Newlon Housing Trust (202125837)

REPORT

COMPLAINT 202125837

Newlon Housing Trust

14 February 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 handling of the resident’s concerns about who is responsible for the cost of making the boiler flue compliant with gas safety regulations.

Background

Legislative Framework

The Gov.uk website on shared ownership homes: ‘buying, improving and selling’ states that the homeowner will need to pay for repairs and maintenance no matter what share they own. They also need to have their boiler serviced every year by an engineer on the Gas Safe Register.
The Gas Safety (Installation and Use) Regulations of 1998 set out to exclude long leases (specified as those lasting over 7 years) from being subject to the landlord’s duties under Regulation 36. If the agreement says the lease is longer than 7 years the duties of a landlord in respect of gas safety checks do not apply.
The lease agreement states that the original term of the lease was for 99 years from January 2010.
The lease agreement also contains the following information:
1. clause 3 (3) states that the leaseholder hereby covenants with the landlord to keep (as well as the other things listed) the gas and electrical apparatus of the Premises and all pipes drains and wires which are in the Premises and are enjoyed or used only for the Premises clean and in good and substantial repair and condition.
2. Clause 24 (d) “to ensure that the electrical installation and any gas installation is maintained in a safe condition”.
The landlord’s leaseholder’s handbook, published on its website states:
1. flats and maisonette’s (page three), “if you live in a flat or maisonette we (landlord) are likely to be the freeholder or the head lessee of the building and will be responsible for repairing and maintaining any shared areas”.
2. flats and maisonette’s (page three), the leaseholder is responsible for any work that needs doing inside the home, including electrical wiring, gas servicing and plumbing work.
3. Repairs maintenance and estate management (page five) the landlord is responsible for the fabric of the building e.g. foundations, brickwork, damp course, roof, drains etc. It is also responsible for repairs to the communal areas of the block.
4. Gas Safety checks (page six) it is the leaseholders responsibility to make sure the gas central heating system is checked every year and serviced, by a gas safe registered engineer.

Summary of events

On 1 July 2013 the resident completed her purchase of her first floor flat. She bought it from the previous leaseholder as opposed to, as a new build from the landlord. It was purchased utilising the shared ownership scheme; the resident owned 30% while the landlord owned the remaining 70%.
In April 2020 the landlord undertook a fire safety review of the block. As part of the fire risk assessment process they asked to inspect the residents boiler.
On 28 April 2020 the landlord wrote to the resident advising her that her boiler flue was not compliant with current gas safety regulations. It explained that “it believed” the original design of the concealed flue, was included in the planning process and when the building was constructed in 2008 it was compliant.
It explained that new legislation introduced in 2010, had now outlawed this flue design in her property. As the flue did not run through any communal areas the landlord had no responsibility to check it.
The landlord also went on to say that responsibility for sharing the details of the changes in legislation with property owners and landlords fell to Gas Safe(formally Corgi) engineers. Gas Safe were formally tasked in 2012, (through their annual gas safety checks), with identifying any non-compliance and notifying the owners and landlords.
The landlord also went on to say that the flue route would have to be changed, and this should have been picked up in the resident’s annual gas safety checks from 2012 onwards. A new boiler would need to be relocated to an outside wall of the property, the cost using the landlord’s retained gas contractor would be relatively low due to other work and equipment on site, at £4,100. The landlord said it would be prepared to cover half this cost, but the offer would be open for three weeks only.
On 13 November 2020, having not received a response from the resident to its correspondence of 28 April 2020, the landlord sent a chase up e-mail.
On 23 November the resident responded, advising she had not received the earlier correspondence and questioned her liability for the cost of the flue. She had purchased the property, as a shared-owner in 2013, after the changes to the legislation, and the non-compliance had not been disclosed to her at purchase.
The landlords response re-iterated its offer to share the cost of the boiler relocation.
The resident emailed back on 16 December 2020, advising that she was not happy with the response, it took three weeks to arrive, she had a gas safety certificate completed 2019 and the reply did not answer her question.
On the resident’s gas safety certificate of 2019, the boiler flue section had been marked by the gas safe engineer as ”non-applicable”.
The landlord replied on 18 December 2020 saying its role in the purchase was to act as agent, “the only duty would have been to disclose any service charge implications and or major works, and whether there were any arrears on the rent account, relating to that property for the rental percentage of equity” The issue of non-compliance should have been picked up by any annual gas service, which is the owner’s responsibility. It also suggested if she has a current certificate she might want to speak to the contractor she used for her gas safety checks about the boiler flue.
On 19 May 2021, the resident submitted a formal complaint, the key issues are summarised below:
1. Why was the “structural issue” (boiler flue) to do with compliance only raised with her last year.
2. It was her understanding that her responsibility was for the internal part of the property and landlord’s responsibility for the structure and fabric of the building.
  1. Why was the flue’s non-compliance raised after the National House Building Corporation (NHBC) cover had expired.
  2. Why did the landlord not do anything to make it compliant.
3. Why when the property was sold to her as non-compliant was she being rushed to make a decision. She explained she had been reaching out to other parties involved in the purchase of her property.
4. If the landlord cannot provide her with the outcome she is looking for could she have more time to take advice.
5. Can the landlord assure her the works proposed would not de-value the property and what is going to happen to the space the original boiler is removed from.
6. The outcomes requested were acknowledgements by the landlord that the property was sold to her with a non-compliant flue, assurances works would not devalue her property and that the landlord cover the full cost or at least 75% of the cost of the works.
The landlord acknowledged the complaint within in its 10 day targeted response time, and in line with its policy advised a further 10 days were required to investigate the complaint.
The landlord’s stage one response was sent out on 22 June 2021, in it the landlord said:
1. Building plans were reviewed in 2020 in relation to external cladding and fire safety, this is when the landlord became aware of the issue.
2. The regulations changed in 2010, as the resident purchased in 2013, the non-compliance issue should have been picked up through the purchasing process, where a gas safety certificate is required.
3. The rush for a decision was because of the urgency of the work required, they had been liaising with the resident for a year.
4. It was not prepared to address the issue of property value.
5. The area from which the original boiler would be moved from would be made good.
6. It would only be prepared to pay 50% of the cost, and not 75% as this was a gesture of goodwill. The landlord has not been responsible for the boiler or gas safety since the regulations changed and it was not its responsibility to check and inform the resident. Leaseholders are responsible for gas safety in their properties.
The resident was not satisfied with the stage one response and escalated it to stage two of the process on 21 July 2021, her reasons for escalation were that:
1. She felt the landlord was passing the responsibility to leaseholders, without adequately reviewing the regulation and legislation and what should have been done. She quoted articles on the issue, prior to 2010 from the NHBC and Housing Safety Executive (HSE), which was also prior to the property becoming leasehold and questioned why it was not picked up as a defect. She did not feel the landlord had adequately explained why they were not liable.
2. She felt it was unfair for her to be financially liable for something that should have been rectified prior to her purchasing the property. Landlords were legally responsible for the gas safety checks. The resident felt the landlord had not considered the property value when coming up with the proposed design.
The landlord provided a stage 2 response on 23 July 2021. It said:
1. When buildings are built, they are required to meet the building regulations at the time of planning consent, which is often in advance of when the building is constructed and subsequently completed. The block adhered to the planning and building regulations at the time, and achieved build sign off in March 2008 as fully compliant. The landlord enclosed a copy with the response.
2. The initial bulletins around this flue design were available as far back as 2007; these though were just general alerts, these would have been followed by industry reviews, which took place over the next couple of years and subsequently followed through with the building regulations update in 2010.
3. The landlord said it could not comment on defects back in 2008-2010, or NHBC as this is a warranty company. If there was a fault during that period, the leaseholder would have had the right to raise it.
4. Although the regulations changed in 2010, they did not take immediate effect. It was not until 2011, that gas engineers were tasked with issuing advice on the matter, via annual gas safety checks. Homeowners and landlords had until the end of 2012 to inspect the full length of the flue and take corrective measures. If corrective action was not taken on any flue by the end of 2012, they could not be issued with a gas safety certificate from January 2013 onwards.
5. The landlord re-iterated that the resident bought her property in 2013. The solicitors should have undertaken relevant enquiries on the property which would have covered the utilities installation. This normally requires confirmation of both the gas and electrical systems certification within the property. If these enquiries were carried out fully, the landlord would have expected the legal team to have flagged the issue then.
6. The landlord accepted its response was delayed and did not meet its published standards on complaint handling. It apologised and awarded £50 compensation for the delay.
The landlord has advised this service that although the time restrictions on their offer to pay half of the associated costs was extended and has since passed, they are still prepared to extend that offer to the resident following the outcome of this investigation.

Assessment and findings

Scope

The Ombudsman requires that residents make a formal complaint within a reasonable period of the matter arising, which is normally within six months. The resident has been advised that this means events which occurred prior to her purchasing the property and whether the defect should have been identified before she purchased the property will not form part of the investigation.
The resident has also previously been advised by this service, that she may wish to seek legal advice or contact The Leaseholder Advisory Service for more information about the landlord’s responsibilities concerning defects prior to her purchase of the property.

Assessment

The resident purchased her first floor flat in 2013. It was purchased through the shared-ownership (SO) scheme, and the resident bought a 30% share of the property.
Government guidelines on repair and home improvements for shared ownership, highlights two key responsibilities for SO homeowners. The homeowner is responsible for repairs and maintenance no matter what share they own. The homeowner needs to have their boiler serviced every year by an engineer on the Gas Safe Register
The lease agreement between the landlord as freeholder for the property and the resident as leaseholder, also sets out that repairing and maintenance responsibility for the individual property falls to the leaseholder. Responsibility for maintenance and repair of the structure, exterior and communal area falls to the landlord.
As the term of the lease between the resident and the landlord exceeds seven years, the landlord is excluded from the responsibility of annual gas safety checks (Gas Safety (Installation and Use) Regulations of 1998). Responsibility therefore lies with the leaseholder; which has been written into the lease agreement and the landlord’s leaseholders handbook.
The resident bought the property from the previous leaseholder and not, directly from the landlord as new build. This means that all repair, maintenance and gas safety, prior to the resident’s purchase was the responsibility of the previous leaseholder and not the landlord.
In 2020 the landlord started a building fire safety review and as part of the review it re-visited the building plans and completed site inspections. Through this review it came to the landlord’s notice that the flue to the boiler in the resident’s property, may no-longer be compliant with the current gas safety regulations.
In response to its findings, the landlord acted responsibly, by quickly arranging an inspection of the resident’s boiler. The landlord’s inspection confirmed that the flue in the resident’s flat served just her property, was concealed and ran through the void space in other leaseholder properties and was therefore non-compliant.
The landlord appropriately wrote to inform the resident straight away to tell her of its findings. In its correspondence it explained that this type of flue was gas safety compliant when the block was built in 2008, but revised gas safety legislation introduced in 2010 had since outlawed this type of flue.
The landlord acted appropriately in putting forward a proposal to rectify the non-compliance which involved replacing the boiler and re-locating it to an outside wall. It acted fairly in securing a reasonable price for the work, taking advantage of its gas engineers and equipment already being on site. It was reasonable for the LL to offer to do the work as it will ensure there is no adverse effect to the exterior of the building, which it has responsibility for. It also proposed, because so few properties were affected as a gesture of good will it would pay 50% of the cost , which was more than fair.
Legislation supports that the landlord has no responsibility for the maintenance or repair of the gas boiler and as the flue did not run through any communal areas, the lease confirms that it has no responsibility for inspection and maintenance of the flue either.
It was understandable for the resident to question their liability for this unexpected cost, particularly as they had not received any gas safety inspection certificate which identified the issue previously.
The landlord’s response to this was timely and appropriate. The landlord re-iterated that it had no responsibility for the boiler or flue, as the property was leased, and the regulations make leaseholders responsible for gas safety checks from the time the lease is issued. This applies if the lease is longer than seven years, which the resident’s lease is. Despite having no responsibility for the boiler and flue, the landlord was more than fair, in extending the offer again, to pay 50% of the cost.
The landlord’s stage two response was appropriate. This is because it re-iterated its argument that it was not liable for the cost of making the flue compliant by explaining that the building was signed off as compliant with all planning and building regulations in place in 2008 and provided the resident with the sign off paperwork. As the gas safety regulations were not effective until 2011-12, the original sign off was valid when the property was leased in January 2010
The landlord also acted reasonably when it tried to explain, the complexity of the building regulatory framework, to give the resident a better understanding. This included explaining that regardless of a building’s completion date, the regulations relevant are those that were in effect at the time of planning consent, which can be a number of years before. The articles from 2007 did not change the gas safety requirements; it explained that, these briefings are usually followed by further debate and industry testing to decide if regulatory change is needed. When regulations do change they are not always effective immediately, the 2010 regulations became effective therefore, between 2011-12.
In relation to the residents’ concerns that the landlord did not consider the impact the remedial works might have on the value of her property. In any investment there is an element of risk, property included. The landlord’s priority is safety and compliance and it is under no obligation to consider the impact of essential works on the resident’s investment.
In regard to the resident’s complaint about not being notified until 2020; the landlord had given a full explanation of why it was not aware of the problem until 2020. The gas safety inspections were the means to identify and rectify any non-compliance of the boiler flue from 2011-12 onwards ( as set out in the 2010 Gas Safety changes). The landlord had no responsibility for the gas safety inspections of the property since the regulation change was effective. The non-compliance came to the landlord’s notice when a fire safety review was carried out on the whole building in 2020.
In its explanation, it was appropriate for the landlord to refer the resident to her purchasing process and her gas safety responsibilities set out in the lease agreement. The conveyancing process is the legal safety net for those purchasing property. The landlord’s position that this should have been identified and raised with the resident by her legal team or surveyor through this process is not unreasonable. The landlord set out in its response that its role was as agent only in this process, which has very specific duties, that do not relate to compliance.
It was also appropriate for the landlord to suggest in its response, that it could also have also been picked up in the annual gas safety checks; as Gas Safe engineers have been tasked with the responsibility of identifying non-compliance and notifying homeowners and landlords since 2011.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration by the landlord in respect of, its handling of the residents’ concerns about who is responsible for the cost of making the boiler flue compliant with gas safety regulations.

Reasons

Whilst the Ombudsman recognises the position the resident finds herself in, with the unexpected cost of relocating a non-compliant boiler and flue. The Ombudsman has found no failure by the landlord in its handling of this issue.
The landlord provided an explanation of how the property was compliant with the relevant building and safety regulations at the time it was leased, and provided the relevant evidence.
Current legislation, the lease agreement and leaseholders handbook all confirm that the landlord has no responsibility for gas safety inspections, the boiler or the flue. The gas safety inspections were the route for identifying non-compliance. As the landlord was not responsible for these inspections, it could not have been aware of the non-compliance issue in this property, brought about by the gas safety regulation changes in 2010 (effective 2011-12).
The landlord explained it only became aware in 2020, when it looked at other fire safety aspects of the building. Since that time the landlord has kept the resident informed, proposed a solution and offered to pay half of the cost when there was no requirement for it to do so.

Recommendations

The landlord, honours its continued offer to pay 50% of the costs in making the boiler and flue compliant with current gas safety regulations. We would ask the landlord, to confirm within the next three weeks, that it has contacted the resident to progress the offer.