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NSHG.TenantsVoice.Scrutiny Report. Service Charges – Final Version 1

Tenants Voice Scrutiny Panel

Scrutiny of Service Charges

March 2015

1. Introduction

The TVSP is an independent group of residents who carry out resident-led scrutiny of North Star Housing Group. As part of the current scrutiny, it was decided to focus on Service Charges, and to determine whether these charges were being managed satisfactory and whether they represented Value for Money. It needs to be emphasised that 25% of Endeavour Tenants and 3% of Teesdale Tenants in General Needs properties are liable to pay Service Charges.

2. How we chose Service Charges

We followed the procedures set out in the TVSP’s Scheduling Scrutiny Activities document and also requested suggestions from the Board and Group Senior Management Team.

Our top priority is to scrutinise subjects that affect customer satisfaction and services that appear to be experiencing serious, continuing or systems failure.

A case in point being that Ernie Jones (a former TVSP member) completed a project on Service Charges, which entailed much effort. Tenant Inspectors looked at St Michael’s Court, highlighting poor Ground Maintenance and asked the Tenants to complete a questionnaire. Looking at the complaints and the low level of satisfaction it was decided that Service Charges should be scrutinised.

Looked at General Needs rather than Supported Housing. Supported Housing is much more complex than General Needs; Supported Housing service charges are personal to the tenant and can include extra care services. This approach was agreed between TVSP and staff at the scoping session.


3. How we carried out the scrutiny The TVSP, being an independent group of residents, carry out resident-led scrutiny of North Star Housing Group. We have access to the information we needed to carry out the scrutiny (except certain confidential and legally protected information) and to all the relevant North Star staff. We meet regularly to discuss the project and we used the following methods to carry out this scrutiny exercise:

A presentation by the Head of Finance Interviews with the Head of Finance, Development Officer, Housing

Services Manager, Welfare Benefits Officer, Property Service Manager, and Housing Officers were all carried out

Desktop reviews of the relevant documents and web pages Examination of performance information Discussions with a Tenant about Service Charges Produced a scenario (tree surgery) and asked a Housing Officer to

explain how the process works Reading of key documents of other Housing Associations, e.g.

Southern Housing and a2 Dominion An inspection of the Service Charge communications from NSHG A customer telephone survey carried out by NSHG Customer Service

Team on the TVSP’s behalf

4. How to read this report

This report is designed to be read by Tenants, Staff, Board members and anyone who is interested in North Star Housing Group.

We begin the report with a summary in which we have highlighted our

key findings.

The summary is followed by a set of recommendations, which are set out in tables, numbered and in bold; there are ten of them.

Below each recommendation, we have provided some background so

the reader, can understand the policies, systems, arrangements and staff we are talking about.

Underneath the background we have described the scrutiny methods

we used to help us reach our recommendations.

The final box contains the response from North Star’s Group Senior Management Team to each of our recommendations. If the team disagree with any of our recommendations they explain why in this box, and the Board may decide to call the TVSP and the Group Senior Management Team together for further discussions on a way forward.

We think it is sensible and efficient to let the managers prepare a

response before our report goes to North Star Board. This approach saves time and may sometimes speed up any fixes that may be required. We are completely independent of the Group Senior


Management Team and our main relationship is with the Board. The managers have had no influence over our recommendations.

At the back of the report there is an Action Plan, which shows how the

(management team) will respond to our recommendations; who is responsible, and the timescales.

We will use the Action Plan as a tool to track improvements and to

make sure that North Star carries out its commitments. We will meet with managers for progress reports and we will use our webpage and the tenant newsletters to keep everyone informed of developments.

5. Findings

What Service Charges are and what they could include. How Service Charges are calculated. Tenants are not involved in setting Service Charges. Insufficient information is provided to Tenants who are liable to pay

Service Charges. There is no NSHG documentation specific to Service Charges.

Tenants are not aware of their Service Charge Standards – they only have the main headings (e.g. cleaning – this is not broken down).

Service Charges fluctuate each year – this is not clearly explained to Tenants. The charges are based on the previous year.

Under Welfare Reform there will be Benefit changes which will affect certain payments once Universal Credit is introduced.

Gobart Court in Darlington has an unusual Service Charge for the heating system, which may cause issues with Universal Credit.

There have been issues where there has been a misunderstanding as to what is the tenant’s responsibility and what is the landscaper’s responsibility.

North Star consulted with Tenants at St Cuthbert’s Court to agree service charges. In the beginning, some tenants were unhappy with the change - from a warden to floating support, but we found the Tenants are now happy with this arrangement through surveys and notes of the 1:1s between the Tenant and the support worker.

NSHG have void loss insurance on certain supported properties / schemes. This is because Supported Housing properties can take longer to let, as these lets can be more complicated due to the special needs of the tenants.

There is a 10 or 15% admin cost on Service Charges as set down by the Government. NSHG have a 10% admin charge to General Need’s properties and 15% admin charge to Supported Housing properties. This is higher for Supported Housing due to the special requirements of individual tenants.

When NSHG procure (buy) goods and services, Value for Money is a critical component, looking at both the cost and quality of the service. Later in the year NSHG is going to award a new contract for the Ground Maintenance / Cleaning services.


Tenants are unable to opt out of service charges. This is because the system needs to be fair to all the tenants as they have access to the service.

Currently, there is no easy way for Tenants to challenge Service Charges. They would need to follow the complaints procedure.

The letters that go out to Tenants and the summaries given at sign up are not in great detail. Currently this information does not include the standard of the service charge or any further information on service charges.

The formula from Her Majesty’s Revenue and Customs is used to work out the depreciation of assets. For example the replacement of a carpet in a communal area.

There has not been an internal audit on Service Charges. The legislation on Universal Credit and Service Charges says there

are eligible and ineligible charges. Tenants need an understandable explanation, such as ‘what you can and cannot claim for’.

The results of our telephone survey shows that: 75% were satisfied with the charge they pay for the service. 77% were satisfied with the information and notifications they receive. 77% were satisfied with the service they receive. Satisfied is based on tenants scoring 7 and above on the 1-10 scale.


6. Recommendations Recommendation 1 A double sided A5 leaflet explaining exactly what Service Charges

are and how they are calculated should be produced.

Background Southern Housing document (see appendix 3), includes: Your Service Charge explained Monitoring a service A clarification of service provision Surpluses and deficits How to challenge your Service Charges / or think charges are being

unreasonable How to query your Service Charge How do I pay my Service Charges Is the Service Charge eligible for housing benefit?

TVSP has created an example of this leaflet from a tenant view – see appendix 4 Method

Desktop review – how other Housing Associations manage and communicate their service charges

Senior Management Team response: Agreed. The templates provided by the Panel and work we are already progressing will be combined to provide a North Star Guide to Service Charges document. We will get tenant input into this document before it is finalised. This Guide will be the basis for internal training of staff on Service Charges. We feel that staff training is critical to the embedding of an effective and consistent approach to Service Charges throughout the Group. GSMT/TVSP discussions: Agreed Recommendation 2 Existing Tenant Representatives to be involved from the beginning

with new buildings to discuss the cost of Service Charges.

Background We carried out an interview with Simon Davis, Property Services Manager. Currently, the Development team liaises with the Maintenance team over

the service charges for a new development. There is no tenant involvement in setting these charges.

Method


Interviewing Simon Davis

Senior Management Team response: The development team will share likely service charge information with a tenant representative for our approved 2015/18 development projects which have a service charge element. Not all service charge costs will be defined in detail prior to going on site with the build contracts, however will be refined leading up to project handover. Agreed and happy to share service charge information. GSMT/TVSP discussions: Agreed Recommendation 3 There should be a simple way for tenants to challenge Service

Charges without going through the complaints procedure.

Background Currently tenants have to use the complaints procedure to take up an

issue with a Service Charge. The complaints procedure can take a long time to resolve, which may not be necessary with a Service Charge issue.

Method Desktop review (Southern Housing) and Jane Fowler, Group Financial

Operations Manager interview.

Senior Management Team response: Agreed. When we send out Service Charge statements we do ask customers to refer any queries to the housing contact but we can make this process clearer in our communications. Our Service Charges training will equip our staff with the skills and information access for Service Charges to ensure that challenge and queries are quickly attended to. GSMT/TVSP discussions: Agreed


Recommendation 4 Provide or inform the Tenants they can receive the service level

agreement, which breaks down the Service Charges.

Background Tenants do not know exactly what they are paying for – communication

(letter / summaries etc.) only say ground maintenance / cleaning etc. (the service level agreement needs to be clarified).

It begs the question, how do Tenants know if they are getting the correct service, if they do not know what the service should be?

Method

Talking to Tenants and Housing Officers.

Senior Management Team response: The North Star Guide to Service Charges and the Annual Service Charge Statement will provide details on what tenants are paying for and how the Service Charges will be monitored and managed. GSMT/TVSP discussions: Agreed Recommendation 5

NSHG communications should state that the cost of Service Charges can go up or down. This should also advise tenants that costs include a 10% (General Needs) or 15% (Supported Housing) administration cost.

Background

The current summary sheet / leaflet / letters / Housing Officer communication etc. do not do so.

Method

Looking over current communication to Tenants (summary / letters).

Senior Management Team response: Agreed. We will improve the current presentation of administration costs in the revamped Annual Service Charge Statements. We are trialling improvements to the Statements with tenants at our Gloucester Place scheme and will incorporate these and other improvements into our Service Charge communications with tenants. GSMT/TVSP discussions: Agreed


Recommendation 6

Monitor whether the contracted services are being carried out and hold a diary for the contractor to sign in communal areas.

Background

We discovered that other than estate walkabouts, and possibly the Housing Officer checking, there is no formal monitoring carried out by NSHG.

Method

On checking we found that a Tenant liable for Service Charges has not had their service diary/log completed since 2012.

Speaking to Simon Davis, Property Services Manager and Housing Officer.

Senior Management Team response: Agreed. This approach will also be supplemented with inspections by the Property Services Team and contract monitoring arrangements with individual contractors. GSMT/TVSP discussions: Agreed Recommendation 7

Tenants to be involved in selecting the new contractors for the appropriate services beginning in 2015.

Background

Later in the year NSHG is going to award a new contract for the Ground Maintenance / Cleaning services. There is nothing put in place at this present time for tenants to be involved.

Tenants should be involved to ensure they are receiving Value for Money.

Method

Interview with Simon Davis, Property Services Manager.

Senior Management Team response: Agreed.

GSMT/TVSP discussions: Agreed


Recommendation 8

When NSHG surveys Tenants in new developments, there should be a question added about their satisfaction with the Service Charges.

Background

Currently a customer satisfaction survey is carried out in new developments. However, there are no questions concerning Service Charges.

Method

Interview with Paul Green, Development Officer.

Senior Management Team response: Agreed. GSMT/TV discussions: Agreed Recommendation 9

Although it appears that the majority of tenants surveyed are satisfied, it shows that 25% of them are not satisfied. This feedback needs to be examined and addressed.

Background

As part of this scrutiny exercise, TVSP asked the Customer Service team to carry out a satisfaction survey over a period of 2 months. TVSP designed the survey – see appendix 2.

On average between the 3 questions asked, 25% of the tenants were not satisfied with their service charges. (This is based on tenants scoring 6 and less on the 1-10 scale).

Method

Telephone survey by the Customer Service team.

Senior Management Team response: Agreed. The timing of this Scrutiny Review is excellent as it coincides with learnings we are currently addressing from three service charge related complaints. The core improvement needs we have identified include:

Improved communication. Service Charges training for staff. Improved contract management of Service Charge activities.


We will repeat the Telephone Survey (Appendix 2) to assess the impact on customer satisfaction of our planned improvements. GSMT/TVSP discussions: Agreed

Recommendation 10

Tenants that are affected by the changes to Universal Credit need to understand how they will be affected. The legislation on Universal Credit and Service Charges says there are ‘eligible and ineligible charges’. NSHG should produce an understandable explanation, such as what you can and cannot claim for.

Background

‘Universal Credit Service Charges – guidance for landlords, December 2012’ document.

Gobart Court in Darlington has an unusual Service Charge for the heating system, which may cause issues with Universal Credit.

Method

Interview with Welfare Benefits Officer.

Senior Management Team response: Agreed and we welcome the text on UC provided by the Panel in Appendix 4 of this report. GSMT/TVSP discussions: Agreed


Appendix 1 – List of documents reviewed

Jane Fowler, Group Financial Operations Manager, initial presentation

on Service Charges

Tenant Satisfaction and Complaints information on Service Charges

from 2011/12 – 2013/14

Research by a North Star Housing Group tenant, Ernie Jones, July 5th 2013

A2 Dominion, ‘A Guide to your Rent and Service Charges’

Southern Housing Group, ‘Quick Guide to Service Charges’

A Case Study of St Cuthbert’s Consultation, January 2013

Examples of summary sheets for Service Charges

Examples of letters sent out to tenants

Service Charges, www.gov.uk website

Universal Credit Service Charges – guidance for landlords, December

2012

‘Service Charges’ search on North Star website

Sign up information for tenants

Relevant updates (Service Charges) were received from staff via email

http://www.gov.uk/


Appendix 2 – Results of Telephone Survey

To ask customers paying Service Charges how satisfied they are. The Customer Service team were given a list of Tenants who pay

Service Charges and asked questions on behalf of TVSP. The surveys were carried out over December 2014 and January 2015.

The team tried to call 167 tenants with service charges. The team managed to survey 57 Tenants, chosen at random.

TVSP came up with three questions: On a scale of 1-10 (1 being very dissatisfied and 10 being very satisfied) Question 1: Are you satisfied with the charges you pay for the service?

Question 2: Are you satisfied with the information and notifications you receive (letters, leaflets, increase in charge etc.) concerning the level of the Charges?

2% 0% 5%

4%

7%

7%

5%

7%

33%

30%

1

2

3

4

5

6

7

8

9

10

2% 0%

7% 3%

7% 4%

4%

2%

30%

41%

1

2

3

4

5

6

7

8

9

10


Question 3: Are you satisfied with the service you receive overall?

Although it appears that the majority are satisfied, it shows that 25% of them are not satisfied (this is based on tenants scoring 6 or less on the 1-10 scale). This needs to be examined and addressed.

2% 0%

7% 3%

7% 4% 4%

2%

30%

41%

1

2

3

4

5

6

7

8

9

10


Appendix 3






Appendix 4 – Service Charges Guide (Leaflet from a tenant perspective)



Service Charge Action Plan Recommendation Action Corporate

Objective Lead Officer Target Date Completion

Date 1. A double sided A5 leaflet explaining exactly what Service Charges are and how they are calculated should be produced.

Produce a North Star Guide to Service Charges document.

Sarah James, Head of Finance.

August 2015.

2. Existing Tenant Representatives to be involved from the beginning with new buildings to discuss the cost of Service Charges.

Development Team to provide details of new development projects with a service charge element to a Tenant Representative prior to being handed over into management. This will be an ongoing process however we will provide costs / arrangements on relevant schemes.

Sarah Fawcett, Head of Development.

August 2015.

3. There should be a simple way for tenants to challenge Service Charges without going through the complaints procedure.

Clear signposting of tenants to challenge / query of Service Charges to be included in:

The North Star Guide to Service Charges.

Annual Service Charge Statements.


August 2015.

4. Provide or inform the Tenants they can receive the

Clarity on what tenants are paying for and how Service

Sarah James, Head of

August 2015.


service level agreement, which breaks down the Service Charges.

charges are being monitored will be included in:

The North Star Guide to Service Charges.

Annual Service Charge Statements.

Finance.

5. NSHG communications should state that the cost of Service Charges can go up or down. This should also advise tenants that costs include a 10% (General Needs) or 15% (Supported Housing) administration cost.

To include in: The North Star Guide

to Service Charges. Annual Service

Charge Statements.


August 2015.

6. Monitor whether the contracted services are being carried out and hold a diary for the contractor to sign in communal areas.

Work with tenants, scheme managers and contractors to agree and implement method of monitoring for each scheme as they may prefer a slightly different process. On some schemes it is not possible to hold a diary on site and therefore an alternative method of evidencing contractors have attended may be required i.e. asking a tenant to sign a card.

Simon Davis, Property Services Manager.

Implementation to begin from 5th April 2015 with completion by 31st July 2015.


Regular contract meetings will be held with cleaning and landscaping contractors to measure performance and implement corrective action processes as necessary.

7. Tenants to be involved in selecting the new contractors for the appropriate services beginning in 2015.

Tenants will be invited to provide questions for the Invitation To Tenders (ITT’S) for both cleaning and landscape contracts. Tenants will be also asked for their views on the level of service they wish to be provided (although this is likely to result in a higher level of service charge). To achieve this we will visit each scheme to gather views as this may vary from one scheme to another. Those tenants will also score the submitted tenders and interview contractors.

Simon Davis, Property Services Manager.

Consultation to commence from 5th April with procurement processes to be completed by end September 2015.

8. When NSHG surveys Tenants in new developments, there should be a question

To review the current satisfaction survey and include a question which

Sarah Fawcett, Head of Development.

End April 15.


added about their satisfaction with the Service Charges.

provides data on levels of customer satisfaction with Service Charges.

9. Although it appears that the majority of tenants surveyed are satisfied, it shows that 25% of them are not satisfied. This feedback needs to be examined and addressed.

Customer Services will repeat the telephone survey to allow us to gauge the impact of our improvements on customer satisfaction with Service Charges.

Sara Herrington, Head of Housing & Support.

December 2015.

10. Tenants that are affected by the changes to Universal Credit need to understand how they will be affected. The legislation on Universal Credit and Service Charges says there are ‘eligible and ineligible charges’. NSHG should produce an understandable explanation, such as what you can and cannot claim for.

We will ensure this guidance is included in our North Star Guide to Service Charges.


August 2015.


Acknowledgements The Tenants Voice Tenants Scrutiny Panel would like to thank: Jane Fowler Sally Thomas Paul Green Diane Cosstick Andrea Peacock Simon Davis Alex Newton Customer Service Team Tenants Voice Tenant Scrutiny Panel: Carol Pearson (Chair) Eric Redfearn (Vice Chair) Eileen Bell Barbara Hagan Alf Hannaford Independent mentor to the Tenants Voice: Kevin Farrell, TPAS TVSP would also like to thank Ernie Jones(deceased), for his research on Ground Maintenance Service Charges

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