Aster Group Limited (202230053)

REPORT

COMPLAINT 202230053

Aster Group Limited

5 July 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 landlord’s handling of the resident’s request to assign his tenancy via a mutual exchange.

Background and summary of events

2. The resident is an assured tenant of a one-bedroom flat on the third floor of a development containing thirty-two flats. He became the tenant following an assignment by mutual exchange. The tenancy was assigned to him on 21 December 2020. He has confirmed that he had no local connection with the area, and that no checks were made regarding this when the mutual exchange took place. When the resident requested permission to assign the property via mutual exchange approximately two years later, he was told that the incoming resident would need to satisfy the local connection criteria. The resident disputes this and has explained that due to the high rent cost of his home, he is unlikely to find a match locally.
3. In March 2022, the resident requested permission to assign the tenancy via mutual exchange and provided details of the exchange partner. The landlord conducted its initial checks which were all approved, however, the exchange partner withdrew from the assignment in May 2022.
4. A new mutual exchange application was completed in December 2022 with the same exchange partner. The landlord sent the application form to the resident on 16 December 2022.
5. On 22 December 2022, the resident was told that the exchange partner would need to meet the local connection requirements and be registered on the housing register. The landlord explained that this was due to section 106 planning regulations that were in place in relation to the development. As the exchange partner was from outside the local area, The landlord confirmed its decision to refuse permission in a letter dated 3 January 2023.
6. The resident submitted a complaint on 4 January 2023. He believed the exchange partner satisfied the local connection criteria as he had family members living locally. The resident disputed that being registered on the housing register was a valid requirement.
7. The landlord submitted its complaint response at stage one of the complaints process on 25 January 2023. This confirmed that the property in question was subject to the section 106 requirements, but the landlord’s records for the flat had not contained the relevant alert. This requirement had therefore been missed at the time of the resident’s mutual exchange, and the initial request for permission. This error had been corrected and came to light due to the member of staff’s knowledge of the development, having dealt with a similar request.  The landlord apologised for its oversight.
8. In relation to the current request for permission, the exchange partner was asked to submit evidence to establish his local connection within 14 days. This would need to include the name and address of the family member and their relationship with the exchange partner. They would also need to establish that they had lived in the area for the previous 5 years and provide evidence to support this. The letter stated that if the exchange partner were unable to provide the proof as requested within 14 days, the landlord would refuse the exchange on the grounds that he did not meet the section 106 criteria.
9. The landlord confirmed that the resident was correct and registration on the housing register was not a requirement. This element of the complaint was upheld, and the requirement removed.
10. The letter also set out the steps the landlord would take to prevent similar complaints from occurring. This included conducting a check of its records in relation to the development, writing to all residents who were subject to the section 106 requirements reminding them of the consequences of this when seeking a mutual exchange. Further, it would add new wording to its tenancy agreements where the property was affected by a section 106 agreement and ensure that a copy of the agreement was provided to new residents.
11. The resident escalated his complaint to the final stage of the complaints’ procedure. The date of this request is not known.
12. The landlord issued its final response to the complaint on 1 March 2023. This reviewed the actions taken at stage one. It apologised for the earlier error and upheld the decision. It confirmed that the resident could not carry out an exchange with someone who did not have a local connection. As this was part of the local authority planning regulations it was not something that the landlord was able to change or overlook. The exchange partner had not provided any evidence to show he met the criteria and therefore permission had been refused.

Assessment and findings

13. It is not within the Ombudsman’s remit to determine whether a mutual exchange application should have been successful. That is a decision for the landlord to make alone and this Service would not make an order to overturn the landlord’s decision in that regard. The role of this Service is to consider how the landlord handled the application and the associated complaint – whether it followed its own policies and procedures, behaved fairly and reasonably and/or offered a reasonable level of service.
14. Whether an assured tenant can assign their tenancy depends upon what is allowed under the tenancy agreement. In this case clause 3.49 of the tenancy agreement stated “You must not assign the tenancy except in furtherance of a court order or with our written consent when exercising the right to exchange…”
15. The Deed of Assignment transferring the tenancy sets out that the resident as the Assignee would be subject to the terms and conditions contained in the Tenancy Agreement.
16. The resident does therefore have a right to assign the tenancy via mutual exchange but must obtain the landlord’s consent before proceeding.
17. Section 106 of the Town and Country Planning Act 1990 allows a local authority to enter into a legally-binding agreement or planning obligation with a landowner as part of the granting of planning permission. An obligation either requires the developer to do something, or restricts what can be done with land following the granting of planning permission. 
18. On this occasion, the section 106 agreement dated 8 October 2013, places restrictions and obligations on the allocation of shared equity (or ownership) housing at Radipole Court, Weymouth. The First Schedule, at 2.3, confirms that the landlord was: ‘Not to Occupy or permit the Occupation of the Affordable Dwellings otherwise than by Local Needs Persons who are in the reasonable opinion of the Council in Housing Need’. This means that if the landlord was to offer a tenancy to a non-local person it would be in breach of a local authority planning obligation.
19. Following the resident’s mutual exchange application in December 2022, the landlord wrote to the resident on 3 January 2023. It confirmed that it had refused the application due to the section 106 local connection requirement. Following the resident’s complaint, the landlord allowed the mutual exchange time to provide evidence of a local connection. This was not provided within 14 days and the landlord confirmed it would therefore not change the decision.
20. The evidence shows that the landlord responded to the application and complaint appropriately. The landlord clearly communicated the reason for its decision and explained what it required in order to overturn the decision. The landlord’s decision is in line with its obligations under the section 106 agreement. Overall, the landlord had responded appropriately to the complaint and sufficiently explained its decision to refuse the mutual exchange. However, it is recommended that the landlord contacts the resident to talk through their options for moving and offer any available support with their applications.

Determination (decision)

21. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration by the landlord in the handling of the resident’s request to assign his tenancy via a mutual exchange.

Recommendations

22. The landlord is to contact the resident to talk through their options for moving, help them to identify a qualifying tenant for mutual exchange and offer any available support with their applications.
23. If a suitable mutual exchange cannot be arranged within 4 months, the landlord is to consider approaching the local authority to obtain consent to arrange a mutual exchange free from the restrictions of the section 106 agreement. If that is not possible, the landlord is to consider removing any restriction on the resident moving for a second time within 12 months (this will enable the resident to move locally and quickly move again to his chosen area).
24. The landlord is to consider compensating the resident for the costs and inconvenience he incurred in 2022 arranging unsuitable mutual exchanges because the landlord had not informed him of the local connection restriction.