Clarion Housing Association Limited (202112214)

REPORT

COMPLAINT 202112214

Clarion Housing Association Limited

8 March 2023

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 the landlord’s:
1. Handling of the sale of the resident’s interest in her shared ownership property.
2. Response to the resident’s request that it buy back her share of the property.
3. Complaints handling.

Background and summary of events

The resident is the shared owner of the property which is a one bedroom eleventh floor flat in a building managed by the landlord. The landlord is in turn the head leaseholder of the building which is owned by the freeholder. The building is over 18 meters tall. The landlord has no recorded vulnerabilities for the resident.
Advice Note 14 was issued by the Government in December 2018 as part of its Building Safety Programme. In summary the advice was for owners of high-rise leaseholder buildings where the external wall system of the building did not incorporate Aluminium Composite Material (ACM). The advice set out checks which owners could carry out to satisfy themselves, and their leaseholders, that their building was safe.
The Government’s guidance was consolidated in ‘Building Safety Advice for Building Owners’, issued in January 2020. Paragraph 1.4 of this guidance states “for the avoidance of doubt, building owners should follow the steps in this advice as soon as possible to ensure the safety of residents and not await further advice or information to act”. Paragraph 1.5 of the guidance notes that “the need to assess and manage the risk of external fire spread applies to buildings of any height”.
In response to the guidance some lenders took the view that, if certification could not be provided to demonstrate compliance with the Government’s guidance on fire safety, they would be unwilling to offer a mortgage on properties within these buildings as they would have a value of £0.
In January 2020 the Royal Institution of Chartered Surveyors (RICS), The Building Societies Association (BSA), and UK Finance agreed a new industry-wide valuation process to help people buy and sell homes and re-mortgage in buildings above 18 meters (six storeys). Form EWS1 was introduced to prove to lenders that external cladding had been assessed by an expert.
The landlord’s shared ownership buy back policy and procedure says that the policy applies to shared owners who are in severe financial difficulty, have exhausted all other options and require their landlord to buy back a share of their property as a last resort. It is aimed at preventing repossession and the loss of the home. Any decision to buy back a share of a property is purely at the discretion of the landlord.
Paragraph 5.1 of the Ombudsman’s Complaints Handling Code says that landlords must respond to complaints within 10 working days.
Paragraph 5.13 of the Complaints Handling Code says that landlords must respond to a complaint at stage two within 20 working days. Exceptionally, landlords may provide an explanation to the resident containing a clear timeframe for when the response will be received. This should not exceed a further 10 days without good reason.
On 7 June 2018 the landlord wrote to the resident saying that it had been advised by the managing agents that the building had ceramic cladding which was non-combustible.
The resident informed the landlord in June 2020 that she wished to sell the property. The landlord advertised the property on its share to buy website on 25 August 2020 and a prospective buyer reserved the property on 2 October 2020.
The buyer’s surveyor then requested that the resident provide a EWS1 form for the building.
On 7 October 2020 the landlord sent an internal email to its fire team asking for a copy of the EWS1 form for the building.
0n 9 November 2020 the resident sent an email to the landlord asking if, following her telephone call with the landlord on 26 October 2020, it could give her an update on when the EWS1 form would be available.
On 18 November 2020, after speaking to the landlord the resident sent the landlord an email saying that:
1. The landlord had explained that the responsibility to provide the EWS1 form, rested with the freeholder of the building.
2. She had no legal agreement or relationship with the freeholder.
3. The landlord had confirmed that it was chasing the freeholder on a weekly basis to provide the EWS1 form but the landlord could not provide a timeframe for when it would be available.
On 25 November 2020 the landlord sent an email to the managing agents of the building asking it to advise it if it had an EWS1 form for the building, and if not to confirm when one would be available. The managing agent replied on the same day saying it did not think there was an EWS1 form or that one was required by law, however, the freeholder had been looking into it and was speaking with a number of consultants on the best way to obtain one.
The landlord sent an internal email on 25 November 2020 saying that whilst the managing agent was correct that there was no legal requirement to provide the EWS1 form, it wanted its staff member to “please impress upon them the effect that the absence of one has on home owners ability to re-mortgage or sell”.
In November 2020 the resident moved to live with her partner in another part of the country and started a job in February 2021.
On 7 January 2021 the resident sent an email to the landlord asking if there had been any progress regarding the EWS1 form.
On 10 February 2021 the resident sent an email to the landlord asking for an update. The landlord replied the same day saying that it had chased for a response from the managing agents.
On 10 February 2021 the landlord sent an internal email saying that the managing agent had confirmed that the freeholders were “dealing with this directly and have not provided any updates despite being chased. As we don’t have any involvement with the freeholder I’m afraid there is nothing further I can add. Am sure the fire team will pick this up if anything further is needed.”
On 24 March 2021 the landlord sent a further internal email about the resident’s sale asking if there was any update about the EWS1 Form as sale was “on hold due to this.”
On 9 June 2021 the resident sent an email to the landlord making a formal complaint about:
1. The delay in producing an EWS1 form and/or a fire risk assessment.
2. The lack of communication concerning the provision of the EWS1 form.
In her complaint the resident asked that the landlord buy back her share of the property.
The landlord sent the resident its stage one complaint response on 20 July 2021. In its response the landlord:
1. Apologised for the delay in responding to the complaint and offered the resident £50 compensation.
2. Said that the landlord had requested monthly updates from the managing agent for the building regarding the provision of the EWS1 form from the freeholder’s surveyor. The most recent update had been received on 5 July 2021.
3. Said that the requirement for a EWS1 form was at the discretion of the lender. It was not a legal requirement for owners of buildings to obtain one, therefore it was unable to apply any pressure on the managing agents to obtain one.
4. It was committed to supporting residents who wished to sell their homes, and it would continue to request updates from the managing agent.
5. Said that it would not be able to reimburse the resident for the costs she had incurred in relation to the sale of the property and the legal, administrative and marketing costs would still apply.
6. Its buyback policy applied to shared owners who were experiencing financial hardship and wanted to remain in their property. As the resident was wanting to sell the property this was not something it was able to consider at this time.
7. The landlord could consider allowing the resident to sublet the property and if this was something the resident wanted to explore it could provide her with further information on this.
8. It would continue to advise the resident on the situation concerning the EWS1 form and it was sorry to hear of the inconvenience being caused to her.
On 25 July 2021 the resident sent an email to the landlord asking to escalate her complaint. In her escalation request the resident said that:
1. The landlord’s stage one response had not provided a clear roadmap with details about the actions the landlord, the managing agent and freeholder were going to take to provide an EWS1 form.
2. The landlord had not communicated effectively with the resident about providing the EWS1 Form.
3. The landlord had not considered her individual circumstances but had just referred to its buy back policy only applying to people who wished to stay in their property.
4. She didn’t feel that she could sublet the property as she had no experience of being a landlord and she lived and worked far away from the property.
On 25 August 2021 the resident spoke to the landlord who informed her that it would need another 20 working days to provide its stage two complaint response.
The landlord provided its stage two response to the complaint on 4 October 2021, following contact from this Service. In its response the landlord said that:
1. It would pay the resident £25 for the delay in providing its stage two complaint response.
2. Its stage one response had been fair and reasonable.
3. The responsibility for providing the information about the EWS1 form rested with the freeholder and it had passed on her request when asked to do so. It regularly chased the freeholder.
4. As previously advised, any buy back of a property would be dependent on the resident wanting to stay in the property. As this was not the case in the resident’s case it would be unable to explore this further.
5. It could make a contribution towards any costs incurred to date trying to sell the property but it would not be able to waive the costs of the sale entirely. It would not be able to reimburse the costs that accumulated until the sale was completed.
The landlord’s stage two response dated 4 October 2021 was its final response to the complaint, confirming that the complaint had exhausted the landlord’s internal complaints procedure.
The EWS1 form was issued on 13 January 2022.

Assessment and findings

In reaching a decision about the resident’s complaint we consider whether the landlord has kept to the law, followed proper procedure and good practice, and acted in a reasonable way. Our duty is to determine complaints by reference to what is, in this Service’s opinion, fair in all the circumstances of the case.

The landlord’s handling of the sale of the resident’s interest in their shared ownership property

During the course of this investigation the resident has informed this Service that the landlord informed her on 17 February 2022 that the original prospective buyer of the property had withdrawn and no other buyer has been found.
As the landlord is not the freeholder of the building it was unable to obtain certification pursuant to Advice Note 14 itself, the freeholder needed to do this. While the landlord could not obtain form EWS1 itself, the Ombudsman does consider that the landlord had a responsibility in respect of the guidance. This is because the Ombudsman would expect to see pro-active engagement by the landlord with the freeholder regarding its response to the guidance, for its own benefit as a leaseholder, and for its own leaseholders.
The Ombudsman has not seen evidence of the landlord’s discussions with the freeholder, via its managing agents, in respect of the freeholder’s response to Advice Note 14, including compliance with the guidance. The landlord has said that it regularly chased the managing agents for updates. However, the Ombudsman has not seen any update requests sent by the landlord to the managing agents, or any of the updates received. The landlord has informed this Service that some of the updates from the managing agents were received by telephone, however this Service has also not seen copies of any records of the telephone conversations.
This Service has also not seen evidence concerning any contact between the landlord and the freeholder or managing agents prior to 25 November 2020, despite it being widely known by the summer of 2019 that Advice Note 14 compliance was causing issues with mortgage valuations.
Although responsibility for compliance with Advice Note 14 resides with the freeholder, the landlord owns the relationship with the resident and had an obligation to all the residents to ensure it was aware of what the compliance situation was. This was in order to keep itself sufficiently informed so that it could, in turn, keep residents informed. There is no evidence that the landlord has provided any communication to other residents about this issue, and any information that it provided to the resident has been in response to her enquiries.
The landlord’s lack of engagement with the freeholder prior to November 2020, its lack of proactive communication to the residents in the building and its failure to alert the resident to potential issues surrounding mortgage valuations represent maladministration by the landlord.
The Ombudsman has made an order for compensation relating to this aspect of the complaint below.

The landlord’s response to the resident’s request that it buy back her share of the property

The landlord’s decision not to buy back the property was appropriate as:
1. The resident did not fulfil the requirements of the landlord’s buy back policy as the resident wasn’t in severe financial difficulty, at risk of repossession and the loss of the home.
2. The landlord’s buy back policy says that any offer to buy back shares in a property is entirely at the landlord’s discretion.
The landlord also acted reasonably in offering to allow the resident to sublet the property. Whilst the resident has said that she didn’t wish to do this as she had no experience of being a landlord and lived a long way from the property the landlord’s offer demonstrated that it had considered the resident’s individual circumstances that she needed to move and was unable to sell the property.
Therefore, the landlord took reasonable steps to assist the resident and enable her to move out of the property.

The landlord’s complaints handling

The landlord has acknowledged that there were failings in its complaints handling as it apologised for the delay in its response at each stage and offered the resident £50 compensation for the delay at stage one and £25 for the delay at stage two.
The landlord took 29 working days to respond at stage one, 19 working days outside the timescale set out in the Ombudsman’s Complaint Handling code. The sum of £50 compensation, together with the landlord’s apology for the delay, was proportionate to the distress and inconvenience experienced by the resident as a result of the delay in responding at stage one.
However, there was maladministration in the landlord’s response to the resident’s stage two complaint as:
1. The landlord’s took 50 working days to respond to the complaint at stage 2, 30 working days outside the 20 working day timescale set out in the Ombudsman’s Complaint Handling Code.
2. The landlord’s lack of response caused the resident to incur time and trouble in contacting this Service.
3. Despite having told the resident on 25 August 2021 that it would provide its stage two response within 20 working days it did not do so until 4 October 2021, 28 working days later.
4. The delays in responding to the stage two complaint were therefore significant, and the landlord’s offer of £25 compensation was not proportionate to the time and trouble experienced by the resident as a result of the landlord’s complaint handling delays.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration by the landlord in respect of the complaints about its:
1. Handling of the sale of the resident’s interest in their shared ownership property.
2. Complaints handling.
In accordance with paragraph 52 of the Housing Ombudsman Scheme there was no maladministration by the landlord in it response to the resident’s request that it buy back her share of the property.

Reasons

There is no evidence that the landlord was in contact with the freeholder about its response to Advice Note 14 prior to the resident’s request for an EWS1 form in October 2020, or that it alerted the resident to potential issue with mortgage valuations. There is no evidence that the landlord regularly updated residents about the freeholder’s compliance with Advice Note 14.
There was significant delay in the landlord’s complaints handling.
The landlord acted appropriately in deciding not to buy back the resident’s share of the property and the landlord took reasonable steps to assist the resident to enable her to move by allowing her to sublet the property.

Orders

The landlord is ordered within four weeks of the date of this report to pay the resident compensation totalling £500. This is comprised of:
1. £400 for the distress and inconvenient incurred by the resident as a result of the landlord’s handling of the sale of the resident’s interest in their shared ownership property.
2. £100 for the time and trouble incurred by the resident as a result of the landlord’s failures in complaint handling.