Moat Homes Limited (202102664)

REPORT

COMPLAINT 202102664

Moat Homes Limited

10 February 2022

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

This complaint is about the landlord’s handling of:
1. communications with the resident when he attempted to sell his property;
2. the resident’s request to purchase an additional share of his property;
3. the resident’s request for compensation.

Background and summary of events

Background

The resident holds a 25% shared ownership lease of the property. The lease is dated 14 October 2014 and the landlord has described the property as a two-bedroom flat on the sixth floor of a building (the ‘block’). The landlord is a housing association and has advised that it is not the freehold owner of the block.
The landlord was informed in early 2020 that the resident had medical conditions that meant he was in the vulnerable shielding category for Covid-19 purposes.
The lease agreement obliges the resident ‘to pay the specified rent and the management charge’ to the landlord and not to ‘underlet’ the property ‘before final staircasing has been accomplished’.
The lease agreement contains the following staircasing provisions for residents to acquire a further percentage ownership of the property:
1. the landlord ‘shall apply to the valuer to determine the market value as at the date of service of the leaseholder’s notice’
2. ‘the decision of the valuer shall be final and binding’.
The lease agreement defines ‘market value’ as the price of the property if sold on the open market by a willing seller, disregarding ‘any mortgage of the leaseholder’s interest’.
The landlord has a homeowners booklet that includes sections on staircasing and sub-letting showing that:
1. to enable it to provide ‘a purchase price for the shares you wish to buy, your property must now be valued by an independent surveyor qualified through the Royal Institute of Chartered Surveyors’ and that it instructs the valuation
2. both it and the resident can query any valuation but ‘the decision of the valuer is final’
3. the resident may be able to obtain their own valuation ‘if for any reason one of these surveying companies are unable to provide the report’
4. sub-letting of a shared ownership property is possible for a maximum term of 12 months.
The landlord has a ‘selling your shared ownership home’ booklet that shows it will provide a leasehold management pack to a buyer’s solicitor which ‘will contain information about your home, service charges and planned works’ but that the solicitor ‘may also require a pack from the managing agent if you live on a development where a separate company manages the services you receive’.
The government issued ‘Advice Note 14’ in December 2018 as part of its Building Safety Programme. In summary, the advice was for owners of high-rise leaseholder buildings where the external wall system of the building did not incorporate Aluminium Composite Material (ACM). The advice set out checks which owners could carry out to satisfy themselves, and their leaseholders, that their building was safe.
In December 2019, the Royal Institution of Chartered Surveyors (RICS), the Building Societies Association (BSA) 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 (six storeys). Form EWS1 was introduced to prove to lenders that external cladding had been assessed by an expert.
The landlord has a complaints policy that sets out a formal two-stage complaints process with responses required within 28 days (at stage one) and 21 days (at stage two) respectively.
The landlord has a compensation policy that shows that it will consider compensation for residents who have experienced time and trouble due to its service failure. It adds that any amount owned to it ‘by the customer by way of rent arrears, outstanding service charges or sundry debts will be deducted from any compensation payments made’.

Summary of Events

The resident wrote to the landlord on 24 June 2019. He asked for confirmation that the building met the guidance set out in Advice Note 14 and noted that this was needed to allow an intended sale of the property to progress.
The landlord forwarded the above request to the block managing agent on 24 June 2019. The agent told the landlord the same day that it should be aware of the full building inspection information.
The landlord wrote to the resident on 2 July 2019 – it advised that it was aware that the resident had put the property on the market for a 100% share so a simultaneous staircasing-sale process would be needed. It noted that a property valuation would be needed and it signposted the resident to a panel of potential surveyors from which he could choose.
The resident wrote to the managing agent in July 2019 and August 2019, asking it when the landlord was originally made aware of a situation regarding the block cladding.
The landlord wrote to the resident on 17 August 2019 – it said that it could only pass on information from the managing agent as it was not the freeholder of the block and that it understood all available information had been provided but the buyer’s lender had decided the information was too old. It added that the staircasing option was open to the resident albeit a valuation would be needed so it again asked for the resident’s preferred surveyor from its list of possibilities.
The resident signed a staircasing application which was sent to the landlord on 15 November 2019, with a property surveying company selected.
The resident was in contact with a property surveying company during early January 2020. The resident advised the property valuer on 3 January 2020 that he withdrew the property from the market several weeks earlier while he tried to get a resolution from the landlord and he believed the property was worthless due to the cladding issue (and that the costs for removal would be passed to leaseholders).
The property valuer advised the resident on 8 January 2020 that his report and valuation was completed but needed to be peer reviewed prior to release.
The landlord has since advised the resident that it wrote to the property surveying company on 10 January 2020, advising it that a nil valuation would not meet the requirements of the ‘market value’ definition laid out in the lease.
The property valuer advised the landlord on 13 January 2020 that it could not provide a value currently because there was ‘every possibility that the figure could be significantly influenced by the cost of any remedial work, which is not yet known’. It asked the landlord to place this on hold ‘until the building has been assessed to ensure that it meets the requirements of current guidance from MHCLG, or, alternatively obtaining a BR135 safety certificate’ and it would review this once the landlord was ‘in receipt of an appropriate External Wall Fire review form completed by an appropriate professional’.
The property valuer advised the resident on 15 January 2020 that it was agreed that it would await a cladding report that the landlord had advised would shortly be available. It also advised the landlord on the same day that it (the surveying company) had been placed into administration.
The resident’s solicitor wrote to the landlord on 23 January 2020 as follows:
1. the resident’s property sale could not proceed in June 2019 because the landlord had not responded to his request for a fire safety certificate on 24 June 2019
2. the resident was now having to pay rent and charges that he should not have been required to if the sale had gone through
3. it asked for a write off of all rent and charges from 1 August 2019 when the property sale completion should have gone through
4. property valuers had offered to provide valuations as part of the resident’s staircasing application but the landlord had told the valuer to wait for the fire safety certification and the valuer had then gone into liquidation
5. it asked for the landlord to proceed with a valuation that reflected the market value at the point of the original application (when the block did not have fire safety certification).
The landlord obtained legal advice on 5 February 2020 that a property valuer would need to establish the market value of the property and that this meant ‘the amount someone would be willing to pay to purchase the property on the open market unhampered by a mortgage and therefore the property would have a value on the open market to a cash buyer’.
The landlord replied to the resident’s solicitor on 13 February 2020, advising that:
1. it had assisted the resident in July 2019 with the information it held but this had not been sufficient for the buyer’s mortgage lender
2. it was the responsibility of the building owner or managing agent to provide cladding documentation so this was not the landlord’s role and it simply passed the service charge to the managing agent so the resident would need to approach them for any reimbursement
3. the property valuer asked the landlord if the valuation could be put on hold pending a block survey which it agreed to and it was out of its control that the valuer had then gone into liquidation
4. it referred to recent managing agent advice that had gone to leaseholders in the block which showed that issues with the cladding had been identified and that property sales or re-mortgages were likely to be on hold until the building was ‘compliant’
5. a surveyor would be appointed for a market value property valuation as of 15 November 2019 (when the resident’s staircasing application was made).
The landlord noted telephone calls with the resident during 24-26 February 2020 – the notes show that assurance was given that it would not, and cannot, influence property valuation surveyors and any compensation claim would need to be considered through the complaints process.
The landlord asked a second property surveying company on 26 February 2020 for it to undertake a market value property valuation as of 15 November 2019 for the purpose of a staircasing application.
The resident’s solicitor wrote to the landlord on 2 March 2020 as follows:
1. it asked why the landlord had intervened in an agreement between the resident and valuer that a current valuation (without certification) and future valuation (with certification) would be provided
2. it mentioned that a recent landlord instruction to a new valuer had not made clear the situation regarding fire safety certification at the block so it asked the landlord to rectify this
3. it set out that any valuation of the property would not reflect a current market value if the cladding situation was not taken into account.
The landlord’s rent account records show that the resident informed it on 2 March 2020 that he would stop paying rent on the grounds that there was a dispute to do with the landlord preventing a property sale.
The landlord chased the second property surveying company on 1 April 2020, following up the original request it had made on 26 February 2020. The company replied the same day, advising that valuation was on hold ‘as per the applicant as he required clarification with regards to cladding’.
The resident wrote to the landlord on 15 April 2020 and 21 April 2020, chasing up the staircasing progress and advising that there had been no response to his solicitor’s correspondence. It was added that the resident was vulnerable and finding the process stressful.
The landlord followed up with the property surveying company again on 21 April 2020 to check if the valuation remained on hold or not as this was needed to progress the staircasing application. The company replied to the landlord on the same day to advise it had declined the instruction because the resident had accused it of collusion with the landlord.
The landlord wrote to the resident’s solicitor on 28 April 2020. It advised that:
1. there was no validity to the claim that it had intervened in the property valuation process during January 2020
2. it agreed that ‘the lack of certification for the building may influence the market value of the property, and that the surveyor’s report should take into account the lack of certification when reaching providing a market value for the property’
3. with reference to buildings without certification, ‘some surveying companies have declined to provide a valuation for such properties, as they are unable to provide a market value as defined by the lease’.
The landlord wrote to the resident on 30 April 2020. It asked for confirmation as to whether the resident’s solicitors were still involved, requested that he contact it to discuss rent repayments (given large arrears) and advised that, in accordance with the lease, a valuation was required for the staircasing to proceed.
The landlord’s rent records show that it reviewed the file on 12 May 2020 and decided that the usual rent recovery actions could proceed as it had answered the resident’s solicitor’s correspondence and the resident was required to pay rent and service charges pending the outcome of the staircasing application.
The resident wrote to the landlord on 18 May 2020 – he asked:
1. why the landlord did not provide the property valuers with information about lack of cladding certification
2. how the landlord had interfered with the valuation process in January 2020
3. why the property valuers had been told that the landlord would not accept a nil valuation
4. if he could appoint his own property valuation surveyor.
The landlord replied to the resident on 29 May 2020, answering the above correspondence as follows:
1. it was not standard practice for it to provide any information to property valuers about the block cladding situation but it would do so going forward
2. it was not the building owner and the managing agent was the ‘responsible person’ for fire safety
3. it explained that it wrote to the property valuer on 10 January 2020, advising them why it could not accept a nil valuation, and that it was the valuer who asked to place a hold on the valuation process
4. it explained how it had defined what a ‘market value’ was in accordance with the lease and that it could not accept a nil valuation as the property would have a value on the open market
5. the lease also states that the landlord must instruct the valuation and its practice is for the resident to choose from a panel of regulated surveyors
6. given there were surveyors for the relevant geographical area, it did not agree to the resident’s request to arrange his own surveyor and asked him to choose from its list.
The landlord wrote to the resident on 5 June 2020 with cladding ‘update 4’ – it advised him that, in regard to cladding remediation costs, the block freeholder would register with the government’s building safety fund and solicitors had advised there was potential for a claim under the ‘buildmark warranty’. It added that ‘quotations have been requested from two companies for the installation of a fire detection and alarm system’ and the managing agent was ‘seeking estimates for the provision of a temporary waking watch until an appropriate alarm system is available’.
The resident wrote to the landlord 16 June 2020. He set out the history of having lost a property sale during 2019 and queried what would happen if they could not obtain a property valuation. He raised concern over the communications offered by the landlord, said he had been told that day that there was a sub-letting option and claimed that a nil valuation of the property was justified.
The landlord replied to the resident on 30 June 2020. It expressed sympathy for the position of the resident but reiterated that a valuation was required to allow the staircasing to proceed and it was willing to cover the cost of this. It sent a sub-letting application but advised that the resident’s rent arrears would need to be cleared to allow this option and it was likely that £1600 per month rent would be the maximum chargeable sub-let amount.
The landlord wrote to the resident on 2 July 2020, following up a telephone call. It advised that its usual maximum timescale for a sub-let was 12 months but it was looking to provide licenses for two to three years given the cladding issues. It asked the resident which property valuer he would prefer it to instruct.
The resident wrote to the landlord on 6 July 2020 – he selected another property valuation surveying company, asked for compensation for what he described as more than 12 months of trying to sell an unsaleable property and requested more easing of sub-let restrictions.
The landlord asked a third property surveying company on 8 July 2020 for it to undertake a market value property valuation as of 15 November 2019. It highlighted that the block had cladding and there was currently no EWS1 form.
The property surveyor replied to the landlord on 14 July 2020, advising that it could not accept the instruction as it had recently decided ‘to exclude carrying out any inspections on properties that have cladding or do not hold the relevant fire safety certificates’.
The landlord wrote to the resident on 22 July 2020 with cladding ‘update 6’ – it advised that solicitors were chasing a response on the ‘buildmark warranty’ claim and the government had provided a building safety fund reference. It added that the freeholder was an organisation that was owned by a property development company.
The landlord wrote to the resident on 24 July 2020 – it advised that:
1. senior management had been advised of the compensation claim but this could not be considered while the rent account remained in arrears
2. it would be prepared to extend the sub-let term to five years, waive the usual administration fee and its solicitor costs and agree to a rental figure of £1800 per month maximum (based on average rent in the area for a two-bedroom flat)
3. there was a ‘Homes England’ stipulation that sub-letting tenants would need to earn no more than £90,000, be in employment and not be homeowners but this had not caused an obstacle in other sub-let cases
4. a further property surveying company had rejected the valuation instruction so it now felt that the staircasing option had been exhausted as it seemed that a valuation would not be given due to the cladding issue
5. the rent account needed to be up to date in order for a sub-let application to be agreed.
The landlord’s rent records show that it reviewed the resident’s case during July 2020 and advised him on 29 July 2020 to pay the arrears of £4785.91 now an answer had been given on compensation. It noted further on 18 August 2020 that the arrears had risen to £6092.38 and the resident was asked to make contact.
The resident submitted a complaint on 8 September 2020 on the grounds that:
1. he was not informed of a 2017 cladding report that apparently identified questions about the cladding that could stop a property sale
2. he had received an offer in early 2019 but the buyer was declined a mortgage due to the lack of necessary certification
3. he would have ‘organised differently’ had he been aware of the cladding implications and his solicitors had advised the landlord that he would stop paying rent until it ‘addressed the issues raised’
4. the landlord had failed to explain why it had not passed on the information in 2017 about cladding and continued to pursue him for rent
5. the landlord had advised that tenants would be liable for costs associated with cladding but he had recently learned that there was a building warranty it could utilise so he was concerned the landlord would try to profit from the situation
6. he wished to be able to staircase and sought a rent reimbursement.
The resident wrote to the landlord on 16 September 2020, reiterating that he sought compensation for rent paid on a property that he felt was unsafe and that he had no hope of staircasing or selling. He asked why the landlord was reminding him weekly of unpaid rent and threatening action when he had told it why he had withheld payments.
The landlord’s rent records show that it apologised to the resident on 16 September 2020 if he felt there had been bullying in regard to its rent recovery and offered to explore opportunities to resolve the matter before taking court action. It noted that it would not take legal action pending the complaint outcome although it had decided it should keep the resident updated on the account balance.
The landlord wrote to the resident on 22 September 2020 with cladding ‘update 8’ – it advised that there had been a meeting with the building contractor that built the block and they had indicated a willingness to put right defects and it was looking into the possibility of obtaining an ‘EWS1 Option B certificate (which states that remedial works are required), which may enable lending against our properties once we have a binding commitment to carry out an agreed programme of works’.
The landlord issued a stage one complaint response to the resident on 30 September 2020. It concluded that:
1. it had agreed to cover the cost of valuation (to be paid on completion) when the resident sought to sell the property in May 2017 but this was prior to the Grenfell tragedy
2. it had been unable to ascertain that it was advised by the managing agent of an autumn 2017 report
3. its fire and electrical safety manager had provided the resident with all the cladding information it held in July 2019 when the managing agent declined to do so but it understood this had been insufficient to allow a potential buyer to secure a mortgage
4. it became aware of cladding issues at the block in November 2019 and had worked with the managing agent since then to take further action to clarify and remediate them
5. the managing agent advised all block leaseholders in February 2020 of the cladding issues and that the building did not meet new fire safety regulations so there could be problems with selling or re-mortgaging properties
6. property sales at the block had dropped since the introduction of the EWS1 form but the landlord was unaware of the impact this would have on lenders until late 2019 and had responded by sharing information as and when it was made available by the managing agent
7. it had responded to the resident’s solicitor in full on 28 April 2020 so contact about rent arrears had been opened up since then albeit it had been agreed that this would not be by telephone
8. it would not take legal action regarding the rent arrears while the complaint remained open
9. it had been unable to obtain a valuation report due to the cladding issues and it was not possible to staircase without a valid valuation as it could not just simply accept an offer from the resident
10. it had offered the resident the option of sub-letting his property until an EWS1 form was available (and staircasing or a sale was then possible)
11. it had advised leaseholders of its position on cladding remediation costs but would continue to seek other funding solutions and would not profit from the situation
12. it would only consider compensation once rent arrears were paid.
The resident escalated the complaint on 12 October 2020 on the grounds that:
1. he made the landlord aware of the potential cladding issue in June 2019 and there was a 2017 report so he did not believe that it had only become aware of the cladding problem in November 2019
2. the constant threat of court action while the dispute was ongoing amounted to bullying
3. the lack of communication about the block from either the landlord, or the managing agent, meant that he had not been able to take action to help cover his costs and this was the reason for the compensation claim
4. the landlord had not explained why it deferred a staircasing valuation without consulting with him
5. he did not accept that he should make rent payments in order for the landlord to consider his compensation claim.
The landlord wrote to the resident on 29 October 2020 – it confirmed that the claim from the government’s building safety fund was proceeding and works would commence by 31 March 2021 if the claim was approved.
The landlord issued a final complaint response on 5 November 2020. It concluded that:
1. it apologised if any distress had been caused by its actions in advising the resident of potential rent arrears recovery proceedings albeit it was necessary for it to offer this information
2. it had agreed that no verbal or written communication would be offered while the complaint was unresolved
3. it does not own or manage the block so was ‘reliant on the managing agent to take the actions required as the person responsible for fire safety’
4. it only became aware of the extent of block cladding issues in November 2019 when it strongly encouraged the managing agent to undertake an intrusive survey and fire risk assessment
5. the 2017 report was forwarded to it by the resident in June 2019 but this did not identify the cladding issues
6. it had not instructed the managing agent to withhold information from residents and had ensured that all shared owners and leaseholders were invited to future resident meetings
7. it approached a number of valuers on its panel to provide a valuation report but it became apparent that the cladding issues meant a valuation could not be offered so staircasing was not possible
8. compensation could only be considered once the resident’s rent and service charges accounts were back in credit.
The resident responded to the landlord on 17 November 2020. He said that the landlord’s complaint response was a ‘broad stroke of denial of any culpability’ and demonstrated ‘a lack of transparency, threatening and bullying and interference in the valuation process and an unwillingness to enter into a discussion on compensation without coercing us in to settling our account’. He said that he would escalate his complaint to this Service.
The landlord’s rent records show that it reviewed the case on 7 December 2020, noting that the complaint had exhausted its complaints process.
The resident wrote further to the landlord on 5 January 2021, thanking it for recognising distress that had been caused and setting out concerns over its rent recovery practices and failure to ensure shared owners in the building were kept updated on block inspections and the fact that the property would be ‘unsaleable’. It asked that the landlord consider a goodwill agreement for it to:
1. allow him to offer a modest sum to purchase the remaining 75% share of the property, given his age, that the cladding issue would not be resolved for five years and there was no policy that prevented staircasing based on a nil valuation
2. award compensation for rent incurred between autumn 2017 (when he said an inspection found the building was unsafe and demanded a further inspection) and 2019 (when the final report was done)
3. allow him to wait until compensation was paid before paying rent arrears that he had decided to withhold.
The landlord issued a complaint review response to the resident on 16 February 2021. It said its head of neighbourhood services had undertaken an impartial review and concluded that:
1. it apologised for a lack of pro-active communication between various teams, resulting in delay and miscommunication with the resident
2. it could have offered the sub-letting option to the resident earlier than it did
3. as it was not possible to obtain a valuation in line with the terms of the lease, it was not possible to progress the resident’s staircasing request
4. it offered £1,000 compensation, as a gesture of goodwill, in recognition of delays in it resolving some of the issues the resident raised with it and the impact of this on him.
The resident wrote to the landlord on 26 February 2021. He raised continued concern that:
1. it had failed to recognise bullying behaviour which he said had been ‘rife’ in its dealings with him
2. it had not responded to the offer for him to purchase the property
3. he wanted to be able to rent the property out without tight restrictions being imposed
4. the £1,000 compensation offer was derisory and patronising and he sought compensation for stress, financial difficulties and not being able to sell or rent the property, given it was aware from 2017 of serious safety questions.
The resident approached this Service in May 2021, advising that he wished to:
1. be able to purchase the remaining share in the property (to reflect its current value)
2. receive compensation to cover rent and service charges since he was denied the opportunity to buy or sub-let the property
3. be able to sub-let the property without restrictions (until the cladding issue was resolved) once it was purchased.
A private company submitted a planning application on 23 June 2021 for ‘removal of existing combustible cladding and replacement with new cladding’.
The resident reiterated to this Service in January 2022 that the landlord:
1. should have allowed the surveyor to continue work to provide a current valuation in January 2020
2. threatened him with court proceedings on a regular basis despite his solicitor telling it that he would withhold rent until the complaints process was complete
3. had withheld the staircasing valuation, meaning he had been subject to full costs (which he said were £45,000 for a two-and-a-half-year period).

Assessment and findings

The Ombudsman’s Dispute Resolution Principles are:

Be fair
Put things right
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 Ombudsman’s guidance note on fire safety and cladding sets out that, as the government’s expectations about this matter are only currently detailed in guidance, there is an element of discretion for a landlord as to how and when it chooses to comply. The Ombudsman’s guidance further advises that, when investigating a complaint relating to fire safety and cladding, the Ombudsman will consider the following points:
1. what are the landlord’s long-term plans for compliance with the guidance and are these fair and reasonable?
2. how has it communicated with residents regarding the situation and was this communication appropriate?
3. how has it responded to the individual circumstances of the resident?

Property sale

The resident has raised concerns that the landlord failed to notify him of a 2017 cladding survey that he said was likely to prevent a successful property sale. However, this Service has seen no evidence that the landlord obtained a cladding report at this time or that it was obliged to share it with the resident – no service failure has therefore been demonstrated in this regard. Indeed, it was only in December 2018 that the government issued Advice Note 14 which gave landlords guidance on how they should satisfy themselves and residents of the safety of high-rise buildings.
The resident initially sought information from the landlord in June 2019 about whether the block met the December 2018 Advice Note 14 guidance which he said was needed for a pending property sale. The landlord’s ‘selling your shared ownership home’ booklet shows it will provide a leasehold management pack to a buyer’s solicitor but that a further pack may be needed from the managing agent if it is responsible for services at the block. No evidence has been seen by this Service of a request submitted to the landlord for a leasehold management pack and, if such a request was made, how it was responded to – no service failure has therefore been established on the landlord’s part in this regard.
The landlord initially referred the resident to the managing agent on 24 June 2019 and it is not disputed that it offered some information about the building to the resident in late July 2019. It has since been alleged that the potential buyer pulled out of purchasing the property because the information supplied about the building was out of date. However, no evidence has been seen by this Service to demonstrate this or to show that the resident or prospective buyer sought additional facts from the landlord subsequent to the information it provided in late July 2019.
In summary, there is no evidence that the landlord withheld information from the resident prior to December 2018 that it was obliged to offer. When the resident asked for information to assist with a property sale in June 2019, the landlord signposted him to the managing agent and passed on the information it said it held – this was a reasonable approach and there is no evidence that it received a request for further material or failed to respond to a leasehold management pack request.

Staircasing

The resident initially submitted a staircasing application on 15 November 2019. It is unclear from the evidence submitted to this Service what actions the landlord took over the subsequent month but the valuation process was ongoing during January 2020. This indicates that the landlord had worked with the resident to appoint a valuer as the lease and its homeowners booklet require – this was therefore appropriate.
The resident has alleged that the valuer was ready to provide a property valuation based on the block not having EWS1 certification but that the landlord intervened to prevent this. This Service has seen no evidence that the landlord told the valuer to suspend the valuation process.
The landlord has acknowledged that it did write to the valuer on 10 January 2020 to explain why it was of the view that a nil valuation would not be in accordance with the ‘market value’ definition laid out in the lease. It is unclear what prompted this correspondence but the ‘homeowners booklet’ shows that either party can query a valuation and there is no evidence that the landlord acted contrary to the lease agreement’s requirement that the valuer’s decision is final – there was therefore no failure on the part of the landlord in this regard and the evidence indicates that it was the valuer’s decision to suspend the valuation process.
The valuer’s company went into liquidation shortly after its decision to suspend the valuation process. This will have caused delay in the resident’s ability to progress the staircasing application which will inevitably have been frustrating but this was not due to a failing on the part of the landlord.
The resident’s solicitor subsequently raised concerns with the landlord about potential interference in the valuation process. The landlord responded by seeking legal advice in February 2020 on the definition of ‘market value’, offering assurance to the resident that it could not influence a valuation and agreeing that any further valuation instruction would request a market value as of the resident’s original staircase application date – these actions on the part of the landlord were all reasonable attempts to progress the staircasing application.
The landlord instructed a second valuer in February 2020 and chased progress with them in April 2020. The valuer initially advised that the resident had asked it to suspend progress and then informed the landlord that it had declined the instruction due to allegations made by the resident of collusion between it and the landlord. There was therefore no failure on the part of the landlord in the lack of staircasing progress between February-April 2020.
By April 2020, the landlord advised the resident that some valuers were refusing valuations on buildings where there was no EWS1 certification. This demonstrates that the landlord was aware at this point of the likely significant obstacles to the resident’s staircasing intentions. The only actions it took to assist the resident over the coming months were to:
1. agree in May 2020 to advise any future valuer in advance of the cladding situation
2. send a sub-letting application to the resident in June 2020
3. instruct a third valuer in July 2020, advising it in advance of the lack of EWS1 certification.

Although the EWS1 form was fairly new, given it was aware that the valuation process was unlikely to be completed, the landlord should have taken pro-active steps in April 2020 to assess potential solutions, discuss possible alternatives to staircasing with the resident and consider his individual circumstances – its failure to do so was unreasonable.

The landlord also rejected the resident’s request to arrange his own surveyor in May 2020. Although the lease sets out that the landlord will instruct a valuer, the ‘homeowners booklet’ shows that a resident may be able to appoint their own surveyor if the companies on the landlord’s list are unable to provide a valuation. Given the valuers on the landlord’s list seemed unable to provide a valuation at this point, the landlord should have given more consideration to the resident’s request. Its explanation for the refusal – that there were more surveyors on its list that covered the relevant geographical area – was insufficient given it was already aware that a successful valuation using these options was unlikely to be successful.
However, from July 2020, the landlord took further steps to address the resident’s situation by:
1. changing its sub-let requirements in July 2020 to improve the likelihood of the resident being successfully able to sub-let the property for a longer period than was usually allowed (by changing the maximum rental figure, extending the sub-let term allowed and waiving the usual resident costs)
2. advising him in September 2020 that it was looking into the possibility of obtaining an EWS1 Option B form for the building that could enable lenders to give the property a value
3. updating him in October 2020 that a claim on the government’s building safety fund had progressed with an aim to complete cladding remedial works by 31 March 2021.

The landlord’s actions in negotiating increased flexibility with the resident on its sub-letting requirements and updating him on progress to address the block cladding were pro-active and demonstrated that it was willing to use its discretion to present the resident with alternatives to staircasing.

The resident made a request in January 2021 for the landlord to allow him to purchase an increased share in the property by accepting a modest offer from him. The landlord rejected this proposal in February 2021 on the grounds that a valuation was needed to progress a staircasing application. Given the staircasing section of the lease sets out that the landlord needs to instruct a valuer if a resident seeks to increase the proportion of the property they own, the landlord’s decision was appropriate and it is unclear how the resident and landlord would have been able to determine and agree the ‘market value’ of the property without an independent valuer.
When the landlord reviewed its handling of the resident’s complaint in February 2021, it acknowledged that there had been failures of communication and a delay in it providing a suitable sub-letting option. It apologised for this, said it was looking into ways to improve, renewed its sub-letting offer and awarded £1,000 compensation in recognition of its failure. This level of compensation is within the range that the Ombudsman recommends for maladministration that has had a severe long-term impact on the complainant. The landlord’s service failings related to the period April-July 2020 but, given the potential serious impact of these on the resident’s financial circumstances and mental health, this was a proportionate level of redress that recognised the potential long-term impact on him. The landlord acted fairly in its assessment of its failure to communicate and offer sub-letting options and put this right by amending its sub-letting rules and making a significant compensation award. It also indicated that it was seeking to improve its service in this area and a recommendation has been made in this regard below.
In summary, the landlord’s initial response to the resident’s staircasing application in November 2019 was in accordance with the lease and its relevant policies and there is no evidence that its handling of the valuation process was inappropriate. However, after the failure of two valuation attempts in January-April 2020, the landlord delayed unnecessarily in advising the resident of alternatives to staircasing. Nevertheless, in accordance with the Ombudsman’s Dispute Resolution Principles, the landlord was fair in its assessment of this service failure and took steps to put things right.

Compensation request

The resident initially made a request through his solicitor in January 2020 for the landlord to waive rent and service charges from August 2019 due to its handling of the requests for information when he attempted to sell the property. The landlord responded in February 2020 by signposting the resident to its complaints process and suggesting that he should revert to the managing agent for any concerns about information sharing during the attempted sale. While it was appropriate for the landlord to suggest the resident’s claim should be considered through the complaints process, it was unreasonable that it did not log a complaint accordingly and that it failed to offer clear advice to the resident in March 2020 when he said he would stop paying rent pending the resolution of the dispute.
Although the landlord did not respond directly to the resident’s advice on 2 March 2020 that he intended to stop paying rent due to his dispute with it, it was appropriate that it continued to notify the resident of his rent account balance. The lease obliges the resident to pay rent and service charges and does not allow for a suspension of payments if the resident has made a compensation or rent reimbursement claim – it was therefore not at fault for the subsequent contact it made with the resident to advise him of his rent arrears and potential recovery action.
There were occasions when the landlord agreed to suspend legal action to recover unpaid rent. For instance, it offered assurance to the resident twice during the complaints process (September to November 2020) that it would suspend legal action pending the complaint outcome. This was a reasonable approach for it to take and demonstrated that it was willing to use its discretion to avoid causing undue stress given the resident had advised of his concerns about the impact of the matter on his health.
The Ombudsman acknowledges the difficult situation the resident was in with regards to progressing either a property sale or purchase of a further share in the property and that this was likely to significantly impact his financial decision-making. However, he remained obliged to pay rent in accordance with his lease and there is no evidence that the landlord gave any agreement that he could suspend rent payments so its practice of contacting him about unpaid rent was not unreasonable.
However, between July 2020 (when it reviewed the resident’s request) and February 2021 (when the landlord issued a follow-up complaint response), the landlord advised the resident on three occasions, including in both its formal complaint responses, that it was unable to consider a compensation award while the resident was in rent arrears. There is no such stipulation in the landlord’s complaints or compensation policies – this advice was therefore inappropriate and meant that the landlord did not fully assess the resident’s compensation request until February 2021, seven months after it was initially made.
In summary, the landlord was not obliged to waive the resident’s rent and service charges and it was appropriate that it continued to interact with the resident about arrears that accrued on his rent account. However, its approach to suspend a decision on the compensation request while the resident’s account was in arrears was unreasonable and caused an unnecessary delay of seven months.

Determination

In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was no maladministration by the landlord in its handling of communications with the resident when he attempted to sell his property.
In accordance with paragraph 55b of the Housing Ombudsman Scheme, the landlord has offered reasonable redress to the service failures identified in its handling of the resident’s request to purchase an additional share of his property.
In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was maladministration by the landlord in its handling of the resident’s request for compensation.

Reasons

The landlord provided block information to the resident the month after his initial request and there is no evidence that it failed to provide information that it was obliged to offer either before or after this request in June 2019.
The landlord delayed unnecessarily between April to July 2020 in considering the resident’s individual circumstances and potential solutions given the difficulties in progressing his staircasing application. However, it accepted and apologised for this service failure, said it would look to undertake improvements, revised its sub-letting requirements and its compensation award was fair given the circumstances of the case.
The landlord inappropriately refused to consider the resident’s compensation request on the grounds that his rent account was in arrears.

Orders

The landlord to write to the resident to:
1. apologise for the service failures identified in this report;
2. if it has not already done so, update him on cladding remedial works progress at the block and how these works are to be funded.
The landlord to pay the resident compensation of £250 in recognition of the inconvenience caused to him by the maladministration in its handling of his request for compensation.

The landlord should confirm compliance with these orders to this Service within four weeks of the date of this report.

Recommendations

The landlord to write to the resident and this Service to confirm how it has improved its communications and sub-letting options with shared owners since it reviewed his complaint in February 2021.

The landlord should confirm its intentions in regard to this recommendation to this Service within four weeks of the date of this report.