Catalyst Housing Limited (202003309)

REPORT

COMPLAINT 202003309

Catalyst Housing Limited

29 March 2021

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 response to the resident’s request to provide form EWS1 for the building which the property is situated in.

Background and summary of events

Background

The resident is the shared owner of the property (the property) the complaint concerns. The landlord is the freeholder.
The property is a flat situated in a purpose-built block (the building). The building is 11 storeys high.
Advice Note 14 will be referred to throughout the assessment. This advice note was issued by the Government in December 2018 as part of its Building Safety Programme. In summary the advice was for owners of high-rise leaseholder buildings where the external wall system of the building did not incorporate Aluminium Composite Material (ACM). The advice set out checks which owners could carry out to satisfy themselves, and their leaseholders, that their building was safe.
In June 2019 the Government issued an advice note on risks arising from balconies on residential buildings, regardless of height. The guidance set out that, where a building has balconies which are constructed of combustible materials and thereby pose a risk of external fire spread, building owners should take appropriate action to manage that risk.
The Government’s guidance was consolidated in ‘Building Safety Advice for Building Owners’, issued in January 2020. Paragraph 1.4 of this guidance states “for the avoidance of doubt, building owners should follow the steps in this advice as soon as possible to ensure the safety of residents and not await further advice or information to act”.
In response to the guidance some lenders took the view that, if certification could not be provided to demonstrate compliance with the Government’s guidance on fire safety, they would be unwilling to offer a mortgage on properties within these buildings as they would have a value of £0.
In January 2020 The Royal Institution of Chartered Surveyors (RICS), The Building Societies Association (BSA), and UK Finance agreed a new industry-wide valuation process to help people buy and sell homes and re-mortgage in buildings above 18 meters (six storeys). Form EWS1 was introduced to prove to lenders that external cladding had been assessed by an expert.

Summary of events

On 31 July 2019 the landlord wrote to the resident following his enquiry to purchase the remaining share of the property – the staircasing application. The landlord set out the steps the resident must take to complete the staircasing application including the instruction of a qualified RICS valuer to value the property.
On 10 January 2020 the resident contacted the landlord to request a copy of the report demonstrating compliance with Advice Note 14 in order for the lender to approve his mortgage application to purchase the remaining share of the property.
On 14 January 2020 the landlord wrote to the resident, following a telephone conversation with him, setting out that it was working towards getting a report demonstrating compliance with Advice Note 14 “as soon as possible”.
On 5 February 2020 the landlord provided the resident with a copy of the “fire stopping report” for the building. The landlord confirmed that its technical team were working on a “more detailed report” and once completed would provide it to the resident.
On 25 February 2020 the resident requested an update on the more detailed report. In response the landlord informed the resident that the report was not yet available as it was waiting for an accredited fire engineer to attend the building to investigate the cladding on the building.
On 4 March 2020 the resident repeated his request for a copy of the detailed report in order to satisfy his lender.
On 17 March 2020 the resident wrote to the landlord to request information regarding the external cladding on the building, including cladding material and combustibility. The resident also asked the landlord if the detailed report had been commissioned.
On 16 May 2020 the resident contacted the landlord to request a copy of the cladding report. The landlord informed the resident that it was not yet available.
On 22 May 2020 the resident registered a complaint with the landlord regarding its response to Advice Note 14. In summary the resident said:
1. He was unable to purchase the remaining share of the property as the landlord had not provided form EWS1 for the building.
2. Due to the landlord not providing form EWS1 in a timely manner his mortgage application had been refused and the valuation he had obtained had expired. The resident noted that the cost of the valuation was “significant”.
3. The landlord should provide form EWS1. The resident said that if the landlord was unable to provide it, it must provide a statement confirming that an engineer had been instructed to inspect the property in addition to a timeframe for the inspection.
On 4 June 2020 the landlord responded to the resident’s “request for an EWS1 form for [the building]”. In summary the landlord said:
1. It was sorry but it was “currently unable to provide” form EWS1 for the building.
2. Form EWS1 was a document which provided independent certification that buildings meet Government advice about external wall construction of residential apartment buildings.
3. In order to demonstrate compliance with the Government guidance, building owners need to undertake a complex and intrusive inspection. The landlord said that this “would take a lot of time and resource”.
4. It was sorry that the resident had been affected by “this issue”.
5. It had attached a factsheet for leaseholders in relation to EWS1.
In brief the factsheet that the landlord provided set out the following information:
1. The landlord provided an explanation of form EWS1.
2. The landlord said that lack of form EWS1 for a building may result in “sales delays, purchasers withdrawing offers and even finding that it may not be possible [for an owner] to sell their property in the short to medium term”.
3. The landlord said that it was aware that some lenders would lend on properties in blocks over 18 metres high and those that required fire safety works without form EWS1.
4. The landlord recommended that leaseholders who were looking to staircase, sell or re-mortgage should find out their own options by speaking to an independent financial advisor who was familiar with the current mortgage market for high risk blocks of flats.
5. The landlord said that it was not able to carry out the detailed intrusive investigations to all of its buildings and complete any remedial works all at once due to the scale and cost of the work involved. The landlord explained that it was “instead” prioritising its buildings based on risk – defined by height and the building materials used “amongst other factors”.
6. The landlord said that its top priority was the removal of ACM cladding. The landlord explained that it would then develop a programme of inspections and a planned programme of works for its other high-rise buildings. The landlord advised that it anticipated that its programme of inspections, testing and remedial works would “take several years to deliver”.
7. The landlord apologised to those leaseholders impacted. The landlord noted that it was working with other housing associations and the National Housing Federation to encourage action from the Government.
On 8 June 2020 the landlord responded to the resident’s complaint. In summary the landlord said:
1. It was sorry for the length of time the resident had been waiting to hear back from it regarding form EWS1. The landlord said that it had raised this internally to ensure that communication was improved.
2. It was unable to provide form EWS1 for the building at this time as the building had not been inspected. The landlord confirmed that it was not in a position to say when the inspection would be undertaken.
On 11 June 2020 the resident requested to escalate his complaint. In summary the resident said:
1. He was not satisfied with the landlord’s response as form EWS1 had not been provided and it had not provided “an alternative solution to getting a mortgage”.
2. It was unacceptable that, despite the landlord acknowledging that form EWS1 was required for the building, it had not provided a timescale for the inspection other than “several years”.
3. The landlord should:
  1. “Contract a fire engineer to conduct the necessary investigations to complete an EWS1 form;
  2. Distribute the up-to-date fire risk assessment;
  3. Distribute contact information for lenders [it] had found that don’t require an EWS1 form”.
On 18 June 2020 the landlord acknowledged the resident’s escalation request.
On 13 July 2020 the landlord provided its final response. In summary the landlord said:
1. It was currently going through a procurement process to retain the services of a fire engineer. The landlord confirmed that it would keep the resident informed once the process was concluded.
2. It would provide the resident with a copy of the up-to-date fire risk assessment once obtained.
3. It was “unable to make any suggestions of which lenders to use”. The landlord advised the resident to seek financial advice “from those familiar with the issues within the industry who would be able to sign post [him] to lenders”.
The landlord concluded by confirming that the resident may refer the complaint to this Service if he was not satisfied with its response.
As the resident was not happy with the landlord’s response he referred the complaint to the Ombudsman for adjudication in July 2020.
In August 2020 the landlord wrote to all shared owners and leaseholders regarding form EWS1. In summary the landlord said:
1. Following feedback from owners it was aware they needed it to share further information about the implications of the new and ever-changing fire safety regulations.
2. Since the Grenfell tragedy the Government had issued a series of recommendations in relation to fire safety. The landlord said that in response to the advice it had been undertaking assessment of its tall buildings to check the external wall materials.
3. Building and fire safety would always be a top priority for it.
4. Given the fast-paced changing nature of the Government’s advice it was likely that many of its buildings would require some work to meet future building safety regulations.
5. It expected its programme of inspections, testing and remedial works to take some time to deliver – “maybe years”.
6. Shared-owners and leaseholders may be affected by difficulties in obtaining form EWS1. The landlord explained that this was because lenders were requesting one in relation to mortgage applications. The landlord acknowledged that this would be “upsetting and frustrating”.
7. It had applied to the Government “Building Safety Fund” in relation to any remedial works required.
8. It had been supporting affected shared owners and leaseholders by discussing their individual circumstances and exploring the support available to them.
9. It was in the process of developing a fire safety hub on its website.
On 25 September 2020 the building was inspected. The inspection recommended that “the timber decking to the balconies should be replaced with material achieving Euroclass A2 or better”.
On 27 September 2020 form EWS1 was signed setting out the building required remedial works to be compliant with Government guidance on fire safety.
On 29 September 2020 the landlord confirmed that it provided the resident with a copy of form EWS1 and confirmed that the building would be included in its remediation program and once a design solution was agreed he would be informed.
On 28 December 2020 the resident registered a second complaint to the landlord regarding form EWS1. In summary the resident said:
1. Form EWS1 had been provided for the building which set out that it was not compliant with the Government’s guidance on fire safety and cladding.
2. Despite contacting the landlord “three weeks ago” to request information on the remedial works required to the building, including costings, timeframe and liability, it had not responded.
3. The landlord had also failed to provide him with details of the engineer who completed the inspection.
An internal record by the landlord dated 5 January 2021 set out that it spoke with the resident earlier that day about his complaint and he had raised the following points:
1. When would the landlord provide an update regarding remedial works following form EWS1?
2. Form EWS1 had been completed incorrectly and required an accompanying cover letter confirming the fire engineer’s details.
3. Who would cover the cost of the remediation works?
On 18 January 2021 the landlord wrote to the resident setting out that it was in the process of obtaining information in order to respond to his complaint.
On 20 January 2021 the resident responded to the landlord setting out that it was unsatisfactory that it was not in a position to respond to his complaint or provide further details regarding remediation works. The resident asked the landlord to escalate his complaint.
On 27 January 2021 the landlord responded to the complaint. In summary the landlord said:
1. It was sorry that the resident had been chasing it for updates regarding form EWS1 and remediation works.
2. Form EWS1 identified the need to replace parts of the decking on the balconies with non-combustible material.
3. It was not in a position to provide the resident with a schedule of works to undertake the remediation work. The landlord explained that this was because it was “focusing on [its] priority blocks which required the removal of ACM cladding”. The landlord added that it was currently in the process of developing a programme of planned works to external wall systems for its other taller buildings, “specifically focusing on which of [its] buildings [had] high pressure laminate materials next”.
4. The building had been “identified as low risk” and would therefore be in its “later” programme of planned works. The landlord confirmed that it would be in touch when it could provide more information about the work needed, timescales and how it would be covering the costs of the work.
5. It understood how upsetting and frustrating the situation would be for the resident.
6. An independent financial advisor would be able to discuss the resident options with him regarding mortgages.
The landlord confirmed to this Service that its response dated 27 January 2021 is its final response to the new complaint. The landlord also confirmed that it would be happy to offer the resident £150 compensation to recognise that its response to the new complaint was not delivered in a timely manner.

Assessment and findings

The Ombudsman’s internal guidance for caseworkers considering complaints about cladding (available on this Service’s website) sets out that, as the Government’s expectations in relation to cladding and fire safety are only detailed in guidance, there is an element of discretion for a landlord as to how and when it chooses to comply with it.
The Ombudsman’s guidance further sets out that when investigating a complaint relating to the Government’s guidance on fire safety and cladding the Ombudsman will consider the following points:
1. What are the landlord’s long-term plans for compliance with the guidance and are these fair and reasonable?
1. How has it communicated with shared owners/leaseholders regarding the situation and was this communication appropriate?
2. How has it responded to the individual circumstances of the leaseholder?
These points will be considered when assessing whether the landlord’s actions and response to the complaint were fair in all the circumstances.

Scope of investigation

In investigating this case the Ombudsman will consider the landlord’s response to the resident’s request to provide form EWS1 for the property taking into account the landlord’s response to both complaints which the resident made, registered in May 2020 and December 2020. While the resident’s complaint dated December 2021 was made after he referred his original complaint to the Ombudsman, the Ombudsman considers that both complaints are linked. Further the Ombudsman considers that this approach is appropriate as the landlord has provided an update on its position in relation to the remediation works within its final response to the second complaint.

The landlord’s response to the resident’s request to provide form EWS1 for the building which the property is situated in

As the Government’s expectations in relation to cladding and fire safety are only detailed in guidance there is an element of discretion for a landlord as to how and when it chooses to comply with it.
The evidence shows that the landlord did not reference Advice Note 14 in its response, dated July 2019, to the resident’s staircasing enquiry made at that time. The Ombudsman is aware that by summer 2019 it was clear that some lenders would not lend on a property where compliance with the guidance could not be demonstrated. As the impact of the guidance was recognised within the industry by summer 2019 the landlord should have made the resident aware of the situation on receipt of his staircasing application, so that he was aware of the potential impact on the property which he part-owned. In the Ombudsman’s opinion it was unsatisfactory that the landlord did not do so as the resident was therefore unable to make an informed decision on his staircasing application – whether to proceed or not.
The Ombudsman can see that the resident incurred costs for the valuation of the property, as part of his staircasing application, which he may not have done so had the landlord informed him of the impact of the guidance in July 2019 on receipt of his application.
The first comprehensive communication the Ombudsman has identified from the landlord to the resident detailing its response to Advice Note 14 and form EWS1 is dated 4 June 2020. Within the correspondence, the landlord explained that it was its intention to comply with the Government’s guidance in respect of the building. The landlord explained that it would do so by inspecting the building and carrying out any remedial works identified. This was appropriate as while the guidance is not a legal requirement it has been established as best practice in relation to building safety and form EWS1 is required by lenders.
Within its correspondence the landlord also explained that it was taking a risk based approach to prioritising its buildings for inspection considering height and building materials “amongst other factors” and that the programme of inspections and remediation would take several years to deliver. In the Ombudsman’s opinion this was appropriate to manage the resident’s expectations. The Ombudsman recognises that the process to obtain certification is complicated and requires input from experts, which there is currently a shortage of within the industry. The evidence shows that the building was inspected in September 2020 with form EWS1 setting out that remedial works were required.
While the landlord was taking steps to comply with the Government’s guidance, in the Ombudsman’s opinion during the period under investigation the landlord’s communication regarding its response was not satisfactory.
Firstly, it was not until the resident’s complaint that the landlord informed him of the impact of the Government’s guidance and detailed the steps it was taking to comply with it. This was approximately 18 months after the guidance was issued, 11 months after the resident had first made enquiries about staircasing and six months after he had first asked for information to demonstrate compliance with Advice Note 14 so that he could progress his mortgage application. The landlord’s delay in providing a comprehensive update between January 2020, the resident’s initial request for evidence demonstrating compliance with the guidance, and June 2020, would have resulted in months of uncertainty regarding the success of his staircasing and mortgage applications.
Secondly, the landlord did not provide a comprehensive update to the resident following the inspection in 2020. Rather the landlord only noted that the building had been included in its remediation program and once a design solution was agreed he would be informed. In the Ombudsman’s opinion the landlord should have set out timescales, even if provisional, for the stages of the process for the remediation works to be designed, commissioned and undertaken in addition to committing to provide regular updates as matters progressed.
While the Ombudsman accepts that a risk based approach is a reasonable method for prioritising buildings for inspection and remediation in relation to Advice Note 14, in the Ombudsman’s opinion the landlord’s approach does not take into account that not all shared-owners and leaseholders are in the same situation or circumstances and may be significantly affected if they are required to wait for buildings with a higher priority to be dealt with first.
In this case the resident wished to purchase the remaining share of the property but was unable to do so as form EWS1 was not available for the building. The Ombudsman cannot see that in considering the resident’s concerns in relation to form EWS1 the landlord considered the impact of its prioritisation policy on his individual circumstances or his reasons for wishing to staircase. In the Ombudsman’s opinion this would have been appropriate in order to determine if there was any action the landlord could take to mitigate the adverse effect of its risk based approach on the resident. The Ombudsman notes that in the landlord’s update to shared-owners and leaseholders in August 2020 it set out that it had been supporting affected residents by discussing their individual circumstances and exploring the support available to them. As set out above, the Ombudsman cannot see that it did this in the resident’s case.
In response to the resident’s request for information on lenders who would lend on a property despite form EWS1 not being available the landlord said that it was unable to make suggestions on which lender to use, instead referring him to seek financial advice. This was unsatisfactory as the landlord had set out in its factsheet that it was aware of several lenders who had lent on properties where form EWS1 was not available. In the Ombudsman’s opinion the landlord could have provided a list of lenders where transactions had completed on a property which was subject to the Government’s guidance but form EWS1 was not available, making it clear that it was not recommending any particular lender. This could have assisted the resident potentially identifying a lender to support his staircasing application.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in respect of its response to the resident’s request to provide form EWS1 for the building which the property is situated in.

Reasons

The Ombudsman notes that the resident’s current situation is difficult and that he is in this position through no fault of his own. This is because until the landlord is able to provide certification, in line with the Government’s guidance, the resident is unable to get a mortgage to allow him to complete his staircasing application as lenders will not lend on the property because of the cladding issue.
By summer 2019 it was clear that some lenders would not lend on a property where compliance with the Government guidance on fire safety and cladding could not be demonstrated. As the impact of the guidance was recognised within the industry by summer 2019 the landlord should have made the resident aware of the situation on receipt of his staircasing application, so that he was aware of the potential impact on the property which he part-owned.
The resident incurred costs for the valuation of the property, as part of his staircasing application, which he may not have done so had the landlord informed him of the impact of the guidance in July 2019.
It was not until the resident’s complaint that the landlord informed him of the impact of the Government’s guidance and detailed the steps it was taking to comply with it. This was approximately 18 months after the guidance was issued, 11 months after the resident had first made enquiries about staircasing and six months after he had first asked for information to demonstrate compliance with Advice Note 14 so that he could progress his mortgage application. This would have resulted in uncertainty for the resident, especially while his staircasing and mortgage applications were open.
The landlord did not provide a comprehensive update to the resident following the inspection in September 2020. Rather the landlord only noted that the building had been included in its remediation program and once a design solution was agreed he would be informed. The landlord should have set out timescales, even if provisional, for the stages of the process in addition to committing to provide regular updates as matters progressed.
In considering the resident’s concerns in relation to form EWS1 there is no evidence that the landlord considered the impact of its prioritisation policy on his individual circumstances or his reasons for wishing to staircase. This would have been appropriate in order to determine if there was any action the landlord could take to mitigate the adverse effect of its risk based approach on the resident.
As the landlord had set out in its factsheet that it was aware of several lenders who had lent on properties where form EWS1 was not available it was unsatisfactory that it refused to provide a list of lenders where transactions had completed on a property which was subject to the Government’s guidance but form EWS1 was not available.

Orders and recommendations

Orders

The landlord should pay the resident the following compensation within four weeks of the date of the determination:
1. £100 for not informing the resident regarding the Government’s guidance on receipt of his staircasing application in July 2019.
2. £200 for the delay in providing a comprehensive update on its response to the Government guidance and how it intended to comply with it
The landlord should reimburse the resident the cost of the valuation which he paid in respect of his staircasing application, on receipt of evidence (such as an invoice) of the cost he paid, within four weeks of provision of this information, if it has not already done so.
The landlord should contact the resident within four weeks of the date of the determination to see if it is able to provide any support to the resident regarding his staircasing application while certification demonstrating compliance with Advice Note 14 is outstanding.
The landlord should write to the resident (and other shared-owners and leaseholders) to provide an update on the remediation works to the building. The update should provide timescales, even if provisional.

Recommendations

The landlord should provide updates regarding the remediation works to the building at least every quarter, to ensure that its customers are kept appropriately informed.
The landlord should offer the resident the £150 compensation it informed the Ombudsman it was willing to pay in respect of the new complaint, if it has not already done so.