London & Quadrant Housing Trust (L&Q) (202404648)

REPORT

COMPLAINT 202404648

London & Quadrant Housing Trust (L&Q)

30 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 the landlord’s handling of the resident’s service charge refund.

Background

2. The resident is a shared ownership leaseholder of a flat.
3. On 25 September 2023, the landlord wrote to the resident confirming the final service charge balance for the year 2022/23. It explained that the resident had overpaid and £199.19 would be credited to his customer account within 14 days. The letter also said that if the resident paid by direct debit, the landlord would try to refund any credit owed within 60 days of applying it to the account. If the resident did not receive the refund within the stated timescales, he could request it by emailing the landlord.
4. On 2 October 2023, the landlord credited £199.19 to the resident’s customer account.
5. The resident raised a complaint with the landlord on 3 April 2024, because he had not received his service charge refund into his bank account.
6. On 10 April 2024, the landlord issued a refund of £261.07 into the resident’s bank account. It is not clear from the evidence why the refund amount differed from the balance credited.
7. On 15 April 2024, the landlord issued its stage 1 complaint response to the resident. It apologised for the distress and inconvenience caused by the delay in processing his service charge refund and explained this was due to the high volume of refunds it had to process. It confirmed the resident had now received his refund and referred to its earlier letter, which explained what steps to take if a refund was not received on time.
8. On the same day, the resident asked the landlord to escalate his complaint to stage 2 of the complaints process. He said the delay had broken his trust, was evidence of misconduct, and requested compensation and confirmation that future credits would be automatically refunded without him needing to follow up.
9. The landlord issued its stage 2 complaint response to the resident on 2 May 2024. It acknowledged it had taken longer than 60 days to issue the refund but repeated that the resident had been advised to contact it if he had not received the refund within the stated timeframe.
10. On 15 May 2024, the resident escalated his complaint to our service. He said the landlord’s delay to issue his service charge refund caused him financial stress and that, had he not raised the issue, the refund would have remained unclaimed for years. He told us he wanted an apology from the landlord and for it to change its policy so that all outstanding credit is automatically refunded to bank accounts.

Assessment and findings

Legal policy and framework

11. Under the terms of the resident’s lease agreement, the landlord must assess actual service charge expenditure at the end of each account year and issue a certificate confirming the final position. Where there is an overpayment, the landlord must refund the overpayment or apply a credit to the resident’s account promptly after issuing the certificate. The lease requires timely adjustment following the certificate but does not specify a fixed number of days for completing the refund.

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

12. The landlord confirmed on 25 September 2023 that it would apply a credit of £199.19 to the resident’s customer account within 14 days. It applied the credit on 2 October 2023, within 8 days, in line with its stated timescale. However, the landlord did not refund the credit to the resident’s bank account until 10 April 2024 – 192 days later. This delay significantly exceeded the landlord’s stated 60-day timeframe for processing refunds and the lease’s requirement for prompt adjustment following the issue of the service charge certificate. The delay caused avoidable inconvenience to the resident, who had to pursue the matter and was denied timely access to funds owed to him.
13. The landlord advised the resident to get in touch if he did not receive a refund within 60 days of the credit being applied to his customer account. The resident contacted the landlord on 3 April 2024, and the landlord issued the refund a week later. It was positive that the landlord provided clear instructions and responded promptly once the resident raised the issue. However, while operational pressures can cause delays, the landlord’s explanation that a high volume of refunds contributed to the delay to process the resident’s refund, does not fully explain its failure.
14. In its complaint responses, the landlord apologised for the delay to process the resident’s service charge refund, but did not offer compensation. While not every service failure warrants a financial remedy, the Ombudsman’s Remedies Guidance, available on our website, states that a small award may be appropriate where a resident has experienced avoidable inconvenience or been put to time and trouble pursuing an issue. It also recognises that financial compensation may be appropriate where the time and trouble incurred by the resident is significantly greater than would reasonably be expected. In this case, the resident experienced avoidable inconvenience and unnecessary time and trouble pursuing the refund of an overpayment that the landlord should have processed automatically. A modest award of compensation would therefore have been reasonable to acknowledge the impact.
15. We have therefore determined that there was service failure in the landlord’s handling of the resident’s service charge refund.
16. In line with the Ombudsman’s Remedies Guidance, where service failure has been identified due to a single or limited number of minor failings in the landlord’s service delivery, landlords should offer residents a financial remedy of £50 to £100, to put things right. In this case, the landlord must pay the resident £50 to acknowledge the avoidable inconvenience and time and trouble caused by its delay in processing the refund of his service charge overpayment.
17. As part of his escalation to our service, the resident said that he wanted the landlord to change its policy to automatically refund any future service charge credits to residents’ bank accounts without the need for further contact. It was reasonable for the resident to seek assurance that similar delays would not occur again. During this investigation, the landlord provided evidence that it had refunded the resident’s 2023/24 service charge credit within its stated timescales, which shows some improvement in its processes.
18. However, while automatic refunds may be appropriate in some cases, we recognise there may be operational reasons, such as different payment methods or accounting requirements, that make this impractical in all circumstances. We therefore recommend that the landlord reviews the resident’s request, considers whether any changes to its refund process or policy are possible, and provides the resident with a clear written response. If it cannot implement automatic refunds, it should explain the reasons for this and what steps it will take to avoid similar delays in the future.

Determination

19. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord in its handling of the resident’s service charge refund.

Orders and recommendations

Orders

20. Within 4 weeks of the date of this determination, the landlord must pay the resident £50 to acknowledge the avoidable inconvenience and time and trouble caused by its delay in processing the refund of his service charge overpayment.
21. The landlord is ordered to provide evidence of compliance with the above orders to the Ombudsman within 4 weeks of the date of this determination.

Recommendations

22. We recommend that the landlord reviews the resident’s request for it change its policy to automatically refund any future service charge credits to residents’ bank accounts without the need for further contact, considers whether any changes to its refund process or policy are possible, and provides the resident with a clear written response. If it cannot implement automatic refunds, it should explain the reasons for this and what steps it will take to avoid similar delays in the future.