Aster Communities (202005481)

A picture containing logo

Description automatically generated

REPORT

COMPLAINT 202005481

Aster Communities

11 January 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

The complaint is about:
1. The landlord’s decision to sell the resident a 70% share of its property under the Help to Buy Scheme.
2. The landlord’s sales process and its decision not to buy back the property.
The Ombudsman has also considered the landlord’s handling of the resident’s complaint.

Background and summary of events

Background

The resident has been a Shared Owner, in respect of the property, since 13 March 2020.
The property is a two-bedroom house.
The resident purchased the property along with her partner. All financial checks and affordability assessments were therefore completed for both parties. For ease within this investigation, “the resident” has been used to refer to both owners.

Summary of events

On 24 July 2020 the resident submitted an official complaint. She explained that she wished to complain about the percentage she had been told that she needed to purchase of her Shared Ownership property. She explained that she had been advised that she needed to purchase 70% of the property, however believed that this was unfair as she now wished to sell the property and did not believe that anyone else would be able to afford such a high share. She requested to see the landlord’s calculations to establish why she had been told to pay this share when others had been given the option to pay 30-45%.
On 28 July 2020 the landlord provided the resident with a response under its “Fast Track” process. It explained:
1. Financial assessments were undertaken for all purchases. It noted that the resident had been sent a copy of her original financial assessment.
2. Under government rules for Shared Ownership, buyers were not to use more than 45%, or less than 25%, of their income to pay for the rent, mortgage (where applicable), and service charge for the house they were looking to buy.
3. As the resident was a cash buyer, however, her debt to household income ratio was 17%. The landlord explained that in such cases where the income spent is less than the lower threshold, each case is assessed on its merits. It therefore had to establish whether the purchase was acceptable under the government rules and whether a mortgage could still be viable to enable the resident to buy a bigger share and to increase the level of income used for the purchase. It explained that this was not an option and as such, it was agreed that a 70% cash purchase could be classed as an exceptional circumstance under the government’s rules.
4. It was required to ensure that customers bought the largest share they could afford and subsequently could not sell less than the 70% share to the resident.
On 27 August 2020 the resident wrote to the landlord. She explained:
1. She remained upset that the landlord had chosen to accept her purchase of a 70% share, over those who had shown interest for a smaller share. She stated that the landlord had been keen to complete the sale.
2. She was disappointed with the quality of the property.
3. The landlord had made a promise to buy back the property if she was dissatisfied or if there was a change in circumstance.

The resident therefore requested that the landlord provide a refund. She stated that she no longer considered the property to be a home and did not believe that her interests were considered within the sales process.

On 4 September 2020 the landlord responded to the resident. It advised:
1. Its properties were sold on a “first come, first serve” basis. It explained that if there was another buyer who was ahead of the resident in their application, they would have been offered the property irrespective of the share they sought. It did not prioritise those buying bigger shares.
2. It was not willing to buy back properties except in exceptional circumstances. A buy back option was not standard policy and was not widely offered. Its sales negotiators would not have offered this.
On 9 September 2020 the resident explained to the landlord that staff had advised her that it would have first refusal, should she wish to sell her share of the property. Further comments were made about the condition of the property.
On 20 September 2020 the resident registered a further complaint. She stated:
1. She was disappointed with the quality of the property. She reiterated that she had been verbally advised by the landlord that should she be unhappy, it would buy the property back. She stated that her decision to go ahead with the purchase had been based on this conversation.
2. She remained disappointed that she was asked to buy such a large share. She stated that others would not have been asked to pay this amount and would be unable to afford a 70% share. This made the property unsellable.

The resident also made further comments in relation to the quality of the property.

On 24 September 2020 the landlord confirmed that the resident’s complaint had been escalated to stage one of its complaints process. The Ombudsman can see that the landlord sought to clarify the resident’s complaint points on 28 September 2020 and explained that as her concerns with the quality of the property and the number of defects was being dealt with under a separate complaint, this would not be addressed in its response.
It appears that the landlord spoke with the resident on the phone on the following day. The Ombudsman has not seen notes of this conversation.
A stage one complaint was subsequently provided to the resident on 6 October 2020. Within this, the landlord explained:
1. There appeared to have been some miscommunication or misunderstanding. It did not buy back properties other than in extreme circumstances. It also did not advertise a buy back option. Its sales advisor would have advised of “first refusal” when the resident wished to sell the property, however, which provided the opportunity to have the first chance to find a buyer for the property, as opposed to buying the property for itself.
2. As had been explained, all buyers were required to buy as large a share as they could afford. As a cash buyer, the resident qualified for a 70% share and the assessment had demonstrated that she could comfortably afford to pay the rent. It explained that under the Homes England guidelines, it would not have been able to sell a lower share as this would have made her too affordable in breach of the guidelines.
3. It would not comment on the number of defects as this was being considered under a separate complaint.
On 7 October 2020 the resident expressed that she was unhappy with the outcome of her complaint. Following a telephone call with the landlord on 13 October 2020, it was noted:
1. The resident did not believe that its apology and assertion of a miscommunication was sufficient. Her purchase of the property at 70% share was based on the agreement that the property could be returned to the landlord.
2. The resident felt that the sales advisor had been chasing the money as she had pursued her 70% share offer over other potential buyers who sought to buy a 40% share.
3. The resident had seen little interest in her property from potential buyers. An estate agent had informed that this was as buyers would find it hard to raise the fund to purchase the 70% share.

The landlord noted that the resident subsequently requested that it buy back a 30% share of the property to bring the level down to 40% and improve her chances of selling the property.

On 16 October 2020 the landlord provided the resident with its stage two response. It explained:
1. It could only conclude that the information provided to the resident had been misunderstood as a buy-back option was only ever offered in exceptional circumstances and was not offered to Shared Owners.
2. As a cash buyer, the resident qualified for a 70% share and the affordability assessment demonstrated that the resident could comfortably afford the monthly rent. It reiterated that it would not have been able to sell her a lower share. The landlord clarified that it did not accept the resident’s offer over any other interested parties, but instead operated a “first come, first serve” process. The resident had taken the decision to purchase the property, but had she decided against this, the next person on the list would have been approached irrespective of the size of the share they qualified for.
3. As per the terms of the lease, it had endeavoured to find a buyer for the resident’s share of the property, however had been unsuccessful. The property was subsequently being advertised on the open market at full market value – both the landlord’s 30% and the resident’s 70% share. The buyer therefore did not need to qualify or be eligible for the Shared Ownership scheme as they would buy the property outright. The share of the property purchased therefore did not pose an issue to the sale.
On 16 November 2020 the resident reasserted her earlier points. She added:
1. No financial checks were done.
2. There was a lack of transparency and honesty about the scheme. She did not believe that the landlord looked out for her best interest.
3. There was little time offered to make a decision and to inspect the property before purchasing. She was only allowed 10 minutes.
4. There was a high level of defects and snagging and not all had been resolved.

She therefore sought compensation for the stress and illness caused and to be decanted whilst internal redecorations took place.

The resident was advised by the landlord on 20 November 2020 that her submission, along with its previous investigations, would be assessed at stage three of its complaints process. She would be advised whether a subsequent review was necessary within 10 working days.
The resident chased a response on 4 December 2020. In response to this, the landlord advised that it would offer an update on 7 December 2020.
The Ombudsman can see that the resident chased this again on 10 December 2020.
On 11 December 2020 the landlord explained that it had been unable to complete its assessment within the timescale given. It therefore advised that it would write to the resident once further information was received in the following week, however should the resident wish to go to the Ombudsman Service before this time, it would confirm that the complaints process had been completed.
On 18 December 2020 the landlord provided the resident with its stage three response. It explained:
1. It would not be undertaking a review of the complaint as there was no new evidence to suggest that it should have dealt with matters differently. The outcome would therefore be the same.
2. It could not see that there had been a service failure in the sales process or in how the purchase share was calculated. It apologised that she did not feel the process was transparent.
3. It endeavoured to learn from feedback and therefore would ensure that in the future, the sales team clearly communicated that it would only offer a buy-back option in exceptional circumstances.
4. It had already explained that a financial check had been undertaken in line with the Homes England shared ownership guidelines.
5. It could not comment on how long the viewing actually was, but noted that a longer time period was usually offered. In respect of the time allowed to made a decision on the purchase, it acknowledged that it did ask for a decision reasonably quickly. It highlighted, nonetheless, that the sale was agreed on 25 November 2019, but the exchange did not take place until 4 March 2020, offering time for consideration if she was not happy with the purchase.
6. The defects issue raised was being dealt with under a separate complaint reference.

Assessment and findings

The landlord’s decision to sell the resident a 70% share of its property under the Help to Buy Scheme.

In considering the fairness of the landlord’s decision to sell the resident a 70% share of the property, the Ombudsman has reviewed the guidance published by Homes England (HE) for Shared Ownership homes, provided through the Shared Ownership and Affordable Homes programme 2016 to 2021.
With reference to this, although the resident remained dissatisfied with the landlord’s responses to her complaint, it appears that the landlord acted appropriately and followed the guidance as set out.
Under the HE guidance, providers (such as the landlord) are required to encourage purchasers (such as the resident) to buy the maximum share they can afford. Shares of properties are to be sold flexibly in accordance with the purchaser’s individual circumstance.
What’s more, providers are required to assess the financial position of potential purchasers, to ensure that they are able to sustain the home in the long term. This is done using the affordability calculator provided by HE. The share recommended is subsequently determined by the calculator, which takes into consideration the purchaser’s savings and access to capital.
It was therefore acceptable that where the calculator had established that the resident qualified for a 70% share of the property, while being able to comfortably manage the monthly rent, the landlord encouraged the resident to do so. This was in keeping with the HE guidance and was within the share range that the landlord was allowed to offer (between 25%-75%). The Ombudsman has seen the affordability calculations completed prior to the purchase and is satisfied that this was also considered to be the minimum share that she could purchase to satisfy the HE rules. The resident was sent a copy of this assessment.
The Ombudsman appreciates that in hindsight, the resident may have preferred a lesser share. It was explained, however, that as the resident was a cash buyer, a lower share would have made her too affordable, and therefore ineligible for the Shared Ownership scheme. This was further highlighted by the landlord in its explanation that the HE guidance required purchasers to utilise between 25% – 45% of their household income to cover the rent, mortgage (where applicable), and service charges, however in the resident’s circumstance, her household income utilisation fell below this threshold.
The Ombudsman has also noted the resident’s assertion that other interested parties were given the option to buy a lower share of the property. While this Service has not had sight of any of these offers, as the landlord and the guidance explained, the share proposed would have been determined by the purchaser’s individual circumstance. The Ombudsman would therefore expect to see differences in the share offered to each interested party and that each applicant would be recommended a share based on their individual merits / affordability. The fact that the resident was not offered the property at a 35% -40% share was not evidence of a service failure.
What’s more, the resident asserted that as the landlord had established that she could obtain a 70% share, it prioritised her sale over that of other interested parties. She expressed that the landlord had chased the money and not looked out for her best interest. The Ombudsman is satisfied, however, that the landlord clearly explained that it operated on a “first come, first serve” basis. It did not prioritise those buying bigger shares over others. This was in line with HE guidance which categorically recommends that providers make homes available on a first come, first served basis, providing that Shared Ownership applicants meet the relevant eligibility and affordability criteria. This approach was fair.
While the resident advised that as a result of purchasing such a large share, her prospects of selling the property were limited, this was not an issue which the landlord would have been responsible for, or which it was obligated to consider on the resident’s behalf during the sales process. Such considerations were for the resident to assess in her decision to go ahead with the purchase.
In any case, the Ombudsman notes that the landlord advised it also sought to sell its share of the property – meaning that 100% of the property was available for sale. Given the resident’s concerns that few people hoping to buy the property via the Shared Ownership scheme would be able to afford a 70% share (and therefore making the property unsellable), it was useful that the landlord brought this to the resident’s attention. This highlighted that the property could be sold on the open market, offering a wider pool to advertise the property to and without the restrictions of the scheme.
The Ombudsman has subsequently concluded that the landlord acted reasonably and in accordance with the Shared Ownership guidelines. In the Ombudsman’s view, the landlord offered fair and comprehensive responses to the resident’s complaints and explained why it arrived at the 70% share for the resident. While the resident remained dissatisfied and requested that the landlord buy back a share of the property, the landlord was not obligated to do so. It was therefore acceptable that it declined this.
For completeness, the Ombudsman notes that the resident was dissatisfied with the quality of the property and the number of defects found. It was appropriate, however, that as the matter was already being considered under a separate complaint reference, the landlord made no comments within this complaint. Instead, the landlord advised the resident that the matters would be dealt with under the appropriate reference. This was reasonable.

The landlord’s sales process and its decision not to buy back the property.

The resident suggested that during the sales process, she was only offered 10 minutes to view the property and was required to make her decision on the property quickly. While the landlord has been unable to confirm the length of time provided for viewing, it acknowledged that it did request a prompt decision to confirm her interest in the property.
The Ombudsman accepts that this may not have given the resident the amount of time she would have liked to consider any doubts she may have had, or to be certain about her decision. The Ombudsman cannot overlook the fact, however, that the resident still took the decision to continue with the purchase.
The landlord has also highlighted that while the sale was agreed in November 2019, the exchange did not take place until March 2020. There was subsequently still time, after the viewing process, for the resident to reflect on and/or abandon the sale, if she was dissatisfied with the purchase.
Ultimately, it was the resident’s responsibility to ensure for herself that she was satisfied with the property (in all respects), and to discuss any risks with her solicitor prior to completion. Therefore, while the sales process could have offered her more time, the Ombudsman cannot see that the resident was treated unfairly.
With regards to the resident’s assertion that the landlord had verbally agreed to buy the property back, this matter has been disputed. Despite the resident’s suggestion, the landlord has vehemently claimed that its staff would not have advised the resident of a buy back option, as this was only offered in exceptional circumstances.
The Ombudsman was not present at the time of this conversation. This Service is therefore unable to comment on whether the landlord did or did not make this promise. Due to the significance of this agreement, however, and if the resident’s decision to agree the purchase did indeed rest on this agreement, it would have been reasonable to have obtained this in writing, in the form of a contract. The Ombudsman would have expected the resident to have discussed this with her solicitor and to have taken steps to ensure that this agreement was certified. In the absence of such evidence, the Ombudsman cannot see that the landlord was obligated to buy the property.
The Ombudsman accepts that in the landlord’s complaint response, it advised the resident that this was likely a misunderstanding / miscommunication. This was reasonable as the Ombudsman can see that on 9 September 2020, in an email from the resident to the landlord, she highlighted that she had been advised that the landlord would have first refusal. This was not the same as offering a buy back option.
As the landlord explained, and as set out under the HE guidance, there was an obligation for the resident to offer the home back to the landlord before advertising this on the open market. This was the right to first refusal and gave the landlord the opportunity to find a buyer and/ or to have the first opportunity to accept / decline the property but did not mean that it was obligated to purchase the property for itself. The Ombudsman can see that this was explained to the resident and that the landlord advised that while it had sought a buyer for her, it had been unsuccessful. This was reasonable.
It was also appropriate that the landlord advised that it would take on the resident’s feedback and ensure that its sales team clearly communicated (in future sales) that it would only offer a buy-back option in exceptional circumstances.
In light of the above, the Ombudsman has found no evidence that the property was mis-sold or that there was any maladministration.

The landlord’s handling of the resident’s complaint.

Under the landlord’s complaints policy, where the landlord believes a matter can be dealt with quickly and without investigation, it advises that the landlord will do so under its “Fast Track” service. Given the nature of the resident’s complaint, it was not unreasonable that the landlord did so.
It was also appropriate that upon receiving further complaints, the landlord confirmed that it would formally consider the matter under its complaints process and undertake an investigation. At stage one and stage two, the landlord provided comprehensive responses and within good time.
Upon requesting a review of her complaint, however, in order to exhaust the landlord’s complaints process, the landlord was slow to provide a response. Despite advising the resident that she would be informed whether her complaint would be reviewed within 10 working days, this did not happen.
The landlord’s complaints policy suggests that in the instance the landlord is unable to complete a full response within 10 working days, it will send a written update providing details of the progress and a date when the full response will be provided. This is good practice. It is clear, however, that the resident was only given an update after chasing the landlord and no specific date was offered in which the resident could expect the response. The landlord therefore failed to manage this delay, and the resident’s expectation, in line with its policy. Its stage three response was subsequently offered two weeks later than expected.
While this delay was inappropriate, the Ombudsman cannot see that this would have had a significant adverse impact on the resident. In any case, the Ombudsman has made a recommendation below to ensure that the landlord observes the timeframes and the recommended action set out in its complaints policy, and better manages resident expectations where future complaints are concerned.
It is worth noting that this Service does not consider any complaints process with more than three stages to be acceptable. This prevents complainants from promptly achieving resolution and can also discourage them from pursuing the issue due to the lengths in which they are required to go to. It would be disproportionate, however, to make an order on this basis as the Ombudsman has accepted that the landlord’s responses at each stage were fair. What’s more, the landlord has since updated its complaints policy in line with the Housing Ombudsman Service’s Complaint Handling Code, to provide a more efficient and acceptable complaint handling service.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was:
1. No maladministration in respect of the landlord’s decision to sell the resident a 70% share of its property under the Help to Buy Scheme
2. No maladministration in respect of the landlord’s sales process and its decision not to buy back the property.
3. No maladministration in respect of the landlord’s handling of the resident’s complaint.

Reasons

The above determinations have been concluded as:
1. The Ombudsman has been unable to see that the landlord should have offered the resident a lower share of her property. As the resident’s affordability assessment demonstrated that this was the highest share that she could comfortably afford, it was reasonable that the landlord offered this. The landlord’s approach was in line with the HE guidance.
2. In respect of the alleged buy back agreement, the Ombudsman has been unable to locate any evidence that this was offered. This Service is therefore unable to require the landlord to honour this. The explanation provided by the landlord was reasonable, nonetheless.
3. The Ombudsman is satisfied that while the landlord’s process did not reflect best practice, and the landlord was somewhat delayed in offering its stage three response, it did offer reasonable responses which addressed the matters raised, offered comprehensive explanations, and clarified the landlord’s position. The Ombudsman also notes that the complaints policy / process has since been updated.

Recommendations

The landlord should ensure that when a complaint is made, the timeframes set out under each stage of its complaints process (or which are agreed with the resident) are honoured. Where the landlord is unable to do so, it should make contact with the resident (before the deadline elapses) to explain why it will be unable to meet the deadline and to offer a new timescale in which the resident can expect a response.