Peabody Trust 2018 (202001588)

REPORT

COMPLAINT 202001588

Peabody Trust 2018

29 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 resident has complained that the landlord has offered insufficient compensation following a large leak and extensive, long term follow up repairs.

Background

The resident reported a leak in October 2016. Over the course of the complaint and repairs the leak was found to have been caused by a blocked soil pipe. This caused a leak into the neighbouring property. As this property was unoccupied the leak was able to spread, contaminating the walls and floor. This in turn then caused significant damage to the resident’s neighbour flat. The resident would eventually spend 9 months living elsewhere for the drying out and repairs.
The complaint is complicated by the various parties that are involved:
1. The resident bought the property in 2016 as a shared owner. Therefore at the time of the leak the original builder was responsible for relevant repairs through the defect liability period.
2. However the resident’s relationship is with the landlord, through the leasehold agreement. And the defect liability period is a relationship between the landlord and the developer. Therefore the landlord’s responsibility was to advise and support their resident while ensuring the developer responded to any required repairs as set out in the defect liability agreement.
3. The cause of the leak was not definitively identified by any party. Given the leak was from the soil pipe, it has been assumed another resident may have blocked the pipe by disposing of inappropriate items down the drain. As a result, the repairs were then dealt with through the building insurance as they were not the result of a defect in the original builder’s construction. However due to the defect liability period the builder was extensively involved given their need to first investigate the cause of the leak, and given their ongoing responsibility for the building in that first year.
The Housing Ombudsman Service can only investigate the actions of the landlord. The other parties are outside the jurisdiction of the housing Ombudsman Service.
In summary from the correspondence during the repair and the formal complaint the resident has complained that the landlord has offered insufficient compensation because:
1. They did not receive support from the landlord during the builder’s initial investigation. They feel this investigation was too slow and delayed the eventual repairs via the building insurance.
2. The landlord did not offer reasonable support/contact during the time the they had to move out.
3. The landlord did not offer reasonable support with the building insurance process.
4. The landlord helped the resident with complaints through the builder’s process and in trying to complain to the Consumer Code for Homebuilders. However both of these grievance processes ultimately concluded they were not liable for compensation to the resident as their relationship was with the landlord. However by the time of the landlord’s own final response, it declined to fully investigate the leak as it was 3 years on. The resident believes the landlord needs to provide more training for its staff to prevent its advice leading to delays such as this.
5. The landlord has agreed its communication with the resident was inadequate and it should have put more pressure on the builder. It has offered £1000, but the resident has highlighted how the compensation policy refers to authorisation limits up to £5000.
6. The landlord never answered who was responsible for the builder’s actions.

Summary

There are emails to the landlord in October and December 2016. One of the earliest emails appears to be 24 October 2016 and there is a reply the same day from the landlord explaining it had been referred to the builder to investigate and rectify.
It is not clear what action the landlord then took in November. There is a note of a visit by the builder on 5 December but they were unable to complete any repairs as the property had not dried out. By the middle of the December the issue was recognised as a repair for the building insurance.
By the end of the month the insurer had written to the resident to offer drying out equipment. The appointed loss adjuster had requested a quote for the works from the builder on 23 December and had to chase this during January 2017.
The quote was provided in February, however the resident had to chase the builder for an update in March as they were concerned the works might not be done until May 2017. The builder stated they were awaiting instruction from the landlord (however given the matter was with the building insurer it is not clear what instruction the landlord was required to provide).
The loss adjuster chased the builder 4 times in April/May about arranging further drying out works. It then resorted to arranging its own specialist. However it then had to chase the builder again (as did the resident) in July to confirm the cost and timescale. The loss adjuster copied the resident into their correspondence with the builder. It is not clear whether the landlord was kept updated or sought updates during this time.
The landlord did chase the builder in August at the resident’s request, however it also stated it had a limited role in the process as these works/repairs were outside of the new build contract it had with the builder. The landlord was able to provide the update about the person responsible at the builder to the resident on 4 August
The loss adjuster explained to all parties in December 2017 how the drying out process was still ongoing in the resident’s flat, and had only recently completed in the neighbouring vacant flat. It stated the drying out had taken around a year due as the extent of the leak and damp had not been realised. The resident had arranged to move to temporary accommodation in November 2017 through the loss adjuster.
The resident moved back to the property in August 2018. They had to chase some repairs relating to the leak as well as the start of their enquiries about compensation through August and September with the landlord.
The landlord confirmed in October 2018 that it had opened a complaint internally and it would offer compensation. It also stated that the resident could pursue a complaint with the builder if they wanted. The landlord initially offered £400 to recognise it could have placed more pressure on the builder. This was increased to £800 after the resident’s unsuccessful complaint direct to the builder (See below).
The resident complained to the builder in February 2019. The builder declined to review the complaint as its relationship was with the landlord. The landlord asked that the developer review the complaint based on the involvement of the defect liability period. The builder declined to offer compensation. It explained there was no evidence of a defect that had caused the leak and it had been attributed to incorrect waste management by another resident. Therefore the resulting repair was not its responsibility (hence the involvement of the building insurer). While the builder responded to the liability complaint, it did not address the complaint about the time it had taken to investigate (October-December 2016) or to respond to the loss adjuster (December 2016 – March 2017).
The landlord continued to refer each of the resident’s complaints at all 3 stages of the builder’s complaint process in February-August 2019.
From September 2019 – May 2020 the landlord provided the details of the Consumer Code for Home Builders to the resident. There was some confusion between the Consumer Code and the landlord and the resident compiled a full summary of the complaint to submit to the Consumer Code. However the Consumer Code confirmed in May 2020 that it could not investigate a complaint from a shared owner as they had bought from the landlord which was not a member of the Code (as opposed to buying direct from the builder which was a member). The landlord increased its previous offer of £800 in compensation to £1000 to acknowledge the inconvenience to the resident of having pursued the matter with code following its advice.
Therefore the complaint was ultimately concluded with a final response from the landlord in July 2020. The landlord explained:
1. It would not review the handling of the repair due to the time that had passed.
2. It was not clear as to why £1000 had been offered (and suggested this was above what would normally be offered), but that it would re-offer this figure despite the time that had passed.
3. It highlighted the different parties and their responsibilities in a repair case that includes shared ownership and the defect liability period.
4. Confusingly it included the contradictory statements quoted below:

“Barratts does not have a contractual relationship with you and are under no obligation to liaise with you”

“When New Homes said to you that you can contact Barratts directly this was the correct advice. As Barratts did not want to engage with you it doesn’t mean the original advice was incorrect.”

Assessment

The landlord has accepted that it did not handle the communication with the resident or the relationship with the builder adequately. It has offered a compensation figure that it has explained is above its normal offers. Therefore this assessment will focus on the reasons raised by the resident as to why they believe this figure should be increased.

Initial investigation

The landlord referred the leak the same day it was reported to the builder. This was the correct action as the landlord’s explanation that repairs during the first year are first investigated by the builder due to the defect liability period.
However it is not clear what action the landlord then took to follow up the reported repair. As the landlord has stated, it is the organisation with the relationship with the builder. Ideally, the resident would correspond directly with the landlord and the landlord would then correspond with the builder.
It does not appear the matter was referred to the building insurer until December. It is not clear why the builder took 2 months to confirm the cause of the leak was not a defect. In terms of this case, it its not clear what the landlord did to chase during these 2 months. The landlord did then give the correct advice that the resident, as the leaseholder, would have to contact the building insurer directly themselves for their own property.
Therefore there was a lack of involvement from the landlord in ensuring the builder was fulfilling its obligations to investigate the leak in October-December 23016.

Support and communication

The majority of the updates from December 2016 until August 2018 were from the loss adjuster to the resident. This is not unreasonable as the loss adjuster was handling a claim the resident had to make to the building insurer themselves, under the terms of the insurance.
However it is not clear whether the landlord pro-actively contacted the resident to discuss the situation, particularly given the sensitive and distressing subject of a leak from a soil pipe.
The landlord did intervene in August 2017 to secure the contact details of the person responsible at the builder for the ongoing drying out process. While this was a helpful intervention, it only came following the resident notifying the landlord of the builder’s lack of contact with the loss adjuster, and should have prompted further action by the landlord (for example to pursue the builder about the actual drying out as opposed to just the contact name).
The resident also had chase the landlord for information at the time they were due to move back into the property.
The extent of the drying out and stripping out works appears to have been significantly underestimated. The responsibility for scoping the works (including the drying out) would rest either with the builder due to the defect liability period, or with the building insurer and its loss adjuster.

Complaint handling (including other processes)

The landlord continued to pursue the resident’s complaint with the builder. This was an inappropriate use of time. Instead the landlord should have responded to the resident’s complaint that it had opened in 2018 with itself. It could then have pursued the builder through its own contractual mechanisms for any failures the builder had demonstrated.
The landlord also spent further time helping the resident raise a complaint with the Consumer Code. The landlord did explain at the start of the process it had no experience of the Consumer Code, and it was the Buildmark Cover that had first suggested the resident contact the Consumer Code. However it is not unreasonable for a resident to expect the landlord’s New Home team to be aware of the relevant (and irrelevant) regulator and complaint handling bodies.
Both of these processes did result in additional offers of compensation from the landlord to the resident. The compensation offer has been assessed separately below.
The landlord’s own complaint process was protracted due to the nature of the drying out, the involvement of the builder and insurer, and due to these other complaint processes.
However the final response was not a constructive effort in trying to resolve the dispute. The resident had explicitly stated they wanted the landlord’s actions in communicating with all the parties reviewed. However the final response stated it would not review the handling of the substantive matter due to the time that had passed. It dated the time from the leak (end of 2016 until the response in 2020) however a more appropriate timeframe to use would be from the resident’s return to the property in August 2018 until the final response in July 2020. It is not unreasonable that the resident waited until the actual issue had been fully resolved before complaining about the time it had taken.
Furthermore the periods February – August 2019 and September 2019 – May 2020 were largely taken up by the resident and landlord pursuing the builder’s and Consumer Code’s respectively.
Therefore while it is understandable that the landlord has time limits on the issues it will investigate and on when compensation offers must be accepted, it is also expected to exercise its discretion in cases where circumstances beyond the resident’s control have extended the time (and especially where it has directly added to the time involved).

Different parties’ responsibilities

The resident has complained that the landlord has not explained how the builder will answer for what they consider its failures. Unfortunately, as this case demonstrates, there is no single process.
Ultimately the landlord can enforce the contractual relationships it has with the builder. However there will always have to be a commercial element to the legal decision as to whether any action is likely to be successful or constructive. Therefore the landlord has focused on informal pressure to secure the updates it did over the course of the case. As the landlord has already upheld, it agrees it did not take enough action in this area.
The insurer (and its loss adjuster) may also have some authority when requiring action from the builder (for example the delays they experience when trying to receive quotes and arrange the drying out in 2017). However it is at their discretion as to how they exercise their authority, and any complaint about the insurer or the loss adjuster’s actions (or lack of action against the builder) is outside the Housing Ombudsman’s jurisdiction.

Compensation offer

The Housing Ombudsman Service Guidance on Remedies provides suggested bands for compensation of under £250, £250-£700 and over £700. It states:

Awards of £700 and above – Remedies in the range of these amounts are used in recognition of maladministration / severe maladministration that has had a severe long-term impact on the complainant. Remedies in this range will be appropriate when there has been a significant and serious long-term effect on the complainant, including physical or emotional impact, or both.

Therefore the landlord’s offer of £1000 must be considered a very significant offer of redress.
The resident has highlighted their lost earnings during the repair and complaint, both for providing access and for chasing the various stages. Unfortunately any claim for lost earnings is a claim for damages. Only the courts can award damages following legal action in cases where liability is disputed.
The landlord failed to:
1. Chase the builder in October-December 2016.
2. Evidence reasonable contact/support with the resident in 2017 while the loss adjuster led on handling the repair.
3. Provide appropriate advice about pursing the other parties’ complaint processes.
4. Provide an appropriate final response to the complaint.
It is obvious that such a significant leak together which such a protracted repair will have a major impact on the resident. The landlord has offered compensation that is in line with failures that have a major impact on residents. Furthermore there are limits to what the landlord was required to in a case such as this given the different responsibilities of the builder and insurer. Therefore on this basis the landlord’s offer of compensation is considered a reasonable offer of redress for the failures identified

Determination (decision)

Therefore I can confirm in accordance with paragraph 55(b) of the Housing Ombudsman Service Scheme that the landlord has made an offer of redress that is considered satisfactory in relation to the failures identified.