Irwell Valley Housing Association Limited (201909821)

REPORT

COMPLAINT 201909821

Irwell Valley Housing Association Limited

15 December 2020

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 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

This complaint is about the landlord’s handling of the resident’s application to purchase her property under the Right to Acquire (RTA) scheme.

Background and summary of events

The resident has an Assured Tenancy with the landlord, which started on 17 June 2013, for a three-bedroom house (‘the property’).
The landlord’s correspondence shows that the resident made an enquiry on 27 September 2017 about making a RTA application. This was considered by the landlord on 13 November 2017 and the checklist provided by the landlord shows that the property was eligible for RTA, but it is not clear from this document what checks were carried out by the landlord to establish eligibility. The landlord responded to the resident’s enquiry on 14 November 2017 and stated that “I am pleased to advise that following checks on your tenancy you are eligible for the Right to Acquire, however I must advise that we cannot proceed with a Right to Acquire application as there are arrears on the tenants rent account”. There is no further correspondence on this enquiry.
The landlord’s records show that on 31 January 2019 the resident requested a RTA application pack, which was sent to her. The landlord received the completed RTA application back from the resident on 25 February 2019.
On 7 March 2019 the landlord carried out an interview with the resident to go through the application. On 3 May 2019 the landlord instructed a surveyor to do a valuation report on the property. The property valuation was done on 16 May 2019. The resident has said that she was informed by the landlord that it would take about a month to complete the application process and send out the formal offer letter.
The resident chased the landlord for an update on 17 June 2019. The resident has said that the landlord told her it was still in the process of collecting all the relevant information it needed before sending out the formal offer letter.
The resident contacted the landlord again on 5 July 2019 for an update and the landlord stated that it was having some technical issues with its paperless system which was causing the delay.
The resident chased the landlord on 22 July 2019 and was told that the officer dealing with her application needed to speak to a manager to get the formal offer finalised. The resident was assured that this would be done within a few weeks.
On 16 August 2019 the resident contacted the landlord for an update. The landlord advised her that Director-level approval had been sought and that the formal offer would be sent out by the end of August.
The resident contacted the landlord on 3 September 2019 for an update and the landlord said that it was having operational difficulties but was hoping to send out the formal offer by mid-September. The resident chased again on 17 September 2019 and was advised again that there were still some operational issues and that all offers were still being worked on in date order.
On 3 October 2019 the landlord informed the resident that the formal offer was being finalised and the paperwork would be sent out that week. As she had not received the paperwork, the resident contacted the landlord on 9 October 2019 and was told that it needed to finalise some last bits of information.
The landlord’s records show that on 10 October 2019 a meeting was held by senior staff at the landlord to discuss the resident’s application. It was decided at this meeting that the property was not eligible for the RTA scheme as it had been purchased by the landlord using Recycled Capital Grant Funding (RCGF).
On 15 October 2019 the landlord sent the resident an email confirming its decision to decline her RTA application. It stated that the property did not qualify for the Right to Acquire:
1. Under government rules (regulated by Homes England), a property must be funded by Social Housing Grant (SHG), Social Housing Assistance (SHA) or Disposal Proceeds Fund (DPF) on or after 1 April 1997. The property you occupy was acquired in March 2013 using Recycled Capital Grant Funding (RCGF) and therefore it does not qualify for the Right to Acquire.
2. [The landlord] apologise sincerely for any inconvenience caused and we have amended our procedures going forward to ensure that the issue does not arise again.
The resident was unhappy with this outcome and sought assistance from her local councillor, who wrote to the landlord on 16 October 2019. The landlord responded to the councillor on 18 October 2019 to explain its decision as follows:
1. It appears the property itself is situated on an estate that was subject to stock transfer from […] City Council in March 2000 and therefore would have been eligible for Right to Acquire under The Housing (Right to Acquire) Regulations 1997. However, the property was bought by the then tenant from [the landlord] Housing Association in 2001 which then took this property out of public stock and into the privately owned market. The property was purchased back into [the landlord’s] stock in 2013 using funds from the Recycled Capital Grant Fund (RCGF) making it ineligible for the Right to Acquire scheme.
2. It apologised for its error and said that ‘this particular property was unusual in having been already acquired through RTB and purchased back again. It was only through more detailed diligence, which would only be done at the application stage that the unusual status of this property was revealed’.
3. It confirmed that it would be reviewing its process to prevent this happening again. But in this case, ‘as a public body we have to act within the rules set out within The Housing (Right to Acquire) Regulations 1997 and by allowing [the resident] the Right to Acquire we would not be doing this’.
Following further correspondence between the councillor and the landlord, the resident formally logged a complaint with the landlord on 12 November 2019. As part of her complaint, she set out her suggestions for redress, which were:
1. Allow her to purchase this property.
2. Allow her to purchase another property at the same price as this one.
3. Relocate her to an area of her preference.
4. Pay £10,000 as deposit for another property purchase.
The landlord issued its Stage 1 response on 4 December 2019:
1. It apologised for the delay in making a decision on the RTA application, and it said that this was in part due to significant changes in the organisation which impacted upon staffing capacity and working practices.
2. It explained the reasoning for declining the RTA application, which was that it had discovered during the application process that the property had been purchased by the landlord using funds that made the property ineligible for the RTA scheme.
3. It said that it had made changes to its processes in light of the issues in this case.
4. It offered £100 compensation for the service failures.
5. It had considered the alternative redress options suggested by the resident and had concluded that they were not feasible.
6. It said it would consider reimbursement of any out of pocket expenses incurred as a result of the application e.g. legal costs.
The resident requested that the complaint be escalated on 15 December 2019. The landlord’s records show that it carried out a review of the complaint and it was re-confirmed that it had made an error in not realising early on in the application that the property was not eligible for RTA. It accepted that a mistake had been made, but it could not override the fact that the property was not eligible for RTA.
The landlord issued its Stage 2 response on 13 January 2020:
1. It accepted that it had made a ‘significant error’ in its handling of the RTA application and that it had led the resident to believe, for about eight months, that she would be able to purchase the property. It acknowledged that this was an ‘impactful mistake’. However, it cannot change its decision on the RTA application as the rules of the scheme are set by legislation and the landlord cannot override this.
2. As the property was not eligible for the RTA scheme it could not allow the resident to purchase it.
3. It said that the resident could apply for a transfer to another property, but it could not guarantee that the new property would be eligible for RTA or what the purchase price of the new property would be.
4. It said the resident could apply for a transfer to her preferred area for family reasons but her preferred area was in very high demand and had very low turnover, and as allocations are done based on need, it was likely that there would be a long wait for a property.
5. As it was a social housing landlord, it was not responsible for supporting its tenants’ with their deposits to purchase their homes, and as it had a charitable status it was not able to make a payment of £10,000 to her.
6. The landlord did however increase its compensation award to £800 on the basis that the application had been under consideration for approximately eight months.
The resident remained unhappy and requested that the complaint be escalated on 17 January 2020. Following this request, the landlord carried out another internal review of the complaint and also undertook a conference call on 17 February 2020 between the resident and a senior staff member.
The landlord issued its final complaint response on 20 February 2020:
1. It upheld the earlier Stage 1 and Stage 2 responses and apologised for the service failure and acknowledged the impact this had had on the resident. It reiterated its offer of £800 compensation.
2. It reiterated its reasons why it was not able to agree to the resident’s alternative redress proposals and said the resident remained able to ask for a transfer or use the Home Exchange service.
3. It said that it had sought legal advice and whilst it had led the resident to incorrectly believe that she could use the RTA scheme, it was not liable to accept the application as no formal legal contract had been entered into.
4. It reiterated its offer to reimburse any fees (such as valuation costs) the resident may have incurred as part of the application.
On 13 March 2020 the resident contacted this Service to purse her complaint further, and she advised the Ombudsman that “I believe, I should still be allowed to purchase my home but through a series of errors by my landlord I have been denied”

Assessment and findings

Policies, procedures, and agreements

Tenancy Agreement:

“ln certain circumstances Assured Tenants may have the Right to Acquire. Your Neighbourhood Officer will tell you if you have this right.”

RTA procedure:

The RTA procedure that was in force at the time of the resident’s application sets out what the landlord should have done:

Tenant makes an enquiry for RTA. This is logged. The action is then forwarded on to Finance who will check the relevant systems to determine whether the resident is eligible for the RTA. This can take up to 5 working days to check.
Finance will respond via e-mail to advise whether the tenant is eligible or not. If eligible, then the tenant is sent the RTA1 application pack.
Sales and Leasehold Team will send a report to the relevant Neighbourhood Manager to complete. The Neighbourhood Manager will need to check to see if the tenant has any previous tenancies that may impact on their RTA.
Once RTA1 application is returned the Sales and Leasehold Team have five working days to contact the tenant to carry out a home visit. Once the home visit has been completed. The Sales and Leasehold Team will instruct surveyors to carry out a valuation of the property.
The Sales and Leasehold Officer will then prepare the RTA3 form. This form advises the tenant of the value of the property and how much of a discount they are entitled to and the discounted price the property is to be offered at.
The RTA3 along with all supporting documentation needs to be passed to a Managing Director to be signed off. Once completed the formal offer letter is then issued to the tenant.
The tenant then has 12 weeks to decide whether to accept, and if so, the formal legal conveyance process then begins.

Although not specified in the procedure, the legislation states that landlord has to inform the tenant of its decision on the application within eight weeks.

Compensation policy:

“Where we have failed to meet our agreed service commitment leading to a poor customer experience, discretionary compensation may be awarded. This will be assessed on an individual basis and through the investigation of a formal complaint.
“Compensation can be awarded up to a maximum of £100 and should include the cost of telephone calls, visits, postage and time spent resolving issues.

Landlord’s handling of the RTA application

The Ombudsman’s role is to consider whether the landlord’s handling of the RTA application was in accordance with its policies, procedures, and any agreements it has with the resident, and whether it acted reasonably, taking into account what is fair in all the circumstances of the case.
The resident’s considers that the landlord ought to take responsibility for the poor handling of her RTA application and it should compensate her for what she describes as its ‘life changing’ decision to decline her application.
It is not disputed that the landlord has clearly made significant errors in its handling of the RTA application. The critical criteria of whether or not the property was eligible for the RTA scheme was not checked correctly at the outset of the application. Matters have also been made worse by the fact that the landlord had several opportunities, over several months, to review the application and check eligibility through the application process, but it failed to do so.
The impact on the resident, as demonstrated by her correspondence with the landlord and her supporting statements to the Ombudsman have been duly noted. The outcome the resident is essentially seeking is that the landlord should face more severe consequences for its error. However, the role of the Ombudsman is not to punish or penalise the landlord for its errors, and as we are an alternative to the courts, we operate differently, and we do not award punitive damages or other such financial penalties like a court would.
The landlord has demonstrated in its complaint responses that it has formally acknowledged its service failures with regards to its handling of the RTA application and the unreasonable length of time taken to make its decision. It has duly apologised for these service failures and has offered compensation in recognition of its errors.
The issue the Ombudsman needs to consider is whether or not the landlord’s apology and offer of compensation is reasonable. The resident has said that she has been left in a worse financial position as a result of the application being declined and she would like the landlord to put her in the position she would have been had she been able to acquire her current property.
Looking at the facts of the case, whilst the resident’s points are noted, there is no evidence that the resident has incurred any out of pocket expenses or other financial costs associated with the RTA application. The Ombudsman understands that the property is not eligible for the RTA scheme, and the landlord’s error does not change this. The fact remains that the resident was not entitled to purchase this property and the landlord is not obligated to facilitate the purchase of this property, or any other property.
The service failure on the part of the landlord was that it took some eight months from when it received the completed application pack for it to realise that it had made an error about the eligibility criteria. During that time the resident was given to understand from the landlord that the application was proceeding and she would be able to purchase the property. The resident was given a clear and reasonable expectation that she would be able to purchase the property under the RTA scheme. But the fact remains that the correct position is that she was never eligible to purchase the property under the RTA scheme. As mentioned above, this should have been picked up on much earlier in the process.
The redress offered by the landlord cannot override the fact that the property is not eligible under the RTA scheme. The landlord (nor the Ombudsman) cannot change the RTA scheme rules or criterion that are set in legislation. Having said that, the Ombudsman expects that any redress should recognise that the resident was given incorrect advice, and was led to believe, for eight months, that she was going to be able to purchase the property. Her hopes and expectations had been raised, and the redress should also recognise the disappointment and distress that would have been caused to the resident as a result of those hopes and expectations being diminished through no fault of her own.
In addition to the distress, the redress should also recognise any actual financial detriment caused by the error, and this should be recompensed so that the resident is put back, at least in financial terms, in the same place she would have been in had no error occurred.
The landlord has offered redress for its service failure and has agreed to pay £800 compensation and reimburse any costs incurred by the resident (such as the cost of getting a valuation report). This is based upon the landlord’s compensation policy and takes into account the eight months it took to decide the application. In addition to considering the landlord’s own compensation policy, the Ombudsman has also taken into account our Dispute Resolution Principles (be fair, put things right and learn from outcomes) and our published Remedies Guidance.
The ‘Remedies Guidance’ explains that where there have been service failures by the landlord, if the landlord has recognised the failures itself and has taken appropriate action to put this right, including offering reasonable compensation, then the Ombudsman will not necessarily require that the landlord do anything more. One of the factors that the Ombudsman considers is whether the redress is proportionate to the severity of the service failure by the landlord.
In this particular case, having considered the available evidence, the Ombudsman is of the view that the compensation offered by the landlord is reasonable and proportionate. While the resident’s requests for alternative redress have been noted and considered by the landlord, the Ombudsman considers that these options do not represent a reasonable or proportionate response to the service failure in this case.
The RTA scheme (and other similar schemes) are subject to legal rules and regulations and governed by legislation, and as such, the Ombudsman has no authority over housing allocations and we cannot order the landlord to transfer the resident or offer her another property to purchase. It is also noted that the resident remains able to request an internal transfer or use the Home Exchange process as explained by the landlord.
On a final note, the resident has said that she has spent money on redecorating the property over the years, and that this was done so on the understanding that she would one day eventually purchase the property, and she wants this to be taken into account when considering compensation. The decision to redecorate, and/or otherwise spend money on the property, is for the resident to make and is not dependent upon any binding agreement from the landlord about the eventual purchase of the property via the RTA scheme. It is acknowledged that the resident has said that the landlord’s decision has meant that the money spent on redecorating has been wasted as such, but this was a decision the resident made at the time on the assumption and belief that she would one day eventually own the property, but it is not possible to hold the landlord responsible for such costs retrospectively.
In addition to the redress, the Ombudsman’s role is also to ensure that when things have gone wrong, that the landlord has recognised this and has learnt from its mistakes. Looking at the landlord’s updated RTA application procedure it can be seen that it has clearly taken proactive action and has taken on board the learning from this case. Its new procedure makes it expressly clear that checks should also be carried out to ensure that the property is eligible for the RTA scheme, including checking the funding used to purchase the property. This was not as clear as it ought to have been in the previous procedure that was in force at the time of the resident’s application.

Determination (decision)

In accordance with paragraph 55(b) of the Housing Ombudsman Scheme the landlord has made a reasonable offer of redress in respect of its handling of the resident’s application to purchase her property under the Right to Acquire scheme.

Reasons

The landlord acknowledged the resident’s concerns and investigated the matter appropriately and sought legal advice. It recognised that its handling of the matter fell below it service standards and that it had had a detrimental impact on the resident. This was recognised and acknowledged appropriately during the complaints process. It apologised for the service failure and it has accepted responsibility for this. It has offered compensation which the Ombudsman considers to be reasonable and proportionate redress for the service failure.