Orbit Group Limited (202201763)

REPORT

COMPLAINT 202201763

Orbit Group Limited

27 February 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

The complaint concerns the condition of the property at the start of the tenancy.
The Ombudsman has also considered the landlord’s complaint handling.

Background

The resident is a shared owner of a newly built 2-bedroom flat situated above a garage. The lease began on 21 August 2021. The housing association landlord was also the developer and is the current owner of the development.
On 22 December 2021, the resident contacted the landlord to raise a formal complaint. She said that upon moving into the property, she had reported that “mould had grown on the skirting board, which looked as though it was coming through the paint”. The landlord had treated it, but the mould grew back. She had now discovered the mould spread in her wardrobe and kitchen, and there was a ‘beetle-like infestation’ throughout.
On 8 January 2022, the resident commissioned a home condition report. The report listed over 30 issues. Some were decorative, known as snags, and some were defects concerning the structure and safety of the property. The report found:
1. Penetrations to meter boxes “exposed with no fire-stopping materials, no evidence of fire-stopping measures behind cladding”. No cavity wall insulation.
2. ‘Significant’ amounts of heat loss throughout the property. Draught and a drop in temperature in the kitchen “suggests expansion foam was used to cover a hole in the floor slab”.
3. ‘Very apparent’ black mould growth to skirtings, ‘visible’ damp patches throughout the property on walls, windows, inside cupboards, wardrobes, and carpets. It was noted that the resident placed a dehumidifier inside cupboards and throughout the property to alleviate the dampness and mould.
4. “Small black crawling bugs” throughout the property, inside cupboards, skirting boards, and carpets.
5. Plasterboard cut short, fire door not closing shut – ‘breaching’ building regulation.
6. A leak in the bathroom; the pedestal to the basin was fitted upside down.
7. Cracking to plaster walls and inconsistent finish to the paintwork.
The resident shared the home condition report with the landlord on 14 January 2022 and asked that it would address the questions around breaches in building regulation and fire safety in its formal response to the resident’s complaint. The landlord responded on 25 January 2022 and said:
1. The site manager advised that no fire safety breaches have occurred, and he would be able to explain further when he would attend to inspect the property.
2. It had sought advice from a pest control expert, who confirmed the resident had a bed bug infestation, which was not covered under the defect warranty.
3. It would continue to investigate the mould and keep the resident informed.
The resident contacted the warranty providers on 25 January 2022, seeking to open a claim for the defects. The landlord then contacted the resident and said it would do the required work directly. It said it would start by treating the pests at the resident’s property. Once this had been completed, it would work to carry out a thermal imaging scan of the property and subsequently work through the rest of the home condition report.
The landlord inspected the property on 12 May 2022. Following the meeting, the resident contacted the landlord on 13 May 2022 and said she was “no longer comfortable” with the original site team conducting the remedial work as the “relationship had broken down.” She did not believe in the same team effectively carrying out the remedial works. Therefore, she preferred that an impartial party carry out the outstanding works. On 20 May 2022, the landlord wrote to the resident and said it had decided to engage with the warranty provider to review the outstanding issues at the property in order to bring these to a successful conclusion.
On 7 July 2022, the warranty provider wrote to the landlord and said it had completed the report into the resident’s case and identified areas where the landlord had not complied with the warranty provider’s technical requirements; therefore, it was liable for the remedial works. It said the landlord must start the works by 25 July 2022 and finish by 30 September 2022.
On 27 July 2022, the landlord responded fully to the resident’s complaint and said there was clear evidence that the property purchased had not been up to standard, and there had been delays in progressing the works, which resulted in damage to personal items within the property. It agreed to reimburse the resident for the cost she incurred and offer £500 in recognition of the distress and inconvenience caused.
The resident asked to escalate her complaint to stage 2 on 28 July 2022. Meanwhile, the landlord hired a specialist pest control company on 17 August 2022, which advised the landlord that “first and most importantly,” the damp source needs to be identified and dried out and work carried out to stop it from becoming damp again. Once this has been done, it would inject fine dust into the cavity walls, which would scratch the bugs’ exoskeletons, causing them to lose water, dehydrate and die.
The landlord sent its final response letter on 18 October 2022 and said:
1. Following the warranty provider’s arbitration, it formed an action plan to address the resident’s concerns within the property. As part of the plan, it had relocated the resident to a hotel on 17 October 2022 and started the work. These were expected to take place over 4 weeks. Upon completion, it would invite the resident to attend a post-work assessment to ensure she was satisfied with the completed result.
2. It said it could not propose compensation until the post-work inspection had occurred. It would contact the resident with a fair and reasonable amount after that. It apologised for the stress and inconvenience caused.
During the post-work inspection on 11 November 2022, the resident said that the landlord had previously told her all mould affected MDF would be replaced. However, as she saw there was still mould on hinges and bugs inside kitchen units, she realised the landlord had only treated the wood and reinstalled it. She also said that questions about the building’s safety were still not addressed. Therefore, she was uncomfortable signing off the completed works and asked for an “appropriately qualified and independent expert” to sign off the works.
The resident informed this service in January 2024 that the landlord had suggested the parties would wait for the determination of this service. Although the situation in the flat has improved, to resolve the complaint, the resident would like an independent, qualified surveyor to investigate and certify the works. She would like the landlord to reimburse her out-of-pocket expenses and give her a fair and reasonable amount of compensation.

Assessment and findings

The condition of the property at the start of the tenancy

When investigating a complaint, the Ombudsman applies its Dispute Resolution Principles, which include treating people fairly, following fair processes, putting things right, and learning from outcomes. The Ombudsman must first consider whether a failure on the landlord’s part occurred and, if so, whether this adversely affected or caused detriment to the resident. If a failure by the landlord adversely affected the resident, the investigation will then consider whether the landlord took enough action to ‘put things right’ and learn from the outcome.
In this case, the landlord accepted that as the developer, it was responsible for rectifying defects identified during the defect liability period. It has also accepted that “the property had not been up to standard”. From the outset, the resident reported that mould was growing on the skirting board, “which looked as though it was coming through the paint”. The landlord had treated the mould, but 3 months later, it grew back and spread throughout the house. The resident also reported a beetle-like infestation at that time. The resident commissioned a home condition report, which had raised questions about building and safety regulations breaches.
The construction manager inspected the property and made a passing comment to the resident that, due to time and budget constraints, the site team had knowingly used mouldy MDF during construction. Irrespective of whether mouldy MDF was used or whether this was the cause of the reoccurring mould in the resident’s home, this comment damaged the landlord-resident relationship. Evidently, the ‘breakdown in relationship’ was one of the reasons why this dispute was still ongoing.
Concerned with the condition of the property, the resident turned to the landlord for help. She sought reassurance that she was being listened to and that her concerns were being taken seriously. She raised 3 issues of concern:
1. Reoccurring damp and mould.
2. Pest Infestation.
3. Building Safety.
The landlord initially responded on 25 January 2022. It said it sought advice from a “pest control expert who confirmed the resident had a bed bug infestation, which was not covered under the defect warranty”. When asked by the resident, however, the landlord was unable to provide any evidence to support its claim that it had consulted an expert. There is also no evidence that it apologised to the resident once the infestation was confirmed as plaster beetles, a bug associated with building supplies, damp, and mould.
The resident responded that neither the landlord nor its operatives had inspected the bug, which was “clearly a by-product of the mould she had been sold with the property”. She asked the landlord not to “fob her off”. The landlord’s response was disingenuous and further undermined the relationship between the resident and the landlord.
In response to the allegation of breaches in building safety regulations, the landlord said that the site manager had advised that no fire safety breaches had occurred. This response was insufficient in reassuring the resident. The resident inquired about the authority responsible for certifying the construction of the property. The resident reached out to the fire brigade for advice but was signposted to the local authority. The local authority, in turn, referred her to the warranty provider. The warranty provider then directed her to her conveyancer, who informed her that he was still awaiting information from the landlord’s solicitor. There is no evidence that the landlord assisted the resident in finding out the information. It is concerning that the landlord did not address this issue in any of its communications with the resident despite the resident having raised it on several occasions.
The resident approached the warranty provider, seeking to initiate a claim for the remedial works. The warranty provider’s resolution procedure says that upon receiving a claim from a resident, it would first ask the builder (in this case, the landlord) to form an action plan for the work and to reach an agreement with the resident. If the issue has not been resolved, the warranty provider would:
1. Invite the parties to a resolution meeting. The landlord must ensure that a representative with the knowledge and the authority to negotiate can attend.
2. If the warranty provider found that the landlord did not comply with its technical requirements, it would set out what repairs, tests, and investigations the landlord must do and when this must be completed. The process was binding on the landlord.
3. The landlord must also pay for the reasonable cost of removals, storage, and appropriate alternative accommodation for the resident, but not living expenses such as food and drink.
Consequently, the landlord approached the resident on 25 January 2022 and committed to completing the required work. However, by the end of February 2022, pest control operatives had carried out a 3-step treatment in the resident’s home, but the bugs persisted. Concerns about fire safety and building regulation breaches were not addressed, and the dampness and mould remained.
The resident contacted the landlord on 24 February, asking for its formal complaint response that was due on 8 January 2022. She then contacted the landlord on 1 March, 4 March, 23 March, 4 April, 14 April, and 26 April 2022, chasing the landlord for a formal response. This aggravated the landlord-resident relationship and compounded the resident’s distress.
Eventually, this service intervened and asked the landlord to respond. The landlord responded on 6 May 2022, and it inspected the property again on 12 May 2022. There is a gap in the evidence, and it is unclear what transpired. However, on 13 May 2022, the resident wrote to the landlord and said she was no longer comfortable with the original site team conducting remedial work as the “relationship had broken down”. She felt the team had caused the issue in the first place as they admitted to using mouldy MDF during construction. She did not believe in the same team carrying out the remedial works effectively. Therefore, she asked that an impartial party carry out the outstanding works.
In response, the landlord wrote to the resident on 20 May 2022, advising that it would engage the warranty provider to review the outstanding issues. The landlord’s solution of engaging the warranty provider did not address the resident’s concerns. The warranty provider does not supervise the remedial works, nor does it return to inspect the property when works have been completed. As a result, the resident’s request for an independent construction team was not addressed, unbeknown to the resident. The landlord overlooked the resident’s concerns and missed an opportunity here.
The warranty provider had arranged a resolution meeting between the parties for 6 June 2022. The landlord confirmed its attendance but failed to arrive, forcing the meeting to be rescheduled. It is unclear why the landlord did not attend the meeting. There is no evidence that it apologised to the resident for prolonging the complaint and, therefore, her distress. This was not appropriate.
The warranty provider held the resolution meeting on 7 July 2022. It then wrote to the landlord on 7 July 2022 and said it identified areas where the landlord had not complied with the warranty provider’s technical requirements; therefore, it was liable for the remedial works. It said the landlord must start the work by 25 July 2022 and finish it by 30 September 2022. Pest control operatives were also at the resolution meeting and said: “Holes were still open within the plasterboard when inspected by builders”. As a result, the carpet was reinfested. Operatives recommended further treatment with the carpets replaced. The landlord knew its intrusive inspection of the property left holes in the plasterboard. It nevertheless carried out the pest treatment, and by doing so, it demonstrated a lack of planning on its part.
The landlord’s defect and warranty policy says: “Proactive action to resolve defect repairs within timescales is critical for the effectiveness of the process and to ensure that we deliver the level of service expected by our customers.” The landlord was not proactive in scheduling the work, leaving the resident chasing it to take action. The lack of planning led to bugs contaminating areas that pest control operatives had previously treated. The dampness and mould persisted despite the landlord installing an industrial dehumidifier in the resident’s home. Nearly a year after the resident moved into the property, the landlord failed to make adequate progress with the work required or provide information on the building’s safety. This was not appropriate.
The landlord’s lack of planning was also confirmed when the landlord hired a specialist pest control company on 17 August 2022, which advised the landlord that: “First and most importantly,” the damp source needs to be identified and dried out and work carried out to stop it from becoming damp again”. Similar advice was given to the landlord by the previous pest control contractor and was also written in the warranty provider’s resolution report. The landlord should have relied on the advice of its contractors.
The resident experienced further delay as work that should have been completed by September 2022 had started on 17 October 2022. The landlord moved the resident to a hotel for 4 weeks, which was in line with its obligation under the warranty provider resolution service. It had also agreed to reimburse the resident up to £25 for her daily expenses, such as food and drink, which it was not obliged to do under the warranty provider’s scheme. This was appropriate. The landlord said that upon completion, it would invite the resident to attend a post-work assessment to ensure she was satisfied with the work completed. This was also appropriate.
The resident, however, remained sceptical of the landlord. She contacted this service on 1 November 2022. She said she was not confident the landlord’s final response letter would cover all areas of concern, namely breach of building regulations, “acknowledging the true source of the mould, its negligence, among other things”. This indicates the loss of trust the resident felt at that time.
The warranty provider had stated in its resolution report before the remedial works took place that: “Whilst a lot of the mould growth which was present in the property before occupation has been removed, there is still evidence that some mould remains and is actually re-forming in some areas. The builder must carry out works to make sure that this item complies with our Technical Requirements by removing all traces of mould from the property”. It is, therefore, understandable that the resident returned to the property at the end of the remedial works, expecting all traces of mould to be eradicated.
During the post-work inspection on 11 November 2022, the resident said the landlord had previously told her that all mould affected MDF would be replaced. However, as she had seen mould on hinges and kitchen units and bugs inside kitchen units, she realised the landlord only treated the wood and reinstalled it. Additionally, she still had doubts about the building’s safety. The resident said she was uncomfortable signing the warranty-provider satisfaction sheet for the remedial work. She asked that an independent qualified surveyor inspect the works.
In all the circumstances of the case, the resident’s request for an independent, qualified surveyor to check the remedial works was reasonable. Taking into consideration that:
1. The resident’s confidence in the site team was eroded; she felt “the team had caused the issue in the first place as they admitted to using mouldy MDF during construction”;
2. The resident’s request that an impartial party carry out the outstanding works as “the relationship had broken down”;
3. The repeated chasing of the landlord to respond and take action;
4. The repeated ineffective pest treatments; the reinfestation of the carpets because of holes in the plasterboard,
5. The reoccurring dampness and mould; the warranty provider’s confirmation that mould was reforming in the property and that all traces of mould must be eradicated for the issue to be resolved;
6. She identified areas in the house where, in her opinion, mould was present, and live bugs were found;
The landlord recognised in its letter of September 2023 that the resident had lost her confidence in it. Yet, it did not take the initiative post-remedial works to amend the relationship with the resident and provide reassurance. The landlord could have communicated with the resident by explaining the work carried out, addressing the resident’s concerns, and offering to return to the property after a certain period to ensure the issue had not reoccurred. The landlord failed to follow its defect and warranty policy, as it was not proactive and did not maintain effective communications with the resident.
During the course of this investigation, the landlord explained to this service that there were no breaches in building and fire safety regulations. It said this was contested with the customer at that time, although there is no evidence of this. The landlord explained that:
1. The plasterboard was installed as a decorative finish to cover the insulation installed to the concrete stair soffit and underside of the floor planks correctly. The perimeter of the stairs’ soffit, the junction of the floor planks, and the walls would have been sealed with mortar or fire sealant. Thereby, the plasterboard did not require sealing to meet building regulations.
2. The meter cupboard was not sealed and was not a breach of building regulations as the meter backs onto the staircase void.
3. It explained that a third party had signed off on the construction, and it provided this service with a certificate.
It would have been reasonable for the landlord to have explained its position and communicate with the resident openly and transparently. There is no evidence it did so. Conversely, there is evidence that the resident repeatedly raised her concerns with the landlord and that her frustration grew with each week that went by waiting for the landlord to form an action plan and communicate its plan with her. This was not appropriate.
Furthermore, there is no evidence that the landlord explained to the resident what caused the dampness and mould. The cause remains unclear. Similarly, the issue of fire safety has not been addressed. For example, despite the landlord confirming that all penetrations to meter boxes had been closed off with a fire-resistant material, the resident was adamant this had not been carried out. It would have been reasonable for the landlord to be transparent and explain what went wrong during construction and what it had done to repair. The landlord failed to do so.
In the interest of resolving the dispute, it is reasonable that the parties agree on a single joint expert to inspect the remedial works so that the relationship can be repaired, and the parties move on. An order has been made below for the landlord to work with the resident to do so.
During the landlord’s internal complaint process, the resident submitted to the landlord the cost of expenses she had incurred. The landlord accepted that the delay in carrying out the work had caused damage to the resident’s belongings. It also recognised that she incurred expenses such as increased electricity due to the dehumidifier in her property. In its stage 1 response, the landlord agreed to reimburse the resident for her list of out-of-pocket costs. These came to £3,119. This was appropriate. While the landlord could have referred the resident to make an insurance claim, it acted fairly and in keeping with this Service’s Dispute Resolution Principles by agreeing to pay all the resident’s out-of-pocket expenses.
This, however, was not an offer of compensation. It was reimbursement for costs the resident had incurred. Therefore, it would have been reasonable for the landlord to make the payment as it said it would. Despite contemporaneous evidence that the resident was under financial pressure, known to the landlord, it failed to do so. An order has been made below for the landlord to pay this amount to the resident with interest of 8%, or £249.52, which gives a total of £3,368.52.
The landlord offered £400 in compensation for the distress and inconvenience caused. While it was appropriate for the landlord to offer compensation to try and ‘put things right’ for the resident, the Ombudsman considers that the landlord’s offer of redress does not adequately reflect the level of detriment caused to the resident for the failures identified in this report. Given the length of time, the resident had to contend with a repeated infestation, reoccurring dampness and mould, and unanswered concerns surrounding fire safety, its offer of £400 was insufficient.
Moreover, since July 2022, with a stage 1 offer of £400 in compensation, the resident had relocated to a hotel during the time 4 weeks of the remedial works were underway. It is recognised that the landlord paid daily living expenses, which it was not obliged to do under the warranty provider’s scheme. However, considering the resident worked from home, the hotel stay meant she was confined to a single room for a month. The landlord recognised in its stage 2 response that further compensation would be due to the resident, which it said it was not able to quantify until the works had been completed.
It was appropriate that the landlord recognised that the adverse effect on the resident had continued since its offer of compensation at stage 1; however, there is no evidence that it amended its offer since. A further order has been made below for the landlord to compensate the resident with an amount which reflects the distress and inconvenience caused to the resident throughout the full period of the complaint.
Evidently, the resident did not have quiet enjoyment of her property. She was not able to use her wardrobes or cupboards due to the infestation, meaning her belongings were stored in bags and boxes, which occupied the space of one of the bedrooms. She also had the inconvenience of chasing the landlord to take action and then facilitating pest control treatments, meaning she had to vacate the property for a few hours each time and take time off work as she was not able to work from home. The fumigation was not successful because of a lack of coordination by the landlord. This was confirmed by 2 of its specialist pest control firms. The landlord’s failure to follow its contractor’s advice caused distress and inconvenience over a protracted period.
In recognition of the distress and inconvenience caused, an order has been made below for the landlord to compensate the resident with an amount equal to 15% of the rent paid during this period. From 21 August 2021 until 11 November 2022, 14 months, this service took the rent amount of £310 paid by the resident and calculated £651 in compensation for the distress and inconvenience caused by the loss of enjoyment of her home.

The landlord’s complaint handling

The resident raised her formal complaint on 22 December 2021, and the landlord responded on 27 July 2022, which was 149 working days against a target of 10 working days. This was not appropriate. It caused distress and inconvenience and damaged the landlord–resident relationship.
The landlord offered £100 in compensation, which did not go far enough to reflect the adverse effect on the resident and the detriment to the relationship between the landlord and the resident. The resident had to chase the landlord from December 2021 until July 2022 for her complaints to be acknowledged and addressed. This has resulted in the resident having to necessitate an unreasonable level of involvement.
In recognition of the distress and inconvenience caused by the landlord’s handling of the associated complaint, the landlord is ordered to pay the resident a total of £250. The landlord did not pay the compensation amount offered, and therefore, no deductions are applicable in this case.
Finally, there is no indication that the landlord has ‘learned from outcomes’ in this case or detailed any actions it would take to prevent similar issues from recurring. A further order is made below to address this.

Determination

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration with regard to the condition of the property at the start of the tenancy.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord’s handling of the complaint.

Orders and recommendations

Within 4 weeks from the date of this report:
1. The landlord must send the resident the details of 3 RICS-registered surveyors, out of which the resident would choose 1 surveyor to act as a single joint expert.
2. Within 2 weeks of the landlord being informed of the resident’s choice, the landlord must instruct the surveyor to inspect the works carried out.
3. The surveyor would send the report to both the landlord and the resident. Should the surveyor recommend further work, the landlord must carry them in full within 4 weeks from the date of the surveyor’s report.
Within 4 weeks from the date of this report, the landlord must investigate why it failed to respond to the resident’s complaint. It must then write to the resident with the outcome of its investigation and apologise for its failure to recognise the complaint. In its letter, the landlord must also explain whether additional staff training against the Ombudsman’s Complaint Handling Code is warranted. The rationale for this decision must also be explained in its letter. A copy of this letter must be sent to this service.
Within 4 weeks from the date of this report, the landlord must pay the resident directly £5,119.52, broken down as follows:
1. £3,368.52 for out-of-pocket expenses (£3,119 with 8% interest of £249.52)
2. £850 in recognition of the distress and inconvenience caused to the resident.
3. £651 for the loss of enjoyment of her home (15% of the rent paid from the start of the tenancy until the remedial works had been completed).
4. £250 for the distress and inconvenience caused by the landlord’s handling of the complaint.