Peabody Trust (202401934)

Background

1. On 2 June 2023, the landlord issued the resident’s year-end service charge accounts for the period from 1 April 2021 to 31 March 2022. On 19 June 2023, the resident requested a written summary of costs under Section 21 of the Landlord and Tenant Act 1985. She also asked for an explanation of the external managing agent (EMA) deficit of £3,988.75 from 2020 to 2021, which had been included in her 2021 to 2022 year-end accounts. When she received no response, the resident made a formal complaint on 30 July 2023 and progressed through the landlord’s complaints process to Stage 2. As she remained dissatisfied with the outcome, she referred the matter to us for investigation.

What the complaint is about

2. This complaint is about the landlord’s response to the resident’s query about her service charges.
3. We have also considered how the landlord handled the complaint.

Our decision (determination)

4. We have found:
   1. There was service failure by the landlord in its response to the resident’s query about her service charges.
   2. There was reasonable redress by the landlord in how it handled to complaint.

Reasons

The circumstances of this complaint are well known by the parties involved, so it is not necessary to detail everything that’s happened or comment on all the information we’ve reviewed. We’ve only included the key information that forms the basis of our decision of whether the landlord is responsible for maladministration.

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

What we have not considered

5. We do not investigate complaints about the level or increase of service charges, nor do we determine whether charges have been reasonably incurred. If the resident wishes to pursue these concerns, she may seek to challenge the charges through the First-tier Tribunal (Property Chamber) (FTT) or the court.

What we have considered

6. As the managing agent was neither appointed by the landlord nor is a member of our Scheme, we cannot comment on or take a position on its responses to the landlord’s requests. Our role is to assess whether the landlord’s actions were fair and reasonable.
7. The landlord’s service charge policy states it should support the resident and seek to influence outcomes with the managing agent (EMA). In addition, our Spotlight report on managing agents emphasises that landlords should proactively pursue managing agents to promptly obtain service charge information.
8. On 19 June 2023, the resident asked for a written cost summary under Section 21. She asked how the EMA deficit of £3,988.75, with her share being £328.53, had been calculated. The resident made a formal complaint to the landlord on 30 July 2023 as she  had no reply.
9. In its stage 1 response, the landlord apologised for delays in responding to the resident’s concerns. The landlord said the 2021 to 2022 service charge booklet met Section 21 requirements. It provided copies of the EMA invoices it had paid that year, including an invoice for the £328.53 deficit from 2020 to 2021. It said it had asked the EMA for more detail, including a breakdown of the deficit, and would share this when it was received.
10. Between 5 September 2023 and 6 March 2024, the resident continued to contact the landlord to resolve her concerns. She disputed the accuracy of the EMA service charges and said she could not reconcile the figures in the 2021 to 2022 booklet. She reported missing documents, including a breakdown of the 2020 to 2021 deficit. The resident asked if the deficit was a one-off or showed wider errors. Despite multiple requests, she said she had not received clear explanations or enough evidence. She also said she could not match the EMA accounts to the charges on her property. The resident raised concerns about the landlord continuing to seek payment while the issue remained unresolved. She asked the landlord to place her account on hold until it had provided clear information.
11. The landlord explained parts of the calculation and shared the EMA year-end accounts. It accepted that some gaps remained. The landlord apologised for the delays and said it was working with the EMA and internal teams to improve clarity. It said the charges were payable under the lease and advised the resident to keep paying, if necessary under protest, to avoid arrears. It also suggested a payment plan.
12. On 6 March 2024, the resident escalated her complaint, stating the matter had been going on for too long. While she agree to make the requested payment, she expressed frustration that her concerns remained unresolved.
13. In its stage 2 response, on 21 May 2024, the landlord accepted it had not handled the resident’s request of 19 June 2023 within a reasonable time. It acknowledged poor communication and that unclear expectations had added to her frustration. It recognised the information it provided did not match what it had promised after stage 1. It also recognised that delays in getting details from the EMA and internal teams slowed progress. The landlord noted gaps in communication, which meant the resident had to chase updates many times between late 2023 and early 2024.
14. The landlord acknowledged that it continued to seek payment while the resident was asking for a full breakdown. It accepted that clearer and more transparent information should have been given sooner, although it maintained the charges were payable under the lease. The landlord apologised for its failings and offered £500 compensation for delays, poor communication, and the time taken to provide the required information.
15. In determining whether there has been service failure or maladministration, we consider both the events leading to the complaint and the landlord’s response. We also assess the extent to which the landlord acknowledged any shortcomings and whether the redress offered was appropriate.
16. In this case the compensation offered was proportionate to the failings identified. This is because £500 falls within the range we would expect where there has been a long-term, significant failure that adversely affected the resident. For this reason, we have not awarded any additional compensation.
17. We are also satisfied it was reasonable for the landlord to advise that its 2021 to 2022 service charge booklet met Section 21 requirements. While the service charges were in dispute, it was also reasonable for the landlord to advise the resident to continue paying them and to advise that she confirm this was done under protest. This is because the lease creates a legal obligation to pay service charges when due. Paying under protest would protect the resident from arrears while keeping her right to challenge the charges at a later date.
18. Whilst the above steps were reasonable, ultimately the landlord failed to resolve the complaint. This is because, despite saying it would continue to pursue the EMA for an explanation of the 2020 to 2021 deficit, the resident advised us on 11 June 2026 that she had still not received this information.
19. Shortly after the resident’s initial request in June 2023, the managing agent changed. While this may have complicated the process, the landlord’s obligation to take all reasonable steps to obtain the requested information remained unchanged.
20. By the time of the stage 2 response, the resident had waited 9 months for an explanation of the deficit. As such, it would have been appropriate for the landlord to have considered what further action it could take to resolve the matter, given the lack of response from the EMA. This could have included using its legal and contractual rights under the head lease to require the EMA to provide records and to enforce cooperation. The absence of evidence that the landlord considered or pursued any such action has led to a finding of service failure in this case.
21. To put this right, the landlord has been ordered to provide an update on what action it is taking with regards to the EMA. It has also been ordered to explain how it satisfied itself that the 2020 to 2021 deficit was reasonably incurred. If the resident remains dissatisfied with this response, she may wish to challenge the charges through the First-tier Tribunal (Property Chamber) or the court.

How the landlord handled the complaint.

22. The resident made a formal complaint on 30 July 2023. The landlord should have acknowledged this within 5 working days and issued its stage 1 response within a further 10 working days, by 23 August 2023. We have seen no evidence that it acknowledged the complaint. However, it issued its stage 1 response within the overall 15 working day timescale, on 17 August 2023. The landlord apologised for delay in acknowledging the complaint for which it offered £25 compensation.
23. The resident escalated her complaint on 6 March 2024. The landlord should have acknowledged this within 5 working days, by 13 March 2024. It should then have issued its stage 2 response within the following 20 working days, by 10 April 2024. However, it did not acknowledge the resident’s escalation request until 22 April 2024. The landlord did issue its stage 2 response within a further 20 working days, on 21 May 2024. However, this was almost 30 working days outside of the required timescales.
24. In its stage 2 response, the landlord apologised for the delay and said this was due to staff shortages and a high number of requests. It offered an additional £125 compensation for these failures. This brought the total offered for delays at both stages to £150, the landlord having offered £25 compensation at stage 1.
25. Overall, we find there was reasonable redress by the landlord in respect of how it handled the complaint. It accepted failures in relation to both the resident’s initial complaint and escalation request, for which it apologised. The £150 compensation offered is also in line with amounts set out in our compensation guidance where complaint responses have been delayed by weeks, affecting timely resolution of the dispute.

Putting things right

Where we find service failure, maladministration, or severe maladministration we can make orders for the landlord to put things right. We have the discretion to make recommendations in all other cases within our jurisdiction.

Orders

Landlords must comply with our orders in the manner and timescales we specify. The landlord must provide documentary evidence of compliance with our orders by the due date set.

Recommendations

Our recommendations are not binding, and a landlord may decide not to follow them.