Gentoo Group Limited (202221305)

REPORT

COMPLAINT 202221305

Gentoo Group Limited

19 January 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 application to acquire her property.

Background

2. The resident is an assured tenant of the landlord and has lived at the property since 2017.
3. In May 2021, the resident and her then husband applied to acquire the property from the landlord under
4. In November 2021, the landlord commissioned a surveyor to value the property so that it could establish the correct offer price. The surveyor valued the property at £120,000. The law provides that people exercising the right to acquire in the resident’s area are entitled to £9,000 discount. The landlord therefore offered the property to the resident for £111,000. The landlord was responsible for some delay during the right to acquire process.
5. In March 2022, the resident’s marriage broke down. The resident told the landlord. The landlord advised her that she would have to make a fresh application in her sole name. The resident applied in her own name on 31 May 2022. At this point, the landlord commissioned another survey which valued the property at £140,000. The landlord then offered the property to the resident for £131,000.
6. The resident complained to the landlord on 15 September 2022. She said that the landlord should not have required her to make a fresh application but should have allowed her simply to remove her husband’s name from the application and continue. She said that the landlord’s delays had meant that a second valuation had been required and this had led to a £20,000 increase in the offer price. She asked the landlord to allow her to purchase the property using the original valuation.
7. In its decisions of 7 October and 18 November 2022, the landlord accepted that it had been responsible for some delay and apologised. However, it said that the resident had also been responsible for some delay and had failed to accept its offer within the required timeframe.
8. The landlord further stated that the resident’s change of circumstance meant that a new application had been required. It had then had to seek a new valuation because a surveyor advised that it was necessary, and it was more than 6 months after the previous valuation.
9. In referring the matter to this Service, the resident stated that she wants the landlord to use the original, lower valuation as the offer price for her purchase of the property.

Assessment and findings

10. There are two separate but similar procedures for tenants of housing associations and local authorities who wish to buy the property they rent from their landlord. The Right to Buy Scheme applies mainly to local authority tenants and gives them the right to purchase their property at a considerable discount if they meet certain criteria. The rules for this procedure were set out in the Housing Act 1985.
11. The procedure and rules for the Right to Acquire scheme were set out in the Housing (Right to Acquire) Regulations 1997 (the Regulations). The Regulations state that the procedure for Right to Acquire is identical to the procedure for “Right to Buy” unless stated otherwise in the Regulations.
12. The government has issued guidance which applies to right to buy applications. This sets out a timetable for the procedure including deadlines at various stages which the landlord and tenant must meet. These are:
    1. 4 weeks for landlord to confirm that the applicant has the right to buy.
    2. 8 weeks for the landlord to send the applicant an offer notice.
    3. 12 weeks for the applicant to accept the landlord’s offer. If the resident fails to do so, they can ask for a delay. The landlord should issue a default notice at the expiry of the 12 weeks informing the applicant that, if they do not accept within a further 28 days, the application will be cancelled.
13. The resident sent the original application on 18 May 2021. She did not send a declaration form which should have accompanied the application. The landlord did not respond to the resident telling her to send the declaration until 5 July 2021. The landlord said, in its complaint response, that this did not count as delay as the resident had failed to send the declaration, so the timetable had not started. However, the landlord’s failure to process the application for 2 months was below the level of service the resident had a right to expect and did delay the application.
14. The resident returned the completed declaration on 13 July 2021. The landlord accepts that it missed 2 dates on the timetable. The landlord should have informed the resident that she was eligible to apply by 10 August 2021. It actually did so on 25 August 2021. The landlord should have issued an offer notice on 20 October 2021. It did not do so until 16 November 2021. These delays, totalling 40 days, were unacceptable.
15. However, most of this delay took place before the valuation of 9 November 2021. Because of this delay, the landlord asked for a valuation backdated to 5 October 2021 which remedied the error made.
16. The resident was also responsible for some delay. She should have accepted the offer by 1 February 2022. She did not contact the landlord until 7 February 2022. On 1 February 2022, as it had not received an acceptance, the landlord should have issued a S125E default notice which would have informed the resident that she had a further 28 days to purchase the property or have the application withdrawn. However, it did not do so, and this was a failure on its part.
17. The resident says she took a money laundering declaration to the landlord’s office that day, but the landlord has no record of receiving it. The process stalled at this stage. The landlord says that she did not contact it again until 16 March 2022 when she told an employee that her marriage had ended and was told that she should make a fresh application. In the absence of any evidence to corroborate either version of events, this Service is unable to come to a conclusion on whether or not the declaration was returned. 

Insistence on fresh application

18. The resident says the landlord should have allowed her to remove her husband’s name from the application and continue with her original application. This, she says, would have meant that she would have been able to rely on the original valuation. She says there is nothing in the guidance which says the landlord was obliged to insist on a fresh application as it did. 
19. The landlord denies that this was the case. It says that, because she had failed to progress the original application, and because 6 months had passed since the first valuation, a second valuation would still have been required even if she had continued with the original valuation. That being the case, the resident suffered no financial loss as a result of the landlord’s advice.
20. In any event, the resident wrote to the landlord on 26 May 2022 saying that she had separated from her husband who had now been removed from the tenancy agreement. She said that, so far as she was aware, she had to make a fresh application and would deliver the fresh forms to the landlord, which she subsequently did on 31 May 2022.
21. The landlord said that it processed the new form as a fresh application. Because the application was made on 31 May, more than 6 months after the previous valuation which had been carried out in November 2021 but backdated to October 2021, the landlord said a further valuation was necessary.
22. The landlord carried out a further valuation which valued the property at £20,000 more than previously because of “very strong market conditions within the area”. The resident was distressed by this increase, stating that she could not afford the higher price.
23. For this Service to find that there has been a failing, it would need to be satisfied that it had acted in a way which was at odds with its duties and responsibilities. In this case, the regulations and guidance are not clear as to whether a resident could continue with an application where one party no longer wishes to proceed with acquiring a property. However, the guidance makes it clear that, if there is a change of applicant or an additional applicant, then the landlord has discretion to require a fresh application if it chooses. This Service cannot find fault with a landlord for exercising its discretion lawfully. Research indicates that it is common practice for landlords require a fresh application if one applicant withdraws. The landlord’s position is, therefore, in line with practice in the sector and is not unreasonable given the potential difficulties.

Conclusion

24. The landlord was responsible for failures in the handling of the resident’s application. However, it partially remedied these by taking action to put the resident in the position she would have been but for these failures, by backdating the valuation.
25. While the landlord’s failures did hold up the process at times, the resident’s change of circumstances was also responsible for a significant proportion of the delay. It cannot be said that any failures by the landlord caused the resident the loss that she claims it did.
26. Nonetheless, the landlord’s delay did cause the resident distress. In line with our guidance, the Ombudsman has awarded the resident financial compensation of £200.

Determination

27. In accordance with paragraph 53(b) of the Ombudsman Scheme, there was service failure in the landlord’s handling of the resident’s application to acquire the property.

Orders and recommendations

Order

28. Within 4 weeks of the date of this decision, the landlord should:
    1. Write a letter of apology to the resident acknowledging the delays to its handling of her application.
    2. Pay £200 in compensation to the resident in redress for the delays.