Vivid Housing Limited (202104108)

REPORT

COMPLAINT 202104108

Vivid Housing Limited

18 November 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 Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

1. The complaint is about the landlord’s handling of its letting process, including the terms set out in the tenancy agreement.

Background and summary of events

Tenancy agreement, policies and procedures

2. The signed tenancy agreement between the resident and the landlord for the property detail that the property was being offered at market rent, with the landlord acting as a managing agent on behalf of a third-party landlord. The declaration section of the tenancy agreement confirms that the landlord and the resident agree to be bound by the terms and conditions set out in the tenancy agreement, and that: “This Tenancy Agreement contains terms and obligations of the Tenancy. You should read it carefully to ensure it does not contain anything that you are not prepared to agree to. If you do not understand this Tenancy Agreement or anything in it, it is strongly suggested that you ask it to be explained to you before you sign it. You may consider consulting a Solicitor, Citizens Advice or a Housing Advice Centre”.
3. Section 1.41 of the landlord’s compensation policy confirms that if a financial recognition payment is paid to a resident who has arrears, these payments will be paid directly onto the rent account.

Background and summary of events

4. The resident’s tenancy of the property began on 1 September 2020. Prior to this, the resident was a tenant of the landlord and resided in one of its social housing properties.
5. In May 2020, the resident enquired about the availability of properties on a specific estate, as they appeared to have sufficient space to meet the needs of her and her daughter. This was because they both used wheelchairs, and her daughter needed additional space to allow her to complete the physiotherapy that she was undergoing. As a result, the resident was looking to move and to apply for a disability grant to carry out adaptations to the property, which included moving the stairlift from her old property to her new one. Following this, the resident told the landlord that she was currently an assured tenant and would like to move to one of the three–bedroom market rental properties that had been advertised, on an assured tenancy basis.
6. In response the landlord confirmed that it did not offer assured tenancies for market rental properties, and it only offered market rental and intermediate market rental tenancies on its market rent properties. It advised the resident to contact the local authority about her housing application or to try Homeswapper. Around this time, it also confirmed that the resident was able to bid for properties through the local authority’s housing allocations scheme and that the local authority had assessed her as a requiring a two bedroom property.
7. On 14 August 2020, the resident contacted the landlord about two properties she had seen advertised. She said that she needed to move from her current home urgently and asked the landlord to confirm if she could rent one of the advertised properties via a management transfer. Following this the resident viewed one of the advertised properties.
8. On 25 August 2020, the local authority wrote to the resident to “strongly urge” her to “carefully consider” a number of factors in respect to her interest in the property, and is summarised as follows:
   1. The award of grants to fund property adaptations was subject to approval, for which it could not guarantee. It also raised concerns that her proposed adaptations may not be viable.
   2. It strongly advised the resident against moving her stairlift into a new property, as this could pose a greater hazard to her.
   3. In respect to her request for a three-bedroom benefit entitlement, it was unable to determine whether she would be eligible. However, it explained that the rent for property she was interested in was “substantially in excess” of its allowance rate. It further explained that at her current two-bedroom benefit entitlement, it would result in a shortfall of £397.11 per calendar month, and £247.52 if she was eligible for a three-bedroom entitlement.
   4. It highlighted that a failure to meet her rental liability would put her tenancy at risk. Therefore, it urged the resident to rent a suitably adapted property through its “home choice” option instead of taking on a property that put the resident at risk of homelessness in the future.
9. On 26 August 2020, the landlord noted that the resident wanted to ask the landlord some questions before signing the contract for the property.
10. On 1 September 2020, the resident signed the tenancy for the property. Following this, there was correspondence between the resident and landlord about her housing benefit entitlement, and whether the landlord was the registered landlord or managing agent of the property.
11. On 4 November 2020, the resident called the landlord to raise concerns that she was having problems with her housing benefit claim. This was because the property was not considered to be social housing. She was unhappy that the landlord had not informed her of this, and she requested it investigate.
12. On 5 November 2020, the landlord emailed the resident. It confirmed that the tenancy agreement outlined that the property was available for a market rent tenancy, and that it was not the registered landlord for the property. The resident responded by saying that she was told from the start that the landlord would continue to be her landlord and she would be granted a social market rent assured tenancy. She was unhappy that after needing to move due to her previous home being unsuitable for her and her daughter’s needs, she had moved to a property she could not afford and had now also come off the housing list. She had also secured a grant to install a stairlift in the property, which committed her to the property for five years, or she would have to repay the grant.
13. On 7 November 2020, the resident emailed the landlord and provided evidence of its advertisements for the properties in the development, which she said suggested that it was the registered landlord. She said she needed her tenancy agreement to show the landlord as the registered landlord to obtain her housing benefit and pay the rent for the property.
14. On 26 November 2020, the resident emailed the landlord to explain that she must have passed the landlord’s affordability checks based on the property being a housing association property, as she would not have done so for a market rent property. Initially, she had been offered a five-year assured shorthold tenancy for the property which had the landlord listed as the registered landlord; when she requested an assured tenancy, she did not notice the change of landlord on the agreement. Therefore, she wanted to revert back to the original five-year assured shorthold tenancy.
15. On 1 December 2020, the landlord responded to the resident. It explained that it carried out affordability checks on all of its market rent properties but carried out a different assessment if the customer was in receipt of benefits. It confirmed that it if was to change the tenancy to a five-year fixed term then the resident would have less flexibility in relation to ending her tenancy. It offered to support the resident with her housing benefit claim and to refer her to its support team in respect to the concerns over her mental health.
16. On 8 February 2021, the resident emailed the landlord with details of her complaint. She said that:
    1. Her complaint was that she was told the property was a social market rental from the moment she first enquired about the property.
    2. The landlord was fully aware of her income/benefit entitlement yet she passed the affordability assessment as the calculations were based on receiving full housing benefit for a social housing property, which would have covered the full rent.
    3. The marketing materials for the property stated that the landlord would be the registered landlord. She had witnesses to the conversations with the landlord that confirmed this was the case.
    4. Once the local authority received something in writing to confirm the landlord was acting as her landlord, it would backdate the housing benefit payments so the arrears would be paid in full.
    5. She had added comments to the signed tenancy agreement and she never saw the first page confirming who her landlord was.
17. On 15 February 2021, the landlord issued its stage one complaint response to the resident, which is summarised as follows:
    1. It explained that it owned the affordable and social homes at the development, which were available through the local authority’s home choice scheme following bidding from the housing register. Therefore, it was the registered landlord to those residents in these properties.
    2. However, market value homes were not designated as affordable housing and had never been offered on that basis. The landlord of these properties had been specially created by the local authority and the landlord to deliver a more accessible rental portfolio of properties to the community. Furthermore, the applicants for these properties were not allocated from the housing register. In such properties, it acted as a management agent.
    3. In regard to the property, it confirmed that it was advertised on a public platform by a lettings agent as a market rent home. Furthermore, it referred to the letter sent from the local authority as detailed in paragraph 11, in support of the resident having been made aware of the shortfall between her housing benefit and the rent for the property. It confirmed that the tenancy agreement could not be amended to reflect it as the landlord.
    4. It explained that both the local authority and the registered landlord were aware of the ownership of her property. It could not comment on any suggestions that either party had told the resident otherwise.
    5. In respect to the resident’s suggestion that she had previously been sent a sample tenancy agreement with it listed as the registered landlord for the property, it held no record of such agreement and had not made any changes to the tenancy agreement which she had signed.
    6. It apologised for the resident feeling that she had been mis-led, however it was satisfied that the resident was made aware of the risks associated with moving into the property. It would be reviewing its future property marketing to add greater clarity on its role for market rent properties.
    7. It explained that the resident should contact the local authority in the first instance if the rent remained unaffordable and she could consider applying for a discretionary housing payment if she had not already done so.
18. The resident was dissatisfied with the response to her complaint and requested its escalation. She felt that she had been told “several times” that the landlord would be the registered landlord for the property. To resolve her complaint, she wanted a tenancy agreement for the property with the landlord detailed as the registered landlord.
19. On 19 February 2021, the resident emailed the landlord to request it be added to her complaint that she felt it was in breach of contract, the Consumer Protection from Unfair Trading Act and the Committee of Advertising Practices.
20. On 16 March 2021, the landlord issued its final stage complaint response to the resident, which is summarised as follows:
    1. It acknowledged that some of its literature may have caused the resident some confusion as to whether it was acting as the landlord or managing agent. It was also clear from some of the recordings the resident sent in that it was not clear to all staff the resident spoke to that the landlord was the managing agent rather than landlord.
    2. It therefore wanted to ensure that at the time the resident signed the tenancy agreement she knew that the landlord was not going to be her landlord. It had interviewed the staff that completed the tenancy sign-up. They had confirmed that the draft tenancy agreement provided to the resident had listed the landlord as the management agent, and they believed the resident had read the agreement fully as they responded to queries she raised about clauses in the agreement. They had said that during the sign-up the resident read the tenancy agreement and there was no discussion about who the landlord was as the resident was aware that it was the managing agent.
    3. It had approached the landlord of the property to see if it could lease the property, however it was not willing to do so.
    4. Although it was satisfied that the resident was informed that it would be the managing agent and not the landlord for the property, it was clear that it had caused “some confusion”. It offered £200 compensation for this, which it would deduct from the rent arrears. It had also identified learning points from the complaint, to ensure that this did not happen again in the future.
21. The resident subsequently referred her complaint to this Service. She remained unhappy as she felt that she had explained to the landlord that she needed social housing, who had given her assurances that it would be the registered landlord. As a result, she did not read the sections of the tenancy agreement with the landlord’s details on, as she believed what she had been told. She also challenged the landlord’s assertion that she had been encouraged not to move into the property.

Assessment and findings

22. In her correspondence to the landlord, the resident has provided details of the advertisements for the property. While the advertisements do not state that the landlord was the managing agent for the property, they do clearly state that the property was for market rent. Therefore, it was apparent from the advertisements that the rent level for the property would not be at a “social” or “affordable” rent level.
23. No records of the tenancy sign-up and what was discussed during this have been provided, and therefore, it has not been possible to establish what exactly the landlord told the resident about who her landlord would be. However, after receiving the formal complaint, the landlord took appropriate steps to investigate the matter by speaking to the members of staff involved. As they confirmed that it had been made clear that the landlord would be a managing agent, and there was no evidence to confirm otherwise, it was reasonable for the landlord to conclude that the resident had been made adequately aware that it would not be her landlord.
24. The resident has said that she was provided with a draft copy of the tenancy agreement which confirmed the landlord was the registered landlord of the property. This has been challenged by the landlord, who confirmed in its stage one complaint response that it had no record of this. No evidence has been provided to show that a draft tenancy agreement was sent the resident with this information and therefore the landlord reached a reasonable conclusion on this aspect of the complaint.
25. It is important to note that the resident had a responsibility to ensure that she was satisfied with the terms and conditions of the tenancy agreement, including who would be her landlord, as the tenancy agreement is a legally binding agreement on all parties involved. This is also confirmed by the tenancy agreement, which recommended that the resident seek advice on any aspects of the tenancy agreement that she did not understand. The tenancy agreement clearly set out who the registered landlord of the property was and that the landlord would be acting as a managing agent. The resident therefore had the opportunity to consider this information before signing the tenancy agreement and it was her choice to proceed with the tenancy sign-up. 
26. As a resolution to her complaint, the resident has requested that the landlord change the registered landlord on the tenancy agreement. There was no requirement for the landlord to do this. Nevertheless, the landlord acted over and above its obligations by contacting the registered landlord about the matter, who declined the request. Therefore, the landlord was unable to take this any further.
27. It is acknowledged that the resident has experienced financial difficulties due to the shortfall in her housing benefit and that this will have caused her considerable worry. No evidence has been provided to confirm the outcome of the affordability assessment carried out as part of the lettings process. However, the available evidence indicates that the resident passed the assessment based on the amount of her income. While this may have suggested that the resident was able to afford the shortfall in rent, the resident was also made suitably aware by the local authority prior to signing the tenancy agreement that there would be a significant shortfall in her rent. Therefore, the resident was aware of the risks involved in moving to the property and the landlord cannot be held responsible for her decision to do so.
28. The landlord did however recognise that some of its communication with the resident may have caused confusion, as not all staff were aware that the landlord was a managing agent. The amount of compensation offered by the landlord (£200) represents adequate redress for this failure in service and is in line with this Service’s remedies guidance (published on our website) as well as the landlord’s own compensation policy. The Ombudsman’s remedies guidance suggests awards of between £50-£250 where there has been service failure which had an impact on the complainant but was of short duration and may not have significantly affected the overall outcome for the complainant.
29. In this case, the confusion the landlord had caused the resident in its communications did not affect the outcome of the complaint as the resident had been made aware via the tenancy agreement that the landlord would be the managing agent, and of the likely shortfall in her housing benefit, should she move to the property. It was reasonable for the landlord to confirm that the compensation award would be offset against resident’s rent arrears, as this was in accordance with its policy as detailed in paragraph 8.
30. The landlord has sought to learn from the complaint and has confirmed that it has improved its marketing literature for its market rent properties to add greater clarity for prospective residents. It has also carried out additional training for its staff in handling future tenancy applications where housing benefit income is received, in order for it to highlight the impact on the resident. This was appropriate action for the landlord to take and demonstrates its desire to learn from the complaint and improve its service to its residents.
31. The resident claims that the landlord has acted in breach of contract, the Consumer Protection from Unfair Trading Act and the Committee of Advertising Practices. The Ombudsman is unable to make a finding on this aspect of the complaint as only the courts are able to make legally binding decisions on whether a contract or legislation have been breached. The resident would need to seek legal advice if she wishes to pursue this aspect of her complaint further.

Determination (decision)

32. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the landlord has offered redress to the resident which, in the Ombudsman’s opinion, satisfactorily resolves the complaint about its handling of its letting process, including the terms set out in the tenancy agreement.

Reasons

33. It has not been possible to establish what the resident was told during the tenancy sign-up due to a lack of evidence. However, the tenancy agreement clearly shows the landlord acting as the managing agent for the property and that the property was being offered at market rent. The resident therefore had the opportunity to consider this information before signing the tenancy agreement. 
34. The landlord has acknowledged that it may have caused the resident some confusion during its communications with her and has offered her a reasonable amount of compensation for this service failure.

Recommendations

35. It is recommended that the landlord does the following within the next four weeks:
    1. Re-offers the £200 compensation award to the resident, if this has not been paid.
    2. Offers to meet with the resident with a view to establishing if there is any support it can offer her eg in relation to applying for discretionary housing benefit, re-housing etc.
    3. The landlord (managing agent) should provide the resident with direct contact details to speak with her current landlord and provide guidance on how she can raise a complaint with it directly.