Notting Hill Genesis (NHG) (202215504)

REPORT

COMPLAINT 202215504

Notting Hill Genesis (NHG)

16 May 2024

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. Response to the resident’s queries regarding the reasonableness of service charges paid.
2. Response to the resident’s concerns about internal fire compartmentation in the building.
3. Handling of the resident’s concerns about the delays to cladding remediation works.
This investigation also considers the landlord’s complaint handling.

Jurisdiction

What the Ombudsman can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to this service, the Ombudsman must consider all the circumstances of the case, as there are sometimes reasons why a complaint will not be investigated.
After carefully considering all the evidence, in accordance with paragraph 42(e) and 42(a) of the Housing Ombudsman Scheme, the following complaints are outside of the Ombudsman’s jurisdiction:
1. The landlord’s response to the resident’s queries regarding the reasonableness of service charges paid.
2. The landlord’s response to the resident’s concerns about internal fire compartmentation in the building.

Reasonableness of service charges paid

In his correspondence to the Ombudsman, the resident has complained about the level of service charge that is payable. He says that the landlord has charged residents unreasonably high amounts for the services provided. While the resident’s concerns are noted, the evidence provided to this Service demonstrates that the landlord’s handling of service charges has been the subject of proceedings at the First Tier Tribunal (Property Chamber) in January 2024 which made a legally binding determination.
Under paragraph 42(e) of the Scheme, the Ombudsman may not consider complaints in which in the Ombudsman’s opinion concern matters where a complainant has or had the opportunity to raise the subject matter of the complaint as part of legal proceedings. It follows that the resident had reasonable opportunity to raise his concerns as part of the proceedings in January 2024. This complaint therefore falls outside of the Ombudsman’s jurisdiction.

Internal fire compartmentation

When the resident initially complained to the landlord, he expressed concern about whether the walls in his property met fire compartmentation regulations. The landlord provided a response at stage 1 of its procedure. The resident, however, did not express further concern or ask for this element of the complaint to be escalated. As such, his complaint about internal fire compartmentation has not exhausted the landlord’s complaints procedure.
Paragraph 42(a) of the Scheme states that the Ombudsman may not consider complaints which, in the Ombudsman’s opinion are made prior to having exhausted a member’s complaints procedure, unless there is evidence of a complaint-handling failure and the Ombudsman is satisfied that the member has not taken action within a reasonable timescale.
Based on the evidence, there is nothing to suggest that the resident escalated his concerns. There is no evidence of a complaint handling failure by the landlord either. It follows that this complaint also falls outside of the Ombudsman’s jurisdiction. If the resident remains unhappy with the landlord’s handling of his concerns regarding internal fire compartmentation, he may wish to escalate his complaint to stage 2 of the landlord’s internal process. If he remains dissatisfied after the landlord has had the opportunity to consider the issue at stage 2, the resident can escalate the complaint to this Service.

Background and summary of events

Background

The resident is a shared owner of a 2-bed flat which is situated within a 10-storey block of similar properties. The landlord is the freeholder of the building.
The building was constructed in 2012 and the resident has lived there since its completion.
In 2019 the landlord identified combustible material in the cladding and insulation of the block and this was removed by the original contractor. In 2021 work began on replacing the cladding.
In November 2022 the resident made a formal complaint to the landlord. The landlord provided a stage 1 complaint response in December 2022 and, following the resident’s escalation request, also provided a stage 2 complaint response in December 2022.
The resident remained dissatisfied with the landlord’s response and escalated his complaint to this Service. His complaint was duly made on 1 March 2023.
On 21 March 2023 the landlord made the resident an offer of compensation.
The cladding remediation works to the block continue at the date of this report and an EWS1 certificate has not yet been issued.

Cladding guidance

Following the tragic events of the Grenfell fire in June 2017, the government issued ‘Advice Note 14’ as part of its building safety programme in December 2018. This set out expectations on owners of buildings of over 18 metres in height where the external wall system of the building did not contain aluminium composite material (ACM). The advice outlined checks which owners could carry out to satisfy themselves, and their leaseholders, that the building was safe.
In January 2020 this guidance was consolidated in ‘Building Safety Advice for Building Owners’. 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”.
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 (6 storeys). Form EWS1 was introduced to prove to lenders that external cladding had been assessed by an expert.
In March 2021 the RICS issued new proposed guidance which sought to remove the need for an EWS1 form for buildings taller than 18m with no cladding, as well as buildings of under 6 storeys with less than a quarter of the external wall covered in non-metal composite cladding. The guidance came into force on 5 April 2021.
The Building Safety Act came into force on 28 April 2022. The Act offers protections to qualifying leaseholders from the cost of works to resolve historical building safety defects.

Landlord policy and procedure

The landlord is responsible under the terms of the lease for the maintenance and repair of the structure of the block which includes the external walls.
The landlord operates a 2 stage complaints process. It aims to respond to stage 1 complaints within 10 working days and stage 2 complaints within 20 working days.

Summary of events prior to the period of investigation

The cladding and insulation on the building was identified as containing combustible materials and was removed in 2019. Remediation works to install replacement cladding and rectify fire safety issues started in January 2021.
The landlord met with its contractor monthly from January 2021. This Service has been provided with minutes from these meetings. From July 2021 the contractor also provided the landlord with monthly progress reports.
In November 2021 the landlord began issuing monthly newsletters to residents in the block. These included a standing update on the cladding works.
The landlord has stated that it has held quarterly engagement meetings with residents of the block along with 6-weekly building safety meetings. It has provided this Service with minutes from several of these meetings.

Summary of events during the period of investigation

The resident made a formal complaint on 22 November 2022. He said:
1. Works to replace the cladding on the building started in January 2019 and were still incomplete.
2. Every provisional completion date provided to residents had been missed.
3. His psychological wellbeing was suffering.
4. As the cladding had been removed residents were experiencing extreme heat in the summer and cold in the winter.
5. The sound from daily drilling was impacting on his studying.
The landlord provided its stage 1 complaint response on 1 December 2022. It said:
1. It apologised for the delay between the removal of the cladding in 2019 and the start of the remediation works in 2021.
2. The delay was caused by the “changing compliance and regulation environment”.
3. Throughout 2021 and 2022 it had established a building safety team and increased resources in this area.
4. It continued to negotiate with the contractor to “accelerate” its programme of works.
5. It had also negotiated with a banking group to “commence lending on the site”.
6. It acknowledged that the works were causing a disturbance and had created a “dedicated ‘working from home’ space” in its reception area. The area was quieter and free wi-fi was provided.
7. It disagreed that there had been a lack of accountability in the management of the estate.
8. Engagement sessions were held every quarter and building safety meetings were held 6-weekly.
The resident asked the landlord to escalate his complaint to stage 2 of the complaints process on 2 December 2022.
The resident’s local MP wrote to the landlord on 11 December 2022 and asked it to provide information regarding the resident’s concerns about the cladding and other issues not considered by this report.
The landlord provided its stage 2 complaint response on 15 December 2022.It said:
1. It believed its stage 1 response appropriately addressed the resident’s concerns and its position had not changed.
2. It would continue to deliver the cladding remediation project to the agreed programme and keep residents updated.
3. It was working to establish the appropriate compensation to offer residents.
4. The purpose of the building safety meetings was to update residents on the project. They were an opportunity for residents to raise their concerns and the landlord had acted on those raised. It provided several examples.
The landlord responded to the resident’s MP on 4 January 2023 in response to an email they had sent. It stated:
1. Negotiations with the contractor who built the block had been “protracted and difficult”.
2. The contractor had agreed that the works should be completed at no cost to the leaseholders.
3. Investigations had concluded that the cladding and insulation on the block “posed a risk of fire spread” and it was removed in 2019.
4. After the cladding removal “residents did…encounter uncertainty” in relation to the timeframe for the remediation works.
5. Delays were due to negotiations with the contractor, changing government advice, and the planning approval process.
6. The landlord had “tasked” the contractor to complete the works sooner than its initial estimate of summer 2024 and the work was now expected to be completed by December 2023.
7. It was keeping residents updated by monthly newsletter, virtual meetings, drop-ins, and email.
The resident replied to his MP and said:
1. He had no confidence in the landlord meeting the deadline of December 2023 as the projections were “unachievable”.
2. He wanted to know when an offer of compensation would be made.
3. Residents had not received invitations to meetings with the landlord as it had suggested.
The landlord wrote to residents on 9 February 2023. It accepted that its previous communication had been “mixed”. It apologised for this and outlined improvements to its communication plan. It stated that the estimated completion date for the works to the resident’s block was March 2024 and that it was considering the appropriate level of compensation to offer residents.
Also on 9 February 2023 the landlord wrote to the resident’s MP. It repeated the information provided in the letter sent to residents. It also apologised for the delay in its response and offered £50 compensation to the resident in view of this.
The landlord emailed the resident and other residents in the block on 10 February 2023 inviting them to a meeting regarding the cladding works. The resident told the landlord on 13 February 2023 he had not received the invite and the landlord re-sent it.
The resident emailed this Service on 15 February 2023 and said that the landlord had promised to complete cladding works to the block within 2023. It had since acknowledged that they would not be completed until March 2024. He said this would be 5 years from the start of the project.
The resident’s complaint to this Service was duly made on 1 March 2023.

Summary of events after the duly made date

On 21 March 2023 the landlord made a compensation offer to the resident of £9,689.50 which covered the period of 1 February 2019 to 31 March 2023. This was calculated as 10% of the daily rental value of the property for the period plus £250 for the landlord’s failure to progress the works. The offer also stated that a further payment will be made once the cladding is reinstated.
The agreement contains a clause stating that the resident would “keep strictly confidential all details about the fact and terms of this agreement (including the circumstances leading up to the agreement)”.
In May 2023 the landlord introduced a website where residents can view all information related to the remediation works. This includes a live tracker which allows residents to see progress and where this is delayed. At the date of this report the tracker shows that the external insulation and cladding works are delayed and have not yet been completed.
The landlord has stated that the resident has “accepted the compensation offer for the cladding as a legal full and final settlement of claims in relation to these works”. A payment has already been made to the resident from the point of project start up until the compensation offered and the second payment will be made to the resident on completion of works.

Assessment and findings

Handling of the resident’s concerns about the delays to cladding remediation works.

The Ombudsman’s guidance for complaints about cladding (available on our website) sets out that there is an element of discretion for a landlord as to how and when it chooses to comply with it. This is because the government’s expectations in relation to cladding and fire safety are only detailed in guidance.
The Ombudsman’s guidance further sets out that when investigating a complaint relating to the government’s guidance on fire safety and cladding the Ombudsman will consider the following points:
1. What are the landlord’s long-term plans for compliance with the guidance and are these fair and reasonable?
2. How has it communicated with shared owners/leaseholders regarding the situation and was this communication appropriate?
3. How has it responded to the individual circumstances of the leaseholder?
These points will be considered when assessing whether the landlord’s actions and response to the complaint were fair in all the circumstances.
While outside the scope of this investigation it is noted that the landlord responded swiftly in removing the cladding when it was identified as containing combustible materials. It thereby effectively managed the heightened fire safety risk.
The landlord has accepted that there have been delays in the start of the cladding remediation works. It has stated to the resident, his MP and this Service that the delays have been due to negotiations with the contractor, changing government advice, and the planning approval process.
It is accepted that government advice in relation to this issue changed rapidly over a relatively short period between 2018 and 2022 and that it has been challenging for landlords to keep abreast of and comply with these changes.
The landlord has demonstrated that it is working with the contractor to complete the cladding remediation works to the building as quickly as possible. The landlord has made changes to its structure and practices in order to respond to the changing compliance environment by introducing a new building safety team and increasing its resourcing of this area. Considering the demands on landlords in this area this was sensible.
While the landlord accepts that its communication has been “mixed”, this Service considers it has overall been reasonable. It has been providing residents with updates via a monthly newsletter since November 2021 and has held quarterly engagement meetings and 6-weekly building safety meetings since August 2022. It is accepted however that the resident has reported that residents did not receive invites to all these meetings and had concerns about their effectiveness. The landlord has appropriately addressed these concerns within its communications with the resident.
The landlord met with its contractor monthly from January 2021. This Service has been provided with minutes from these meetings. From July 2021 the contractor also provided the landlord with monthly progress reports on the cladding works. This demonstrates a positive approach by the landlord.
The landlord has stated that it was negotiating with its contractor to “accelerate” its programme of works. While this Service accepts this was a reasonable aim, the contractor was unable to meet the accelerated deadlines. It would have been reasonable for the landlord to avoid building residents’ expectations and causing unnecessary disappointment by providing more measured and deliverable timeframes.
The resident explained to the landlord that the noise of the works was impacting on his studying. The landlord put in place measures to provide quieter working spaces for its residents while work was ongoing. It is accepted that the measures were not ideal for all residents but it constituted a clear attempt by the landlord to acknowledge the negative impact on residents and introduce a practical solution. This is a further example of good practice which could be implemented by other landlords.
In March 2023 the landlord offered the resident compensation of £9,689.50 which covered the period of 1 February 2019 to 31 March 2023. It also agreed to pay further compensation for the period between 1 April 2023 and the completion of the cladding works.
It is important to note that a resident accepting an offer of compensation from the landlord does not preclude the Ombudsman from making a further order for compensation if it felt this was justified. This is the case whether the offer states it is in full and final settlement or not.
This Service however considers that the compensation offered by the landlord was substantial and appropriately reflected the distress and inconvenience, time and trouble experienced by the resident. We have not therefore made an order for further compensation.
The landlord’s offer of compensation was made after the resident’s complaint was duly made to this Service. This Service’s remedies guidance states that offers of financial redress should be made on the landlord’s own initiative and prior to the Ombudsman’s formal investigation. The Ombudsman’s investigation starts when the complaint is duly made which was on 1 March 2023, 3 weeks prior to the date of the landlord’s offer of compensation.
In this case however it is clear that the landlord was in the process of calculating a fair and reasonable compensation offer to the resident prior to the duly made date. We therefore consider that the offer was made in good faith and not as a response to this Service’s involvement or as an attempt to deter further investigation.
We have however commented on the landlord’s use of a confidentiality clause in its compensation agreement later in this report.
Overall, while it is accepted that there have been delays in the completion of cladding works, much of this was impacted by factors outside of the landlord’s control. The landlord has communicated regularly and proactively with residents though it has acknowledged that its communication has been “mixed”. This Service considers that the landlord has offered substantial compensation to the resident which, in the Ombudsman’s opinion, resolves the complaint satisfactorily. Therefore there was reasonable redress in the landlord’s handling of the resident’s concerns about the delays to cladding remediation works.

The landlord’s complaint handling.

The landlord responded to the resident’s stage 1 complaint within the timeframe outlined in the Ombudsman’s Complaint Handling Code (the Code) 2022 and in its own complaints policy.
The stage 1 response addressed each of the issues raised by the resident. It acknowledged and apologised for delays, explained what actions it was taking to resolve the issue, and outlined what it had put in place to lessen the impact on residents.
The response did not however offer any financial compensation. It is accepted by this Service that as the issue was ongoing and there was no definite timeframe for its resolution it would have been difficult for the landlord to calculate compensation at that time. It should reasonably however have made clear that it would be considering compensation when the project was finished.
The landlord also responded to the resident’s stage 2 complaint within the timeframe outlined in the Code and in the landlord’s own policy.
The stage 2 response reiterated the findings of the stage 1 response and added that it was working to calculate a reasonable compensation figure for residents. This Service considers that this was reasonable.
At the end of March 2023 the landlord made an offer of substantial compensation to the resident which was proportionate to the detriment experienced by the resident.
This Service is concerned however about the landlord’s use of a confidentiality clause in its compensation agreement with the resident. We consider this is entirely contrary to the ethos of openness and transparency and demonstrating a willingness to learn from complaints.
While the landlord responded to the resident’s complaint in line with its own policy and the Code 2022 this Service considers that its use of a confidentiality clause was inappropriate. Therefore there was service failure in the landlord’s complaint handling.

Determination (decision)

In accordance with paragraph 53 (b) of the Housing Ombudsman Scheme there was reasonable redress in the landlord’s handling of the resident’s concerns about the delays to cladding remediation works.
In accordance with paragraph 52 of the Housing Ombudsman Scheme there was service failure in the landlord’s complaint handling.
In accordance with paragraph 42(e) of the Housing Ombudsman Scheme, the complaint about the landlord’s response to the resident’s queries regarding the reasonableness of service charges paid falls outside of the Ombudsman’s jurisdiction.
In accordance with paragraph 42(a) of the Housing Ombudsman Scheme the complaint about internal fire compartmentation in the building falls outside of the Ombudsman’s jurisdiction.

Reasons

It is accepted that there have been delays in the completion of cladding works and that this has caused detriment to the resident. Much of the delays however were caused by factors outside of the landlord’s control such as changing government advice and negotiation with contractors. The landlord communicated proactively with residents, offered practical solutions to reduce the impact on residents, and has offered substantial compensation to the resident.
The landlord responded to the resident’s complaint reasonably and in accordance with its own policy and the Code 2022. This Service is however concerned that the use of a confidentiality clause was inappropriate and not demonstrative of openness and transparency.

Orders and recommendations

Orders

Within 4 weeks of the date of this report a senior officer of the landlord at director level or above apologise to the resident for the failings identified by this investigation in line with the Ombudsman’s remedies guidance.
Within 8 weeks of the date of this report the landlord to review its approach to confidentiality clauses within compensation agreements. The outcome of the review should be shared with this Service within 2 weeks of its completion.