Ocean Housing Limited (202001833)

REPORT

COMPLAINT 202001833

Ocean Housing Limited

30 March 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

1. The complaint is about:
   1. the landlord’s handling of and response to the resident’s 2019 Right to Buy (RTB) application.
   2. Information provided by the landlord about the property in 2017 at the time of the resident’s first RTB application.

Jurisdiction

2. What we can and cannot consider is called the Ombudsman’s jurisdiction. This is governed by the Housing Ombudsman Scheme. When a complaint is brought to the Ombudsman, we must consider all the circumstances of the case as there are sometimes reasons why a complaint will not be investigated.
3. Paragraph 39(e) of the Scheme, states that the Ombudsman will not investigate complaints that were not brought to the attention of the landlord as a formal complaint within a reasonable period, which would normally be within six months of the matters arising.
4. The resident has complained that the landlord gave erroneous information relating to the condition and value of the property during her initial RTB application in 2017. There is no evidence of a formal complaint being raised about this until October 2019. The Ombudsman encourages residents to raise complaints with their landlords in a timely manner, so that the landlord has a reasonable opportunity to consider the issues whilst they are still ‘live’, and whilst the evidence is available to reach an informed conclusion on the events which occurred. As the substantive issues become historical, it is increasingly difficult for either the landlord, or an independent body such as the Ombudsman, to conduct an effective review of the actions taken to address those issues.
5. In view of the time periods involved in this case, and that the resident was aware of this for some time prior to complaining, in line with paragraph 39(e), this investigation will focus on the landlord’s handling of and response to the RTB application of May 2019. It will also consider the resident’s complaint about the landlord incorrectly advising her she was eligible for RTB in 2017, as she only became aware of this in May 2019.

Background and summary of events

6. The resident was granted an introductory tenancy (a trial tenancy with a specific timeframe, usually one year), on 3 January 2000 by a former local authority. After 12 months, barring any incidents, she would have become a secure tenant, which would give her more rights as a tenant, and subsequently be eligible for RTB.
7. In February 2000 the former local authority’s housing stock was transferred to the landlord (a then new housing association). Residents who already held a secure tenancy at the time of the transfer held a ‘preserved RTB’, meaning they could still buy their home under the RTB scheme in the same way as if they were still a council tenant. Housing association tenants are usually not eligible for RTB. Instead, they can take advantage of the housing association Right to Acquire (RTA). However, RTA is not always as beneficial as RTB.
8. Those who held an introductory tenancy at the time of the stock transfer (such as the resident) were granted an assured tenancy by the new housing association. The resident signed her assured tenancy on 26 March 2001.     
9. In August 2017 the resident applied to buy her home under RTB. This was accepted by the landlord in September 2017, but the sale was not completed in the set timescales and did not proceed. The resident has advised this Service that the sale was not completed because she was unhappy with the landlord’s offer price and was disputing it.
10. On 25 May 2019 the resident sent the landlord another RTB application for her home.
11. The landlord wrote to the resident on 19 June 2019. By this time the landlord had conducted further checks, and identified the circumstances of the resident’s tenancy. It explained that this meant she did not have a preserved RTB. The landlord acknowledged that this outcome would be disappointing, particularly given her previous application. It explained that its systems and processes had improved since her first application, and it was now able to conduct more thorough searches for customers wishing to exercise a preserved RTB.
12. In reply to the above, on 13 October 2019, the resident asked to make a formal complaint.
13. The landlord sent the resident its stage one response to the complaint, dated 17 October 2019, in which it reiterated why the resident did not have RTB. It confirmed that on 7 February 2000 the local authority’s housing stock, including the resident’s property, was transferred under a large-scale voluntary transfer to the housing trust. As part of the transfer pledge, and to give transferring tenants security, tenants who held an introductory tenancy at the time of the transfer were granted an assured tenancy by the newly formed housing trust. To qualify for the RTB at the time of the stock transfer, tenants would have needed to be holding a secure tenancy with the local authority, and the resident had not. Her tenancy with the local authority had been an introductory one at the time.
14. The landlord confirmed that its response to the application was correct, and that the resident did not have a statutory right to purchase the property under RTB. It advised the resident of other home ownership options available to her, including RTA, and through shared–ownership schemes. Finally, the landlord explained how the resident could escalate her complaint if she remained dissatisfied.
15. On 30 October 2019 the resident asked to escalate her complaint. She said that she was not happy because her original RTB application in was approved, she had spent a considerable amount of money on surveys etc., and it was “not acceptable for the landlord to change its mind”.
16. The landlord sent its stage two complaint response on 12 November 2019. It confirmed that the resident’s RTB application in 2017 was incorrectly accepted, which it had since identified and confirmed to the resident; however, the application was later terminated as the sale failed to complete in the relevant timescale. The landlord explained that if the purchase had completed, the resident would have purchased the property at a discount using a statutory mechanism which she was not lawfully entitled to. The landlord said it was complying with the law and would not knowingly do something which contravened it. It said that it believed that costs which the resident had incurred during the process of her first RTB application were of her own volition, and not a requirement of the RTB process. It appreciated the resident’s frustration following its response to her previous RTB application, but confirmed that the outcome was correct, and it was unable to change its decision on her eligibility.
17. In acknowledgement that its “error in admission following [the resident’s] first application may have misled [her] into believing that [she did] have a RTB”, the landlord offered to reimburse the resident for costs she may have incurred from her solicitor, up to £500. It advised that, if the resident remained unhappy with its response to her complaint, she could escalate her complaint to stage three of its complaints process.
18. On 1 December 2019 the resident asked the landlord to advise why it said that her purchase of the property would have been unlawful and said she did not see why the sale of the property should not proceed.
19. The landlord’s solicitor wrote to the resident on 18 December 2019. They explained that the basis on which the landlord was permitted to sell properties were set out in the Housing Act 1985, and in the landlord’s letter of 17 October 2019. They confirmed that it could not continue with the sale, which was erroneously approved in 2017, but not completed, as the landlord was precluded from selling unless the relevant criteria was met. The solicitor said that the resident’s new application was correctly identified as being outside the requirements permitting the landlord to sell the property to the resident under the RTB legislation.
20. On 8 January 2020 the resident said that as eviction proceedings were not initiated or an extension of the introductory tenancy requested (by her original landlord), her introductory tenancy should have been automatically enhanced to a secure tenancy after one year, giving her a preserved RTB.
21. The landlord replied on 9 January 2020 and said that, for to the reasons it previously explained, the resident did not have a RTB.
22. Following contact from the resident, this Service asked the landlord on 21 August 2020 if its letter of 9 January was its final response to the complaint, or if the resident could escalate the matter further with the landlord.
23. The landlord replied on 26 August 2020 that it had escalated the resident’s complaint and would respond by 4 September.
24. In the landlord’s final response of 28 August 2020, it said that the resident was not granted a secure tenancy as the law did not allow the housing association to do so. Only secure tenancies provided for RTB, and those tenants who held a secure tenancy at the point of the transfer had that right protected under what is known as the preserved RTB.
25. The landlord confirmed that, to reassure the resident that it had correctly applied the law in relation to the second application, its solicitors wrote to her on its behalf on 19 December 2019. The landlord said that this confirmed that it was not legally able to sell the resident her property under the RTB scheme.
26. The landlord said that its previous complaint response should have included an apology for the fact it incorrectly accepted her first RTB application and apologised that it did not. It acknowledged that the resident would have incurred costs in relation to her first application and expended time and effort in relation to her second. Therefore, it would arrange for a payment of £500 to be made to her.
27. Finally, the landlord confirmed that this was its final response to the complaint and the resident may refer her complaint to this Service, if she remained unhappy.

Assessment and findings

28. Both the resident and the landlord have made arguments on their interpretation of legislation, specifically the Housing Act 1985. Such a dispute would be a matter more appropriate for the courts because only the courts can make a legally binding interpretation of legislation. The Ombudsman cannot make a determination on which of the two positions are legally correct. Instead, this investigation considers the reasonableness of the landlord’s handling of the matter and how it reached its decision.
29. In responding to the resident’s second application, the landlord clearly explained why it was declined. Where the resident raised concerns about the landlord’s response, it sought to investigate further, liaised with its solicitor, and gave a detailed response explaining why the resident was not eligible for RTB. It also provided information on other potential options, explaining that buying the property through RTA, or shared–ownership schemes might be available to her. Ultimately, the landlord’s position was in line with its solicitor’s advice, which it was entitled to rely on, and was therefore reasonable.
30. The resident was understandably frustrated that her previous RTB application in 2017 was accepted, and she did not feel that the landlord should “change its mind” on such matters.
31. The landlord acknowledged that it initially made a mistake when accepting the first RTB application. However, that error does not convey a right which the resident was not otherwise eligible for.
32. The landlord apologised to the resident for incorrectly accepting her first application. In recognition of this, it offered her £500 compensation. It also explained that its systems had been improved since then, and it was now able to conduct extensive searches on the eligibility of customers wishing to exercise a preserved RTB.
33. Where there are admitted failings by a landlord, the Ombudsman considers whether the redress offered by the landlord (in this case, clear explanations, an acknowledgment of its error, apologies, improving its systems to avoid reoccurrence, suggested other options, and compensation) put things right and resolved the resident’s complaint satisfactorily in the circumstances. There is every sympathy for the situation the resident has found herself in. However, the landlord’s decision was reasonable in the circumstances, it clearly explained how it reached its decision, and took steps and offered remedies which were appropriate and proportionate to the mistake it originally made with the resident’s first application.

Determination (decision)

34. In accordance with paragraph 55(b) of the Housing Ombudsman Scheme, the landlord made an offer of redress to the resident before the investigation, which satisfactorily resolves the complaint.

Reasons

35. The landlord clearly explained why the resident did not have the RTB the property, in line with its solicitor’s conclusions, and provided the resident with information on how she may buy the property via the means of the right to acquire and shared–ownership schemes.
36. The landlord recognised its mistake in accepting the resident’s first RTB application in 2017 and explained that it had since made changes to its system, enabling it to check the eligibility of residents wishing to exercise the preserved RTB.
37. The landlord offered compensation at a level proportionate to the service failure identified.