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London & Quadrant Housing Trust (202014712)

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REPORT

COMPLAINT 202014712

London & Quadrant Housing Trust

30 June 2022


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 response to the resident’s concerns about the block Right to Manage (RTM) company, an ‘estate separation agreement,’ and the impact on her lease.

Background and summary of events

Background

  1. The resident is a shared ownership sub-leaseholder of the landlord, a housing association. The landlord is a head leaseholder of a freeholder. This investigation understands that the building is managed by a RTM company, which has an appointed managing agent that manages the block and communal services. The landlord is billed for its share of the costs and in turn it bills the resident for her proportion of these. The terms of the sub-lease confirms the resident covenants to pay a share of charges, outgoings and expenses in respect to the premises or estate including charges related to the head lease.
  2. The Commonhold and Leasehold Reform Act 2002 makes provision for a RTM company to exercise rights in relation to the management of premises. The Act also states the circumstances in which the right ceases to be exercisable, which includes circumstances such as an agreement between parties involved or the RTM company being wound-up.
  3. The Royal Institution of Chartered Surveyors’ ‘Service Charge Residential Management Code and additional advice to landlords, leaseholders and agents’ details some best practice for the private sector, but contains an RTM section that appears more generally applicable. The Code confirms that RTM is a right for qualifying leaseholders of flats to manage the building in which they live; and that where this is acquired, the management functions transfer from a landlord to a RTM company. The Code adds that where the RTM acquires the right to manage a development with shared estate services, parties should enter into a written agreement with each other, to clarify how shared services are to be carried out; which party is to carry them out; and how costs incurred for the shared services are recovered.

Summary of events

  1. The landlord advises that in 2018, the resident agreed with a majority of other residents to form a Right to Manage (RTM) company for her block. The RTM company issued a ‘claim notice’ on 19 July 2018 to parties such as the freeholder and the landlord, informing them of their intention to acquire the right to manage the premises on 26 November 2018. The claim notice lists the resident as one of the qualifying tenants and members of the company.
  2. The resident subsequently emailed the landlord on 15 January 2021 about information that had been provided to her by the RTM company directors:
    1. She had been informed that an ‘estate severance agreement’ had been signed off or was about to be ratified; and had been informed the previous year that an ‘estate severance agreement’ would only be made available and disclosed to her when she sold her home.
    2. She raised concern whether this meant there had been an ‘estate severance agreement’ or variance to the lease of her home which could affect the her flat value when sold.
    3. She said she had never been involved in discussions or consulted about the matter by the landlord or the RTM company. She requested a copy of the draft ‘estate severance agreement’ or lease variance, and details of the landlord’s department that would have dealt with these in order to correspond with them.
    4. She asked the landlord to investigate, address and respond to her concerns, and asked if it could provide any additional support to resolve the matter due to dexterity issues and a learning disability.
  3. The resident contacted the landlord to query a lack of response to this email on 27 January 2021; re-sent the query at its request on 29 January 2021; and called it on 3 and 9 February 2021.
  4. On 17 February 2021, the resident complained to the landlord. She raised dissatisfaction with lack of written response and telephone calls from the landlord following her emails and calls, after being informed these would be forthcoming. The Ombudsman also referred the complaint to the landlord on 2 March 2021 after contact from the resident around this time, and on 18 March 2021 the landlord issued its stage one response:
    1. It said it had been clarified by the RTM company that the agreement was an ‘estate separation agreement’ between the right to manage companies of two different blocks. It said it had requested a copy but it transpired there were some outstanding points before the agreement could be finalised and sent out.
    2. It acknowledged her concern that a variance to the lease may affect her property value. It assured her that a separation agreement would not affect or vary the lease as no deed of variation had been completed or filed at the land registry.
    3. It acknowledged her query about which department would deal with the matter. It restated that no deed of variation had been completed or filed, and that it was her responsibility to seek legal advice once the agreement had been received.
    4. It said it had contacted the RTM company so that it would be privy to the separation agreement when finalised. It acknowledged the resident’s request for support and said it would facilitate communication where possible and keep her up to date with any information sent to it as the leaseholder. It noted there was a clear line of communication and process and any clarification should always be sought from the RTM company or the managing agent. It noted that its influence was limited due to the establishment of the RTM company and the move away from management by the landlord.
  5. The resident expressed dissatisfaction to this Service which the Ombudsman referred to the landlord on 29 March 2021. This included that the landlord had not acknowledged the previous contacts and formal complaint; not addressed the separation agreement’s impact on the property value; was not supporting her to obtain a copy of the agreement; had not detailed the department dealing with the agreement; had not explained differences between the current and previous RTM companies; and not acknowledged her physical health issues.
  6. On 10 May 2021 the landlord issued its final response:
    1. It said that having reviewed the complaint, the information provided had addressed the email on 15 January 2021, and this had not changed.
    2. It noted the resident’s contacts in January and February 2021 and a complaint being raised following contact from this Service. It acknowledged service failings in respect to lack of communication and delays in its response to the complaint, and detailed steps that had been taken to discuss the issues internally to improve its future service.
    3. It apologised and awarded £170 compensation for the service failings, inconvenience and time and trouble the resident experienced.
  7. The landlord informs this Service that it has been noted on the system since November 2020 that the resident has mobility issues. The internal correspondence seen by this investigation notes there is little the landlord can do until it has had sight of the ‘estate separation agreement,’ but has discussed reviewing this once it has been constructed.

Assessment and findings

  1. The Housing Ombudsman considers complaints about housing associations which relate to their housing management functions. In this case, the right to manage was acquired, which means the management function transferred from parties such as the landlord to a RTM company. This appears to limit the landlord’s involvement to some extent, since the RTM company is a separate governing body over which the landlord will have no jurisdiction. This investigation therefore mainly focuses on whether the landlord, given its remit in the case, has followed proper procedure, followed good practice, and behaved reasonably, taking account of all the circumstances.
  2. The resident’s lease is an area that this investigation understands the landlord will retain a management function, and so there is expectation that it would investigate the resident’s concerns about the impact of the ‘estate separation agreement’ on the lease.
  3. The resident contacted the landlord on 15 January 2021 with her queries and did not receive a response until the landlord’s complaint response on 18 March 2021, two months later, which was inappropriate. It was also inappropriate that it required the resident to escalate the complaint before this was acknowledged by the landlord, in its final response on 10 May 2021. However, this response appropriately acknowledged and apologised for the delays and communication issues and detailed steps that were being taken to improve future service. In addition, it awarded £170 compensation, which in the Ombudsman’s opinion is reasonable and proportionate to the service failings evidenced. This was positive and customer focused and demonstrates that the landlord sought to respond to the complaint in line with this Service’s Dispute Resolution Principles to be fair, put things right and learn from outcomes.
  4. Setting aside the delayed response to the resident’s concerns, the evidence shows that the landlord appropriately considered the concerns and set out its position on these. Based on the evidence and information available, the landlord has responded reasonably and within the boundaries of its role to concerns about the ‘estate separation agreement’ and the impact on the lease.
  5. The precise nature of the ‘estate separation agreement’ is unclear, however there appears to be two RTM companies on the estate, and the agreement appears likely to be of the type detailed at paragraph 4 of this report, intended to clarify how shared services are to be carried out and which party is to carry them out. These relate to the management of the estate, which would be outside the landlord’s responsibility since the management function transferred to the RTM company. The RTM company is a separate organisation to the landlord and the landlord would not be expected to be party to much of its decision-making.
  6. There is no evidence that the ‘estate separation agreement,’ or an agreement of the type detailed at paragraph 4 of this report, alters the resident’s lease. The RTM company and estate separation agreement appear to be separate from the lease. The lease is a legal document which would not be quick and easy to amend, and would very likely require both the resident and the landlord’s involvement to do so. The landlord’s response that the separation agreement would not vary the lease therefore appears reasonable. Further, the landlord’s lack of provision of a department involved appears reasonable, as there is no evidence the landlord has or would have involvement in the agreement, in order for it to be able to provide such information.
  7. Overall, the landlord considered the resident’s concerns and provided a reasonable response within its remit; and, in the Ombudsman’s opinion, provided reasonable redress for the delay in the response to the resident.

Determination (decision)

  1. In accordance with paragraph 55 (b) of the Housing Ombudsman Scheme, there was reasonable redress in the landlord’s response to the resident’s concerns about the block RTM company, an ‘estate separation agreement’ and the impact on her lease.

Reasons

  1. The landlord considered the resident’s concerns and provided a reasonable response within its remit; and, in the Ombudsman’s opinion, provided reasonable redress for the delay in the response to the resident.

Orders and recommendations

Recommendations

  1. The landlord to pay the resident the £170 previously offered, if it has not paid this already.
  2. The landlord to take steps to review the ‘estate separation agreement’ once this is finalised, in order to review if there are any issues of potential concern that may affect its residents’ leases.