Haringey London Borough Council (202110720)

REPORT

COMPLAINT 202110720

Haringey London Borough Council

27 April 2023

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 leaseholder 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:

1. The landlord’s communication with the leaseholder about its insurance cover.
2. The landlord’s response to the leaseholder’s request that he be reimbursed by the landlord for loss of rental income and the cost of re-installation of the property’s electrical supply. 

Jurisdiction

2. What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme. When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.
3. After carefully considering all the evidence, in accordance with paragraphs Paragraph 42(g) and 42(k) respectively of the Housing Ombudsman Scheme (‘the Scheme’) the following aspects of the complaint are outside of the Ombudsman’s jurisdiction:

• The landlord’s response to the leaseholder’s request that he be reimbursed by the landlord for loss of rental income and the cost of re-installation of the property’s electrical supply. 

4. Paragraph 42(g) of the Scheme states: The Ombudsman will not investigate complaints which, in the Ombudsman’s opinion concern matters where the Ombudsman considers it quicker, fairer, more reasonable or more effective to seek a remedy through the courts, a designated person, other tribunal or procedure.
5. The leaseholder believes that the landlord should be liable for his financial losses including loss of rental income and the cost of replacing the electrical supply in the flat. The leaseholder claims that the landlord was negligent as it did not arrange adequate insurance cover for him as he had been paying for insurance cover through his service charge and the landlord was aware that the property was sub-let. This aspect of the leaseholder’s complaint cannot be considered by this Service. This is because the Ombudsman cannot determine matters such as liability in tort as these are matters within the jurisdiction of the court and the Ombudsman cannot provide a legal determination of either a landlord or leaseholder’s interpretations of the rights and obligations. The leaseholder should therefore approach a solicitor for legal advice should he wish to pursue this aspect of his complaint further.
6. The leaseholder also disputes the findings of the insurance company that the loss he claimed for was not covered by the insurance. Paragraph 42(k) of the Housing Ombudsman Scheme provides that the Ombudsman will not investigate complaints that “fall properly within the jurisdiction of another Ombudsman, regulator or complaint-handling body” Any dispute about the insurers’ processes and decisions would be for the leaseholder to raise directly with them and their regulator.
7. The complaint about the landlord’s communication with the leaseholder in relation to their insurance cover is within the Ombudsman’s jurisdiction and has been considered below.

Background

8. The leaseholder owns a three bedroom flat which he purchased in 1990. He sub-lets the property and has done so since the property was first purchased.
9. The landlord’s complaints policy provides that stage one complaints will be dealt with within 10 working days (2 weeks) unless the person reviewing the case needs to speak to the parties involved and is unable to make contact. Stage two complaints will be dealt with within 25 working days (5 weeks) unless the person reviewing the case needs to speak to the parties involved and is unable to make contact. The policy states that “complaints that cannot be dealt with under this policy include insurance or legal matters.”
10. The lease provides that the leaseholder must pay the landlord a service charge to cover reasonable expenses and outgoings incurred by the landlord in the improvement, repair, maintenance, renewal and insurance of the building and estate. The landlord must arrange insurance cover for the building each year. The landlord must provide relevant details and figures forming the basis of the service charge to the leaseholder on written request.
11. The landlord charges an additional amount to leaseholders if they sublet a property. This Administration Charge is either £20 per year or £75 per tenancy and it covers the landlord for costs incurred with enforcing their legal responsibilities for the building and any administration costs.

Summary of events

12. In or around late 2020 the leaseholder’s sub-tenant left the UK for an extended trip and arranged for another occupier to remain in the property and pay the rent on their behalf to the leaseholder. The occupier used the property for the purpose of producing cannabis and in doing so tampered with the electricity supply. The police forced entry to the property  and the electricity was subsequently disconnected and the supply removed due to the high risk of fire.
13. The leaseholder pays a service charge to the landlord which includes an amount for buildings insurance. The leaseholder contacted the insurance company in order to make a claim for the cost of reinstating the electricity supply around January or February 2021.This claim was rejected on the basis that the leaseholder’s insurance did not cover him for damage incurred in these circumstances.
14. The leaseholder complained about this to the landlord in May 2021. The landlord directed his complaint to the insurance company. The insurance company wrote to the leaseholder on 19 May 2021 to inform him that they upheld their decision that the claim would be declined due to the damage being criminal in nature and therefore ‘malicious’ intent rather than accidental. However, regardless of this as the property was sublet with the damage caused by a permitted occupier, even in the event of accidental damage the claim would be excluded.
15. The leaseholder contacted the landlord on 20 May 2021 after he received the complaint response from the insurance company. He said that he would like the landlord to cover his losses for rental income and for the cost of reinstalling the electricity supply. This was because the landlord should have ensured that he had adequate insurance cover for such a situation and as it had acted as agent for the insurers it was liable by default through negligence and mis-selling. The landlord responded that the leaseholder would need to liaise with the insurance company as directed in its letter to him, if he remained unhappy with their decision.
16. The leaseholder subsequently contacted this Service. Contact was made with the landlord and a request was made for the landlord to issue a complaint response by 23 December 2021.
17. The landlord issued its stage one complaint response on 21 January 2022. In its response it stated that:

1. The leaseholder had first approached the landlord in February or March 2021.
2. Enquiries were made whether the reinstatement of the electricity supply would be covered under the policy. It was determined that the building insurance cover did not cover the loss claimed for. This was because the cause of damage was not an insured peril and was caused by the sub-tenants.
3. The leaseholder was advised to obtain landlord insurance for the type of loss described.
4. The leaseholder did not agree with this decision and the landlord asked for the underwriters at the insurance company to review the claim. They did so and they responded that the loss claimed for was not covered by the insurance.
5. The landlord advised that compensation would not be offered where the cause of damage was as a result of an unlawful activity.
6. The landlord’s records show that the leaseholder sublets his property, and the registration for this along with the relevant sublet fee is in place. The leaseholder is responsible to take the appropriate action to deal with the actions of his tenants.

18. The leaseholder requested that his complaint be escalated on 12 April 2022.  The landlord responded on 12 May 2022. In its response it stated that:

1. Under a lease the landlord is responsible for procuring and arranging only Buildings Insurance cover for all the leaseholders.
2. All properties are appropriately insured based on their building sum for losses in relation to damage from insured events such as fire, flooding, escape of water and subsidence.
3. There is no obligation on the landlord to provide and/or arrange insurance policies to cover all eventualities.
4. The landlord is not an insurance broker nor was it in a position to provide advice to leaseholder landlords on how best to protect their properties or manage their tenancies.

e.  If the insurance policy that the landlord arranges for leaseholders were to include landlord insurance, the premiums would increase dramatically and this would not be fair on the majority of all leaseholders who are owner occupiers.

f.  The onus would have been on the leaseholder to arrange his own landlord insurance when he decided to sublet the property.

19. The leaseholder was dissatisfied with this response and referred his complaint to this Service as he considered that the landlord had not insured him fully and was therefore liable for losses incurred.

Assessment and findings

The landlord’s communication with the leaseholder about its insurance cover

20. The landlord’s website advises that “The insurance policy covers the leaseholders’ share of the exterior structure and communal areas of the building against perils such as fire, storm damage, vandalism, flooding (including burst pipes).” The website states that advice was available about complying with the conditions of the building insurance policy and leaseholders are signposted to the landlord’s insurance team if they have any specific queries.
21. The insurance pages on the landlord’s website provides a link to the insurance provider’s policy document. The insurance page states that leaseholders who sublet must arrange their own landlord insurance as this is not part of the Leasehold Building Insurance which covers the leaseholders share of the exterior, structure and communal areas of the building only. The website also advises that home contents insurance that a leaseholder may have taken out should be checked to see if it would provide cover where the property is rented out.
22. The landlord has provided accessible information about the requirements of insurance cover for leaseholders and a copy of the insurance policy is available via a link on its website. Further, the landlord has provided details of its insurance team and a contact number and email address by which leaseholders can make contact should they have any enquiries about insurance cover. It is the leaseholder’s responsibility to ensure that they have adequate insurance cover in place for their own contents or where a property is rented out. While this has clearly been a difficult situation for the leaseholder, in the Ombudsman’s view there were no service failings by the landlord in its communication with the leaseholder about its insurance cover.

Determination (decision)

23. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration by the landlord in its communication with the leaseholder about its insurance cover.