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Ongo Homes Limited (202219039)

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REPORT

COMPLAINT 202219039

Ongo Homes Limited

27 February 2024

 

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 residents’ complaint about delays progressing their Right to Acquire application.

Background

  1. The residents were tenants of the landlord at the time of the complaint. The property is a house with solar panels.
  2. The residents applied for the right to acquire their home in late 2021 or early 2022, and the landlord sent an offer notice on 24 February 2022. This explained that the residents had 2 options in respect to the solar panels installed on the roof of their property. The residents could purchase the property and the solar panels, paying the landlord for the property and paying a termination fee to the solar panel contractor. Alternatively, they could purchase the property and sign an air space lease with the solar panel contractor, and the ownership of the solar panels would transfer to them after a period for a ‘peppercorn’ fee.
  3. The residents proceeded with their Right to Acquire application, and it is understood they obtained a mortgage offer that was valid until 31 August 2022.
  4. In late March 2022, the residents contacted the landlord about the solar panels and asked if they could be removed prior to purchase. The landlord responded that the solar panels came with property and there was no option to remove them with the purchase.
  5. On 29 June 2022, the residents’ solicitor emailed queries about the draft air space lease. The Ombudsman has not had sight of this email, but based on information provided, the solicitors said the airspace lease needed to include responsibilities for the solar panels where works are required to the roof, and make clear what happens with the panels at end of the lease. The landlord responded on 12 August 2022 that the airspace lease was its standard lease, and it would not be amending it.
  6. On 24 August 2022, the residents’ solicitor said that the residents wanted to proceed without the airspace lease and solar panels, and asked if the landlord could do this. The landlord responded on 7 September 2022 that the property was being sold with the solar panels and they could not be removed.
  7. On 9 September 2022, the residents’ solicitor said that if the panels could not be removed, the draft lease needed to be amended to take account of the provisions requested in their 29 June email. The landlord responded on 28 October. It noted the previous queries said the lease needed to include responsibilities for the solar panels where roof works are required, and make clear what happens with the panels at the end of the lease. The landlord said that clauses 4.2, 18, 23 and 24 of the lease made provisions for repairs, and clause 20 made provisions for what happens at the end of the lease.
  8. The residents obtained a new mortgage offer after their original one expired, and subsequently made a complaint. They raised concern that the landlord had caused delays to the Right to Acquire process, which had resulted in an increase to the interest rates and deposit required to complete the purchase. They sought an explanation for the delays and for the sale to be concluded as soon as possible.
  9. On 3 November 2022, the landlord provided its stage 1 response. It said that its legal team had confirmed it was responsible for delays of 2 to 3 weeks, due to staff leave and gathering information. It said that given the estimated timeframes of 3 to 6 months to complete the process, 2 to 3 weeks seemed reasonable and not excessive for a legal conveyancing case. It said it would not be surprised if there had been delays on both sides, and the resident’s mortgage lender had also requested information it normally would not supply, which had taken time to investigate. It noted the residents did not want the solar panels to remain and it said that the property being sold with the panels was a condition of the purchase.
  10. On 7 December 2022, the landlord provided its stage 2 response. It restated that it accepted responsibility for delays of 2 to 3 weeks, and it was informed that the residents’ solicitor was responded to every time they requested an update. It noted that the residents’ lender was not satisfied with elements of the air space lease, which it said was unusual, and it had to have the terms of the air space lease reviewed by its legal advisers. It explained that obtaining legal advice can take time and 2 to 3 weeks was not unusual. It said that under the Right to Acquire the property was offered to the residents “as seen,” which included the solar panels. It assured the residents that it would continue to progress the application as quickly as possible, and noted that it was yet to receive any correspondence from their solicitor after it responded to queries on 28 October.
  11. The property sale subsequently completed in May 2023. The landlord recently explains to the Ombudsman that the sale took 4 to 5 months longer than the norm, and initially anticipated, due to a number of different factors. This included multiple staff being absent from July 2022, the residents’ lender raising unexpected issues, the complexity of an airspace lease being involved, and its having to seek advice from an external solicitor.

Assessment and findings

  1. The residents complained that due to the landlord’s delays, they were given a new mortgage offer that was smaller, required £9,000 more deposit and had a mortgage term that was 13 years longer than the previous one. The landlord’s responses acknowledged delays of 2 to 3 weeks, which it did not consider unusual, and suggested that there were delays on both sides.
  2. The landlord provides correspondence between it and the residents’ solicitor. Based on these, it took the landlord 6, 2 and 7 weeks to respond to 3 queries the residents’ solicitor raised. This totals 15 weeks, which goes beyond 2 to 3 weeks acknowledged by the landlord. The longest delay from the residents’ solicitor, from the information provided, was 12 days. The Ombudsman understands that property sales may be complex and lengthy, but the landlord’s handling was noticeably less timely than the residents’ solicitor, which it recently indicates were due to two staff members being absent for a lengthy period. The landlord did not appropriately acknowledge and address the above in the timeframe of the complaint, including the extent of the delays or the length of time it took for certain queries.
  3. In 29 June 2022 correspondence, it is evident that the residents’ solicitor said the solar panels airspace lease needed to address responsibilities when works were required to the roof, and what happened at the end of the lease. The initial response to this was that the lease was the standard airspace lease, which did not address the queries in any substantive or helpful way. It was not until 28 October 2022 that the landlord referred to sections in the airspace lease that set out what happened when roof works were needed and when the lease ended, 4 months later. The queries seemed to be addressed by the lease, which the residents’ solicitor and lender could have identified, however the length of time it took for the landlord to highlight what sections of the lease addressed the 29 June queries was not helpful or reasonable.
  4. The airspace lease includes sections that say what happens if any works are required, and what happens when the lease ends in 2037. The residents have the right to inspect, repair, and replace the roof, and the landlord is obligated at its own expense to take steps to facilitate this, such as remove or relocate the solar panel system while works are done. The landlord will remove the solar panels for the residents to carry out any planned works to the roof, provided it is given 2 months written notice. The landlord will also temporarily remove the solar panels to enable the residents to carry out any emergency works. The solar panels pass into the possession of the residents at the end of the lease.
  5. The landlord should reasonably have referred to the clauses in the airspace lease which set out the above earlier than the 4 months it took to do so. The lack of clarification was unhelpful and will have contributed to delays in progress, as the residents’ solicitor sought to explore removing the solar panels from the purchase, before re-requesting answers to the unaddressed June queries. The landlord was understaffed and there was some complexity, but the queries related to repairs responsibilities and the lease term, which do not seem unusual questions in the context. The landlord was a party in the lease, so it would be expected to be more aware of its contractual obligations, in respect to leases it enters into, as well as to fulfil its responsibilities if and when roof works are needed.
  6. It is not clear however that without the identified issues with the landlord’s handling, the sale would have completed by when the first mortgage offer expired on 31 August 2022. The government’s guide to the Right to Acquire indicates that purchases are normally expected to complete within 3 to 7 months of an offer notice, so the process progressing beyond the first mortgage offer expiry on 31 August 2022 (6 months after the offer notice) does not seem unreasonable. The involvement of an airspace lease does bring complexities, and it seems reasonable that a property sale involving one may take longer than a normal property sale.
  7. There are also factors to consider that were out of the landlord’s control. The queries about responsibilities and removal of solar panels were addressed by the airspace lease and the February 2022 offer notice, which could have been given more regard to by the residents’ solicitor. If the stated available options for the solar panels were accepted from the start, this may have avoided some delay. The change in the mortgage offer will have been due to the market conditions at the time of the government’s 2022 mini budget, 3 weeks after the first mortgage offer expiry, and it would not be reasonable to hold the landlord responsible for the timing of the second mortgage offer.
  8. Overall, while the Ombudsman understands how distressing the circumstances were for the residents, it is not clear that the identified service failings are reasonably responsible for the differences in the mortgage offer such as the increased term and increased deposit. If the residents hold the landlord liable, they would be recommended to seek independent advice, as only a court may be able to make a definitive decision on this aspect. However, there were unacknowledged issues with understaffing and response delays, which will have resulted in unnecessary delay in progress. The landlord’s investigations were also fairly limited, lacked an evidence-based approach for the response delays, and missed potential opportunities to identify and rectify any current issues with service. It is understandable that the landlord’s response may have caused frustration and an ongoing sense of injustice to the residents, which is not reasonable.

Determination

  1. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in the landlord’s response to the residents’ complaint about delays progressing their Right to Acquire application.

Orders and recommendations

Orders

  1. The landlord to, within 4 weeks, pay the residents £250 for the issues identified.
  2. The landlord to, within 6 weeks, carry out a case review and consider potential service improvements. This could include:
    1. reviewing staff training needs for the responsibilities, including the landlord’s own, in respect to leases such as solar panel air space leases when a property is sold to tenants.
    2. considering implementing internal and/or external FAQ guides for documents such as air space leases, which provide some general guidance about party responsibilities and where these may be stated in the lease.

Recommendations

  1. The landlord to consider how to ensure there is sufficient staffing resource during similar absences, in order to continue to effectively deliver service.
  2. The landlord to ensure it investigates and responds to complaints in an evidence-based way.