One Housing Group Limited (202005806)

REPORT

COMPLAINT 202005806

One Housing Group Limited

17 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

The complaint is about:
1. The landlord’s response to the resident’s allegation that it did not inform her about the Government’s guidance in relation to fire safety and cladding in respect of her staircasing application;
2. The landlord’s communication and complaint handling.

Background and summary of events

Background

The resident is the shared owner of the property (the property) which the complaint concerns. The landlord is the freeholder.
The property is a flat situated in a purpose-built block (the building). The fire risk assessment dated August 2019 sets out that the building is eight storeys high.
Advice Note 14 will be referred to throughout the assessment. This advice note 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.
The Government’s 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”.

Summary of events

On 23 January 2019 the landlord wrote to the resident about “buying more shares in [her] home”. The landlord confirmed that it would like to offer the resident a £1500 incentive if she purchased additional shares in the property by 31 March 2019.
On 22 March 2019 the resident’s staircasing application completed. The resident purchased an additional 35% share (the share) in the property, bringing her total share to 55%.
On 9 May 2019 the landlord undertook an initial inspection of the building to determine the “extent of opening-up” required to investigate the external wall system in line with Advice Note 14.
On 15 August 2019 the landlord undertook the intrusive inspection of the external wall system on the building. The landlord confirmed that the report following the inspection was received on 28 October 2019.
On 28 November 2019 the landlord wrote to all residents setting out its response to Advice Note 14 and following the intrusive inspection. In summary the landlord said:
1. It had completed its review of the report presented by the independent fire consultant who carried out the test on the cladding on the building.
2. Since Advice Note 14 was released many lenders had been seeking greater levels of technical detail, some of which could only be only be evidence through intrusive surveys. The landlord explained that the surveys were “complex and time consuming to carry out”.
3. On receipt of lender enquiries related to the whole wall system on the building it instructed an intrusive survey to be completed.
4. The conclusion from the consultant was that the cladding did not meet the requirements of Advice Note 14. The landlord confirmed that it had enclosed a summary of the consultant’s findings with its letter.
5. There were “indications that some lenders may be willing to accept other evidence” in the absence of certification demonstrating compliance with Advice Note 14, such as a fire risk assessment.
6. It was working with other housing associations to ask the Government to provide clarity on the situation regarding Advice Note 14 and the impact on mortgages.
7. It was prioritising a programme of remediation works and would write to residents as soon as it had details
On 24 February 2020 the resident made a formal complaint to the landlord that it had mis–sold the share to her. In summary the resident said:
1. She increased her share in the property from 25% to 55% following the landlord’s incentive in January 2019.
2. The landlord failed to inform her that the building was subject to Advice Note 14 on introducing the incentive in January 2019. The resident stated that the landlord had “a responsibility” to inform her about Advice Note 14 and the potential impact of the guidance on the building as part of the staircasing process, however it did not do so.
3. The independent surveyor, who completed the property valuation, and who was approved by the landlord also failed to inform her about Advice Note 14.
On 5 March 2020 the landlord responded under its complaint procedure. In summary the landlord said:
1. The Government released Advice Note 14 in December 2018 to advise building owners on what they should be looking to do to check that their buildings were safe and the changes it was making retrospectively to the building regulations. The landlord explained that in response to the guidance it took steps “to understand [its] buildings better and ascertain the materials that were on the buildings themselves”.
2. Lenders had “a delayed reaction” to the guidance. The landlord explained that initially lenders “only” wanted confirmation that there was no ACM cladding on a building. The landlord confirmed that lenders’ position changed “during the summer [of] 2019” so it would not have been able to provide “any early advice to residents who were looking to purchase more shares of their home in early 2019”.
3. It had no influence or control over how lenders had interpreted the Government’s guidance and their requirements had changed steadily since the summer.
4. It had assessed the risk levels of each of its buildings based on the materials present and height so that it could prioritise its intrusive testing programme.
5. It had communicated the result from the intrusive survey of the building on 28 November 2019.
6. It had been working with “specialist consultants” on the creation of the remediation programme for all of its buildings over 18m where an intrusive survey had been undertaken.
7. It had engaged a solicitor to get legal advice on the recovery of costs for the works from the parties involved in the construction and sign off of the building. The landlord explained that this process “whilst time consuming [was] being completed in the best interests of all parties”.
8. While conversations had started with the third parties it was unable to confirm a start date for remediation works. The landlord confirmed that the works would have “a clear programme and team project managing them so that clear milestones and stakeholder updates [could] be communicated to all, including residents”.
9. It was looking at its communications strategy and it would be producing more general information for homeowners about the impact of Advice Note 14. The landlord confirmed that it expected this to be coming out in April 2020.
The landlord concluded by confirming that the resident may refer her complaint to the Ombudsman if she was not satisfied with its response.
As the resident was not satisfied with the landlord’s response she referred the matter to this Service for adjudication. Within her referral the resident noted the following points:
1. The landlord did not inform her of Advice Note 14 on receipt of her staircasing application and its potential impact.
2. During the staircasing process she was “only permitted” to use one of the landlord’s preferred surveyors to complete the valuation. The resident stated that the surveyor did not inform her that the building required an intrusive survey in relation to cladding.
3. She would not have “invested further” into the building had she had been informed of Advice Note 14.
4. She became aware of Advice Note 14 on receipt of the landlord’s letter dated 28 November 2019.
5. She would like the landlord to buy back the share to resolve the complaint.

Assessment and findings

The landlord’s response to the resident’s allegation that it did not inform her about the Government’s guidance in relation to fire safety and cladding in respect of her staircasing application

The Ombudsman can see that the landlord wrote the resident about its staircasing initiative on 23 January 2019 which was approximately one month after the Government published its guidance on fire safety and cladding – Advice Note 14. The Ombudsman notes that the landlord’s correspondence did not reference Advice Note 14. The Ombudsman also notes that the landlord did not reference Advice Note 14 within its valuation letter to the resident dated 20 February 2019 as part of her staircasing application.
In the Ombudsman’s opinion it would have been best practice for the landlord to have informed the resident regarding Advice Note 14 within its letter introducing the staircasing incentive and its later communication with the resident regarding her staircasing application. This is because the building was subject to the guidance.
However, the Ombudsman notes that by January 2019 the landlord may not have decided on its response to the guidance and it may not have been aware of any issues with the building’s internal wall system at that time. As the Government’s expectations in relation to cladding and fire safety was only detailed in guidance, there was an element of discretion for a landlord as to how and when it chose to comply with it. The Ombudsman can see that the landlord has taken steps to comply with the guidance in respect of the building as it has completed an intrusive inspection (August 2020) and has committed to completing the remedial works identified. This is appropriate, as while the guidance is not a legal requirement, it has been established as best practice in relation to building safety.
The Ombudsman understands that according to the terms of the property’s lease agreement the leaseholder is required to pay 100% of any service charge regardless of the percentage of share owned. Therefore, despite the resident’s increased share in the property after March 2019 she is still required to contribute the same level of service charge as before, which may include a contribution towards the remediation works. While the resident’s concerns that she was not informed about the Government’s guidance in relation to fire safety and cladding at the time she purchased the share are understandable, in the Ombudsman’s opinion there was no significant adverse effect on the resident by the landlord for its failing.
The landlord’s booklet on staircasing sets out (page 4) that “your home must be valued by an independent Royal Institute of Chartered Surveyors (RICS) valuer… Under the terms of your lease we must agree to your choice of surveyor… We have a list of pre-approved surveyors to help speed things up”. The lease sets out (schedule nine) that the valuer must be agreed between the landlord and the leaseholder. While the Ombudsman notes that the resident suggests that she was required to use one of the landlord’s preferred surveyors to complete the valuation for her staircasing application, in line with the booklet and terms of the lease agreement this was not the case.
The Ombudsman notes the resident’s concerns that the surveyor did not tell her that the building would be subject to the guidance as set out in Advice Note 14. However the Ombudsman is unable to comment on the surveyor’s findings or report as the Ombudsman has no jurisdiction in relation to independent surveyors – this Service’s role is to consider the actions of our member landlords.

The landlord’s communication and complaint handling

The Ombudsman has not seen any evidence that the landlord notified the resident about the Government’s guidance and its response to it in respect of the building until its communication dated 28 November 2019. This was approximately seven months after the resident completed her staircasing application and 11 months after the guidance was introduced. In the Ombudsman’s opinion this was unsatisfactory. In the Ombudsman’s opinion once the landlord had established its response to the guidance it should have notified the resident (and other owners) of the steps it was taking to comply with the guidance, and the potential impact on them – including in respect of liability, disruption, mortgage applications and saleability of property, so that they could make informed decisions regarding their properties. The Ombudsman notes that some communication could have commenced from spring 2019, the date of the first inspection.
The landlord has confirmed that at the time of the complaint it operated a one stage complaint process. The landlord has also confirmed that following the introduction of the Ombudsman’s Complaint Handling Code it has updated its process to comply with the requirements of the Code.
The resident complained that the landlord, and its approved surveyor, failed to inform her that the building was subject to Advice Note 14 in relation to her staircasing application and therefore that the share was miss-sold. Having reviewed the landlord’s complaint response in the Ombudsman’s opinion the landlord failed to address this concern. Rather the landlord’s complaint response focused on its response to the Government’s guidance and lenders’ approach to the guidance. While these points are linked to the resident’s complaint, they do not address the complaint which she made. This is unsatisfactory as a good complaint response should address the complaint which a resident makes, which the landlord did not do in this case. The resident was therefore left without a comprehensive response to her complaint.

Determination (decision)

In accordance with paragraph 54 of the Housing Ombudsman Scheme there was:
1. No maladministration by the landlord in respect of its response to the resident’s allegation that it did not inform her about the Government’s guidance in relation to fire safety and cladding in respect of her staircasing application
2. Service failure by the landlord is respect of its communication and complaint handling

Reasons

The landlord’s response to the resident’s allegation that it did not inform her about the Government’s guidance in relation to fire safety and cladding in respect of her staircasing application

It would have been best practice for the landlord to have informed the resident about Advice Note 14 within its letter introducing the staircasing incentive and its later communication with the resident regarding her staircasing application as the building was subject to the guidance. However, the Ombudsman notes that the guidance was published in December 2018 and therefore by January 2019 the landlord may not have decided on its response to the guidance and it may not have been aware of any issues with the building’s internal wall system at that time. Furthermore as the Government’s expectations in relation to cladding and fire safety was only detailed in guidance, there was an element of discretion for a landlord as to how and when it chose to comply with it.
In line with the landlord’s staircasing booklet and terms of the lease agreement the resident was not required to use a surveyor from the landlord’s approved list to undertake the valuation of the property.

The landlord’s communication and complaint handling

The Ombudsman has not seen any evidence that the landlord notified the resident about the Government’s guidance and its response to it in respect of the building until its communication dated 28 November 2019. Once the landlord had established its response to the guidance it should have notified the resident (and other owners) of the steps it was taking to comply with the guidance, and the potential impact on them – including in respect of liability, disruption, mortgage applications and saleability of property.
The landlord’s complaint response failed to address the complaint which the resident made, namely that the landlord, and its approved surveyor, did not inform her that the building was subject to Advice Note 14 and therefore she was miss-sold the share. This is unsatisfactory as a good complaint response should address the complaint which a resident makes, which the landlord did not do in this case.

Orders and recommendations

Orders

The landlord should pay the resident £200 compensation in respect of its communication and complaint handling within four weeks of the date of this determination.

Recommendations

While not part of the complaint, the Ombudsman can see that following the end of the complaint procedure the resident requested information and updates on the remediation works required to the building following the intrusive inspection. The Ombudsman therefore recommends that the landlord should write to the resident (and other owners) within four weeks of the date of this report with an update on the status of the remediation works, including timescales even if provisional, and an update on the work to determine liability for the cost of the works.