Peabody Trust (202203174)

REPORT

COMPLAINT 202203174

Peabody Trust

19 December 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

The complaint is about:
1. The level of the resident’s rent.
2. The landlord’s handling of the resident’s concerns about the level of his rent.
3. The landlord’s handling of the resident’s request that it buys back his share in the property.
4. An apparent flaw in the shared ownership scheme which the resident says means he can never exit it.
5. Complaint handling.

Jurisdiction

What the Ombudsman can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Scheme. When a complaint is brought to this service, the Ombudsman must consider all the circumstances of the case, as there are sometimes reasons why a complaint will not be investigated.
After carefully considering all the evidence, in accordance with paragraphs 42(d) and (f) of the Scheme, the following aspect of the complaint is outside the Ombudsman’s jurisdiction: the level of the resident’s rent.
In accordance with paragraph 42(o) of the Scheme, the following aspect of the complaint is outside of the Ombudsman’s jurisdiction: the apparent flaw in the shared ownership scheme.
Paragraph 42(d) of the Scheme says the Ombudsman will not investigate complaints which, in the Ombudsman’s opinion, concern the level of rent or service charge or the amount of the rent or service charge increase.
Paragraph 42 (f) says 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, other tribunal or procedure. The resident’s concerns about the level of rent would be a matter for the First Tier Tribunal (Property Chamber). Further information can be found at First Tier Tribunal (www.gov.uk)
Paragraph 42(o) says that the Ombudsman will not investigate complaints which, in the Ombudsman’s opinion, concern matters where the complainant is seeking an outcome which is not within the Ombudsman’s authority to provide. Shared Ownership is a government scheme that offers individuals the chance to buy a share of a property from a housing association (a non-profit-making body that provides homes).
Any concerns the resident has about the illegality of any such shared ownership scheme would be a matter for the courts.
This report will therefore focus on the landlord’s handling of the resident’s concerns about the level of his rent; its handling of his request that it buys back his share in the property; as well as its complaint handling.

Background

The property is a 1-bedroom flat on the 12th floor of a block. The resident is a shared owner of a flat with the landlord since 2015. He is required to pay service charges in addition to the rent in line with the lease. The landlord has no recorded vulnerabilities for the resident.
The lease gave the specified annual rent figure for the property as £7,350. The lease also said that the rent was subject to review each year and gave details of how that would be calculated.
The landlord’s rent setting policy explains that shared ownership rents are set out in individual lease agreements. These in turn are determined by government and regulatory guidance at the time they are issued.
The policy says the landlord will increase the rental element every year in line with the lease. It retains the discretion to view the increase set in the lease as a maximum where it considers that increasing the rent element by the full amount may affect the ability of leaseholder to meet their commitments or may discourage future staircasing.
The landlord’s shared ownership policy says that it will help the shared owner comply with their obligations in the lease and give advice about market sale if suitable nominees cannot be found. In practice, this would usually mean that the shared owner will staircase to 100% and sell the property outright simultaneously. The lease sets out any obligation to offer the property to the landlord before placing it on the open market. It has a 4-week nomination period to market the property. If a new buyer has not been identified, the property can be placed on the open market and sold either through shared ownership or outright.
The policy says it will consider buying back shared ownership properties on an exceptional basis in line with the Capital Funding Guides and subject to approval by its Capital Management Group.
The landlord’s ‘Guide to selling your Shared Ownership home’ says that, in the event it has been unsuccessful in finding a buyer after marketing the property for four weeks, the resident is able to instruct an estate agent to market the property, paying their fee for the service they provide. It says further that, if the resident has been unable to find a buyer for the full value of the property, then it may be able to agree selling to another shared ownership buyer that the estate agent had found.
The landlord has a 2-stage formal complaints procedure. It aims to respond within 10 working days at stage 1 and 20 working days at stage 2.

Summary of events

On 23 February 2021 the resident set out his concerns about the sale of the property. In summary he said that it was clear the rent on his flat was set at a level that was fundamentally disparate from typical rent levels in the building. (He included a table which he said supported this assertion.) The resident said, as a result, there had been no interest in buying the property for over 6 months, in contrast to identical properties in the building that had sold instantly and recently.
The resident said that action was required from the landlord to adopt their approach to the resale of the property in this instance. He described “the suffering, both mental and physical, I have endured due to [the landlord’s] indifference and refusal to acknowledge clear and evidenced issues thus far during the resale process”. He also referred to this causing “severe mental and physical trauma”. The resident explained that he wanted the landlord to buy back his share of the property or lower the rent payable.
On 25 February 2021 the landlord apologised to the resident for the stress and inconvenience selling the property had caused him. It gave a timeline of events:

4 July 2020 – the resident submitted an intention to sell form to the landlord.

14 July 2020 – surveyors valued the flat at £595k (this was later amended to £605k).

22 July 2020 – the landlord approved the valuation.

7 August 2020 – a different surveyor valued the property at £710k.

The flat was on the market for 6 weeks for shared ownership of the property (full value of £710k) with little interest.

The price was then reduced to £605k.

The landlord subsequently gave the resident the option of selling 100% of the value of the property on the open market.

23 November 2020 – there was a buyer interested in purchasing 100% of the property and the landlord asked the resident to confirm he was still marketing with his estate agent. In response he asked why the buyer could not buy 100% through the landlord who explained that was due to the terms and conditions of the scheme.

There was another buyer but, after conducting the financial interview, it became apparent that due to their financial circumstances, they would not have sufficient funds to purchase the property.

The sales team asked the resident about having more viewing dates in January 2021, but he did not respond.

The landlord said it would not buy back the 25% share in the property because it did not have the funds. It explained it was a not-for-profit organisation and any money it generated was invested in building new developments to help first-time buyers who were unable to purchase a property on the open market. The landlord also explained that the rent was set in line with the terms of his lease and specified by the local authority so it would not be able to adjust the rent. The landlord added it would be happy to remarket the property.
In terms of the rent, the landlord explained that all purchasers were made aware of the discrepancies of the rents and the tiered approach at the time of reserving a property within the scheme. It said the local authority had required a tiered approach of the values and rents for each property sold and that his solicitor would have been aware of this. The landlord said that it understood all buyers were financially assessed and were informed of the different tiers depending on their individual financial circumstances. It added that a reservation form was completed which included the list of properties and the different rents.
The landlord explained how the resident could escalate his complaint to stage 2 if he remained dissatisfied.
In response, the resident sent a long document to the landlord disputing some of the points it had made.
On 26 March 2021 the landlord replied to the resident. The main points were:
1. Its priority must be to get the sale of the property through for him as quickly as possible and it would continue to do so. It was looking at the next steps it needed to attract more buyers and arrange additional viewing dates.
2. It worked closely with the local authority on all of its affordable housing developments. The local authority had a strict allocation and affordability criteria, and the cost affordability analysis was set by them. Further, the local authority would have provided it with a list of candidates and nominated him, based on the set affordability.
3. Any perspective purchasers had to fit within the required income brackets and be able to afford the rent and mortgage under affordability calculations. The local authority was also a high property value area and they wanted to ensure that the homes remain under their affordability guidelines. The landlord had no flexibility over that.
4. Given the rent to share ratio of the apartment, it would be challenging to find a shared ownership buyer meeting the income criteria. It was sorry to hear that a previous potential buyer was unaffordable due to student debt.
5. Previous sellers had had better success in selling their home on the open market due to the high value of the property. That might be an option that the resident might still want to consider.
6. It was unable to offer a buy back on the property or reduce the rent.
7. It could allow the resident the opportunity to sublet the property. That was unusual, but given the health issues he had mentioned, it could explore this option if he wished.
The landlord said that if the resident was unhappy with that response, he should raise a formal complaint.
The resident responded to the landlord saying he would be seeking compensation for the ongoing cost of the flat. He said the fundamental issue was that of rent disparity. He also said that he refused to be entered into the complaints system as that would result in massive delays which he could not afford.
Some six months later on 22 October 2021, the landlord told the resident that “after much consideration and looking at other options” for him, its conclusion stood that it was not currently buying back properties from shared owners/leaseholders, and it had no buy back policy in place. It suggested that he make a formal complaint if he wished to escalate matters.
In response the same day the resident said he had made a complaint four months earlier. He said he had been dealing with the sales team with the word “complaint” in the subject line. The resident said his request was not to buy back the property but one of the solutions that he had proposed given his property had been on the market for 16 months and had not sold. He said it would “never be sold” unless the landlord changed something. The resident said he had recently had major surgery and the trauma of dealing with this matter was impeding his recovery “with lifetime implications”. The resident added that an estate agent could not sell the property for many reasons and had tried for many months.
On 4 November 2021 the complaints team asked that a stage 1 complaint response be issued to the resident. The sales team responded saying that the resident had not wanted to “proceed down the formal complaint route”. The complaints team decided it would therefore look at the complaint at stage 2.
On 15 November 2021 the sales team noted that it appeared the higher rent was putting people off as sales were going through for that block. It noted the resident had been offered the opportunity to sell 100% of the property through an estate agent, but he had refused. It noted further that the price of the property did not appear to be an issue.
On 26 November 2021 the landlord issued its final complaint response under its formal complaint procedures. The main points were:
1. It had previously explained why the rent he paid was proportionally higher than some other properties in the block. It said shared owners living in similar properties on the same estate and paying different rent was not unique to his block or that local authority. Potential shared owners should be aware of this prior to signing the lease.
2. When its homeowner sales team gave the resident possible solutions, these might not have been his preference, but that did not make them flawed. It was sorry that he had not been able to secure a buyer. When he purchased the lease, the landlord made no guarantee he could sell it at a future date so it would not necessarily be at fault for the difficulties he was experiencing.
3. It acknowledged the resident’s concerns that this matter had caused him anxiety, stress and harm. It said that was not its intention. It also acknowledged the resident’s statement that matters had compounded a medical condition for which he had recently undergone major surgery.
4. It confirmed it did not issue a stage 1 complaint response explaining that it was clear the resident was becoming increasing frustrated about how his concerns were dealt with. It added it was not necessary for the sales team to provide a stage 1 response because they had already made their position clear.
5. It said in relation to buying back the property, its position remained the same, it did not buy back properties. With any purchase of a property there would always be a risk of finding a buyer when it came to selling, if it cannot be sold that did not mean that responsibility passed to the landlord.
6. It was not prepared to amend the lease to reduce the amount of rent the resident had to pay. It explained that when the resident signed the lease, he agreed to be bound by those terms, including the rent. If it reduced his rent, it would have to extend this to other leaseholders in the block and further afield. That would set a precedent.
7. It would give permission for the resident to sublet the property for a short time period but noted that subletting had to be the resident’s choice and he would be responsible for any risk that might bring. It said this was not a long-term solution.
8. The landlord said it marketed the property, but it did not have a legal obligation to find a buyer.
The landlord signposted the resident to the Ombudsman.
When the resident approached us, he stressed the “severe medical impact and harm” this issue continued to have on him, the length of time it had caused him harm and the powerlessness he had to resolve it. He added that the property had not been suitable for his needs for a very long period of time and was now “rarely used”. The resident said he wanted the Ombudsman to order the landlord to buy back his share in the property.

Assessment and findings

Scope

The resident mentions the significant effect on his health that these issues have caused him. We do not doubt the resident’s comments regarding his health, but we are unable to draw conclusions on the causation of, or liability for, impacts on health and wellbeing. Matters of personal injury or damage to health, their investigation and compensation, are not part of the complaints process, and are more appropriately addressed by way of the courts or the landlord’s liability insurer as a personal injury claim.

Concerns about the level of the rent

The resident is aware that the level of rent is outside the jurisdiction of the Ombudsman. In his correspondence, however, the resident explained that the issue was not the level of rent but the “disparate rent per square foot” required from a new shared owner, which he believed made the property “unmarketable”.
In its complaint handling the landlord explained that, when the resident signed the lease, he agreed to be bound by those terms, including the level of rent. It also explained why it could not reduce the level of rent. The landlord’s response was reasonable, and the response was given promptly thereby managing the resident’s expectations. Ultimately, it was the resident’s responsibility to ensure he fully understood the terms of the lease before signing and to discuss any aspects of it he was unsure about with his solicitor prior to completion. Should the resident wish to challenge the terms of the lease, that would be a matter for a court.

The resident’s request that it bought back his share in the property

The resident told us that, whether or not the landlord handled the request to buy back his share in the property appropriately was also not the issue. He asked that the Ombudsman rule that the landlord should do so as that would resolve the matter. The Ombudsman does not have the power to order the landlord to do so.
The Ombudsman appreciates that the resident’s current situation is difficult. The landlord is not obliged to buy back properties that did not sell, and the landlord acted appropriately by giving that information promptly to the resident.
In October 2021 the landlord said it had carefully considered the options available. We note it took reasonable steps to try to alleviate the situation for the resident by allowing him to sublet the property on a short-term basis and it also gave him the opportunity to sell 100% of the property through an estate agent.
We note the landlord’s shared ownership policy says it will consider buying back shared ownership properties on an ‘exceptional basis’. It is not clear from the evidence provided from the landlord whether or not it has done so. Given the resident’s poor health and evident vulnerability (which the landlord has been aware of since at least early 2021), it would be reasonable for the landlord to consider if the resident’s poor health and evident vulnerabilities qualified for consideration of a buy back on an exceptional basis. A recommendation for the landlord to do so now has been made below. In making this recommendation, we do not seek to raise the expectations of the resident, but rather to ensure that the landlord has explored all avenues to assist him.
It might be helpful to explain that, in the absence of any service failing, we have made this recommendation as we consider that this is a step the landlord could take to improve its service and learn from the outcomes of the complaint we have investigated. While the orders we make are enforceable, recommendations are not.

Complaint handling

In its final response, the landlord explained that it had not issued a stage 1 complaint response and the reasons for that. However, it appears that a stage 1 response was issued in February 2021. Although it was not labelled as such, in it the landlord explained how the complaint could be escalated to stage 2.
It would have been reasonable for the resident’s response to have been treated as a request for escalation. While it was escalated to a senior manager for response at the end of March 2021 this did not follow the landlord’s formal complaints procedure. This response was not labelled as a stage 2 response nor did it explain how the resident could approach this service; rather, it said he should raise a formal complaint if he remained dissatisfied. This suggests that it was not aware of the apparent stage 1 complaint response previously issued.
The resident did not receive a final response to his complaint until late November 2021. While we recognise the resident’s statement that he did not want to make a formal complaint, the landlord had already treated his initial concerns in this way. The landlord’s handling of the complaint was not appropriate because the complaint procedures were not followed. The delay in issuing a final complaint response was not appropriate because it is clear that the landlord recognised this as a complaint from the naming of internal emails as ‘urgent – complaint’ in April 2021.
In relation to the failures identified, the Ombudsman’s role is to provide fair and proportionate remedies where maladministration or service failure has been identified. That is, to consider the impact of the landlord’s failings on the resident which can include distress, inconvenience, time and trouble and what is fair.
Financial compensation of £240 is appropriate here for the evident inconvenience and frustration caused to the resident by its poor complaint handling. This has been calculated as £30 a month for a delay of some 8 months.

Determination (decision)

In accordance with paragraph 52 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of its handling of the resident’s:
1. Concerns about the level of his rent.
2. Request that it buys back his share in the property.
In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration by the landlord in respect of its complaint handling.
The following aspects of the complaint are outside the Ombudsman’s jurisdiction: the level of the resident’s rent and the apparent flaw in the shared ownership scheme.

Reasons

While the resident is unhappy at the amount of rent that he is payable, the landlord managed his expectations in terms of any amendment to the resident by explaining that the amount of rent and annual increases was set out in the terms of the lease that he signed. The landlord’s explanation of why it could not decrease the rent paid was reasonable.
The landlord was clear it did not have a buy back policy in place and would not buy back his share of the property. It is not evident if the landlord considered his request on an exceptional basis and a recommendation has been made for the landlord to do so now.
There was a significant delay by the landlord in issuing the stage two complaint response.

Orders

The landlord should take the following action within four weeks of the date of this report and provide evidence of compliance with these orders to the Ombudsman:
1. Apologise to the resident for impact of the complaint handling failures identified in this report.
2. Pay the resident the sum of £240 for the impact of those complaint handling failures.

Recommendations

It is recommended that the landlord takes the following action within the next four weeks:
1. Considers if, given the resident’s poor health and evident vulnerabilities, whether or not he qualifies for consideration of a buy back on an exceptional basis.
2. If the landlord decides that he qualifies, it should consider whether a buy back would be appropriate in these circumstances.
3. It should then write to the resident with the outcome of that decision.