Paragon Asra Housing Limited (202107012)

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REPORT

COMPLAINT 202107012

Paragon Asra Housing Limited

21 December 2021


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. This complaint is about:

    a. the level of transparency shown by the landlord in relation to an increase in its service charges;

    b. the landlord’s response to ongoing cleaning issues at the property and its complaint handling.

Background and summary of events

Background

  1. The resident is an assured tenant, and the tenancy began on 2 January 2006. The tenancy agreement shows the property is a one-bedroom first floor flat. The property is situated in a building containing three flats and a small communal area.
  2. The resident contributes towards the building’s costs, for example utilities and cleaning of communal area, through a service charge. In February 2021 he received notification the overall level of charges would be increased by the introduction of a separate “administration management fee”.
  3. The “Service Charge Budget Statement Year commencing April 2021” confirms the building receives six services to be managed. It shows the weekly cost of the administration management fee, but no details of the underlying calculation are provided. The document confirms the resident pays a fixed service charge.
  4. Complaints concerning the level of a rent or service charge increase fall outside the jurisdiction of this Service. The First Tier Tribunal (Property Chamber) can establish whether variable service charges are reasonable or payable. However, case law has shown fixed charges are not service charges for this purpose. The Ombudsman can consider the landlord’s communication in relation to the charges, including its response to the resident’s concerns. On that basis, the complaint defined above is within our remit to assess.
  5. The tenancy agreement confirms the resident has a right to information from the landlord, which includes information about its repairing obligations, its consultation process and its performance as a landlord.
  6. The resident’s concerns about the increased level of service charges arose in the context of issues he experienced with cleaning and management in the building. He feels the landlord has given insufficient information to allow him to decide whether to dispute the increased charges.
  7. The landlord operates a two stage complaints process. Its complaints policy, effective from 26 March 2021, can be found online. The resident’s concerns have completed the landlord’s complaints process on two occasions. This is because the resident raised a separate complaint about the tone of the landlord’s initial stage two response. This complaint was escalated and prompted a second full review of his concerns.

Summary of events

  1. The resident was notified of an upcoming increase in the level of his rent and service charges in two letters dated 22 February 2021.
  2. The first letter confirmed a 1.50% increase in the resident’s rent, and a 1.0% increase in his service charges would take effect from 10 May 2021.It included a comparison table that set out the existing weekly cost of his rent and service charge against the upcoming amounts to be applied. The table showed a separate “administration management fee” would become payable for services the landlord provided, whereas these costs were previously included within the general service charge. The letter said further details about service charges or a breakdown of the estimate of costs could be provided on request by contacting the landlord’s helpline.
  3. The second letter specifically addressed changes to the management fee. It said the landlord was moving from a percentage-based calculation of management fee costs to a banding system based on the level of services provided and the administration required to manage them. A table showed the resident’s annual fee would increase over a period of three years from £84 to £140. Both letters included QR code links to additional information including a guide to the new rent and service charge and an information page.
  4. The information page confirmed the new calculation was based on establishing the amount of time each member of the landlord’s staff spent on service charge management, as a percentage, and applying this percentage to their salary. Banding was based on factors including the size and type of property and the range of services provided. It confirmed some residents, based on their tenancy type, may be able to appeal the changes through the First Tier Tribunal. It also included a link to a table which described the property type for each banding tier and gave the annual management service fee figures for both fixed and variable charging types.
  5. Email correspondence from 21 April 2021 shows the landlord responded to around twelve questions from the resident, concerning the new charging structure, at a senior level. In summary, it said the new fee was designed to recover the landlord’s costs resulting from service charge administration and management duties. Further, the fee was separate to his rent and the banding system was chosen to ensure fairness and consistency for residents.
  6. The Ombudsman has not seen copies of the resident’s original complaint or the landlord’s initial stage one response. However, later correspondence been the parties gives a good indication of the highlighted issues. The landlord’s stage two response dated 9 July 2021 included the following information:
    1. Cleaners were unable to access the building after a resident lost their key. Whilst the locks were replaced, new keys were not issued to the cleaning staff.
    2. A deep clean was carried out to correct missed cleaning appointments but it was acknowledged the resident had disputed the quality of the work. When regular cleaning resumed a refund would be calculated for missed sessions between March and June 2021.
    3. The new banding structure had been adopted following a full review. It was intended to simplify calculations in line with good practice in the sector.
    4. The resident had been sent a copy of the banding and the information was online.
    5. Banding was based on several variables including the size of the scheme, services provided, type of tenancy and complexity of the charge calculations.
    6. A phased approach had been adopted to the new structure and would be monitored through annual reviews
  7. The resident replied to the landlord the same day and complained, broadly, about the tone and professionalism of its response. The Ombudsman has not seen a copy of his original email.
  8. The landlord opened a separate complaint and issued a stage one response on 20 July 2020. It addressed the wording and tone of the previous complaint handler’s correspondence along with the quality of their investigation. It included text from the resident’s complaint email, which was used to address his concerns directly. In summary, it found no issue with its previous response but apologised for how the resident was made to feel.
  9. On 20 July 2021 the resident asked for the new complaint to be escalated. He said the landlord’s dismissive tone was inappropriate given scheduled fortnightly cleaning had been completed once since 13 April 2021. Further, he had given video evidence that, he felt, showed no deep clean had taken place, but this had not been given sufficient consideration. The landlord had also omitted his right to escalate the complaint from its previous response.
  10. The landlord acknowledged the resident’s escalation request on 3 August 2021. The acknowledgment confirmed his concerns had been reviewed at a senior level. Further, delays and service failures had been identified during his complaint journey relating to its management of repairs and communal services along with its communications. It said internal investigations were being undertaken in relation to the staff involved in issuing its previous correspondence. The resident was asked if he agreed to a video call to address his outstanding concerns.
  11. The resident agreed to a further discussion the same day and gave details of his availability. He chased the landlord on 10 August 2021 and a meeting was arranged for the following week.
  12. On 12 August 2021 the resident updated the landlord. He said the problem of replacement keys had been resolved for some time, so it was unclear why cleaning had not resumed. Further, the matter was uncomplicated and should have been resolved by having a key cut, arranging cleaning and refunding any overpayment of the service charge. Instead, he had been frustrated by his experience of trying to resolve the issue, which took place within the wider context of a significant increase in management fees.
  13. On 17 August 2021 the resident gave the landlord a copy of a stage one response relating to an entirely separate complaint from September 2019. The correspondence indicated the scheduled meeting between the parties took place on this date and that the separate complaint was also discussed. The Ombudsman has not seen minutes of the meeting. 
  14. The landlord issued a second stage two response on 9 September 2021. The main points were:

a.     The correct keys had been issued and cleaning of the communal area was scheduled for 14 September 2021. Regular cleaning would be carried out thereafter while options for self-management by residents were explored in line with a recent proposal from the resident. The resident had been allocated a dedicated point of contact who would ensure any agreed actions were completed.

b.     A copy of the service charge and administration management fee breakdown was included with the response. This information represented the highest level of detail the landlord was able to provide. However, the fee calculation method was changed following a full review by the landlord along with benchmarking and legal advice.

c.      Following a full review of the complaint, the landlord agreed it had failed to meet its service targets and acted unreasonably by not resolving the resident’s concerns in a timely manner. As a result, it was prepared to award the maximum amount of £500 in compensation to reflect the inconvenience the resident had experienced. This offer included a previous award of £120, comprising £100 gesture of goodwill for a damaged carpet and £20 for a missed appointment, from the separate complaint in September 2019.

  1. The information seen by the Ombudsman suggests a copy of the “Service Charge Budget Statement Year commencing April 2021” was provided at this point.
  2. The resident replied on 10 September 2021. He said the breakdown provided had not given sufficient clarity about the banding system and, given his charges were supposed to reflect the services he used, he wanted to ensure the management fee was an accurate reflection of the landlord’s costs. Since the property was situated in a small building, its position in the third banding tier, based on factors including scheme size and its complexity to manage, did not reflect his experience as a resident of the building.

    However, he was prepared to accept the landlord’s offer of compensation providing he was able to pursue the issue of the management fees. Further, the award should not include the previous offer of £120 or the repayment of the service charge.

  3. The above prompted a reply from the landlord on 13 September 2021. It apologised it had been unable to resolve the resident’s complaint, but the option of self-managed cleaning by the building’s residents was under review along with a corresponding reduction in the level of service charges.
  4. Further correspondence between the parties occurred on 24 September 2021 when the resident asked for a breakdown of the service charge. The landlord provided an additional copy of the Service Charge Budget Statement Year commencing April 2021
  5. On 20 September 2021 the resident notified the landlord a scheduled cleaning appointment had been missed on 14 September 2021, despite its assurance that regular cleaning would resume from this date.
  6. The landlord’s cleaning schedule shows a deep clean of the communal area was conducted on 27 September 2021.
  7. On 30 September 2021 the resident advised the Ombudsman, since his complaint was not motivated by monetary compensation, he had offered to accept a lower amount of compensation providing his core concerns were resolved. This was in line with his preference for a permanent resolution to the issues.
  8. On 8 October the resident notified the landlord that a repayment of the service charge remained outstanding.
  9. On 13 October 2021 the landlord issued correspondence that confirmed ten cleaning sessions had been missed from May 2021. As a result, a corresponding refund of £19.54 in service charges had been arranged to address the error. Further, two deep cleans had since been completed, at the landlord’s expense, to restore the building to its previous standard of cleanliness.
  10. On 18 October 2021, after he disputed the value of the refund, the landlord notified the resident its previous credit had been calculated incorrectly. However, a payment for the correct amount, £39.07, had been issued to his bank account.
  11. On 25 October 2021 the resident notified the landlord, and the Ombudsman, that the overpaid service charges had been correctly refunded. Therefore, the outstanding issues related to the transparency shown by the landlord in respect of the management fee, and the need for a plan to improve cleaning services in building. He restated his willingness to accept a reduced figure of £300 compensation in relation to the landlord’s cleaning and complaint handling failures, providing the outstanding issues were successfully resolved.
  12. On 3 December 2021 the resident notified the Ombudsman that cleaning scheduled for 30 November 2021 had not been completed as scheduled.

Assessment and findings 

Transparency in respect of increased service charges

  1. Regarding the level of transparency the landlord demonstrated, in connection with the increased service charges, the Service Charge Budget Statement shows the resident pays fixed charges. This is further supported by the information in the linked table, accessed from the second letter dated 22 February 2021, which shows the annual management fee for fixed service charge type tenancies is £84 in the first year of the new charging structure. Should he wish to contest the new charging structure, based on the information seen, the resident will likely need to do this in court rather than at the First Tier Tribunal. Legal advice should be sought should he want to pursue this course of action.
  2. Although the tenancy agreement confirms the resident has a right to information, provisions contained in the Landlord and Tenant Act (1985) giving tenants rights to inspect a landlord’s accounts and access to invoices do not apply to fixed charge type tenancies. As a result, there is no information to show the landlord is obliged to meet the Act’s requirements to allow the resident access to this level of detail.
  3. The letters from February 2021 confirmed the landlord would provide further information about the charges, or a breakdown of the estimate of costs on request. It is noted the estimate was ultimately provided in the form of the Service Charge Budget statement, although it is acknowledged this information could have been provided sooner in the timeline. The letters contained a significant amount of information, and its wording indicated the landlord had sought legal advice before implementing the new structure. This was later confirmed by its correspondence from 9 September 2021.
  4. It was reasonable for the landlord to seek legal advice in this matter. Further, it was entitled to act on the advice it received, and it demonstrated an appropriate level of transparency in communicating that legal advice had been sought. It also allowed the resident to question members of its management team in detail about the charges, as confirmed by the timeline, which represents further transparency on the part of the landlord.
  5. Overall, the resident was given details of the new charging structure, its cost to him and the landlord’s rationale from the outset. The landlord also engaged with his specific questions throughout the timeline and gave further details of its calculation method. This assessment therefore found the resident was given sufficient information to allow him to challenge the increased charges through an appropriate means. As a result, the landlord showed an appropriate degree of transparency in respect of its new charging structure and increased management fee.

The landlord’s response to ongoing cleaning issues and its complaint handling

  1. It is acknowledged the resident is seeking to permanently resolve ongoing cleaning issues in the building. Further, since he has said similar issues have occurred before and could occur again, that the issue is frustrating. However, because it is an internal matter, the Ombudsman cannot tell the landlord how to improve its cleaning or management of services in the building going forwards. We can assess whether it took appropriate steps to redress the missed cleaning sessions, which form the subject of the resident’s complaint.
  2. It is noted the landlord has engaged with the resident’s suggestion to allow cleaning in the building to be self-managed by its residents. This was reasonable on the part of the landlord and the information seen indicates the proposal is under consideration. However, any such proposals are likely to require the consent of the building’s other tenants, and the resident’s preferred outcome cannot therefore be guaranteed.
  3. While it is recognised the resident has given evidence that shows scheduled cleaning on 30 November 2021 was also missed, he will need to raise this as a separate formal complaint with the landlord to ensure it has a fair opportunity to investigate and respond accordingly. He can approach the Ombudsman again if he remains dissatisfied on completion of the landlord’s internal complaints procedure.
  4. The landlord’s schedule confirms ten cleaning sessions were missed, over a period of around five months, between 11 May 2021 and 26 September 2021. It also shows deep cleans were completed on 9 June and 27 September 2021. While it is acknowledged the resident has disputed whether the first deep clean took place, the parties agree that at least one deep clean did occur. Since deep cleaning was conducted at the landlord’s expense, and the resident received a proportional refund of service charges in relation to the missed cleaning, the landlord took appropriate action to rectify the lack of cleaning in the building.
  5. Further, the landlord’s offer of £380 in compensation, following deduction of the £120 related to the separate complaint, is in line with this Service’s expectations for instances where repeated failure to meaningfully engage with the substance of the complaint, or failure to address all relevant aspects of a complaint, leading to considerable delay in resolving complaint has occurred.
  6. This is a reasonable benchmark given the timeline confirms the resident’s concerns completed the landlord’s complaints process twice before matters such as the proportional refund of cleaning charges, or the inconvenience the resident experienced began to be properly addressed. Since its award also recognised acknowledged service failures on its part, overall, the landlord’s remedial actions and offer of £380 in compensation represented reasonable redress for this complaint.

Determination (decision)

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration in respect of the level of transparency shown by the landlord in relation to an increase in its service charges.
  2. In accordance with paragraph 55 of the Housing Ombudsman Scheme, the landlord has offered reasonable redress in respect of its: response to ongoing cleaning issues at the property, acknowledged service failures and complaint handling.

Reasons

  1. The evidence shows the resident has a fixed charge type of tenancy agreement. The legal requirements, in terms of facilitating access to the landlord’s accounting information, are less exacting for this type of tenancy. No evidence has been seen to show the landlord is required to provide more information than it has already given.
  2. The resident was given detail of the new charging structure, its cost to him and the landlord’s rationale from the outset. The information indicated the landlord had sought legal advice. Overall, this assessment found the information given was appropriate since it was sufficient to allow him to challenge the increased management fee through an appropriate means. As a result, the landlord has shown an appropriate level of transparency in relation to the increase in service charges.
  3. The landlord conducted at least one deep clean to rectify a lack of scheduled cleaning that occurred over a period of around five months. The resident was provided with a proportionate refund of his service charges to account for the landlord’s error. Further, it awarded a reasonable amount of compensation to address the inconvenience the resident experienced resulting from missed cleaning, service failures and its protracted complaint handling.

Orders and recommendations

Recommendations

  1. The landlord to provide the resident with a written update of its progress in considering his proposal for cleaning in the building to be self-managed by its occupants.
  2. The landlord, if it has not already, to pay the resident its previous offer of up to £380 in compensation.