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Clarion Housing Association Limited (202207661)

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REPORT

COMPLAINT 202207661

Clarion Housing Association Limited

24 January 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:

  1. The landlord’s handling of the resident’s request for a Deed of Variation (DOV) to the lease, including its offer of compensation.
  2. The Ombudsman has also investigated the landlord’s complaint handling.

Background

  1. The resident occupies the property as a leaseholder under a shared ownership scheme with the landlord. The landlord leases the property under a ‘headlease’, and entered into an ‘underlease’ with the resident in February 2020.
  2. On 6 January 2021 the resident notified the landlord via her solicitor that she wished to remortgage. The solicitor reported an issue in both the headlease and underlease, which gave no right of access over the private road outside the property, meaning the parking space that the property had the benefit of was essentially landlocked. The solicitor requested that the landlord arrange for a DOV to the lease by the freeholder to correct this. The solicitor chased the landlord for a response several times throughout March 2022, and again on 11 April 2022, before the landlord confirmed on 19 April 2022 that a DOV was required.
  3. On 28 April 2022 the landlord asked the solicitor who had acted on its behalf in drawing up the lease to rectify the error and complete the DOV, which the resident said was required in order to complete her remortgage before 30 June 2022. On 16 May 2022 the landlord’s solicitor confirmed it would draft this as a matter of urgency.
  4. The resident and her solicitor continued to chase the landlord for updates. On 13 June 2022 the resident made a formal complaint about the landlord’s poor communication and the ‘inordinate amount of time’ it was taking to complete the DOV. She explained that she had been subject to increasing monthly costs on her variable rate mortgage while the matter was pending, and she would incur additional costs due to rising interest rates should she fail to secure her mortgage offer by the deadline of 30 June 2022. The landlord responded to the resident on 17 June 2022 and said the draft DOV was now approved. It said it had little influence over how long its solicitor was taking but had explained the issue was pressing and all that remained was for the plan to be updated and the DOV to be registered.
  5. On 28 June 2022 the landlord’s solicitor informed the landlord further amendments were required to the plans and it had not heard from the freeholder directly so was unsure the DOV would be completed before the end of June 2022. The landlord passed this update on to the resident’s solicitor the same day.
  6. On 30 June 2022 the landlord explained to the resident that the DOV would not be completed that day and it was unable to provide a timeframe for completion. It noted in order to complete the DOV, its solicitor needed to make contact with the freeholder. It explained it was likely to take time to get through to the freeholder and they may wish to provide input causing further delays. The landlord apologised and explained the situation was out of its hands. The resident contacted the landlord and expressed her disappointment, requesting that the matter be escalated to stage 2 of the complaints process.
  7. On 5 July 2022 the resident made a further complaint, outlining the chain of events and requesting compensation for time, stress and anxiety as well as £1,887.60 for additional interest costs across the 2-year fixed term of her new mortgage offer. The resident added to the complaint on 13 July 2022, noting the landlord had delayed unnecessarily and given false information which led her to believe the DOV would be completed before the deadline. She noted the landlord was still unable to give a timescale and was not sending updates or responding to emails, meanwhile the situation was costing her emotionally and financially. She asked that going forward she receive regular and accurate updates, and that the DOV be completed as soon as possible.
  8. The resident chased the landlord for an update and a response to her complaint on a number of occasions throughout August 2022, and again on 13 September 2022. On 16 September 2022 the Ombudsman contacted the landlord on behalf of the resident, asking that it provide a response by 3 October 2022. The landlord explained that, due to a cyber-security incident, it was unable to process the request at that time.
  9. It ultimately provided its stage 1 response on 14 October 2022, when it acknowledged the lack of communication and unnecessary delays which had led to the mortgage offer being lost. It awarded £400 compensation for distress and inconvenience. It updated the resident about delays on the freeholders part and said it hoped the DOV would be completed very soon.
  10. The resident escalated her complaint on 14 November 2022, asking to be directly compensated for the additional costs in her new mortgage offer in addition to the £400 offered by the landlord. The DOV was completed the same day.
  11. The landlord responded to the stage 2 complaint on 16 December 2022. It acknowledged there were initial delays where the request for a DOV was not proactively managed, but stated the view from its legal team was that the DOV could have completed after the remortgage. The landlord increased the offer of compensation from £400 to £600 for its handling of the matter. It said it was undertaking a review of home owner related processes and improving communication with customers. It also said it had improved access into the Home Ownership (HO) team, and its web content on home owner related processes. It offered a further £100 compensation in recognition of complaint handling failures, including its delay in responding.
  12. The resident was dissatisfied with this response and referred her complaint to the Ombudsman in January 2022. She is seeking compensation of £2,287.60, inclusive of costs incurred by remaining on a standard variable mortgage with increasing interest rates throughout the period of time it took to complete the DOV. This excludes the £700 already offered by the landlord which she considers appropriate for the distress and inconvenience caused.

Assessment and findings

Scope of Investigation

  1. The process for obtaining a DOV in this case was a complex one which involved a number of third parties including solicitors, freeholders and their managing agents. It is not within the remit of the Ombudsman to assess the actions of these agencies. In accordance with paragraph 34 of the Scheme, this Service can only consider complaints relating to the actions or omissions of a social landlord, as a member of the Scheme.

Landlord’s handling of the request for a DOV

  1. The resident first requested that the landlord arrange for a DOV to correct the error on the leases on 6 January 2022. It was not until 28 April 2022 that the landlord passed this request to its solicitor to review. The landlord has provided copies of its email correspondence which shows that, subsequent to the resident’s initial request, it made enquiries into the matter but it was not prompt in doing so.
  2. It took the landlord 13 days before it responded to the solicitor’s initial request on 18 January 2022, and a further 17 days before the HO team made internal enquiries with its leasehold specialist as to whether the DOV was needed, on 10 February 2022. The leasehold specialist responded promptly to the HO team’s enquiry, asking who owned the land between the demise and parking space. There was no evidence this was then followed up by the HO team. The landlord was undoubtedly slow to raise initial external and internal enquiries here, and there appeared to be a lack of ownership in following through on the request of the leasehold specialist.
  3. The solicitor was left to chase again on 3 March 2022, but it was not until 14 March 2022, after a further 22 days of apparent inaction, that the matter was referred to a contact in the DOV team. Given there now appeared to be a dedicated contact, we might have expected better communication and follow through. However, despite being asked to look into the matter and update the solicitor, it was, again, only when the solicitor contacted the landlord on 23 March 2022, expressing frustration that she had been unable to get through to the relevant department or contact, that further action was taken.
  4. The DOV officer approached the internal legal team who responded promptly on 25 March 2022 stating its opinion that the DOV was not needed. This was not communicated to the resident’s solicitor until 31 March 2022, who contested this. Again, it took the solicitor chasing the matter on 11 April 2022 for it to be passed back to the legal team to reconsider. The legal team then concluded, on 19 April 2022, that there was an error in the headlease that needed amending.
  5. The Ombudsman understands that the circumstances around the need for a DOV may require the consideration of different departments, agencies and expertise, but there were unnecessary delays on the part of the DOV officer in acting as an intermediary between the various parties and communicating information. The Ombudsman cannot comment on whether the DOV was legally required and appreciates the ambiguity and complexity that may have been involved in determining this. However, it remains that the landlord’s delay in reaching its conclusion was to the detriment of the resident, whose mortgage offer was time limited and, according to her solicitor, dependent on resolution of this issue.
  6. The landlord’s delays were also compounded by its poor communication, which left the resident in the position of not knowing how to proceed. She expressed extreme concern and anxiety in an email to her solicitor on 28 March 2022, asking what would happen if the landlord continued with its avoidance.
  7. Once it had been determined that the DOV was required, there was a further wait whilst the landlord tracked down the solicitor who acted on its behalf in drawing up the original lease. The landlord, in its later email of 17 June 2022, attributed its early delays to this taking far longer than expected. In fact, the DOV team made enquiries with the development team on 21 April 2022, who provided the information a week later on 28 April 2022. While this was not prompt, the landlord could be seen to have overstated this as a reason, given it was only a contributing factor in the wider delays that had occurred thus far.
  8. Upon receipt of the information the DOV team acted reasonably, making contact with its solicitor the same day and requesting the DOV. It chased its solicitor for an update on 10, 16 and 30 May 2022, and responded to requests for information from its solicitor promptly. It communicated better with the resident’s solicitor, providing updates on 28 April 2022, and 6,12 and 26 May 2022, in which it gave assurances that it was chasing the matter up. However, this communication was somewhat reactive, sent in response to the solicitor’s queries, in some cases after several days.
  9. On 13 June 2022 the resident complained to the landlord and requested that the DOV be expedited. The landlord’s correspondence evidences that, overall, it took appropriate actions to progress the completion of the DOV at this juncture. Upon receipt of the draft DOV on 13 June 2022, the landlord approved this within several days. It was a further 5 days until it requested expedited plans, but upon receipt of them promptly forwarded them to its solicitor on 27 June 2022.
  10. Further complications became apparent in the final days leading up to the 30 June 2022 deadline, for which the landlord cannot reasonably be held responsible. The landlord’s solicitor informed it further amendments were required to the plans it had provided. It is not clear whether the solicitor should have given clearer direction here, whether the landlord did not brief the planning agency, or whether the planning agency omitted obvious markings from the plans. In the absence of clear information either way, it is not possible to determine responsibility for this.
  11. The Ombudsman can only consider whether, upon receipt of this information, the landlord acted appropriately to resolve the matter. In this case the landlord promptly requested a draft plan from its solicitor clearly showing what should be included, contacted the planning agency to discuss the issue, and enquired whether the DOV could progress with the updated plans to follow.
  12. Regardless, it emerged that a further issue was stalling progress at this stage. The landlord’s solicitor informed the landlord on 28 June 2022 that it had not heard from the freeholder as required to complete the DOV. The solicitor had asked the landlord for contact details for the freeholder on 20 June 2022. The landlord delayed in this due to the cyber-security issue rendering some of its systems inaccessible, but provided contact details for the managing agent on 29 June 2022. Again, it would be unreasonable to blame the landlord for the difficulties in reaching the freeholder.
  13. It is not evident that the landlord bore responsibility for sourcing and providing this information, or that its delay in doing so was pivotal in the failure to complete the DOV before the deadline. As the landlord outlined to the resident in its email of 30 June 2022, the solicitor had made contact with the freeholder late in the process and it remained out of its control how long it would take for the freeholder to engage on the matter.
  14. The resident complained again on 5 and 13 July 2022 in which she submitted that the landlord had given her false information, leading her to believe the DOV would be completed prior to the mortgage deadline. She noted a disparity between the landlord’s update on 17 June 2022, which said the DOV had been drafted and approved, and the communication received from its solicitor several days later, which said the DOV was ‘in the process’ of being drafted. Having reviewed communications from the landlord to the resident throughout June 2022, it was reasonable for the resident to feel hopeful about the prospect of completion before the deadline.
  15. While the landlord did not explicitly state this would be the case, in emails sent to her on 1 and 17 June 2022,  it noted it would contact the solicitor to see if it could ‘get the last part of the process expedited’ and said all that remained was for the plan to be updated and for the DOV to be registered. In fact, the process was not near to completion and this was not all that remained to be done.
  16. However, having reviewed communications between the landlord and its solicitor, it appears reasonable that the landlord assumed, and thus communicated, that things were progressing appropriately. The correspondence shows the landlord’s solicitor sent it a ‘draft DOV’ on 13 June 2022, and so the landlord’s update to the resident in this instance was not incorrect, and it did not deliberately mislead her. The solicitor was only explicit in informing the landlord that it had not heard from the freeholder and was unsure the DOV would be completed close to the deadline, on 28 June 2022. The landlord communicated this position to the resident’s solicitor and the resident as soon as it was aware, on 28 and 30 June 2022 respectively.
  17. The resident and her solicitor asked the landlord to be clear if it could not assist in obtaining the DOV on several occasions. This was so they could explore alternative options such as indemnity insurance, with which the mortgage could progress. The insurance provider relied upon written correspondence from the landlord to that effect. Again, based on the information received from the solicitor it was reasonable that the landlord considered it possible the DOV could be completed on time. Additionally, it was able to assist with the matter, albeit not before the mortgage expiry deadline.
  18. The Ombudsman considers that the landlord’s communication could have been better with the resident throughout June 2022 as the deadline approached. The resident sent emails on 22, 24 and 27 June 2022 asking for an update on the situation. The landlord responded on 27 June 2022 noting the plans had been updated, but it still had no estimate from the solicitor as to a date for completion. Given the poor communication thus far, the resident’s complaint to that effect, and her stress given the approaching deadline, it would have been helpful for the landlord to respond more promptly, to assure her it was chasing the solicitor and assisting as it could. However, as it outlined in its stage 2 response, the landlord experienced a cyber-security incident during this period which rendered some parts of its systems inaccessible, including the communications it was both receiving and sending.
  19. This poor communication continued into July and August 2022. The resident made further complaints on 5 and 13 July 2022, and chased the landlord for an update in regard to these complaints throughout August and September 2022, seemingly without any response. She also asked the landlord to contact the freeholder to stress the urgency of the matter. The correspondence suggests that, during this time, the matter was being pursued by both the landlord and resident’s solicitors. It therefore may not have been appropriate for the landlord to act on the resident’s request, however, it was responsible for keeping her updated, and it failed to do so. While the Ombudsman appreciates the landlord was limited in what it was able to do during this time, this was still to the detriment of the resident whose queries went unanswered.
  20. The DOV was finally completed in November 2022, some 5 months after the mortgage deadline. The correspondence provided shows there were further complexities which delayed matters, including the requirement for a consent certificate from a third party interest and the sourcing of a second signature by the freeholder to the DOV. These were legal issues which the landlord cannot reasonably be held accountable for. Where the landlord was able to progress matters the correspondence suggests it endeavoured to do so promptly. It arranged for its governance team to sign the DOV on 23 September 2022, and paid the freehold managing agent swiftly upon request in early November 2022 to ensure the DOV could progress.
  21. The landlord acknowledged there had been delays in both its stage 1 and 2 complaint responses but, in the Ombudsman’s opinion, did not fully reflect or account for what went wrong. In its stage 1 response it incorrectly stated it was first made aware of the request for a DOV on 14 March 2022. In its stage 2 response it acknowledged the request was made in January 2022, and noted that there had been around 9 weeks of delays when it did not proactively manage the request as efficiently as expected, for which it apologised.
  22. In fact the request was made on 6 January 2022 and it took 11 weeks for the matter to be referred to the legal team, and 14 ½ weeks before there was agreement that the DOV was needed. As discussed, the Ombudsman understands the issue was a complex one which may have taken some time to consider but, in light of this, the legal team should have been consulted sooner. Instead, the issue was passed around between teams with queries unanswered and the issue left to drift.
  23. The landlord also acknowledged its communication had been poor in its stage 1 response. In its stage 2 response it added that it was working to improve communication with residents, and had improved access into the HO team with customers able to reach the team directly. It has also since drafted a DOV policy outlining the steps to be taken upon receipt of a DOV request. This instructs staff to set up a case file, add the case to a log and add a note to the CRM timeline for the contact. It notes if there are complications, the HO team should refer to the legal team. The Ombudsman would advise the landlord to go further and establish clearer deadlines for updating the resident and for referring the matter to its legal team to promote efficiency and accountability.
  24. The landlord increased its offer of compensation from £400 to £600 in its stage 2 response, in recognition of its delays and poor communication. This offer could be seen to align with its compensation policy, which states that remedies of between £250 and £700 may be appropriate where there has been ‘considerable failure’. This includes where a complainant has had to repeatedly chase responses and seek correction of mistakes, necessitating an unreasonable level of involvement by that complainant, or where they have been repeatedly passed between staff and/or teams, with no one officer or department taking overall responsibility. Given that the above applied, and this caused the resident stress and anxiety over a sustained period, the Ombudsman would expect an offer at the top end of the scale to be appropriate here, as a minimum.
  25. The policy gives the landlord scope to award compensation of over £700 where there has been ‘serious mishandling or misdirection leading to speculative loss’. It provides an example of such a situation as follows: ‘Mishandling by a landlord of a ‘Right to Acquire’ application leading to the complainant’s mortgage offer expiring and the new mortgage offer being on less favourable terms’. The landlord appeared to take some responsibility for the loss of the mortgage offer in its stage 1 response.
  26. However, in its subsequent response it claimed the view from its legal team was that the DOV was not required as a condition of the remortgage. It is not for the Ombudsman to make a determination on matters of a financial and legal nature such as this, but there was clearly some inconsistency in the landlord’s position here and frustration felt by the resident who maintained, on the authority of her solicitor, that the DOV was necessary for the remortgage and that this had been explicitly stated by her mortgage lender.
  27. The resident also noted in her complaint to the Ombudsman that the error on the lease was the fault of the landlord who had failed to check the details when granting the sublease. The Ombudsman agrees that it was not the fault of the resident, yet she was burdened by its impact, both emotionally and monetarily. The correspondence suggests the landlord’s solicitors acknowledged the error and took responsibility for correcting this by way of the DOV. As discussed, it is not within the jurisdiction of the Ombudsman to consider the actions or omissions of third parties, and nor would it be fair to extend liability to the landlord for those operating on its behalf in a specialist capacity.
  28. Ultimately, the Ombudsman considers there were unnecessary delays in the landlord’s initial handling of the matter, and issues with its communication throughout which amount to maladministration. While the Ombudsman appreciates the resident incurred a significant financial loss as a result of the loss of her mortgage offer, through no fault of her own, it is not possible to apportion full blame for this on the landlord. Even if we took the position that the mortgage offer was dependent on the DOV, to hold the landlord fully responsible would negate the actions of third parties and require us to speculate that, without the initial delays the outcome would have been different, which is far from obvious.
  29. Therefore it is not appropriate, or within the Ombudsman’s remit, to require the landlord to compensate the resident for the additional mortgage costs. However, this Service considers an offer of £600 to be inadequate to fully address the distress and inconvenience experienced by the resident as a result of the significant early delays and poor communication throughout.

Landlord’s complaint handling

  1. The landlord put an interim complaints policy in place on 17 June 2022, 4 days after the resident had submitted her stage 1 complaint. This was in response to the cyber-security incident and extended the timeframe for the landlord to respond to stage 1 complaints received after this date from 10 to 20 days. It noted for complaints made prior to this date it would contact the complainant and try to progress these through to resolution.
  2. In this case, the resident received a response to her complaint on 14 October 2022, some 4 months later. This was, to use the resident’s words, an ‘inordinate amount of time’, and well outside the timeframe specified in the landlord’s policy.
  3. The landlord’s handling of the resident’s complaint was confused. Following the resident’s request for an update on 13 September 2022, the landlord explored the matter, noting in its internal correspondence on 15 September 2022 that it had initially logged the complaint but had then passed it on to the HO team to be dealt with. It confirmed the matter was not logged or recorded and was to be dealt with outside the complaints process by the HO team. This was despite it acknowledging the complaint and informing the resident it had been assigned on 8 August 2022. It was only in response to a request from this Service on 16 September 2022 that it again ‘logged and raised’ the complaint.
  4. The landlord’s policy outlines that, in some situations, it may be appropriate to consider a complaint as a service request, and have this resolved by a specific team. In these situations, it notes an explanation will be provided, setting out the reasons why the matter is not suitable for the complaints process. If further enquiries are needed to resolve the matter or a customer requests it, the issue will be logged as a complaint. The HO team responded to the resident’s complaint on 17 June 2022, but did not explain its position so it was unclear that this response constituted an alternative to a formal complaint.
  5. The Ombudsman considers this should have been investigated as part of the complaints process. The resident had evidenced her dissatisfaction in several previous emails and was very clear she considered this a formal complaint, titling her correspondence as such. Furthermore, it was not appropriate that the very team dealing with the complaint was the team she had expressed a lack of confidence in.
  6. The resident requested that her complaint be escalated to stage 2 on 20 June 2022, and 5 and 13 July 2022. She also chased the matter on 4, 10 and 15 August 2022, and 13 September 2022. The landlord acknowledged the escalation requests in its stage 2 response and explained these were not logged as it did not consider a stage 1 complaint to have been made. The Ombudsman does not consider this a reasonable explanation. The escalation requests, and subsequent follow up emails, should have acted as a prompt to consider the resident’s initial complaint. At the very least an explanation should have been given as to why the matter had not been escalated, as outlined in its policy.
  7. On the request of the resident, the Ombudsman contacted the landlord on 16 September 2022, and asked it to provide a response by 3 October 2022. The landlord responded the same day and explained it was unable to progress the request at this time due to the cyber-security incident but would do so as soon as it was able. It noted it was communicating actively with residents about the disruption. However, there is no evidence it communicated this position to the resident specifically, and she was again left to contact the Ombudsman on 4 October 2022 stating she had received no response.
  8. The landlord ultimately provided its response on 14 October 2022 in which it acknowledged the complaint as received on ‘16 September 2022’ and apologised for the delay. The resident escalated the matter to stage 2 on 14 November 2022, in which she noted the inaccuracy in the date of her initial complaint. In its stage 2 response the landlord acknowledged the resident had complained on 13 June 2022 and that it had taken 2 months for it to log this as a formal complaint. This was again inaccurate, as it was only on 16 September 2022, on the request of the Ombudsman, that the complaint was logged, some 3 months later.
  9. Following the resident’s escalation request on 14 November 2022, the landlord responded stating the outcome she received had been its final response. The resident contacted the Ombudsman who requested that the landlord provide a response within 20 days. However, the landlord’s correspondence suggests it had already noted its error and raised an internal stage 2 investigation on 16 November 2022. Nevertheless, this only added to the confusion in the landlord’s approach throughout its handling of the complaint.
  10. The landlord provided its final response on 16 December 2022, after 25 working days. The Ombudsman’s ‘Complaint Handling Code’ (Code) requires landlords to provide a response at stage 2 within 20 working days, however recognises the landlord extended this timeframe to 40 days as outlined in its interim policy. This was in response to the challenges that have been imposed by the cyber-security incident. The Ombudsman understands the landlord intends to revert to its original policy and timeframes as of April 2024.
  11. In its stage 2 response the landlord acknowledged it had mishandled the resident’s complaint. It offered £100 compensation in recognition of the length of time it took for the stage 1 complaint to be recorded, its failure to follow process and the inconvenience caused to the resident in having to chase up the matter. The Ombudsman considers this amount to be insufficient in the circumstances.
  12. The landlord did not appear to acknowledge the full extent of its delays in responding, there was confusion in how it handled the matter which meant it failed to progress the complaint and missed opportunities to rectify this, and it communicated poorly with the resident. These failings exacerbated the resident’s frustration at the handling of the substantive issue and caused her further distress and inconvenience, time and trouble, and a loss of confidence in the landlord. As such, the Ombudsman considers an offer of £250 to be appropriate, in line with the landlord’s own policy and this Service’s remedies guidance.

Determination

  1. In accordance with paragraph 52 of the Scheme, there was maladministration in the landlord’s handling of the resident’s:
    1. Request for a DOV to the lease, including its offer of compensation.
    2. Formal complaint.

Orders

  1. Within 4 weeks of this report the landlord must pay the resident £950 compensation (£700 for distress and inconvenience caused by delays in progressing the DOV, and £250 for delays in complaint handling).
  2. If the £700 previously offered to the resident during the complaints process has already been paid, it can be deducted from this total. This should be paid directly to the resident and not deducted from any applicable rent balance unless requested by her.

Recommendations

  1. It is recommended that the landlord adapt its DOV policy to ensure greater efficiency and accountability in dealing with requests. Where specialist input is needed, it should establish deadlines for referring matters to relevant individuals / departments, such as the legal team. It should also specify appropriate timeframes for providing updates to residents and promote ownership of issues, by ensuring requests are allocated to an officer at the earliest opportunity. When the policy has been finalised relevant staff should be trained on it.
  2. The landlord should continue with the efforts outlined in its stage 2 response to improve communication with residents.
  3. The Ombudsman intends to issue updated complaint handling guidance in its Code later this year and expects that the landlord will self-assess against this and bring its policies into alignment.