The new improved webform is online now! Residents and representatives can access the form online today.

Notting Hill Genesis (201905832)

Back to Top

REPORT

COMPLAINT 201905832

Notting Hill Genesis

20 August 2021


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 the landlord’s:
    1. response to the resident’s request that it assign full ownership of the property to him;
    2. complaints handling.

Background and summary of events

Background

  1. The resident has been a shared ownership leaseholder of the property along with the landlord since 3 February 1994. The landlord is a registered provider of social housing.
  2. The property was purchased through the government’s Do It Yourself Shared Ownership (DIYSO) Scheme. The resident’s initial ownership percentage was 25%. The lease provides that the resident must pay annual rent on the landlord’s ownership share. The rent is reviewed annually, increasing by the greater of the RPI increase or 5%. The lease allows for the resident to increase his ownership share by a process called ‘staircasing’ in which he purchases portions of the landlord’s share at the current market value.
  3. The landlord operates a two stage complaints policy. The policy notes that complaints will be responded to within 10 working days, and escalated complaints within 20 working days.
  4. The landlord operates a compensation policy. The policy notes it may offer discretionary compensation for distress and inconvenience of up to £100 where an issue took longer than expected to resolve or where it failed to meet its service standards.

Summary of events

  1. On or before 10 April 2018, the resident requested the landlord contact him to discuss entering into a “buyout clause” for his property. He advised he had been unable to staircase his property due to “unforeseen circumstances,” but that as he had paid approximately £100,000 in rent since purchasing the property, he considered it fair for the landlord to offer the buyout clause at a “massively reduced figure” based on the rent paid compared to the landlord’s initial outlay of £60,000.
  2. On 12 April 2018, the landlord responded that all rent charged had been in line with the terms of the lease and that it would be unable to offer a buyout clause. On the same date, the resident requested to discuss the issue with a member of the landlord’s senior management, following which the landlord advised a manager would call on 20 April 2018. It is not evident, however, that the resident received any call.
  3. On 25 October 2018, the resident advised he was yet to receive any call relating to his earlier query. The landlord subsequently advised it would call on 12 November 2018, however, on 28 November 2018, the resident advised he had not received any call. On 29 November 2018 the landlord apologised for not calling, noting its staff member had been unwell. It confirmed, however, that it would not be changing its position. It noted the resident could raise a formal complaint if he wished.
  4. On 5 August 2019 the resident advised he did wish to make a formal complaint and on 8 August 2019, the landlord provided him with information on how to do so. On 31 August 2020, the resident made a formal complaint, in which he reiterated that he wanted the landlord to “revert back” the property to him as his rent had exceeded the landlord’s initial outlay. On 1 September 2020, the landlord advised it would respond within 10 working days.
  5. The landlord provided its stage one response on 11 September 2020. It noted that the resident had already raised this issue on two previous occasions and that its position remained unchanged. It noted that the lease allowed for it to charge and increase rent annually and that there was no provision for a buyout clause. It also advised that should the resident increase his ownership percentage by staircasing, this would decrease the amount of rent payable on the remaining share. On the same date, the resident requested an escalation of his complaint.
  6. On 14 September 2020, the landlord enquired as to what element of its response the resident disagreed with and what outcome he was seeking. The resident subsequently reiterated he considered that the landlord had been adequately repaid by his rent payments. On 15 September 2020, the landlord advised it would respond within 20 working days.
  7. On 7 October 2020, the landlord apologised for its delay and queried the outcome the resident was seeking, to which he replied on 13 November 2020 that he wanted it to assign ownership of the property. On 20 November 2020, the landlord advised it would provide its response by 3 December 2020. On 3 December 2020, it advised it was waiting for further information and that its response would be delayed.
  8. The landlord provided its stage two response on 10 December 2020. The landlord advised that the purpose of the DIYSO scheme had been to assist residents to own a share of equity in a property as opposed to purely renting, and that the lease gave them the option to increase that share by staircasing. It also reiterated that the lease required the continued payment of rent on the remaining share. It further reiterated its position that it would not revert the ownership of the property and that if the resident wished to own the property outright, he would need to acquire the remaining 75% by staircasing. It also advised that the rent paid to date was not towards staircasing. The landlord noted, however, that the resident had experienced difficulty in receiving a return phone call following his initial enquiries and that its stage two response had been delayed. It subsequently offered £100 in compensation.

Assessment and findings

Property ownership

  1. It is not disputed that the property was initially purchased through the DIYSO scheme, and that the ownership split was 25% to the resident and 75% to the landlord. It is also not disputed that the landlord’s contribution to the purchase price was approximately £60,000, nor is it disputed that to date, the resident has paid approximately £100,000 in rent. Additionally, it is also not disputed that the lease agreement was willingly entered into by the parties (initially the resident’s mother, later assigned to the resident).
  2. Schedule 2 of the lease provides that the method for the resident to increase his ownership percentage is through staircasing. It notes that in order to acquire an additional percentage share, the resident must make a formal written request indicating his intention and the amount he wishes to acquire. The landlord will then arrange for the property to be valued and the price for the share to be acquired will be set at the current market value. Paragraphs 2 and 3 of the lease require the resident to pay the rent specified in the particulars, along with the ground rent in the head lease. Schedule 1 of the lease also provides for the method of rent review, which allows the landlord to increase the rent annually to the greater of the RPI increase or 5%. There is no provision within the lease requiring the landlord’s share to be assigned to the resident after a specific time, or after a specific amount of rent has been paid.
  3. It is not evident that the resident made any formal requests to acquire an additional share by staircasing, nor that he intended any of his rental payments to constitute contributions towards staircasing. While he is entitled to request that the landlord amend the lease by way of a buyout clause, there is no obligation within the conditions of the lease for the landlord to do so. Additionally, while the resident considers that his rental payments have exceeded the amount contributed to the purchase price by the landlord, the method of staircasing requires the property to be revalued upon each acquisition of a share, meaning the total amount payable for the acquisition of the full property over this period is likely greater than the initial purchase price due to property price inflation. It was therefore reasonable for the landlord to reject the resident’s request for it to assign the remaining share of the property to him on the basis of the rental amount paid. It was also appropriate that the landlord clearly articulated its position following each of the resident’s enquiries and in each of its formal responses, and that it referred the resident to the terms of the lease for clarification.

Complaints handling

  1. The Ombudsman considers it best practice to reply to a resident’s query or follow up any promised communications within a reasonable time. It is not evident, however, that following its promise to call the resident on 20 April 2018, and again on 12 November 2018, that the landlord made either call. Additionally, the landlord’s complaints policy notes that it will respond to a stage two complaint within 20 working days. While there was initially some delay in communication between both parties following the landlord’s queries about what outcome the resident desired, it is evident that the landlord’s stage two response was delayed. While it initially apologised for its earlier failures to make the promised telephone calls to the resident and it also appropriately advised the resident its response would be delayed, the failure to call and delays to its response would have caused distress to the resident as he would have been usure about how his enquiries/complaints were being addressed. The landlord’s compensation policy notes that in such instances, it may offer up to £100 in discretionary compensation. In the Ombudsman’s opinion, the landlord’s offer of this amount in its stage two response appropriately addresses its service failure as a result of these delays.

 

 

Determination (decision)

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of its response to the resident’s request that it assign full ownership of the property to him.
  2. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, and in the Ombudsman’s opinion, there was reasonable redress offered by the landlord for its service failure in respect of the complaints regarding its complaints handling.

Reasons

Property ownership

  1. There is no indication in the lease that the resident’s rental payments, as required by the lease, were intended to represent acquisitions of additional ownership shares in line with the staircasing provisions under the lease. Furthermore, there is no provision within the lease which required the landlord to assign its ownership share to the resident for any reason other than a formal acquisition in accordance with the staircasing provision in the lease. While the resident was entitled to request the landlord amend the lease to include a buyout clause, the landlord was not required to agree, and so it was reasonable that it refused this request.

Complaints handling

  1. The landlord appropriately offered compensation, in line with its compensation policy, to reflect its service failure for failing to follow up its promised call backs to the resident and the delays to its stage two response.

Recommendations

  1. The landlord to write to the resident within four weeks of the date of this determination and reiterate its offer of compensation, if it has not done so already.