Citizen Housing (202003591)

REPORT

COMPLAINT 202003591

Citizen Housing

12 February 2021

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 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:
   1. providing inaccurate information to the resident about the number of years remaining on the lease;
   2. making a decision about which potential buyer to sell the property to;
   3. charging the resident an administration charge;
   4. charging the resident for the survey for the lease extension.

Background and summary of events

Background

2. The resident was a shared owner and the landlord the freeholder of the property which is a semi detached house.
3. The landlord’s complaints policy provides for a two-stage formal complaints process, with an initial quick resolution stage before stage one. This also specifies that when there is no requirement to progress a complaint to the final stage, it should explain this to the resident.
4. The landlord’s leasehold and freeholder management policy confirms that it may charge fees for certain items and it will provide a schedule of fees charged. This also advises that when processing a lease extension, it will instruct a valuer to determine the premium payable for each lease extension if needed.
5. The landlord’s compensation procedure provides for discretionary compensation payments of £10 to £200 for service failures leading to inconvenience.

Summary of events

6. The resident submitted a notice to sell to the landlord, which was signed on 4 November 2019. This included the details of the solicitor he had appointed to handle the sale.
7. It is evident that after this the landlord informed the resident that there was a lease term of 125 remaining, and that the landlord made a decision to approve one of two buyers the resident had found for the property. The landlord retracted this decision on 25 November 2019 when it wrote to the resident to advise that it was happy for the property to be sold to his preferred buyer. The landlord advised that, as the buyer was found through an estate agent, it would charge an administration fee of £175 on completion of the sale.
8. The landlord also emailed the resident to apologise for making the decision on which buyer to proceed with and advised that it would raise this as a complaint because there was a dispute over the administration fees.
9. On 14 January 2020 the landlord and resident exchanged emails and the landlord advised that a lease extension might be necessary for the property as the lease term was 99 years, of which 69 years were remaining. The resident asserted that this was incorrect as the landlord had informed him on 4 November 2019 that the lease term was 125 years.
10. The landlord and resident exchanged further emails on 15 January 2020 in which the resident stated that this new information had affected the ability of his buyers to obtain a mortgage. The landlord advised him that the lease term was information that was openly available to him, and this should have been identified by his solicitors as part of the conveyancing process.
11. Between 17 and 20 January 2020, the resident advised that he wished to extend the lease and corresponded with the landlord to request further details on the timeframe and cost. He requested that it “fast track” the process. The landlord commenced enquires about this on 21 January 2020.
12. In further emails between the landlord and resident between 21 and 24 January 2020, the landlord provided an example of potential costs involved in extending the lease and advised that a survey would be required. The resident contended that he had already undertaken a valuation survey and there was no need for another. The landlord explained to him that this survey was distinct from a valuation survey and was necessary for the extension of the lease and the cost for this would be £360. It further advised that it could not do much to expedite the process.
13. On 28 January 2020, it is evident that the resident paid two amounts of £360 to the landlord. The landlord emailed him that day to confirm that the lease extension was a legal procedure and therefore it could not “fast-track” this, nor could it provide an accurate figure for the cost of the lease extension until the survey had been completed. It confirmed that the example of potential costs it had provided previously could not be used as the figure was speculative.
14. The resident and landlord exchanged emails on 16 and 17 April 2020 in which the resident pressed the landlord to sign the lease extension documents, stating that these had been in its possession for three weeks and had not been returned to him. It advised that due to corona virus restrictions, it was only undertaking critical work and would not instruct staff members to travel to its offices to pick up the documents for the protection of its staff. The resident suggested that the documents could be signed electronically without the need to pick up the physical papers. The landlord replied that it would be considering changes in the future, to allow for electronic submission of such documents but confirmed that it currently could not proceed with the lease extension.
15. The resident raised a stage one complaint with the landlord on 24 April 2020 in which he detailed the following points of dissatisfaction:
    1. On 4 November 2019 he had been inaccurately informed that the lease term was 125 years.
    2. Sometime prior to 25 November 2019 the landlord chose a buyer, “which was not [its] right to do so”.
    3. It had sent him a letter on 25 November 2019 stating that it would charge him £175 for using his own estate agent to find a buyer. The landlord had previously advised it would charge £300 if it marketed the property. He found this to be inconsistent.
    4. When the lease was subsequently found to have only 69 years remaining, the landlord agreed to fast track the lease extension, but he encountered difficulties in obtaining definitive answers about the cost and timescale.
    5. He disputed the need for another survey to be done for the lease extension.
    6. When the resident paid the £360 for the lease extension survey he was charged twice by the landlord.
    7. After the lease extension survey was carried out, on 12 February 2020, he was asked for a further £900 to process the lease extension.
    8. Since then, the landlord had been “not willing” to sign the lease extension.
    9. The resident added that he had encountered difficulties in obtaining responses from the landlord’s staff and had needed to make multiple contacts to obtain responses.
16. After acknowledging the complaint on 27 April 2020, the landlord issued a stage one complaint to the resident on 12 May 2020. In this it acknowledged that it had provided incorrect information about the lease term and apologised for this. The landlord asserted that he should not have solely relied upon this information and his solicitor should have noticed this. Furthermore, the correct lease term was visible on the land registry title.
17. The landlord acknowledged that it had not followed procedure in choosing a buyer for the property and this had been resolved on 25 November 2019.
18. The landlord explained that the administration charge of £300 was for its marketing of the property, and £175 if the resident marketed it himself. In recognition of the “confusion” caused by providing unclear information on this, the landlord agreed to waive this £175 administration charge.
19. The landlord clarified that the leasehold extension procedure could have been completed in early April 2020 if not for the corona virus lockdown restrictions and considered that it had proceeded within reasonable timescales for this. It acknowledged that it had missed an opportunity to keep the resident better informed about the process.
20. The landlord clarified that the £360 payment requested from the resident was for a surveyor to assess the amount payable for extending the lease which was distinct from a valuation survey. It advised that this was in accordance with its statutory obligations to comply with the Leasehold Reform, Housing and Urban Development Act 1993. The landlord acknowledged that it had charged the resident twice for this and had refunded it within a matter of days once it was aware.
21. The landlord advised that it had reviewed communication between itself and the resident and found that it had “generally responded to [his] enquires within two working days or less”. It noted that he had addressed his emails to specific staff members, which it explained could lead to delays when staff were unavailable and therefore requested he direct his correspondence to the team inboxes to enable a more efficient response.
22. The landlord confirmed that it had arranged for lease extension paperwork to be signed that week, with an electronic copy to be sent to the resident’s solicitor by 15 May 2020.
23. The landlord offered compensation of £245, comprised of:
    1. £10 for not setting out the procedure clearly for the sale of the property and extending the lease
    2. £10 for not communicating clearly about the lease extension and costs
    3. £50 for delays in providing the accurate term of the lease
    4. £175 administration cost to be waived.
24. On 13 July 2020 the resident emailed the landlord to escalate his complaint, stating that the offer of compensation was “unacceptable”. He contended that he should never have been charged the £175 administration fee, therefore its offer to waive this was similarly unacceptable. The resident noted that a charge of £96 had appeared on the completion statement which he had not been informed about and therefore disputed this.
25. On 18 July 2020, the landlord’s internal correspondence noted that the resident was not informed about a charge of £96 for its management pack during the sale and therefore decided not to pursue the resident for this.
26. The landlord issued its final response to the resident on 21 July 2020 in which it stated that it found no reason to reinvestigate the complaint and considered its response of 12 May 2020 to be its final response.

Assessment and findings

The complaint about the landlord providing inaccurate information to the resident about the number of years remaining on the lease

27. In the landlord’s stage one complaint response on 12 May 2020 it acknowledged that it had originally provided an incorrect lease term to the resident. While it was reasonable for the landlord to state on 15 January 2020 that confirmation of the lease term was not solely its responsibility, as this information was available to the resident on the land registry, it is still expected  to provide clear and accurate information when asked.
28. It should be clarified that the Ombudsman’s approach to considering compensation, is to consider whether awards of compensation are made in accordance with the landlord’s policy and are proportionate to the level of likely distress and inconvenience caused to the resident. Compensation is not awarded to punish or ‘make an example’ of the landlord; instead it is awarded to recognise the likely detriment caused to the resident by any failures it exhibits.
29. Therefore, there was a failure by the landlord to provide accurate information and it provided £50 compensation for this aspect of service failure specifically. This is a reasonable offer which is in accordance with its compensation procedure above at point 5. This is also in line with the Ombudsman’s remedies guidance where “there has been service failure which had an impact on the complainant but was of short duration and may not have significantly affected the overall outcome for the complainant”.The landlord’s offer of compensation was proportionate to the impact that its failures had on the resident.

The complaint about the landlord making a decision about which potential buyer to sell the property to

30. The landlord acknowledged, in its stage one complaint response of 12 May 2020, that it had not followed procedure in making a decision on which buyer to sell the property to. The landlord acted fairly in acknowledging its failing in this regard.
31. While the landlord has not explicitly awarded compensation for this element of the complaint, it apologised for this failing and offered £10 compensation for not being clear about the procedure for the sale of the property. Considering that this failing appeared to be rectified in the time between 4 and 25 November 2020 and the likely detriment caused to the resident during this time, the award of £10 was in accordance with the landlord’s compensation procedure, above at point 5. When considered as part of the total amount of compensation of £245 (together with the waiving of the £96 management pack fee, above at point 25), which includes its waiving of the £175 administration charge, this award is reasonable and proportionate.

The complaint about the landlord charging the resident an administration charge

32. The landlord’s leasehold and freeholder management policy, above at point 4, confirms that fees are chargeable for certain services, which should be notified to the resident. The landlord has acknowledged that it sent communication to the resident advising for an administration charge of £300. This has not been made available to this Service; however, there is evidence that the landlord advised the resident on 25 November 2019 that an administration charge of £175 would be payable.
33. The landlord has acknowledged that its communication about the administration charge was confusing. Whilst it was appropriate for the landlord to charge the administration charge under the terms of its leaseholder and freeholder management policy (at point 4), it acted reasonably, demonstrating a resolution focused approach, in waiving the £175 charge.

The complaint about the landlord charging the resident for the survey for the lease extension

34. The landlord informed the resident of the reason for the £360 cost of a survey for the lease extension in its correspondence with him between 21 and 24 January 2020. The landlord acted appropriately, in accordance with the provisions of its leaseholder and freeholder management policy (above at point 4) in charging the resident for the survey. Therefore, there is no evidence of any failing by the landlord in this respect.

Determination (decision)

35. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme,  the Ombudsman considers that the landlord has made redress to the resident which, in the Ombudsman’s opinion, resolves the complaint concerning the landlord providing inaccurate information to the resident about the number of years remaining on the lease satisfactorily.
36. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the Ombudsman considers that the landlord has made redress to the resident which, in the Ombudsman’s opinion resolves the complaint concerning the landlord making a decision about which potential buyer to sell the property to satisfactorily.
37. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the Ombudsman considers that the landlord has made redress to the resident which, in the Ombudsman’s opinion resolves the complaint about the landlord charging the resident an administration charge satisfactorily.
38. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of the complaint about the landlord charging the resident for the survey for the lease extension.

Reasons

39. The landlord acknowledged and apologised for its failure to inform the resident of the correct lease term and offered a reasonable and proportionate award of compensation.
40. The landlord acknowledged and apologised for its error in deciding which buyer to sell the property to and the total offer of compensation it offered recognised this failing proportionately and reasonably.
41. The landlord acknowledged that its correspondence may not have been clear and offered to waive its administration charge.
42. The landlord acted appropriately and in accordance with the terms of its polices.

Recommendations

43. Within four weeks of the date of this determination it is recommended that the landlord:
    1. pay the £70 compensation to the resident if it has not already done so.
    2. review its property sale procedures to ensure that clear and appropriate information is provided to residents throughout the process to reduce any confusion or ambiguity.