Vivid Housing Limited (202002223)

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REPORT

COMPLAINT 202002223

Vivid Housing Limited

13 January 2021

Our Approach

 

  1. 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.

 

  1. Both the leaseholder 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 refusal to cover the full cost of an excess payment to have roof repairs carried out at the leaseholder’s property.

 

Background and Summary of Events

 

  1. The leaseholder has shared ownership of the property. When the property was built in 2016, the builder took out a building warranty with a warranty provider.

 

  1. In January 2020, the roof of the property started leaking and when the leaseholder reported this to the landlord, she was advised to contact the buildings insurer. When she did so, she was advised that, as the property was a new build, she should contact the warranty provider. The leaseholder then contacted the warranty provider and was asked to send photographs of the problem. She was also told that, in the event of a valid claim, she would need to pay a £900 excess before any repairs could take place.

 

  1. On 21 January 2020 the leaseholder queried the amount of the excess with the landlord and the landlord responded on 24 January 2020, advising that this was a standard excess. It also said that she could obtain her own report and, if a defect were found, it could go back to the builder, but there was no guarantee the builder would accept this. It said that the other option was to go through the warranty provider and, if a defect were found, the warranty provider would go back to the builder.

 

  1. The leaseholder contacted the landlord again on 14 February 2020, stating that she had read the various documents provided when she had purchased the property, and she should have received a copy of the warranty provider’s certificate, but had not received this at the time. She explained that she had received a copy that day, and it said that the excess was £650, not the £900 she had been quoted. She also said that she had spoken to the warranty provider and had been told that under normal circumstances there would not be an excess, and there was only an excess because the landlord had chosen a ‘choice’ policy. She stated that, as the property was shared ownership, she thought there should be more interest from the landlord in resolving the problem.

 

  1. In the landlord’s response of 18 February 2020, it said the insurance cover premium (it is assumed that it meant excess) would rise over time, and as the warranty was initially from June 2016, it would have gone up. It also said the warranty was the same for every property on the development and any shared owner would have to pay any excess on a claim. Finally, it said it had sent the leaseholder’s enquiry to its Asset Delivery Team, as they look into any claims for latent defects.

 

  1. The Asset Delivery Team confirmed that the building warranty was the leaseholder’s only option if she could not get the roof repaired herself, and that there would be an excess to pay. It explained that the landlord would only be responsible for repairing the roof if the property were a block of flats with shared owners/leaseholders in it, as it would be responsible for repairing the common parts. The landlord therefore advised the leaseholder that the matter would be her responsibility to resolve.

 

  1. On 27 February 2020 the leaseholder made a complaint to the landlord. She explained the situation and said she had not received a copy of the building warranty certificate upon completion in 2016. She also said that she had not received the latest building insurance documents (though she accepted that that was not relevant to the roof leaking). She said her lease stated that she was responsible for the excess payable for the building insurance, but the warranty was not buildings insurance, and so she thought this would be the responsibility of the landlord.

 

  1. The landlord spoke to the leaseholder about the matter on 4 March 2020. It then provided its Stage 1 response on 10 March 2020, as follows:

 

11.1.      The builders had attended its office in March 2020, and it had asked them to look into the issue. The builder had declined to do so and said that it was a matter for the warranty provider as it was outside the relevant period. The landlord discussed paying for a structural survey to take place for the builder to consider, but the builder refused this approach;

 

11.2.      The lease clearly states that the leaseholder has all repairing obligations;

 

11.3.      The building warranty is standard in the new build industry, including the excess amount;

 

11.4.      It had promised that it would work with the leaseholder on the matter, so to put things right, it offered to pay half the difference between the amount of excess originally stated on the policy certificate and the amount it had risen to. It confirmed its understanding that the excess was £650 on day one, and had risen to £900. Therefore, it would pay £125 towards the difference.

 

  1. On 17 March 2020 the leaseholder told the landlord that, based on the advice she had received, the building warranty excess was the landlord’s responsibility. She therefore wanted the landlord to pay the full excess so that the repair work could start.

 

  1. On 23 March 2020 the landlord contacted its solicitor about the matter. Its file papers say that it was advised the leaseholder’s solicitor ought to have told her about the excess. Also, the landlord’s solicitor should always provide the warranty certificate to the buyer’s solicitor as it is a legal requirement to complete. The landlord’s internal correspondence said that it was its process to also leave the certificate at the property for the leaseholder but given how long ago the leaseholder had moved into the property, it could not be sure that that had happened.

 

  1. In the landlord’s Stage 2 response of 24 April 2020, it confirmed that the Stage 1 response had been accurate and reflected its position. It said that it was unable to force the builder to review the roof leak and, if it was a defect, the leaseholder would need to go through the building warranty. Although the leaseholder was a shared owner of the property, she still had the normal responsibilities of a full owner, and her lease outlined those responsibilities. For that reason, she would be responsible for paying the excess if she decided to make a claim to the warranty provider. The landlord offered to increase the offer of £125 to £250 as a gesture of goodwill if she decided to make a claim under the warranty.

 

  1. The leaseholder remained unhappy and so contacted her MP about the matter on 28 April 2020. She said:

 

15.1. The roof had been inspected by two roofing contractors who had advised her that it was a build defect, most likely to do with the chimney. She thought this should be the responsibility of the builder to put right;

 

15.2. Appendix three to her lease said “Although initially the property is not owned outright, the Leaseholder does have the normal responsibilities of a full owner. This means, for example, that the Leaseholder will be obliged to pay 100% of the outgoings relating to the property and to keep the property in good and substantial repair and condition.”

 

15.3. As the issue was a latent defect, it should not be classed as a ‘repair’. A Government advisory service had told her that this meant the warranty provider’s excess would be the responsibility of the landlord.

 

  1. The MP raised the leaseholder’s concerns with the landlord and received a response on 16 June 2020. The landlord reiterated that it was the leaseholder’s responsibility to repair the leak and noted that an offer of £250 compensation had been made. It acknowledged that the issue of whether or not the leak was a defect had not been clarified so if the leaseholder obtained a written report that confirmed there was a defect, it would be willing to assist in a resolution with the builder. The landlord confirmed that the warranty had been chosen by the builder, as well as the excess, and reiterated that the excess was the leaseholder’s responsibility as she had full repairing responsibilities for her home. Finally, it explained that the building warranty documentation would have been provided to the purchaser’s solicitor throughout the purchase, and the solicitor reports to the purchaser and their lender regarding such matters.

 

  1. The leaseholder then brought her complaint to this Service, stating that she wanted the landlord to either arrange for the builder to resolve the defect, or to pay the £900 excess to the warranty provider to get it fixed.

 

Lease and Policies

 

  1. The lease states that it is the leaseholder’s responsibility to repair and keep at all times the premises clean and in a good condition and well and substantially repaired, maintained and decorated.

 

  1. The building warranty policy schedule and policy document explain that the first two years of cover is the ‘builder warranty period’, and the builder will be required to put right any ‘defect’ in that period. The warranty provider guarantees the obligations of the builder under the builder warranty. From year three to the end date, the warranty provider will put right damage to the property (including roofs) if this arose from a ‘defect’ because the builder failed to meet certain requirements when building the property.

 

  1. ‘Defect’ is defined in the building warranty as a breach by the builder of any mandatory requirement set out by the warranty provider (such as compliance with building regulations).

 

Assessment and Findings

 

  1. The leaseholder advised her MP that her roof had been inspected by two roofing contractors, and that it was thought there was an issue with the way the property had been built. However, no documentary evidence of those contractors’ findings has been provided to the landlord, or this Service. Nor has a claim been made to the warranty provider that has been accepted.

 

  1. It therefore has not yet been shown that there is a defect, as defined by the policy document (see paragraph 20 above). If there is found to be a defect, then that is what the warranty is designed to cover. As the issue was found in the third year after completion, the builder was not obliged to put right the damage, and instead the responsibility for this would fall to the warranty provider, subject to the payment of the excess. If a defect is not found, then the warranty provider will turn down the claim and there will be no excess to pay.

 

  1. The lease explains that it is the leaseholder’s responsibility to repair and maintain the property (see paragraph 18 above). The leaseholder’s correspondence to her MP referred to appendix three of the lease, which has not been provided to this Service, but a full quotation was included in her correspondence (see paragraph 15.2 above). This confirms that she, as the leaseholder, has the normal responsibilities of a full owner and that she is obliged to pay 100% of the outgoings relating to the property.

 

  1. Therefore, whilst the leaseholder does not own 100% of the property, in terms of outgoings and keeping the property maintained, the responsibility for this is hers rather than the landlord’s. This means that the leaseholder is responsible for any excess that is required to be paid in order for the repair to take place, rather than the landlord.

 

  1. The leaseholder says that it is not a repair, but rather an issue with the way the property was built, though this is precisely what the warranty is designed to cover. In allowing the leaseholder to purchase part of the property, the landlord has not guaranteed that there will not be any defects to the property or that it will take responsibility if defects are discovered. The builder guarantees this, under the ‘builder’s warranty’ which is provided in the first two years following completion. After that, it is the warranty provider’s responsibility to put right a defect, until the warranty’s end date.

 

  1. The landlord did approach the builder and ask if it would look into the matter, but the builder refused to do so. It was reasonable for the landlord to take this approach, and it acted fairly by also offering to pay for a structural report for the builder to consider, as it was not obliged to do this. Unfortunately, the builder refused to become involved further. As the issue was discovered outside the two-year builder warranty period, that meant that neither the landlord nor the warranty provider could require the builder to look into the matter.

 

  1. The initial advice given by the landlord on 24 January 2020 was not quite correct. It had said that if the leaseholder made a claim through the warranty provider and a defect were found, then the warranty provider would go back to the builder. That would not be the case. As the issue had been found in year three of the warranty, then if it were found to be a defect, the warranty provider itself would be required to put the matter right. Although the landlord gave the leaseholder incorrect advice here, she was not disadvantaged by this error.

 

  1. Whilst the leaseholder has concerns about the amount of excess chargeable by the warranty provider, the landlord has confirmed that the warranty was arranged by the builder, and so was the excess. The landlord is therefore not responsible for the amount of excess payable, nor the increase of this throughout the term of the warranty.

 

  1. The leaseholder says she did not receive a copy of the warranty certificate when she purchased her share of the property in 2016. The landlord says that it was a legal requirement for its solicitor to provide this to the leaseholder’s solicitor. It also thinks the leaseholder’s solicitor ought to have made her aware of the excess. If the leaseholder did not receive this information from her solicitor when purchasing the property, she may wish to raise this with her solicitor.

 

  1. The landlord says that its process is to leave a copy of the warranty paperwork in the property on completion, though given the passage of time, it does not know if it did so here. As it would seem the landlord was not obliged to provide the warranty documentation directly to the leaseholder, and it also cannot now be established whether it did so or not, it would not be appropriate to conclude that the landlord did something wrong here. Nonetheless, the landlord has offered to make a payment of £250 as a goodwill gesture as the excess had increased from £650 to £900 since the completion date. It was not obliged to do this, and so its offer seems fair.

 

Determination (decision)

 

  1. In accordance with paragraph 54 of the Scheme, there was no maladministration by the landlord in respect of its refusal to cover the full cost of an excess payment to have roof repairs carried out at the leaseholder’s property.

 

Recommendations

 

  1. The Ombudsman recommends that the landlord should, in the interests of maintaining good relations, pay the leaseholder the £250 compensation previously offered if she does make a claim to the warranty provider and is required to pay the excess.