SETTLEMENT OVER SERVICE CHARGES – Communication Failure
The complaint
The Tenant in a leasehold property had an outstanding balance of £10,562 in service charges.
The Tenant and the property management company came to an agreement surrounding the service charge with a settlement offer for the Tenant to pay 50% of the outstanding balance and the other 50% to be waived. The Tenant paid the reduced fee, requested confirmation of the zero balance, and thought this was the end of the matter. However, despite two further requests for confirmation of a zero balance, the Managing Agent failed to respond.
The Tenant then complained adding that the Managing Agent had also failed to properly inform them of additional service charges that had subsequently been charged.
Investigation
The review does not cover whether the tenant was legally liable for the sums he was asked to pay. This is a matter which can only be determined by a tribunal or in court. The Ombudsman cannot consider whether service charge demands and section 20 notices were served correctly. However, the ombudsman can still consider the adequacy of the property management company.
The managing agent should have communicated clearly and professionally at all times, in accordance with their obligation to provide a service consistent with fairness, integrity and best practice under the TPO General Membership Obligations. They should have conveyed the landlord’s instructions in relation to the dispute over the complaints service charge in clear terms. It would also be expected that they respond to any requests and or communication in a timely manner.
The managing agent said they understood the offer which was made by the tenant was in relation to major works only. They advised that the tenants share of the major works stood in the area of £6,500. However, the tenant believed it was £4,936, in which case the offer of £5,218 could not have been construed as being only against the major works element. Regardless of the balance due, the managing agent gave the clear impression in their email on 12 November that they had accepted the tenants offer of 50% in full and final settlement of the total balance of arrears, and not just the element relating to major works.
The managing agent did not state anywhere on the e-mail that their acceptance was in respect to the major works component only or give any indication that this was the case. The managing agent’s ambiguity in the e-mail lead to confusion further down the line. Had they conveyed the landlord’s position accurately, the tenant would have known there would be some additional charges further down the line.
Furthermore, when the tenant questioned the additional charges in January 2020, the managing agent failed to acknowledge that their communication was unclear. The agent should have acknowledged that they had failed to communicate clearly and apologised.
In addition, the lack of response to the tenant’s e-mails in November & December 2019 requesting a statement showing a zero-balance meant that the tenant believed their debt had been written off. Overall, it was supported that the managing agent’s communication could have been better and that due to their shortcomings it led to unnecessary confusion for the tenant.
Outcome
There was an outcome to the complaint however, this outcome only assessed the adequacy of the agent’s communication. TPO advised that the issue would need to be assessed by the First Tier Tribunal and that TPO’s response about communication is separate to the matter of the tenant’s service charge liability.
The tenant was offered £250 compensation for the aggravation caused by the managing agent’s communication shortcomings. Had the managing agent handled the situation transparently and honestly the complaint would have been unlikely to have come to TPO.
Award: £250