident to contribute toward the sinking fund and service charge, and if the landlord identifies required works that exceed what is in the sinking fund, this does not seem to go against the lease or prevent the resident from being obligated to contribute towards the difference.
The resident questioned what say the residents had when spending decisions were taken, and said that residents had voted against renewing the window system. The landlord provided details as to who made the ultimate decision on whether to go ahead with major works, but did not address the query regarding the involvement of residents. The section 20 consultation process should have provided the resident with the opportunity to raise her concerns. It is not known whether these were raised as part of that consultation, however, it would have been useful if the landlord had explained the process in its complaint response. This would have addressed the resident’s concerns as to how the views of residents were considered before decisions to proceed with major works were taken. However, while under the relevant law the landlord is obligated to give regard to resident observations, there is no obligation for it to comply with them.
The resident raised concerns in her complaint about delays in completing repairs, and in its total compensation offer of £350, the landlord offered £100 for delays in completing repairs. The repairs in question are:
1. The AOV system not operating properly during the hot weather.
2. The lift being out of service for two periods totalling 15 weeks.
3. The door entry system only working intermittently, and for some periods not at all, resulting in residents having to prop open a fire door for access.
4. A radiator in the corridor not working for a three-month period.
In respect to the AOV system, the resident raised concerns that it failed to work as anticipated during the heat wave, resulting in uncomfortable conditions in the communal areas. In addition to a compensation amount covering this, the landlord apologised for this and took action to ensure that the system was working correctly, which seems reasonable based on the evidence.
In respect to the lift, the resident’s original complaint refers to a 9-week period when the lift was out of order. During the course of the complaint there was a further 6-week period when the lift was out of order (2 July to 15 August 2022). The resident’s home is situated on the third floor, which will have caused inconvenience to her, particularly given that the property is for those aged 55 or over. In addition to a compensation amount covering this, the landlord’s response explained the actions it had taken to repair the lift and re-procure the maintenance contract. Whilst these were appropriate actions, there is no recognition that the resident was left without a service for 15 weeks, a significant period of time. There has been no offer of any reduction in the service charge as a result of the landlord’s failure to provide the service, nor any offer of compensation for the inconvenience this will have caused.
In respect to the door entry system, there were a number or repair issues with the door entry system, which appears to have been working intermittently for a period of 12 months and required multiple repairs. It is understand that this may be the reason why it was decided to replace the system. The landlord accepted that the system has been working intermittently since September 2021 and noted in its final response that the system was repaired on 26 August 2022. This response (sent on 5 October 2022) failed to acknowledge that the system was not working in September 2022 during the landlord’s visit. The resident reported that when the system was not working, residents had to prop open a fire door to enable access to and from the block. This action would undermine the AOV system, and the fire safety steps put in place by the landlord.
In respect to the corridor radiator, the resident raised concerns about delays in repairs for a corridor radiator that had not been working for a 3-month period. The resident queried whether this would result in any reduction in charge. The landlord confirmed that residents would only pay for the actual costs of the electricity used, therefore if this was reduced due to lower usage, this would be reflected in the payment charged to residents. It noted that the increase in the cost of gas and electricity would have an impact on the charge but confirmed that residents would only pay the actual cost of usage once the accounts were finalised. The landlord’s response satisfactorily addressed this aspect, as the detriment during the period that the radiator was non-functional seems limited, given no costs will have been incurred.
It is evident that the landlord has taken steps to engage with the resident, and has arranged for senior staff to meet with her to explain how it has handled the sinking fund and expenditure at the property. It has recognised that there have been a number of problems with the systems at the property, and taken steps to repair and get the systems operating again. It has also recognised that there have been delays in successfully completing repairs and offered compensation for this, which was positive.
However, the landlord has failed to demonstrate that it considered the service charge payments that the resident made for services that were not provided, and has failed to demonstrate that it considered the specific inconvenience the issues may have caused the resident. The landlord’s offer of £100 for repairs delays equates to £25 for each delayed repair, which does not seem to fully recognise that the resident paid for services that she did not always receive, some for significant periods of time, or seem to fully recognise the potential detriment caused by this. In the Ombudsman’s view therefore, while the landlord’s offer of compensation went some way to address failings, this was not sufficient to put things right for the service delivery failings. This leads this Service to find service failure in the landlord’s response to the resident’s concerns about its management of the sinking fund and repairs at the property.

Complaint handling

It is evident that there were failings in communication and significant delays in the landlord’s handling of the complaint. The landlord has recognised that there were delays in its complaint handling and that the resident had to actively pursue the matter with both the landlord and this Service to get a response. This was appropriate, and in the Ombudsman’s view, the landlord has provided adequate compensation to put things right in its offer of £150 for delays in complaint handling and its £100 in recognition of the time and trouble taken by the resident.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme there was service failure in the landlord’s response to the resident’s concerns about its management of the sinking fund and repairs at the property.
In accordance with paragraph 53 (b) of the Housing Ombudsman Scheme, there was reasonable redress by the landlord in relation to its complaint handling.

Reasons

While the landlord’s handling of issues related to the sinking fund was reasonable, the landlord did not demonstrate it fully explored whether the resident was adversely affected by repairs delays, and its offer of compensation failed to consider any refund for the relevant service charge elements.
The landlord appropriately acknowledged issues with its complaint handling and, in the Ombudsman’s opinion, offered reasonable compensation for this.

Orders and recommendations

Orders

The landlord to pay the resident the £350 it previously offered, if this has not already been paid.
The landlord to pay the resident an additional £100 in respect to the issues identified above.
The landlord to consider a service charge refund to all the residents at the block for the losses of service in the period of the complaint, including the approximately 15 week loss of service in respect to the lift. It should then inform the resident (and other residents, if applicable) of the outcome.
The landlord should confirm its compliance with the orders in this case to this Service within four weeks of the date of this report.

Recommendations

The landlord to ensure that, when it responds to service charge disputes and complaints, it makes residents aware of the First-Tier Tribunal.