Trent & Dove Housing Limited (202211211)

REPORT

COMPLAINT 202211211

Trent & Dove Housing Limited

30 March 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 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 a shared ownership application.

Background

2. This complaint centres around an application to purchase a share of a shared-ownership property. In this case, the Ombudsman has referred to the complainant as the applicant and to the third party who also applied for the property as ‘the second applicant’.

 

3. In December 2021, the applicant was one of several people who contacted the landlord to express an interest in a four-bedroom property under a shared ownership scheme. The landlord sent an email to all interested parties on 20 April 2022. The applicant advised that they did not receive this email. The property was initially reserved at that time. The applicant said she had missed out on an opportunity to buy a share, having not received the email.

 

4. On 1 June 2022 the sale fell through, and the property became available again. The landlord contacted the interested parties, including the applicant, to let them know they could apply to buy a share in the property.

 

5. The applicant completed and returned their application form (and all required documents) to the landlord on 1 June 2022 at 10.28pm. This was the last working day prior to an extended bank holiday. There is no dispute that the application form was sent and received on this date.

 

6. The evidence shows that the landlord received an application from the second applicant at 3pm on 6 June 2022, after the bank holiday weekend. The evidence submitted shows that the second applicant did not submit all the information required by the landlord. All necessary information was provided by the second applicant at 10am on 7 June 2022.

 

7. The landlord has stated that as it was an extended bank holiday, the applications were not assessed until 6 June 2022.

 

8. The landlord contacted the applicant on 6 June 2022, to discuss concerns it had around her affordability. The applicant told the landlord she had spoken to a mortgage advisor and there would be no concerns in her securing a mortgage. There is no evidence to suggest the landlord asked the applicant what her deposit was. Part of the application form included a section on savings but did not specifically ask what deposit any applicant was putting forward.

 

9. At 8.19am on 7 June 2022, the landlord contacted the applicant to advise that it would need to see a mortgage in principle before her application could proceed. It advised this was required in order to confirm the applicant could afford the property, and that they would get a mortgage. At 2.38pm on the same day, the applicant sent their mortgage in principle to the landlord, which had cost her £250.

 

10. At 3.45pm on the same date (7 June 2022), the landlord sent an email to the applicant to advise that the property was no longer available. The applicant contacted the landlord and it advised her that it considered the second applicant to be in a better position to proceed. There was some suggestion that the resident did not have enough deposit.

 

11. The applicant logged a formal complaint on 10 June 2022. The applicant stated that she was not asked about her deposit or given the opportunity to pay a reservation fee. She stated that she felt discriminated against based on her personal circumstances and income. She was also not advised that part of the application process would require her to get a mortgage in principle at the outset.

 

12. The landlord responded on 23 June 2022. It advised that the initial assessment on affordability was done by its Sales Officer (‘SO’) who had ‘years of experience’ assessing applications. The landlord said it met with the Help to Buy Agent, assessed both applicants and felt the second applicant was in a better position to move forward.

 

13. The applicant escalated her complaint. The landlord provided a stage two outcome letter on 19 July 2022.  The landlord did not uphold the complaint stating:

 

1. The landlord’s CLO went through the initial eligibility and sustainability assessment. It explained all the criteria it looked at when completing the assessment. The landlord said the applicant may have arrived at her own conclusion as to why the second applicant was successful. The landlord apologised if the applicant felt discriminated against.

 

2. It is not just the deposit alone that determines which applicant is successful, several factors will be considered. The landlord did not clarify these other factors.
3. The CLO apologised if the applicant was led to believe they would be successful by providing additional documentation. The learning was to communicate this better to applicants in the future.

 

4. The CLO did not share the full reasons why the applicant was not successful, as this may have disclosed the second applicant’s financial position. The CLO recalled sharing the eligibility and sustainability calculator criteria with the applicant, and gave scenarios of what could have been the reasons for the decision. It said the applicant concluded the other applicant may have been a couple, with a bigger deposit.

 

5. The landlord agreed to refund the £250 that the applicant paid to have a mortgage in principle completed.

Assessment and findings

 

14. There are two parts to this complaint. Firstly, whether the landlord contacted the applicant when the property initially became available in April 2022. Secondly, whether the landlord followed a fair and proper procedure in considering the applicant’s application to purchase a share of the property.

 

Did the landlord contact the resident when the property became available in April 2022?

 

15. The landlord has provided a screenshot of the email it sent on 20 April 2022. It is the same email address used by the applicant in their correspondence with the landlord. This Service has no reason to believe the email was not sent. Based on this evidence, it is reasonable to conclude that the landlord did attempt to contact the applicant to alert her that the property had become available again.

 

The landlord’s handling of the application to buy a share of the property

 

16. The landlord’s policy and procedure does not give full details about the process to be followed when it receives an application. The process does state that applications will be assessed strictly in date order, it does not clarify any difference in respect of extended bank holidays or otherwise.

 

17. In this case, the applicant’s full application was received by the landlord on 1 June 2022 at around 10pm, whereas the second applicant’s full application was not received by the landlord until 10am on 7 June 2022. Even considering the late May Bank Holiday and the late Queen’s jubilee, the applicant’s application would have been received on the next business day, namely 6 June 2022. This was still before the second applicant’s full application the following day. On that basis, the landlord failed to follow its policy and consider the applications in strict date order.

 

18. The landlord’s policy and procedure does not indicate when it will request information about deposits, or a mortgage in principle. The evidence produced to this Service shows the applicant could afford a 22% share of the property. However, based on the SO’s concerns, the applicant was asked for a mortgage in principle very early on.

 

19. Paragraph 3.1.4 of the government’s Capital Funding Guide states:

 

“The assessment as to what share purchase an applicant can afford must be undertaken by a suitably qualified, experienced and regulated mortgage advisor or financial advisor.”

20. Therefore, once the landlord confirmed the resident was eligible and appeared she could afford a 22% share, the landlord ought to have put the applicant’s application to a mortgage advisor, or Independent Financial Advisor to confirm the position. The landlord failed to do this and instead, relied on the Sales Officer’s belief that the property was not affordable for the applicant. That was not appropriate.

 

21. When the landlord asked the applicant to obtain a mortgage in principle, it did not allow her a fair and reasonable time to provide this before it allowed the second applicant to pay a reservation fee. That was not fair or appropriate.

 

22. The landlord then made suggestions that the applicant was unable to afford a deposit. This was not supported by the evidence. The landlord’s own affordability assessment set out that the applicant had a deposit, and the applicant was not asked for evidence of her savings.

 

23. Importantly, in the telephone call recordings reviewed by the Ombudsman between the applicant and the landlord, the landlord said that it had learned lessons to ensure it would allow more time for applicants to obtain a mortgage in principle, before allowing the property to be reserved by another applicant. However, the landlord did not set this out in its complaint responses.

 

The landlord’s published procedures

 

24. It is the Ombudsman’s view that landlords should have in place an overview of the application process, and that this should be made available to applicants at the outset. This would manage applicants’ expectations about the procedure to be followed, and set out what information may be required during the process.

 

25. The lack of detailed procedure in this case, allowed the landlord’s staff to ask for more information based on initial assumptions about what may or may not have been affordable, and who may have been in a better position to complete a purchase.

 

26. A detailed procedure, and associated guidance, would mean applicants would be dealt with consistently and based on fairness. It would also give guidance to staff about what information to request and when, and how long it should allow applicants to provide information. The lack of a detailed procedure in this case, was a contributing factor to how the applicant’s application was dealt with.

The landlord’s offer of redress

 

27. When things go wrong, the Ombudsman’s Dispute Resolution Principles require landlords to put things right, as best they can.

 

28. In the stage two response, the landlord offered to reimburse the £250 paid by the resident for the mortgage in principle, as a ‘good will’ gesture. The landlord has advised that the applicant has the right to bid along with other applicants on other properties, and has been given a bidding number. The landlord has also signposted her to other schemes offering shared ownership properties. It has advised that it does not currently have any four bedroom houses available for shared ownership, or any planned in the immediate future.

 

29. Whilst it was reasonable of the landlord to reimburse the cost of obtaining the mortgage in principle (financial loss) the landlord’s complaint responses did not consider the impact of its failings on the resident and it did not offer compensation to recognise that. The Ombudsman’s Guidance on Remedies calls this compensation for distress and inconvenience and states:

 

“The amount of compensation that we decide does not reflect a definitive loss, as we are not able to quantify this, but it is a recognition of the overall distress and inconvenience caused to the complainant by the particular circumstances of the complaint.”

 

30. Having carefully considered the guidance and the background in this case, the Ombudsman considers the impact on the resident falls into the second band of awards namely compensation between £250 and £700. Considering case study 8 in the Guidance, a fair level of compensation to recognise the distress and inconvenience would be £350.

 

31. Sales of properties can fall through for a variety of different reasons at any time during a sales process. As such, it is not possible to say with any certainty that the resident would have purchased the property had her application proceeded. On this basis the compensation awarded by the Ombudsman is to reflect the upset caused by the landlord’s handling of the application process.

 

Conclusions

 

32. Having carefully reviewed the evidence provided, the Ombudsman finds that:

 

1. The landlord’s procedure stated that applications should be assessed in strict date order. The evidence demonstrates that the applicant was the first application submitted and the landlord did not deal with the applications in date order.

 

2. The landlord ought to have allowed a mortgage advisor or independent financial advisor, to confirm whether the applicant could afford a share of the property, and if so, what level of share. The landlord was at fault for failing to have the affordability properly assessed once it had information that the applicant could afford a 22% share of the property.

 

3. The landlord asked the applicant for a mortgage in principle and did not allow her a fair and reasonable amount of time to provide this, before allowing the second applicant to reserve the property. That was unfair.

 

4. The level of redress offered by the landlord was not fair to recognise the level of distress and inconvenience it is likely the applicant experienced.

Determination

33. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration in the landlord’s handling of a shared ownership application.

Orders

34. The Ombudsman orders the landlord to, within 28 days of the date of this determination:

 

1. Write to the applicant and offer a full apology for the errors identified by the Ombudsman in this case.

 

2. Pay the applicant £600 compensation, made up as follows:

 

1. £250 financial loss for the cost of the mortgage in principle (already offered).

 

2. £350 for the distress and inconvenience caused.

 

3. Write to the applicant with details of any available shared ownership properties it currently has available.

 

4. If the landlord has a mailing or waiting list for potential applicants, it must ask the applicant if she would like to be a part of this in case new properties become available.

Recommendations

35. The Ombudsman recommends that the landlord develops a detailed procedure and guidance on how applications will be dealt with once they are received. The landlord may wish to include:

 

1. When the landlord can ask for additional information, such as mortgages in principle, or evidence of deposits.

 

2. What timescales applicants have for submitting additional information.

 

3. When an application will be sent to a mortgage advisor or independent financial advisor.

 

36. The Ombudsman recommends that the landlord create an information pack for applicants, which includes information about the process.

 

37. The landlord has itself identified the need to make it clear to applicants that requesting additional evidence does not mean the application has been successful, and this is part of the process to assess eligibility and affordability. This Service recommends that this is made clear in all future correspondence and in any associated documents provided to applicants.