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Midland Heart Limited (202107053)

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REPORT

COMPLAINT 202107053

Midland Heart Limited

9 September 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 resident complains about the landlord’s handling of his Voluntary Right to Buy (VRtB) application, and its response to his subsequent formal complaint.

Background

  1. The landlord’s VRtB policy sets out that tenants would not be eligible if they had any rent arrears at the point of application or purchase completion.
  2. The landlord’s complaint policy sets out that, in the first instance, it would aim to provide an ‘immediate solution’ via the department complained about (resolution stage). However, if the matter required a formal investigation it would be logged as a formal complaint and dealt with at the ‘investigation’ stage of the complaint process. It would aim to provide a response within 10 working days.
  3. If a resident remained unhappy with the outcome of the complaint, they could request escalation to ‘Formal Review’ stage. The complaint would be escalated if the landlord found that there was evidence that its complaints process had not been followed, and/or there were elements of the complaint that had not been addressed. It would aim to provide the outcome of a Formal Review within 20-working days.

Summary of events

  1. The resident made a VRtB application to purchase his home, but this was subsequently cancelled by the landlord in March 2019 due to a high level of arrears on his rent account.
  2. On 12 September 2019 the resident emailed his MP about his VRtB application. He said that he was aware that no arrears were permitted on the rent account at the time of the application being made. He said ‘…I phoned Midland Heart and ask how much am I in arrears on my rent and made the payment. But after about 6 months passed they contacted me to say I can’t buy my property.’
  3. He said that the arrears were not his fault as he was up to date with his payments, and the rent shortfall was due to his universal credit being paid in arrears, and on occasions, late. He said this meant it was impossible to know how much to pay to clear any arrears.
  4. The MP forwarded on the matter to the landlord, which responded on           23 September 2019 explaining that it was obliged to follow the rules of the VRtB process, and these included a stipulation that an applicant must not have rent arrears at the point of their application: The resident had been in arrears since April 2016. The email said, ‘I am pleased to advise that if [the resident] is able to pay his arrears balance quickly we can seek to reinstate his voluntary right to buy application.’ The resident cleared the arrears shortly after.
  5. The VRtB team disbanded at the end of April 2020. On 1 September 2020 the resident emailed the landlord and explained that following on from its email of 23 September 2019, he had immediately paid off his rent arrears. He said that he tried to contact the landlord’s customer service team towards the end of 2019 and at the start of 2020 but was told he was not permitted to speak to the team directly, and they would contact him in due course. However, this did not happen, and the resident said ‘Then came the virus and everything was on hold and you only deal with emergency only. I am getting concerned as to how long this is taking to get sorted.’
  6. The landlord responded on 3 September 2020 noting that it had written to the resident in March 2019 to advise that his VRtB application was cancelled due to rent arrears. It noted that the resident had been advised of the full debt amount in January 2019 and so had the opportunity to clear the arrears prior to the VRtB application review on 12 March 2019. The need for a clear rent balance was set out on its website and in the VRtB literature provided to the resident.
  7. After the MP made contact in September 2019, the landlord agreed that if the arrears were paid off promptly, then ‘…we would be able to seek to re-instate your application.’ The resident cleared the arrears on 4 October 2019, but there was no evidence that he made any further contact with the landlord to discuss or request progress of the VRtB application. It had reviewed calls received from the telephone number that the resident had provided, but none of the calls (or emails) found had included an enquiry regarding the progress of the application.
  8. The landlord said ‘I have therefore concluded that this period of time, and available contact resources available to you provided you with an adequate opportunity to make further enquiries regarding your application.’ The landlord acknowledged that this was disappointing for the resident, but the portal to apply for the VRtB was currently closed.
  9. The landlord provided a similar response to an MP enquiry the following week, stating, ‘Although [the resident] did subsequently clear his rent arrears he did not contact us to say he was ready to restart his voluntary right to buy application. The voluntary right to buy scheme has now closed so we are unable to reinstate his application.’
  10. The resident emailed the landlord again about the matter, stating that around a month after he began the VRtB process, the landlord emailed him to say that the application had been cancelled because of rent arrears. He said that this was not his fault and was due to universal credit being paid in arrears. He said that the landlord should have contacted him and given him the chance to clear the balance.
  11. Following on from clearing the arrears in October 2019, he had waited to hear from the VRtB team. When he did not, he contacted customer services and was told that they would pass on a message to the VRtB team. As he heard nothing further, he telephoned again in January 2020 and was again told that a message would be passed to the VRtB team, as there was no way for him to make contact with them himself. He explained that when Covid-19 arrived in March 2020 the landlord was dealing with emergencies only, and when he did make contact again in July 2020, he was told that the VRtB team no longer existed.
  12. The resident stated that the landlord’s 23 September 2019 email did not stipulate that he had to make contact once he had cleared his arrears, and in fact had said if he cleared the arrears then his VRtB application would be reinstated. The resident felt it was unfair that he was being penalised for the landlord’s mistake.
  13. The landlord logged this as a formal complaint and provided a stage one response on 2 October 2020. In this it reiterated its previous responses and said ‘Once you had cleared the arrears it would be reasonable to expect that you made the VRTB team aware of this, so they could continue to process your application. Having reviewed our internal systems I have been unable to see you contacted us to progress your VRTB application.’ The landlord did not uphold the complaint as no service failure had been found.
  14. The resident escalated the matter to the final stage of the landlord’s complaint procedure, explaining that the landlord’s 23 September 2019 email did not make it clear that he had to reinstate his application after clearing his arrears. The landlord provided its final response on 14 October 2020, stating that while the arrears had been cleared, there was no evidence that the resident had requested that his VRtB application be reinstated.

Assessment and findings

  1. In his complaint to this Service the resident has stated that the landlord failed to follow the government’s VRtB guidance. He states that while this does say that there must not be any rent arrears, ‘…they didn’t set out if that means tenants needs to pay their rent in advance…’ The resident has also said that he telephoned the landlord to ask about the arrears on his account before making his VRtB application, and paid this amount before submitting it. He said the landlord did not make any further contact with him about the arrears until it sent him an email two months after cancelling the application.
  2. He also says that government guidance states that there should be a team who deals directly with the VRtB and that tenants should be able to speak directly to this team, which was not the case with the landlord. He said if he had been able to speak with the VRtB team, none of the problems would have occurred and he would have owned his property by now. The resident states that he phoned the landlord in both December 2019 and March 2020 to check on progress with his application.
  3. Regarding the landlord’s 23 September 2019 email agreeing to reinstate the application if the arrears were quickly cleared, the resident points out, ‘It didn’t state anything about what process I needed to take…just plain and simple, if I clear my arrears then my VRTB would be reinstated.’ The resident feels that the landlord’s investigation into his complaint was poor and did not address this point. The resident has explained that he has lost the chance to ever own his own home due to failings by the landlord.
  4. The section of the guidance (Voluntary Right to Buy – Midlands Pilot Guidance for housing associations) the resident refers to in relation to contact with the VRtB team comes under ‘Responding effectively to tenant complaints’ and is not part of the guidance as such, but a case study from another landlord that sets out that particular landlord’s processes and the importance of the VRtB team being contactable. Nevertheless, this Service agrees that it would be good practice for the landlord to have ensured that applicants were able to discuss any concerns with the VRtB team when necessary.
  5. The resident considers that he was not behind with his rent payments, rather, his universal credit payments were paid in arrears. However, it is still the case that his rent account was several hundred pounds in arrears when he made his VRtB application. While the resident has stated in his communications that he cleared the debt prior to submitting his VRtB application, the rent account does not reflect this, and shows that he had been in arrears for a long period and there was no point at which the account was clear. There is also a record of him being advised of the current level of arrears in January 2019, but no indication that the arrears were cleared following this.
  6. Both the Midlands Pilot Guidance document and the landlord’s own policy sets out that a resident with any rent arrears at the point of application would not be eligible for the VRtB scheme. Therefore, it was reasonable that the resident’s application was not progressed. Further, to try and resolve the resident’s concerns, the landlord agreed to reinstate the application if the resident was able to quickly clear the arrears. This demonstrates that the landlord was prepared to take action to assist the resident, and the Ombudsman finds that it acted fairly here.
  7. The resident claims that he did attempt to chase up his application once the arrears were cleared. The landlord disputes this and has supplied this Service with a record of all the contacts it has logged from the resident from September 2019 through to September 2020 to support its position, none of which were in relation to the VRtB.
  8. The resident has detailed calls he made to the landlord in late 2019 and early 2020 chasing his application. He describes being told that it was not possible to speak with the VRtB team and that they would be in touch with him. The Ombudsman acknowledges that it can be challenging for residents to provide evidence of phone calls as they do not have the same recording capabilities as landlords. It is also noted that in another of the Ombudsman’s investigations concerning a similar matter, a resident of the same landlord detailed that he could not make direct contact with the landlord’s VRtB team but was told to wait for the team to contact him.
  9. Ultimately, it is not possible for this Service to determine exactly what happened here or the reason for the discrepancy between the resident’s recollection of events and the landlord’s records. There is some indication that the resident may have attempted to contact the landlord about his application, and the landlord may benefit from reviewing its processes for recording telephone contact, but there is insufficient corroborating evidence to conclude that the resident actively pursued his application following payment of the rent arrears. 
  10. Nonetheless, it was reasonable for the resident to expect the landlord to have reinstated his application without his making contact, given the content of the 23 September 2019 email, which stated that once the arrears had been cleared, the application would be progressed. No mention was made of the resident having to take any action other than clearing his arrears.  If it was the case that the resident needed to take specific action to progress the application after clearing the arrears, it would have been prudent and reasonable for the landlord to have advised of this in its 23 September 2019 email.
  11. It is not possible to put the resident back into the same position had the failing not occurred, i.e., for the resident’s application to be reinstated. It is also not possible to say with certainty that the resident has missed the opportunity of purchasing the property, only that the landlord’s action contributed to the resident missing the opportunity to submit his application. This is because the application was at a very early stage of the process and there are many variables in such transactions, including securing a mortgage.
  12. Finally, it would have been appropriate for the landlord to have addressed the resident’s concern about this matter in its response to his complaint. That it did not caused frustration for the resident, and the landlord missed an opportunity to resolve the complaint.

Determination (decision)

  1. In line with section 54 of the Scheme, the Ombudsman finds service failure in the landlord’s handling of the Voluntary Right to Buy (VRtB) application, and its response to his subsequent formal complaint.

Reasons

  1. It was reasonable for the landlord to cancel the VRtB application on the basis of the rent arrears, and it acted in a fair and customer focused manner in allowing the resident the opportunity to clear these and have the application reinstated.
  2. However, there were failings in the landlord’s handling of the resident’s enquiries about the VRtB application because it did not explain to the resident that he was required to contact the landlord following clearance of the arrears. Its advice led the resident to not unreasonably understand that the application would be automatically progressed once the arrears were cleared. The landlord’s action therefore contributed to the resident missing the opportunity to submit his application while the VRtB scheme was still running.

Orders

  1. Within one month of the date of this report, the landlord should pay the resident a total of £350, comprised of:
    1. £300 for the loss of opportunity experienced due to the landlord’s handling of the resident’s enquiries about the VRtB application, and;
    2. £50 for the frustration caused by the failings in the complaint handling.