Network Homes Limited (202102613)

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REPORT

COMPLAINT 202102613

Network Homes Limited

11 January 2022


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 response to the resident’s concerns about his service charge, including his requests for an explanation regarding:
    1. the breakdown of current charges;
    2. the credits and debits on his statement;
    3. carpet cleaning costs;
    4. the difference between the estimated cleaning costs and the actual cleaning costs.
  2. The complaint is also about landlord’s communication and complaints handling.

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.
  2. Paragraph 39(a) of the Housing Ombudsman Scheme notes as follows:

39. The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion:

a) are made prior to having exhausted a member’s complaints procedure, unless there is evidence of a complaint handling failure and the Ombudsman is satisfied that the member has not taken action within a reasonable timescale.

  1. On 6 May 2021, the resident advised this service that he was concerned that the landlord had not notified him of changes to the contractors it used, that it had not provided an estimate of the 2019/2020 accounts, and that it had mislaid his request for a section 22 inspection of documents. The resident also provided this service with undated extracts of emails to the landlord in which he noted these concerns. These extracts also show he requested these issues be considered a formal complaint.
  2. The landlord has provided this service with a communication dated 22 December 2020 in which it advised that its most recent contracts were entered into after a consultation with leaseholders prior to the date the resident became an owner. The landlord also advised it notified the resident of its intention to enter into its most recent new contracts, being for “small works” and “alarms,” in June 2020.
  3. These issues were not the subject of the landlord’s formal internal complaints procedure responses, discussed below, and so are outside the scope of this investigation. In its communication dated 11 June 2021, the landlord did advise the resident that should he consider himself due any compensation for the alleged mismanagement of the service account, he should raise a new formal complaint.
  4. While the Ombudsman would expect a landlord to acknowledge a communication in which a resident requests a complaint by treated as a formal complaint, it is not evident that the resident has pursued this concern. Should the resident wish to reiterate this complaint, once it has progressed through the landlord’s internal complaints procedure, should he remain dissatisfied with the outcome, he may then be able to refer the complaint to this service.

Background and summary of events

Background

  1. The resident is a leaseholder of the property of the landlord. The lease provided to this service does not include a copy of the most recent transfer deed, so it cannot be determined when the resident became the leaseholder. The landlord is a registered provider of social housing.
  2. The lease provides that the resident will pay the service charges for the property. The service charge includes cleaning, maintenance, the provision of services for the common parts, insurance, and the landlord’s management costs.
  3. The landlord operates a two stage complaints policy. The policy notes that a complaint relating to a service charge dispute will not be dealt with under the complaints policy and will be referred to the landlord’s service charges team or if unresolved, to the First Tier Tribunal (FTT). The policy also notes that it will aim to provide a stage one response within 10 working days of a complaint, and 20 days of an escalation.
  4. The landlord operates a service charge policy. The policy notes that estimated service charges are calculated based on the pervious expenditure incurred. The policy does not note whether the landlord will provide copies of its service agreement contractors to residents.

Summary of events

  1. On or around 28 September 2020, the landlord presented the resident with a request for payment of the actual service charges due for the period of 1 April 2019 to 31 March 2020. The request included a summary of the service charges which included cleaning, maintenance, insurance etc. The request also noted a breakdown of the original estimates and the actual charges.
  2. Following receipt of this request, it is evident that the resident raised concerns regarding the amounts included in the summary. This service has not been provided with the initial communications from the resident, but it is not disputed that these included general concerns about what the service charge covered and specific concerns about the amount of the cleaning charge and a charge for carpet cleaning. The resident has also provided this service with an undated extract of an email to the landlord in which he requested an explanation as to why there were two amounts credited to his account and then debited the same day, for which he provided amounts and dates for the landlord’s reference.
  3. The landlord acknowledged these concerns on 2 October 2020. This service has also been provided with an undated email which appears to be from around this time in which the landlord advised it had opened a stage one complaint regarding the resident’s concerns.
  4. In December 2020, the landlord advised the resident of his obligations to pay the service charge as per his lease agreement and further advised it was investigating his concerns about the cleaning charges. The landlord has advised this service that this information was forwarded to the resident again on 14 January 2021.
  5. The landlord provided its stage one response on 29 January 2021. It advised that complaints relating to the service charge were not covered under its complaints policy, however, a representative of its accounts team would provide an additional response.
  6. On 2 February 2021, the landlord provided further advice about various elements of the service charge. It advised that it was required to insure the entire block in which the resident’s property was located. It further acknowledged that the descriptions of various maintenance charges were not very informative and that these would be changed to be more informative in future service charge requests.
  7. On 3 February 2021, the resident requested an escalation of his complaint. He advised he wished to know a full breakdown of the current service charges, and that he wished to be provided with copies of the current contracts for cleaning/maintenance so he could understand the expected levels of service. He further clarified he was not aware of any communal carpeted areas in the property and so wanted an explanation as to why there was a carpet cleaning charge. Additionally, he requested an explanation as to why the finalised ‘cleaning’ element of the service charge was £324.48, whereas the estimate had only been £22.62.
  8. The landlord provided its stage two response on 4 March 2021. Regarding the resident’s request for a list of the current service charges payable, the landlord noted this was included in its most recent request for payment of the service charge. Regarding his request to view its contracts for cleaning/maintenance etc. the landlord advised it did not share these contracts with residents and that it had sought legal advice on this position. It did advise, however, that it was happy to provide the resident with copies of the invoices if he wished to make a section 22 request. It also signposted the resident to where he could read more information about this process.
  9. Regarding the charge for carpet cleaning, the landlord advised it did not include a “specific budget” for this and that its cleaning service cleaned all floor types. Regarding the difference between the amount noted as an estimate for the cleaning charge, and the actual charge, the landlord accepted that there was a noticeable increase, and advised that it was likely the estimate had been based on the previous year’s charge, for which it had “under recovered.”
  10. The landlord noted the resident had queried some specific credit and debit charges on the service charge account and advised it had already addressed these in its communication dated 14 January 2021. The landlord also noted the resident had raised concerns about delays to its communications. It apologised for these delays and explained this had been due to staff absences. It subsequently offered £50 compensation for its service failure regarding its communication.
  11. It is evident that the resident considered his requests for breakdowns of the service charge to constitute a section 22 request, however, on 7 April 2021, the landlord advised it had not considered this to be the case. The resident subsequently made a section 22 request, which the landlord acknowledged on 12 April 2021.
  12. Following the landlord’s formal responses, there have been a significant number of ongoing communications between the parties in which the resident queried the amounts of a number of elements of the service charge, following which the landlord would provide its position.
  13. In May 2021, the resident has advised this service that he remains unclear as to the meaning of the credits and debits that have appeared on his service charge account.
  14. In July 2021, the landlord noted that it had identified that some charges had been noted twice on the charges summary, for which it was currently investigating. As noted above, the landlord has also advised the resident to raise a further complaint regarding any requests for compensation for it failing to advise the resident about contractor changes, or regarding its handling of the section 22 request. It also signposted the resident to the FTT in relation to these issues.

Assessment and findings

Service charge

  1. As noted above, the Ombudsman’s jurisdiction is governed by the Housing Ombudsman Scheme. Paragraph 39(g) notes as follows:

39. The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion:

g) concern the level of rent or service charge or the amount of the rent or service charge increase.

  1. This investigation is therefore unable to consider the level of individual charges made within the service charge, some of which the Ombudsman notes have been disputed by the resident in his ongoing communications with the landlord. The correct body to investigate these concerns is the FTT, which the landlord has signposted the resident to.
  2. The Ombudsman is able to consider, however, the landlord’s complaint responses to the resident.
  3. While part of an undated extract of an email, it is not disputed that the resident raised concerns regarding a number of debits and credits to his service charge account. The resident also provided specific amounts and transaction dates for the landlord to address. In its stage two response, the landlord advised that it had nothing further to add to its communication dated 14 January 2021. The landlord has advised that this email was a repeat of its email dated 22 December 2020. The email, nor the preceding emails in the email chain, make specific reference to any credits or debits, nor provide any specific explanation. The emails to provide an explanation about the obligation to pay a service charge as per the lease agreement, along with information about the cleaning charge.
  4. Given that the resident had made reference to specific amounts and dates, the Ombudsman would consider a reasonable investigation of the issues to address these specific concerns. In the Ombudsman’s opinion, referring to the obligation to pay a service charge is not a reasonable explanation why four specific payments (two credits and two debits) occurred on a specific day. The landlord therefore failed to provide a reasonable response to this element of the complaint.
  5. The resident also included as part of his complaint a request for a breakdown of all current charges that made up the service charge. It is evident from the context of later communication between the parties that the resident wished to know detailed information about the details of each element of the service charge, for example all the cleaning duties that were covered by the cleaning charge. It was reasonable at the time of its complaint response, however, for the landlord to consider the request related to the various descriptions for individual charges that made up the service charge. These descriptions were included in the summary attached to the request for payment sent to the resident in September 2020 and so it was reasonable for the landlord to refer to this document in response to this element of the complaint.
  6. The Ombudsman also notes that the landlord has appropriately continued to provide further details regarding the individual charges throughout its ongoing communications with the resident.
  7. Regarding the carpet cleaning charge, the Ombudsman notes that the request for payment noted a charge for carpet cleaning in the estimate, but that this had been reduced to £0.00 in the actual charges. It was nevertheless reasonable for the resident to wish for the landlord to clarify this charge category, given that it is not disputed that there are no carpets in the communal areas. In its stage two response, the landlord appropriately clarified that all floors, regardless of type, were included in the cleaning charge. The landlord has also appropriately advised the resident that it intends to rename the categories of its service charges to help provide greater clarity to what they relate to.
  8. It was also reasonable for the resident to request an explanation of why the estimated cleaning costs were significantly different to the actual cleaning costs. As noted in the landlord’s service charge policy, the landlord bases its estimate on the previous year’s costs and so its explanation that the estimate was low because it had under recovered the previous year’s costs was reasonable. Whether this approach was sufficient to give a correct estimate or not was not the subject of this complaint. As noted above, the resident has raised concerns that he did not receive any estimated charges for the 2019/20 financial year and so it could not be said that he had relied upon the estimate, having only been made aware of it when he received the request for payment of the actual costs.
  9. The Ombudsman also notes that the resident requested to review the landlord’s contracts for various services. The landlord denied this request, which the Ombudsman considers reasonable in the circumstances. While a resident is entitled to request to review these documents, there is no contractual or statutory requirement for the landlord to disclose them and it is entirely at the discretion of the landlord to do so. Given the potentially commercially sensitive nature of the contracts, it was reasonable for the landlord to refuse. The landlord did, however, appropriately advise the resident of his right to review the invoices and signposted him to further information on this issue.
  10. In summary, while the landlord’s formal responses addressed a number of the concerns raised by the resident adequately, it failed to provide a reasonable response to the concerns regarding specific credits and debits on the resident’s service charge account. A formal complaint response is an opportunity for the landlord to demonstrate to a resident that it has carried out a reasonable investigation of the complaint and to clarify its position. The landlord could have rearticulated its position in the complaint response, however, its reference to an earlier communication, one which did not provide specific comments on the dates or amounts raised as a concern by the resident, was an insufficient response. In the Ombudsman’s opinion, this constituted service failure and it is appropriate that an amount of compensation be ordered to reflect the distress caused to the resident by not having this element of his complaint addressed. In the circumstances, an amount of £50 is appropriate.
  11. As noted above, the landlord has appropriately continued to liaise with the resident about his concerns regarding the service charges. While this service does not have the authority to assess the reasonableness of a service charges, it nevertheless expects that a landlord will clarify its position on any issues raised through its internal complaints procedure in relation to these charges. This will help a resident to understand the charges and enable them to make an informed decision about whether to take the issue further (i.e. to the FTT). It also provide the landlord with the opportunity to identify potential administrative errors, such as those identified in the landlord’s communication in July 2021.

Complaints handling

  1. The landlord’s complaints policy notes that it does not apply to complaints relating to the service charge. The Ombudsman would nevertheless expect a landlord to provide a response to a resident’s concerns that were in connection with a service charge and to do so within a reasonable timeframe. Additionally, even outside of a formal complaint, the Ombudsman would expect a landlord to reply to communications from a resident within a reasonable timeframe.
  2. Following the receipt of the request for payment of the service charge in September 2020, it is evident that the resident raised initial concerns about elements of the service charge. While some of the emails from this period provided to this service have been undated, making it difficult to comment on the exact amount of time that had elapsed between the communications, the landlord has accepted in its stage two response that its communications throughout the period of the complaint had been delayed.
  3. The landlord appropriately offered an apology for these delays and accepted service failure, for which it offered an amount of £50 compensation. While the delays would have been frustrating for the resident, the landlord eventually did provide responses to the resident’s concerns (except where noted above) and has also continued to liaise with the resident about his concerns beyond the period of the complaint. In the Ombudsman’s opinion, the amount of compensation offered provided reasonable redress for the service failure in the circumstances. A recommendation has been made bellow that the landlord reiterate this offer of compensation should it not have already been accepted by the resident.

Determination (decision)

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of the complaints regarding its response to the resident’s concerns about his service charge.
  2. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, and in the Ombudsman’s opinion, there was reasonable redress offered by the landlord for its service failure in respect of the complaints regarding its communication and complaints handling.

Reasons

Service charge

  1. The resident’s service charge complaint covered a number of concerns. The landlord provided reasonable responses to all but one of these concerns, and appropriately signposted the resident to where he could obtain further information where applicable.
  2. The landlord failed, however, to provide a reasonable response to the resident’s concerns regarding several specific charges on his service charge account. The landlord also missed the opportunity to provide an explanation in either its stage one or stage two response, instead referring to an earlier communication which also did not specifically address these concerns.

Complaints handling

  1. The landlord appropriately acknowledged that its communications and complaint responses had been unreasonably delayed, for which it accepted service failure and apologised. Its offer of compensation, in the Ombudsman’s opinion, amounted to reasonable redress in the circumstances.

Orders and recommendations

Orders

  1. The Ombudsman orders the landlord to pay compensation of £50 for any distress and inconvenience caused to the resident by its failure to fully address his concerns about specific amounts credited and debited to his service charge account.
  2. This amount must be paid within four weeks of the date of this determination.

Recommendations

  1. The landlord to reiterate its offer of £50 compensation in relation to its poor communication and complaints handling if not already accepted by the resident.
  2. The landlord to write to the resident within four weeks of the date of this determination and enquire if there are any outstanding concerns regarding his service charge that he wishes to be considered under the landlord’s internal complaints procedure.
  3. The landlord to consider amending its complaints policy to further clarify how complaints regarding service charges will be responded to, in particular, ancillary complaints such as requests to view documents or similar.