Newlon Housing Trust (202100887)

REPORT

COMPLAINT 202100887

Newlon Housing Trust

13 September 2021

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 the landlord’s:
1. Response to the resident’s request for an EWS1 form and works start dates.
2. Response to the resident’s request to reimburse the fees she incurred in relation to the sale of her property.
3. Complaint handling.

Background and summary of events

Background

The resident is a shared owner of the property, a flat in a block, which the complaint concerns.
Advice Note 14 (AN14) was issued by the Government in December 2018 as part of its Building Safety Programme. In summary the advice was for owners of high-rise leaseholder buildings where the external wall system of the building did not incorporate Aluminium Composite Material (ACM). The advice set out checks which owners could carry out to satisfy themselves, and their leaseholders, that their building was safe. This guidance was consolidated in ‘Building Safety Advice for Building Owners’, issued in January 2020. Paragraph 1.4 of this guidance states “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 or information to act”.
In response to the guidance some lenders took the view that, if certification could not be provided to demonstrate compliance with the Government’s guidance on fire safety, they would be unwilling to offer a mortgage on properties within these buildings as they would have a value of £0.
In December 2019, the Royal Institution of Chartered Surveyors (RICS), The Building Societies Association (BSA), and UK Finance agreed a new industry-wide valuation process to help people buy and sell homes and re-mortgage in buildings above 18 meters (six storeys). Form EWS1 was introduced to prove to lenders that external cladding had been assessed by an expert.

Summary of events

In 2017, the landlord wrote to residents and confirmed that aluminium composite material (ACM), limited to panels above some walkways, was removed from the building.
On 24 May 2019, the landlord wrote to residents and explained that in line with government guidance it was assessing the cladding on its tall buildings, which this Service believes will have been part of its response to AN14 as set out in Paragraph 3 of this report. The landlord confirmed that an assessment of the resident’s building had identified cladding materials not deemed to be of limited combustibility, and that materials of possible concern were cementious panels, foam insulation and high pressure laminate panels. The landlord advised it needed to reassess the cladding’s fire performance and, depending on the outcome, it was possible some or all of the cladding would need to be replaced. It advised that it did not believe the risk of fire had increased but there was concern about possible spread of fire between flats in an unlikely event of a serious fire reaching the cladding and, as a precaution, fire marshals would patrol the building 24/7 until further notice. It provided details of a drop in surgery and an email address for residents who had concerns and questions.
In December 2019, the resident put the property on the market after paying resale instruction and valuation fees to the landlord. On 28 January 2020, she then accepted an offer to purchase the property from a buyer, and solicitors were instructed the following day.
On 19 February 2020, the landlord wrote to residents and explained it had commenced a programme to assess the external cladding, insulation and fire stopping at the building, which this Service understands will have been the reassessment referred to in Paragraph 7 of this report. The landlord advised it would contact residents again if remedial works were required and in the meantime, would continue to provide a 24/7 fire warden service. It advised it was aware some leaseholders had encountered difficulties trying to sell, staircase or re-mortgage properties, due to the government’s Advice Notes and lenders’ requests for additional information, including a new EWS1 form to confirm a building’s fire safety. It advised it did not know exactly when an EWS1 form for the building would be received however, as soon as it was, residents would be contacted.
On 23 March 2020, the resident and buyer made cladding and fire safety enquiries, following which the landlord supplied a Fire Risk Assessment and, referring to its February 2020 correspondence, stated it did not know exactly when it would receive the EWS1 form.
On 16 April 2020, after contacts from the resident expressing concern her buyer required the EWS1 form to secure a mortgage, the landlord updated the resident that the form and a ‘qualifying statement’ was expected in up to four weeks, following an invasive inspection of external wall systems on the building which had been carried out.
On 4 May 2020, the information provided advises that the landlord supplied the resident and the buyer with the EWS1 form, and an accompanying statement which this Service has not seen. The EWS1 form advised that combustible materials were present in external walls and that an adequate standard of safety was not achieved.
The same day, the landlord wrote a letter to residents of the block which advised:
1. The external cladding was confirmed to be non-compliant and it was working with consultants to produce a plan for necessary works. There was not an exact timescale, however based on previous experience and the Covid-19 pandemic, it was likely works would take a year to commence then 12 to 18 months to complete.
2. There was currently no plan to recharge residents for fire safety remedial works nor had they been charged for the ongoing cost of a fire warden service, however there could be no guarantee costs would not be passed to leaseholders as the scale of works were yet to be determined.
3. Works had already been completed to remove ACM and for internal fire stopping measures, and the ongoing fire warden patrol and strategy for the building meant there were no additional fire safety risks.
4. The EWS1 form and supporting statement for the block would be supplied to residents who had corresponded about property sales, and would be useful to buyers and lenders, however it was difficult to know the impact on their decisions since works were needed.
The landlord advises a letter was supplied to lenders which included the information in Paragraphs 13 a. and b.
On 29 June 2020, the resident complained to the landlord about the ‘horribly managed process.’
1. She advised that after contacting the landlord for guidance, she had put the property up for sale in December 2019, and had paid valuation and legal fees. She explained her buyer could no longer proceed as lenders were unwilling to offer a mortgage without more specific information, which the landlord was not in a position to provide.
2. She was unhappy that the landlord had been unable to say when the EWS1 form would be available and that this was chased several times. She was unhappy that when the EWS1 form was provided, no information about when remedial works would commence was supplied, which was a critical lender requirement.
3. She was unhappy that after she had raised concern, the landlord had directed her to its website which informed of risks putting homes on the market. She reported that this was only published in March 2020, three months after her sales process started.
4. She advised she lacked information on what remedial work the landlord was doing; lacked a target date for when she could sell the property; and requested the landlord reimburse her costs which amounted to £3,900.
On 13 July 2020, the landlord issued its stage one response.
1. It advised that following the Grenfell fire it was required to review its taller buildings above 18 metres for ACM cladding. It explained it did this within a short period and at the resident’s block identified some limited ACM cladding, which it put in place works to remove and replace. It advised that in its experience this did not affect people’s ability to sell their homes.
2. It advised that the government subsequently issued advice notes and made changes to building regulations, and lenders’ responses to these had made it harder for people to sell their homes.
3. It advised that from late summer 2019, people started to experience problems with sales, and it appointed specialist fire safety engineers to provide certified statements for lenders which stated the position of buildings in relation to AN14 (referenced in Paragraph 3 of this report). It advised that in many instances this was enough to allow sales to progress, even if a building needed remedial works or had not been inspected, and where sales fell through, it was not necessarily aware if this was due to fire safety compliance issues.
4. It advised that the introduction of an EWS1 form to standardise information about building fire safety compliance caused issues for property sales. It explained these required sign off by specialist fire engineers, who would not sign off a building as compliant if it was not inspected or required remedial works under AN14. It explained the limited number of qualified engineers meant it did not exactly know when these would be completed for individual buildings.
5. It advised that once it became aware lenders were requesting EWS1 forms and this was causing problems with property sales, it wrote letters to residents at all buildings where it was carrying out investigations or had started remedial works, in which it updated on fire safety works and inspections; explained that it was aware people could be experiencing difficulty with property sales; and set out support it could provide such as allowing subletting.
6. It provided a timeline of the resident’s communication with its property sales team which it advised showed it had been as responsive as possible in providing requested information, including that an EWS1 form and statement was supplied to parties on 4 May 2020 after being requested on 23 March 2020.
7. It advised that it had supplied the EWS1 form when received and was unable to reimburse the resident’s £3,900 in costs, as how the form was used when processing a mortgage application was out of its control. It also advised it could not advise of a target date for when the resident could sell the property.
On 28 July 2020, the resident requested escalation of the complaint.
1. She advised that the landlord did not provide information at the beginning of or during the sales process that it was in the process of following any regulatory guidelines to remove cladding from the building, or that this was presenting an issue to buyers and sellers.
2. She advised that when she raised concern to the landlord about when the EWS1 form and works details would be provided, she was informed selling the property was at her risk and referred to a web page only published in March 2020.
3. She advised that when the landlord was able to provide clearer details she would need to start the process again and incur similar fees. She requested the landlord to reimburse fees as it was aware of the status of the building and the work required, and did not provide further details requested by lenders such as tentative timescales and works start dates, which led to the sale falling through.
On 19 October 2020, the landlord confirmed to the resident that the complaint would be reviewed by a panel on 23 October 2020.
On 10 November 2020, the landlord issued its final response.
1. It noted the resident’s complaint that an absence of information contributed to lost conveyancing fees, and that a main point was that at the start of the decision to sell in December 2019, she felt insufficient information was made available by the landlord.
2. It advised that the information provided in the stage one response showed the landlord responded in a frequent and timely way, and it referred to communications it sent in 2017, 2019 and 2020 which it advised demonstrated it had supplied information before the resident decided to sell the property. It included correspondence from 2019 and 2020 with its response, referred to in Paragraphs 7 and 9 of this report.
3. It advised that it was not liable for the decision to sell that the resident made independently and with expert advice from selling agents and solicitors, and advised that it did not agree for a refund of her conveyancing fees.
4. It acknowledged that the complaint had overrun the target timeframe and awarded £25 in recognition of this.
On 12 April 2021, the resident brought the complaint to this Service. She complains that she was now stuck at the flat without a sale target date, had incurred losses of £3,900, and received a delayed response to the complaint. She advised the landlord should reimburse her, provide clear details about plans to rectify the cladding, and waive its costs when the process for the sale of the flat starts again.

Assessment and findings

The Ombudsman’s internal guidance for caseworkers considering complaints about cladding sets out that, as the Government’s expectations in relation to cladding and fire safety are only detailed in guidance, there is an element of discretion for a landlord as to how and when it chooses to comply with it.
The Ombudsman’s guidance further sets out that when investigating a complaint relating to the Government’s guidance on fire safety and cladding the Ombudsman will consider the following points:
1. What are the landlord’s long-term plans for compliance with the guidance and are these fair and reasonable?
2. How has it communicated with shared owners/leaseholders regarding the situation and was this communication appropriate?
3. How has it responded to the individual circumstances of the leaseholder?
These points will be considered when assessing whether the landlord’s actions and response to the complaint were fair in all the circumstances.

The landlord’s response to the resident’s request for an EWS1 form and works start dates.

As the Government’s expectations in relation to cladding and fire safety are detailed in guidance, there is an element of discretion for a landlord as to how and when it chooses to comply with it. It is clear from the landlord’s correspondence that it is taking steps in order to comply with the Government’s guidance in respect of the building. The evidence shows that the landlord has done so by inspecting the building in February 2020 and committing to completing the remedial work identified. In addition, prior to this, following an assessment circa May 2019 the landlord arranged a waking watch at the building as a precaution. In the Ombudsman’s opinion this is appropriate as, while the guidance is not a legal requirement, it has been established as best practice in relation to building safety, and the landlord has taken reasonable action to mitigate and manage the risks identified until such time that the risks are resolved and a further EWS1 form required by lenders may be issued.
The Ombudsman notes the resident’s concern regarding communication and delay providing the EWS1 form, and notes that the landlord provided an EWS1 form on 4 May 2020 after being requested on 23 March 2020. The EWS1 form took just over a month to be provided which was sooner than the landlord anticipated on 16 April 2020, when it informed the resident it may take up to four weeks. As communicated by the landlord at Paragraph 9 of this report, and also set out at Paragraph 16 d, the Ombudsman is aware there is a limited number of qualified engineers, which means timeframes to produce an EWS1 form can be longer than experienced in this case. In the Ombudsman’s opinion, the communication and timeframe was reasonable as there is no evidence that the landlord communicated unreasonably or unreasonably delayed in supply of the EWS1 form.
The Ombudsman notes the resident’s concern regarding lack of clear information about works start dates. The information provided advises that on 4 May 2020 the landlord provided estimates that works would likely take a year to commence then 12 to 18 months to complete. The Ombudsman has not seen any evidence that the landlord possessed clearer information than this, or that it is unreasonably delaying in commencing works. The Ombudsman is aware that the situation is challenging, landlords are taking a risk-based approach when prioritising works, and notes that the timeframe the landlord provided reflects a timeframe specified in a report from its independent experts. In the Ombudsman’s opinion therefore, the landlord appeared reasonable to advise it could not advise of a further target date for when the resident could sell the property, as in correspondence it appeared to have supplied the most current timescales it possessed.

The landlord’s response to the resident’s request to reimburse the fees she incurred in relation to the sale of her property.

The landlord refused the resident’s request to reimburse any costs that she had incurred in relation to the sale of the property. The landlord has explained that this was because:
1. It previously supplied information to residents in respect of the fire safety of the building.
2. It was not liable for the decision to sell that the resident made independently.
3. How information such as the EWS1 form was used when processing a mortgage application was out of its control.
The Ombudsman notes that the resident advises she felt insufficient information was made available by the landlord when she took the decision to sell in December 2019.
The Ombudsman notes that in May 2019, the landlord informed residents that in line with government guidance it was assessing the cladding on its tall buildings, and an assessment of the resident’s building had identified cladding materials not deemed to be of limited combustibility. This Service believes this will have been part of its response to the Government’s Advice Note 14 (AN14) as set out in Paragraph 3 of this report. The Ombudsman notes that the impact of AN14 on mortgage applications was not immediately known following the introduction of the guidance, and some lenders continued to offer mortgages despite a building not being compliant, and so it does not appear unreasonable that the landlord’s May 2019 correspondence omitted reference to potential difficulties. While this is the case, it may have been reasonable and customer focused for the landlord to have included more detailed explanation about AN14 or to have provided an update earlier than its next update in February 2020, nine months later.
The Ombudsman notes however that the impact of the guidance on mortgage applications was widely recognised within the housing sector by mid–2019, and as set out at Paragraph 16 c. of this report, the landlord has identified problems with sales were experienced from summer 2019. A separate complaint (from a different resident, investigated by the Ombudsman) also shows that by September 2019, residents had raised concern about the landlord’s failure to inform them of potential implications of AN14 on mortgages and property sales.
By December 2019/January 2020, the landlord should therefore have been aware of the impact of the guidance on mortgage applications, and of sales of its own properties involving ongoing fire safety investigations falling through, and it was in a unique position to provide timely and appropriate advice to the resident, drawing on its knowledge in the housing sector and from its direct experience.
In the Ombudsman’s opinion therefore, from December 2019 when the resident applied to put the property on the market, to 29 January 2020 when solicitors were instructed, there was a missed opportunity by the landlord to explain the situation in relation to the AN14 guidance and to detail the potential impact of the guidance on mortgage applications. This would have been clearly useful to the resident to understand the risks in putting the property on the market at that time, and in the interests of being open and transparent regarding the situation, before significant fees were incurred.
The Ombudsman can see that the resident incurred costs in relation to the sale of the property which she may not have done, had the landlord informed her of the impact of the Government’s guidance within its letter in May 2019, or most significantly, had the landlord informed her of this between 9 December 2019 and 29 January 2020 when corresponding about the property sale. The landlord’s lack of communication regarding the widely recognised impact of the Government’s guidance on mortgage applications, will have impacted on the resident’s ability to make an informed decision regarding the sale of the property, which is unsatisfactory.
In light of the landlord’s poor communication the Ombudsman finds that the landlord’s decision to not reimburse the resident the costs which she incurred in relation to the sale of the property was therefore unreasonable. This is because the landlord did not recognise that its failing impacted on the resident and her decisions in respect of the property.

The landlord’s complaint handling.

The landlord’s complaint policy sets out that it will respond to stage one complaints within ten working days, and a stage two panel should be held within 30 working days of the escalation request.
The resident’s stage one complaint was made on 29 June 2020 and the landlord provided its stage one response on 13 July 2020. The landlord’s stage one response was provided within its service standard and therefore appropriate.
The resident requested to escalate her complaint on 28 July 2020 and the landlord provided its final response on 10 November 2020, following the panel hearing on 23 October 2020. The four month delay in the final response was not in accordance with the landlord’s service standards.
The landlord did not specifically apologise for its delayed response, which would have been customer focused, however it acknowledged that the response exceeded its target timeframe and awarded £25 compensation. This was in accordance with its compensation policy, which advises such an amount is applicable for failure to reply to letters or failure to meet published timescales.
Further, while the four month delay was contrary to good complaint handling and would have resulted in unnecessary uncertainty, there is no evidence the resident spent time and trouble chasing a response during this time; nor is there evidence that this unreasonably impacted the resident’s ability to refer the complaint to the Ombudsman, as the complaint was referred to this Service five months after the landlord’s final response.
In the Ombudsman’s opinion therefore, the landlord overall responded reasonably in respect of its complaint handling, as the remedy the landlord provided reflected its policy and was not unreasonable in this instance for the evidenced impact of the delayed response itself.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was no maladministration by the landlord in respect of its response to the resident’s request for an EWS 1 form and works start dates.
In accordance with paragraph 54 of the Housing Ombudsman Scheme there was maladministration by the landlord in respect of its response to the resident’s request to reimburse the fees she incurred in relation to the sale of her property.
In accordance with paragraph 55(b) of the Housing Ombudsman Scheme there was reasonable redress by the landlord in respect of its complaint handling.

Reasons

The landlord responded appropriately following requests for the EWS1 form and works start dates. The landlord supplied the EWS1 form in a reasonable timeframe after being requested; and it supplied the most current works timescales it possessed, which reasonably reflected works timescales specified in its independent expert’s report.
The resident incurred costs in relation to the sale of her property, which she may not have done had the landlord informed her of the impact of the Government’s guidance. By the time the resident placed the property on sale, the impact of the guidance on mortgage applications was widely recognised within the housing sector; the landlord acknowledged problems with sales were experienced from summer 2019; and the landlord had already received a complaint about a failure to inform residents of potential implications of AN14 on mortgages and property sales.
The landlord overall responded reasonably in respect of its complaint handling, as its remedy reflected its policy and there is no evidence the delayed response unreasonably impacted the resident’s ability to refer the complaint to the Ombudsman.

Orders and recommendations

Orders

The landlord should, within four weeks of the date of this determination, pay the resident £300 for the distress and inconvenience that will have been caused by its lack of communication.
The landlord should refund the resident the resale/valuation and legal costs which she incurred in respect of the sale of the property, on receipt of invoices from her. The landlord should contact the resident to request this information within four weeks of the date of this determination.
The landlord should, if it has not already, and within four weeks of the date of this determination, take steps to ensure that a procedure is in place to inform leaseholders of potential risks to putting a property on the market, including if a building is awaiting investigation or works in respect of its fire safety. As part of this it should consider if general information about the potential impact of AN14 guidance on mortgage applications should be incorporated into documents provided at the start of the property sale process, such as its resale instruction form.

Recommendations

The landlord should review the frequency of updates it has provided about the building, and consider writing to the resident and other leaseholders to provide a more current update on the progress to complete remedial works on the building, even if only provisional timescales can be provided.
The landlord should ensure that it responds to complaints in line with its policy and where this is not possible, ensure that it updates residents in a timely way.