Anchor Hanover Group (202234287)

REPORT

COMPLAINT 202234287

Anchor Hanover Group

10 April 2024

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:
1. The sale of the shared ownership property.
2. The resident’s complaint.

Background

The complaint relates to the sale of a 2 bedroom first floor flat, which was owned on a 50% shared ownership basis by the complainant’s mother, who lived at the property from 1999 to January 2022. The complainant (referred to in this report as ‘the resident’) had been managing her mother’s affairs and took steps with the benefit of a Power of Attorney, to sell the property as it was accruing costs and her mother had moved in to long term residential care. The resident’s mother passed away on 13 August 2022.
The landlord confirmed on 15 September 2022 that the property could be sold and it was put on the open market on 16 October 2022. A full asking price offer was made on 11 November 2022 which was then withdrawn, and a second one was made on 23 November 2022. The sale completed in February 2023.

Summary of events

On 21 February 2022, the resident enquired with the landlord about the value of the sinking fund and the process for selling the property. She advised the landlord on 7 March 2022 that her mother had been relocated to long term residential care and she asked for details of a local estate agent and surveyor because she wanted to move forward with selling the property but she had not yet received details about selling the property.
On 24 March 2022 the resident asked the landlord for clarification on whether she was liable for building insurance as the property had been unoccupied for more than 60 days, and whether she had to arrange a valuation. She also asked for a summary of what was involved in selling the property including potential costs and information about the sinking fund.
The landlord replied on 25 March 2022 and said:
1. The buildings insurance was still covered within the service charge.
2. She needed a RICS (Royal Institute of Chartered Surveyors) valuation. The valuer would need to know the percentage of ownership to put in its valuation report.
3. Once it received the valuation it would have 21 days to review the waiting list but if no one was on it, it would advise her to market the property with an estate agent of her choice at the valuation price.
4. Its fees/costs payable were:
  1. Sellers and Purchasers information pack £200 plus VAT; £240.00.
  2. Sales transition and Administration fee £220 plus VAT; £264.00.
  3. Any outstanding and apportioned Service Charge.
  4. Copy lease attached free of charge.
  5. Sinking Fund calculation (to the end of February 2022 was £15,202).
The resident asked the landlord on 30 March 2022 whether the surveyor should calculate the value based on the “special assumption” of there being 85 years left on the lease, or valued based on the actual remaining term of 76 years. The landlord responded on 5 April 2022 and explained the valuation had to be based on the actual remaining term to make it a fair and accurate valuation.
On 11 April 2022 the property was valued at £58,000.
The resident sent the landlord a copy of the valuation report, on 19 April 2022. She asked the landlord to confirm it agreed with the independent evaluation, that it had instructed the Estate Manager and the 21 day period has started and she wanted to know the next stage in the selling process.
On 22 April 2022, the landlord asked the surveyor for an explanation of the valuation made. It said the resident’s mother owned a 50% share and based on a £58,000 valuation, that share would amount to £29,000 which compared to other properties, seemed low. The surveyor replied the same day and provided a definition of ‘market value’ and it stood by its valuation.
The landlord asked the surveyor on 27 April 2022 whether its valuation was based on “comparables in section 19 being 100% equity”, and it gave other properties in the area as examples of where valuations had been made based on 100% equity.
The resident asked the landlord on 3 May 2022, whether it had agreed a value of the property, with the surveyor. It replied on 10 May 2022 and explained it had queried the low valuation with the surveyor on 27 April 2022.
The resident acknowledged the landlord’s email on 11 May 2022, and asked it to liaise with the surveyor over the discrepancy on valuation. She explained it was delaying the sale process and affecting her mother’s finances as she had limited funds.
On 26 May 2022 the landlord told the resident it was still awaiting a response from the surveyor, in relation to the valuation from the property. Once received it could then proceed with the sale. It enclosed the property title and said it was happy for the Council to add a deferred charge to the Title Register. It said it would need a copy of the Notice of Charge along with £42 inclusive of VAT in order to receive the Notice. It explained as the property was leasehold, it held the deeds for the building, but the lease was specific to the flat. It asked the resident to clarify any further information she needed so it could look into this as soon as possible.
The resident responded and thanked the landlord for speaking with her on 26 May 2022 and for forwarding on a copy of the property register and clarifying who held the deeds. She asked for a breakdown of the costs accrued in relation to the deferred sinking fund and an up to date breakdown of money owed to date and a projection to the end of that year.
The surveyor advised the landlord on 29 May 2022 that its valuation was “based on the comparable evidence in section 19 NOT being 100% equity”. It also said it had compared the sale prices of other properties and that there was a short lease. It apologised for the time it had taken to respond, which was as a result of being unwell.
The resident chased the landlord for the information requested, on 30 May 2022. She explained she was liaising with the Council regarding her mother’s future care fees and they needed a breakdown of the value of the property and ongoing expenses until it could be sold.
The landlord told the resident on 7 June 2022 that it had queried the valuation provided, but it had been confirmed at £29,000; therefore, it consented to it being marketed at that price.
The surveyor asked the landlord on 9 June 2022 whether a valuation should be based on the freehold or leasehold. It responded on 14 June 2022 and explained it should be based on the leasehold title.
On 10 June 2022 the landlord told the resident the sinking fund up to June 2022 was £15,418.87 but it could not provide the exact amount until the end of the year as it would vary. The same day, the resident made arrangements to speak with the landlord on 14 June 2022 about the proposed sale. The resident then contacted the landlord on 28 June 2022 and referred to the conversation that took place on 14 June 2022. She said it had been agreed it would contact a surveyor and update her within 7-10 days with an update on proceeding with the sale, but she had heard nothing. The landlord responded the same day and apologised for the delay but explained it was still awaiting a response from the surveyor so it had sent a chaser that day.
On 25 July 2022 the resident chased the landlord for information she requested on 28 June 2022 about the evaluation of the property and a projection for deferred payment of the sinking fund to July 2022. She commented that issues between the landlord and a surveyor had delayed the property being sold.
The landlord responded on 1 August 2022 and apologised for her having to chase a response. It said:
1. The sinking fund contribution due at the end of July was £15,534.74.
2. It had made contact with the surveyor to discuss their report.
3. The surveyor fully understood the shared ownership situation and confirmed its report valued the 50% equity and subsequent sale price as being £29,000. There was an initial concern that the valuer had not fully understood the shared equity situation but was proved to not be the case.
The resident emailed the landlord on 8 August 2022 with queries about marketing the property and the valuation. She chased for a response on 15 August 2022 and informed it her mother had passed away.
The landlord sent its condolences to the resident on the same day, 15 August 2022, and apologised for the delay in its response. It went on to reply to queries about selling the property the resident had sent.
The resident sent the landlord another valuation report on 13 September 2022 and explained she was an executor to her mother’s estate. Although she was waiting for the Grant of Probate, she wanted to proceed with selling the property. The following day, the landlord explained to the resident that there was no one on the waiting list to purchase a property, but before it could consent to the sale, it had noted a discrepancy in the valuation report. It said the 100% value was £61,500 and 50% was £35,000 and this needed rectifying. The landlord also explained it automatically placed service charge “on hold” for an initial period of 12 weeks following a bereavement to allow for probate to be granted. It would then expect a conversation about the service charge account and how it would be addressed, later.
Having received the clarification needed, the landlord confirmed on 15 September 2022, that the property could be marketed at £35,000 for a 50% share. The resident sent some queries about the property to the landlord the following day and these were responded to on 20 September 2022.
On 22 September 2022, the resident acknowledged the landlord had responded to queries she had made, and she said she had arranged meetings with estate agents the following week and would supply them with the information provided. She also said she would update the landlord if any offers were received.
The resident sent her complaint to the landlord on 26 September 2022 by email and post. She was unhappy that it took about 7 months, until September 2022 to receive confirmation she could market the property and the lack of communication over that period. She received an email acknowledgement the same day and the letter was received and signed for by the landlord the following day. However, having not received a response, she chased the landlord on 24 October 2022 and agreed to resend it. It acknowledged receipt on 25 October 2022 and said it would issue a response within 10 working days.
On 27 October 2022, the resident provided the landlord with her solicitor and estate agent details. She also enquired about pets at the property and asked for a breakdown of the sinking fund.
The landlord responded to this email on 8 November 2022 and apologised for the delay in replying, which was as a result of being on leave. It answered the resident’s questions and said it would also be sending a response to her complaint separately. It also emailed the resident’s solicitor the same day and offered to send its management pack, which it accepted.
The landlord issued its stage 1 response to the complaint on 16 November 2022. It acknowledged its service had fallen short; in particular that:
1. Incorrect information had been given by its location manager.
2. Emails were not responded to.
3. A valuation report had been provided but no action had been taken for 5 months.
4. Its communication had been confusing.
5. Straight forward queries took too long to deal with and its 5 day response service level had not been communicated to the resident. This led to the resident chasing for information.
The landlord apologised for its failings, said it would waive its sale administration fee of £264 as well as “all other sale-related administration fees”, which included its £240 fee for its management pack and any additional enquiries the resident’s solicitor may raise which would usually require an administration fee for answering.
On the same day, 16 November 2022, the landlord’s Home Ownership Team asked the estate agent for the new buyer’s details to arrange a meeting with her.
A document signed by the new owner dated 29 November 2022 confirms the purchase price was £35,000 for a 50% share.
The resident asked for the complaint to be escalated to stage 2 on 29 November 2022 and the landlord acknowledged that on 7 December 2022 and said it would aim to respond within 10 working days.
The buyer’s solicitor wrote the resident’s solicitor on 7 December 2022 and confirmed the buyer was proceeding on the understanding all sums payable under the lease were up to date. It estimated at that time it included, a payment to the sinking fund or approximately £14,250, with interest of £1,552.89 and service charges of £538.34. The landlord consented to the buyer purchasing the property, the same day.
An account statement produced by the landlord on 8 December 2022 said the resident’s late mother’s account was in arrears of £807.51, as a result of no service charge or rent being paid in October, November or December 2022. It also gave its formal consent to the sale on the same day.
It issued its stage 2 response to the complaint on 19 December 2022. The response reiterated the stage 1 findings but accepted she had experienced delays which could have been avoided. To recognise how the prolonged issues had affected the resident, it offered to pay her an additional £250 compensation.
On 21 December 2022, the resident told the landlord she remained dissatisfied with its response and would escalate it to this Service because it had:
1. Not considered the cost of a second valuation fee or additional costs incurred such as service charges, incurred as a result of its delays.
2. Not provided an explanation for the delay in acknowledging the initial complaint in September 2022.
Following a query from the resident on 23 January 2023, the landlord explained to the resident and her solicitor on 25 January 2023, that its usual charge for the management pack would be £240, but it had waived this charge (as per its stage 1 and 2 complaint response).
On 27 January 2023 the landlord sent the resident’s solicitor Part 1 and Part 2 of its electronic Seller’s and Purchaser’s Information Pack (SPIP). It contained details of the age criteria for occupation of properties on the estate and information about the charges payable under the terms of the lease at the point of completion and provided details of others which may apply.
The resident was contacted by the landlord on 7 February 2023 and told she was in arrears. She contacted the landlord the following day to query this but did not receive a reply.
The resident’s solicitor asked the landlord on 8 February 2023 if a deferred sinking fund contribution plus any interest was payable on completion of the sale, and if so, how much. In response, the landlord explained on 10 February 2023 that with interest it would be £15,768.47 but this was an estimation and would need to be firmed up once a completion date was known. Completion occurred on 17 February 2023.

Assessment and findings

The landlord’s handling of the sale of the shared ownership property.

The lease and the landlord’s Valuations for shared ownership and equity share properties procedure says the landlord has 21 days to find a prospective buyer once served notice that the property will be sold. They say the valuation must be the market value of the property and a valuer is an independent expert or someone on behalf of the President of RICS (schedule 8). This is reiterated by the Resident’s Handbook.
The landlord explained this to the resident in March 2022 and it also clearly set out the likely costs that the resident would also be liable for. It therefore complied with its obligations in that respect. However, there was though a delay in the landlord providing the resident with this information and with details about the steps she needed to take to sell the property. It took over a month, from 21 February 2022 until 25 March 2022 which is unacceptable and the information was only provided when the resident chased.
The landlord did then respond promptly to a further enquiry about the length of the lease but matters did then slow down, due to a discrepancy over the valuation of the property.
Having been sent a copy of the valuation in April 2022, the landlord quickly queried the valuation with the surveyor as it was concerned it was too low. This issue led to the sale not progressing for about 5 months (until September 2022).
While the resident’s frustration at how long things took is understandable, it is important to acknowledge that the landlord had a justified concern over the property being undervalued. The landlord agreed to the property being marketed for £29,000 on 7 June 2022, which was based upon the initial valuation. However, it was as a result of it challenging the valuation that seems to have prompted a second valuation. Had the landlord simply accepted the initial valuation of £29,000 that was given, the sale may have progressed more quickly and the resident may have saved on some costs, but it is not possible to know for sure if that would have been the case. What is apparent though is that had the sale progressed at £29,000, the resident would have lost out financially as the property was revalued at £35,000 and sold at that amount. Therefore, while a second valuation was obtained and the resident believes she paid service charges and other costs unnecessarily for 5 months, any losses she believes she had from the property not selling sooner have to be offset against the gain of selling at a higher price.
The landlord has accepted though, that its service fell short between April and September 2022 because it did not always respond to emails and incorrect information was given. It also accepted its communication was confusing, its straightforward queries took too long to deal with, and it should have explained it had a 5 day response service level for enquiries. This is not in dispute and had the landlord spoken with the surveyor rather than rely upon occasional email exchanges, it is possible the valuation issue may have been resolved sooner. However, as explained above, it would be too speculative to say how much quicker the sale may have been had things been done differently. That is because it was not possible to know when/if the property would have been revalued at £35,000 or when/if a different purchaser would have been found sooner. It therefore follows that while the Ombudsman appreciates the property was subject to certain costs until it was sold, it is unable to conclude that the landlord should waive any of those costs as a result of what happened.
The lease dated 8 February 1999 says as well as paying the monthly service charge, the lessee had to pay a deferred service charge in to a sinking fund and for it to be paid upon the disposal of the property (paragraph 4.6.6). The resident has commented on the landlord providing differing sinking fund figures but the evidence shows she was told the figures were only an estimation, until the correct amount could be confirmed once a completion date was known. This was also reiterated to the resident’s solicitor by the buyer’s solicitor. The resident was clearly aware a payment needed to be made to the sinking fund in accordance with the lease. The delay that occurred as a result of the difference of opinion between the landlord and surveyor over the valuation, does not relieve her of the responsibility to have to pay that.
Although the resident has indicated she feels the landlord’s service did not improve after September 2022, it was not until late November 2022 that a buyer was in place and there is no evidence that anything done by the landlord after that, negatively affected the sale. There was a question raised about service charge arrears but the landlord explained to the resident in September 2022 that it automatically placed service charge on hold for 12 weeks following a bereavement and this was reflected on the service charge statement. This accounted therefore, for the arrears and was not a mistake on the part of the landlord.
The landlord’s document entitled ‘Summary of additional charges’ says what it will charge when a property is sold. It includes a £220 plus VAT sale and seller and purchaser’s information pack at £200 plus VAT. It also explains there is a £25 plus VAT charge for additional solicitor enquiries.
These costs were waived by the landlord in recognition of its service failures in its stage 1 response. In addition, at stage 2 it also offered to pay the resident an additional £250 compensation; a total remedy of £754 which is significant.
While there has been poor service, there has been no permanent detriment, and the landlord acknowledged its failings and attempted to put things right. In circumstances like that, this Service’s Remedies Guidance suggests compensation of between £100 and £600. In this case, as the overall remedy amounts to more than that, the Ombudsman finds that the redress already offered is reasonable to resolve this part of the complaint.

The landlord’s handling of the resident’s complaint.

The landlord’s Complaints, Compliments & Suggestions Helpsheet and Resident’s Handbook says it will acknowledge a complaint at stage 1 within 1 working day; that a complainant will be contacted by telephone within 2 working days and a response issued within 14 calendar days from receipt. A review can be carried out at stage 2 and this should also be done within 14 calendar days.
The resident’s complaint sent on 26 September 2022 was acknowledged and signed for but not responded to, and this led to the resident having to chase the landlord for a response, which is unacceptable. The complaint was then re-sent and it was acknowledged promptly and the resident told a response would be sent within 10 working days. However, a response was not sent until 16 working days after it was re-sent which meant the landlord again failed to adhere to its obligations, and the resident’s expectations were mismanaged.
The landlord then failed to respond to the resident’s complaint at stage 2 within 14 calendar days, as it should have done which is indicative of it having not learnt from its mistakes at stage 1. While at stage 2 the landlord did increase the remedy it had offered at stage 1 to recognise the impact the poor service relating to the house sale had had, it did not offer any compensation for its failing in its overall complaint handling.
The landlord’s Compensation Policy says it should consider paying compensation and take in to account such things as the frequency with which something has occurred, the number of failures and any impact as well as a resident’s particular circumstances or vulnerabilities. In this case its complaint handling fell short at both stages and the resident had to chase for a response. It would therefore have been reasonable for the landlord to have made an offer of compensation to recognise the failings in its complaint handling at a time when the resident was already going through a difficult time having recently lost her mother.
There has therefore been maladministration in the landlord’s complaint handling, and as no attempt was made to put things right, it would be appropriate for the landlord to not only apologise for this but to pay compensation of £400.

Determination (decision)

In accordance with paragraph 53 (b) of the Scheme, the landlord has made an offer of redress prior to investigation which, in the Ombudsman’s opinion, resolves the complaint about the landlord’s handling of the sale of the shared ownership property.
In accordance with paragraph 52 of the Scheme, there was maladministration in relation to the landlord’s handling of the resident’s complaint.

Reasons

There were some communication issues which led to a delay in dealing with the sale of the property but it waived its costs associated with selling the property and offered compensation which overall was reasonable by way of a remedy.
There were delays in responding to the complaint at both stages which were not recognised when the landlord addressed the complaint.

Orders and recommendations

Orders

Within 4 weeks of the date of this report, the landlord should:
1. Apologise to the resident for the failings identified in this report.
2. Pay the resident £650 compensation made up of:
  1. £250 for its handling of the sale of the property (if it has not paid this amount already).
  2. £400 for the delays in its complaint handling.
1. Review its complaint handling processes to ensure complaints are actively monitored and are dealt with in line with this Service’s recently revised complaint handling code.