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Longhurst Group Limited (202103507)

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REPORT

COMPLAINT 202103507

Longhurst Group Limited

31 July 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:
    1. Response to the resident’s request to buy a 25% share of a shared ownership property.
    2. Complaint handling.

Background

  1. The resident has been an assured shorthold tenant of the landlord since November 2020. The landlord is a housing association.

Policy and legal framework

  1. The landlord operates a shared ownership sales policy. At the time of the complaint, the policy said that the landlord would sell initial shares between 25% and 75%. It would determine the average share values that could be sold based on the financial viability of the scheme. It would look to maximise the initial shares sold and would take applicants individual circumstances in to consideration. It would adhere to the principles of the Homes England Capital Funding Guide.
  2. The Homes England Capital Funding Guide sets out requirements for landlords in relation to selling shared ownership properties that are funded as part of the Shared Ownership and Affordable Homes Programme (SOAHP) 2016 to 2021. The minimum initial share that could be purchased was between 25% and 75%. Landlord’s should not fix shares in advance but offer buyers a share size appropriate to their individual circumstances. It was expected that properties in a development would be sold across a range of share sizes and landlord’s must not sell all properties in a development at the same share size. It confirmed that it was reasonable that landlord’s would have a target average share size across all properties within a development.
  3. The landlord’s sales progression procedure lists the first stage as an ‘initial enquiry’ and on receipt of this, it will issue the application form and reservation form to be completed. On receipt of these, it will carry out an affordability assessment and if approved issue the ‘acceptance letter’ and ‘intention to proceed form’. On receipt of the intention to proceed form a reservation fee is also payable.
  4. The landlord’s complaints policy at the time set out a two stage process where it committed to respond to stage one complaints within ten working days and stage two within 20 working days. At stage one of the process it committed to make contact within two working days to discuss the complaint, agree a preferred method of contact and confirm a date when further feedback would be given. At stage two of the process it committed to make contact within two working days of the escalation request “to seek clarification and gain further information and evidence (where appropriate)”.

Summary of events

  1. On 3 March 2021, the landlord provided information on a new shared ownership development with properties for sale. It said that initial shares between 45% and 75% were available to buy.
  2. On 15 March 2021, the resident asked if the landlord would agree to her buying a 25% share of one of the three bedroom properties on the development. The landlord replied that it could not offer her a 25% share of the property and the lowest share it could offer was 35%. It also suggested some other developments for her to consider.
  3. On 18 March 2021, the resident made a complaint to the landlord about its decline of her request to buy a 25% share of the property identified. She said that Homes England guidance stated that initial shares could be between 25% and 75% and asked why she could not be offered a 25% share. She asked the landlord to put a hold on the sale of the property while it looked into this matter. The landlord acknowledged the complaint in writing four days later.
  4. The landlord spoke to the resident on 31 March 2021, and agreed an extension for its complaint response to give it time to answer some additional points raised, which were:
    1. It had not completed a financial assessment for her or considered her future affordability plans.
    2. She had not been given other options.
    3. The sale of the property she had expressed an interest in buying had not been put on hold as requested.
  5. On 8 April 2021, the landlord provided its stage one complaint response, which said:
    1. It could not sell properties at this development at the minimum share value of 25% because of its financial requirements and targets. While it had said shares lower than the launch percentage of 45% were available, it had never specifically mentioned 25%. It always considered buyers financial circumstances when assessing applications and where possible would offer lower shares but this has to be balanced against its financial requirements and targets.
    2. While Homes England guidance said that shares between 25% and 75% should be offered, it was not obligated to do so. The guidance also did not say when differing share sizes should be offered. It initially advertised shares in line with what it needed to sell to meet its financial requirements and targets. It assessed demand once it started to sell properties and would reduce the shares on offer, where it needed to generate further sales.
    3. A financial assessment had been carried out for her in August 2020. Applications could only be considered based on finances at the time of the application and not future affordability plans.
    4. The sale of properties could not be put on hold for enquiries, only where an application had been received.
    5. It provided other options of properties to consider and committed to provide  her with ongoing help to buy a property.
  6. On 10 April 2021, the resident asked to escalate her complaint to stage two for the following reasons:
    1. It had not followed its complaints procedure.
    2. Information it had provided regarding the shares available was misleading. It had invited contact to discuss lower shares but not given specifics of what it would agree.
    3. She had applied for the property in question, not just enquired.
  7. On 12 May 2021, the landlord provided its stage two complaint response, which said:
    1. It had not fully followed its complaint process as it had failed to contact her within the committed two days, not agreed a preferred method of contact or agreed timeframes for updates. It apologised for this and confirmed that staff training would be provided.
    2. It had said it might be able to offer a lower share, not that it could and only committed to look in to this, which it had done. It confirmed that it had offered her a lower share in another property and the sale of this was progressing.
    3. It had not received a full application for the initial property identified, which included completion of an application form and provision of supporting documents.

Assessment and findings

Scope of investigation

  1. The resident made complaints to the landlord in July and August 2020 regarding its handling of shared ownership reservations and a rent to buy application. Neither of these complaints completed the landlord’s internal complaints procedure and for that reason, these issues fall outside of the scope of this investigation.
  2. The resident has told this service that the landlord’s handling of this matter has had a negative affect on her mental health. The Ombudsman does not doubt the resident’s comments; however, it is beyond the remit of this service to make a determination on whether there was a direct link between the landlord’s actions and the resident’s health. The resident may wish to seek independent advice on making a personal injury claim if she considers that her health has been affected by any action or failures by the landlord. While the Ombudsman cannot consider the effect on health, consideration has been given to any general distress and inconvenience which the resident experienced as a result of any service failure by the landlord.

Response to the resident’s request to buy a 25% share of a shared ownership property

  1. When the resident asked to buy a smaller share of the property than had been advertised, the landlord responded quickly that it could not agree to this. While frustrating for the resident, in the Ombudsman’s opinion, this was a reasonable response. The Homes England guidance said that initial shares should be offered between 25% and 75% but did not mean that the landlord had to agree to sell the property at the lower share size. The Homes England guidance acknowledged that landlord’s would have a target average share size within a development and in this case, the landlord explained the reason for this was due to its financial requirements and targets. It is understandable that the landlord would have financial targets in respect of new developments and while 25% shares could be offered, it may not always be financially viable for it to do so. Ultimately, this is a decision for the landlord to make and while upsetting for the resident, it is the view of the Ombudsman that this was reasonable.
  2. The resident felt that she was misled by the landlord as it had invited contact to discuss buying a lower share than advertised but then refused her request. While frustrating for the resident, it was appropriate for the landlord to invite contact from prospective buyers to discuss this as in some circumstances, it may have been able to agree to sell a lower share value. The resident said that the landlord should have been clearer about what it would or would not agree to; however, without knowing the circumstances of what would be asked, this could have been overly complicated and restrictive and so it was reasonable that it invited contact from people to discuss this so it could assess each individual request as it committed to do within its sales policy.
  3. The landlord explained that it would reassess the shares on offer after receiving some reservations and sales, which was a reasonable approach to take. It is understandable that the landlord would want to sell the properties at the maximum share value in order to meet its targets and so would not want to lower the initial share values before assessing the demand.
  4. The resident asked the landlord to hold the property but it did not do this and said this was because she had not made an application, only an enquiry. In the Ombudsman’s opinion, this was a reasonable response. The resident said that she did make an application; however, the landlord advised that no application form or supporting documents had been provided. The landlord’s sales progression procedure is clear that the initial contact is considered an enquiry and that there is a formal application process involving forms to be completed, an affordability assessment and payment of a reservation fee; all of which are reasonable requirements in respect of an application to buy a property. As the resident did not do any of these things, it is reasonable that the landlord did not consider her request to be a formal application, only an enquiry and so did not hold the property for her. While reasonable that it did not hold the property for her, it could have been clearer that it would not do this and its reason at an earlier stage. The resident asked the landlord to hold the property on 18 March 2021 but it wasn’t until 8 April 2021 that it explained why it had not done this.
  5. Overall, there was no maladministration in the landlord’s response to the resident’s request to buy a 25% share of a shared ownership property.

Complaint handling

  1. The landlord responded to the residents stage one complaint in 15 working days, which was over its committed response time; however, it made contact with her on day 10 to agree an extension, which was appropriate. Its reason for agreeing the extension was to consider additional points raised by the resident; however, had it made the initial telephone call within 2 working days as is committed within its policy, the resident would have had the opportunity to raise these issues earlier. Had she been given this opportunity, the landlord would have been in a position to provide its response within the committed timeframe, rather than needing an additional 5 days. While understandably frustrating for the resident, the delay in the final response being issued was minor and she was kept informed about this, which was appropriate.
  2. The landlord acknowledged in its stage two response that it had not fully followed its complaints process, which was appropriate. It apologised for this and committed to provide staff training, which was reasonable and in line with the Ombudsman’s dispute resolution principles to put things right and learn from outcomes.

Determination (decision)

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was no maladministration in respect of the landlord’s response to the resident’s request to buy a 25% share of a shared ownership property.
  2. In accordance with paragraph 53(b) of the Housing Ombudsman Scheme, the landlord has made an offer of redress in relation its complaint handling which, in the Ombudsman’s opinion, resolves the complaint satisfactorily.

Reasons

  1. While frustrating for the resident that the landlord did not agree to her request to buy a 25% share of the property, its decision was reasonable and in line with Homes England guidance. The landlord was entitled to make offers and progress sales based on its financial requirements and targets and to reassess the shares on offer based on demand. It invited contact from people to consider lower shares, which was reasonable and allowed it to consider the individual circumstances of each request as is committed within its sales policy. It did not treat the resident’s enquiry as a formal application and so did not hold the property for her, which was reasonable as she had not completed an application form, provided supporting documents or paid a reservation fee.
  2. The landlord acknowledged that it did not fully follow its complaints process. It put things right by apologising to the resident and identified learning.