Origin Housing Limited (202005974)

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REPORT

COMPLAINT 202005974

Origin Housing Limited

1 November 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 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 concerns regarding the sale of property due to the Government’s guidance on fire safety and cladding.
2. Response to the resident’s request for compensation to cover his estate agent fees.
3. Complaint handling.

Background and summary of events

Background

The resident is the shared-owner of the property (the property) which the complaint concerns. The landlord is the freeholder.
The property is a flat situated in a purpose-built building (the building). The building has “ground plus 5 floors [with] the last storey height [at] 15.19 meters”.
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.
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 December 2019 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 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”.

Summary of events

In summer 2019 the resident decided to sell his share in the property. The landlord has confirmed that the resident put the property up for sale independently of it, via an estate agent.
On 14 October 2019 the landlord received payment from the resident for the management pack to support the sale of the property, which it issued on 22 October 2019.
On 6 March 2020 the resident wrote to the landlord in relation to the sale of the property. The resident explained that the sale had collapsed as the landlord had been unable to provide form EWS1 for the building to the buyer’s lender. The resident stated that the landlord should have stopped him from putting the property on the market in 2019 when it was aware of a potential safety issue. The resident requested that the landlord refund the money he had paid it towards the sale, namely the management pack. The resident noted that the situation had caused him “a lot of stress and anxiety”.
On 1 July 2020 the landlord responded to the resident’s email. In summary the landlord said:
1. It was sorry that it had not followed up the resident’s email sooner.
2. It would be happy to refund the resident the cost of the management pack and therefore requested how he would like the refund to be processed.
3. Over the last year it had been actively working to survey all its buildings which fell within the defined scope of the Government’s Building Safety Guidelines.
4. The building had been surveyed and it was currently working on a plan to complete the necessary remedial works identified. The landlord noted that while the works were outstanding it had implemented “some temporary safety measures” which it would update all residents on in due course.
5. Due to changing Government guidance and “tighter controls from mortgage lenders” it recognised that it had been more difficult for some of its residents to sell their homes.
6. Since “late last year” it had advised residents and solicitors of the challenges they may face in selling their property each time a management pack was requested.
On 26 July 2020 the resident wrote to the landlord setting out that the estate agent who was dealing with the sale of the property had requested payment of its fees despite the sale not going ahead. The resident asked the landlord to provide a letter, which he could show the estate agent, confirming that the sale had not gone ahead due to “the fire risk of the building”. Within his letter the resident noted that he had received the refund for the management pack.
On 28 July 2020 the landlord responded confirming that it was unable to provide a letter stating that the property could not be sold, however it was happy to confirm that remedial fire safety works had been identified to the building. The landlord also suggested that the resident review his contract with the estate agent to see if it was entitled to request payment when the property had not sold.
On 7 August 2020 the landlord provided the resident with a letter regarding the remedial works identified to the building which he could provide to the estate agent. The landlord set out:
1. Its investigations had indicated that remedial works were required to the building before form EWS1 could be provided.
2. Waking watch security and upgrades to the fire alarm system had been implemented while it developed a programme to address the remedial works. The landlord confirmed that once it was aware of when the remedial works would begin it would notify all residents.
3. It was conscious that the remedial works and outstanding form EWS1 was preventing many residents from being able to sell their properties.
On the same day the resident responded stating that despite the landlord’s letter the estate agent was still seeking a fee from him. The resident asked the landlord if it had any additional information which may be able to assist him.
On 16 September 2020 the resident wrote to the landlord to advise that he was “still waiting for information about the sale of the property and why it was suspended”. The resident noted that he was being chased by the estate agent and its debt agencies. The resident added that he would also like to know why he was “allowed to put [the property] on the market if it was not safe to do so”.
On the same day, 16 September 2020, the landlord responded. In summary the landlord said:
1. It was unable to provide any supplementary information in addition to the letter which it had previously provided on 7 August 2020.
2. The sale of the property did not proceed as the buyer was unable to get a mortgage from their chosen lender.
3. The management pack for the property, to support the sale, was provided to the resident on 22 October 2019. The landlord explained that at this time it was unaware that remedial work would be required to the building.
4. In January 2020 it appointed a specialist engineer to carry out a review of the building’s façade system. The landlord confirmed that the report following the review was provided in February 2020 which identified areas of remediation.
5. It was unable to restrict residents from putting their homes on the market or advise that properties could not be sold. The landlord stated that it did however recognise that it may be more difficult to obtain a mortgage in the current climate. The landlord confirmed that it had therefore updated its website “on this matter” and it was also advising solicitors and residents of the current position “with every management pack request”.
On 6 October 2020 the resident wrote to the landlord stating that he was waiting to hear from it when he may put the property “back on the market”. Within his correspondence the resident noted:
1. He had “made some complaints about the sale of the property in terms of fire risk which [he] was never told about” however had not had a response.
2. He had received a letter about paying towards the cost of the remediation works which he did not understand.
On 12 October 2020 the landlord replied reiterating its correspondence dated 16 September 2020. The landlord added that it was not yet able to confirm when the remediation works would commence and therefore when form EWS1 would be available. The landlord also explained that a Section 20 notice had been sent to all residents regarding remediation works, however the notice would only apply should it be necessary for it to recharge the cost of the fire safety works to them.
On 22 October 2020 the resident made a formal complaint to the landlord about “the suspension of the sale of [the property]”. The resident confirmed that he would like the landlord to explain why the sale was suspended and why he was not informed of the fire risk prior to putting the property up for sale. The resident stated that the matter had caused him “a lot of stress and anxiety” and the estate agent was “harassing [him] because of this fiasco”. The landlord acknowledged the resident’s complaint on 23 October 2020.
On 6 November 2020 the resident chased the landlord for a response to his complaint.
On the same day the landlord replied apologising that a formal response had not yet been provided. The landlord however noted that it had left a voice message for the resident on 3 November 2020 confirming that its investigation was ongoing. The landlord confirmed that a response would be provided shortly.
On 11 November 2020 the landlord provided its stage one response. In summary the landlord:
1. Reiterated the content of its correspondence dated 16 September 2020.
2. Noted that it had refunded the resident the cost of the management fee as a gesture of goodwill.
3. Acknowledged the resident’s frustrations as it was “aware [he had] wasted time by finding a buyer that was not able to proceed at no fault of [his] or theirs”.
4. Noted that the resident had a contract with the estate agent to sell the property on the open market for which fees were payable.
On 13 November 2020 the resident wrote to the landlord confirming that he would like compensation for the stress and anxiety he had experienced as a result of the sale of the property not proceeding, including compensation to pay the estate agent’s fees.
On 16 November 2020 the resident wrote to the landlord setting out that he was disappointed by the outcome of its stage one investigation. The resident stated that the building’s fire risk should have been investigated a long time ago. The resident noted that he was going to “seek an impartial view of this matter”.
On 17 November 2020 the landlord responded to the resident’s request for compensation. The landlord said that it was not able to offer compensation as:
1. It was not aware that the building required remedial works prior to the resident putting the property on the market in 2019.
2. The estate agent the resident had selected required him to pay its fees within a 10-month period regardless of whether the property was sold or not.
Later on 17 November 2020 the landlord confirmed that it had opened a new complaint in respect of the resident’s request for compensation.
On 19 November 2020 and 2 December 2020 the resident wrote to the landlord to repeat his complaint regarding the sale of the property and his request for compensation.
On 4 December 2020 the landlord responded. The landlord confirmed that it had responded to the resident’s complaint about the sale of the property previously and it had also addressed his request for compensation. The landlord added that as soon as it was aware that the building would require form EWS1 it made the resident aware. The landlord noted that it was also the resident’s decision to select an estate agent who charged a fee regardless of whether the property sold or not.
On 15 February 2021 the landlord wrote to the resident following contact from this Service advising that he was not happy with its response to his complaint. The landlord asked the resident to confirm the outstanding issues of the complaint so that it could provide a response.
On 12 March 2021 the landlord wrote to the resident following a phone call with him. The landlord confirmed that it understood that the resident’s outstanding concern was “primarily about the building not being confirmed as safe at the point of putting [the property] on the market”.
On 1 April 2021 the landlord provided its final response. In summary the landlord said:
1. Following the Grenfell Tower fire the Building Safety Bill was established which set up a new regulation system designed to ensure other buildings did not suffer the same failures.
2. The building was completed in 2006 with the required building regulations and consents in place.
3. Lenders were requiring form EWS1 demonstrating compliance with the Government’s guidance on fire safety and cladding in order to lend on a property. The landlord noted that the building was not subject to form EWS1, as it was below 18 metres tall, however some lenders were insisting on it.
4. The property sale was suspended when the buyer could not obtain a mortgage for the property, as form EWS1 was not available for the building.
5. The management pack for the property was provided to the resident on 22 October 2019. The landlord confirmed that at this time it was not aware that remedial works were required to the building.
6. In February 2020 it was informed, following an intrusive inspection, that remedial works were required to the building in order to demonstrate compliance with the Government’s guidance.
7. It was not able to restrict owners from putting their homes on the market or to advise them that their homes were unsellable unless it had reasons to substantiate it.
8. It understood that it may be more challenging to obtain a mortgage in the “current climate without the relevant fire safety certificate”.
9. It had refunded the management pack fee to the resident as a gesture of good will, a cost of £375.
10. It appreciated the resident’s frustrations at finding a buyer that could not then eventually proceed to purchase the property.
11. It was the resident’s decision to market the property with the estate agent.
12. Once it had received a satisfactory form EWS1 it would be issued to the resident.
13. It was able to allow the resident to let the property in order for him to rent another property closer to his desired location.
The landlord concluded that it had acted in a responsible manner by investigating the fire safety issues raised within a short timescale by inspecting the building and committing to completing the remediation works identified.

Assessment and findings

The landlord’s response to the resident’s concerns regarding the sale of property due to the Government’s guidance on fire safety and cladding

Advice Note 14, introduced in December 2018, was for the attention of those responsible for residential buildings over 18 metres high. The Ombudsman notes that the building, in which the property is situated, is less than 18 metres. In the Ombudsman’s opinion it was therefore reasonable that the landlord was not taking steps to review and inspect the building in accordance with the guidance following its introduction.
From review of the chronology of the complaint the resident put the property up for sale in 2019. This was prior to the introduction of the Building Safety Advice for Building Owners, which was introduced in January 2020, and set out that the guidance applied to buildings of any height. In the Ombudsman’s opinion it was therefore reasonable that the landlord did not highlight any potential fire concerns with the building which may have impacted on the sale of the property in 2019. This is because there was no advice note which specifically applied to buildings under 18 metres at that time which recommended an intrusive inspection in relation to fire safety and cladding. The Ombudsman notes that the most recent fire risk assessment prior to the resident putting the property on the market is dated October 2018. The fire risk rating of the building was assessed to be “moderate” as “purpose-built block with reasonable compartmentation of means of escape and good fire rated flat entrance doors. Service riser fire stopped at compartment floors & ceilings”. The Ombudsman has not identified any recommendation for an intrusive inspection of the building within the fire risk assessment.
Following the introduction of the Building Safety Advice for Building Owners in January 2020 the evidence shows that the landlord arranged for an intrusive inspection to “assist in identifying potential conformance issues, viable solution and recommendations” against Government guidance. This was appropriate, as while the guidance was not a legal requirement, the building had been brought within its scope, and the guidance had been established as best practice in relation to building safety. The Ombudsman notes in an update to residents dated 4 August 2021 the landlord confirmed that resident consultation for the remediation works would begin shortly. The landlord confirmed that it anticipated the start date for the works would be in January 2022 with the works taking six months to complete. Prior to this update the landlord confirmed that a waking watch had been implemented to mitigate any risks while remediation works were outstanding.
As the landlord identified that the sale of the property had been impacted due to there being no form EWS1 following the introduction of the Building Safety Advice for Building Owners, it was reasonable for the landlord to confirm that it would refund the resident the cost of the management pack which he had paid. This is because the landlord recognised that the sale of the property did not proceed through no fault of the resident’s own.
In responding to the resident’s concerns, the landlord confirmed that since the end of 2019 it was notifying residents, and their solicitors, regarding the challenges they may face when trying to sell their properties. In the Ombudsman’s opinion this was appropriate, in order for a resident to make an informed decision in regard to selling their property and the risks involved.

The landlord’s response to the resident’s request for compensation to cover his estate agent fees

In the Ombudsman’s opinion the landlord’s decision to decline to reimburse the resident’s estate agent fees was reasonable. This is because the resident entered into a contract with the estate agent, which the landlord was not a party to, to provide him with the service to market and sell the property. The Ombudsman notes that a term of the contract between the resident and estate agent, following review of the estate agent’s website, was that the fixed fee was redeemable by the estate agent where a qualifying offer was made within 10 months of the contract start date.
The evidence shows that the landlord attempted to assist the resident in relation to the fee payable to the estate agent by providing a letter which documented the reason why the sale did not proceed – due to remedial works. This was good practice.

The landlord’s complaint handling

The resident submitted his formal complaint on 22 October 2020 and the landlord provided its final response on 1 April 2021. This is a period of approximately six months. In the Ombudsman’s opinion this is a protracted period of time for a complaint to remain open without a final response.
The Ombudsman notes the landlord’s correspondence dated 4 December 2020. Within this correspondence the landlord makes its position clear on the outstanding issues which the resident was raising in response to its stage one letter – sale of the property and compensation. In the Ombudsman’s opinion, it would have been appropriate and best practice, for the landlord to have confirmed that this was its final response on the complaint and to have signposted the resident to this Service as it had indicated that its position would not change. In not doing so, it was a missed opportunity and resulted in the resident expending additional time in seeking confirmation of his right of referral to this Service, via a final response letter.
The Ombudsman is also not clear why the landlord advised the resident on 17 November 2020 that it had opened a new complaint to consider his request for compensation following its stage one response, rather than seeking to escalate the original complaint. The Ombudsman notes that no formal response was provided by the landlord under its complaint procedure in respect of his request at that time.
In addition to the failures identified in respect of the landlord’s complaint handling, the Ombudsman has also identified some poor communication by it. Specifically, the landlord delayed in responding to the resident’s correspondence dated 6 March 2020 by approximately four months. While the landlord did apologise for its omission, which was appropriate, the Ombudsman understands that it would have caused the resident uncertainty while it went unanswered. The Ombudsman has therefore factored this in, in its order of compensation for complaint handling.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was:
1. No maladministration by the landlord in respect of its response to the resident’s concerns regarding the sale of property due to the Government’s guidance on fire safety and cladding.
2. No maladministration by the landlord in respect of its response to the resident’s request for compensation to cover his estate agent fees.
3. Service failure by the landlord in respect of its complaint handling.

Reasons

The landlord’s response to the resident’s concerns regarding the sale of property due to the Government’s guidance on fire safety and cladding

It was reasonable that the landlord did not highlight any potential fire concerns with the building which may have impacted on the sale of the property when the resident put the property on the market in 2019. This is because there was no advice note which specifically applied to buildings under 18 metres at that time which recommended an intrusive inspection in relation to fire safety and cladding.
The most recent fire risk assessment prior to the resident putting the property on the market in 2019 assessed the fire risk of the building to be “moderate” and did not recommend that an intrusive inspection of the building was required at that time.
As the landlord identified that the sale of the property had been impacted due to there being no form EWS1 available, it was reasonable for the landlord to refund the resident the cost of the management pack which he had paid as it recognised that the sale of the property did not proceed through no fault of his own.

The landlord’s response to the resident’s request for compensation to cover his estate agent fees

The landlord’s decision to decline to reimburse the resident’s estate agent fees was reasonable as the resident entered into a contract with the estate agent, which the landlord was not a party to, to provide him with the service to market and sell the property.

The landlord’s complaint handling

The landlord’s complaint handling was unsatisfactory as it took a protracted length of time to confirm its final position on the complaint. It was also unclear why the landlord confirmed that it would consider the resident’s request for compensation in respect of the sale of the property under a new complaint rather than seeking to escalate the matter.

Order

The landlord should pay the resident £100 compensation in respect of its complaint handling within four weeks of the date of this determination.

Recommendation

The landlord should share this report and the Ombudsman’s Complaint Handling Code with its staff members who deal with complaints to ensure that complaints are responded to in line with best practice going forwards.