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Hundred Houses Society Limited (202126661)

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REPORT

COMPLAINT 202126661

Hundred Houses Society Limited

26 June 2023

 

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 the landlord’s handling of the resident’s application to purchase the landlord’s share in their joint ownership property.

Background

  1. The resident is a former tenant of the landlord. They occupied the property on a shared ownership basis.
  2. The resident applied to the landlord on 11 June 2020. There then followed a lengthy delay in completing this staircasing process, which finally completed in November 2021. The time taken to complete this process formed the basis of the complaint that the resident submitted to the landlord in December 2021. In his view, landlord failures had resulted in financial implications for him in proceeding with the full purchase of the property as they meant that he has missed out on the opportunity of purchasing whilst stamp duty had been temporarily reduced.
  3. In the landlord’s stage one response to the complaint, it acknowledged that the error on the EWS1 form contributed to the delay in completing the sale of the property. However it also stated that there were additional reasons for the delay and that this meant that it disagreed that it was responsible for the resident missing out on lower stamp duty costs. The landlord apologised for the delays in processing the staircasing request. However it did not agree that compensation was warranted in respect of the complaint.
  4. The resident escalated the complaint to stage two of the landlord’s process on the basis that the landlord was partially responsible for the delay, and was therefore requesting to be compensated in part for the extra costs. In the stage two response, the landlord reiterated that the lender was partially responsible for the delay. It also pointed out that it took a further four months from receipt of the corrected EWS1, to finalise the mortgage offer. The landlord therefore maintained its position not to award compensation.
  5. The resident remained dissatisfied and has brought the complaint to this Service. The resident does not agree with the landlord’s response, that its delays were not the sole reason for missing the stamp duty holiday deadline. The resident has confirmed his desired outcome, namely compensation for the extra costs he incurred by missing this deadline.
  6. Following the referral to this Service, the landlord identified that it was responsible for a delay during the application process that occurred between March 2021 and May 2021. The landlord wrote to the resident on 6 July 2022 to confirm that it had now amended its complaint decision to partially upheld. On 29 July 2022, the landlord also offered total compensation of £500 for its handling of the staircasing application. The resident confirmed acceptance of the offer via email on 19 August 2022.

Assessment and findings

The resident’s application to staircase

  1. The resident first contacted the landlord on 11 June 2020 to start the staircasing process. The resident had been given the all clear from the mortgage lender and had paid the valuation fee by 26 June. The landlord was then required to chase up a valuation report from the surveyors, which meant it took until 21 July 2020 before it could proceed to the next stage.
  2. There was no evidence of contact between the landlord and resident between 21 July and 27 August 2020, when the resident contacted it to advise that he had an appointment arranged with his mortgage lender on 16 September to start the full mortgage application.
  3. The resident contacted the landlord on 5 October 2020, to advise that there had been a problem with the mortgage application process, and that due to a change in lending criteria, the lender was no longer able to lend the full amount needed. The resident therefore wished to cancel the staircasing request. This issue appears to have been resolved quickly, as the resident emailed the landlord later that same day, advising that the lender had changed position. The lender was now able to provide the full amount required for the purchase, and the resident confirmed they wanted to proceed. The resident advised at this point that the lender was asking for an EWS1 form in order for the mortgage to proceed. It is noted that at this point, only the EWS1 itself was requested, with no mention of a covering letter.
  4. The EWS1 form was introduced in December 2019 for buildings over 18 metres high, following the Grenfell fire and government advice on building safety. In January 2020 the government issued guidance which stated that, “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 of information to act”. It added that, “The need to assess and manage the risk of external fire spread applies to buildings of any height”.
  5. Following this advice, mortgage lenders began to require an EWS1 form for buildings under 18 metres. There was no statutory obligation for landlords to carry out an EWS1 assessment. It was a discretionary and not a statutory scheme. The requirement or an EWS1 was a decision for the lenders rather than a statutory requirement, although it was based on government advice. Given the discretionary nature of the scheme, practices varied between lenders. Some lenders required the EWS1 as part of their application process, while others did not insist on the EWS1.
  6. Correspondence from the landlord dated 8 October 2020 advised that there was no current EWS1 for the property, due to the building being under 18 metres in height. As the EWS1 was required by the lender, the landlord did take steps to obtain this form. The resident requested an update on 8 October and was advised that the survey was being carried out the following week, and that the EWS1 would be issued once any remedial work identified in the survey was completed. The landlord stated at this point that from experience it would likely be weeks rather than days, before the EWS1 was ready.
  7. On the evidence available it is not clear when the EWS1 was received by the landlord. However email correspondence from the landlord dated 14 December 2020 advises that the EWS1 form had been misplaced, and that it needed a new copy. The new copy was provided by the estate manager on the same day.
  8. It is not clear when the lender received the EWS1 form, but on 22 December 2020 the lender contacted the client to request a covering letter for the EWS1. This request was passed on to the landlord by the resident. The landlord advised the resident that it had requested details for the surveyors who created the EWS1, so that they could ask for a covering letter. The evidence on file does not confirm whether this request made at this time.
  9. On 4 January 2021 the resident contacted the landlord to chase up the covering letter. The landlord responded on 5 January advising that there was no update as yet. It then emailed the surveyor a few minutes later to request the covering letter. The language used in this correspondence suggests that it was an initial request, as opposed to chasing up a previous request. It is therefore reasonable to conclude that the landlord did not make this request until the resident chased progress on it. The surveyor provided the covering letter on the same date (5 January 2020).
  10. Consideration has been given on the fact that the Christmas period covered the majority of the time between the residents requests for the letter. When the request for the letter was made on 5 January 2021 it was produced on the same day. It is therefore reasonable to conclude that, had the letter been requested on 22 December 2020, it could have also been produced promptly. It is therefore also reasonable to conclude that the landlord’s failure to request the covering letter immediately contributed towards the overall delay in the sale progressing.
  11. The covering letter for the EWS1 was sent to the lender on 5 January 2021 and confirmation of receipt was provided by the lender. The lender contacted the resident on 9 February 2021 to advise that the postcode on the EWS1 and covering letter was incorrect and needed to be amended. The resident contacted the landlord on that same date to advise and ask for assistance rectifying. The landlord contacted the surveyors the next day to request amended copies.
  12. The landlord has confirmed that it received a corrected EWS1 and covering letter by 24 March 2021. The landlord continued to chase for an amended covering letter until a second copy was provided on 14 May 2021. This led to a delay of more than seven weeks.
  13. There is no evidence to suggest what date the lender received the amended EWS1 documents, although the resident did confirm on 31 July 2021 that they now had their mortgage offer.
  14. The resident provided the landlord with a copy of the mortgage offer on 10 August 2021. There was a delay in the process, where the seller’s solicitors requested documents from the buyer’s solicitor. This request was not actioned for approximately 6 weeks. There were questions over whether the valuation of the property was still valid, given that it was carried out the previous year. However this appears to have been resolved during the delay in correspondence between solicitors.
  15. A completion date was agreed between solicitors. A query was raised over the purchase price, as a higher amount had been listed on the memorandum of sale. However this was resolved quickly and the sale was finally completed on 26 November 2021.
  16. As the sale was completed almost five months after the end of the stamp duty holiday, the resident missed the stamp duty exemption and had to pay approximately £2000 in stamp duty on completion of the purchase. There were delays on the part of the landlord, some of which have been acknowledged in the responses to the resident’s complaints. However there were also delays on the part of the lender and solicitors which also contributed to the overall delay.
  17. When the problem with the EWS1 form and covering letter was resolved on 14 May 2021, it took a further two and a half months for the resident to receive their mortgage offer. Had the EWS1 form and covering letter been correct first time, it is possible that the sale could have progressed in advance of the stamp duty rule changes. However, it is not the role of the Ombudsman to make that decision, but rather to consider how the landlord responded to the complaint raised on this issue and assess whether this response was fair in all the circumstances of the case.
  18. The landlord acknowledged that it had been responsible, in part, for the overall delay. It referred to the delay between March 2021 and May 2021 as well as the administrative error in relation to the covering letter. It also referred to other issues which were outside of its control and the fact that the mortgage wasn’t finalised until several months after this issue was resolved. This was a reasonable position to take as the administrative error was clearly not the only issue experienced by the resident in getting the property purchase progressed.
  19. The landlord did not agree to award compensation for the resident’s financial costs incurred due to the delay in progressing the sale. In all the circumstances, the Ombudsman considers that, having acknowledged that it was in part responsible for the delay, an amount of compensation would have been reasonable. This would have reflected the landlord having identified that it had been responsible, if only in part, for an issue that resulted in a financial detriment to a resident. In arriving at this conclusion, it is also relevant to note the additional delay caused between December 2020 and January 2021 that seemingly resulted when the landlord failed to pass on the request for the covering letter.
  20. The resident considers that he ought to be compensated the full amount he said he lost out on due to the delay in the sale of the property. However, such a decision would sit more appropriately with a court of law, who could determine whether the landlord had acted in a so negligent a manner that it had caused the full financial cost to the resident. In this case, the compensation ordered by the Ombudsman is intended to reflect both the landlord’s acknowledged and unacknowledged failures that contributed to the delay in the purchase of the property.
  21. The landlord has already paid the resident a sum of £500 in compensation, a figure that is consistent with the Ombudsman’s remedies guidance and the detriment experienced as a result of its failures. However, the available evidence indicates that the landlord was unlikely to have revisited this complaint and made an amended offer to try to resolve the dispute without the resident first referring the matter to this Service. As such, although no additional compensation is warranted, this is indicative of a service failure by the landlord.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme there was service failure in respect of the landlord’s handling of the resident’s application to purchase the landlord’s share in their joint ownership property.

Orders and recommendations

Order

  1. The landlord to pay the resident £500 in compensation in respect of the failures identified. It is noted that the landlord has already done so.