Midland Heart Limited (202408923)

Background

1. On 1 March 2024, the resident raised a number of queries about the 2024 to 2025 service charges in his recent rent and service charge notification letter. The resident initially corresponded with his estate officer about his queries. On 11 March 2024, the resident raised a formal complaint as he was dissatisfied with his estate officer’s response. The resident remained dissatisfied with the landlord’s response at the end of its formal complaints process and asked us to investigate. The resident pays a fixed service charge.

What the complaint is about

2. This complaint is about the landlord’s response to the resident’s request for further information about his service charges.

Our decision (determination)

3. We have found there was service failure by the landlord in its response to the resident’s request for further information about his service charges.

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

Reasons

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.

What we have not considered

4. We do not investigate complaints about the level or increase of service charges. We will also not investigate whether the charges are ‘reasonable’ or provide value for money. If the resident wanted to pursue his concerns about these matters, as a fixed service charge payer, he may wish to challenge the charges by applying to the court.

What we have considered

5. As the resident pays a fixed service charge, the landlord is not required to provide detailed cost breakdowns, receipts, or accounts. However, the landlord should provide clear explanations of the charges, including what they cover and how they are set. It should also demonstrate that services are delivered and respond reasonably to queries.
6. The resident raised broad concerns about the transparency, fairness, and necessity of several charges. These concerns covered several charges, including the provision of assets, communal electricity, emergency lighting, and the ranger service.
7. In relation to the provision of assets, the resident queried depreciation calculations, frequent upgrades, particularly to CCTV and door entry systems, and the lack of visible improvements. He also raised concerns about reduced CCTV coverage, unclear benefits of new features and the lack of consultation. The resident also questioned inconsistencies in the information provided and whether the charges were reasonable.
8. The landlord demonstrated a structured and generally reasonable approach consistent with a fixed charge. It explained that it spread costs over asset lifespans and apportioned them across relevant properties. However, it did not provide enough evidence of the need for, or benefits of upgrades. It also did not address concerns about how often it replaces assets or show that it consulted residents. As a result, its response only partially addressed the resident’s concerns.
9. The resident accepted that electricity costs were high but considered the communal electricity charge excessive and insufficiently explained. The landlord provided a reasonable response to these concerns. It explained that it based charges on the previous year’s actual utility costs. It said this covered communal lighting, fire systems, and heating where applicable. It also explained that it apportioned costs across 48 properties over 53 weeks. As noted above, as the resident is a fixed service charge payer, the landlord did not have to provide detailed cost breakdowns.
10. In relation to emergency lighting, the resident considered separate servicing and testing charges to be duplication and excessive, particularly given limited visible work. He also questioned the landlord averaging cost across schemes and the need to separate provision and running costs. The landlord explained that servicing and testing were distinct functions with separate costs and that it spread contract costs across properties. While this explanation was broadly reasonable, it lacked clarity on how the costs were calculated and did not fully address concerns about paying for services with limited visible activity. This reduced the overall transparency of the response.
11. The resident also questioned the ranger charge, again referring to limited visibility and unclear benefits. He suggested the service mainly involved basic tasks such as waste management. He also raised concerns about cost, consistency, and fairness, particularly as the charge appeared to apply only to flat residents. The landlord said the ranger provided wider services, including safety checks, inspections, minor repairs, and dealing with fly-tipping. While it described the service as cost-effective compared to external contractors, it did not explain how it reached that conclusion. It also did not adequately address the resident’s concerns about service visibility, consistency, or the fairness of this service only being charged to the residents of flats. As a result, its response again only partially addressed the resident’s concerns.
12. Overall, the landlord explained that it calculated charges using structured methods appropriate to fixed service charges. These included spreading long-term costs over asset lifespans or using historic expenditure, then apportioning those costs across properties. It outlined what the services covered and justified some approaches, describing the in-house ranger service as ‘cost-effective’.
13. However, the landlord’s responses lacked sufficient detail, supporting evidence, and tailored explanations. As a result, it only partially addressed the resident’s concerns, particularly in relation to how services related to his property and their benefits, consistency, and fairness. The landlord also failed to explain why it considered the in-house ranger service to be cost-effective.
14. This understandably caused the resident frustration and undermined his confidence in the accuracy of his charges. For this reason, we find service failure. We have ordered the landlord to apologise and pay the resident £100 in compensation. This amount is consistent with our compensation guidance, which applies where there has been a service failure that the landlord did not appropriately acknowledge or fully remedy. We have also ordered the landlord to address the gaps identified in this report in its response to the resident’s request for further information.

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.