Watford Community Housing Trust (202207230)

Background

1. The resident has been represented by her father in respect of this complaint. The resident complained about whether a service charge for buildings insurance and audit fees was payable and details on her personal electricity usage. Both the resident and her father signed our representative authorisation form, which advised the resident has learning difficulties. The terms of the resident’s tenancy agreement imply she pays a variable service charge.

What the complaint is about

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

Our decision (determination)

4. We have found that:
   1. There was maladministration by the landlord in response to the resident’s concerns about her service charges.
   2. There was severe maladministration by the landlord in how it handled the complaint.

We have made orders for the landlord to put things right.

Summary of reasons

5. The landlord has failed to show it was permitted to charge the resident for either building insurance or audit fees as these charges do not appear in the tenancy. The landlord also failed to provide evidence that it had provided the resident with sufficient information about her personal electricity costs, which it would have been reasonable for the resident to expect it to do.
6. There were extensive and repeated complaint handling failures by the landlord which resulted in an excessive delay in the resident’s complaint being responded to. The landlord’s failures resulted in significant inconvenience, time and trouble, and frustration for the resident’s representative in trying to progress his daughter’s complaint. The landlord’s failures also resulted in the resident’s representative having to contact us on numerous occasions in order to try and progress the complaint.

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.

Our investigation

The complaint procedure

What we found and why

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.

What we have not investigated

7. We do not investigate complaints about the level of service charge or the amount of the service charge increase. We will also not investigate whether the service or the costs of works themselves are ‘reasonable’ or whether the service or works provide value for money. If the resident wants to pursue her concerns about these matters, she may wish to challenge the charges by applying to the First-tier Tribunal (Property Chamber) or the court. Nothing in our Scheme rules prevents us from considering whether it would be fair in all the circumstances to claim a service charge, however.

What we have investigated

8. When the resident’s representative referred the complaint to us, he highlighted 3 areas that he wanted investigated. These were:
   1. The resident was a tenant and so should not have to pay for insuring the building.
   2. It was not right that the landlord passed the entire cost of auditing its accounts on to residents.
   3. Whilst a key was eventually provided to access the electricity meter, the landlord did not provide the resident with details of what tariff she was on for the personal electricity it charged her for.
9. Building insurance is generally the landlord’s responsibility, because it covers the structure of the property (walls, roof, fixtures, etc.), which the landlord owns. Tenants are usually responsible only for contents insurance for their personal belongings. A landlord can only charge tenants for building insurance if the tenancy agreement explicitly allows it as part of a service charge. The tenancy agreement does not oblige the resident to pay any costs towards buildings insurance.
10. Under the Landlord and Tenant Act 1985, a service charge can include management costs. Audit fees can fall under “management costs”, however only if the tenancy agreement expressly allows for this. As with the building insurance, the resident’s tenancy agreement does not state the resident has to pay towards audit fees.
11. In their responses to the resident’s complaint the landlord’s solicitor stated the building insurance and audit fees charges were legitimate. The landlord’s solicitor sought to justify this by referring to clauses 1(3) and 3(4) of the resident’s tenancy agreement.
    1. Clause 1(3)(i) states that the resident shall pay charges for electricity and water. It does not explicitly state this includes building insurance or audit fees.
    2. Clause 1(3)(ii) states the landlord may, after consulting with the residents affected, increase, add to, remove or reduce, or vary the services provided. However, the landlord provided no evidence that any such consultation took place to introduce a charge for buildings insurance or audit fees.
    3. Clause 3(4) states that the resident agrees to meet all outgoings applied to the premises including water charges and electricity and other costs, whether metered or not.
12. The wording of the agreement should be clear to include any services the landlord is providing and is charging for. Lord Neuberger in Arnold v Britton [2015] UKSC 36 stated that a term cannot “bring within the general words of a service charge clause anything which does not clearly belong there”. It cannot fairly be said that buildings insurance and auditing fees come within the ordinary meaning of electricity or water – especially when referring metering and not premiums or expert’s fees. Moreover, the landlord cannot charge for these without them being fairly listed in the tenancy or introduced at some later point following a fair and proper process to introduce them. Our Scheme rules allow us to decide if a landlord has behaved unfairly, unreasonably or in a heavy-handed manner. It would be unfair, in our view, to charge a resident for items they could not reasonably tell they were responsible for by reading the tenancy agreement.
13. Given the resident’s tenancy does not mention either building insurance or audit fees (explicitly or expressly), and the landlord has provided no evidence of consulting with the resident for these charges to be added, we are not satisfied that a reasonable explanation has been provided for the landlord doing so.
14. With regards to the resident’s electricity charges. Under the Landlord and Tenant Act 1985, charges must be reasonable and transparent. In circumstances, such as in this case, we would expect the landlord to provide clear information about the basis for the charge and to respond to requests for further information. Whilst the Act does not explicitly refer to ‘tariff details’, residents have the right to request evidence of actual costs, and the invoices upon a demand. 
15. In their complaint responses the landlord’s solicitor said that details of the resident’s electricity tariff had been provided as part of the landlord’s consultation programme about tenants taking responsibilities for their own utilities. However, the landlord has provided us with no evidence to support this, and the resident’s representative has advised us that these were never provided.

Taken together the landlord has not shown it has acted fairly in all the circumstances by having a clear term in the tenancy which allows it to demand the charges claimed. For those reasons, we’re asking it to stop claiming the charge and refund what has been paid in respect of the auditing fees and buildings insurance. This is the only fair way to put things right in accordance with paragraph 55 of our Scheme rules.

16. As a member of the Housing Ombudsman Scheme, the landlord was obliged to comply with the Ombudsman’s Complaint Handling Code (‘the Code’) and progress complaints in a timely way.
17. It is open to the landlord to decide not to respond to the resident’s representative due to a lack of authority. It must, however, respond directly to the resident with the complaint responses. If the landlord believed the resident had capacity, it would be entitled to contact her to discuss the complaint.
18. The Code requires the landlord to accept any expression of dissatisfaction as a complaint. In this case, our letter to the landlord on 22 July 2022 gave written notice that the resident, via her representative, was dissatisfied with the matters set out in that letter. As such, the landlord had 5 working days to acknowledge the complaint and then 10 working days to provide a substantive response. However, by 5 August 2022, the landlord had neither acknowledged the complaint nor provided a stage 1 response.
19. Between 5 August 2022 and 22 November 2022 there was extensive correspondence between the resident’s representative, the landlord, its solicitor and us as to whether the resident’s father had the authority to make a formal complaint to the landlord on her behalf.
20. In our correspondence with the resident’s solicitor on 22 November 2022, we confirmed that we were satisfied the landlord had been notified of the complaint that day, and would be required to respond within the timescales set out in the Code. As such, the landlord had 5 working days to acknowledge the complaint and then 10 working days to provide a substantive response.
21. This would mean it should have contacted the resident, or her representative by 29 November 2022 to acknowledge the complaint and to have provided its stage 1 response to them by 13 December 2022. However, instead of providing its response to the resident or her representative, the landlord’s solicitor sent this to us on 7 December 2022. It was not until 30 March 2023, that the landlord’s solicitor provided the resident’s representative with a copy.
22. Following this the resident’s representative continued to contact the landlord and its solicitor as he remained dissatisfied with its response. However, it was not until 1 June 2023, that the landlord acknowledged the resident’s escalation request.
23. Having acknowledged the escalation request on 1 June 2023, the landlord would have been expected to provide its stage 2 response by 29 June 2023. However, by 19 October 2023 this had not been done.
24. This meant that the resident’s representative had to again contact us for assistance. Following this contact we wrote to the landlord on 19 October 2023, to advise that if it had not done so already it was to provide its final response to the complaint by 23 November 2023. Again, it did not do so.
25. A final response was not then sent until 7 December 2023. Again, this was sent to us and not the resident or her representative until 17 January 2024. This was almost 14 months after we had instructed the landlord, on 22 November 2022, that it was obliged to respond to the complaint in accordance with the Code.
26. The complaint handling was poor and despite receiving advice on the Code, the landlord did not follow it in a timely way. This is likely to have caused significant frustration to the resident.

Learning

27. There are two key areas for learning for the landlord in this case, as follows:
    1. Its staff knowing and understanding when it may claim a service charge and when it is fair to do so. In this case, the landlord’s staff failed to recognise the potential unfairness to residents by applying generic terms in a tenancy to allow it to claim specific charges.
    2. Complaint handling in cases where residents may not have capacity. The landlord unreasonably focussed on the resident’s capacity even when it was informed and provided with a copy of a signed complaint form from this Service. The purpose of the Code is to ensure that complaints procedures do not unnecessarily stall and that residents are not left without answers to their complaints for significant periods. The landlord did not meet those aims in this case.