Thames Valley Housing Association Limited (202106528)

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REPORT

COMPLAINT 202106528

Thames Valley Housing Association Limited

10 October 2022


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 response to the resident’s reports about:
    1. The increase in service charges for the property.
    2. The time taken to deliver and the information contained within the landlord’s service charge invoices.
    3. The landlord’s handling of the option for a ‘deed of covenant’ to transfer the service charge payments directly to the management company.
    4. The landlord’s communication and complaints handling.

Background

  1. The resident is a leaseholder, owning 100% of property, having initially purchased it through a shared ownership scheme in 2015.  The landlord is the head leaseholder, not freeholder.  The service charges are paid partially to the landlord and partially to a management agent.
  2. Residents that have purchased 100% share of their property are eligible to apply for a deed of covenant, which will entail that service charges are only payable to the management agent and not the landlord.
  3. The resident complained about the increase in service charges, the delay in providing information pertaining to service charges and the lack of breakdown of service charge costs.  She also complained about the landlord’s handling of her request for information regarding the deed of covenant, which would enable her to ‘divorce’ the landlord in respect of service charge payments.  Additionally, the resident complained about the landlord’s communication, namely, its lack of response to her queries, errors made in the information it provided and its handling of the complaint.
  4. The landlord upheld the complaint in its stage two response, finding that there was service failure in respect of its complaints handling, for which it offered £25 compensation.  The landlord acknowledged also, that it had made mistakes in some of the information it had provided pertaining to service charges and ground rent, that letters were sent to the resident in error and that its communication could have been better, for which it offered a further £125 compensation.  
  5. The landlord explained it had made changes to its procedures to help prevent a recurrence of the issue of letters being sent to the resident in error and that it was trying to facilitate a direct relationship between the freeholder and resident. In terms of the service charge amounts, it explained that its accounting year was different from the management agent’s accounting year, which led to it having to make estimates as to service charges for the following year before receiving the actual charges of the previous year. It further explained that any adjustments made, were then done at a later date.
  6. The resident remains dissatisfied with the landlord’s response.  She does not believe the compensation amount offered reflects the extent of its failures, nor that it has properly addressed the points raised in her complaint.

Scope and jurisdiction of investigation

Increase in service charges

  1. The resident is dissatisfied by the increase in service charges, which she states increased by 150% in the period between 2015 when she purchased the property and the point that she brought her complaint to the Ombudsman.  The issue of increases in service charges has been exacerbated, in the resident’s view , by wheat she believes to have been insufficient detail in relation to what the service charges are precisely for.  The resident expressed the impact of the situation on her, besides the financial, being that the level of service charges negatively impacted on the ability to sell the property.
  2. The issue concerning the level of detail provided by the landlord in respect of the service charges is addressed in the section below, with the increase itself, addressed here.  The Ombudsman is unable to make a finding on the level of increase of service charges, as set out in the Housing Ombudsman Scheme, which states at paragraph 42(e) that “The Ombudsman will not investigate complaints which, in its opinion, concern the level of rent or service charge or the amount of the rent or service charge increase”.
  3. The matter of increase of service charges, including proportionality of cost to services received and other comparable and differently constituted blocks is therefore outside of the Ombudsman’s jurisdiction to consider. The appropriate route to pursue matters concerning the level or increase of service charges, is to take the matter to the First Tier Tribunal (Property Chamber). 

Service charge information

  1. The resident is dissatisfied with the breakdown of service charges provided by the landlord, deeming the detail to be insufficient to enable her to establish what her money is being spent on.  Whilst the resident is dissatisfied by the overall increase in service charges, this is further frustrated by what the resident believes is a lack of granularity around expenditure and therefore, lack of transparency over spending, which in turn, undermines trust.
  2. Whilst the matter of level of detail is one that can be determined by the Housing Ombudsman Service in its own right, in this case, the issue is intrinsically linked to that of the level of increase in service charges overall.  Each inherently affects the other. When considering different aspects of a complaint, the Ombudsman must consider the matters both individually and in the round, taking as fair and pragmatic approach as possible, which includes deciding whether a complaint falls within its jurisdiction, or would be better dealt with elsewhere, or as part of a wider complaint.
  3. Having carefully considered all of the circumstances in this case, it is the Ombudsman’s decision that the aspect of the complaint concerning the level of detail of service charge expenditure is out of the jurisdiction of this Service. This is because the matter is one that is part of the overarching complaint about the increase in service charges. In consideration of the complaint about the level and increase of service charges, the First Tier Tribunal (Property Chamber) would naturally need to consider the breakdown in service charges and expenditure as part of assessing reasonableness.  In doing so it would also be able to assess – and be better placed at this juncture – the level of detail provided alongside this, as part of the wider case. 
  4. Whilst this is likely to be a disappointing outcome for the resident, the Ombudsman arrives at this decision having carefully considered the different facets of the complaint and the wider circumstances.  It follows that the most appropriate route for this aspect of the complaint, is the First Tier Tribunal (Property Chamber) which is in accordance with paragraph 42(g) which states “The Ombudsman will not investigate complaints which, in its opinion, concern matters where the Ombudsman considers it quicker, fairer, more reasonable or more effective, to seek a remedy through the courts, other tribunal or procedure”.

Assessment and findings

Deed of covenant

  1. The resident considers that the landlord withheld information pertaining to the ‘deed of covenant’, which when exercised, would enable her to sever ties with the landlord in respect of payment of service charges.  She is of the view that the landlord obscured and made difficult this possibility and the process surrounding it, in order to continue to obtain a financial benefit. The resident states she discovered that other residents paying their service charges to the management agent only, and not the management agent and landlord, paid a lower overall charge.
  2. From the documentation made available to this investigation, it is not clear what information the landlord provided to the resident or when, concerning the possibility of obtaining a ‘deed of covenant’. Neither is there information as to the application process surrounding this and eligibility – the resident states that this is an option once a 100% of the share of the property is owned, although this, nor other information pertaining to this, is provided.
  3. The landlord acknowledges in its response to the complaint, however, that it is pursuing the option of a direct freeholder-resident chain of communication, although uses the term “residents” rather than addresses this particular resident’s dissatisfaction directly.  The landlord’s response is vague, providing no information as to direct steps it is taking or timeframes within which the resident can expect to hear.  The landlord was constrained by the freeholder’s actions including the time taken for them to respond; however, its response to the complaint did not seek to manage expectations as the Ombudsman would expect. For example, there is no evidence of it indicating when the resident might be provided with an update.
  4. Moreover, detail concerning the issue of obtaining a ‘deed of covenant’ is not mentioned explicitly by the landlord. Instead, the pursual of a direct freeholder-resident relationship is mentioned, which was confusing and unclear.  The lack of information and vagueness of information provided at this juncture was inappropriate because it left the matter unaddressed and the resident consequently frustrated and disempowered. Although the matter was a complex and legal one, it was the responsibility of the landlord to understand and navigate these difficulties, making sense of them and conveying them to the resident as appropriate, which it did not seek to do.
  5. In addition to the exasperation of the resident, due to the landlord’s handling of this issue, there was another very real impact, which was that the resident was unable to explain to potential buyers of the property the situation concerning service charges in the longer term, given that she had no answer to this herself.  The resident has said that the cost and uncertainty around service charges contributed to her being unable to sell the property for a protracted period of time, which also understandably caused her a level of stress.  Whilst the Ombudsman cannot assess detriment and award damages in the way that a court can, this Service can assess the landlord’s response to an issue raised or complaint made by a resident.  This includes demonstration of its consideration of impact of an issue on the resident, such as an expression of an appreciation of this, or empathy offered. This opportunity was missed by the landlord, which undoubtedly contributed to the breakdown of the landlord-resident relationship.

Communication and complaint handling

  1. The landlord’s complaint handling was poor, as appropriately acknowledged by it its stage two response to the complaint. In terms of mistakes made in its communication with the resident in February 2021, the landlord explained that there were errors in its spreadsheets, which is why incorrect figures had been stated.  The landlord appropriately explained what it had done to help prevent a recurrence, which was to change its sign-off procedures.  Part of responding to a complaint and putting things right, includes demonstrating that the matter has been taken seriously and one way of doing this is to inform the resident of any improvements to procedures made in order to stop the same error from being repeated.  The landlord appropriately did this, although its explanation was vague.
  2. Similarly, the landlord appropriately recognised a further error that had been brought to its attention in respect of the amount of ground rent it advised the resident that she owed and said it would be investigating this error further and rectifying matters.  In addition to this, it acknowledged the resident had erroneously been sent letters from the management agent chasing monies which she should not have and that this had been “picked up and dealt with”. While again, appropriately acknowledging this error, the landlord did not go far enough in explaining why the error had occurred, or what had been done to prevent a recurrence.  In order to prevent an error from happening again, there must first be an understanding as to what went wrong and why and this was absent from the complaint response.
  3. The landlord failed to acknowledge the other historic errors stated by the resident, or the impact of these errors on her– they were not insignificant, but rather, errors which demanded monies which were not owed; a daunting and anxiety inducing prospect.  Nor did it fully resolve this aspect of the complaint; its reference to further investigating how the error occurred with the ground rent amount for example, should have been carried out during the investigation of the complaint and the findings included in its response, not thereafter.
  4. Communication by the landlord was lacking in other ways including in respect of its lack of communication with the resident and lack of acknowledgement of her contact with it, when she chased it as to the issues set out in this report.  The landlord’s recognition of its failings here led to it stating that it would “keep residents informed of progress and updated timelines” in respect of the issues concerning the ‘deed of covenant’, which is again, a generalist and vague approach which does not specifically address the issues set out by the resident. The lack of specific information or timelines again mean that expectations were not managed and the matter remained unresolved.
  5. Turning more specifically to the landlord’s response to the complaint in terms of procedure, the stage one complaint was delivered late, 20 working days from the day that the complaint was made, set against a 10-working day timeframe in its complaints policy. This was appropriately acknowledged by the landlord, with £25 compensation offered in recognition of this.  The landlord’s compensation matrix sets out levels of compensation commensurate with the severity of the issue and service failure and this starts at £50, however.
  6. The further £125 compensation offered in recognition of communication failures, namely, errors and delay was appropriate given its findings.  The landlord missed an opportunity, however, to award compensation for the stress and inconvenience caused, as well as in recognition of the resident’s time and trouble in pursuing the matters, which its compensation policy enables it to do. This would have been reasonable given the failings noted.
  7. Moreover, the compensation alone did not go far enough to satisfactorily resolve the complaint.  The responses to some of the resident’s queries were vague and adopted a generalist rather than resident-specific approach, some of which was repeated from general correspondence which had been sent out to all residents. This only served to frustrate the situation.
  8. Expectations were not managed with the landlord stating it would undertake further investigations into the error made with the communication around the ground rent and reimbursement required, however no timeframe was provided and the investigation was yet to be undertaken.  Similarly, it said it would get in touch regarding the ‘deed of covenant’ and would attempt to facilitate a direct relationship for residents and freeholders but this gave no detail or timeframe and was a general, rather than tailored response, which was an inappropriate way to respond to and seek to resolve a complaint.

Determination

  1. In accordance with paragraph 42(e) of the Housing Ombudsman Scheme, the complaint about the increase in service charges is out of the jurisdiction of the Housing Ombudsman.
  2. In accordance with paragraph 42(g) of the Housing Ombudsman Scheme, the complaint about the time taken for the landlord to deliver, and the information contained within the service charge invoices, is outside the jurisdiction of the Housing Ombudsman.
  3. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord, in respect of the issue concerning the deed of covenant.
  4. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure by the landlord, in respect of its communication and complaint handing.

Orders

  1. Within 28 days of the date of this report, the landlord to pay the resident £225 compensation, comprised of:
    1. £125 for the service failures found in its communication;
    2. £50 for the service failure found in its complaints handling, and;
    3. £50 for the stress and inconvenience caused and the resident’s time and trouble.
    4. This compensation is the total amount and not in addition to any compensation previously accepted and paid.
  2. Within 28 days of the date of this report, the landlord to fully explain the situation to the resident concerning:
    1. The ‘deed of covenant’ and the procedures around this, and;
    2. The possibility of direct freeholder-resident contact.