Network Homes Limited (202115065)

REPORT

COMPLAINT 202115065

Network Homes Limited

3 December 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

The complaint is about:

a. the landlord’s communication with the resident about subletting his property.

b. the landlord charging the resident a subletting admin fee.

Background and summary of events

The resident is the leaseholder of the property and the landlord is the freeholder. The resident sublets the property to a tenant and the tenancy is managed by a letting agent (the agent).
In correspondence from the landlord to the resident regarding a historical complaint on 22 April 2016, sent to an address overseas, the landlord acknowledged that he was intending to sublet his property. It said that it would be contacting him in due course to request information related to the subletting of the property and request payment of the subletting fee. There was no subsequent record of this occurring and there does not appear to have been any further communication between the resident and the landlord about this until March 2021.
On 19 March 2021, the landlord emailed the agent to inform them that it had contacted them on several occasions about noise complaints it had received about the property and that it had gathered that the property was being sublet. It said that it had received no reply to its calls or emails, or responses to its voice messages. The landlord relayed that it had no record of the property being registered as sublet and requested the confirmation registration letter if it had been registered. If the property was yet to be registered for sublet, it said that this could be done retrospectively and attached its sublet policy for information about this.
The landlord confirmed that it required information about the tenants of the property to ensure that the sublet tenancy agreement met the lease agreement, that it was not in breach of its requirement and for reasons of health and safety and antisocial behaviour.
The resident emailed the landlord on 19 March 2021 to attempt to arrange a telephone conversation for that day as he was aware that it had sent letters to the property which specified deadlines, despite it being aware of his correspondence address. He noted that it had sent letters concerning other matters to his correspondence address.
The landlord replied to the resident later that day to advise it would not be able to speak and relayed that it had made several attempts to contact the agent as it did not hold contact details for him. It had an overseas address on file that was not attached to a sublet registration, therefore it did not wish to send information there in line with data protection legislation. The landlord also explained that, due to its remote working practices since the corona virus lockdown, it did not have the capability to send post to addresses outside of the UK.
The landlord said that it wrote the address of the property as it could legally serve notices on the property address and it was the resident’s responsibility to ensure that it could access any post sent to the property. It said that, once it received his email, it noted the return email address so that it could contact him directly. The landlord stated that it had not raised the prospect of legal action but the resident could seek legal advice if desired. It said that its earlier email had provided the information necessary to resolve the subletting registration and acknowledged that the matter may have been overlooked by either party which was why it was asking for confirmation of registration. In the event that the sublet was not registered, it offered retrospective registration.
The resident responded to the landlord later that day to inform it that he was intending to raise a formal complaint about the matter.
The resident raised a stage one complaint with the landlord on 21 March 2021 in which he said that it was “well aware” that he was subletting the property through the agent. He referred to a complaint made in 2016 in which he advised it of the subletting of the property and recalled it informing him that “sometime in the future [it] planned to introduce an obligation to register sublets”. The resident said that no other mention of registering the sublet of the property had been made by the landlord.
The resident contended that the landlord had always been aware of his overseas addresses as he had regularly received post from it. He added that he had corresponded by email “extensively” with it concerning the 2016 complaint and regarding a service charge enquiry he made on 8 December 2020, during which he confirmed his current postal address. The resident stated that it was a “matter of public record” that he had sublet the property, as he was licensed by the local authority as a landlord, and a licence search would have revealed his overseas contact address. The resident highlighted that he had received post from the landlord to his overseas address twice in January 2021.
The resident advised the landlord that he had not received correspondence it had sent to the property addressed to “the occupier” and said that his agent had not informed him of any contact from it between October 2020 and March 2021. He added that he had emailed the landlord on 12 March 2021 to give the agent permission to liaise with it to obtain new access fobs for the property for his tenant, to which he had not received a response.
Regarding the email the landlord sent on 19 March 2021, the resident highlighted that its use of the heading “without prejudice” had “alarmed” him as it implied the threat of legal action. He contended that it had displayed “administrative incompetence” in its management of its communication and his contact details, and it had been contradictory in its communication with him about why it had not written to him at his overseas postal address about the subletting of his property. The resident said the landlord’s explanation of not having the capability to send postal mail overseas was “implausible” and questioned its interpretation of data protection legislation.
The resident quoted case law which stipulated that freeholders were not charge unreasonable fees to leaseholders for permission to sublet; he said such fees should not exceed £40.
The resident expressed his belief that the information requested by the landlord in its subletting policy was excessive and unlawful, and contravened data protection legislation. He added that the policy did not explain why such information was required and highlighted that its request included information on his tenants, who were a third party.
To resolve his complaint, the resident wanted an apology from the landlord for its handling of the matter which included it not contacting him directly and using threatening language in its communication with him. He wanted it to agree to charge no more than £40 plus VAT for its admin charge for subletting registration. Finally, he wanted the landlord to change its subletting policy to make it compliant with data protection legislation.
The landlord issued its stage one complaints response on 7 April 2021 to the resident. In this, it explained that it had received complaints about noise from the property and its investigation into this found that the property had been sublet. As the landlord had no record of the permission to sublet the property, it wrote to the occupier of the property, who asked it to deal with the agent. It received the resident’s email address from the agent “after a number of months”, at which point it corresponded directly with him.
The landlord asserted that it was not its responsibility to investigate which of its leaseholders may be subletting their properties; it said it was the resident’s responsibility to inform it of this. It noted that he said he had previously informed it of the subletting but it had no record of this. The landlord noted that its other departments may have contacted the resident but this did not prove that permission to sublet had been granted. It acknowledged that it had alternative contact addresses for him but it decided not to use these as it was unable to confirm if these were still current.
The landlord agreed that its “language and tone could have been warmer” but maintained that it had acted correctly in seeking evidence that the sublet of the property had been registered. It explained that this was because the matter at hand was the possible breach of the lease due to the installation of laminate flooring at the property and subletting without permission. The landlord said that its discussions with the resident’s tenant indicated that laminate flooring had been installed which he needed to rectify. It apologised if its communication had been perceived as threatening but said that these discussions were necessary when possible breaches of lease were found.
The landlord explained that it had run a benchmarking exercise with the G15 organisation of housing associations which found that its subletting admin charge of £100 was consistent with its peers. It listed the items requested from him to register the sublet as:
1. A letter from the resident’s mortgage lender agreeing to a specified letting period.
2. A copy of the tenancy agreement between him and his tenant.
3. Copies of the gas safety, energy performance and electrical installation condition report certificates.
4. Confirmation that furniture provided in the property conformed with the Furniture and Furnishings (Fire Safety) Regulations 1998.
5. Contact information for the resident while away from the property.
6. Contact details of any agent acting on the resident’s behalf.
7. Contact details for his tenant in case of emergency.
8. The admin fee.
The landlord explained that it required the confirmation from the resident’s mortgage lender as this affected the type of mortgage product he was eligible for. It required the copy of the tenancy agreement in order to confirm that he had not granted any terms to his tenant which had not been granted to himself as the leaseholder. The landlord explained that the documentation requested allow it to ensure that the relevant safety measures had been taken and that it required contact details of the resident, his tenant and his agent in order to enable it to respond swiftly to any reports of antisocial behaviour or emergencies which may occur. It said that this information was necessary to ensure that it could “effectively perform [its] role as freeholder to the building and therefore not excessive”.
The resident escalated his complaint to the final stage of the complaints procedure on 11 April 2021. In this he confirmed that he continued to be dissatisfied for the same reasons expressed in his original complaint and added that he found it “bizarre” that it did not seek confirmation of his landlord licence from the local authority. The resident disputed that the landlord had made him aware of his responsibility to seek permission to sublet from it, highlighting that it had never provided its subletting policy to him previously and this was not available on its website.
The resident said that it was a “deliberate distortion” by the landlord when it referred to him being contacted by other departments within its organisation; he highlighted that the complaint handler’s signature appeared on the letters he had received at his overseas address in January 2021. He also said that it had been contradictory about whether or not it possessed contact addresses for him, noting that the complaint said it had, whereas previous correspondence stated that it did not.
The resident contended that his issue with the landlord’s communication was not about the tone but that its first contact with him “amounted to a threat to take legal proceedings” and was contradictory to the service standards in its customer charter. He said that, only after receiving its stage one complaint response, was he reassured that its initial email was not a “scam… to extract £100” from him, such was how unprofessional he found the communication to be.
The resident said that the stage one complaint response was the first occasion on which it had been put to him that laminate flooring had been laid at the property. He denied that this was the case and contended that this was “victimisation”. The resident questioned if this would have been raised had he not complained and said it was a “fabricated accusation… to intimidate [him]”.
The resident noted that the landlord had not referred to the legal ruling about the reasonableness of the subletting admin charge in its stage one complaint response and questioned the legitimacy of the benchmarking exercise it had referred to.
The resident contended that omitting the reasons for requesting the information as part of the subletting registration process in its subletting policy was contrary to data protection legislation. He held that the reasons it gave were vague and was unconvinced they were genuine. The resident informed the landlord that he declined to provide the information requested as part of the subletting registration, other than that which it already possessed, expressing concern over its handling of such information.
On 14 April 2021, the resident emailed the landlord to add further information to his complaint escalation. He highlighted that it had attempted to use an incorrect email address for its agent on several occasions and relayed that the agent did not have any record of the contact attempts it referred to in its initial email on 19 March 2021. The resident acknowledged that consideration of this information may involve an extension to the timeframe required for the landlord to provide a final response.
The landlord issued its final stage complaint response to the resident on 11 May 2021 in which it apologised for the terminology used in its correspondence with him and acknowledged that this may have been perceived as threatening. It found historical communication with him which included his email address. While the landlord said this was not “readily available”, it acknowledged that it could have made more effort to locate this information within its systems.
The landlord also noted that it was evident that it had been aware that the resident had been subletting “for some years” and had not pursued the information about the sublet it had recently requested of him. It held that the reasons for requesting the information were clearly explained in its stage one complaint response, however, in light of the information which had come to light, it no longer required this.
The landlord explained to the resident that the issue of laminate flooring stemmed from a report of noise coming from the property. It noted that he disputed this and asked for photographic evidence that there was no laminate flooring installed.
The landlord explained that it required the agent’s contact information because, as they were managing the tenancy, they were better placed to liaise with the tenants in case of any emergency. It noted the agent’s correspondence dated 16 March 2021 about seeking a replacement entry fob and confirmed that it had provided them with an authority to represent form so that it could liaise with them directly in future.
The landlord acknowledged that contact to the agent was unsuccessful as an incorrect email address had been used in error. It apologised for the confusion caused by this.
The landlord asserted that the subletting fee of £100 was a reasonable level and justified to reflect the work involved in dealing with a subletting. In light of its acknowledgement that it had been aware of the sublet for a significant time, it considered it was not appropriate to charge this. The landlord acknowledged that it had displayed failures in record keeping and its communication with the resident. It confirmed that, other than its request for evidence that laminate flooring had not been fitted at the property, it did not require any further action regarding the subletting of the property. In recognition of the inconvenience caused to the resident by its failures, the landlord offered compensation of £150 and asked him to confirm his acceptance of this.
The resident contacted this Service on 6 October 2021 to state his continued dissatisfaction with the landlord charging a subletting admin fee and requiring information about his tenants. To resolve the complaint he wanted it to alter its subletting policy and post it online to confirm that it was not entitled to charge a subletting admin fee or request information about subtenants. The resident added that he had not received the compensation the landlord had offered him in its final response.

Assessment and findings

Policies and procedures

The landlord’s lease agreement with the resident confirms that he is not to lay laminate flooring in the property without the landlord’s written permission.
The landlord’s subletting policy applies when a request for subletting, or discovery of subletting, occurs and allows for subletting when the resident is a leaseholder and owns 100% of their property. This confirms that the following documents are required: a letter from the resident’s mortgage lender, if applicable; a copy of the tenancy agreement; copies of gas safety, energy performance and electrical installation condition report certificates; confirmation that provided furniture is compliant with relevant fire safety regulations; contact information for the leaseholder; details of any agent used for the subletting; and payment of an admin fee of £100 to the landlord.
The landlord’s complaints policy provides for a two-stage complaints procedure. This specifies that responses to be provided to the resident within ten working days at the first stage of the procedure and within 20 working days at the final stage of the procedure.
The landlord’s compensation policy provides for offers of compensation where an ‘injustice’ such as it causing “avoidable expense, trouble or inconvenience” to the resident. This provides for offers of compensation of £5, £10 or £20 per week for distress and £1, £3 or £5 per week for inconvenience based on a low, medium or high impact of the failure. This also provides for offers of between £25 to £150 for an inappropriate threat of legal action.

The landlord’s communication with the resident

A landlord would be expected to ensure that its records of resident’s contact details were kept up to date and accessible to prevent miscommunication with them. It was not disputed that the resident provided up to date contact details to the landlord on 8 December 2020 and that it had sent letters to him in January 2021. This was contrary to its assertion on 19 March 2021 and its stage one complaint response on 7 April 2021 that it did not hold up to date contact details for him and was a failure on the landlord’s part to manage the resident’s contact information effectively.
The resident contended that the landlord’s use of the phrase “without prejudice” in its communication on 19 March 2021 “amounted to” a threat of legal action. While this is one possible interpretation of this, it is important to note that there was no direct threat of legal action made to him. It was reasonable for the landlord to highlight the legal implications of the situation to him at this stage, even though it was acting on the misapprehension that he had not informed it of the subletting of the property. If a breach of the lease had occurred then the ultimate consequence could be legal action to recover the property. It was therefore in the interest of both parties for the landlord to inform the resident of the potential outcome. Although this understandably would have caused worry to the resident, the landlord acted reasonably based on the information it was aware of at the time.
The landlord acknowledged, in its final response on 11 May 2021 that it had not reviewed its records sufficiently to draw the correct information about the situation and had not made sufficient efforts to extract contact details which were already in its possession. This acknowledgement of its failures was reasonable in the light of the historical information that since came to its attention.
The Ombudsman’s remedies guidance, available to view at https://www.housing-ombudsman.org.uk/wp-content/uploads/2020/11/Remedies-Guidance.pdf provides for compensation awards of between £50 and £250 for failures “which had an impact on the complainant but was of short duration and may not have significantly affected the overall outcome for the complainant” such as “not having regard to a complainant’s preferred method of contact or contact requirements”. The landlord’s offer of £150 compensation for its communication failures was broadly in accordance with this, and also its compensation policy, and therefore represented a reasonable offer of redress for the failures it exhibited.

The landlord charging the resident a subletting admin fee

In line with the rules which govern our service, the Ombudsman will not make a determination on complaints which concern policies which have been properly decided by the landlord in accordance with relevant and appropriate best practice. Furthermore, the resolution sought by the resident of the landlord altering its subletting policy to state that no subletting fees are chargeable is an outcome which is not within the authority of this Service to provide. This is because it is our role to look at individual complaints where the resident has potentially suffered some detriment as a result of the landlord’s actions or inaction. In this case, the landlord’s decision to charge an admin fee for other leaseholders would not cause any detriment to the resident and therefore the Ombudsman is unable to tell the landlord to waive this fee for all its leaseholders.
This assessment will only consider whether the acted reasonably and in accordance with its policies when charging the fee of £100 to the resident and will not consider whether the subletting admin fee of £100 was an appropriate amount.
The landlord’s subletting policy as mentioned above, confirms that to register a sublet an admin fee of £100 is payable by the leaseholder. It was therefore appropriate and in accordance with its policy for the landlord to request this fee from the resident. It is noted that this fee was later waived by the landlord in its final complaint response to him in recognition of it not pursuing the matter since 2016 when it was first made aware of the subletting of the property. This was a reasonable response to its acknowledged historical failure to address the matter. As the fee has been waived, the landlord does not need to take any further action in response to this aspect of the complaint.

The landlord’s request for information to register the subletting of the resident’s property.

As discussed above, it is not within the Ombudsman’s authority to provide the resident’s desired outcome; that of the landlord amending its subletting policy to reduce the level of information requested of resident’s who sublet and, as also mentioned above, this Service will also not consider complaints about policies which have been properly decided by the landlord in accordance with relevant and appropriate best practice. It is additionally noted that the resident has expressed concern over the landlord’s handling of personal information and questioned whether this was in accordance with data protection legislation. The Ombudsman is unable to consider complaints about alleged breaches of data protection as these are matters which are properly within the remit of the Information Commissioner’s Office (https://ico.org.uk). Therefore, the Ombudsman will only assess whether the landlord acted reasonably and in accordance with its policy in requesting information from the resident as part of the subletting registration process.
The landlord’s subletting policy above confirms that certain information is required from residents who sublet their properties. It was therefore appropriate for it to request this from the resident when it communicated with him about the subletting of his property. When he challenged this with the landlord in his stage one complaint, it provided a reasonable explanation of why this information was required. A landlord is required to ensure that leaseholders actions are compliant with the lease agreement and it has a responsibility to protect other tenants as well as the structure of the building from possible antisocial behaviour and risks. Therefore, there was no failure by the landlord in its request for the information specified in its subletting policy. However, as above it was reasonable for the landlord to waive the requirement for this information (aside from confirmation that there was no laminate flooring in the property) in view of the fact that it was aware the property was being sublet in 2016 and had not requested further information at that time.

Determination (decision)

In accordance with paragraph 55(b) of the Scheme, the landlord made an offer of redress to the resident prior to investigation which, in the opinion of the Ombudsman, resolves the complaints satisfactorily concerning:
1. The landlord’s communication with the resident about subletting his property.
2. The landlord charging the resident a subletting admin fee.

Reasons

The landlord acknowledged its failures in the handling of communication with the resident and offered compensation, which was reasonable, in accordance with its policy and was proportionate the level of distress and inconvenience it caused him by its errors.
The landlord recognised its historical failure to contact the resident about the subletting of his property and charge the subletting admin fee. It made a reasonable offer of redress to him by waiving this fee.
The landlord acted appropriately by requesting information in accordance with its policy to register the sublet of the resident’s property. As above, it was reasonable for the landlord to waive the requirement for this information in view of the fact that it was not requested in 2016 when it was first made aware that the property was being sublet.

Recommendations

The landlord should:
1. Pay the resident the £150 compensation it offered him in its final response, if it has not done so already.
2. Review its recordkeeping procedures to enable better management of contact details and previous correspondence with residents to avoid similar communication issues from occurring in the future.