Stonewater Limited (202310055)

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REPORT

COMPLAINT 202310055

Stonewater Limited

15 October 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 handling of service charges for support.
  2. The Ombudsman has also investigated the landlord’s complaint handling.

Background

  1. The resident has been a joint assured tenant of the landlord at the property since 9 September 2020. The property is a one-bedroom flat in an independent living retirement scheme. The resident and her husband occupied another flat within the block from December 2019 before they moved into the property. The residents are both vulnerable due to their age and because they have both had cancer diagnoses. The landlord’s records do not show any vulnerabilities for the household.
  2. In July 2022 some of the residents of the scheme asked the landlord why they were paying “sheltered” support costs when other residents were not. In internal emails dated 26 July 2022 the landlord identified that this was because it had decided in 2019, when supporting people funding was cut, to waive the support charge for existing residents. However, it decided to charge any new residents that moved into the scheme.
  3. It also said that it had discovered that it had not consistently charged new residents. This meant that it was charging some residents who moved in after 2019 for support but was not charging others. The charge at that time was £7.01 per week. The landlord decided to stop charging all residents the support charge with effect from 25 July 2022 while it investigated further.
  4. On 1 February 2023, the resident contacted the landlord. The landlord said it would call her back on 3 February 2023. On 9 February 2023, the landlord completed a customer feedback form on her behalf entitled “new complaint”. This said that the resident was unhappy that it had charged her for support since 2019. She was also unhappy that even though the landlord had stopped charging her for it in July 2022, her direct debit had not been changed so her rent account was now in credit. She said she wanted a refund of the service charge from the start of her original tenancy up until July 2022. The landlord noted that it had “not logged this as a complaint yet.”
  5. The landlord called the resident on 10 February 2023. It explained that it might start to charge all residents in the scheme for the support charge. However, it also noted that it “agreed with the resident that regardless of what is decided with the charge, her and the other residents who paid it previously should receive a backdated refund.” It also arranged to refund the credit on the residents rent account due to the direct debit not having been altered when the service charge was removed in July 2022.
  6. The landlord emailed the resident on 24 February 2023. It apologised that it had not advised her to contact its income team in July 2022 to alter the direct debit for her rent payment. It offered her £150 compensation for this oversight. It also said that it would consider her request for a refund of the support charge from the start of the tenancy and let her know the outcome by 10 March 2023.
  7. The landlord emailed the resident on 14 March 2023. It apologised that it had not responded on 10 March 2023 as promised. It said that it had made an error by not charging all new residents since 2019 for support costs and said that it would correct this error. It said that it had checked her tenancy agreement and found that it said that the weekly charges for the property included a service charge of £7.15 for a “support charge”. It said that as she had received the service it was unable to offer her a refund.
  8. The resident complained again on 15 March 2023. She told the landlord that she had felt rushed when she signed up for the property. She said that it was unfair that it charged some residents for support and not others. The landlord acknowledged receipt of the complaint on 17 March 2023. On 29 March 2023 it advised the resident that it had “taken the decision to extend the complaint response date” and it intended to send the response by 6 April 2023.
  9. The landlord provided a stage 1 complaint response on 26 April 2023. It apologised that she had felt rushed at the property sign up but explained that its procedures had since changed. It said that it had already addressed the issue of the service charge and inserted a copy of the previous email sent on 24 February 2023 into the complaint response. It then repeated what the email had said. It asked her what further action she would like it to take and offered £150 compensation for the delay in providing the stage 1 response.
  10. The resident remained dissatisfied and asked the landlord to escalate the complaint to stage 2 of the complaints process. The landlord acknowledged receipt of the complaint on 5 May 2023 and provided a response on 2 June 2023. It said that it was clear that she had been charged for support since she first moved into the scheme and that her tenancy agreement confirmed that the weekly charges for the property included a service charge of £7.15 for a “support charge”. It said that it encouraged tenants to check their tenancy agreement before signing it.
  11. It said that it had already acknowledged its inconsistency in charging this previously. However, it had rectified this and following consultation it now charged all residents for support. It said that as she had received the service provided, she was not eligible for a refund.

Assessment and findings

Scope of Investigation.

  1. While the Ombudsman can consider how a landlord responds to service charge queries or provides service charge information, actual disputes about the level of service charges are more appropriately considered by the First-tier Tribunal (Property Chamber). The Tribunal has the function of judging disputes over leasehold issues like service charges and can investigate and make orders further than the Ombudsman can. Because of that, in line with paragraph 42.d of the Housing Ombudsman Scheme, this investigation will consider the landlord’s responses to the resident’s queries but will not seek to determine the reasonableness of the service charge costs.
  2. Information has been provided regarding activity that occurred more than 6 months prior to the stage 1 complaint. Any reference to these events is for reference purposes and context only and has not otherwise been considered. Specifically, the landlord’s actions at the sign ups in 2019 and 2020 have not been investigated. This is in accordance with paragraph 42.c of the Housing Ombudsman Scheme.
  3. We cannot assess the extent to which a landlord’s failings have contributed to, or exacerbated, a resident’s physical or mental health, nor can we directly quantify this. However, our awards should recognise that a resident’s circumstances affect the emotional impact that a landlord’s failings have on them. In this case, both residents’ vulnerabilities were aggravating factors in the distress and inconvenience caused by the landlord’s failings and have been considered in our award.

The landlord’s handling of service charges for support.

  1. The resident’s tenancy agreement said that the weekly charges for the property included a service charge of £7.15 for a “support charge”. The resident received services for this and the landlord acted reasonably in charging the resident the weekly support charge.
  2. The landlord did not, however, charge everyone in the block for this service even though all residents received the same support. This Service has seen no evidence that it advised the resident when she moved in that existing residents were not charge for the service. This lack of transparency meant that the resident was surprised when she discovered the anomaly and felt that the landlord was acting unfairly. The landlord’s failure to communicate this effectively caused the resident distress and inconvenience.
  3. The landlord also failed to apply the rule consistently to all new tenants of the block. This error and lack of attention to detail added to the resident’s feelings of unfair treatment, adding to her distress and inconvenience. The landlord could have used its discretion to refund the payments the resident had made from the start of her tenancy until July 2022, however it did not. While we acknowledge the sense of injustice this gave the resident it was reasonable that the landlord considered the wider implications of providing a refund including the costs it had incurred in running the service.
  4. This Service has seen no evidence that the landlord returned the residents call on 3 February 2023. This failure cost her time and trouble because she contacted the landlord again for an answer.
  5. There is evidence that the landlord told the resident verbally that it agreed with her that she should get a refund of the charge from the start of the tenancy. However, this did not happen. The landlord should not have indicated that it thought she could get a refund before it made a final decision. This lack of consistency and mixed message caused her further distress and inconvenience.
  6. The landlord stopped charging everyone in the block in July 2022 while it investigated the situation. This was an appropriate action to take. It did not, however, let the resident know how to change the direct debit for her rent payment. This meant that she overpaid the landlord for several months. This error cost the resident time and trouble because she contacted it again for a resolution. The landlord apologised, refunded the overpayment and also awarded £150 compensation for its error, which were all appropriate actions to take.
  7. The landlord did not take into account the distress and inconvenience and time and trouble caused by:
    1. Its failure to communicate that it did not charge all residents for support costs.
    2. It’s error in not charging all new residents.
    3. Its verbal indication that it thought the service charges should be refunded.
    4. Its lack of response to her phone call.

Therefore, an order has been made for the landlord to pay a further £250 compensation to the resident.

  1. Due to the failings identified there has been maladministration in the landlord’s handling of service charges for support.

The landlord’s handling of the resident’s complaint.

  1. The Housing Ombudsman’s Complaint Handling Code in place at the time (the Code) said that a complaint must be defined as: “an expression of dissatisfaction, however made, about the standard of service, actions or lack of action by the organisation, its own staff, or those acting on its behalf, affecting an individual resident or group of residents”. It goes on to say that “a complaint should be raised when the resident raises dissatisfaction with the response to their service request.”
  2. The resident clearly asked to make a complaint on 9 February 2022, however the landlord decided not to log a complaint at that time. It had already taken action following a previous query and she was still dissatisfied. Therefore, it should have logged a complaint. Its failure to do so caused the resident further distress and inconvenience and cost her time and trouble because she had to raise the complaint again. It also delayed her access to an investigation by this Service.
  3. The Code also said that “landlords must respond to the complaint within 10 working days. Exceptionally, landlords may provide an explanation to the resident containing a clear timeframe for when the response will be received. This should not exceed a further 10 days without good reason. If an extension beyond 20 working days is required to enable the landlord to respond to the complaint fully, this should be agreed by both parties”.
  4. The landlord took 27 working days to respond to the stage 1 complaint. While it informed the resident that there would be a delay and gave a reason for this it failed to update her when it did not meet the second deadline and failed to agree an extension beyond 20 days with her. This failure to follow the Code caused the resident further inconvenience and also further delayed her access to an investigation by this Service.
  5. The Code also said that the complaint handler must “act independently and have an open mind.” However, despite there being a delay in providing a stage 1 response letter, the landlord’s main response to the resident’s service charge complaint was to copy and paste an email that it had already sent her. The complaint handler should have looked at the issues with fresh eyes and responded accordingly. This caused the resident further distress because she had already expressed dissatisfaction with the email.
  6. Within the stage 1 complaint response the landlord also asked the resident what further action she would like it to take. It should have ascertained this as part of its investigation, particularly as it had had an extended period to do this. This failure caused the resident further distress and cost her further time and trouble because she had to escalate the complaint.
  7. The complaint responses showed no empathy about how the landlords handling of the situation would have made the resident feel. Even though it had made the decision not to provide a refund it should have acknowledged how its lack of communication about the charges from the outset and failure to consistently apply the charge to new residents would affect her. Although it acknowledged its errors it did not apologise for them and the effects they would have had on her. The resident advised us that her continued correspondence with the landlord over a prolonged period caused her and her husband to lose sleep at an already difficult time. This failure caused the resident further distress and cost her further time and trouble because she approached this Service for an investigation.
  8. The landlord paid £150 compensation due to its delay in responding to the stage 1 complaint. However, due to the other failures identified an award has been made for a further £250 compensation to be paid.
  9. Due to the failings identified there has been maladministration in the landlord’s handling of the resident’s complaint.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration in respect of the landlord’s:
    1. Handling of service charges for support.
    2. Complaint handling.

Orders

  1. Within 28 days of the date of this report the landlord must:
    1. Pay the resident directly a total of £500 in compensation. This is in addition to any compensation it has already paid. This is broken down as:
      1. £250 for the distress and inconvenience caused by its handling of the service charges.
      2. £250 for the distress, inconvenience, time and trouble caused by its complaint handling failures.
    2. Apologise to the resident. A senior member of staff to apologise to the resident in writing for the failures in this case.
    3. Contact the residents to find out up to date information regarding their vulnerabilities and ensure that it updates its records accordingly.
  2. In accordance with paragraph 54.g of the Housing Ombudsman Scheme, the landlord is to provide the Ombudsman with a review conducted by a senior manager within 12 weeks of the date of this report to ensure:
    1. The wider public interest is addressed by identifying any other independent living schemes where there is a lack of consistency with charging for support charges previously funded by supporting people.
    2. That these inconsistencies in charging are addressed.
  3. The landlord must provide the Ombudsman with evidence of compliance with these orders by the above deadlines.