Southern Housing (202128671)

REPORT

COMPLAINT 202128671

Optivo (now Southern Housing)

9 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 is about the landlord’s:
1. Handling of the sale of the resident’s interest in the property.
2. Response to the resident’s reports of financial difficulties.
3. Handling of the resident’s buy back request.
4. Handling of the resident’s complaint.
This service has also investigated the landlord’s knowledge and information management.

Background and summary of events

Background

The resident lives in a 2 bed, second floor flat. She entered into a shared ownership lease agreement with the landlord in June 2005 on a 99 years terms. She bought a 30% share in the interest in the property. The resident’s lease was a sublease of that held between the predecessor landlord, its management company and a superior landlord building company.

Scope of investigation

The Ombudsman may not review a complaint if it considers it fairer, more reasonable or effective to seek a remedy through the courts or other procedure in line with paragraph 42(f) of the Housing Ombudsman Scheme (‘the Scheme’). While this Service has assessed many aspects of the resident’s complaint below, the question of what caused the sale of her home to fall through and appropriate remedy would be more effectively pursued via the courts or a claim to the landlord’s insurers. The matter of the landlord’s potential negligence requires technical consideration and a resolution suited to a definitive ruling.
Under the rules of the Scheme, this Service may not investigate matters that were not brought to the attention of a landlord within a reasonable period, usually considered as within 6 months of the matter(s) occurring. The resident brought her complaint to the landlord on 17 March 2021. One of the key concerns raised was the landlord’s handling of the sale across 2019. The landlord exercised discretion to consider her complaint back to 2019, outside of its ordinary time limits in view of the personal importance of the issue. This Service further noted that the resident reported becoming aware of the key error subject of her complaint from emails exchanged with the landlord in March 2021. It is considered fair in these circumstances for this Service to assess the handling of the sale across the same period of investigation as considered by the landlord.
The resident informed the Ombudsman the landlord’s handling of the matters under review in this investigation had a negative impact on her health and wellbeing. This Service is unable to look into and make a decision about the cause of, or liability for, any impact on health and wellbeing. Nonetheless, consideration has been given to the general distress and inconvenience which the situation may have caused the resident.

Summary of events

The sale of the resident’s interest in the property

The resident submitted to the landlord a request to sell her 30% share in her home on 21 January 2019 together with signed terms and conditions.
The share of the resident’s flat was advertised for sale by the landlord. The landlord confirmed to the resident by email that its advert had gone live on 30 January 2019. The closing date for applications was 22 February 2019, later extended.
The resident raised a number of queries during the marketing stage about the sales process and advert, to which the landlord responded. The landlord offered to place an advert via Zoopla for a fee. The resident confirmed her agreement and the landlord agreed to action this on 14 February 2019. The resident subsequently chased the advert. On 3 April 2019 the landlord updated that the Zoopla advert had been placed and waived the associated fee in recognition of delay.
There was little interest in the property. By June 2019 the records and correspondence noted the resident’s intention to sell the property on the open market. The surveyor valuation was extended.
On 11 June 2019 the resident raised a query with the landlord to pass to her estate agent. She asked for confirmation of the years’ terms of the lease based on her 30% share and if there was a 100% outright purchase. The landlord advised that the resident’s lease had 99 years at purchase, with 85 years remaining. It stated the terms would be the same whether it was a share sale or outright purchase. The resident’s flat was advertised for sale using the information provided.
By mid-July 2019 the estate agent raised concern with the resident that the advertised term was significantly lower than comparable properties at 100% and queried by interested buyers. On 19 July 2019 the estate agent advised it had found the registered title information to be inconsistent with the landlord’s advice.
The same date, the resident asked the landlord for urgent confirmation about the number of years on the lease for the interest of an outright buyer. She raised concern that title documents suggested a lease terms of 999 years from 2004. Her request was repeated on 22 July 2019 and 30 July 2019.
On 1 August 2019 the landlord wrote to the resident by email. It set out that the resident’s interest was subject to an underlease of 99 years; it was this lease that would be subject of the purchase. The headlease was not being sold; this had a term of 999 years. The resident forwarded this information to her estate agents and authorised a reduced price offer.
On 15 August 2019 the prospective buyer made a direct enquiry to the landlord about the terms of lease on outright purchase. It forwarded professional advice that said a final purchase should be subject to the terms of the 999 years headlease and not the 99 years underlease. The landlord replied the next day. It stated that at ‘final staircasing’ (to 100%) the headlease would be assigned to the shared owner, causing the underlease to fall away. It confirmed that at outright purchase the buyer would take over the headlease of 999 years.
The landlord’s records retained a memorandum of sale of 21 August 2019 between the resident and interested buyer. The particulars referred to an intended back to back sale and purchase of additional shares to bring the buyer to an outright purchase. Further information was exchanged across August in anticipation of sale.
On 10 September 2019 the landlord instructed its solicitors to act in the sale. The resident’s solicitor raised requests to the landlord for information in early September. The landlord replied on 25 September 2019 and apologised for the delay awaiting details from its management agent. The landlord provided the documents requested, including buildings insurance and a fire risk assessment on 5 October 2019.
In mid-October 2019 the buyer’s lender requested confirmation that the property met requirements of the then government guidance relating to fire risk. The landlord confirmed in correspondence to the resident’s solicitor on 22 October 2019 it had requested the necessary information but did not believe it would be able to provide what was required.
The sale subsequently fell through. The landlord recorded the sale as aborted in December 2019 due to the management company being unable to supply a satisfactory EWS1 form (regarding external wall fire risk) as requested by the buyer’s lender.
The resident raised queries with the landlord on 11 February and 10 March 2021 about increasing her share of the property to 100%, to outright sale. The landlord replied on 12 March 2021 to confirm that staircasing to 100% would result in the headlease of 999 years being transferred, as if it was sold as 100% on the open market.
The resident submitted a complaint to the landlord on 17 March 2021 within which she raised concern about the landlord’s handling of the sale of her flat in 2019. She stated that:
1. The landlord failed to take proactive steps to push the sale.
2. She was given incorrect information by the landlord about the terms of years for sale of the flat at 100%. This caused the property to be offered on the open market using incorrect information, which was off putting to potential buyers, and the resident accepting a lower offer. It further lead to delay from raising inquiries.
3. The landlord provided incorrect building insurance documentation.
4. The landlord’s errors and poor handling caused the sale to be delayed. By the time the sale was due to proceed, requirements concerning cladding and fire risk were updated. The landlord’s delay was fatal to the sale.
The landlord acknowledged the resident’s complaint the next day. On 1 April 2021 the landlord responded to the complaint. It acknowledged that incorrect information was given during the resale process about the lease term on final staircasing and apologised. It advised it would not charge valuation or legal services fees should the resident sell her share in the property.
The resident requested escalation of her complaint by email of 12 April 2021. She raised the issue that the landlord failed to explain its errors or address that mistaken information was provided on multiple occasions. She expressed that the gravity of the mistake was not acknowledged by the landlord. The resident considered the landlord’s offer to cover fees inadequate; it failed to put right her situation or reflect the detriment caused by its mistakes.
On 20 April 2021 the resident submitted a review panel request form. This repeated her previous submissions and requests.
On 28 April 2021 the landlord notified the resident it required further time to consider her request and provided an updated response time of 21 May 2021. The resident sought reasons for delay. The landlord responded the same date with an apology and explained it was seeking advice from its legal team.
On 4 May 2021 the resident’s MP wrote to the landlord. He outlined the circumstances of the aborted sale and concern that incorrect information from the landlord lead to the purchase falling through. The MP detailed the adverse impact the lost sale had on her life. He raised concern that the landlord failed to provide an explanation for its errors or adequate redress.
On 21 May 2021 the landlord issued a refusal to escalate the resident’s complaint for review. It said this was because the outcome sought by the resident was outside of policy. It added:
1. It accepted a failure in service by the provision of incorrect information.
2. Its mistake occurred because it failed to consider the full circumstances.
3. The resident had not provided any evidence it was responsible for the failed sale or resulting impact on her life.
4. Its offer of redress was bound by the remit of its complaints procedure.
5. The resident was advised to seek independent legal advice to consider a claim.

The landlord included in its response an offer of a ‘discretionary payment’ of £250 to recognise its service failure.

The landlord’s response to the resident’s reports of financial difficulties

The resident’s rent account showed very low level arrears in July 2020. On 8 July 2020 the landlord sent a letter to the resident about her arrears of rent.
On 21 July 2020 the resident emailed the landlord. She explained the failed sale in 2019 lead to her losing a job opportunity. She was unemployed and having difficulty finding employment, exacerbated by COVID-19 . She told the landlord she had spent all of her savings and resorted to borrowing to manage rent and mortgage payments.
The landlord replied on 27 July 2020 with direct contact details for an officer to discuss her options. The resident emailed the next day, explaining her circumstances. She expressed being unable to keep up with payments for her home and sought advice on her options.
The landlord called the resident on 29 July 2020 and noted her financial challenges. The resident explained that a claim for universal credit would not cover her costs and she was unable to borrow more. The landlord completed a referral to a specialist debt counselling charity.
On 30 July 2020 the landlord called the resident and advised an option to consider was subletting. The resident raised concern that the rent chargeable would not be enough to cover her accommodation costs. She later emailed the landlord asking further advice about its subletting process and requested waiver of its charges in recognition of the issues impacting her ability to sell.
The landlord replied on 5 August 2020 promising to send its subletting forms. It confirmed an administrative fee. The resident replied the same day raising assurances from a different officer of the landlord that the fee would be waived. She chased response on 12 August 2020.
On 13 August 2020 the landlord said it was receiving a high volume of subletting and was charging the fee. It asked for evidence of the prior assurance. The resident replied immediately, forwarding a previous email chain. The landlord returned to the resident on 17 August 2020 and confirmed it would waive the fee. It attached the subletting request forms.
The resident submitted an application for the landlord’s permission to sublet on 25 August 2020. The landlord approved the application on 28 August 2020, with permission conditional on an initial period of 6 to 12 months.
No payments were made by the resident into her rent account from August 2020 up to November 2020. The landlord recorded monitoring the account across the end of August and September 2020.
On 2 October 2020 the landlord tried to call the resident. The resident called back on 5 October 2020. The resident’s rent arrears were discussed. She explained she was in hospital and unemployed. She told the landlord she was still looking into subletting and due to apply for benefits. The landlord offered to complete a referral for assistance and the resident agreed. The resident added on 7 October 2020 that she could not afford to pay the current rent.
The landlord monitored the resident’s rent account in February and March 2021.
In the resident’s complaint of 17 March 2021, the resident described her financial difficulties. She advised that the strain of her circumstances had a serious impact on her health including an adverse effect to her mental health and wellbeing.
The resident repeated her concerns in emails with the complaint handler the following day. The landlord advised it was making a referral to its financial inclusion team. The resident raised concern she had previously been advised that she could not afford the flat. She updated that her claim for universal credit had been refused.
The landlord’s financial inclusion service called the resident on 19 March 2021. The resident outlined her debts and advice previously received from a debt counselling charity. She explained that her benefits claim had been declined due to savings. The landlord noted the resident’s anxiety about the cost of lease renewal. It recorded the resident declining a further debt counselling referral. The landlord noted there was nothing further with which its financial inclusion service could support the resident.
On 23 March 2021 the resident contacted the landlord by email and raised her concern that the advice provided by the financial inclusion service would not resolve her financial difficulties. She highlighted that universal credit would not cover her accommodation costs.
Within the landlord’s complaint response of 1 April 2021, the landlord reminded the resident of the option of temporarily subletting her home.
The resident’s request of 12 April 2021 to escalate her complaint included representation that the landlord’s offer of subletting would fail to change her situation and the cost of her net outgoings in any meaningful way.
Within the resident’s MP letter of 4 May 2021, he descried the resident facing serious financial difficulties. He asked the landlord to exercise its discretion in a way that prevented her further liabilities and supported lease extension.
On 10 May 2021 the landlord spoke to the resident by phone about her rent arrears. She explained that she had no ability to pay as she was unemployed. The landlord encouraged the resident to apply for universal credit. The resident explained this would not cover her costs in full.
Within its review request response of 21 May 2021, the landlord repeated its offer to waive fees and the option of subletting. It also provided direct details for additional support with advice on claiming benefits should the resident wish to explore that further.

The landlord’s handling of the resident’s buy back request

On 30 July 2020 the resident asked the landlord by phone if it would buy back her share of the interest in the property. The response was not noted on the landlord’s record of the call.
On 17 March 2021, within her complaint, the resident asked the landlord to consider a buy back of the property or down staircasing to 0%. In an email exchange with the complaint handler the following day, the resident added she was in serious financial difficulty and had poor credit due to borrowing incurred to try to manage her outgoings. She raised concern of potential bankruptcy.
On 19 March 2021 the resident repeated her request for the landlord to consider a buy back as a way to resolve her difficult financial circumstances.
In the landlord’s complaint response of 1 April 2021, it said that:
1. The option of buy back was not available to the resident because it was considered only for shared owners ‘at risk of losing their home through repossession’.
2. Down staircasing was available only to a minimum of 10% shares.
The resident on 12 April 2021 responded to the landlord’s letter. She asked for details of its buy back criteria and requested a review of her circumstances. She explained that due to her deteriorating financial circumstances she was at risk of repossession.
In his letter of 4 May 2021, the resident’s MP repeated the request for the resident to be offered the opportunity of buy back. He asked the landlord to exercise its discretion and raised concern that her home would be at risk of repossession.
Within the landlord’s refusal to review the resident’s complaint on 21 May 2021, it advised that the resident’s desired outcome of full buy back was ‘outside of’ its buy back policy or available complaint outcomes. It advised it could consider a buy back of shares if the resident met its policy criteria and offered a link to its buy back policy.

Post-complaint

The resident confirmed refusal of the landlord’s compensation offer by her email of 21 May 2021. She referred her complaint for review by this Service.
The landlord has continued to liaise with the resident to raise the matter of her rent arrears and explore assistance options. The landlord has warned of eviction proceedings. The resident has continued to express her desire to sell the property and move to improve her financial situation. She has repeated her desire to the landlord to buy back her home.
The landlord considered a buy back request across January and February 2022. It determined it was unwilling to buy back shares of the resident’s interest due to its assessment of the resident’s equity taking into account arrears. It decided that a buy back of shares was not financially viable at that stage. It noted its valuation was impacted by the lack of EWS1 certificate.
The resident has grown her family since the proposed sale. She now has a young child and is due to imminently give birth. She describes feeling trapped in the flat and that her life is on hold; unable to sell due to the impact of fire related risks but without means of resolving her interim financial situation. The circumstances are reported to cause her serious anxiety leading to adverse impact to her physical health. She describes continuing to experience distress from the landlord’s handling of the issues subject of her complaint. She stated to this Service, ‘this has consumed my life’.

Assessment and findings

The Ombudsman’s Dispute Resolution Principles are:
1. be fair;
2. put things right;
3. learn from outcomes.

This Service will apply these principles when considering whether any redress is appropriate and proportionate for any maladministration or service failure identified.

The landlord’s obligations

The resident’s lease and the landlord’s shared ownership resales procedure provided for a ‘nomination’ period during which the landlord was entitled to try to find a buyer for the property. The resident’s lease specified a nomination period of one month. Where the landlord failed to make any nomination, the resident was permitted to look for a buyer on the open market. The landlord’s resales procedure outlined its sales process. This included sending a letter to the resident on expiry of the nomination period outlining their options if it had failed to secure a buyer.
The terms and conditions for selling entered into by the parties stated that the nomination period was 8 weeks unless otherwise stated in the lease and that the property would be marketed on the landlord’s website and other affordable housing websites.
In December 2019, the Royal Institution of Chartered Surveyors, the Building Societies Association and UK Finance agreed a new industry-wide valuation process to help people buy and sell homes and re-mortgage in buildings above 18 metres (6 storeys). It was launched in December 2019 as a way for mortgage lenders to assess the external wall safety of buildings over 18 meters. Form EWS1 was introduced to prove to lenders that external cladding had been assessed by an expert.
The government issued ‘Building Safety Advice for Building Owners’ in January 2020. Paragraph 1.4 of this guidance stated that ‘for the avoidance of doubt, building owners should follow the steps in this advice as soon as possible to ensure the safety of residents and not await further advice or information to act’ and paragraph 1.5 stated that ‘the need to assess and manage the risk of external fire spread applies to buildings of any height’. In response to the guidance, some lenders took the view that, if certification could not be provided to demonstrate compliance with the government’s guidance on fire safety, they would be unwilling to offer a mortgage on properties within these buildings as they would have a zero valuation.
The landlord’s home ownership policy said where a resident was in arrears of rent, it would take appropriate action for recovery. It would adapt its approach on a case by case basis, and consider legal enforcement action as a last resort. It detailed adapted options to support hardship including extended repayment, buy back of shares and subletting in exceptional circumstances.
The landlord had an internal financial inclusion service to advise and support those reporting financial difficulties. Options offered by the service included exploration of referrals for specialist debt advice, help with debt forms and debt action plan support. Internal referrals to the service were to be responded to with initial contact within 3 working days.
This Service issued a guidance note for consideration by social landlords in October 2020 as trends emerged in the sector’s response to residents impacted by regulatory advice and lender expectations around fire risks and cladding. It noted that sales were being impacted for many residents outside of their control. The guidance outlined that when assessing whether a landlord’s actions have been fair in all the circumstances, this Service would consider as a key factor whether it had responded to the resident’s particular circumstances. It expressed expectation that a landlord would show empathy for residents trapped by the circumstances and take steps to mitigate the impact where possible.
The landlord had a buy back policy for shared owners detailing how it would use its discretion to buy shares from its residents. It provided for purchase up to a maximum of 80% shares, however the resident had to retain at least 10%. The policy outlined criteria for buy back; that the resident was in financial difficulty having exhausted all other options, had a rent account that was clear or would be cleared by buy back and no negative equity. The process for submitting a request and supporting evidence was detailed. The policy said the landlord could help the shared owner to collate the required evidence.
The landlord was required to have regard to a complainant’s disability in line with its obligations under the Equality Act 2010. Where on notice, it must consider when making decisions and providing a service whether its decision making/ actions could place the person at a particular disadvantage due to their vulnerabilities. The landlord is also required to make appropriate reasonable adjustments.
The landlord’s complaints resolution policy set out the ordinary timescale for complaints to be raised as within 6 months of the issue occurring, subject to a discretion to accept older complaints. It also listed matters ordinarily considered outside of its complaints procedures, including legal action and insurance claims, these being subject to separate processes.
Its associated complaints resolution procedure detailed a 2 stage complaint process. At stage 1, the landlord would provide its formal response within 10 working days. Where dissatisfied with its reply, the resident could request a review of their complaint by a panel including an ‘involved resident’ or by an independent director. Notification of the decision whether the landlord agreed to escalate to review was to be issued within 10 working days of its acknowledgement of the request. The procedure explained the landlord may refuse to escalate a complaint to review.
The then Ombudsman’s Complaint Handling Code (‘the Code’) set out the expectation that a complaints policy set out clearly the circumstances in which a matter would not be considered by a landlord and that such circumstance be fair and reasonable to residents.
The landlord also had a policy and procedure about it making offers of compensation. Its policy gave a list of reasons it may make offers for service failings; failure to repair, quality of repair and missed appointments. The policy excluded matters subject to tribunal or legal proceedings. The procedure allowed for discretionary payments rising to £250 in exceptional cases.

The landlord’s handling of the sale of the resident’s interest in the property

This Service requested but was not provided with the landlord’s fuller records of its handling of the sale process. This included documents specifically referred to within its resales procedure eg the advertisement for sale and procedural correspondence with the resident. The landlord has advised this Service that this important evidence of what it did/ did not do was subject to destruction. The records retained by the resident gave partial sight of the key events in the sales process. This landlord’s knowledge and information management has been assessed below. This Service’s assessment and findings of the landlord’s sales handling were necessarily impacted and limited as a result.
It is evident from the records available, including the relevant lease, that the landlord provided incorrect information during the sales process about the prospective lease terms. This was and remains undisputed by the landlord. The resident raised issue with:
1. The extent of the landlord’s acknowledgement of failing;
2. The explanation of its errors;
3. The redress offered in response.
Although the landlord’s stage 1 complaint response letter expressed overall admission of incorrect advice, it was apparent from the resident’s escalation request that she felt the acknowledgement was insufficient to put matters right for her. The landlord’s reference to a mistake in the singular at stage 2 reasonably created doubt as to whether it had acknowledged the full level of its failings. The landlord unreasonably failed to provide appropriate detail of its acknowledgement of failings.
The landlord’s mistaken advice about the prospective lease terms was repeated at different stages of the sales process. The mistake lead to the property being marketed with incorrect information. It caused delay to the progression of the sale as a result of the series of back and forth enquires from the parties involved to clarify the information. It was only following the resident’s efforts to raise a complaint that the landlord apologised for its mistakes; it did not offer any such acknowledgement at the time of their making. The delay of the sale of her home, a matter of significant importance to her, would inevitably have caused her distress and inconvenience.
The landlord’s response overall failed to reasonably put matters right or address the detriment caused. The apology failed to acknowledge the full extent of its failings as considered above. The compensation offer of £250 and commitment to waive future sales fees demonstrated an effort to minimise any future related costs to the resident. However, a future waiver was of limited impact in the circumstances known to the landlord at that time. Due to fire risk guidance, there was very little prospect of the resident being able to sell and therefore receive the benefit of the offer in the near or medium term future. It was accordingly of minimal impact as a form of redress; the prospects of the conditional event occurring were slim.
The sum of £250 in acknowledgement of its failing did not reflect the full detriment caused to the resident by the delay as well as the associated distress, inconvenience and trouble which she unnecessarily incurred. While this figure represented the maximum for a discretionary payment from the landlord’s compensation guidance, this Service considers that this fixed sum failed to allow recognition of the particular detriment experienced by the resident.
Within the resident’s complaint, she sought redress for a series of events and impacts that she asserted arose as a result of the landlord’s handling of the sale, including the sale falling through with severe personal impacts. The level of challenge faced by the resident cannot be fairly reflected by this simple summary; it is recognised by this Service that she has experienced extremely difficult circumstances. While this Service has a wide discretion to determine complaints, as detailed above, the matter of causation for the cancelled sale and its subsequent effects is considered outside of its remit. We cannot consider whether the landlord’s handling of the sale was the ultimate cause of it falling through and if the landlord was responsible for the resulting impacts.
The landlord responded to the resident’s request for redress for the cited impacts from its handling of the sale by saying the following:
1. It did not have evidence it was responsible for the sale failing or the described impacts.
2. It had sought advice from its insurance and legal services and suggested she seek independent legal advice about raising a claim outside of the complaint process.
This position was in line with the landlord’s complaints resolution policy and procedure. It was reasonable where the landlord received allegations of negligence for which substantial financial loss was asserted, that it considered this a matter suited to legal action or via its insurers. It was fair in these circumstances that the landlord advised that its internal complaints process was not the appropriate process to consider this particular aspect of the resident’s complaint.
The resident’s complaint raised concern with other aspects of the landlord’s handling of the sale; how it marketed the sale, the timeliness of response to inquiries and provision of insurance information. The landlord failed to address these specific concerns at all within its complaint response. This left the resident without the review or reply to her concerns from an investigation.
Regarding the marketing of the property, this Service noted confirmation in correspondence that the landlord placed adverts with sources that were in line with the terms and conditions agreed with the resident. The landlord was not required by its procedure or the agreed terms to advertise the sale outside of this process. However, it did enter into an additional agreement with the resident to place an advert for sale on Zoopla. It is reasonable to expect the landlord would do so in a timely manner, particularly as time is of the essence during the sale process. The landlord failed to place the advert for sale within a reasonable period of time. The advert was subject to delay of a month and a half. It is noted that the landlord waived its Zoopla fee in recognition of its delay, however it did not specifically apologise. It failed to address the matter at all within its complaint response and to therefore consider whether it had offered a suitable form of remedial action.
This Service is unable to consider the full extent of queries raised to and associated responses from the landlord during the sale process due to the absence of full records. From review of partial correspondence between those involved in the sale process, there were at least a small number of delays responding to queries and providing documentation. These were, however, relatively short and with explanation that was reasonable in the circumstances.
In her complaint the resident raised the discrepancy between the buildings insurance certificate provided during the process of sale and that discoverable via an online portal. The landlord failed to reply to the resident’s explicit concern on this point. The accuracy of the certificate was a matter that the landlord should reasonably have addressed. The resident was put to the trouble of raising this issue for clarification. However, there is no evidence that the information, erroneous or not, had any adverse actual impact on the sales process.
Review of the available documents disclosed an error by the landlord that was not identified by its complaint investigation or the resident’s representations. The landlord notified this Service that the sale was subjected to a nomination period of 8 weeks. This period was inconsistent with the resident’s lease that provided for a shorter nomination period of just one month. The landlord’s application of its 8 weeks period was a failure to apply or have regard to the precise terms of the lease. This was a further failure by the landlord to consider or identify relevant information. This error delayed the point at which the resident was entitled to decide whether or not to advertise her interest for sale on the wider market. As the landlord failed to identify this error, its response to date has failed to recognise or offer any form of redress to the resident for this further matter.
Due to the above identified failings, this Service finds the landlord responsible for maladministration in its handling of the sale of the resident’s interest in the property. While it apologised for service error, it failed to acknowledge to the resident the fuller extent of its failings. It made avoidable errors at various stages of the process and delayed advertising the property as promised to the resident. It subsequently failed to keep reasonable records of the sale. The remedies offered by the landlord did not put right its failings and were not proportionate to the particular detriment caused to the resident during the sales process.

The landlord’s response to the resident’s reports of financial difficulties

The resident placed the landlord on notice on 21 July 2020 that she was in financial difficulty due to the impacts from the failed sale. This followed a letter to the resident concerning what were at that time low level arrears of rent. The landlord responded to this update and the resident’s subsequent request for assistance in a reasonably timely manner. Review of the landlord’s records show it took note of the resident’s full circumstances and discussed options to support her circumstances including the possibility of a benefits claim. The landlord offered to the resident a referral to specialist debt counselling. It further offered the option to consider subletting.
The landlord’s response in July 2020 to the resident’s financial difficulties was timely and appropriate. It directed the resident to potential sources of income and suggested a solution aimed at easing some of the financial pressure of her particular circumstances. It appropriately identified that specialist debt advice and support would be useful in view of the difficulty of her situation and made a timely referral. It explored options that were reasonable in the circumstances. It displayed an adapted approach in line with its home ownership policy to support financial hardship.
It is acknowledged, as raised by the resident, that the options presented may not have alone or even as a package presented a complete solution to the financial difficulties she was facing. However, it was appropriate in view of the challenges that she reported to the landlord that it directed her to all available sources of income even if it was only a partial means of easing her financial burdens.
The resident was subject to delay, albeit short, in the landlord’s response to her subsequent requests regarding its subletting process in August 2020. The landlord also provided information that was inconsistent about the application fee. While the landlord did confirm its earlier assurance of waiver and confirmed no fee was payable, it failed to apologise for its error. Although these failings were low level and of minimal impact, the landlord missed an opportunity to promptly put matters right.
The landlord processed the resident’s subletting application within just a few days and granted permission to sublet on reasonable terms. It acted reasonably by exercising its discretion to permit subletting, recognising the challenges presented by her situation as exceptional. It took further account of her particular difficulties by agreeing to waive the process fee. It showed application of the approach required by its home ownership to adapt to the individual circumstances of a case. Although subletting was only one available option and not a complete solution, it was one of the principal mitigating options within its gift to consider. That it handled the application in an overall timely manner and exercised discretion to offer this option displayed compliance with its policy.
The resident’s rent arrears grew significantly between August 2021 to November 2021. The landlord monitored the account in the interim. While the landlord’s home ownership policy allowed for recovery action, the landlord’s approach showed application of an adapted approach based on its knowledge of the resident’s situation. It was appropriate that the landlord exercised full caution against any enforcement option to enable the resident space and time to navigate her choices in a very difficult situation, while also monitoring the developing situation.
By October 2021 and following 3 months of no payment, it was further reasonable that the landlord made proactive contact with the resident to discuss the difficulties. The landlord took note of the resident’s update that she was still looking into subletting and due to apply for benefits. It offered to refer the resident for external assistance and continued to monitor the rent account over subsequent months. The landlord showed proactive support being offered in respect of the financial difficulties and a willingness to exercise discretion to account for those challenges by monitoring the account and giving the resident space to pursue the options she advised were being explored.
At the point of the resident’s complaint to the landlord in March 2021, the arrears were over £1,000. The resident updated the landlord about her financial difficulties. The landlord reacted quickly to the updated request for assistance, completing an urgent referral to its financial inclusion service to consider financial advice and support options. Its specialist service contacted the resident within 2 days and reviewed the circumstances with her. It explored with the resident options including a debt counselling referral and benefit claim. The resident expressed reluctance to pursue options she had previously found unhelpful. The landlord however demonstrated good practice response to its updated awareness of the resident’s financial challenges. It identified that updated specialist advice may be of use and that maximising income would reasonably be of assistance, even if it was an incomplete solution to the overall problem.
The landlord was aware at this point in time that the resident described being in distress and subject to a heavy emotional toll concerning the difficult circumstances she was facing. Given the importance of the advice and signposting provided by the financial inclusion service, it would reasonably have been helpful for its advice to be confirmed in writing to the resident. This would have allowed for reflection upon options and advice given.
The landlord’s stage 1 complaint response was a good opportunity for the landlord to confirm in writing to the resident its advice to date about her financial difficulties and the support options available to her. While it reminded her of the option of temporary subletting, it did not confirm the available other services and financial options. This may have been out of caution to respect the resident’s express rejection of those options. The landlord did by its correspondence of 21 May 2021 detail the further available support and once again reminded the resident of the subletting option. This put right the potential oversight.
During the further period of the complaint ending 21 May 2021, the landlord did not take any further steps to seek to enforce the rent arrears. It spoke further with the resident on 10 May 2021 and encouraged her to give further consideration to a benefits claim. This displayed further care being taken to guide the resident to appropriate forms of assistance and a tailored approach against enforcement in view of the circumstances.
The landlord acted reasonably in its overall response to the resident’s financial difficulties. It displayed proactive engagement with the resident to consider options available to support her financial challenges. It exercised discretion to offer an option that may have eased at least partially her financial burdens and gave advice that was reasonable in the circumstances. This Service recognises that the options presented to the resident were not a complete solution to her difficulties. However, the landlord responded reasonably and with matters within its discretion. It displayed the good practice recommended by this Service’s guidance note by taking steps to seek to mitigate the impact to the resident and explored reasonable options particular to her circumstances. This Service accordingly finds that there was no maladministration in the landlord’s response to the resident’s financial difficulties.
This Service noted that the resident raised a request after submission of her complaint for the landlord to consider support with lease extension fees. This matter falls outside of the investigation, it not having been subject to the landlord’s internal complaint process. The landlord is recommended to review whether any consideration was given to this request and if not determined, outline to the resident how she can submit a request and receive written response with reasons.
This Service was also provided with recent information from the landlord that it has a discretionary payment scheme open to leaseholders. The landlord is recommended to provide the resident with details of the scheme and process for application so that she is in a position to consider if this may assist.

The landlord’s handling of the resident’s buy back request

The landlord was not subject to an obligation to buy back the resident’s interest in the property; this was a matter at its discretion. The landlord’s buy back policy detailed the limits within and procedure through which it would exercise this discretion.
The resident raised a verbal request to the landlord on 30 July 2020. The landlord’s record of the call is very limited; it kept no record of its response to the resident. As the resident’s request fell subject to a particular policy and process, it is reasonable to anticipate the landlord would take steps to ensure she was aware of its buy back scheme, procedure and relevant criteria. The key details of such a scheme would not otherwise be reasonably known to her to help inform her position and choices. There is, however, no subsequent evidence that the landlord considered her request through its buy back policy or directed her to the process by which she could submit the application form and evidence. It is not until the resident’s complaint in March 2021 that it alerted the resident to the presence of a related policy.
This displayed a lack of proactive assistance to the resident despite the landlord’s awareness of financial hardship that may have fallen within the remit of its buy back scheme. The lack of evidenced advice or follow up represents a failure by the landlord to explore with the resident reasonable available options and enable access to the scheme. This was further a missed opportunity to support her earlier understanding of the limits of the scheme and manage expectations of its policy.
The resident outlined a further buy back request to the landlord within her complaint of 17 March 2021 and updated details of her financial hardship on 19 March 2021. The landlord was aware from their prior intervening discussions that the resident was in serious financial difficulty. The landlord’s response of 1 April 2021 failed to show reasonable account had been taken of her known circumstances. It informed the resident buy back was not available to her because it was for those at risk of losing their home through repossession. By the time of this response, the landlord was on clear notice the resident was in serious debt and had referred her to debt counselling. Its reasoning for deciding that the process was ‘not available’ failed to demonstrate reference to or consideration of her individual circumstances.
The landlord’s response was expressed as definitive concerning her access to buy back even though it was considered outside of the request process specified by its policy. By determining her access to the scheme before she had opportunity or information to submit a formal request, the landlord applied discretion outside of the relevant policy. This was unfair to the resident who was not been given proper access to the application process before its refusal.
The landlord on 21 May 2021 outlined a position in response to the resident’s concerns about her buy back request. It explained that full buy back was outside of its policy and referred her to its criteria and policy should she wish to request the buy back of shares. It gave a link to the relevant policy to enable the resident to review the detail of the criteria and process to be followed should she opt to consider down staircasing. It was clear that its policy did not include full buy back. This response provided the fuller clarity and access to information about its policy that was previously lacking despite her requests and efforts. The landlord’s response was appropriate in the circumstances of it operating a policy that did not provide for full buy back.
The landlord did not identify or offer any redress to the resident for having missed earlier opportunities to clarify the position to her, support her understanding of its scheme and making a decision outside of its specified process. While the correspondence of 21 May 2021 did go some way towards putting right the resident’s access to key information and relevant process, it did not address the detriment caused to the resident by its failure to do so earlier.
The landlord is responsible for maladministration in its handling of the resident’s request for a buy back. Its failings placed her at a disadvantage having to re-exert her request including by recourse to her MP, repeat difficult personal circumstances and left her unclear for a period of the full options available to support her challenges. The resident described feeling despair and distress that the landlord did not appear to be listening. The landlord is ordered to pay the resident compensation in recognition of the overall detriment.
This Service issued a Spotlight report in 2021 providing guidance for member landlords dealing with cladding related concerns. Landlords were urged to consider whether buy back could be accommodated in exceptional circumstances and whether its policies and procedures were sufficiently flexible to enable all possible options to be offered to those residents trapped in difficulties outside of their control. The Homes England Capital Funding guide provides for use of capital funds to enable an offer of a flexible tenure by full buy back. This Service noted that the effect of the landlord’s buy back policy is to prohibit any full buy back, regardless of the individual circumstances of the resident or financial viability. This Service is conscious a number of factors reasonably influence such a policy decision including the form/s of funding and headlease terms. However, a blanket policy wide prohibition of full buy back runs contrary to the flexible approach encouraged of landlords responding to the difficulties impacting residents through no fault of their own. The landlord is ordered to review its buy back policy to consider whether it can viably provide additional flexibility to consider full buy back in exceptional circumstances

The landlord’s handling of the resident’s complaint

This Service reviewed the landlord’s approach across the complaint process and made the following findings indicative of positive complaint handling:
1. It provided timely acknowledgement of the resident’s complaint and review request in line with its procedure.
2. It conducted its complaint investigation at stage 1 of its process in line with policy and held a timely case conference and provided a written response within its stated timescale.
3. It exercised discretion in favour of the resident outside of its standard exceptions to extend the period for investigation of her complaint. This demonstrated a willingness to listen to the resident and flexibility to consider the resident’s individual circumstances.
However, the landlord’s handling of the resident’s request for review of her complaint failed to display the same level of compliant complaint handling. The first aspect of this failing is important but of lesser impact; the landlord failed to provide its response within the timescale required by its complaints resolution procedure. It issued a response 32 working days after the resident’s request was made in substance on 12 April 2021, 14 working days later than its procedure commitment. While the landlord did advise the resident it required further time, it did not seek to agree the extension and rather acted unilaterally without discussion or recourse to the resident. It failed initially to provide the resident any explanation for its delay, providing it only after the resident sought understanding. This was a failure by the landlord to comply with its own procedure as to extending the timescale for response. It failed to give appropriate regard to the experience of the resident by simply imposing an extension without explanation or discussion. This was contrary to the expected complaint handling set out in the Code.
The landlord’s delayed response of 21 May 2021 was to refuse further review of the resident’s complaint. While the landlord’s complaints resolution procedure and the Code recognised circumstances in which a complaint may not be considered by its process, exclusion at any stage was required to be fair and reasonable to the resident.
The landlord reasonably applied its policy to determine certain aspects of the resident’s complaint unsuitable for review by its complaint process. However, there were other aspects of substance concerning the landlord’s stage 1 response raised by the resident’s escalation request. The resident raised issue with the adequacy of its explanation for the acknowledged error and recognition of the wider extent of its failings. These matters were of importance to the resident and reasonably merited a fair review. As considered above, the landlord had failed to consider at all in its response a number of matters raised by the resident arising from the sales process.
The landlord appropriately identified it was unable to meet the precise outcome sought by the resident’s review request, however it is unclear why this would prevent the landlord considering at review whether it could offer any separate or lesser forms of redress or actions/ support options to seek to put matters right. Simply because parallel processes existed to determine aspects of the complaint this did not prevent the landlord fairly reviewing other aspects ie wider issues or solutions outside of a prospective insurance or legal claim, for example its financial support schemes.
The landlord’s refusal to escalate aspects of the resident’s complaint was unreasonable and out of compliance with Code requirements. She had raised matters of substance about the landlord’s first stage response and other forms of redress could at least in part be reasonably be reviewed distinct to separate process. By excluding her escalated concerns from its formal review process, the resident lost the opportunity for her complaint to be reviewed by a panel involving independent residents.
Although the landlord asserted to the resident it would not review her escalated concerns, the letter of 21 May 2021 contained what was in essence a partial response and a form of redress by providing additional explanation and making an offer of compensation. This was inconsistent with the landlord’s position that a review panel was unable to consider her concerns or available redress within its complaints procedure. In so doing, the landlord unfairly provided a response and offered redress outside of its complaints resolution procedure. The resident had sought review by an independent panel involving residents. The landlord’s response was by an internal complaint handler only. This resident was fairly entitled to review of her complaint within the appropriate forum specified by the landlord’s procedure.
The resident placed the landlord on notice by her complaint on 17 March 2021 that her housing and financial circumstances were having a serious impact on her health. She described herself as struggling mentally and emotionally. The landlord was required in line with the Equality Act 2010 to give consideration as to whether the resident has a disability as defined by law. Outside of its disability related obligations, it is expected practice that a landlord would take into account any other vulnerability disclosed to ensure a sensitive and linked-up approach by its record keeping, appropriately tailored communication and offers of relevant support.
The landlord’s records show no regard for the detrimental impact to health as reported by the resident. There is no evidence the landlord considered the resident’s vulnerabilities during the rest of its course of contact with her. There is no record that the landlord acknowledged or responded to the mental health concerns she stated were connected to the difficulty of her circumstances eg by offering relevant support via internal or external services. It failed to actively engage in conversations with the resident that would have enabled it to understand her needs and make relevant reasonable adjustments. This represents additional detriment to the resident.
This Service finds that the resident’s complaint was subject to maladministration by the landlord as a result of its lack of evidenced regard to her expressed vulnerabilities and handling of her request for a review.
The landlord’s response was late by nearly 4 weeks and the landlord failed to engage appropriately with the resident about its delay. The resident was unreasonably and unfairly prevented access to a fuller assessment of her concerns by a forum involving her peers.

The landlord’s knowledge and information management

The landlord advised its failure to retain full records of the sale was in line with its 2 year data retention policy. It is unclear why the landlord did not exercise discretion to retain the particular records of sale or whether it did review this position. As from March 2021 the issue of its handling of the sale was subject to complaint investigation and latterly enquiries from the resident’s MP. The landlord was notified in May 2021 that the resident intended to refer the matter to this Service. The landlord, as a member of the Housing Ombudsman Scheme, would reasonably be aware that this Service would ordinarily consider complaints referred within 12 months of completion of the complaints process. There was reasonable prospect of a referral to this Service that would require disclosure of all relevant evidence. That associated records were destroyed only 6-7 months after closure of the related complaint is a failure by the landlord to retain reasonable records.
This Service finds there was maladministration in the landlord’s knowledge and information management. Its failure to retain reasonable records adversely impacted the ability of this service to further assess its sales handling. This caused detriment to the resident by preventing her recourse to fuller review of its handling that she reasonably anticipated.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in the landlord’s handling of the sale of the resident’s interest in the property.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration in the landlord’s response to the resident’s reports of financial difficulties.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in the landlord’s handling of the resident’s buy back request.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in the landlord’s handling of the resident’s complaint.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in the landlord’s knowledge and information management.

Reasons

The landlord made avoidable errors across the resales process and did not acknowledge the full extent of its failings. It failed to advertise the property within a reasonable period of time. The remedy it offered to the resident did not put matters right or reflect the adverse impact caused to her. The landlord’s failings and associated delay concerned a matter of significant personal importance that was time sensitive. This aggravated the detriment experienced.
The landlord displayed proactive and tailored engagement with the resident to consider how it might support her financial burdens. While the options explored were an incomplete solution, the landlord responded reasonably in the circumstances and took available steps within its discretion.
The landlord expressed multiple decisions to the resident’s repeat requests for buy back outside of its policy and failed to direct her to the relevant application process. This lead to delay in the resident securing information about and access to the appropriate procedure. The landlord also failed to evidence that account was taken of highly relevant information about the resident’s circumstances when reaching a decision.
The resident’s was unreasonably and unfairly denied access to review of her concerns by a forum involving her peers in line with the landlord’s policy. The landlord’s refusal to review her complaint was delayed. The resident placed the landlord on notice of her vulnerabilities but the landlord failed to show it had any regard or responded in line with its equality duties.
The landlord failed to retain reasonable records, impacting the assessment and findings of this Service.

Orders and recommendations

Orders

Within 4 weeks of the date of this decision, the landlord is ordered to:
1. Arrange for a senior member of the landlord’s staff to apologise to the resident in writing for the failings identified in this report.
2. Pay the resident £1,200 compensation comprised of:
  1. £500 to address the distress and inconvenience caused to the resident by its handling of the sale of the resident’s interest in the property.
  2. £200 to address the distress and inconvenience caused to the resident by its handling of the resident’s buy back request.
  3. £350 to address the distress and inconvenience caused to the resident by its handling of her complaint.
  4. £150 to address the inconvenience to the resident caused by its knowledge and information management.

The above ordered compensation should be paid direct to the resident and not be offset against any outstanding arrears of rent or service charge.

Offer to arrange a meeting between the resident and a manager independent of the service areas responsible for the failings identified by this investigation with the aim of rebuilding the relationship of trust with the resident.
Contact the resident to explore her updated circumstances and any further assistance or support it may offer including the suitability of its discretionary payment scheme. Any advice provided about financial or other assistance is to be confirmed in writing to the resident.
Provide the resident in writing with details of how to make an insurance claim and offer support from an experienced officer not previously involved in the handling of the resident’s case.

Within 6 weeks of the date of this decision, the landlord is ordered to:
1. Carry out a review of the failings identified by this investigation to determine why these occurred and the steps and actions it will now take to prevent reoccurrence. The landlord should provide a copy of the review to the Ombudsman.
2. Assess the adequacy of its current staff training to equip those handling resales queries with a satisfactory understanding of how to identify and interpret lease terms.

Wider order

In accordance with paragraph 54(f) of the Housing Ombudsman Scheme, the landlord is ordered to carry out a review of the following:
1. Its quality assurance for lease terms advice.
2. Its buy back policy. The landlord is to consider whether it is able to provide any additional flexibility for full buy back in exceptional circumstances.
The review should be conducted by a senior manager independent of the service areas responsible for the failings identified by this investigation.
A copy of the above ordered reviews and any associated updated policies or procedures should be provided to the Ombudsman within 8 weeks of the date of this determination.

Recommendations

It is recommended that the landlord:
1. Consider its policy for retention of records relevant to complaints, in particular where a resident has indicated desire to pursue external recourse.
2. Review and respond to the resident’s request for support concerning lease extension.
The Ombudsman has recently made a number of orders and recommendations in other investigations related to the landlord’s complaint handling and record keeping. The Ombudsman has therefore not made further orders or recommendations around these aspects of service in this report but expects the landlord to take all relevant learning points from this case into account in its overall reviews.