Cobalt Housing Limited (202102557)

REPORT

COMPLAINT 202102557

Cobalt Housing Limited

14 July 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

The complaint is about the landlord’s handling of the resident’s Right to Buy (RTB) application, including the valuation of the property.

Background and summary of events

The legal context / Policies and Procedure
The landlord has confirmed that it has adopted the legislative documents and supplementary guidance as its RTB procedure. Therefore, in accordance with the 1985 Housing Act:
The landlord will send out a RTB application (RTB1) within seven days of any request. The landlord will admit or deny an application by serving an RTB2 within four weeks of a fully completed application or within eight weeks if it needs to contact another authority to confirm the tenancy details/claim.
1. The landlord will issue an Offer Notice (s125 Notice) within eight weeks of serving an RTB2 Notice for a house or 12 weeks for a flat. The landlord will request a valuation to be completed by a Royal Institute of Chartered Surveyors (RICS) qualified surveyor.
2. Included with the s125 Offer Notice is a s125D Tenants Notice of Intention form providing the tenant with 12 weeks to accept or withdraw from the landlord’s offer or request a redetermination of the valuation from the District Valuer.
3. On receipt of the completed s125D confirming acceptance of the Offer Notice, the landlord will instruct for a plan to be drawn and pass to its acting solicitors and confirm these details to the tenant’s solicitors.
4. If a tenant returns the s125D confirming they wish to have the value of the property redetermined by the District Valuer, the landlord will respond to tenants confirming receipt and request a plan to be completed for the District Valuer.
Once the plan has been received, the landlord forwards the request to the District Valuer. On receipt of the valuation from the District Valuer, the landlord will issue a Redetermination Offer Notice (s128 Notice) to the tenant. The District Valuer’s valuation decision is final even if the valuation is higher than that on the s125 Notice. Included with the s128 Offer Notice is the Redetermination Tenants Notice of Intention (s128D Notice) providing the tenant 12 weeks to accept or withdraw from its offer.
A tenant may serve an Initial Notice of Delay (RTB6) on the landlord where there has been a delay caused by the landlord. The notice will include a date (which must be at least one month) to rectify the delay. Qualifying delays under this section include:
1. Replying to an application form.
2. Issuing Offer Notice (s125).
3. Progressing the sale towards completion.
If the landlord does not serve the counter notice to a RTB6 from within the time limit, then the tenant can serve an “operative notice of delay” (form RTB8). This has the effect of net rent payments during the delay period, counting both as rent and as payment towards the purchase of the property.
The landlord’s Complaint Policy in effect when the resident made her complaint confirmed that the landlord had a two stage complaints procedure. At Stage 1, the landlord a target response time of 10 working days and at Stage 2 the landlord had a target response time of 20 working days.
The Complaint Policy allows the landlord to make discretionary offers of compensation:
Where there is a “Failure to meet a service standard or communication of incorrect information”, the landlord may make a “payment up to a maximum of £50 for each service failure. Total maximum of £100”.
Where there is “Loss or additional direct costs as a result of a lack of service provided directly from Cobalt Housing”, the landlord may make a payment “up to a maximum of £250”.
The landlord revised its Complaints Procedure in April 2021 but the above provisions remained the same.

Summary of Events

The resident became a tenant of the landlord when the landlord was formed in February 2003 following stock transfer from the local authority. The resident’s new tenancy with the landlord confirmed that she had the Preserved Right to Buy. The property is a house.
The resident has been represented by her partner when dealing with the landlord and this Service. However, for ease of reference, this report will simply state “the resident”.
On 16 September 2019, the resident submitted a RTB application with her partner who is listed on her tenancy agreement as a household member but not a joint tenant. On the form they entered a previous tenancy with the local authority between 1983 and 1986.
The surveyor appointed by the landlord to carry out the valuation inspected the resident’s property on 16 September 2019 and arrived at a valuation of £62,500 as of 16 September 2019, taking into account the sale prices of neighbouring properties. The surveyor noted that “no major structural defects were apparent”, although “there may possibly be cavity tie failure, there is a weakness to the bathroom floor and the pointing to the front bay is in poor condition”.
On 11 October 2019 the landlord issued the RTB2 Notice.. The residents representative advised this was received by post. approximately on the 13 or the 14 October 2019.
On 13 December 2019, the landlord sent the s125 offer notice in which it provided the valuation of the resident’s property, £62,500. The notice stated that there was a discount of £40,625, based on 35 years residency (65% discount). In the notice the landlord stated that “no structural defects were apparent”.
On 6 January 2020 the resident challenged the offer as she disagreed with the offer price and consequently on 13 January 2020 the landlord asked the District Valuer to provide a definitive valuation. An inspection by the District Valuer scheduled for 2 March 2020 was cancelled due to the resident suffering a bereavement.
The landlord’s records indicate that after the onset of the Covid-19 pandemic lockdown, it phoned the resident to advise that the valuation would be delayed as no-one could attend to survey as they would have to enter the home.
On 16 July 2020, the Valuation Office recommenced services and contacted the resident to arrange a visit. On 28 August 2020, the District Valuer provided its valuation. It listed structural defects including cracks to brickwork and pointing on the front elevation, areas of internal damp plaster and damp staining and probable lintel failure to both rear ground floor window openings. Taking into account the defects found, the District Valuer arrived at a value of £60,000 as of 16 September 2019.
On 21 September 2020 the landlord sent a new offer notice. The resident in response stated that she would withdraw the application as she was not in a position to accept the purchase price at that time and stated that she would re-apply after October 2020 when she would have completed another full year as a tenant and therefore be eligible for a discount based on 37 years tenancy (67% discount). The landlord confirmed that the District Valuer valuation would not expire until after six months.
On 2 November 2020 the resident formally rejected the offer of 21 September 2020 and hand-delivered a new RTB application, changing the dates on the initial application and initialling them. On 12 November 2020 the landlord advised the resident that she would have to complete a new form and posted one out.
On 4 January 2021, the landlord sent a new s125 offer notice, the valuation of the property being the redetermined amount provided by the District Valuer, but retaining a valuation date of 16 September 2019, which the resident accepted on the same day. She also submitted a formal complaint about the length of time the process had taken, stating that the landlord had the necessary information to make an accurate determination since 28 August 2020.
On 27 January 2021 the landlord sent the Stage 1 response to the complaint, stating the following:
1. Incorrect Discount period applied – The landlord agreed that it should not have been necessary for the resident to demonstrate a previous tenancy of her partner; however, it could not ascertain what time this added to the process as other aspects of the process continued.
2. Disputed valuation – It used an independent valuer for RTB valuations and it was not liable for the delay caused by the resident challenging the initial valuation.
3. Delay in District Valuer valuation – It did not cause the delay in the District Valuer valuation and following the redetermination on 19 August 2020, it processed the application efficiently, making a redetermination in September 2020.
4. New application form submission – It agreed that the resident could make a new application so that the resident could benefit from a further year’s discount percentage. It exercised its discretion by not resetting the dates and not starting a new process with a fresh valuation. Although there were difficulties in getting a fresh form for the resident to submit, things had progressed well since. In any event, it backdated the form to the date the resident made a request for a new application.
5. Rent payable since first submission – It did not believe that it was responsible for delays in the progression of the RTB and rent was lawfully due during this period. However, if it had missed timescales, this would have been a couple of weeks for which could provide reimbursement for as a goodwill gesture.
On 3 February 2021 the resident advised that after receiving further information she would appeal the complaint decision as all issues raised had not been addressed.
On 19 March 2021 the resident emailed the landlord to chase up the RTB application, stating that her solicitor had not heard back. She also enquired when she would receive the Stage 2 complaint response.
On 8 March 2021 the resident escalated the complaint. She contended that the landlord should have been aware of structural issues as the local authority, when dealing with a previous RTB application in 1996 had identified possible subsidence and signs of settlement, which led them to withdrawing that application. She stated that she handed a copy of the report to the landlord in December 2019.
On 27 April 2021, the landlord sent the Stage 2 response to the complaint, stating the following:
1. Incorrect Discount period applied – The offer of 13 December 2019 was made one week over the statutory timescale of 8 weeks, therefore it would offer compensation of one week’s rent.
2. Disputed Valuation – The valuation of the resident’s property on the initial valuation was comparable with the examples of similar properties sold on the open market in the local area. It therefore did not consider the original valuation overpriced. With regards to the structural issues raised by the District Valuer, the landlord had undertaken a survey in April 2021. It found that the only visual sign of a major defect was lintel corrosion above doors and windows, and that it could be a considerable number of years before the wall ties fail and the brickworks began to move. It therefore did not consider that further compensation was due.
3. Delay in District Valuer determination – It had no influence over when the District Valuer carried out valuations and had not caused the delay in the District Valuer survey. However, a 3-4 week delay after the report was issued should not have occurred, therefore it would offer three weeks rent as compensation.
4. New application form submission – The new application was received on 3 November 2020 and the resident received the offer on 4 January 2021. It accepted there was a delay in signing the offer and proposed a further four weeks’ rent as compensation.
5. Rent payable since first submission – It apologised that it had not met the statutory timescale by a couple of weeks, but the majority of the delay was associated with the District Valuer.
6. Further works – As part of its compensation offer it proposed to carry out ventilation works to tackle damp in some rooms, this issue having been identified at the inspection of April 2021. It advised the works would be completed within four weeks, subject to access. The remaining defects identified were not in need of urgent attention.
7. Communication – It accepted that its communication was not of the standard expected, although in the initial stages this was due to the onset of the pandemic, and proposed £100 compensation for this.
In total, the landlord offered compensation of nine weeks rent, taking into account one week’s rent offering at Stage 1 for rent payable since the first submission, totalling 9 x £91.18 = £820.62, to be deducted from the purchase price. The offer of £100 compensation for communication failures was to be paid directly to the resident.
On 4 May 2021, the resident advised this Service that she considered the s125 notice of December 2019 to be “fraudulent” as:
1. The neighbouring property which was end of terrace, had more land and was in better condition was only valued as £500 more. Surveyors had advised that cracks in their house could be indicative of settlement due to falling wall ties and broken lintels.
2. The discounted price was based on the resident being a tenant with the landlord and the local authority previously for 32 years – however, the resident had a previous tenancy, details of which were stated in the RTB application, therefore she had in fact been a tenant for 35 years. As a result, the discounted offer price was 3% more than it should have been.
3. On the s125 form the landlord had stated that “no major structural defects were apparent”. However either side of the notice, structural issues had been identified, in 1996 when the local authority surveyor referred to signs of settlement and in August 2020 when the District Valuer mentioned various cracks to the brickwork and pointing.
The resident also advised of further delays throughout 2020 due to further inaccurate value determinations, further denials of obvious structural faults, delays and absence of communication, and a legal boundary dispute. On 11 May 2021 the resident further stated that she though if the landlord had produced an accurate property valuation on 16 December 2019, this would have prevented the failings it accepted in 2020 from occurring.
On 19 May 2021 the resident advised the landlord that she was dissatisfied as it had not satisfactorily explained why the s125 offer notice of December 2019 was “so inaccurate”, and that an accurate s125 offer notice would have prevented the need for her to refer the matter to the District Valuer. She stated that it had not explained why:
1. It did not provide the required discount for 3 years for the previous tenancy.
2. It valued her property at just £500 less than a neighbouring property.
3. It issued a s125 notice stating that there were no major structural faults when four surveyors had reported that this was the case.
On 16 July 2020, the resident advised this Service that she remained dissatisfied as she did not consider that the landlord addressed the issues raised. The case was therefore accepted within the Ombudsman’s formal remit. The resident has later advised this Service that she completed the purchase of her property in October 2021.

Assessment and findings

Jurisdictional limits to investigation

Paragraph 39(a) of the Housing Ombudsman Service states that “The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion are made prior to having exhausted a member’s complaints procedure”. A landlord should have the chance to consider and resolve a matter complained of within its complaints procedure before this Service can assess how it dealt with the matter complained of. In line with paragraph 39(a) this investigation has focussed on the matters raised within the complaint that exhausted the landlord’s complaints procedure on 27 April 2021.
In February 2020, the resident’s solicitor queried the property plan noting a boundary discrepancy with the adjacent owner-occupied property due to conflicting title plans. The solicitor stated that the fence / brick pier for the gates was in the wrong place and did not reflect ownership over the width of a walkway. In May 2021, an updated plan was sent to the resident’s solicitor with the boundary line changed and registered as it was currently placed, providing a stipulation of access being preserved for both the resident and the neighbour having right of way to the rear gained through the passageway. On 5 July 2021 the landlord advised the resident it would reduce the sale price by a further £911.80 (10 weeks rent) due to a delay in reaching a decision on the boundary issue. Thereafter, the resident completed the purchase of her property in October 2021.
Whilst the Service recognises the resident’s frustration over the boundary issue, and the resultant time taken to complete the conveyancing and purchase of the property, these matters were not considered within the landlord’s complaints procedure. Therefore, this Service cannot therefore investigate these aspects of the resident’s case.

Assessment

In investigating the resident’s complaint, the Ombudsman is concerned with assessing the reasonableness and appropriateness of the landlord’s actions at this time, taking into account the legal context, its policies and procedure, any relevant good practice. It is not the role of the Ombudsman to make findings on the valuation itself, nor to make technical assessments of the repair condition of the resident’s property.
Following receipt of the resident’s RTB application, the landlord arranged for a valuation by a RICS surveyor in line with the RTB procedure. The surveyor arrived at a valuation of £62,500 and did not identify structural defects. The landlord was reliant on the surveyor to carry out the valuation and it was in line with the RTB procedure that the landlord’s s125 offer notice of 13 December 2019 reflected the surveyor’s findings. The resident exercised her right to challenge the valuation. In response, the landlord again followed the RTB procedure by making a referral to the District Valuer for a final, binding valuation.
The resident has raised concerns that the landlord applied the wrong discount in the s125 offer of 13 December 2019. The copy of the offer provided to this Service does not confirm this as a discount of 65% reflecting 35 years residency and encompassing the previous tenancy was applied. In any event, any error in the discount calculation at this time was superseded by the resident’s request for a revaluation of the property after which the discount would be recalculated.
The resident has also raised concerns that the valuation of 13 December 2019 did not identify structural issues. However, it was role of the appointed surveyor to consider the condition of the property, identify any structural issues and decide if any identified issues affected the valuation. As it was in line with the RTB procedure for the landlord to follow the surveyor’s findings at this time, there was no service failure on its part in not stating there were structural issues in the s125 offer. The resident also had the opportunity to report any structural issues to the landlord prior to her RTB application so that it could inspect or otherwise consider the structural issues raised. There is no evidence from the landlord’s repair records that she did this which again does not support that there was an omission by the landlord in relying on the RTB surveyor.
The resident has noted that the District Valuer identified structural issues. The Ombudsman does not assess the actions of a landlord with hindsight but considers what action it took based on the information available to it at the time. As stated above, its s125 offer reflected the information from the surveyor at the time and was therefore appropriate.
There were various delays culminating in the resident’s RTB application not completing at the time she completed the complaints procedure. It is noted that the extent of the delays caused the resident to pay an amount of rent from the time she first applied that exceeded the financial benefits from the District Valuer redetermination and extra discount received when submitting the new application of 2 November 2020. The Ombudsman appreciates that this must be distressing to the resident, but in investigating this complaint is concerned to establish whether there were any unreasonable delays on the part of the landlord.
A significant delay occurred between the landlord’s referral to the District Valuer on 13 January 2020 and the valuation of 28 August 2020. However, the landlord is not responsible for the actions of the District Valuer, or the reasons for the delay – the postponement of the initial appointment then the introduction of Covid-19 lockdown restrictions. As such there was no service failure on the part of the landlord for this delay.
There was also a delay caused when the resident decided to reject the s125 offer of 21 September 2020 so that she could make a new application after October 2020. However, as this was the resident’s choice, the landlord was not responsible for this delay. In fact, it exercised its discretion in accordance with the wishes of the resident by not insisting on a new valuation following the new application. As such, there was no service failure on the part of the landlord for this delay.
Where there have been delays in the handling of the RTB application on the part of the landlord, it has acknowledged them.
It accepted that it took too long to send the s125 offer after receiving the District Valuer valuation of 28 August 2021. Its offer of three weeks rent rebate reflected the time elapsing until it sent the notice on 21 September 2021. The RTB procedure allows for rent rebates and the landlord’s offer here was therefore proportionate to the circumstances.
It offered four weeks’ rent as compensation for the time taken to send the new s125 offer of 4 January 2021 after it received the resident’s new application of 2 November 2020. This new RTB application could be expedited with the landlord having agreed to rely on the valuation of 20 August 2020, therefore avoiding the need to arrange a valuation after receiving the application. Nonetheless, the s125 offer was less than a week outside the statutory eight week time limit therefore the compensation of four weeks’ rent was more than reasonable.
The landlord also offered compensation for accepted failures in its communication. Whilst the landlord did not specify what failures of communication occurred, neither did the resident. Ultimately, its compensation offer of £100 for communication failures was in accordance with the guidance in its complaints procedure, and on top of the compensation for delays and therefore proportionate to the circumstances of the case.
The landlord’s compensation for the delay in sending the original s125 notice of 13 December 2019 was reasonable and appropriate. It offered one week compensation for not meeting the statutory timescale of eight weeks by one week. The eight weeks timescale applied, as the property was a house.
Therefore, i the landlord offered redress to the complainant prior to investigation which, in the Ombudsman’s opinion, resolves the complaint satisfactorily.

Determination (decision)

In accordance with paragraph 55b of the Housing Ombudsman Scheme the Ombudsman determines that there was reasonable redress by the landlord.

Reasons

The landlord acted appropriately when sending the initial s125 notice offer of 16 December 2019 insofar as it acted in line with the RTB procedure and acted reasonably in following the valuation of the surveyor at the time. The landlord also followed the RTB procedure by referring the resident’s challenge of the valuation to the District Valuer.
The landlord sought to offer redress to the resident for the delays in the RTB application that it was responsible for. It also offered compensation specifically for communication failures that was proportionate to the circumstances of the case. The landlord offered reasonable redress for its service failure in relation to its failure to send out the section 125 notice until 16 December 2019 by offering appropriate compensation under its internal complaints procedure.

Recommendations

Within the next four weeks, the landlord is recommended to pay the resident the compensation offered within the complaints procedure if it has not already done so.