Orbit Group Limited (202214098)

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REPORT

COMPLAINT 202214098

Orbit Group Limited

29 January 2024 (amended at review)

 

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. Response to the resident’s requests for information about service charges;
    2. Response to the resident’s requests for certified accounts;
    3. Response to the resident’s request for permission to complete home improvements;
    4. Complaint handling.

Jurisdiction

  1. Paragraph 41c of the Housing Ombudsman Scheme says the Ombudsman cannot consider complaints which, in the Ombudsman’s opinion concern matters that are the subject of court proceedings or were the subject of court proceedings where judgement on the merits was given.
  2. As a result, this investigation cannot consider the matters decided upon in court on 26 September 2022. It was not disputed this related to the landlord’s provision of certified accounts. Therefore, this investigation will not consider the landlord’s handling of the resident’s requests for certified accounts.

Background

  1. The resident is a leaseholder. It is not disputed the resident lived at the property for approximately 3 years. The resident is obliged to pay service charges under the terms of the lease. The resident made a ‘request for permission to carry out improvements’ at the property, using the landlord’s application form. This was dated 22 February 2021. The resident contacted the landlord again on 24 August 2021 to ask about the technical specification of the internal walls.
  2. In January 2022 the resident made a formal request for a written summary of relevant costs relating to his property. The request was made under section 21 of the landlord and tenant act 1985 and was for the charges applicable to the year ending 31 March 2021. The landlord responded 10 days later and attached an ‘actual versus budget statement’ to show the resident’s contributions, his proportion of the actual expenditure and the variance between the two. The management company for the block provided a number of services, including: cleaning, window cleaning, grounds maintenance, bulk refuse removal, lift charges, fire equipment repairs and insurance. The landlord was responsible for a proportion of these costs, which were then passed on to leaseholders.
  3. The resident responded and said the 2021/22 actuals suggested he and other residents may have been “double charged”. He also questioned the omission of charges including those for cleaning and why there were 2 new services in relation to the lifts. Further he said the document provided did not satisfy the legal requirement to be certified by an independent qualified accountant.
  4. The resident contacted the landlord on 14 March 2022. He said he submitted an application for home improvements in January 2021, a response to which was chased multiple times. He said the landlord told him it would respond but failed to do so. The application was approved on 8 March 2022. The landlord also said it did not know the answer to the question about the technical specification of the interior walls.
  5. The resident raised a formal complaint in March 2022 about the lack of information provided in relation to the service charge budget for 2022/23. He raised a further complaint on 5 March 2022 about the landlord’s response to his home improvement application from January 2022. He subsequently referred to a number of attempts to chase the landlord for a response before receiving the approval on 8 March 2022. He said the landlord was untruthful when it said it would provide approval at various stages prior to this date.
  6. The landlord issued its stage 1 response on 22 April 2022. It said there was no requirement for the qualified accountant to be independent. It apologised for the delay in responding to requests made to its service charge team. Further, the team were unable to provide a breakdown of the management company’s charges as it was yet to receive these. It acknowledged the failings in responding to the resident’s request for permission for home improvements. It offered £140 compensation comprising £70 for the delay in responding to the complaint and in providing the relevant information; and £70 for the “frustration and inconvenience” suffered as a result of the service failings identified.
  7. The resident escalated the complaint on 30 April 2022. He said the landlord had not provided a breakdown of the management company charges; the budget for 2022/23; a breakdown of cleaning charges; or the written summary of costs for the year ending March 2021. Further, it had not provided a substantive response to his request for information about the plasterboard or permission for home improvements. Finally he said the landlord did not respond to his complaints in line with the Housing Ombudsman Complaint Handling Code.
  8. The landlord upheld the resident’s complaint at stage 2 and offered £850 compensation; comprising: £400 for distress and inconvenience in sending numerous emails chasing information; £150 for “poor complaint handling”; and £300 as a goodwill payment for the time and effort in reviewing the service charge information provided. It also said it “recently made some internal changes to the structure of our team that has assigned more resource to the allocation of external management company charges”. The landlord acknowledged errors in the information provided to the resident over the period of the complaint and up to August 2022. Is said this included a refund of charges totalling £80.06 which were incorrectly applied or duplicated. This included cleaning and grounds maintenance, and lift repair charges.
  9. The resident filed a county court case against the landlord, reflected in a summons dated 31 August 2022. It is not disputed the landlord received a judgment following a “guilty plea” for the “non-issue of certified accounts” on 26 September 2022. It said it was ordered to pay a fine and to pay the resident a victim surcharge and court costs totaling £367.
  10. In January 2023, the resident contacted the landlord’s service charge team to request year end statements. The provision of the statements prompted the resident to seek clarification on the management company’s charges; the inclusion of a ‘grounds contract’ charge which he said was a “known error” from previous statements; charges relating to lift inspections; and its procedure for sending out statements, as he said these were not received by any resident in the block. The landlord’s failure to respond led to the resident raising a new stage 1 complaint on 15 February 2023. Further, he said the two errors in the 2021/22 year end accounts and 2023/24 meant the landlord was unable to produce a single error free statement in 3 years.
  11. The landlord issued a response on 20 March 2023, which it called its “final response letter”. It said it responded to the resident’s request for information on 7 March 2023 and identified service failings in the time taken to respond. It offered £70 compensation in acknowledgement of this failing. The resident escalated the complaint on 2 April 2023. He said every statement the landlord provided included an attempt to overcharge him and that it was “still unable to send a corrected year end 2021/22 statement”. The resident chased a response on 31 May 2023.
  12. The landlord emailed the resident in April 2023. In relation to the 2021 year end statements, it said grounds maintenance costs were removed as it did not maintain these areas. Further, in relation to the 2023/24 budget, a new statement would be issued to show removed grounds maintenance charges and the removal of a duplicated charge for fire equipment repairs.

Assessment and findings

The landlord’s response to the resident’s request for information on service charges

  1. Paragraph 42e of the Housing Ombudsman Scheme says the Ombudsman may not consider complaints which, in the Ombudsman’s opinion concern the level of rent or service charge or the amount of the rent or service charge increase.
  2. The First Tier Tribunal Property Chamber (the FTT) deals with disputes between leaseholders and their landlords. The FTT can make determinations on all aspects of liability to pay a service charge and/ or administration charge, including by whom, to who, how much and when a service charge is payable. In order to decide liability, the FTT also decides whether service charge costs have been reasonably incurred and if so whether the standard of any services or works for which the costs are charged is reasonable. Accordingly, this investigation will not consider aspects of the dispute which are about such matters. It is more appropriate for these matters to be considered by the FTT.
  3. The lease says the resident agrees with the landlord to pay the service charge. Further the charges will be calculated before the beginning of the account year and will consist of ‘sum comprising the sum estimated to be incurred in that year’ by the landlord. The expenditure will comprise all expenditure incurred in connection with the repair, management, maintenance and improvement of the building.
  4. The landlord’s service charge policy says:
    1. It levies a service charge towards the costs of services, insurance, general maintenance, repairs or reserve and sinking funds. A management fee will also be included to cover its cost of providing the services.
    2. It will manage service charges in a transparent way, compliant with all statutory obligations to provide annual service charge statements and accounts in the prescribed format and in accordance with the relevant lease, tenancy or licence agreement.
    3. It will provide its customers with clear up to date information including ‘standardised budgeting and accounts information’ and ‘bespoke information relevant to each scheme and, if applicable, each customer’.
    4. Customer statements will be prepared in accordance with relevant legislation
  5. The corresponding service charge procedure says:
    1. Following receipt of a query, the landlord has 10 days to make initial contact with the customer. This will either be with a resolution of the query or an update.
    2. Queries that are received via complaints will be checked to see if a query has previously been received. If query has not been received before, it is not treated as a complaint and service charge team are to respond directly to the customer.
    3. If a customer query has been transferred to the complaints team, because the landlord has not replied or the customer is dissatisfied with the way the service charge team dealt with it, this will be treated as a complaint and be dealt with in line with our complaints policy.
  6. The landlord acknowledged there were errors in the statements provided to the resident following the initial complaints process. The timeline shows these errors included duplicated and incorrectly applied charges. While it would have been appropriate for the landlord to produce correct and accurate statements first time, it was reasonable for it to acknowledge the errors, apologise to the resident and highlighted steps it would take to prevent similar issues occurring. It also offered £850 compensation. This was a reasonable amount in addressing the issues arising in the initial complaints process.
  7. In January 2023, the resident requested the year end service charge statement for 2021/22 and said this typically arrived around September, approximately 6 months after the year end. The landlord said it was not sure why he did not receive it and it attached the statement by return. The landlord’s response indicated an acknowledgement the statement should have been sent out earlier. It did not offer an explanation. This was not reasonable as it left the resident to chase the landlord for information he was expecting to receive.
  8. Upon receipt, the resident said he found errors on the statement and that these were consistent with errors on previous statements. There was no evidence seen to show the landlord responded before the resident raised a formal complaint a month later on 15 February 2023. This was not appropriate as it was not in accordance with the landlord’s service charge procedure which said it would respond within 10 days. Further, it was not disputed the statement contained errors which indicated a failure of policy requirements around the drafting and provision of statements.
  9. The landlord responded to the complaint and apologised for the time taken to respond to the resident’s service charge query on 8 March 2023. It acknowledged the service failings in its response time and offered £70 compensation to the resident. However, the response did not address the issues raised by the resident in relation to inaccuracies in the statement, which was not appropriate.
  10. Overall, the resident experienced continued issues with the accuracy and timely provision of statements since the start of 2022. Despite acknowledging errors and issues with its processes, the landlord did not appear to learn from this. Nor did it highlight any further learning when the resident raised similar issues again in January 2023, through to its complaint response in March 2023. The subsequent complaint highlighted similar errors in the statements, around duplications and incorrect charging. This was evidently highly frustrating to the resident, who was forced to persistently chase for information which should have been provided in a timely and error free manner. Further, it was apparent that had the resident not pointed out the errors, these would not have been picked up by the landlord. Overall this constituted maladministration.
  11. The timeline indicates other leaseholders in the block may have been affected in a similar way, through inaccuracy and timely provision of statements. This Service has therefore decided to issue a wider order under paragraph 54(f) of the Scheme for the landlord to review its policy or practice in relation to the service failures investigated in this determination. The scope of the review is set out in the orders section below.

The landlord’s response to the resident’s request for permission to complete home improvements

  1. The landlord’s procedure on ‘customers’ own home improvements’ sets out how it will manage such requests. While it is silent on the timescales for approving or rejecting applications, it is reasonable to expect such requests to be handled in a timely manner.
  2. The timeline shows resident initially made an application for improvements in February 2021. This was followed by a request for technical information about the internal walls in August 2021 and a further application for improvements in January 2022. It is not disputed the resident received the approval in March 2022, over 1 year after the initial request and 2 months after the most recent request. This was not reasonable as it left the resident with uncertainty over whether he could proceed with the proposed improvements. This meant the resident had to chase the landlord for responses which was also inconvenient for him.
  3. The landlord did respond to chasers from the resident. It said it would contact him and gave timescales for doing so; for example, that it would contact him within the next 3 working days on 2 February 2022. However, it did not do so, nor did it follow up on other chasers sent by the resident after saying it would. This compounded the overall delay as it created an expectation for the resident that he would receive the approval much sooner than he eventually did. This was distressing and inconvenient for the resident and overall it constituted maladministration.

The landlord’s complaint handling

  1. The landlord operates a 2 stage complaint policy. It says it will respond to stage 1 complaints within 10 working days and stage 2 complaints within 20 working days.
  2. The resident raised complaints about service charges and the delay to the home improvement application, on 5 and 14 March 2022 respectively. The landlord issued a combined response on 22 April 2022. This was outside of its stipulated timeframe and not appropriate in the circumstances.
  3. The resident escalated the complaint on 30 April 2022. He reiterated the same points and added it was unhelpful of the landlord to group the complaint responses. The landlord issued the stage 2 response on 30 May 2022 which was close to its prescribed timeframe and reasonable in the circumstances.
  4. The landlord acknowledged the failures in complaint handling. It offered £150 compensation to the resident. However, it did not acknowledge the grouping of complaint elements, which the resident directly raised as being unhelpful, nor did it highlight any learning going forward or apologise to the resident.
  5. The resident raised a further complaint on 15 February 2023. The landlord responded on 20 March 2023 which was approximately 1 week outside of its prescribed timeframe. Further, the landlord called this response its “final response letter”. This response should have been its stage 1 response with the option to escalate to stage 2. The resident proceeded to escalate the complaint to stage 2, but there was no evidence seen to show the stage 2 response was provided. This was not appropriate and not in accordance with its complaints policy.
  6. Overall, while the landlord recognised failures in its complaint handling and offered compensation to the resident, it did not demonstrate it learned from its failures, nor did it take steps to implement future learning. The landlord issued delayed complaint responses and grouped complaints which the resident said he found unhelpful. It also issued a stage 1 response which it called its final response letter. This was clearly frustrating for the resident as well as inconvenient as he was required to chase responses. Overall this constituted maladministration.
  7. Post determination re-assessment
  8. At review stage, the resident raised that the investigation had failed to consider a further complaint of 15 February 2022. The Ombudsman assessed this, and agreed it should have been included as part of the investigation. The assessment of this complaint is now included.
  9. The resident made a complaint to the landlord on 15 February 2022. This complaint was about the landlord’s failure to acknowledge the resident’s request to raise a complaint in relation to year end actual costs for 2020/2021 (requested January 2022).
  10. In its stage one response of 22 April 2022, the landlord failed to address this aspect of the resident’s complaint.
  11. The landlord then provided a response at stage two of its procedure on 30 May 2022. Within this complaint response, the landlord acknowledged it had failed to address the resident’s complaint of February 2022. The landlord stated this may have been due to the volume of correspondence received from the resident.
  12. The Ombudsman notes the landlord did not apologise for this error or offer any form of resolution. It likely should have done so. That the member of staff dealing with the resident’s complaint had left the landlord’s employ should not have prevented it from apologising for any failings on its behalf.
  13. The evidence indicates that in its complaint response of 9 June 2022, the landlord acknowledged the resident initially raised the complaint with it on 15 February 2022, and did not receive an acknowledgement email from the case handler until 8 March 2022. It confirmed it had been experiencing delays in acknowledging some of the complaints it had received due to a backlog. Nevertheless, it acknowledged the resident’s complaint was not responded to within the timeframes set out in its Complaints Policy, and apologised for this.
  14. By way of resolution, in addition to the apology, it offered £50 in compensation for its failings.
  15. The landlord ought to have provided the resident with an apology (and compensatory resolution) on 30 May 2022. It failed to do so, but corrected this in its response of 9 June 2022. It is clear that in failing to address this complaint within its earlier responses, the landlord was working outside of the timescales allowed to respond to a complaint (10 working days).
  16. As this failure is likely to have caused additional frustration to the resident in having to follow-up with the landlord to obtain a response to this complaint, it is appropriate to award a further £50 for the landlord’s identified failings regarding this complaint. This is in addition to the £50 offered by the landlord in its response of June 2022, and will be included in the award for distress and inconvenience as a result of the landlord’s failures in complaint handling.
  17. Further, in relation to the aspect of the resident’s complaint to the landlord relating to the handling of their complaints of 15 February 2022 (2 complaint points regarding service charges) and 14 March 2022 (regarding a home improvement application), the resident was unhappy that these complaints were grouped together.
  18. The resisdent raised this with the landlor on 30 April 2022. This was not acknowledged by it until 9 June 2022, far past the limit of 5 working days.
  19. The resident then requested to escalate to stage two of the landlord’s procedure on 21 June, which was acknowledged on 1 July 2022; also outside of the timescales allowed.
  20. While I am of the opinion the grouping of your complaints was not contrary to the Ombudsman’s Complaint handling Code (which allows for this), it is clear that by doing so the landlord’s responses to the resident’s complaints became disjointed and confusing to them. This also led to the landlord unreasonably declining to escalate the resident’s complaint, as it was under the impression it had already provided a full response. This was later acknowledged once the landlord recognised a further stage two response should have been sent to the resident. This was issued 11 August 2022.
  21. However, it took too long for the landlord to recognise its error. To put things right, it is appropriate to award a further £100 for the landlord’s poor complaint handling.

Determination (decision)

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in relation to the landlord’s:
    1. Response to the resident’s requests for information on the service charges.
    2. Response to the resident’s request for permission to complete home improvements.
    3. Complaint handling.

Orders and recommendations

  1. It is ordered that within 4 weeks of the date of this report, the landlord must:
  2. Pay £1,970 compensation directly to the resident, less any amount which has already been paid. This comprises:
    1. £1170 offered in its complaint responses.
    2. An additional £300 for distress and inconvenience as a result of its failures in relation to the provision and administration of service charge information requested in 2023.
    3. A further £200 for distress and inconvenience as a result of failures in relation to the response to the home improvement application.
    4. A further £300 for distress and inconvenience as a result of the landlord’s failures in complaint handling.
  3. The landlord is to review the circumstances of this case. It should understand the reasons why its policies were not followed and identify clear steps it will take to prevent similar issues arising in the future. It will report back on its findings to this Service.
  4. The landlord must apologise to the resident for the failings identified in this report.
  5. In accordance with paragraph 54f of the Housing Ombudsman Scheme, the landlord is to:
    1. Within 6 weeks of the date of this report the landlord must:
      1. Investigate the extent of possible issues relating to the issuing of service charge statements and the accuracy of those statements.
      2. Understand whether the issues were at a block, estate, or regional level.
    2. Within 12 weeks thereafter, the landlord is to:
      1. Ensure all issues and errors are corrected.
      2. Review its agreement with the management company and check whether the relevant obligations are reflected appropriately in the statements.
      3. Consider the assurances it can provide in these areas and report back to this Service, also within 12 weeks.