One Housing Group Limited (202227379)

REPORT

COMPLAINT 202227379

One Housing Group Limited

11 March 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

The complaint is about the landlord’s response to the resident’s concerns about service charges.

Background and summary of events

The resident is an assured tenant of the landlord and has lived at the property since 24 February 2014. The property is a 2-bedroom first floor flat and is within a 3-storey building divided into 3 properties. The landlord confirmed it did not have any vulnerabilities recorded for the resident.
All 3 properties within the building contribute to the costs of maintaining the communal parts. The landlord confirmed that the residents of this building have different types of tenancy agreement and therefore service charges are calculated differently for each resident.
The landlord’s records noted that the resident had raised a query with the landlord on 4 March 2021 about a charge listed in his service charge booklet for gardening and grounds maintenance as he did not have a communal garden space. On 1 April 2021 the landlord records noted it had confirmed the charge was an estimated charge based on the removal of an ash tree and it was an error to pass on further gardening and grounds maintenance charges. The charges were removed from the 2021/2022 estimated charges.
The resident emailed the landlord on 25 February 2022. He said the building had been charged a sum of £550 for grounds maintenance. He had included the landlord’s statement from the previous year confirming this was an error.
The landlord responded on 7 March 2022 and agreed the charge was incorrect. It said that in order to correct the charges, any amendments would be processed at the end of the financial year. The landlord confirmed that if the actual costs were higher than the estimate, it would ask residents to pay the shortfall, and if the actual costs were lower than the estimate, the overpayment would be refunded. The resident responded on the same day and said the landlord’s response had not included any previous years in which payment had been made for a service not provided. He said last year the charge had been removed as soon as he had raised this and the service charge adjusted. He said the years prior to this, he had not been aware of the incorrect amount and this would need to be reimbursed. He asked for confirmation that he would not need to pay an incorrect amount until September 2022.
The landlord emailed the resident on 25 March 2022. It said at the end of the financial year when processing the actuals, it would calculate and refund any incorrect charges for the previous years. The landlord said it no longer made ad hoc changes during the year and all corrections and refunds were processed at the end of the financial year. It also confirmed that the resident’s existing estimated payment would continue until September 2022.
The resident contacted the landlord on 28 September 2022 and asked when the accounts would be completed. He emailed the landlord on 30 September 2022 to follow up on this. He said his neighbour had received a letter which had included a breakdown of the amounts overpaid and detailed the repayment due, but he had not received this. The resident said he wanted to know how much remittance he was owed and when the repayment would be made.
The resident followed up with the landlord again on 17 October 2022. The landlord responded on 4 November 2022. It confirmed that due to data protection, it had been unable to discuss the issues raised by other residents and their specific property or tenure. The landlord acknowledged the grounds maintenance costs should not have been included in the service charge and advised that this would be corrected when the final actual accounts were processed. It apologised that the refund was not immediate and said the corrections would be backdated.
On 6 November 2022, the resident emailed the landlord and said the following:
1. He was aware that his neighbour had received a repayment, and he hoped his refund could be expedited.
2. He wanted the landlord to pay the refund into his bank account rather than as a rent credit.
3. The misapplied charges went back to 2017.
On 9 November 2022, the landlord confirmed to the resident that it would provide an update on the 2021/2022 actual service charge costs to all residents by January 2023.
On 24 November 2022, the landlord responded to the resident’s email on 6 November 2022. It said it would process the calculation of the service charge overpayment when finalising the relevant year end accounts. It said it would inform the resident when this was completed and the relevant refund actioned. The landlord confirmed that it was usual practise for refunds to be credited to the service charge account.
The resident raised a formal complaint on 24 November 2022. He said he had not received details from the landlord about when his repayment would be made. He also stated that the landlord had told him that calculations would be made at the end of September but he had still not received notice of what he was owed.
The landlord acknowledged the resident’s complaint on 6 December 2022, it said it aimed to respond by 20 December 2022 due to additional time needed to conclude its investigation.
The landlord responded to the resident’s complaint at stage 1 of its complaint process on 19 December 2022. It said the following:
1. The grounds maintenance charge had not been included in the 2018/2019 estimated service charge but had appeared each year since 2019/2020.
2. The resident had been told that this charge would be corrected at the year end. This was incorrect because the charge of £183.40 was more than 15% of the total service charge, it should have been amended when the issue had been raised. The landlord apologised for this error.
3. It had reviewed the service charges for 2017/ 2018 and confirmed that it had spent £483.36 on grounds maintenance that year.
4. Grounds maintenance had not been provided from April 2018 onwards and should not have been included in the estimates from that date.
5. The end of year accounts for the service charges in 2019/2020, 2020/2021 and 2021/2022 had not yet been completed. The landlord apologised for not providing these in September 2022 as promised. It said it would compete these in December 2022 and it would let the resident know once it had completed them.
6. The resident was paying a variable service charge, and it set an estimate at the start of the year which was spread over the 52 weekly payments. The landlord explained that when the end of year accounts were completed, it then added the difference to the next years estimate, in accordance with the tenancy agreement. It said that where it had spent more, it asked the resident to pay an additional amount and where it had spent less, a refund would be provided.
7. New service charges would be issued for 2023/2024 year in February 2023. This would include any adjustments needed to take into account the amount spent in 2019/2020, 2020/2021, and 2021/2022.
8. The refund of any overpayment would take place between April 2023 and March 2024 in accordance with the tenancy agreement.
9. The reply to the resident on 7 March 2022 was incorrect. It should have advised the resident that it had served a section 20B notice to let the resident know it was not able to produce the end of year accounts. The landlord said it should have told the resident that it intended to complete the outstanding end of year accounts before the next year estimates were delivered to him.
10. It noted the resident had not received a response to his email on 28 September 2002 and had sent a further email on 17 October 2022.
11. The resident had referred to neighbouring properties having been reimbursed and had been advised the landlord was not able to comment on other resident’s accounts.
12. It apologised for the correspondence that had not answered the resident’s questions about the removal of the grounds maintenance charges or confirmed when it would provide him with the outstanding end of year accounts.
13. It upheld the resident’s complaint and offered £100 compensation as a gesture of goodwill.
The resident escalated his complaint on 19 December 2022. He said the landlord had still not provided the amount he was due back. He stated that the grounds maintenance charge for 2017/2018 was not correct. He said the garden at the building was not communal and was only accessible by one of the flats. The resident also said he was being treated differently to his neighbour. He said he had been paying an incorrect service charge for several years, and despite having flagged this to the landlord, it had happened again that year. The landlord acknowledged the resident’s complaint escalation on 22 December 2022.
The landlord issued its final response on 18 January 2023. It included the following:
1. The landlord had included a copy of the invoice from a contractor for the removal of an ash tree from the rear garden. It said while it did not provide general grounds maintenance to the building, it had passed a share of the costs onto the resident as a legitimate charge in the 2017/2018 service charge accounts.
2. In response to the resident’s concerns about a neighbour who had received a reimbursement of their service charges. The landlord explained that:
  1. The resident was an assured tenant and the service charges were passed on in accordance with his tenancy agreement. Service charges for residents with different agreements were treated differently.
  2. For assured tenants, the landlord spread any adjustment over the following year along with the estimations.
  3. As the resident was paying a variable service charge, when the end of year accounts were completed, the landlord would add the difference to the next year’s estimate, in accordance with the tenancy agreement.
  4. The resident would receive notice of the new service charges for the 2023/2024 year in February 2023. The landlord would include any adjustments needed to account for the amount spent in 2019/2020, 2020/2021, and 2021/2022.
  5. Overpaid monies would be refunded to the resident between April 2023 to March 2024 by adjusting the weekly charge.
3. It did not uphold the complaint at stage 2 because the one-off charge for the removal of the tree in the 2017/2018 accounts had been passed onto the resident correctly and in accordance with the terms of the tenancy agreement.
The resident contacted the landlord on 19 January 2023. He said the ash tree was not in a communal area, and the rear garden belonged to one of the other flats. He asked the landlord to reconsider its final response. The landlord responded to the resident on 7 February 2023 and confirmed that the costs of the tree removal in 2017 had been charged in error. It said it would arrange for the removal of the costs from the resident’s account.
The landlord emailed the resident on 3 March 2023. It said it fully accepted the grounds maintenance charges including the tree works had been charged in error. The landlord stated it had initially relied on the information provided on the invoice for the work, and the information held within its system, which did not set out who had access to which garden. It said the resident had recently received the 2023/2024 estimated charges which had included adjustments for the 2019/2020, 2020/2021, and 2021/2022 end of year accounts. It said it was processing the removal of the charge for the tree work of £183.40 from the resident’s account.
On 19 January 2023, the resident contacted this Service and said he was dissatisfied with the landlord’s response to his complaint. The case was accepted for investigation on 23 February 2023.
On 28 March 2023, the landlord issued a follow on to its stage 2 response. It included the following:
1. A review of its decision at stage 2 had taken place, and the resident’s stage 2 complaint was now upheld. This was because its stage 2 response was incorrect. The garden maintenance charge in 2017/2018 should not have been passed onto the resident.
2. The landlord offered the resident a further £150 compensation to the £100 offered at stage one, in recognition that the resident had needed to chase the landlord again to review its complaint, and the mistake it had made.
The resident contacted the landlord on 29 March 2023. He said the landlord had still not made clear how much he had overpaid over the years. He said he had also not been provided with the calculations which detailed how the money was being returned to him.
The landlord’s internal records stated that the adjustment to remove the 2017/2018 gardening charge was completed on 2 May 2023.
The resident had continued to follow up with the landlord in May 2023 on his request for a full breakdown of the incorrect amount he had historically paid. The landlord responded on 7 June 2023 and provided a service charge summary of the estimated amount paid, the actual cost, and the year end adjustment for the years 2021/2022, 2020/2021, 2019/2020 and 2017/2018.

Assessment and findings

Scope of investigation.

As part of his complaint, the resident raised issues related to the level of service charges. Paragraph 42d of the Scheme says that the Ombudsman may not investigate a complaint that concerns the level of rent or service charge or the amount of the rent or service charge increase. This report will therefore not determine whether the service charges are reasonable. While this Service is unable to decide on the matters above, the Ombudsman has investigated the resident’s concerns related to possible calculation errors and administration of the service charges. The Ombudsman has also considered whether the landlord’s explanation into the queries, and communication were reasonable and appropriate.
Complaints concerning the level of a rent or service charge are best suited to be considered by the First Tier Tribunal (Property Chamber), who can establish whether service charges are reasonable or payable. The resident may wish to visit the First Tier Tribunal (Property Chamber) website for further advice of this matter.

Policies, procedures & legal obligations.

The tenancy agreement states the following in relation to service charges:
1. A resident agrees to pay the service charge during the accounting period of 1 April to 31 March by equal payments in advance.
2. The landlord may charge for services on the basis of either reasonable costs incurred during the previous accounting period and/or estimates for the current or next accounting period.
3. The service charge of any accounting period will be calculated before the beginning of the accounting period.
4. The service charge shall be the sum of the expenditure estimated by the landlord as likely to be incurred in the accounting period and the relevant excess of shortfall from the previous accounting period.
5. As soon as practicable after the end of each accounting period, the landlord will determine the amount by which the estimate has exceeded or fallen short of the actual expenditure in the account period, and will supply the resident with a copy of the actual service charge schedule. It also says the amount by which the actual expenditure had exceeded or fallen short of this estimated expenditure shall be debited or credited accordingly to the following accounting period.
The landlord’s rent and service charges procedure states the following:
1. A variable service charge is set at the start of a year based on estimated service costs. Where the cost of the service increases or decreases through the course of the year, the final charge can be changed accordingly to ensure that residents pay the true cost of the service. Surpluses or deficits will be dealt with in line with the tenancy.
2. The landlord will use the previous year’s actual costs where possible to estimate the costs more accurately for the next year.
3. The Service Charge Team prepare previous years block/scheme costs for certification. This is verified and final statements prepared by the end of September. Any adjustment against the previous estimate is shown and billed for collection. If the 30 September deadline cannot be achieved due to unavailability of certain costs, then Section 20B notices must be served.
4. The landlord will calculate the difference to be apportioned to each property. Residents with variable charges will have debit added or credit refunded to their service charge account added to the following years estimated charge.
5. This will show as an adjustment and is communicated to the individual resident in the end of year accounts booklet sent in February.
The landlord’s complaints policy states it operates a 2 stage complaints process for formal complaints. It aims to make contact with the resident within 2 working days and respond to stage 1 complaints within 10 working days of a complaint being logged. A stage 2 response will be acknowledged within 3 working days, and a response provided within 20 working days of receipt of an escalation. At both stages a further 10 working day extension can be applied in exceptional circumstances.
The landlord’s complaint procedure states that the level of rent and service charge increase or their reasonableness should not be deemed a complaint, unless the complaint is about a failure to manage the process, or services were not delivered.
The landlord’s compensation policy states that compensation payments can be made if there has been mismanagement, a delay in service, and/or additional costs have been incurred due to a service failure. It says that discretionary compensation payments will be paid depending on the impact on the resident.

The landlord’s response to the resident’s concerns about service charges.

The landlord acknowledged in its stage 1 response that the grounds maintenance charge had appeared in the estimated service charges each year since 2019/2020. The landlord said that it should have amended the resident’s account when he had raised the issue again in March 2022. The landlord had here acknowledged that it had failed to rectify the resident’s account in accordance with its procedures. The amount was corrected in February 2023, 11 Months after the landlord should have put this right. As a result of this failure the resident continued to pay an incorrect amount for longer.
It was not clear why the landlord had taken the decision to charge the tree cutting costs as a communal charge in 2017/2018. It was a concern that the landlord had not been aware that the work carried out was within a garden only accessible by one of the properties within the building.
It was evident that the landlord had relied on the information from the resident and Google maps to determine if the garden was communal or not. This Service expects a landlord to keep accurate records about its housing stock. The landlord’s explanation here demonstrated a poor standard of record keeping, which had resulted in the resident being provided with incorrect information throughout his complaint.
The failure to create and record information accurately can result in landlords not taking appropriate and timely action, missing opportunities to identify that actions were wrong or inadequate, and contributing to inadequate communication and redress. As a result of the landlord’s record keeping failure, it had here delayed in identifying the error in charging the tree cutting costs in 2017/2018, until it had reviewed its final response in March 2023. As such a recommendation has been made for the landlord to complete a self assessment against the Ombudsman’s Spotlight report on Knowledge and Information Management.
While it was appropriate for the landlord to review its stage 2 decision in this case, this had resulted in a protracted complaint process for the resident. The landlord should have sufficiently investigated the issue when it was first raised by the resident and looked to update its records accurately. This would have avoided the resident having to take the time and trouble to follow up on this.
The landlord had here delayed in correcting this charge until May 2023. This was over 2 years after the resident first brought the issue to the landlord’s attention in March 2021. The landlord had here failed to correct is error in an appropriate timeframe. As such the resident had incurred incorrect charges on his account for an appropriate amount of time. Which had caused him distress and inconvenience.
The landlord offered the resident compensation of £150 upon reviewing the case in March 2023. This was in recognition of the resident having had to follow up with the landlord to review the stage 2 response, and for the error in its final response on the tree removal charges. While the landlord’s work to resolve the issue post its internal complaints process is to be encouraged, it is still expected that the complaints process will normally result in a full resolution to the complaint. The landlord’s offer here was not enough to put things right for the resident. It had not acknowledged that the resident had first raised this error in March 2021, in which he confirmed his property did not have access to a garden space. He had to endure the inconvenience and trouble of following up on matter again in 2022 for over a year.
It was evident that the landlord had provided the resident with inaccurate information about when he could expect any errors in the charges to be refunded. From the responses provided by the landlord in March 2022, the resident had been left with the expectation that his refund would be confirmed in September 2022. This response was in line with the timescales in landlord’s rent and service charges procedure for the adjustment of charges.
The landlord said in its stage 1 complaint response that it had served a section 20B notice. This Service has not been provided with the details of this notice. However, it was clear that the resident had followed up with he landlord in September 2022 and October 2022 because he had not received confirmation of the errors or when a refund would be paid.
The landlord told the resident in November 2022 that an update on the actual service charge costs would be provided by January 2023. However, the landlord’s final response confirmed that any adjustments to the resident’s service charge account would be provided in February 2023. This was 5 months after the date the resident was initially told the information would be provided by. The landlord’s explanation throughout the complaints process was not accurate and caused the resident the inconvenience of continuing to follow up, and frustration with the landlord for not providing the information it had said it would.
The landlord acknowledged at stage 1 that it should have been clearer in its communication with the resident. The landlord also acknowledged that it had not responded to the resident’s email on 28 September 2022. The landlord here had demonstrated a poor level of customer service. It had provided unclear responses and had not responded to the resident in an appropriate timeframe.
The landlord had confirmed in its stage 1 and final response that the refund of any overpayment of service charges from the previous years would take place between April 2023 through to March 2024. The landlord’s response here was in line with its rent and service charge procedure which stated that surpluses or deficits would be dealt with in line with the tenancy. However, it was noted that the resident needed to have raised this as a complaint in order to receive the correct information about when any refund would be calculated and repaid. The delay to confirming this information had caused the resident the distress and inconvenience of not knowing when a refund would be confirmed.
While it was appreciated that it had been distressing for the resident to receive a different response about the refund of the overpaid service charges to his neighbour, the landlord had provided evidence to this service to demonstrate that it had followed the terms of the occupancy agreements in each of its responses. Service charges and rents are calculated and charged following different methods which are dependant on the type of tenancy agreement. Due to data protection, the landlord was not able to share the specific terms of the neighbour’s tenancy agreement with the resident. This was an appropriate response from the landlord which was in accordance with the terms of the tenancy agreement.
Part of the resident’s complaint was that he had not received a detailed breakdown of the incorrect amounts that had been charged to his service charges account. The resident was clear in his correspondence with the landlord over the complaint period, that he had requested confirmation of how much he had been charged in error for the grounds maintenance charges. While it was acknowledged that due to the way the service charges were calculated as a variable charge meant the landlord may not have been in a position to confirm the total amount it would refund, it should have been much clearer in communicating this to the resident. This caused both confusion and frustration to the resident.
The resident confirmed to this Service in February 2023, that he had accepted the compensation offered and an adjustment of the service charge to refund an overpayment of charges in 2023. However, the resident said he had not received a breakdown of the overpayments. As such, an order has been made for the landlord to provide the resident with a full breakdown of the adjustments made and an explanation of how it had calculated this.
To provide a fair response, landlords are expected to resolve complaints by addressing both the main issue raised and any inconvenience that has happened. As well as the £150 of compensation the landlord offered in its review of its final response, the landlord had offered the resident a total of £100 compensation during the complaints process. This was for not answering all of the resident’s questions, that it had not addressed the removal of the grounds maintenance charges, and that it had not confirmed when the resident would receive the end of year accounts. The landlord’s offer here was not enough to put things right for the resident. It had also not accounted for the resident having to further follow up with the landlord following the end of the complaints process to continue to request a breakdown of any incorrect charges.
As stated previously, it is not within the Ombudsman’s remit to confirm what charges should have been charged or refunded to the resident. However, a clearer explanation should have been provided by the landlord to clearly cover all of the concerns raised. This would have provided the resident with reassurance of when any refund of charges would be confirmed and paid.
Overall, the landlord demonstrated a poor level of customer service. It provided inaccurate information to the resident and did not clearly answer his questions. It also did not provide information he had requested, or an explanation as to why it was not able to have provided this. As a result of the misinformation provided throughout the complaint process, the resident had to continue to follow up.
The landlord did not demonstrate that it had appropriately investigated the resident’s concern about the communal charges made in error, or that it had kept adequate up to date records on the building. It had also delayed inappropriately in correcting its error. This had caused the resident inconvenience, time, and trouble. The landlord’s attempt to put things right during and after its complaints process went part way to putting this right for the resident. However, in all the circumstances, its final offer of compensation was not sufficient to reflect the full extent of the detriment the resident experienced. Therefore, there was service failure in the landlord’s response to the resident’s concerns about service charges. As such, an order has been made for a further amount of compensation of £150. This is in line with the remedies guidance of this Service for circumstances which have adversely impacted a resident.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman’s Scheme, there was service failure in the landlord’s response to the resident’s concerns about service charges.

Reasons

The landlord failed to communicate effectively with the resident around his concerns about service charges. The landlord provided the resident with inaccurate information about when it would refund the incorrect service charges. Although the landlord acknowledged service failure in its complaint responses, it had not offered sufficient redress.
The landlord demonstrated a poor level of record keeping. As such, it had missed opportunities at stage 1 and stage 2 of the complaints process to provide an accurate answer to the resident’s concern about the incorrect charge to his rent account for the year 2017 to 2018. This considerably delayed the processing of the refund of this charge.
The resident had to repeatedly ask for the same information The landlord did not provide a breakdown of the full incorrect service charges as requested by the resident. As such it had failed to put things right.

Orders and recommendations

Orders.

The Ombudsman orders the landlord to pay the resident a total of £400 in compensation. This amount includes the £250 compensation offered during the complaint process plus an additional £150 for the failures identified in this report. Compensation not already paid, should be paid directly to the resident, and not offset against any arrears.
The landlord is to provide the resident with a full breakdown of the adjustments made to his service charge account and an explanation of how it had calculated this. If any further errors are identified, the landlord is to calculate the refund due and take into consideration the interest rate.
The landlord is to provide evidence of compliance with the above orders to this Service within four weeks of the date of this report.

Recommendation.

In May 2023, the Ombudsman published a spotlight report on knowledge and information management. Although this report was issued after this case, it is recommended that the landlord, if it has not already done so, completes a self-assessment against this report and identifies any potential improvements to its service delivery in the future.