Castles & Coasts Housing Association Limited (202221875)

REPORT

COMPLAINT 202221875

Castles & Coasts Housing Association Limited

12 March 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 the sale of the late resident’s property.
The Ombudsman has also considered the landlord’s complaint handling as part of this investigation.

Background

The late resident was a leaseholder of the landlord under a shared ownership scheme from 2006, in which the resident had owned 75% of the property. The property is a 2-bedroom first floor flat. The resident passed away in May 2022. The resident’s daughter, as the executor of the late resident’s estate, has made the complaint.
The landlord provided the executor with a confirmation of the valuation of the late resident’s estate on 5 July 2022. This stated that the lease would determine the criteria of the prospective purchasers of the property. The flat was marketed for sale the following day. On 30 August 2022, the executor told the landlord that she had accepted an offer on the property. The landlord rejected the prospective buyer’s application on 20 September 2022. It said that the prospective buyer did not meet the criteria of the lease which stated a resident must be fully retired.
The executor asked the landlord on 26 September 2022 if it would look at varying the terms of the lease, in consideration that other residents in the building were not fully retired. The landlord confirmed to the executor on 12 October 2022 that mistakes been made in the past and it was not able to vary the terms of the lease. The executor raised a formal complaint with the landlord on 13 October 2022. She said the landlord had admitted it had made mistakes in the past and had failed to ensure existing residents were retired, the landlord had made it difficult to sell, it was discriminating against her trying to sell the property, and she was unable to tie up the late resident’s estate.
The landlord agreed with the executor during a call on 24 October 2022 that its full response would be issued once it had received legal advice on the matter the following week. The landlord responded to the executor on 11 November 2022. It said the following:
1. The legal advice had confirmed that the word retired appeared in only the recitals of the lease which were normally nonbinding.
2. The lease did not have a requirement for the leaseholder of the property to be retired in addition to being over the age of 55.
The executor escalated her complaint on 14 November 2022. She said the following:
1. A perspective buyer had pulled out of the sale because the landlord had insisted that a buyer needed to be fully retired.
2. She could have sold the property and tied up the late resident’s complaint if the landlord had understood the terms of its own leases.
3. There had been delays and a lot of correspondence while the leasehold team and legal department considered the matter.
4. The landlord had taken 2 months to let her know it had been incorrect.
5. She had informed the landlord that other residents in the building were not retired in September 2022.
6. The executor had been provided incorrect information from the landlord when it had said it would have to vary the lease which was not possible.
7. A further valuation was now required as the 3-month period had lapsed.
8. She would incur further costs that would have ceased if the sale had been completed. This included utilities, ground rent, insurance, and council tax.
9. The situation had caused upset and stress to her and her family.
The landlord issued its final response on 13 December 2022. It apologised for the initial information provided. In addition to its stage one response, it said the following:
1. It was sorry that the ambiguity in the lease had existed.
2. It had implemented processes with the Home Ownership Team to prevent a future occurrence of the issue.
3. It offered £500 of compensation for the inconvenience due to the information received and the avoidable delay in receiving the subsequent information.
4. The cost of a revaluation of the property would be covered.
The executor remained dissatisfied with the landlord’s response and contacted this Service on 23 December 2022. In April 2023, the landlord made a revised offer of compensation to the executor following an enquiry from the executor’s MP in March 2023. It offered up to 12 months payment from November 2022 of the service charges for the property, and the increase in the annual sinking fund contribution. This was in addition to the £500 offered in its final response. The executor told the landlord in April 2023 that she had not accepted this offer as it had not covered the full costs she had incurred. The executor confirmed to this Service in February 2024 that the landlord had covered the costs of the service charges and the sinking fund annual contribution as detailed in its offer prior to the property sale in August 2023.

Assessment and findings

Scope of investigation

Part of the executor’s complaint involved the landlord’s liability for the loss of the executor’s sale in September 2022. Resolving such a complaint requires a binding decision about whether the landlord’s actions resulted in any liability for the financial loss the executor claims to have suffered. An assessment to quantify the financial loss suffered would also be needed. The Ombudsman does not have the power to issue binding decisions about liability, nor does this Service have the necessary expertise to quantify loss. It has therefore been determined that this aspect of the executor’s complaint is best suited for consideration by a court and is not one that the Ombudsman can consider. However, this investigation has considered the landlord’s overall handling of the sale and whether the landlord’s actions were reasonable in the circumstances of the case.

The landlord’s handling of the sale of the late resident’s property.

The lease recitals stated that the landlord has previously granted or intends to grant leases of all flats in the estate to elderly retired persons aged 55 years or over at the date of the grant of the said leases subject to the mutual covenants set out in the first schedule. The lease stated that the leaseholder covenants with the landlord not to assign or part with possession of the whole premises except to a person of or over the age of 55 at the date of the assignment. Clause 1 of the first schedule stated a mutual covenant not to use the property, nor permit the same to be used, for any purpose whatever other than as a private residence in single occupation for those of or over the age of 55.
The landlord’s shared ownership executor resale process map states that when the landlord is notified of an offer and the purchasers details, it sends the application form to the prospective buyer to assess the application and affordability. If the application is not approved, the landlord informs the applicant.
The landlord operates a two stage complaints policy. It says that a complaint will be acknowledged within 5 working days of receipt and responded to within 10 working days of the complaint being logged. If the issue is complex and requires further time to resolve, the landlord will keep a resident informed. This response should not exceed a further 10 working days. The landlord will respond to complaints escalated to stage 2 within 20 working days, unless further complex investigations are required.
The landlord calculates compensation payments, where it has a responsibility in the loss or inconvenience suffered, based on impact to a resident. For instances resulting in a minor impact, it can offer £0-£50, a moderate impact £50-£100, and a severe impact £200-£500. Severe impact is defined by the policy as where there has been a serious failure in meeting the required standards, and where a resident has suffered a considerable inconvenience or financial loss.
It was evident that the landlord had initially interpreted the terms of the lease incorrectly in September 2022 when assessing the application of a prospective buyer. The landlord acknowledged in its stage 1 complaint response to the executor on 11 November 2022 that its initial interpretation had been incorrect. It was a concern that the landlord had not demonstrated an accurate understanding of the terms of its lease.
The landlord provided its approval for the executor to market the property with an estate agent on 5 July 2022. The valuation letter provided to the executor said the lease would determine the criteria of the prospective purchaser of the property. However, the landlord had not confirmed it was applying the correct criteria when assessing prospective buyers of the property until November 2022. This lack of clarity over the terms of the lease had resulted in the landlord applying an incorrect criteria to prospective buyers of the late resident’s property for a period of 4 months. It is imperative for a landlord to understand the terms of its own lease in order to be able to carry out its obligations as part of the sale process. The landlord had here demonstrated a poor level of service delivery which it had acknowledged during the complaints process.
The landlord had rejected a prospective buyer as a result of its error in interpretation of the terms of the lease. While this service cannot determine the liability of the loss of a property sale, it was evident that this error had further delayed the property sale process for the executor. The landlord told the executor that the lease stated a leaseholder needed to be over the age of 55 and retired. It said the seller was obliged to inform the estate agent of any criteria determined in the lease when selling a property. The landlord’s error here had resulted in the executor then marketing the property from 20 September 2022 to 11 November 2022 to prospective buyers over the age of 55 and retired only. This had unnecessarily restricted potential buyers for a period of 52 days.
The delay here in the landlord being in a position to accept prospective buyers using the correct criteria was 4 months. This delay was inappropriate. This caused the executor significant distress and inconvenience. It also had a detrimental financial impact on the executor who had to continue to pay the costs associated with the running of the property for this 4-month period.
The landlord confirmed the correct interpretation of the lease on 11 November 2022. As such, the executor had therefore marketed her property correctly in the initial instance. The executor had to change the marketing details for the property on two occasions, which caused inconvenience. This also caused the executor delays to being able to take the correct actions to settle the late residents estate, which had caused the executor further distress during a difficult time.
It was not clear why the landlord had not investigated its interpretation of the lease when the executor first raised her concerns that other residents in the building were not fully retired in September 2022. She said this had previously been overlooked by the landlord. The landlord had told the executor on 12 October 2022 that in regard to other working residents, the landlord had understood that “mistakes” had happened in the past and that it could only move forward in the correct manner adhering to the terms of the lease. This response was confusing and demonstrated that the landlord had previously taken an inconsistent approach. The response here was not customer focused and did not demonstrate that the landlord had investigated this matter fully.
Given that the landlord was made aware of the possibility that other sales had progressed that contradicted its interpretation of the lease, it should have here taken the opportunity to thoroughly investigate this and seek to clarify its interpretation at this point. While the landlord had taken the appropriate step of seeking legal advice on its interpretation of the lease, this was only after the executor raised her formal complaint on 13 October 2022. The landlord had here missed the opportunity to put things right for the executor sooner. It delayed in seeking advice on this matter, which resulted in an inappropriate delay in the executor receiving the correct information. As a result, the executor needed to raise this issue as a complaint, in order for the landlord to investigate the terms of the lease and provide her with an accurate response.
The landlord said in its final complaint response that it had taken learning from the executor’s complaint and had implemented processes to prevent future recurrence of the issue. This Service would expect the landlord to demonstrate that it had learned from the outcome of its complaint process, in line with the Ombudsman’s dispute resolution principles. While the landlord had demonstrated it had taken legal advice following the executor’s complaint to confirm the terms of the lease, it had not detailed the processes it said it had implemented to prevent a future occurrence of the issue. As such, a recommendation had been made for the landlord to review its criteria for perspective leaseholders to ensure that the criteria is clear and reflects accurately the terms of the lease.
To provide a fair response, landlords are expected to resolve complaints by addressing both the main issue raised and any inconvenience that happened. When a landlord agrees that it failed to provide a service, the expectation is for the landlord to offer redress. The landlord attempted to resolve the substantive complaint through an offer of compensation both during the complaints process and on a review of the complaint prior to this investigation.
It offered the executor £500 of compensation for the inconvenience caused to her as a result of the information it had provided and the avoidable delays in her receiving the correct information about the lease. It also offered to cover the cost of a revaluation of the property. Following the end of the complaint process, in April 2023, the landlord offered 12 months payment of the service charge and the increase in the annual sinking fund contribution for a period of 12 Months from 1 November 2022.
The executor had rejected the landlord’s final offer of compensation because it had not fully reflected the additional costs she had experienced as a result of the landlord’s failures. This included paying council tax and utilities during the period the sale was delayed. While the landlord had offered the executor the possible revaluation of the property, the service charges, and sinking fund costs for up to 12 months, it said it was not able to cover her additional costs because these were separate agreements between suppliers and the executor. The landlord’s reasoning here was not fair as the lack of any contractual relationship between the landlord and the third party suppliers of these services had no relation to the landlord’s ability to offer compensation to reflect the potential role its acknowledged failures played in these services being required for a longer period. It would have been fair for the landlord to offer a reasonable figure which had reflected the landlord’s potential role in the further costs experienced by the executor.
As such, this compensation did not go far enough to reflect the full detriment to the executor. The executor had experienced significant distress and inconvenience during the landlord’s handling of the sale of the late resident’s property. The landlord’s actions here had resulted in an excessive delay to the property being marketed correctly, and also the rejection of a prospective buyer. The executor also had to endure the unnecessary concern for almost 2 months that she was restricted to selling the property to a buyer who was fully retired. These delays caused the executor significant distress, additional costs, and also delayed her being able to finalise the late resident’s estate.
In summary, the executor experienced an inappropriate delay to her being able to market the property to prospective buyers correctly. The landlord demonstrated that it had not understood the terms of its own lease, and as a result, it had incorrectly rejected an application by a prospective buyer based on incorrect criteria. The executor had to take the time and trouble to raise a complaint in order for the landlord to establish the correct terms of the lease. The delay had caused the significant distress of prolonging the closure of the late resident’s estate as well as the financial detriment of the ongoing costs associated with the property during this 4-month period. The landlord had attempted to put this right for the executor both during and after the complaint period. However, its offer of redress did not go far enough to reflect the full impact of its failures here. Therefore, there was maladministration in the landlords handling of the sale of the late resident’s property. A further compensation amount of £500 has been ordered in addition to the compensation previously offered by the landlord. This is in line with the Ombudsman’s remedies guidance for cases where the landlord’s failures have had a serious, and detrimental impact.

The landlord’s complaint handling.

The Complaint Handling Code sets out the Ombudsman’s requirements for landlords’ complaint handling practices. The Code also states that landlords must address all points raised in the complaint and provide clear reasons for any decisions.
It was evident that the landlord had initially said its stage one complaint would be investigated and responded to by the senior officer who had made the decision the executor had raised a complaint about. This was not in line with the Code which states a complaint investigation is to be conducted in an impartial manner, seeking sufficient reliable information from both parties so that fair and appropriate findings and recommendations can be made. It was noted that the landlord had reallocated the complaint investigation to an alternative member of staff following the executor raising the issue. However, the landlord should have initially allocated the complaint to a member of its staff who had not been directly involved in the executor’s service delivery. As a result, the executor had to take the time and trouble to follow up with the landlord to have her complaint investigated in an impartial way.
In her complaint, the executor raised that the landlord had allowed other resident’s in the building who had not been fully retired to purchase a lease. She also raised in her complaint escalation that the landlord had discriminated against her in preventing the sale in September 2022. The executor also raised concerns about the financial impact of the delays. The landlord did not respond to these points formally in its complaint responses. This was a failure to fully address all parts of the executor’s complaint. This was not in line with the Code which requires the landlord to address all parts of the complaint. The landlord had here missed the opportunity to explain its position on these issues to the executor and set expectations. As a result, the executor spent time and trouble following up on these issues with the landlord during and after the complaints process.
Following the end of the complaints process, the landlord made a subsequent offer of compensation upon reviewing the case in April 2023. The review of the complaint following an enquiry from the executor’s MP, demonstrated a further attempt to put things right for the executor. The Ombudsman encourages local resolution of complaints even when the internal complaints process has been completed. However, it is expected that a landlord do all it can to resolve the matter while the complaints process is live. When compensation offers come after the landlord’s complaint process is exhausted, it is harder for the landlord to demonstrate it will act fairly and consistently in all cases.
The landlord should have offered the compensation at the appropriate stage of the complaints process. It remained unclear if the landlord would have taken steps to acknowledge its failures or offer additional compensation had the complaint not been referred to the executor’s MP. The landlord’s failure to consider the complaint in detail at the time the events were live, meant that the complaints process was not fair and transparent for the executor. The landlord had here attempted to put things right for the executor. However, it had missed the opportunity to learn lessons from the outcome at the time of its original investigation
In summary, the landlord’s complaint process did not answer all of the complaint, the executor had to follow up to request an impartial investigation, and the compensation offered after the end of the complaints process demonstrated that the landlord had failed to learn from the outcomes at the time of its complaint investigation. As such, and this amounted to maladministration in the landlord’s complaint handling.
It would be appropriate for the landlord to pay the executor compensation of £300 for the inconvenience, time, and trouble caused by its poor complaint handling. This is in line with the Ombudsman’s guidance on remedies for instances of maladministration which have adversely affected a resident and where a landlord has failed to acknowledge its failings.

Determination

In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was maladministration by the landlord in its handling of the sale of the late resident’s property.
In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration in the landlord’s complaint handling.

Orders and recommendations

Orders.

The landlord is ordered to write to the executor to apologise for the service failures identified in this report.
The landlord is ordered to pay the late resident’s estate a total of £1300 compensation within 4 weeks. This amount includes the £500 of compensation offered during the complaint process. The compensation is comprised of:
1. £1000 for the significant distress and inconvenience caused by the landlord’s failures when handling the sale of the late resident’s property. This is in addition to the payment of the service charges and the increase sinking fund contribution the landlord had already paid for from November 2022 to the sale of the property.
2. £300 for the inconvenience, time and trouble caused by the landlord’s poor complaint handling.
The landlord is to provide evidence of compliance with the above orders to this Service within four weeks of the date of this report.

Recommendation.

The landlord should review its criteria for perspective leaseholders to ensure that the criteria is clear and reflects accurately the terms of the lease.