Sage Housing Limited (SHL) (202116347)
REPORT
COMPLAINT 202116347
Sage Homes RP Limited
31 October 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 was about:
- The landlord’s handling of the resident’s request for documents relating to Japanese knotweed (“knotweed”) during the sales process and the resident’s concerns about staff conduct.
- The landlord’s complaint handling.
Background and summary of events
- During the period of the complaint, the resident was in the process of purchasing a shared ownership long lease of a three-bedroom house from the landlord.
Legal and policy framework
- Under the lease, the resident was obliged to refund to the landlord a proportion of outgoings attributable to the premises, such proportion to be conclusively determined by the landlord and pay to the landlord proportion of: the reasonable costs in connection with the provision, maintenance and management of the communal facilities.
- The complaints policy set out the “rare occasions” it would exclude a complaint. The landlord operated a two-stage complaint process. The landlord would respond within 10 working days at Stage 1 and within 20 days at Stage 2. If this was not possible to reply within that timescale, the complainant would be contacted with an explanation and an estimated timescale, which should be no more than a further 10 days (20 days from receipt).
- The property was purchased by the landlord in 2020 from the builder/developer “B”. In November 2018, a knotweed contractor “A” carried out works to eradicate knotweed on what would be the resident’s plot for B.
The documents.
- The documents provided by the landlord to this Service and throughout the complaint process were as follows:
- A document entitled “treatment of knotweed and warranty of 2018 works and report” at the property prepared by A for B. The report stated that “following the excavations and removal of knotweed” by A, the “contaminated areas were found to removed and unable to regenerate”. A was “happy that all conditions have been met and that no rhizome material remains viable in the soil”. “As a direct result”, it presented B “with a site warranty and insurance to ensure that the knotweed would not sustain any re-growth within the defined treated area”. The warranty itself at Appendix C was missing. The document was later referred to as a “validation” report”.
- A completion Certificate dated 20 December 2020 issued by A to B stating “The treatment and monitoring is now completed with successful outcome”.
- A 10-year insurance policy with a date of completion of 27 November 2021, with B as the beneficiary. The exclusions included where the contractor (A) had not ceased to trade, and where the policy holder was unable to supply a copy of a management plan, completion certificate and written guarantee. The insurance would commence on the estimated completion date of the treatment (27 November 2021). The completion date was the date that the contractor certified, in the form of a completion certificate, that the treatment and monitoring works detailed in the management plan had been completed. The policy holder was required to notify the insurers if the completion date was going to vary by any more than 6 months from the estimated completion date.
- A site report for the works carried out on 27 November 2018 prepared by A.
- An unsigned guarantee permitting assignment on specific conditions.
Chronology
- On 17 July 2020, according to an internal email exchange, the sales pack for the relevant properties would include copies of the insurance policy and the validation report provided by the developer.
- On 16 June 2021, the resident’s solicitor requested the following information requested on behalf of the resident’s lender as follows:
- A request for a deed of variation to remove statutory remedies arising from a rent charge that a lender would not find acceptable.
- She had the policy validation report and requested a copy of the warranty referred to at Appendix C.
- It noted that the insurance-backed guarantee was transferable to subsequent owners. She requested a copy of the policy of insurance, a copy of the contract, completion certificate, and written guarantee.
- The landlord’s solicitor replied that the warranty was attached to its email and the insurance would follow. The resident’s interest would not be noted as the landlord was the policy holder. The attachment was not provided to this Service but from the later events, it appeared that the warranty was not, in fact, provided.
- On 28 June 2021, the resident’s solicitor informed the resident that she was unable to give a timescale for the sale. While the lender did not have specific instructions, she referred to other lenders’ requirements by way of example of what could be faced in relation to the presence of knotweed. The landlord’s solicitor had not attached the documents she had requested, only the validation report which she took to be the management plan as referred to in the insurance policy. She explained that the policies issued to B were reliant upon production of a completion certificate and warranty, neither of which had been provided to her. Given the estimated completion date, it was not clear whether the documents were in fact available.
- The solicitor wrote to the landlord asking again for the documents and to explain her reasons. Both the solicitor and the resident chased the landlord. On 22 July 2021, the landlord’s solicitor re-sent a copy of the insurance policy. The landlord’s solicitor wrote to the resident’s solicitor on 27 July 2021 that those were the only documents it held. There was a further discussion about the rent charge clause.
- On the same day, the landlord wrote to the resident stating that if his solicitor was not satisfied and would “not progress (the) purchase” then he “may need to consider switching to a new solicitor”.
- The resident made a complaint on 28 July 2021 as follows:
- He stated that the knotweed was identified in the survey.
- The landlord’s solicitor had not provided the documents his solicitor had requested.
- The landlord had been “rude” and “on occasions” advised he should replace his solicitor.
- On 30 July 2023, the landlord made enquiries with B.
- On 9 August 2021 the resident’s solicitor wrote stating the landlord’s solicitor had merely re-sent the same documents. The following day, a third party made enquiries with B on the landlord’s behalf. B replied that the warranty cover started from the completion date (27 November 2021) “in order to extend the cover period, the November 2021 (date) was given”. There was no ongoing treatment or management as the knotweed had been removed from the site.
- On 13, 15 and 18 August 2021, the resident chased the landlord for a complaint response. He wished to complete the purchase by 31 August 2021. The landlord updated the resident in the meantime with reassurances that it was pursing the matter. It was having difficulties contacting B.
- According to an internal email 13 August 2012, the landlord had tried to contact the sales director at B and would escalate enquiries further. It felt the information “must” exist as it was required in order to make the insurance policy/warranty valid. The landlord made further enquiries with B on 16 and 19 August 2021.
- On 19 August 2021, it sent to the resident’s solicitors documents from B who advised “I have attached the documents that B’s solicitors had provided, “as this was usually the submission for lender requirements.” It was not sure if they were of any further use but it was still chasing B. The resident’s solicitor explained why they were not satisfactory. She also asked the resident whether he wished to go ahead with the sale and advised that the absence of the documentation could affect a future sale.
- The landlord continued to chase the documents. On 20 August 2021, it provided the validation report, insurance policy, and application form, and an unsigned assignment of the guarantee from B to the landlord, “hoping that was what (the resident’s solicitor) was after”.
- On 25 August 2021, the landlord wrote to the resident that “in order to move this forward”, it needed to “take the stance that (it) “cannot provide these documents and report to the lender accordingly” and see what stance they take.
- On 26 August 2021, the resident asked the landlord to escalate his complaint as the complaint could not be resolved.
- Internally, the landlord considered rejecting the complaint altogether. It made internal enquiries as to their contractual relationship with B and whether it could take any action to “force” B to provide them. B had disclosed the previous existence of knotweed but it had already been cleared up. The landlord’s solicitors who had acted on the purchase “should be aware of this”. It had “an insurance backed guarantee” from the contractor that cleaned up the knotweed and the landlord had been satisfied that the land was clear of knotweed and any further outbreak would be covered by a warranty and insurance. It referred to what appear to be replies to enquiries by the landlord to B stating that B confirmed that all knotweed works had been completed and all contaminated material had been removed.
- On 31 August 2021, the landlord wrote to the resident as follows that it hoped it had resolved the issue by its offer of an indemnity and attached an email from its in-house solicitor stating:
- It had emailed “the company” to see if “the documents” could be provided early, but it should probably assume they would not be issued until November 2021.
- It set out the circumstances in which the policy would be required in the meantime:
- The contractor became insolvent. They were not required in order to rely on the contractor’s guarantee.
- A return of knotweed.
- As far as the lender was concerned, the buyer would have had to have defaulted on their mortgage.
- A gap in insurance coverage.
- As the landlord “also” had ownership of the property and an interest to protect, it would be “sharing the problem”.
- If the property were sold following enforcement by the mortgagee’s lender at an undervalue (to take account of knotweed at the property), the landlord would have to cover this loss.
- On 1 September 2021, the resident’s solicitor provided to the lender the documents and information that it had received to date.
- The resident made further enquiries as to what steps the landlord had taken including contacting A and the construction company who carried out the works for the developer. He asked to be copied into the correspondence. The landlord replied that it had make enquires with the developer but as it was providing an indemnity it was not looking at providing further information, unless the lender did not accept the proposals. Should there be any further issue with knotweed in the future, the landlord would be responsible for making any claim against the insurance. The resident wanted the landlord to make enquiries in any event and also chased its complaint response.
- On 10 September 2021, the resident’s solicitor wrote to the resident that the landlord would not pay for the indemnity insurance. The solicitor reported that the landlord had refused to provide a covenant to pursue any claim under the guarantees, should the knotweed return. The landlord’s solicitor had stated that its client “was still responsible for a percentage of the property so it was in its best interest to sort out any issues”.
- On the same day, the resident requested a timeline of the landlord’s efforts to secure the documents. He confirmed that the complaint related to the non-provision of the documents regarding the knotweed. He stated that it was his solicitor, and not the landlord, who had suggested the indemnity.
- On 14 September 2021, the landlord replied that it would not “accept” the complaint as it had not been able to produce the required documents.
- On 11 November 2021, the resident wrote that the knotweed documentation would be available after 27 November 2021, when “the current management plan would end” and the current insurance plan would then be valid. He asked what steps the landlord had taken in relation to the Knotweed since 2018, and whether a specialist had inspected the property.
- The landlord replied on 30 November 2021 that the deed of variation was “underway”. It was awaiting “the certificate of works which couldn’t be created until a final inspection was carried out on the site recently by the specialist (27th November)”. It had not taken any steps since 2018 because the landlord was satisfied with all of the works and checks that were carried out by B to remove the knotweed. It was also covered by its insurance policy.
- On 25 January 2022, the landlord confirmed its decision not to progress the complaint through the complaints procedure as it was unable to provide the document requested.
- Following the resident reporting this decision to this Service, this Service wrote to the landlord to direct the landlord to respond to the complaint. According to the resident’s email to this Service of 14 February 2022, he stated that on 13 September 2021 that the lender had not found the indemnity to be satisfactory. The issue of the Deed of Variation had been resolved. He was still awaiting the documents relation to the knotweed. The resident’s solicitor advised that, while she was “perplexed” that the documents had not been provided, if the works had been carried out, the risk was minimal and the landlord was offering its assurances to deal with the problem, if one arose.
- On 16 March 2022, the landlord responded with its Stage 1 response as follows:
- The complaint was about the landlord not providing the documents relation to knotweed and its staff had not done enough to obtain the documents. The decision was that it had tried to obtain the documents and it had confirmed it had not been able to do so.
- It was unable to consider the complaint regarding the deed of variation under the complaints policy and procedure as it related to a legal process.
- The resident replied on 23 March 2022 as follows:
- He requested a review of the complaint. He considered that any claim would not be accepted by the insurers as the landlord had been unable to show evidence of the warranty and asked how the landlord could do so. This could affect any resale. The landlord had not contacted A or B.
- The behaviour was unprofessional, given it did not respond to the complaint within the policy timescales. In a more recent email exchange B has labelled him as a difficult client. The deed of variation had not yet been provided.
- In April 2022, the landlord made internal enquires whether it or its solicitors had contacted the organisations the resident referred to. It specifically requested the internal correspondence. It requested clarification whether it could make a claim without the specific requested documents. The responses included that it had not contacted A or the insurer, the certificate did not exist at that time prior to the final inspection due to take place in November 2021, that it was not sure what documents it had and did not have, it had been unable to source the documents “under those names”, but “other documents” had satisfied other buyers. It would make enquiries from its own conveyancing solicitors. The complaints team pressed internally for answers. The landlord referred to its in-house email referred to on 31 August 2021 by way of reply. In relation to the deed of variation, the solicitor had been sent a copy of the deed.
- On 25 April 2023, the landlord declined to review the complaint on the basis it would not change its position. Other buyers had completed on the site without issue. The landlord had suggested the resident change solicitors for that reason.
- In April 2022, the resident informed this Service that he obtained the certificate of completion from A.
- According to the landlord’s emails of June 2012, the resident had completed on the sale. The landlord made further internal enquiries for the purposes of this investigation. The landlord’s solicitors stated it had relied on the completion certificate provided by the resident.
The landlord’s handling of the resident’s request for documents relating to Knotweed during the sales process and the resident’s concerns about staff conduct.
- The Ombudsman will not be investigating the landlord’s conveyancing process or decisions as the resident had a solicitor to advise him. Moreover, there are occasions when a seller of a property cannot or will not satisfy every buyer’s requests for information and assurances In those circumstances, the buyer would need to take a view on whether to go ahead with a purchase. The Ombudsman has considered whether the landlord has taken reasonable steps to make enquiries as to obtaining the documents the resident’s solicitor had advised be obtained.
- There was no dispute that the insurance policy stated that a claim could only be made if A had ceased trading. It was clear from the documents that in order to make a claim, the policy holder would have to present the insurers with a “management plan, completion certificate and written guarantee” (“the documents”).
- The resident’s solicitor had advised the resident that the documents should be obtained. The evidence showed that this was not only in order to satisfy the lender but to avoid any issues on staircasing and on a future sale. The fact that other sales had gone ahead did not mean that the resident’s solicitor’s advice was incorrect. Moreover, the evidence on 13 August 2021 showed that the landlord itself appeared to consider that these documents would be required on making a claim.
- The resident and his solicitor requested the documents on several occasions. It was not clear whether the landlord ever confirmed that the validation report stood for the management plan but there was no evidence this was pursued. Therefore, it is not considered this was part of the complaint.
- The landlord had relied on B’s assurances. That was not the same as the resident having that comfort from the landlord. The landlord perceived the risk to the buyer and lender as minimal. However, the resident’s concerns were also about the impact on a future sale. While he did not raise it, there would also be an issue of covering the costs of any further eradication under the service charges.
- The landlord’s explanation that it was in the landlord’s own interest to address the knotweed issue was reasonable. However, once 100% staircasing on a property had taken place, the landlord would no longer have a shared interest in the property, except as freeholder. The landlord did not explain how it would make a claim without the documents. The evidence showed that the resident’s solicitor was not satisfied with the landlord’s email provided on 31 August 2021.
- The evidence showed that the landlord made enquiries. Its suggestion that the documents be put to the lender was reasonable, though this would not have reassured the resident regarding future sales. It was reasonable of the landlord to seek to resolve the matter by agreeing to provide an indemnity although it was indicated that the lender did not accept this as a solution.
- It was accepted that the completion certificate and warranty would not be produced until 27 November 2021. Given that the completion certificate was dated 20 December 2020, and there did not appear to be a post-works management plan, it is not clear why the completion date had been treated as 27 November 2021, except that there may have been an inspection in November 2021.
- There appeared to be some confusion about the nature of the documents, as demonstrated by the landlord sending the same documents on several occasions, including on 16 June 2021 through its solicitors, and 19 and 20 August 2021.While it is appreciated that this was a specialist area, and it would not be expected that all staff members would have the same level of expertise, and guidance was sought from time to time, there was an unreasonable sense of confusion by the landlord, as demonstrated on 20 August 2021 and in April 2022 and that it sent the same documents on several occasions.
- It was not reasonable that, as the evidence indicated, that the landlord’s enquiries were motivated by the resident having made a complaint and the landlord wanting to demonstrate that it had made a reasonable effort. This is not satisfactory as the Ombudsman would have expected the landlord to have enquiries sooner, proactively and without the necessity of the resident making a complaint. The landlord should also take care it treats all residents in a similar manner, regardless of any investigation by the Ombudsman.
- While the landlord would be entitled to draw a line under the enquiries it would undertake, until that point, the Ombudsman would expect the landlord to make reasonable enquiries as to the existence of the documents. The evidence showed that had the landlord made enquiries with A, as the resident had requested, or had it asked B to do so, the landlord would have at least obtained the completion certificate. In the circumstances, while the evidence showed that it made a number of enquiries, the Ombudsman finds service failure, because the landlord could have done more and at times it appeared not to appreciate what it was doing, which caused delay and frustration.
- The resident made a complaint against individual staff members on the basis that they did not do enough to obtain the document and about the email of 27 July 2021. The Ombudsman has considered this as part of the landlord’s approach as an organisation.
- It was unreasonable of the landlord to suggest that the resident instructed a different solicitor, simply because it did not agree with her advice. The role of the resident’s solicitor was to advise him. It was unreasonable of the landlord to appear to seek to undermine, or interfere in, that relationship.However, there was no evidence of a significant impact of that suggestion as the resident, while frustrated at the suggestion, ignored it.
- There was a significant delay to the sale, as it took 10 months. However, the resident wished to satisfy himself as to the position regarding the knotweed. There is no guarantee that sales can take place within a specified amount of time as the process can be unpredictable. It would be for a buyer to make his arrangements accordingly. It was eventually agreed by the parties that the risk was not a high risk.
- Part of the resident’s complaint was that it was his own surveyor who had identified the previous existence of knotweed. According to the landlord’s evidence, it was disclosed within the sales pack. The Ombudsman has not identified a service failure in this regard. If the resident considers there has been any misrepresentation, he would need to seek legal advice.
- The resident’s solicitor had advised the resident, also to satisfy the lender, to address the rent charges, eventually by way of a deed of variation. While there was some initial resistance and delays by the landlord, this was resolved. In any event, this would be a matter of legal advice for the parties. The Ombudsman has not identified a service failure in this regard.
The landlord’s complaint handling
- There was a lengthy delay to the landlord’s initial complaint response because its approach was to address the complaint “informally” and first attempt to resolve the issue before addressing the complaint. While the landlord did make efforts to resolve the issue, short of contacting A, which was a benefit of the complaints handling, not providing its complaint response within policy timescales was unreasonable. It did not explain its approach during the delay. In any event, the Ombudsman would expect the landlord to adhere to its policy timescales, address a complaint and then seek to resolve the issue. The landlord should then follow the matter up to its conclusion.
- It was unreasonable that, after the lengthy delay, the landlord refused to address the complaint on the basis that it did not have the documents. The reason was not reflected in its policy and it did not explain its reasoning why it should adopt that approach. The internal discussion demonstrated that there was an investigation to be had. Internally, the complaints team raised a number of pertinent questions, which it pressed even further at Stage 2. The enquiries included whether the landlord could have done more to obtain the documents, whether it or its solicitors had contacted A and whether an insurance claim could be made without the documents. Unfortunately, the landlord did not fully address these questions. It did not address why the documents were still not available after 27 November 2021. While it emphasised the low level of risk, it did not clarify the insurance position, or review the matter after the resident obtain the completion certificate. Despite the internal investigation, it declined to respond at Stage 2 altogether, which could have afforded an opportunity for reflection.
- The delays and the landlord’s stance incurred the resident in increased time, trouble and frustration. In the circumstances, the Ombudsman finds service failure in relation to the landlord’s complaint handling. Any compensation will be proportionate to the substantive issue. The landlord should also review its complaint handling, if it has not done so already, and orders will be made accordingly.
Determination (decision)
- In accordance with Paragraph 52 of the Housing Ombudsman Scheme, there was service failure in relation to the landlord’s handling of the resident’s request for documents relating to Knotweed during the sales process and the resident’s concerns about staff conduct.
- In accordance with Paragraph 52 of the Housing Ombudsman Scheme, there was service failure in relation to the landlord’s complaint handling.
Reasons
- The Ombudsman has not made findings on the necessity of the documents but the resident’s concerns were understandable. The landlord made some attempts to comply with the resident’s requests but it did not make the enquiries with A. The landlord did not always appear to have a command of what it was being asked to provide. This caused the resident additional frustration and trouble.
- The landlord unreasonably delayed its response to the resident’s complaint, then declined to respond altogether, until contacted by this Service. It did not adhere to its own complaints policy. Despite carrying out an internal review, it did not provide a review response at Stage 2. The delays added to the resident’s frustration.
- The Ombudsman makes the following orders:
- The landlord is ordered to pay the resident compensation in the amount of £300 within 4 weeks as follows:
- £200 in relation to the landlord’s response to the resident’s requests for documents.
- £100 in relation to the landlord’s complaint handling.
- Within 6 weeks of this report, the landlord should carry out a review of its complaint handling in relation to the points highlighted in this report, including its delays and decision not to address the resident’s complaint. The landlord should provide a copy of that review to this Service within 6 weeks of this report.
- The landlord is ordered to pay the resident compensation in the amount of £300 within 4 weeks as follows:
- The landlord should confirm compliance with the above orders to the Housing Ombudsman Service within 4 and 6 weeks respectively of this report.
Recommendations
- The Ombudsman makes the following recommendation:
- The landlord should, at a senior staff level, review the findings in this investigation, in addition to those relating to the complaint handling, and share this with the relevant staff.
- The landlord should notify the Ombudsman of its intentions regarding this recommendation within four weeks of this report.