Notting Hill Genesis (NHG) (201902574)

REPORT

COMPLAINT 201902574

Notting Hill Genesis (NHG)

25 June 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:
   1. Increase in rent and service charges payable for the property.
   2. Communications and complaint handling.

Background

2. The resident is a shared ownership leaseholder of a 1-bedroom maisonette.
3. The resident was concerned about the increase in rent and service charge. She contacted the landlord for an explanation in April 2022 and the landlord told her the rent increase was linked to the rent review clause within the lease and the Retail Price Index (RPI). It said the lease did not refer to a rent cap and the rent increase was therefore in line with the lease.
4. The resident and landlord communications continued in July 2022 about the service charge increase. The landlord provided the resident with details of the  service charges, however, communications continued and in November 2022, the resident requested to raise a complaint with the landlord.
5. The landlord delayed in registering the resident’s complaint by 3 weeks and this Service intervened. The landlord sent the resident its stage 1 complaint response on 9 January 2022. It had identified a complaint handling failure and offered the resident £100 compensation.
6. The resident escalated the complaint with the landlord the following day. The landlord provided its comprehensive response to the resident on 7 March 2023. It identified and acknowledged a number of failures in relation to complaint handling and an error with its budget calculations. The landlord therefore offered the resident £275 compensation.
7. The resident accepted the landlord’s offer of compensation, however, there appeared to be a delay in the resident receiving the compensation until June 2023. The resident did not appear to receive the landlord’s amended budget information until July 2023.

Assessment and findings

Increase in rent and service charges payable for the property

Jurisdiction

8. 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.
9. After carefully considering all the evidence, in accordance with paragraph 42(d) of the Housing Ombudsman Scheme, the following aspect of the complaint is outside of the Ombudsman’s jurisdiction:
   1. The increase in service charges payable for the property.
10. Complaints that relate to the level, reasonableness, or liability to pay rent or service charges are within the jurisdiction of the First-Tier Tribunal (Property Chamber) and it is more appropriate for the resident to seek free and independent advice from the Leasehold Advisory Service (LEASE) (https://www.lease-advice.org/) in relation to how to proceed with a case, should she wish to do so.
11. The Ombudsman can investigate the landlord’s handling of the resident’s communications and her complaint in relation to the increase in rent and service charges. This investigation will therefore concentrate on these aspects of the resident’s complaint.

Communication and complaint handling

12. The resident contacted the landlord on 5 April 2022 as she was concerned about the increase in rent and service charge. She believed the service charge had increased by 60%. The resident said she had previously emailed the landlord but did not receive a response. The landlord’s records showed it emailed the resident the same day to say it would look into her query.
13. On 9 April 2022, the landlord contacted the resident to say that rent was increased in line with the rent review clause in the lease and the Retail Price Index (RPI). It explained that because RPI was high, the increase in charge was more than previous years. Based on these parameters, the increase for the year was 5.86% plus 1%. The landlord said it had checked the lease and it did not mention a cap restricting a rent increase percentage and it did not believe it had breached regulations.
14. The next landlord record was 11 July 2022 when the resident contacted the landlord to say she was very concerned about the increase in service charge. She asked the landlord to explain the percentage increase for the last 2 years as she had received a further service charge bill from the landlord that requested an extra £127 payment. The resident said the breakdown in charges appeared to be for services not related to her property for example a security door entry system.
15. The landlord replied the same day to explain the charges and said £29.93 was largely made up of an increase to the sinking funds contributions for the estate which was due to low reserve funds and it believed this to be good management practice to ensure there was a healthy reserve for future cyclical and major works. The landlord explained the resident’s contribution was 1.69% that totalled £202.80 and £127.27 due from the 2019/20 accounts.
16. The resident and landlord communications continued and the resident requested additional information and an explanation of the charges, and the landlord responded to the resident’s request. The evidence shows the landlord’s communications with the resident were reasonable in its responses to explain the rent and service charge increase.
17. On 25 November 2022, the resident told the landlord she had previously disputed the service charge but she did not receive a response. The resident then contacted the landlord again on 8 December 2022 and asked the landlord for details of the complaints procedure. The landlord responded to the resident on 15 December 2022. It said it could not see a record of a service charge dispute and the landlord asked the resident for more details so it could follow this up. It also asked the resident to outline her concerns so that it could investigate her complaint. The resident replied the same day to say she had logged another complaint about her “hugely excessive service charge”.
18. The resident contacted this Service on 19 December 2022. This Service asked the landlord to register a stage 1 complaint and provide its response to the resident by 5 January 2022. The landlord replied to this Service on 21 December 2022 to say it had checked its records and could not find a complaint, however, it confirmed it had subsequently logged the complaint.
19. On 21 December 2022, the resident contacted the landlord as she found out via the online portal that the landlord had closed her complaint without her knowledge. She said she was “exhausted with the situation and it was impacting her health and she was off work sick”. The landlord replied and said it could not see the resident’s complaint on its systems. However, it confirmed the complaint had been registered. It is unclear from the landlord’s records what went wrong with its complaints app, nor did the landlord explained the issue to the resident. The landlord’s lack of explanation was therefore unreasonable in the circumstances. This issue clearly caused frustration and inconvenience to the resident and hindered easy access to the landlord’s complaints process.
20. The landlord acknowledged the resident’s complaint on 22 December 2022 and told her it would respond by 12 January 2023. The extension in timescale was due to the Christmas holiday closure period. It is unclear from the landlord’s records what went wrong with the resident’s request for information about the complaints process, however, this appears to have caused a 3-week delay in the complaint being progressed. The Ombudsman’s Complaint Handling Code states landlord’s should log and acknowledge a complaint within 5 working days. The landlord’s delayed actions were therefore inappropriate.
21. The landlord sent the resident its stage 1 complaint on 9 January 2022. It explained the following:
    1. The reasons for the increase in service charge was due to inflation and cost increases across services.
    2. It had reviewed the previous financial year accounts and identified the property was apportioned a deficit and therefore it felt it was good practice to collect more income that year to avoid a potential deficit in future.
    3. It explained service charges were no longer split into multiple schedules and it had reviewed all the leases which resulted in a formal decision to reduce the apportionment charged for each unit in line with the lease.
    4. The lease for the resident’s home specified 2% increase and it had set a 1.64% increase.
    5. Every property was required to pay towards communal services.
    6. Rents were increased in line with RPI and the resident’s rent increase was 5.86% plus 1%.The lease did not appear to state anything about a cap on a rent increase and it was satisfied it had not breached regulations.
    7. Cyclical works were due to take place in 2020, however, due to COVID-19, this did not happen and it would let the resident know of a new date for this work.
    8. It assured the resident it wanted to ensure its charge was fair and it represented the services provided.
    9. It apologised for the delay in its complaint handling and it offered the resident compensation of £100 for the inconvenience caused to her.
22. The same day, the resident asked the landlord to escalate her complaint as she remained dissatisfied with its complaint response.
23. The landlord sent the resident its stage 2 complaint response on 7 March 2023 which recapped on the previous stage 1 findings. The landlord identified the following:
    1. It should have provided more clarity on what the residents rights are in relation to the service charge of making the resident aware she could challenge the service charge at the First Tier Tribunal. However, it said that overall, it was satisfied it had explained the increase in the 2022 to 2023 service charges.
    2. The landlord had not explained the budget increase in its stage 1 complaint and it had identified there were some errors in the budget that was sent to her. It apologised for the unnecessary distress caused.
    3. The landlord said it was working on a revised budget that would accurately reflect the anticipated costs of services in 2023 to 2024 and once it was done it would update her on a revised monthly payment.
    4. The landlord was satisfied with its explanation to the resident about the rent setting criteria. However, it said it should have explained that consideration had been made about the rent review clause in the lease and what this would mean in practice for the resident. The landlord had agreed to apply a rent review in line with the lease and it explained a review was undertaken annually. In 2023 to 2024 a 7% cap would be applied. The landlord signposted the resident to cost of living and support services.
    5. The landlord said it had revised its compensation offer to:
       1. £100 for the lack of a full response to the resident’s complaint at stage 1 of its process.
       2. £50 to reflect the budget consultation letter contained an incorrect budget amount.
       3. £100 in recognition of the stress the error had caused the resident.
       4. In addition, it offered the resident £25 as it had to extend the stage 2 complaint response by mutual agreement with the resident.
       5. In total, the level of compensation offered to the resident was £275.
       6. It concluded that it had responded to the resident in a satisfactory manner at stage 1 about the 2022 to 2023 budget but it should have signposted the resident to the First Tier Tribunal. It identified that it should have explained the budget increase and there were errors in the budget that it would rectify.
24. To conclude, the landlord has evidenced it communicated with the resident within a reasonable time frame from when she raised service charge and rent queries with the landlord. However, when the resident raised a complaint with the landlord, it delayed in registering a stage 1 complaint by 3 weeks; there appeared to be an issue with the landlord’s app and it did not explain to the resident what had caused the issue. The landlord delayed in providing the resident with a stage 2 complaint response by 8 weeks. However, it did mutually agree an extension of time with the resident.
25. When the landlord investigated the resident’s stage 2 complaint, it identified it had not fully responded to all the issues within her complaint. However, it did provide a comprehensive response at stage 2 of its complaints process that included additional compensation in recognition of its full extent of failures both with its complaint handling and wrong budget information.
26. The Ombudsman’s Dispute Resolution Principles are:
    1. Be fair;
    2. Put things right;
    3. Learn from outcomes.
27. The landlord demonstrated it applied all of these principles within its review of the stage 2 complaint and it appropriately increased its offer of compensation to the resident to reflect its complaint handling failures. As such, the landlord’s revised offer of £275 compensation put things right for the resident. This level of compensation is aligned to the Ombudsman’s remedies guidance where the landlord’s failures adversely impacted the resident.

Summary of events after landlord’s complaint process

28. Communications between the resident and landlord continued. There appeared to be a delay in the resident receiving the compensation from the landlord until June 2023 and the landlord did not send the revised budget to the resident until July 2023; 4 months after it had identified errors within the budget as part of the stage 2 complaint response. However, the landlord’s correspondence refers to the budget being sent to the resident in March 2023 and therefore it is unclear from the landlord’s records whether the amended budget was sent to the resident.

Determination

29. In accordance with Paragraph 42(d) of the Scheme, the increase in rent and service charges payable for the property is outside of the Ombudsman’s jurisdiction.
30. In accordance with Paragraph 53(b) of the Scheme, there was reasonable redress with the landlord’s handling of communication and the complaint.

Orders and recommendations

Recommendations

31. Within 4 weeks of this report, the landlord should provide assurance to this Service that the landlord’s app is working correctly for residents to log a complaint.
32. Within 4 weeks of this report, the landlord should provide evidence to this Service that the resident has received correct budget information.
33. The landlord should reply to this Service with evidence of compliance with the timescales set out above.