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The Guinness Partnership Limited (202327344)

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REPORT

COMPLAINT 202327344

The Guinness Partnership Limited

30 June 2025

 

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 query regarding:
    1. The obligation to pay service charges, which include a management fee with a 10-15% levy.
    2. Service charges.
    3. Demands for unpaid service charges and ground rent.
    4. The associated complaint.

Background

  1. The resident is a leaseholder of the property. The resident holds a sublease, and the landlord holds the headlease for the property. The resident originally purchased the property as part of a shared ownership scheme but has since ‘staircased’ to 100% ownership. The property is a 2-bedroom flat. The landlord uses a management company to carry out its responsibilities in relation to the block in which the property is located.
  2. The resident pays a service charge, which includes a management charge.
  3. On 4 July 2023, the resident raised a stage 1 complaint. He said:
    1. In January 2017 he completed the purchase of the remaining shares of his leasehold property but was not informed that he had to continue to pay management charges.
    2. He had received final demands for payment of various charges, which were sent directly to him but addressed to the landlord.
    3. The service charge annual statement did not detail what the money had been spent on.
    4. He understood that his landlord held the headlease, but that he was dissatisfied with paying several hundred pounds management fees to his landlord, as they did not directly provide any services to him.
    5. He wanted to pay his service charge directly to the management company and not to the landlord.
  4. On 22 September 2023, the landlord provided its stage 1 response. It:
    1. Acknowledged that the resident raised a complaint on 4 July 2023 and chased a response on 17 July 2023. It apologised for the frustration caused and said that its communication should have been better.
    2. Found that the resident’s leasehold concerns were complex. Solicitors were instructed to provide advice, and it said an update would be provided by 29 September 2023.
    3. Explained that the complaint was upheld and offered £25 compensation for poor complaint handling.
  5. On 12 October 2023, the resident escalated his complaint to stage 2 of the landlord’s complaint process. He said:
    1. An update had not been provided by 29 September 2023. He wanted to understand why his query had been outsourced, when the landlord had its own legal team.
    2. That his lease does not indicate that once 100% of the property is owned by the resident that he must still pay his service and maintenance charge to the landlord along with a management fee of 10-15%.
    3. His neighbour is paying his service charge directly to the management company and wanted to know why they were being treated differently.
    4. £25 for the auditing process is payable, yet he does not receive these records.
    5. His service charge account was in credit, but the landlord had not offered to refund this amount.
  6. On 8 November 2023, the landlord provided its stage 2 response. It:
    1. Apologised that demands for payment were sent directly to him and that the bills were not paid by the due date on these occasions. It said to send them onwards should anymore be received.
    2. Acknowledged the resident’s concerns regarding his obligations to continue to pay service and management charges following his 100% purchase within the staircasing process. However, it was the resident’s solicitor’s responsibility to have advised on the terms of the lease.
    3. Said that it is important to obtain the correct advice with complex enquiries to ensure that the information provided is accurate. This may include consulting with external solicitors when necessary.
    4. Acknowledged that the resident would like to pay the managing agent directly for service and maintenance charges and that he felt he was being treated differently to a neighbour. It declined the resident’s request because it said there is no provision in the lease to end it upon staircasing to 100%. The lease is for an apartment, of which it is the landlord. This is effectively a sublease which is granted from the head lease.
    5. Confirmed that a management fee of 10-15% is charged in addition to the service charge. This charge is a management fee, which covers the internal cost of managing all services and includes administration and staffing costs.
    6. The service charge statement includes an accountant’s report which shows that the accounts are independently audited. A breakdown of the actual costs was provided to the resident on 27 July 2023.
    7. Confirmed that surplus on service charge accounts is added as a credit for the following year. Refunds are not provided. This is in line with policies and procedures.
    8. Partially upheld the complaint for failed promises, poor communication, and for any inconvenience caused when the demands for unpaid ground rent and service charges were received. It apologised for the resident’s overall experience and the distress caused. It offered a further £50 compensation, which comprised of:
      1. £25 for poor communication and failure to provide the update promised in the stage 1 response.
      2. £25 for any inconvenience caused when demands for unpaid ground rent and service charges were received.
  7. On 8 January 2024, the resident requested that we investigate his concerns. He said he remained unhappy because he would like to pay his service and management charge directly to the managing agents. He said that it was not made clear to him that he would have to pay further charges once he had completed the staircasing process to 100%.
  8. On 4 July 2024, the landlord advised that it had completed a case review of the resident’s complaint at stage 1 and 2 and its subsequent responses. It said that it had identified failures in its case handling and apologised for the impact caused to the resident. It said:
    1. It identified a delay in acknowledging and responding to the resident’s stage 1 complaint and that it was not processed according to its policy.
    2. At stage 1, it should have included all the information requested by the resident in its response.
    3. The resident’s stage 2 complaint was escalated on 12 October 2023; however, the complaint was not acknowledged within its 2-working days timescale.
    4. At both stages of the complaint handling, it did not attempt to call the resident to discuss the investigation and outcome. Further, its stage 1 response was posted when it should have been emailed. This is not the correct process according to the policy.
    5. Acknowledged and apologised that there were overall failures in the complaint handling and that the compensation offered did not fully reflect the failures identified. It increased its offer of compensation by £125 to recognise the poor service received with regards to its complaint handling. This amount was in addition to the £25 offered at stage 1 and £50 offered at stage 2.

Assessment and findings

Jurisdiction

  1. What the Ombudsman can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to this service, the Ombudsman must consider all the circumstances of the case, as there are sometimes reasons why a complaint will not be investigated.
  2. Paragraph 42(d) of the Scheme notes as follows:

42. The Ombudsman may not investigate complaints which, in the Ombudsman’s opinion:

a) concern the level of rent or service charge or the amount of the rent or service charge increase.

  1. The resident said that his lease agreement was ambiguous about whether he was obligated to continue to pay service and maintenance charges following the 100% staircasing of the property. He also said that he is unhappy that he pays a management fee of 10-15% to his landlord. The landlord said that it was the resident’s solicitor’s responsibility to advise on the terms of the lease and that service charges are payable even after final staircasing. With regards to the management fee, it said it makes a small charge to cover the internal costs of managing all services, which includes administrative costs and certain staff salaries. The landlord explained that this is set out in the lease.
  2. After carefully considering all the evidence, in accordance with paragraph 42(d) of the Scheme, the complaint about the obligation to pay service charges, which include a management fee with a 10-15% levy is outside of the Ombudsman’s jurisdiction.
  3. The Ombudsman is unable to make a binding determination on whether the level of service charge is reasonable or payable. Such a determination is more appropriate for the First-tier Tribunal (Property Chamber) or a court. The resident has the option to seek further legal advice if this element of the complaint remains a concern.

Scope of investigation

  1. We encourage residents to raise complaints with their landlords at the time the events happened. This is because with the passage of time, evidence may be unavailable, which makes it difficult for a thorough investigation to be carried out and for informed decisions to be made. Taking this into account and the availability and reliability of evidence, the resident has raised further concerns from time the lease was purchased in 2017, which included inaccurate billing, sinking fund deposit, and a historic final demand for unpaid service charges. While we can understand the resident’s frustration, it is not evident these were raised as a formal complaint with the landlord at the time they occurred, nor that these concerns have completed the landlord’s internal complaint procedure. This investigation will instead focus on the time leading up to the resident’s formal complaint.
  2. What we can consider is whether the landlord responded fairly and appropriately to the resident’s queries regarding his service charges and landlord’s communication about the matter and whether this was timely, clear, and accurate. Where we find a failing, we may award compensation or order an apology.

Service charges

  1. The landlord’s service charge policy explains that a service charge is an amount payable by a tenant, leaseholder, or freeholder as part of or in addition to the rent. It is payable directly or indirectly for services, facilities, and the landlord’s cost of managing the provision of those services and facilities. In the case of leasehold homes, the cost of providing services may include a management charge.
  2. The landlord’s service charge policy also states that it will provide residents with service charge estimates at the beginning of each financial year. The annual service charge review letter will include the overall cost of service chargeable items for the estate, scheme, or block. The letter will include how the estimate has been calculated and an annual statement showing where residents money has been spent. Where applicable, it will identify surpluses and deficits that are deducted from, or added to, subsequent charges.
  3. In March 2023 and again within the complaint dated 4 July 2023, the resident requested to pay service charges and ground rent directly to the management company. He also queried why a neighbour is allowed to do this and he is not. The landlord said that this option was previously explored, and the request declined because there is no provision in the shared ownership lease for this. It also noted that it remained the landlord for the property to which the lease applied. Further, it said it could not comment on the lease of another resident. This response was reasonable as it set out its understanding of the lease. It was also reasonable that it did not discuss the arrangements of another property, in line with its data protection obligations.
  4. The landlord’s complaint response included advice that if he remained unhappy then as this is a legal matter, he should seek specialist legal advice. This was appropriate advice in the circumstances.
  5. The resident also requested clarity regarding why the landlord sought legal assistance externally regarding his queries. The landlord explained that it is important to provide the correct information to resident’s complex enquiries. This was a reasonable response from the landlord and explained why it sought external legal advice.
  6. The resident said that he is in credit on his service charge account and has not been offered a refund. The landlord’s service charges leaflet sent to the resident on 25 September 2023 explained that if the end of year statement shows an account is in credit, the credit will be applied to the next year’s charges. It is evident that this is the landlord’s policy. It was reasonable that the landlord provided its position on how service charge credits are handled. Should the resident dispute the legality of this position, he has the option to seek legal advice.
  7. The landlord’s summary of tenants’ rights and obligations document states that a resident has the right, within 6 months of receiving a written summary of costs, to require the landlord to provide reasonable facilities to inspect the accounts, receipts and other documents supporting the summary. It is evident that following the resident’s concerns, the landlord noted that upon the resident’s last request in July 2023, a breakdown of the actuals was provided. The resident said that he had not seen any evidence that the landlord had paid his service charges to the managing agent and had asked for the accounts but had not received them. Given that concerns remain, a recommendation has been made for the landlord to contact the resident to see what further information he would like to inspect or what he considers is missing, as per its policy.
  8. The landlord’s summary of tenants’ rights and obligations document also states that a resident has the right to ask an accountant to carry out an audit of the financial management of the premises to establish the obligations of the landlord and the extent to which the service charges being paid are used efficiently. However, it is noted that a resident should seek independent advice before exercising this right. The resident has told us that he does not believe the accounts are being audited properly. The evidence presented to this service suggests that the accounts are audited independently and a report of factual findings has been presented. As with above, the resident has the option to seek further legal advice should he wish to pursue this concern.
  9. The landlord’s service charge leaflet and landlord’s complaint response details that where a leaseholder does not consider that a service charge is reasonable, they may refer their concerns to the First Tier Property Tribunal (the FTT). 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. It was right for the landlord to provide this information within its communications.
  10. It is clear that the resident feels a degree of frustration regarding the landlord’s policies and procedures around management fees and his experience with regards to the final purchase to 100%. However, overall, the landlord’s response to the resident’s recent queries regarding the service charges are reasonable and appropriate. This is because it has provided clear explanations within the stage 2 complaint response, referred to policy or procedure and provided the correct escalation route for the resident to obtain further support should he remain unsatisfied.

Demands for unpaid service charges and ground rent.

  1. The resident advised that he has received demands for unpaid service charges and ground rent, which were addressed to the landlord. The resident had paid the landlord directly as per terms and conditions of the lease therefore this has caused the resident concern, frustration, and the trouble of having to forward the bills onto the landlord.
  2. Within the stage 2 complaint response the landlord said that on this occasion the bills were not paid by the due date. It apologised and offered the resident £25 for inconvenience caused.
  3. When there are acknowledged failings by a landlord, as is the case here, the Ombudsman will consider whether the redress offered by the landlord had put things right and resolved the resident’s complaint satisfactorily in all the circumstances. In considering this, the Ombudsman considers whether the landlord’s offer of redress was in line with the Ombudsman’s Dispute Resolution Principles of be fair, put things right, and learn from outcomes.
  4. It was right of the landlord to apologise and offer £25 compensation, which was proportionate in the circumstances. While we have found reasonable redress, a recommendation has been made for the landlord to contact the management company to explore the reasons why this has happened and request that future demands for payment are not sent to the resident.

Complaint handling

  1. The landlord operates a 2-stage complaints process. Stage 1 complaints are responded to within 10 working days and stage 2 complaints within 20 working days. The landlord’s complaints policy states that if required, it may take longer to respond but that this time will not exceed 10-working days unless agreed by both parties. The landlord’s complaints policy references the same timescales as the Ombudsman’s Complaint Handling Code (the Code).
  2. On the 4 July 2023, the resident raised his stage 1 complaint. The resident chased a response from his landlord on 17 July 2023 and 3 September 2023. On 22 September 2023 the landlord provided its stage 1 complaint response. It was inappropriate that the resident had to chase a response and that it took 59 days to respond to the resident’s complaint. This is significantly outside of its policy timescale and therefore inappropriate.
  3. The landlord’s stage 1 response lacked clarity, substance, or a resolution in addressing the resident’s complaint. This was a missed opportunity for the landlord to resolve the complaint at the earliest opportunity. It is noted that the landlord apologised for the delay in responding to the complaint and offered £25 compensation. It was right to acknowledge its failings and offer compensation for its poor complaint handling.
  4. On 12 October 2023, the resident raised a stage 2 complaint. He said that within the stage 1 complaint response, he was told an update would be provided and that it had not. The landlord provided its response on 8 November 2023, which was within its 20-day response timescale. It is noted that the stage 2 response had significantly more detail and provided answers to the customers complaint. This was an appropriate and reasonable response. The landlord offered a further £25 for failure to provide the update as promised within the stage 1 response.
  5. On 4 July 2024, the landlord advised us that it had carried out a case review and had revisited its handling of the complaint. It appropriately identified that there had been failings and apologised for its overall poor complaint handling. It acknowledged that its original offer of compensation was inadequate and offered a further £125 in addition to the £50 offered at stage 1 and 2 to recognise the poor service received regarding its complaint handling. The landlord acted fairly by acknowledging its failings and accepting that it had handled the resident’s complaint poorly.
  6. It also identified some learning and implemented changes as a result of the case review. It said a new training programme had been developed for all complaint handlers, it provided new guidance on offering remedies and its complaints policy and procedure is under review.
  7. The amount offered was in the range of sums prescribed in the remedies guidance for situations where there was a failure which may not have significantly affected the overall outcome for the resident but did include distress, inconvenience, time, and trouble. We would have found reasonable redress, but we have to consider that the landlord made its revised offer after its stage 2 final response. It should not take a resident to have to escalate their complaint to this service for a landlord to act. In such circumstances, our outcome guidance is clear that a finding of reasonable redress cannot therefore be determined.
  8. Given the failings identified, a finding of service failure has been made. While the landlord’s offer has not been accepted as reasonable redress, the Ombudsman has made a matching order for £175 compensation for poor complaint handling on the same basis as the issues identified by the landlord in its offer. This effectively replaces the landlord’s offer; however, the landlord may deduct any amount already paid as part of its previous offer.

Determination (decision)

  1. As noted above, in accordance with paragraph 42(d) of the Scheme, the landlord’s response to the resident’s query regarding the obligation to pay service charges, which include a management fee is outside of our jurisdiction to consider.
  2. In accordance with paragraph 52 of the Scheme there was no maladministration in response to the landlord’s response to the resident’s queries regarding service charges.
  3. In accordance with paragraph 52 of the Scheme there was reasonable redress regarding the landlord’s response to the resident’s query regarding the demands for unpaid service charges and ground rent.
  4. In accordance with paragraph 52 of the Scheme there was service failure in the landlord’s response to the resident’s query regarding the associated complaint.

Orders and recommendations

Orders

  1. Within 4 weeks, the landlord must provide evidence that it has:
    1. Apologised to the resident for the failures identified in this report.
    2. Paid the resident £175 compensation as offered post internal complaints process.
  2. Compensation payments should be made directly to the resident and not credited to the resident’s rent or service charge account.

Recommendations

  1. The landlord is to reiterate its offer of £25 in relation to the demands for unpaid service charges and ground rent if this is yet to have been accepted.
  2. Contact the managing agent and establish the reason for the resident being sent the landlord’s demands for payment. Provide the correct contact and address for such bills in the future.
  3. Contact the resident and provide reasonable facilities for him to inspect the accounts, receipts and other documents relating to his service charges.