Retirement Lease Housing Association (RLHA) (202307482)

REPORT

COMPLAINT 202307482

Retirement Lease Housing Association (RLHA)

24 January 2025

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 is about the landlord’s response to the resident’s request to sublet the property.

Background

The resident was the leaseholder for a 1–bedroom apartment, within an independent living retirement development. The landlord was the freeholder for the property.
On 10 February 2023 the resident complained, via a representative, that in January 2023 the landlord had refused her permission to sublet the property and not explained the reason for this. She said that:
1. the landlord had unreasonably withheld its consent to allow subletting, in contravention of the lease.
2. the landlord did not seek any information about the prospective tenant before it had decided to refuse the request.
3. there had been a change in the landlord’s policy which it had not informed her about, as the landlord had previously allowed her to sublet the property up until the previous tenant’s death in October 2022.
4. the landlord’s decision had also limited her ability to sell the property as prospective buyers were put off by a landlord which “disregarded terms of the lease”.
5. she wanted reimbursement for the loss of value to the property and loss of rental income.
The landlord issued its stage 1 response on 15 February 2023. In this it:
1. apologised that it had not responded to the resident’s email from 27 January 2023 at the time.
2. stated that under the terms of the lease the leaseholder requires the landlord’s consent, which shall not be “unreasonably withheld”. The landlord said it made these decisions on a case-by-case basis. It said its position would usually be to allow subletting where there were challenges in the property sales market or if the leaseholder had to be placed in a care home and needed to rent the property to prevent financial hardship.
3. said it did not consider that the resident’s motivation to continue subletting the property “fits with [the landlord’s] ethos or supports the community”. It did not consider any exceptional circumstances applied to the request to sublet. It said it made this decision based on the wider retirement community rather than the personal circumstances of the proposed tenant.
4. outlined it had previously been challenged by executors in similar cases and the Association of Retirement Housing Managers had upheld its decision to refuse permission for subletting in these cases.
5. said it would not support a prospective leasehold purchase of the property if the buyer intended to use it as a buy-to-let. It stated if potential buyers had withdrawn because they had wanted to buy the property to rent it out then it considered this a positive outcome.
6. said it would not reimburse the resident as:
  1. it was not responsible for the loss of value to the property.
  2. the lease specifies that the landlord needed to grant permission for the leaseholder to sublet the property so there is no guarantee of a rental income.
The resident escalated the complaint on 20 February 2023. In this she said:
1. where the landlord’s permission is needed for underletting or subletting it is required to give this unless it is reasonable not to.
2. there is no information in the lease about the suitability of the prospective tenant except that they are a “respectable and responsible assignee”.
3. she did not understand why the landlord had previously allowed the resident to sublet the property on 2 other occasions based on its reasons for denying the recent request.
4. she still wanted the landlord to provide reimbursement for the financial loss that they experienced.
The landlord issued its stage 2 response on 9 March 2023. In this it:
1. stated that having reviewed the previous emails it would not be changing its decision to withhold its consent to sublet the property.
2. said the resident’s understanding that the landlord has an obligation to permit subletting was not consistent with advice that it had previously received.
3. its decision to allow the resident to sublet the property before was on a case-by-case basis. It reiterated that it would not be permitting the resident to sublet the property again for the reasons it gave in its stage 1 response.
4. said as the resident had asked the complaint to be responded to by the landlord’s incoming chairman it would put the complaint forward to them to address and respond again after 20 March 2023.
The landlord provided a further response on 22 March 2023 saying that it had discussed the resident’s complaint at board level. In this it:
1. said that it does not consider it unreasonably withheld its consent for the resident to sublet the property. It said its policy on serial letting and buy-to-let arrangements is clear that it does not allow this as:
  1. it weakens community spirit
  2. the main driver of a buy-to-let owner is to maximise return. Therefore this had previously led to such leaseholders lobbying for the landlord to withdraw services such as estate managers, which contradicted the ethos of the landlord.
2. reiterated that it may give residents permission to sublet in some situations, such as if the leaseholder had gone into a care home and needed to sublet the property to cover care costs. However, it said the landlord would consider this on a case-by-case basis and a resident would need to reapply for the landlord’s consent at the end of any rental period.
3. stated it had discussed its decision with its trustees and the Association of Retirement Housing Managers which were in agreement with the landlord’s decision to withhold consent in this case.
The resident escalated this complaint to the Ombudsman to investigate. This Service is aware that the resident later sold the property around September 2024. However, she remained dissatisfied that the landlord had not reimbursed her for the loss of rental income.

Assessment and findings

Under the terms of the resident’s lease with the landlord the resident agreed that:
1. in line with clause 27 of the sixth schedule of the lease, she would not underlet or sublet the property to any other person without the written consent of the landlord.
2. clause 27 also stated that the landlord’s written consent was “not to be unreasonably withheld in the case of a respectable and responsible assignee” who complied with the age requirement of clause 34 of the sixth schedule.
3. clause 34 of the sixth schedule stated that the resident agreed to ensure that the property shall only be occupied by persons of an age “commensurate with the receipt of a State Retirement Pension”.
The landlord’s subletting and underletting policy says that:
1. the majority of its leases will state that the landlord must not unreasonably withhold permission. As the landlord wants to make “ethical decisions that protect the communities in which the leaseholders have invested” it will only approve rental requests in certain circumstances.
2. examples where the landlord may grant permission for subletting include:
  1. where the leaseholder has moved to a more supported environment such as a care home, renting out the property is required to cover these costs and a sale is not forthcoming.
  2. where the leaseholder has been unable to sell the property on the open market for a period of 18 months, which has resulted in proven financial hardship for the leaseholder.
  3. for all granted permission to rent out the property the landlord will agree this for a one-time basis only. The landlord’s permission will end with the cessation of the tenancy.
3. examples where the landlord will not grant permission for subletting include:
  1. where the property was purchased with a buy-to-let intention. The landlord states its purpose “is to enable those of retirement age, to purchase their own retirement leasehold property, and to live independently within a likeminded community” so it does not support rentals of its freehold properties for financial gain.
  2. where the leaseholder wishes to rent out the property indefinitely, such as where they are not yet of an age to occupy the property but has a long-term plan to live at the property in later life.
  3. where an executor wants to rent the property indefinitely or for financial gain.
The landlord and resident agree that, prior to the events complained about, it had previously provided its consent for the resident to sublet the property to a different tenant. As set out previously, from the resident’s account this tenancy ended in October 2022 following the death of the tenant.
From the available records the resident first told the landlord about the resident’s intention to rent out the property to another prospective tenant on 18 January 2023. In line with the landlord’s policy its previous consent for the resident to sublet the property ended with the end of the previous tenancy. As such, its decision to consider whether it would consent for the resident to sublet the property again was appropriate. This is because, under the terms of the lease, the resident’s intention to sublet the property again required the landlord’s consent.
The landlord wrote to the resident on 25 January 2023 that it was withholding its consent for the resident to sublet the property. It explained that:
1. it understood that the resident wanted to rent out the property for a further rental term but that the property is also on the market for sale.
2. the estate is a supported retirement community and the landlord considered that, to preserve this purpose, it is important that the properties are owner-occupied.
3. the possibility of the tenant(s) occupying the property changing frequently is not consistent with the sense of security it wanted to offer long-term owner occupiers.
4. though the resident had previously rented the property out on a long-term basis it would not support renting the property out for commercial gain. It said that it would grant consent for a leaseholder to sublet the in certain situations, such as challenges in the sales market or where the leaseholder is in care and requires the rental income to assist with financial hardship.
In the Ombudsman’s view the landlord’s decision to withhold its consent was reasonable. The reasons it gave for why it would not consent, and its explanation of the circumstances where it would consent to this, were consistent with its policy on subletting.
The resident objected to the landlord’s decision on 27 January 2023 and said the landlord was in breach of the lease. The main reasons she gave in her response and later complaint were:
1. the lease only referred to the assignee being “respectable and responsible” and the landlord did not seek any information about the prospective tenant before it decided to withhold consent.
2. the landlord had previously allowed the resident to sublet the property so she did not see on what basis the landlord was now refusing.
In the Ombudsman’s view we have not seen any evidence that the landlord’s decision to continue to withhold its consent was unreasonable for the following reasons:
1. although the lease says the landlord will not unreasonably withhold consent where there is a “respectable and responsible assignee” it does not follow that the landlord was required to give its consent where there is a prospective tenant that meets this criterion.
2. the reasons the landlord gave the resident about why it was withholding consent were consistent with its subletting policy.
3. the resident did not provide any further information to argue that the landlord had misunderstood her financial situation (for example that she needed the rental income to cover care costs or was having difficulty selling the property).
4. the landlord’s policy specified that if it consented to sublet a property this only applied on a one-time basis until the end of the tenancy. As such, it was reasonable for the landlord to consider each request to sublet on a case-by-case basis.
The Ombudsman’s view is that the landlord did not unreasonably withhold its consent when it decided to refuse the resident’s request to sublet the property. As such, we have seen no evidence of a failing by the landlord and it acted in line with its policies and the terms of the lease.

Determination

In accordance with paragraph 52 of the Scheme there was no maladministration in the landlord’s response to the resident’s request to sublet the property.