Audley Group Ltd (202124632)

REPORT

COMPLAINT 202124632

Audley Group Ltd

5 May 2023

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:
   1. The landlord’s response to the resident’s representations about changes of ownership/changes in its company structure prior to purchase.
   2. The landlord’s handling of the resident’s reports of defects to his property. 
   3. The landlord’s handling of the resident’s complaint.

Background

2. The resident purchased the leasehold interest of a two-bedroom first-floor apartment in a retirement village in March 2021.
3. After moving in the resident learned that many of his fellow residents were unhappy with the standard of building work at the development and in their individual properties. He then experienced problems in his property with flooding in his ensuite. He also found that he was continually banging his head against an extractor fan in the kitchen due to its installation height.
4. The resident was concerned that this information suggested to him that the landlord/developer was experiencing difficulties and decided to research its financial stability. In his view his research confirmed that the company was in debt and had changed ownership. The resident was concerned that he had not been aware of this at the time of his purchase. He, therefore, complained to the landlord, setting out the information he had gathered. He stated that as a result of his understanding of the company set up, the level of defects at the village and from his own experience, he wanted to move and wanted the landlord to pay his costs.
5. The landlord provided decisions on the formal complaint between October 2021 and January 2022. It stated that ‘snagging’ issues were being dealt with and were near completion. It explained that it had ‘partnered’ with another company to raise the capital to build the development but once complete, would be buying its share back. It explained that losses had been recorded as a result of a change in its accounting methods, but the company was financially stable, and its annual reports could be viewed on its website. The landlord offered to help the resident with his sale but declined to meet the costs of it.
6. The resident remained dissatisfied with this response and referred the matter to this Service. He maintained that aspects of the ownership of the landlord were not disclosed to him when he purchased the property and would not have been acceptable to him had he known of them. He stated that the landlord has ‘glossed over’ building issues at the development. By way of remedy, he wants the landlord to buy his apartment back and recompense him for all of his expenses.

Assessment and findings

Changes of ownership/changes in its company structure prior to purchase.

7. The primary emphasis of the resident’s complaint relates to what information he was given about who the landlord is/was at the time he viewed the development compared with at the date that he purchased his leasehold interest. He states that his research demonstrates that the landlord is part of a private equity scheme rather than being a company dedicated to developing and running retirement properties – which is what he was looking for. As a result, the resident argues that the lack of this information entitles him to rescind his purchase. 
8. The Ombudsman is not a court of law. It does not have the remit or expertise to determine whether the purchase contract was entered into as a result of misrepresentation or by virtue of a legal contractual mistake. These are legal issues which will not be considered further in this report. 
9. The Ombudsman can, however, consider how the landlord handled the resident’s representations/requests for information on these points.
10. It is noted that the resident first raised his concerns in his complaint letter of 5 October 2021. In its reply of 8 October 2021, the landlord offered an explanation. It explained its financing, set out its accounting methods, and signposted its annual accounts. The landlord explained that the resident was essentially the owner of the property. The resident was not persuaded by this and, on 12 October 2021, pushed the landlord further, asserting that a private equity scheme had been established due to losses and insufficient resources.
11. Shortly after this, the landlord held a Celebration Day at the development and addressed concerns about its funding to the assembled participants. The resident was unable to attend but learned from the landlord on 21 October 2021 that the interest of the company that had provided capital was to be bought back by the landlord once the development overall was completed.
12. It is apparent from the evidence that the resident remained unconvinced by the explanations given, particularly on the question of whether the company is/was a private equity scheme as he feared.  Whilst the resident may not agree as to whether the landlord has or has not proved its status, it is not the remit of this Service to analyse the financial structure of the landlord company or its parent company and other subsidiaries. Neither can the Ombudsman confirm whether the resident’s objection to a private equity scheme is or is not reasonably held. Our role is to consider how the landlord handled the request for information. The above chronology demonstrates that the landlord responded within a reasonable timeframe and covered all the issues raised with it. Its service was therefore reasonable.
13. Following this, the resident requested disclosure of exactly which company in the landlord’s group would be buying back the investor’s interest in the landlord’s company at the end of the development. Whilst the landlord agreed to locate this information, it is noted that before this was answered the resident escalated his complaint. The lack of a response prior to this is not, therefore, considered to be a failing in the service offered.
14. Finally, in its final complaint response the landlord set out its position again on these issues. The resident does not agree with its assessment of its status, but the information was provided and the landlord acted reasonably in the circumstances.

Reports of defects to his property.

15. Before this Service can review a complaint, the landlord must have been given the opportunity to respond to it through its internal complaints procedure. Rule 42(a) of this Service’s Scheme Rules states:
16. “The Ombudsman may not consider complaints which, in the Ombudsman’s opinion are made prior to having exhausted a member’s complaints procedure, unless there is evidence of a complaint handling failure and the Ombudsman is satisfied that the member has not taken action within a reasonable timescale.”
17. The evidence demonstrates that there were some issues in the resident’s apartment with a flood and the positioning of an extractor fan. However, it is noted that the resident did not complain about specific issues in his own apartment in his complaint letter. Instead, he relied on the fact that he understood there was widespread dissatisfaction with standards at the complex to explain why he had investigated the landlord’s company structure and viability.
18. The landlord did, nevertheless, refer to various conversations about resolving “snagging” in the resident’s apartment in its complaint response to which the resident replied that his complaint letter was “not to highlight the outstanding issues on my apartment”. The evidence shows it was not until the resident’s reply to the landlord’s stage two complaint response (after the procedure was concluded) that he raised the question of the landlord’s handling of the flood damage and the extractor hood.
19. No complaint was therefore made about the individual items in the resident’s own apartment and this Service cannot therefore examine when they were reported to the landlord; whether it had responsibility to deal with them; when they were resolved, and whether they were handled in accordance with its policies/service level agreements. This is because the landlord has not been given the opportunity to examine these aspects of the repairs prior to referral to this Service.
20. However, it is noted that the landlord’s handling of snagging at the complex generally was referred to and the landlord addressed this – so consideration can be given to its handling of repairs from that perspective.
21. The evidence demonstrates that in response to concerns raised by residents at the complex, a residents’ forum had been established and that the landlord was engaging with them. The landlord arranged for two of its directors to attend the site in late April/early May 2021. The landlord has produced a comprehensive list of the issues to be resolved which it compiled, broken down into individual addresses, room by room. It has explained to the resident that difficulties occasioned by the COVID-19 pandemic hampered its ability to deal with issues and has acknowledged/agreed with some concerns about standards. It also held a Celebration Day where residents’ concerns were addressed.
22. It is not possible, within the confines of this complaint, to analyse how the landlord dealt with each individual leaseholder or the timescale of individual repairs – which would require a much broader and extensive investigation. However, what the evidence does demonstrate is that the landlord took steps to engage with residents, listen to their concerns, and seek to identify and remedy snagging/defects/repairs required.
23. From this limited perspective and from limited evidence, the landlord has acted reasonably, and no maladministration has been identified.   

The resident’s complaint

24. The landlord operates a Complaints Policy which sets out a two-stage procedure for complaints handling. The landlord commits to providing an acknowledgment of a complaint within three working days of receipt with a response within ten working days. If the resident remains unhappy, they can request the complaint be escalated to the second stage of the procedure where the matter is reviewed at a more senior level. In this case the landlord aims to provide a response within 15 working days of the complaint being escalated.
25. The resident made his complaint on 5 October 2021 and received a response on 8 October 2021, that is within three working days. This was appropriate. The resident requested escalation by email on 6 November 2021 which was a Saturday. He was therefore entitled to expect a response by 26 November 2021, allowing for the necessary 15 working days. On 24 November 2021 the landlord responded. The senior staff member commented that there was nothing that he could add to what had already been said but he would refer to matter to the Managing Director to see if they had any comment to make.
26. A further and final response dealing with the issues raised by the resident was sent on 17 January 2022, some 39 working days later. However, this period does include Christmas and the New Year when some delays might be expected.
27. None of the letters set out which stage of the procedure the resident had reached although it was apparent that the communications were in response to the complaint. However, this left the resident unclear as to whether the complaint had concluded the landlord’s procedure and he needed assistance from this Service to obtain that information. There was also some delay in the final response being given, as set out in the chronology above. The landlord failed to properly follow its Complaint Policy which was inappropriate and represented a service failing on its part. The resident was put to inconvenience in chasing the matter and seeking the input of this Service and an order for compensation for his time and trouble has been made below.

Determination

28. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of its response to the resident’s representations about changes of ownership/changes in its company structure prior to purchase.
29. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of its handling of the resident’s reports of defects to his property.
30. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its handling of the resident’s complaint.

Orders and recommendations

Orders

31. Within four weeks of receiving this determination, the landlord should pay to the resident compensation of £50 for his time and trouble in respect of its handling of his complaint.     
32. The landlord should confirm with this Service that it has complied with the Order within four weeks of receiving this determination.