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Lewisham Council (202301524)

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REPORT

COMPLAINT 202301524

Lewisham Council

2 May 2024

 

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 the landlord’s handling of the resident’s requests for service charge information.

Background

  1. The resident is the leaseholder of the property, a flat owned by the landlord, under a lease dated 18 November 2014.
  2. Service charges are payable to the landlord under the terms of the lease agreement. The landlord, through a management company, provides an estimate of service charges ahead of the financial year which runs from April to March. A statement of actual charges is then provided once that period has ended, and any adjustments are then made to residents’ service charge accounts.
  3. On 5 September 2022 the resident received his actual service charge statement for the financial year April 2021 – March 2022 (21/22). On 24 September 2022 he emailed the landlord’s management company who have responsibility for running the estate the flat is situated in. He requested a summary of those costs.
  4. The management company replied on 6 October 2022, providing a breakdown of the figures for repairs and electricity consumption. They confirmed that charges for grounds maintenance and caretaking were included in the costs of its services as agreed with the landlord and there were no separate invoices for them. Finally, they confirmed that the buildings insurance premium was divided equally between all the properties covered by that policy.
  5. The resident was not satisfied with the level of detail and clarity provided and raised further queries. On 10 November 2022 he complained to the landlord stating that the responses he had received were incomplete and unclear. In the landlord’s final complaint response (incorrectly dated 24 November 2022) it maintained that if the resident was dissatisfied with any aspect of the service charges, he should contact the First Tier Tribunal (FTT). The landlord’s ‘Independent Adjudicator’ then confirmed that stance by email dated 31 January 2023 after reviewing the situation again.
  6. The resident remained dissatisfied and referred the matter to this Service. By way of remedy, he wants the landlord/management company to provide the information he has requested and for it to offer more transparency and accountability in respect of the annual service charge process moving forward.

Assessment and findings

Scope of investigation

  1. As set out above, the resident has raised concerns about various aspects of the costs claimed against him by way of service charge for the year 202120/22.
  2. Paragraph 42 of the Scheme states that “The Ombudsman may not consider complaints which, in the Ombudsman’s opinion:
    1. (d) concern the level of rent or service charge or the amount of the rent or service charge increase.
    2. (f) concern matters where the Ombudsman considers it quicker, fairer, more reasonable, or more effective to seek a remedy through the courts, other tribunal, or procedure.”
  3. The First Tier Tribunal (Property Chamber) [FTT] is better suited to consider the reasonableness of service charges. However, this Service retains the ability to consider how the landlord dealt with the resident’s requests for information and clarity on the charges raised. This complaint will be considered on that basis.

The resident’s requests for service charge information

  1. As also set out above, there are 2 stages to the service charge year – ‘estimates’ and ‘actuals.’ The landlord’s records demonstrate that the resident routinely raises queries about both on receipt of the relevant paperwork. There have been previous complaints about the information provided for earlier years. It is noted that on 2 March 2021 the management company wrote to the resident informing him that the landlord had given them authority to refuse to respond to questions which had been raised before. It stated, “stop sending correspondence regarding the same subject repeatedly”.
  2. The resident’s position on this point is that each service charge year consists of a different set of figures which raise fresh concerns and are not a repeat of questions asked on different sets of accounts. He considers the landlord, via its management company should, therefore, respond to his queries.
  3. The landlord’s records suggest frustration and suspicion on the resident’s part and a sense that the resident is being over exacting on the part of the landlord/ management company.
  4. The queries raised by the resident which are the subject of this complaint will be considered with this history in mind.
  5. A landlord might reasonably be expected to respond to reasonable service charge queries. A resident is entitled, upon receipt of a service charge statement, to have a summary breaking the figures down into their constituent parts. In the event that the resident is questioning the reasonableness of the charges, the landlord might still be expected to provide information on them rather than simply referring the resident to the FTT. This is because the information may alleviate the need for the matter to proceed to Tribunal at all. The issue in this case is whether the resident’s information requests were reasonable – or whether they simply reopened old arguments which had already been addressed and were unreasonable as a result.
  6. The 2021/2022 statement had nine items for which payment was being claimed and the resident wanted a breakdown of them. The request made on 24 September 2022 was responded to on 6 October 2022 – 9 working days later.  The resident’s further queries, raised on 9 October 2022 were then responded to on 19 October 2022, 8 working days later. These were reasonable response times for these replies.
  7. The information provided by the management company on behalf of the landlord can be summarised as follows using its order in the service charge actuals table:
    1. They provided itemised breakdowns of (1) general building and estate repairs, (2) electricity for communal lighting, and (4) communal window cleaning.
    2. In respect of (3) caretaking and (6) grounds maintenance, they confirmed that the cost claimed was included in their overall contract fee to the landlord for managing the estate.
    3. They confirmed that the charge for (5) bulk household waste removal was the cost charged to them for removal of any items over and above normal refuse except for fly tipping which was dealt with by the local authority.
    4. They confirmed that the common parts building insurance (8) was the cost of the policy divided equally between the number of properties they covered.
    5. In respect of the management charge (9) they stated that they had explained this to the resident previously. It was made up of staff and administrative costs and charges for paper, postage, and communications.
    6. The charge for ground rent (7) was not questioned by the resident.
  8. The resident was not satisfied with these responses and had further issues he wanted to be addressed. He stated that the information provided was difficult to reconcile because the landlord had used different headings to the service charge actuals table and had failed to include headings for 2 columns in the electricity breakdown. However, having reviewed the information against the table, it was formatted in such a way that it could be reasonably understood and was satisfactory.
  9. In his email of 9 October 2022, the resident had questioned why the electricity breakdown had been provided for this year but not on the previous one. He went on to raise concerns about inconsistencies in the management company’s approach to providing information. The management company chose to provide additional information with the electricity breakdown, and this was not detrimental to the resident. It does not, in itself, suggest that the information provided for previous years had been incorrect or false. This Service concludes that the response was reasonable.
  10. The resident asked why there were no dates for the individual repairs. Whilst this information would assist in providing a fuller picture to residents, it was not necessary to assess what the charges were and whether they were reasonable. The response was therefore fair and reasonable.
  11. The resident wanted to know why there were no separate invoices for the inhouse costs – but the management company had explained that these were part of the overall cost of its service to the landlord and were not billed separately. The landlord noted that should the resident wish to challenge its management costs and the services that fee included he would need to apply to the FTT. This was a reasonable response as the landlord’s advice was in accordance with the statutory process.
  12. The resident further noted that there had been no charge for an annual light test, which he understood was needed to satisfy health and safety requirements. He noted that further charges had been incurred to repair the bin chute lids. These had already been repaired 4 times the previous year. He considered this suggested there was a bigger picture and that a permanent solution to faults needed to be investigated. He questioned whether money was being spent wisely in repeatedly carrying out ineffectual holding repairs. These requests for information were reasonable. They concerned a missing but anticipated cost and a question about the effectiveness of repairs. The landlord might reasonably have been expected to address them. There is no record of it doing so.
  13. The resident then sent in his complaint dated 10 November 2022. He noted that on the general repairs breakdown there was an item which had no proper description from which to understand what it was, total cost, £162.54. He wanted an explanation regarding that and also about the light test and bin chute lids (“the 3 outstanding items”). The resident noted that in his view he had experienced failures on the landlord/management company’s behalf to respond to requests for information on previous accounting years and which he would still welcome clarity to. He felt this supported his view that the landlord/management company were not being transparent or offering accountability for service charges generally.
  14. By way of response the landlord simply asserted that the resident should approach the FTT. It stated that the management company had explained their consistency of approach in the stage 1 complaint response. However, that document has not been provided to this Service for assessment despite a request that it be produced.
  15. Whilst the resident was essentially questioning the reasonableness of the service charge in his queries about the 3 outstanding items, as stated above, this was still a request for information which might avoid the need to escalate matters to a tribunal. The landlord might reasonably have responded to these queries but failed to do so. It is possible the landlord will maintain that the repetitive charges for the bin chute repairs had been raised and responded to when the previous year’s accounts were submitted. However, the fact that further repairs were required did entitle the resident to question whether the issue should be revisited.
  16. There was a service failing on the landlord’s part in not providing this information. It remains outstanding and an order will be made for it to address these 3 outstanding items. This is because the “items” were not identified by the landlord as warranting a response to potentially avoid a referral to the tribunal. The landlord’s internal complaint process might reasonably have noted this and its failure to do so represents a failing in the service offered.
  17. Overall, the resident has been put to inconvenience chasing a complete response and an order for compensation of £50 has been made below. This has been calculated in accordance with this Service’s ‘Remedies Guidance’ which allows for such a sum in respect of service failings which have no long-term impact.
  18. In terms of the transparency/accountability aspect of this complaint, the resident’s outstanding concerns from the previous accounting year, 2020/2021 were the subject of a separate complaint which is not under consideration here. According to the records, the resident’s concerns appear to be largely informed by the fact the management company is apportioning parts of their overall charge to the landlord to specific items – caretaking, grounds maintenance, management charge – but because it is a global fee to the landlord, they cannot document these charges individually.
  19. The resident has to take the management company’s word for it that these charges are a correct apportionment of the overall fee. Whilst a recommendation could be made that the management company and/or landlord provide a copy of their contract to the resident to (hopefully) offer reassurance, that is, of course, a commercially sensitive document. The management company has declined to give details, for example, for staff costs for this reason and that was an understandable position to take.
  20. In this Service’s view, reassurance can be provided to the resident from the auditing of the accounts because it is reasonable to conclude that any auditor would have access to the necessary information. A recommendation will therefore be made, that the landlord provide these to the resident for at least the periods 2020/2021 and 2021/2022 if this has not already taken place/is not routinely done. Failing that, the resident will, indeed, have to apply to the FTT if he requires further reassurance on the reasonableness of these (or any other) charges.
  21. For the sake of completeness, this investigation has noted further issues with respect to the landlord’s handling of the formal complaint. The landlord provided a stage 2 response dated 24 November 2022, which would appear to be incorrect. This is because the response refers to the resident’s escalation request of 26 November 2022 – that is 2 days into the future, and this cannot be right. On 9 December 2022 the management company emailed the landlord stating that they had drafted the response, but it should be sent by the landlord. It is reasonable to conclude that the letter was sent to the resident sometime after that date once it had approved the draft. In terms of timing, there were some minor delays in the progression of this complaint and a lack of acknowledgements for stages 1 and 3, but these were not of a level as to warrant a further adverse finding.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its handling of the resident’s requests for service charge information.

Orders and recommendations

Orders

  1. The landlord should pay the resident compensation of £50 for the failings noted in its handling of the matter.
  2. The landlord should respond to the resident’s requests for information regarding the 3 outstanding items.
  3. It should confirm with this Service that it has complied with the Order within 4 weeks of receiving this determination.

Recommendations

  1. The landlord should consider providing audited service charge accounts to the resident for at least the periods 20/21 and 21/22 (and before/after that if applicable) if this has not taken place already/is not routinely done.