Southway Housing Trust (Manchester) Limited (202305843)

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REPORT

COMPLAINT 202305843

Southway Housing Trust (Manchester) Limited

28 October 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

  1. The complaint is about the landlord’s handling of the resident’s Right to Buy application.
  2. This report also looks at the landlord’s handling of the resident’s complaint.

Background

  1. The resident lives in a 3 bedroom house that was owned and managed by the landlord. The resident purchased the property on 28 April 2023 by exercising her preserved Right to Buy (‘RTB’) which had been provided when the landlord took ownership of the property under a stock transfer in 2007. Prior to the purchase, the property had been let to the resident under an assured tenancy agreement.
  2. The resident submitted an application to buy the property she occupied on 22 August 2022. The landlord delayed registering her application. The sale of the property was completed on 28 April 2023, 8 months later.
  3. The resident submitted a stage 1 complaint to the landlord on 4 May 2023 in which she said:
    1. She had submitted a RTB application to the landlord on 22 August 2022. However, the landlord did not respond to the application within 4 weeks in breach of its legal obligations because it lost the form.
    2. The RTB sales process was dragged out for 8 months which was unacceptable and evidence of maladministration and service failure.
    3. She was a cash buyer, she required no mortgage, she had accepted the landlord’s valuation without using a district valuer and she did not require the services of a surveyor. Therefore the sales process should not have been delayed.
    4. She had paid 35 weeks of rent totalling £3,500 due to the time it had taken to complete the sale process.
    5. She had missed out on an additional annual discount cap increase of £9,000. Had she known how long the process would take she would have delayed applying until 6 April 2023 in order to receive the additional discount.
    6. She had been diagnosed with a mental health condition and therefore would not restart the process to obtain the additional discount.
    7. She requested:
      1. an explanation as to why the RTB process took so long and why the landlord thought it could get away with breaking the law.
      2. An unreserved apology from the landlord’s CEO and the repayment of the rent she had paid during the time the process had taken.
      3. Compensation equal to 2 months of rent payments for the mental anguish she had suffered and a payment of £9,000 equivalent to the extra rate of discount she had missed out on due to the process being dragged into a new financial year.
  4. The landlord sent a stage 1 response to the resident on 17 May 2023. It said:
    1. There had been an administrative delay in registering her application when she had submitted it on 22 August 2022 for which it apologised. Her application had not been uploaded and acknowledged until 23 September 2022. It was rare for this to occur, but it had handled the application professionally and in a timely manner at all stages thereafter.
    2. It had posted letters to its solicitor at the usual address and could not explain why the post office had returned the documents marked ‘sender not known’. It apologised for the administrative error on behalf of the organisation and for the distress that this caused.
    3. The RTB process had taken an average length of time and if the resident had wanted to claim rent she could have served a delay notice which it would have reasonably considered in keeping with legislation.
    4. As she had not served a delay notice it had not deducted any rent from the final sale price and it did not intend to revisit the matter. It did not believe a rent refund, or any compensation was appropriate.
    5. Only RTB applications made on or after 1 April 2023 were eligible for the new higher discount which was set out by the Government. The delay in registering the RTB application did not cause her to miss out on the discount because if it had not occurred the property sale would have been completed even earlier. Therefore it could not agree to the resident’s request for a £9,000 payment in place of the increased discount.
    6. It partially upheld the complaint regarding the delay in registering her application and said she could escalate the complaint to stage 2 within 21 days.
  5. The resident submitted a stage 2 complaint to the landlord on 19 May 2023. She said she did not accept the findings within the stage 1 response and:
    1. The landlord had admitted to losing her initial application which wasted 4 weeks and had cost her £400 in rent which was maladministration.
    2. It was obliged by law to deliver a RTB2 response to the application within 4 weeks therefore its flippant response and apology was unacceptable.
    3. The postage delay was closer to 4 weeks than 2 weeks for which she had been charged a further £400 rent which was unfair and unacceptable.
    4. Industry standards suggest 2 to 3 months was an expected time frame for completing property sales, not 8 months as the landlord had implied.
    5. There had not been a mortgage company, a surveyor, a state valuer, nor any complex issues involved in the process. The time taken to complete the sale had therefore cost her an extra £3,000 in rent payments.
    6. The matter had affected her mental health, and it had not provided an apology for the distress its recognised service failures had caused.
    7. It had ruled out any chance of offering the extra £9,000 discount that was on offer for applications that had been submitted since 6 April 2023. However, as the sale had entered the new financial year it should provide the new discount or a portion of it as a gesture of good faith.
    8. She would have waited until April 2023 to submit her application if she had known the sales process would take 8 months.
    9. It had not acknowledged her stage 1 complaint within 5 days in keeping with its complaint policy.
  6. The landlord sent a stage 2 response to the resident on 15 June 2023. It said:
    1. It was sorry for the rare service failure it recognised in its initial handling of the RTB application and for the distress this had caused to the resident.
    2. Its solicitor could not explain why it had not received the forms the landlord had posted to it, and which had caused a 2 week delay. Although there was no policy or legislation that required it to do so, it would have been better it if had posted the documents with a requirement for a signature.
    3. It did not have a target time for completing RTB applications but there were stages in the process that must be completed in compliance with legislation. It had reviewed its initial error in uploading the application and could not see that it had breached legislation. However it was sorry that the resident was dissatisfied with the time it had taken and for any comments it may have made that exacerbated the situation.
    4. It could not agree to all or any of the additional discount the resident would have received if the application had begun after the end of the financial year. If through failing to meet its deadlines the resident would have missed out on the discount it would have considered it in its complaint response.
    5. It was sorry if there had been a delay in making contact to agree a resolution in keeping with its complaint procedures.
    6. There was a service failure in relation to the initial RTB application and it could have been more proactive and empathetic in its response. It was sorry for the detriment this had caused to her mental health.
    7. It offered the resident £250 as compensation and it said that it had learned lessons from the complaint related to the acknowledgement and postage of documents and about the contact it makes with residents. It said its complaint response was final, and the resident could contact this Service if she remained dissatisfied.
  7. This Service wrote to the resident on 12 March 2024 to acknowledge her request for us to investigate her complaint about her right to buy application.

Assessment and findings

The landlord’s handling of the resident’s right to buy application.

  1. In an email the resident sent to the landlord on 13 April 2023 she said that the RTB process had a detrimental effect on her mental and physical health. This Service does not doubt that the resident has suffered distress and anxiety. However, we are not in a position to conclude whether this was caused by the landlord’s actions or omissions. Often, when there is a dispute over whether someone has been injured or a health condition has been made worse, the courts are best placed to deal with this as a personal injury claim. They will have the benefit of an independent medical expert that will set out the cause of any injury or deterioration of a condition. For this reason, it would be fairer, more reasonable, and more effective for the resident to seek a remedy via the court. If the resident wishes to pursue this matter, she should seek independent legal advice. However as part of this investigation we have considered whether the landlord caused any distress and inconvenience.
  2. The resident handed a RTB application to the landlord on 22 August 2022 and she retained the delivery receipt the landlord provided. However the landlord did not confirm that it had received her RTB application until 23 September 2022, over 4 weeks later. The landlord explained that it had lost the application in its complaint responses. Consequently its delay in registering the RTB application is not in dispute. The landlord’s failure to process the RTB application in a timely manner was inappropriate. Losing the document, even if only temporarily, also represents a knowledge and information handling failure. The Housing Ombudsman’s May 2023 Spotlight report on knowledge and information refers specifically to these types of incidences and the landlord is encouraged to consider the impact its knowledge management has on the quality of its housing services.
  3. The landlord’s RTB policy says it will achieve the various statutory deadlines placed upon it at all times. As the resident had been a tenant of the landlord for over 3 years it was expected to write to her within 4 weeks of receipt of her application (by 19 September 2022) to advise her of her eligibility to purchase the property. Sending such a notice in reply to the tenant’s RTB claim (a RTB2 notice) was a requirement under Section 124 of the Housing Act 1985 (“the 1985 Act”). Furthermore it was a condition of the landlord’s RTB policy which says once an application is received, it should advise an applicant about their RTB eligibility within 4 weeks. The landlord failed to issue the RTB2 notice to the resident until 19 October 2022 which was 21 working days later than the 4 week target time. The landlord therefore acted inappropriately in not adhering to its obligations to process the RTB application in accordance with the law and its policy. This caused time and trouble to the resident. It is noted that the landlord provided a RTB2 notice to the resident within 4 weeks of the date it had incorrectly registered her application on 23 September 2022.
  4. The landlord issued an offer letter (a S125 notice) to the resident on 7 November 2022 which was within 8 weeks of issuing the RTB2 form and in keeping with its obligations under the 1985 Act. It further issued a notice to complete letter (a S140 notice) to the resident on 3 January 2023. However, the 1985 Act says that a S140 notice shall not be served earlier that 3 months after the service of the landlord’s notice under S125. Given the landlord had issued the S125 notice on 7 November 2022 the landlord’s decision to issue the S140 notice sooner than 6 February 2023 was inappropriate.
  5. The delivery of signed documents which the landlord had posted to its solicitor caused a further delay in the sale of the property. It is understandable that the resident would have been concerned about the potential misuse of the confidential documents which she expressed in her email of 13 April 2023. However this Service has seen evidence that the envelope was securely returned to the landlord marked “not at this address return to sender.” Furthermore we have seen evidence that the envelope had correctly been addressed to the landlord’s solicitor. The postal service’s handling of the signed documents was outside of the landlord’s control, and it sought to put things right by arranging for new forms to be issued. Furthermore in its final complaint response it suggested that it had learned lessons and would arrange ‘signed for’ deliveries in future, which was reasonable.
  6. The sale of the property took place on 28 April 2023, 3 weeks after the RTB discount increased on 6 April 2023 in keeping with the Consumer Price Index. The resident subsequently told the landlord that she hoped she would qualify for the increased discount. The advice published by the HM Government on its website says that the relevant discount level will be set at the date the application is made. If a tenant wants to have the increased discount, they will need to cancel their application and re-apply for the RTB. Their property would then be re-valued based on the date of the new application. In its complaint responses the landlord responded appropriately by explaining that, as the resident’s application had not been submitted after the new discount had been introduced, she was not eligible to receive it. It further explained that any delays that it had caused in the sale of the property would not have resulted in her missing out on the discount as the sale would have been completed even earlier.
  7. The resident referred to the amount of time the landlord had taken to complete the sale, 8 months, during which time she had continued to pay rent for the use and occupation of the property. The time taken to complete the sale is addressed in the following paragraph. However, the resident was obliged to pay rent while living at the property in keeping with section 1.1.3 of the tenancy agreement which says she must pay rent and any applicable service charge on time. There was no further tenancy condition or any legislation that removed the resident’s obligation to pay rent during the sales process.
  8. The landlord said the amount of time it had taken to complete the property sale was reasonably average in its complaint response of 17 May 2023. This Service does not have access to the landlord’s sales information, nor do we dispute its statement. Based upon the 1985 Act legislation timescales it would have been reasonable for the landlord to have taken 4 weeks to register an application and issue a RTB 2 form, a further 8 weeks for it to have issued its S125 (offer notice), and a further 3 months for it to have issued a S140 (notice to complete). It is not disputed that the resident was a cash buyer, required no mortgage, had accepted the landlord’s valuation without using a district valuer and did not require the services of a surveyor. Nor is it disputed that these factors may shorten the time it takes to complete the sale of a property. However the timescales for the completion of the key stages are set within the legislation contained in the 1985 Act.
  9. It is reasonable for there to be a period of time after a S140 notice is issued for the respective solicitors to complete the additional legal processes (signing a lease and registering a TP1 title deed). There is no evidence to suggest the landlord had over extended or deliberately delayed the property sale so as to receive additional rent payments from the resident.
  10. It is evident that the landlord failed to meet its legal obligation in registering the application and issuing the RTB2 notice thereby incurring an extra 4 weeks in the sale of the property. It additionally failed to meet its legal obligation by issuing a S140 notice 4 weeks earlier than the required 3 month timescale thereby regaining the lost 4 weeks on the sale of the property. While these circumstances offset each other in terms of any delay caused to the sale, the landlord was expected to understand and uphold its legal obligations throughout the process. Its actions in this regard were inappropriate.
  11. The RTB legislation makes provision for an applicant to issue a notice of delay form (RTB6) to a landlord if it has not completed parts of the RTB application within the set time limits, or if the purchase is held up in some other way. There is no evidence that the resident or her solicitor submitted a RTB6 to the landlord. It addressed this in its stage 1 response by saying that the resident could have served a delay notice if she wished to claim the rent she had paid which it would have reasonably considered in keeping with legislation. The resident explained to this Service in an email dated 10 July 2023 that the landlord was careful not to exceed 1 month when dealing with matters and consequently she could not serve a RTB6. While there is no legal requirement for the landlord to respond to general enquiries within a prescribed timescale, issuing responses within 28 days was reasonable and in keeping with the shortest of the timescales it is required to meet under the 1985 Act. There may have been an opportunity for a RTB6 to be issued when the landlord failed to issue the RTB2 notice within 4 weeks of the submission of the application in August 2022. Notwithstanding the resident did not submit a RTB6 and therefore the landlord’s response to the matter was reasonable under the circumstances.
  12. The landlord reviewed its handling of the resident’s RTB application in its final complaint response on 15 June 2023. The landlord acknowledged its failings, provided information about its interpretation of the law, and offered an apology. It also explained the lessons it had learned, said that it had improved its processes to avoid reoccurrence, and it offered the resident £250 as compensation. The landlord acted fairly by recognising its failings and seeking to learn from the complaint and improve its services. It clearly explained why it did not consider it had an obligation to reimburse the resident for the rent payments she had made during the sale or to provide her with all, or a portion of, the increased RTB discount. However its handling of the RTB application outside of its legal and policy obligations was inappropriate which caused time, trouble, and inconvenience to the resident.
  13. Where there are admitted failings by a landlord, as here, this Service considers whether the redress offered by the landlord (as set out in the preceding paragraph) put things right and resolved the resident’s complaint satisfactorily in the circumstances. In considering this we take into account this Service’s Dispute Resolution Principles; be fair, put things right and learn from outcomes.
  14. The landlord offered the resident £250 as compensation for the failings it had recognised which it was entitled to do in keeping with its corporate compensation policy. It was not clear how much of the award related to its handling of the RTB application or its handling of the complaint and this is addressed later in this report. This Service has not seen the landlord’s corporate compensation policy. However its offer of £250 for its failings in handling the RTB application was within the range of awards set out in this Service’s remedies guidance for situations such as this where there was maladministration which adversely affected the resident but had no permanent impact. The award proportionately addresses the landlord’s failings in handling the RTB application process and recognises that its failings had caused time, trouble, distress, and inconvenience to the resident. Consequently its offer was reasonable under the circumstances. Taking all matters into account this Service finds that the landlord has provided reasonable redress for the maladministration this investigation has identified in its handling of the resident’s RTB application.

The landlord’s handling of the resident’s complaint.

  1. There was service failure in the landlord’s handling of the resident’s complaint as the landlord:
    1. Did not acknowledge the stage 1 complaint in keeping with its complaint policy and paragraph 4.1 of the Housing Ombudsman complaint handling code (the ‘Code’) which says a complaint should be acknowledged and logged within 5 days of receipt.
    2. Did not issue its response to the resident’s stage 1 complaint of 2 May 2023 until 17 May 2023 which was 1 working day later that its 10 working day complaint policy timescale.
    3. Did not issue its response to the resident’s stage 2 complaint of 19 May 2023 until 15 June 2023 which was 7 working days later that its 20 working day complaint policy timescale.
  2. In the landlord’s final response it explained that it had learnt lessons related to its handling of the RTB application and the complaint. Furthermore it apologised to the resident for its failings, and it offered her £250 as compensation for the detriment its handling of the matters had caused.
  3. It was appropriate for the landlord to have recognised its complaint handling failings, apologised to the resident, and reassured her that it had learnt from the outcomes. However, it did not breakdown the award so as to be clear about how much of the compensation it had provided for its complaint handling failings. This Service considers that a reasonable award in keeping with our remedies guidance for the 8 days it had delayed issuing its complaint responses and its failure to acknowledge the complaint would be £50. This level of compensation is within the range set out in our remedies guidance for instances when, as here, there have been minor failings by the landlord which did not significantly affect the overall outcome for the resident but caused her to incur time and trouble, and delays in getting the complaint resolved.

Determination (decision)

  1. In accordance with paragraph 53 of the Scheme there was reasonable redress in respect of the landlord’s handling of the resident’s Right to Buy application.
  2. In accordance with paragraph 52 of the Scheme there was service failure in respect of the landlord’s handling of the resident’s complaint.

Orders and recommendations

  1. Within 4 weeks of the date of this report, the landlord is ordered to pay the resident £50 for any time, trouble, and inconvenience the resident may have incurred related to the landlord’s handling of the complaint. The compensation is to be paid direct to the resident and not offset against any money that the resident may owe the landlord.
  2. The landlord is recommended to:
    1. Pay the resident the £250 compensation previously offered in its stage 2 complaint response if it has not already done so.
    2. Review the Housing Ombudsman’s May 2023 Spotlight report on knowledge and information and is encouraged to consider the impact its knowledge management has on the quality of its housing services.