Catalyst Housing Limited (202011651)

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REPORT

COMPLAINT 202011651

Catalyst Housing Limited

26 November 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 residents’ reports of delays in the staircasing process.

Background and summary of events

Policies and Procedures

The landlord’s Complaints Procedure states that the landlord “will usually deal with the complaint in the following stages”:
1. “Stage one (informal): The complaint will be recorded and sent to the relevant business area to respond to the customer within 10 working days.”
2. “Stage two (formal): Following stage one, if the customer remains dissatisfied or does not receive a response within 10 working days, a Complaints Handler will conduct a full review of the case and issue a determination.”
3. “Stage three (Independent Review): Should the customer disagree with the outcome of stage two, or if they remain dissatisfied they can request that an independent review is carried out.”
With regards to “discretionary compensation”, the Complaints Procedure states that “we may offer a customer a goodwill gesture payment or a non-financial goodwill gesture (such as a bouquet of flowers), to recognise that a customer has in some way received a poor service, not received a service or received a service that has been unreasonably delayed. Goodwill gestures are not an admission of liability”.
The landlord’s Staircasing, Signing and Sealing Procedure states that a “Valid Valuation” means “a valuation dated no more than three months before the date of exchange of contracts to sell a property or land. All staircasing transactions must have a current valid valuation at the time of completion”.
With regards to the “Memorandum of Staircasing”, the Staircasing, Signing and Sealing Procedure states:
1. “Checking the Memorandum
  1. Ensure that the names of the leaseholders are as stated on the lease.
  2. Check that the completion date is within 3 months of the most recent valuation date.”
2. “Checking the signing and sealing form
  1. Ensure that the names of the leaseholders are as stated on the lease.”

Summary of Events

The residents (Mr X and Mrs X) were shared ownership leaseholders of the landlord. The property is a house. The residents individually contacted the landlord at different times; however, for ease of reference and because they are joint complainants, this report will simply refer to the residents.
It is understood that some time after their purchase, Mr X changed his surname. After their marriage in 2019, Mrs X changed her surname to go by Mr X’s new surname.
The residents wished to purchase more equity in their property and on 6 November 2019, the appointed chartered surveyor provided a valuation for the property, £250,000.
On 27 November 2019 the landlord informed the residents of the prices of further equity shares that they could purchase attaching an “Intent to Staircase” form for them to return. It advised that if the purchase was not completed by 6 February 2020, the valuation would expire and need to be updated.
The correspondence from the chartered surveyor confirms that on 1 July 2020 it carried out a desktop reappraisal of the valuation of 6 November 2019.
Following a query from the residents’ solicitor, on 1 October 2020 the landlord responded advising that the valuation had expired and that it would need an up to date one to proceed. The landlord also requested that the residents complete and return the “Intent to Staircase” form as it had not yet received it.
On both 5 and 6 October 2020, the chartered surveyor carried out further desktop reappraisals of the valuation of 6 November 2019, with the latter valuation amounting to £250,000. The residents forwarded the updated valuation of 6 October 2019 to the landlord on the same day.
On 9 October 2020 the residents sought a timeframe for completing the purchase of the remaining share of their property stating that they were expecting their baby in March 2021 and the sooner they completed the purchase, the sooner they could sell the property on. On 12 October 2020 the landlord informed the residents that it had sent the updated valuation to its solicitor which would advise further. The landlord stated that the purchase should be completed within 2-3 months although this was only an estimate at that stage.
On 21 October 2020 the landlord emailed a letter to the residents which informed them of the prices of further equity shares that they could purchase. The letter contained the “Intent to Staircase” form and noted: “If you do not complete by 06/01/2021, the valuation will expire and will need to be updated. Property prices are subject to change so we will need to issue a new letter informing you of the equity share prices. Your valuer may charge a fee for any updates.” In the covering email the landlord advised that it had not received the completed “Intent to Staircase” form and asked them to return it so that it could instruct its solicitor.
The residents returned the form on the same day confirming their intent to purchase the remaining share in their property. The residents also advised that they were married and that they both legally went by the same surname, providing their marriage certificate as proof. (The certificate contained both Mr X’s previous and new surname).
The covering email indicates that on 5 November 2020, the landlord instructed its solicitor to prepare the transfer of the freehold, using the valuation of 6 October 2020, as the residents wished to purchase the remaining equity share of the property. The instruction form (which was incorrectly dated 10 June 2020) cited the residents’ correct names. The landlord attached other relevant documents for its solicitor’s attention but not the marriage certificate. The landlord also noted that the lease was not available from the Land Registry at that time.
On 5 November 2020, the landlord emailed the residents advising that it was waiting for the Memorandum of Staircasing from its solicitors, after which the memorandum would be referred to its legal team for executing and returned to its solicitor. It also asked the residents to resend their marriage certificate as it could not be located and queried whether Mr X had changed his surname as the name it had on file (his previous name) was different. On the same day, the residents sent the landlord their marriage certificate again as proof that that Mr X had legally changed his surname, On 9 November 2020 the landlord acknowledged receipt of the documents and confirmed that its solicitor had been instructed but could not confirm that the staircasing would be completed before the expiry of the valuation on 5 January 2021.
On 20 November 2020 the landlord’s solicitor provided the landlord with the Memorandum of Staircasing for completion and return. However, the solicitor advised the landlord that there would be a delay as there were missing pages in the lease agreement, so he had requested the residents’ solicitor provide a copy of the lease agreement to check if the copy was the same. The landlord’s solicitor also stated that he was awaiting confirmation of the residents’ names as they differed from the names of the registered proprietors of the leasehold title (which were their previous names).
On 24 November 2020 the landlord asked its solicitor to amend the Memorandum of Staircasing as the residents’ names had changed.
On 15 December 2020, the landlord received an email from its solicitor stating it had now received confirmation from the residents’ solicitor of their full names. The landlord’s solicitor provided amended Transfer documents and Memorandum of Staircasing for signature and return. An internal email sent on 16 December 2020 indicates that a senior member of staff was required to approve the plan of the property and authorise the transfer before returning to the solicitor.
The landlord has not provided contemporaneous records to confirm exactly what happened subsequently. However, its internal chronology of events that it compiled when it investigated the residents’ subsequent formal complaint noted that:
1. It was waiting to hear from its solicitor from 20 November 2020, regarding issues with the missing pages of the Lease Agreement.
2. There were operational difficulties caused by the impact of Covid-19, the high volumes of Resale & Staircasing enquiries, the high customer service expectations to the run up to Christmas and then the Christmas break began.
On 5 January 2021 the landlord emailed the residents advising that the valuation would expire the following day and it required a new one. On the same day the residents responded advising that they had already provided three valuations and did not find the need for a new one to be substantiated. They also complained of delays by the landlord which effectively removed the option of moving property before the birth of their child. The landlord subsequently advised that it would register a formal complaint and a Complaints Handler would respond within 10 working days.
On 6 January 2021 the landlord emailed the chartered surveyor noting that the valuation was expiring that day and asking if it could be extended to the end of the month to allow time for completion and prevent the residents’ incurring additional costs from having to obtain a full valuation. The surveyor advised that the desktop valuation was time limited and therefore it would need to reinspect at a cost of £180. Having been copied into the correspondence the residents advised the landlord that they should not be penalised, for instance if the valuation was different which would lead to further costs with their mortgage advisor and delays from arranging a new mortgage. The residents argued that the landlord’s solicitor was responsible for delays as it provided documentation with incorrect names, and because they had chased regularly over the previous three months to get the purchase finalised.
On 11 January 2021, the chartered surveyor provided a new valuation for the property, the valuation increasing to £255,000.
On 15 January 2021 the landlord sent the Stage 1 complaint response to the residents. It advised that having considered the cause of the delays, it noted that it had received the Intent to Staircase form on 21 October 2020 and instructed its solicitor to proceed on 5 November 2020. It received notification that the names on the form did not match with the names on its systems. The landlord further stated that it had not previously been made aware of the name change, therefore it requested a copy of the marriage certificate so that it could update the residents’ file. Therefore, whilst the residents as a result had to request another valuation, it would not reimburse them for this.
On the same day, 15 January 2021, the residents asked the landlord to review the complaint. They noted that they had provided a completed “Intent to Staircase” form on 21 October 2021, the same day as receiving it, and a copy of the marriage certificate on the same day. They noted that they did not want the name changes to cause delay and if this was the case, they would change their names on the file after the purchase. The residents also stated that they spoke to the landlord’s Home Ownership Team on 1, 5, 6 and 7 October 2020 and were advised it had all the information it required.
On 22 January 2021 the landlord stated to the residents that it could not confirm what was discussed during the conversations of 1, 5, 6, and 7 December 2020. However, ultimately, when it received their Notice of Intent to Staircase on 21 October 2020, it had not previously been made aware that their names had changed. It therefore had to change the residents’ names on its systems first and amend the Memorandum of Staircasing which subsequently resulted in the valuation becoming invalid. The landlord also advised that a senior manager would review the complaint within 10 working days. On 5 February 2021 the landlord sent a holding response to the residents advising that their complaint was still under review it would respond by 10 February 2021.
According to the landlord’s chronology, on 22 January 2021 its Signing & Sealing Team signed the relevant documentation and on 9 February 2020 the residents completed the purchase of their property.
On 10 February 2021 the landlord sent the final response to the complaint. It noted that the residents were required to request a third valuation, as the second one had expired. It further advised that the “Intent to Staircase” document was signed in the residents’ new name. The landlord noted that the residents stated they had spoken to the Home Ownership Team prior to 21 October 2020, and had sent the Intent to Staircase document on 21 October 2020.
The landlord acknowledged the frustration caused to the residents but reiterated its conclusion that the valuation had expired due to the process of rectifying the name change documents. To recognise the residents’ frustration and inconvenience, it offered £150 as a gesture of goodwill.
The residents when referring their complaint to this Service have advised that they have declined the landlord’s offer of compensation, and in addition to the stresses they experienced, they are over £2,500 out of pocket.

Assessment and findings

Whilst the landlord’s Staircasing, Signing and Sealing Procedure does not stipulate a timeframe for staircasing transactions, it is reasonable to expect that the transaction is completed within three months from the date of the valuation. This is because this is the length of time that the valuation is valid. A three-month timeframe for staircasing was also confirmed when the landlord advised the residents of the prices of further equity shares in their property. However, there are no specific timeframes for the individual steps that need to be taken within the three months.
The residents’ formal complaint focused on the handling of their staircasing application from October 2020. It is not within the remit of the Ombudsman to assess the actions of the landlord’s solicitor during this process as it is not a member landlord. However, the Ombudsman can consider the actions of the landlord and assess whether there were any service failures on its part.
Following the valuation of 6 October 2020, the staircasing was not completed by the deadline of 6 January 2021, necessitating a further valuation. There were several factors that contributed to the deadline being missed:
1. Following the valuation of 6 October 2021, it took the landlord over two weeks, until 21 October 2021 to advise the residents of the prices of further equity shares and provide a new “Intent to Staircase” form to complete. Additionally, the landlord was corresponding with the residents during this period, and the residents stated they also spoke to the landlord. It therefore missed opportunities to expedite the return of “Intent to Staircase” form by highlighting to the residents that the valuation was the same as that of November 2019, and therefore they already had the information to complete the form.
2. Following receipt of the “Intent to Staircase” form it took the landlord two weeks, until 5 November 2020, to instruct its solicitor. The landlord did not provide the solicitor with the marriage certificate provided on 21 October 2020, therefore did not provide the solicitor with all the necessary information at the earliest point. The fact that the landlord had to ask for the marriage certificate again on 5 November 2020 indicates that it had misplaced or deleted the copy that had been sent originally. This should not have caused a further delay as the residents promptly re-sent the document. However, there is no evidence that the landlord then sent the marriage certificate to its solicitor.
3. The landlord’s solicitor’s response of 20 November 2020 stated that it was seeking confirmation of the residents’ name changes from their solicitor. This confirms that either the landlord did not send its solicitor the marriage certificate, or that it missed an opportunity to advise the residents that proof of the name changes should come from their solicitor. Either way, there was an error that potentially added to the time taken to staircase.
4. The information provided to this Service does not contain evidence of the landlord’s actions after the landlord’s solicitor sent the corrected Transfer documents and Memorandum of Staircasing on 15 December 2020, aside from a member of staff being asked to provide authorisation. As such, there is no evidence that the landlord took into account that the staircasing should completed by 6 January 2021 and that it worked towards this deadline.
5. The landlord’s solicitor’s correspondence of 20 November 2020 and internal chronology indicated that there was a delay caused by the landlord not possessing the full version of the lease to send to its solicitor. This is because the landlord’s solicitor then had to contact the residents’ solicitor. It was unreasonable that the landlord could not provide a full copy of the lease as the lease is the contract that defines the terms of the landlord/tenant relationship, and therefore should be readily available.
6. Also, the chronology of the case indicates that there were delays caused by backlogs arising from service disruptions from Covid-19, increased demand on the home ownership service due to the upcoming Christmas/New Year break, and office closure over Christmas/New Year itself.
Responding to a complaint is an opportunity for a landlord to demonstrate that it has heard and understood a residents’ dissatisfaction. “Putting things right” is a key dispute resolution principle. This usually includes providing full explanations of what has happened and communicating actions a landlord will take, to help prevent a recurrence, both of which help to facilitate constructive communication and to maintain the landlord-resident relationship. Therefore, after the residents submitted a formal complaint, the landlord had an opportunity to set out the full sequence of events, and assess its handling of their staircasing application, in particular whether there were any errors and/or unreasonable delays on its part.
However, in its complaint responses the landlord made a general, blanket finding that the need to update the residents’ names on its systems, so that the Memorandum of Staircasing could be corrected, caused the delay in the staircasing, and the consequent need to obtain a new valuation. It did not set out in detail the sequence of events and assess its actions, some of which were unreasonable as set out in paragraph 34 It therefore did not take the necessary steps to demonstrate that it had heard the resident and wished to “put things right” to resolve their complaint.
Compounding this, the landlord stated that the need to update the residents’ names on its systems became apparent after or when it instructed its solicitor on 5 November 2020; this was incorrect as the residents made clear that they had changed their names on 21 October 2021. Indeed, the residents highlighted this point when escalating their complaint on 15 January 2021.
Whilst not explicitly accepting any service failure, the landlord offered the residents £150 as a discretionary gesture of goodwill. The Ombudsman’s Remedies Guidance states that awards in the range of £50 – £250 “may be used for instances of service failure resulting in some impact on the complainant. We recognise that there has been service failure which had an impact on the complainant but was of short duration and may not have significantly affected the overall outcome for the complainant”. Given, the number of service failings identified in paragraph 34 of the investigation report, it is considered that the landlord’s offer was inadequate.
Notwithstanding the landlord’s service failures, it cannot be definitively stated that it should be held solely responsible for the staircasing not completing before 6 January 2021. This is because of the various factors affecting the overall length of time for the transaction, including the process taking place over the Christmas holidays, the impact of the Covid pandemic, the involvement of other parties in the process and the fact that the residents had the opportunity to inform the landlord of their name changes prior to 21 October 2020. However, it is clear that the landlord’s actions, or inaction, were a significant contributor to the time taken for the process to be completed and, had the failings identified not occurred, the process may have been completed sooner and within the window of the valuation being valid. In particular, the failure to forward on the marriage certificate caused several weeks of delay, and there was a period of inaction following 15 December 2020.
The Ombudsman also appreciates that the residents may have incurred further costs because of the increase in the valuation of their property on 11 January 2021. Even if the landlord could be held responsible for the staircasing not completing before 6 January 2021, it is not responsible for meeting such further costs. This is because purchasers accept that there is an inherent risk in the conveyancing process. In any event, the landlord is not responsible for changes in prevailing housing market conditions or of changes in interest rates if mortgage offers need to be renewed, both of which, incidentally, can fall to the benefit of the purchaser.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure by the landlord.

Reasons

Following the valuation of 6 October 2020, there were several instances of service failure by the landlord when dealing with the residents’ staircasing application. Given the number of errors/service failings the landlord’s offer of compensation was not proportionate to the circumstances of the case.
When responding to the residents’ formal complaint, the landlord did not set out the full sequence of events, then assess its actions in detail; instead, it made a general, blanket statement that the need to update the residents’ names in itself caused the delay. The landlord therefore did not take the necessary steps to demonstrate that it had heard the residents, recognised what had gone wrong, and wished to put things right to resolve their complaint.

Orders

The landlord sends an apology to the residents for the failings in its handling of their staircasing application.
The landlord pays the residents £250 in respect of the distress and inconvenience caused by the failings in its handling of their staircasing application. (This replaces the offer of £150 that the landlord made within its complaints procedure).
The landlord pays the residents £50 in respect of the distress and inconvenience caused by the shortcomings in its complaint responses.