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Clarion Housing Association Limited (202123972)

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REPORT

COMPLAINT 202123972

Clarion Housing Association Limited

17 February 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

  1. The complaint is about delays in the administration of the sale of the property.
  2. The Service has also considered the landlord’s complaint handling.

Background and summary of events

Background

  1. The resident was a joint shared-ownership leaseholder of the landlord with her partner.  The property is a new build, 3-bedroom semi-detached house. Her lease commenced on 27 October 2017, and she had a 40% share in the property. The landlord took out a 10-year new build warranty starting from the date of practical completion and expiring 31 May 2027. The new build warranty provider went into liquidation in 2018.  Any policies the provider had issued or had underwritten were terminated on 11 August 2018.
  2. At the time of the resident’s complaint the landlord had a 2 stage complaints process.
    1. “Complaint – If an initial attempt to resolve the query is not achieved, a formal complaint will be recorded and will be investigated. We do all we can to resolve Customers issues and put things right.”
    2. “Peer Review – At the conclusion of the complaint process, a customer may request a review of their case. They will need to be clear on what they wish to be considered as their desired outcome and what specifically they are not accepting.”
  3. The landlord’s Compensation Policy allows it to award discretionary compensation:
    1. Awards of £50 to £250
      1. Remedies in the range of these amounts may be used for instances of service failure resulting in some impact on the complainant.
    2. Awards of £250 to £700
      1. Remedies in the range of these amounts may be for cases where the landlord finds considerable failure but there may be no permanent impact on the complainant.
    3. Awards of £700 and above
      1. Remedies in this range will be appropriate when there has been a significant and serious long-term effect on the complainant, including physical or emotional impact, or both.
  4. Section 3.20.4 of the resident’s lease confirms that there is a Nomination Period of 8 weeks for the landlord to find a buyer should the resident wish to sell – assign her interest – in her property. The period commences from the date the resident serves notice that she wishes to assign her interest. Shared Ownership leaseholders can instruct either the landlord’s Resales Team or the landlord’s preferred provider that specialises in shared ownership resales.  The landlord’s fee is 1.5% + VAT on the share value sold. After advertising on Help to Buy / Share to Buy, the landlord will allocate and approve a buyer.
  5. Latimer is the home-building arm of the landlord (for simplicity this report will simply refer to the landlord). Its website provides information on shared-ownership resales and states, “Due to nature of resales, we’re unable to specify how long the process will take. You or your buyer may be in a chain of people who are also selling and buying. We’ll ensure we are supporting you, your buyer and the solicitors to have your sales completed as quickly as possible.”  However, the website elsewhere states, “We’ll work to have the sale completed and your buyer moved into your home within three months.”  Regarding conveyancing, the website states “Once you have a buyer we’ll issue the legal paperwork to both your solicitor and theirs. They’ll start the work needed to get the lease transferred to the new owner.”

Summary of Events

  1. On 7 May 2021 the resident obtained a valuation of her property of £375,000 and on 11 May 2021 she instructed the landlord’s Resale Team to sell her property. It is understood that the resident intended to sell property because of relationship breakdown and by August 2021 before end of her fixed rate mortgage.
  2. On 17 May 2021 the landlord acknowledged the sales instruction form and stated that it would provide an update within 5 working days.  However, it was not until 2 June 2021 that the landlord made contact, sending the details it proposed to use to market the property and asking for further information.  It confirmed that the valuation was only valid for 3 months from the date of report.  After receiving the information on 6 June 2021, the landlord confirmed that the resident’s property had been listed online on 21 June 2021.
  3. On 14 July 2021 the landlord confirmed to the resident that the allocation process had been completed and it had requested formal sign off. It also requested an updated valuation on 2 August 2021.
  4. On 3 August 2021 the landlord told prospective buyers of the resident’s property that it had received their holding fee and that they should commence the legal process to exchange contracts and complete the purchase. The landlord informed the resident of this and obtained her solicitor’s details. It advised further that the buyers had 2 weeks to confirm their solicitor and lender details, at which point it would send a Memorandum of Sale to all parties, which would start the purchase (conveyancing) process.
  5. During the conveyancing the resident’s solicitor found out that the 10-year building warranty provider had been liquidated.
  6. On 15 November 2021 the resident raised a formal complaint stating:
    1. She was unhappy that since starting the process in May 2021 to sell her property, she could not yet set an exchange date, let alone complete. The first case handler was unresponsive, and it took 3 months for a new case handler to be allocated.
    2. Her solicitor had now informed her that day that the building warranty was void with no new warranty in place which rendered her property unmortgageable.
    3. As a result, she had incurred increased mortgage payments and solicitor costs.
    4. There had been a lack of communication by the landlord and its solicitor had also been unresponsive to contact from her solicitor.
  7. On 19 November 2021 the buyers’ solicitor wrote to the landlord and its solicitor noting that the 10-year warranty provider for the property went out of business in 2018, and that lenders would not lend on a new build property without a warranty. It asked the landlord and its solicitor if an alternative warranty was in place.
  8. The landlord’s internal correspondence noted that that its Delivery team denied responsibility for resolving the issue of obtaining a new building warranty. The landlord’s Insurance team stated that it could not assist as the warranty covered construction and workmanship issues which were excluded by insurance policies.
  9. On 17 January 2022 the resident’s solicitor confirmed to the landlord that the buyers’ lender needed ‘an appropriate Professional Consultants Certificate with proof of professional Indemnity Insurance”. As no team would take ownership, the matter was passed to Director level in January 2022.  From this time the landlord decided the Insurance team would help in obtaining a new warranty insurance provider, but this also required assistance from the Development team. The Development team needed to locate and provide several documents in relation to the affected units to provide to the potential new policy provider.
  10. On 25 January 2022 the resident complained that neither she, her partner nor her solicitor had received an update for 3 weeks or a response to her complaint of 15 November 2021.  She reiterated the detriment to her wellbeing and financial hardship including paying a higher rate on the mortgage since August 2021 and the risk of losing her buyers.  
  11. On 31 January 2021, the resident asked for a timeline for resolution.  The landlord advised that it needed to obtain a new and retrospective warranty policy not just a new one.  It was liaising with potential providers, therefore could not provide a timeframe as discussions were ongoing.
  12. The resident contacted the Service as she had not received a response to her complaint. On 2 February 2022 the Service asked the landlord to respond to the resident by 16 February 2022. 
  13. On 4 February 2022 the landlord’s solicitor advised the resident’s solicitor that the matter was with the landlord’s Legal and Development teams and that it was waiting instructions.
  14. The landlord’s solicitor suggested to the buyers’ solicitor that they proceed with an indemnity policy that the landlord could cover.  However internal correspondence dated 9 February 2022 noted that the buyers’ solicitor declined to proceed as this would not be acceptable to the buyers’ lender.
  15. On 11 February 2022, the landlord informed the resident that it was still working on obtaining a retrospective policy, which would affect several properties, but still could not provide a timescale. It would check with the buyers’ solicitor if the lender would reconsider the option of an indemnity policy if the landlord confirmed the policy would be provided later.
  16. On 21 February 2022, the landlord sent the stage 1 response. It stated:
    1. The warranty provider in place at the time that the property was built was no longer trading; as a result, the property required a replacement warranty. The sale was unfortunately unable to be finalised until the issue with the insurance was resolved. This was an unusual situation and taking longer to resolve than it would like.
    2. It committed to weekly updates, investigate interim measures that would enable completion of the sale and pay for a valuation update.
    3. It accepted that there were failings in its service including a lack of regular updates and offered £500 for delays, inconvenience and distress.
  17. On 25 February 2022 the landlord told the resident that the buyers’ lender would not accept the proposed temporary solution to allow the sale to proceed.
  18. On 25 February 2022 the resident escalated her complaint. She advised:
    1. The offer of £500 did not cover financial hardships let alone emotional stress.
    2. The indemnity policy had been rejected by the buyers’ lender and therefore she was trapped in her contract with the landlord.
    3. She did not want another valuation as she was concerned it may expire again.
  19. On 3 March 2022 the resident again asked for a timeline. In responses sent on 4 and 16 March, the landlord advised that its Insurance team was awaiting a number of documents before being able to finalise the request for the retrospective warranty policy.
  20. On 15 March 2022 after speaking to the resident, the landlord acknowledged her stage 2 complaint escalation and advised that it would respond by 15 April 2022. The landlord’s notes of the phone call stated “Mortgage offer keeps expiring, marital/partnership split, is why they want to sell…  Not receiving weekly updates … not willing to pay for valuation, increased rent … Regular updates needed”.
  21. On 31 March 2022 the landlord updated the resident stating that a delay to the complaint response was partly due to the need to retrieve specific historical data for the property. It advised the response should be sent by week commencing 18 April.
  22. On 30 and 31 March 2022 the resident noted that she had not received an update for 4 weeks. On 4 April 2022 the landlord advised that the outstanding information and documents had now been passed on for a quote to be provided.
  23. In emails sent on 14, 22 and 27 April 2022 the landlord confirmed that the Director level team and its Insurance team were reviewing and deciding whether to accept a quote. The resident advised that she had put an offer on another property therefore the matter was pressing. She highlighted that her mortgage payments had increased as well as the landlord’s rent and service charge, and utility bills.  On 6 May 2022 the landlord said that cover had been agreed and should be in place within a week after payment was made.
  24. On 20 May 2022 the landlord sent the stage 2 response. It explained:
    1. During the resident’s resale, it became aware that the warranty provider previously in place for the building had gone into liquidation and replacement cover was therefore needed. As a result, some time was taken to investigate who had the responsibility to place a new provider for the duration of the warranty period, which it found to be itself. It had taken advice from its Insurance team and had gathered the appropriate information relating to the property in order to obtain a quote. This information related to the original sale of the scheme, and unfortunately took some time to consolidate.
    2. Following the liquidation of the original warranty provider, its brokers had found very few insurers agreeable to providing the warranty cover previously provided. Unfortunately, this meant that the procurement of replacement cover took a lot longer than it had hoped.
    3. It now had a provider on board, however, its visiting surveyor needed to attend the building before it would issue the new cover note. It estimated that it would be a further two to three weeks until it was holding the cover note.
    4. In recognition of the delays to resolve the matter and the inconvenience caused, it would waive the resale nomination fee of £2,700, legal fees of £420 and reimburse the cost of valuation fees for all valuations. It also increased the compensation to £1,150 comprising:
      1. £500 – Discretionary Payment from the stage 1 response
      2. £500 – Discretionary contribution towards legal expenses
      3. £50 – Discretionary payment for a delay to its complaint response
      4. £100 – Discretionary payment in recognition of Landlord responsibilities for its sub-contractor services and associated delays caused.
  25. The landlord wrote separately to the resident on 20 May 2022 to say that it had been informed by the prospective new warranty provider that it needed to send a surveyor to inspect the building before confirming it would supply the cover. It estimated that this would take a further 2-3 weeks.  The landlord further updated the resident on 31 May 2002 stating that the warranty provider had now stated that it would need to visit at least 4 properties before it would issue cover. It would contact at least 3 other owners and inform the resident when it had done this. The surveyor had suggested visiting on 7 June 2022.
  26. On 17 June 2022, the landlord advised the resident that the new warranty provider was now awaiting information from the builder which should be available the following week.  The provider would subsequently review the information and confirm the policy within 5 working days.
  27. On 24 June 2022 the landlord confirmed it had sent all requested information to the warranty provider. On 29 June 2022, the landlord advised that it had received the policy that day and sent it on to its solicitors for review.
  28. On 4 July 2022 the resident advised she needed to take another valuation. After she paid for a desktop valuation, she sent the invoice to the landlord for a refund.
  29. On 27 July 2022, the landlord informed the resident that it had sent a certificate to the buyers’ solicitor, but it wanted the full policy to be issued before it would proceed with the purchase. The landlord said it was therefore chasing the new warranty provider for the policy.
  30. The resident made several requests for an update throughout August 2022, also commenting that the interest rate was rising. On 11 August 2022 the resident referred her complaint to this Service stating that she and her partner had paid £15,000 to live in a property she did not want to.
  31. On 18 August 2022, the landlord advised the resident that the warranty provider had asked for more information which it had provided that day. On 22 August 2022 the landlord received the final documents including a new insurance certificate from the warranty provider.  On 24 August 2022 it advised that the resident that its solicitors were reviewing the documents.
  32. On 7 September 2022 the buyers completed the purchase of the resident’s property. The landlord took the valuation and legal fees in error so confirmed on 15 September 2022 that it would provide a refund.

Assessment and findings

  1. The resident complained about the initial handling of the sale of the property.  While the landlord does not guarantee that the sales process will be completed within a set timeframe, it aims to complete the sale within 3 months, which in this case would have been during August 2021. Moreover, as valuations expire after 3 months it is reasonable for the landlord to aim to at least start the legal process to exchange contracts before the valuation expires. It is therefore important that the landlord acts promptly at each stage of the sales process.
  2. In this case, there were instances where the landlord did not act promptly.  It took 12 days to provide an update after receiving the sales instruction form on 17 May 2021, and not within 5 days as promised. It took a further 2 weeks to list the property online. 
  3. Between August 2021, when buyers were found and a holding fee paid, and November 2021, the sale did not progress as an exchange date could not be set. This prompted the resident to make a complaint.  It is not clear to what extent this was due to failings in service provision by the landlord and its solicitor. However, it is not disputed that within this period the parties found out that there was no building warranty in place which stopped the sales process pending resolution of this issue.
  4. The Financial Services Compensation Scheme (FSCS) sought to arrange a deal with an insurer to provide replacement cover for the building warranty provider which had gone into liquidation but failed to do so. On 19 August 2019 it issued guidance stating. “…FSCS recommends that policyholders seek professional advice on obtaining replacement cover as soon as possible by contacting a suitable insurance broker who specialises in latent defect/structural damage policies. Policyholders may be in breach of their mortgage terms and conditions if they do not have a valid latent defect policy for their property. Should policyholders not know of a suitable insurance broker to help with replacement cover, they can get help via the British Insurance Brokers’ Association…”.  The landlord has a responsibility to ensure that its new build properties have appropriate warranties and insurance in place so that defects and structural issues can be remedied. Moreover, the absence of a building warranty can prevent a shared owner from moving as lenders will usually require a warranty to be in place. Therefore, it would have been appropriate for the landlord in 2019 with its brokers to try to obtain replacement building warranty cover, liaising with the builder as necessary. However, it failed to take any action.
  5. After the resident complained in November 2021 that there was no building warranty, the landlord took steps to find replacement cover. There was a delay initially as it took 2 months to decide which team should take responsibility for this.  It was not until August 2022, 9 months later that the landlord found an alternative warranty provider and received all the documents required by the resident and her buyers. This further delayed the sale significantly. The delay may have been avoided had the landlord acted in 2019. 
  6. The resident understandably asked for a timeframe for when the new warranty would be in place.  The landlord was not able to provide a timeframe as there were factors beyond its control such as the decisions of prospective.   alternative warranty providers. Aside from not providing weekly updates after the stage 1 response, the landlord informed the resident of the action it and third parties were taking. This included advising of the need to obtain historical documents for the new warranty provider, to obtain and consider a quote, for a surveyor to visit several properties, for the builder to provide new information to the warranty provider, and to obtain and review the new policy and certificate. As such it kept the resident reasonably informed.
  7. In identifying whether there has been maladministration the Ombudsman considers both the events which initially prompted a complaint and the landlord’s response to those events through the operation of its complaints procedure. The extent to which a landlord has recognised and addressed any shortcomings and the appropriateness of any steps taken to offer redress are therefore as relevant as the original mistake or service failure. The Ombudsman will not make a finding of maladministration where the landlord has fully acknowledged any failings and taken reasonable steps to resolve them.
  8. As redress for the delays in the sale the landlord decided to waive the resident’s fees and reimburse costs. It was reasonable that the landlord offered to reimburse the cost of all valuations as the delay in the sale caused the need to the resident to pay for revaluations.  It was also reasonable that the landlord contributed towards the resident’s legal fees as the delay to the sale extended the resident’s solicitors involvement in the case.
  9. The landlord waived the resale nomination fee and legal fees, which amounted to £3,120.  As the resident was obliged to pay these fees regardless of the delay in the sale, this offer constituted redress to the resident.  The landlord also offered further discretionary compensation for delays, inconvenience and distress totalling £600.  Considering, the length of the delays in the landlord’s initial handling of the sale and the 9 months it took to find an alternative warranty provider, the landlord’s offer of redress here was proportionate to the identifiable delays and other failures attributable to the landlord.
  10. The resident has advised the Service of the amount she and her partner had spent staying in their property after September 2021.  While the Service expects landlords to offer redress for failures in service, it is not obliged to meet the costs that residents would ordinarily have to pay to live in their accommodation.  Furthermore, even though the resident’s mortgage repayments had increased too, she (and her partner) were obliged to pay these costs and in turn the total amount of repayment due reduced.  As such the further mortgage payments made whilst remaining at the property was not “lost” money.
  11. This finding does not mean the Ombudsman thinks the landlord’s handling or impact on the resident was ‘reasonable.’ The finding reflects that there were considerable failings by the landlord, which its compensation offer acknowledges and compensates for in line with the Ombudsman’s approach. While this is the case, this investigation has made a recommendation in recognition of acknowledged and/or identified service issues in respect of this aspect.

Complaint handling

  1. The resident originally submitted a formal complaint on 15 November 2021.  However, the landlord did not acknowledge or respond. Consequently, the resident contacted this Service which added to her time and trouble pursuing a response to her complaint. The landlord only responded after being contacted by this Service.   At this point 2 months had passed since the resident had submitted her complaint. The landlord’s complaints procedure did not specify timeframes; however, the Service’s Complaint Handling Code (the Code) in effect at the time, which provided good practice guidance for member landlords, stated that landlords should respond to stage 1 complaints within 10 working days.  The landlord’s response was outside this timeframe.
  2. With regards to stage 2 the Code states that landlords should send the response within 20 working days from the request to escalate.  The landlord did not respond within this timeframe after the resident escalated her complaint on 25 February 2022.  In fact, it took the landlord 3 weeks to acknowledge the complaint.
  3. When acknowledging the stage 2 complaint the landlord advised that it would respond by 15 April 2022, then the week commencing 18 April 2022. It did not meet this revised timeframe which added to delay in its complaints handling.  The landlord remained in contact with the resident about the new building warranty at this time but did not send further holding responses to the formal complaint. As a result, the resident was not sure when she would receive the final response to her complaint.
  4. The stage 2 response was sent on 20 May 2022. This was 3 months atter the resident had escalated her complaint, outside the 20-day timeframe outlined in the Code.
  5. The landlord in the stage 2 response offered £50 for delays to its complaint handling. This was not a proportionate amount given the length of the delays at both stages of the complaints procedure. In fact, the landlord did not acknowledge the delay at stage 1.
  6. Aside from the delays, there were shortcomings in the landlord’s response. It did not address the resident’s complaint that it and its solicitor had delayed the sale up until her initial complaint of 15 November 2021. This left the issue unexplained and leaving the resident with a sense of unfairness.
  7. Responding to a complaint is an opportunity for the landlord to demonstrate that it has heard and understood a resident’s dissatisfaction. The landlord in this case did not acknowledge the particular circumstances of the resident’s complaint, that the delay in the sale was especially impactful due to relationship breakdown. It thereby missed opportunities to show empathy and understanding which can contribute to the resolution of complaints.

Determination (decision)

  1. In accordance with paragraph 53b of the Housing Ombudsman Scheme the landlord has offered reasonable redress to the resident which, in the Ombudsman’s opinion, resolves the complaint satisfactorily.
  2. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was maladministration by the landlord in its complaints handling.

Reasons

  1. The landlord failed to obtain a new building warranty provider at the time the previous one was liquidated. This contributed to delays in the sale in the resident’s property.  There were also delays earlier in the process. However, the landlord offered reasonable redress that was proportionate to the identified service failures.
  2. The landlord did not offer proportionate redress for the delays at both stages of the complaints procedure. The landlord also did not address the resident’s complaint about delays at the start of the sales process or show empathy to the resident’s circumstances.

Orders and recommendations

Order

  1. The landlord is ordered to pay the resident £300 compensation for her time and trouble and distress and inconvenience arising for the failings in its complaint handling. This award supersedes the landlord’s offer within the complaints procedure, therefore if it has already paid the £50 offered at Stage 2, it should pay the resident £250.

Recommendation

  1. As the finding of reasonable redress is contingent on the landlord’s offer of redress in its stage 2 response, it should make all payments and reimbursements if it has not already done so.
  2. The landlord is recommended to review the records of all its new build housing stock to ensure it has details of all new build warranty providers and copies of the relevant policies/certificates in effect.