Poplar Housing And Regeneration Community Association Limited (202107982)

REPORT

COMPLAINT 202107982

Poplar Housing And Regeneration Community Association Limited

29 June 2022

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 fire safety communication and its response to the resident’s request to reimburse costs for an unsuccessful re-mortgage.

Background and summary of events

Background

2. The resident is a leaseholder of the landlord, a housing association. The property is a flat in a five storey block.
3. The government issued ‘Advice Note 14’ 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.
4. 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 metres (six storeys). Form EWS1 was introduced to prove to lenders that external cladding had been assessed by an expert.
5. The government consolidated ‘Advice Note 14’ when it issued ‘Building Safety Advice for Building Owners’ (BSA) in January 2020. Paragraph 1.4 of this guidance stated that ‘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’ and paragraph 1.5 stated that ‘the need to assess and manage the risk of external fire spread applies to buildings of any height’.
6. 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 zero valuation.
7. The landlord’s website details its approach to building inspections in order to provide EWS1 certification required by mortgage lenders. This investigation has confirmed that the website stated the impact of EWS1 certification on those trying to re-mortgage properties from at least 18 November 2020. Since February 2020, this investigation has also confirmed that the landlord’s web newsletter noted that after the Grenfell fire, it had audited its buildings above four storeys, and that following government guidance mortgage lenders were refusing to lend. It said it had now employed fire engineers to further inspect its taller buildings and explained the test results would mean it could provide certification that should be accepted by lenders; it could take months to confirm certification; and it would inform residents who had contacted it when the inspection of their building had taken place.

Summary of events

8. The information provided advises that in March 2020, the landlord sent the resident the estimated service charge for the 2020 to 2021 financial year. In its cover letter, the landlord included a line which stated that it had now employed three fire engineers to further inspect all of its taller buildings. In August 2020, the landlord identified it was receiving many enquiries about EWS1 forms for buildings less than 18 metres in height, from leaseholders looking to sell or re-mortgage their home. The landlord reviewed other landlords’ approaches then set out in draft responses and its website that it had employed fire engineers to inspect its taller buildings to obtain the certification that should be accepted by lenders.
9. The landlord informs this Service that, since August 2020, it has updated its website about external wall assessments being carried out. In respect to the resident’s block, the landlord advises that the website confirmed on 6 October 2020 that an external wall assessment was due in November 2020; on 18 November 2020 confirmed this was in progress; and on 19 January 2021 confirmed the report had been received and remedial work was required. The landlord provides a copy of an EWS1 report dated 12 January 2021, which confirmed that an adequate standard of fire safety was not achieved and identified remedial measures that needed to be taken.
10. The resident’s account then advises that in February 2021, she instructed a broker in respect to a re-mortgage of the property, and in the middle of this lenders informed her of the requirement for an EWS1 form. She emailed the landlord on 8 March 2021 and was informed the fire safety of her block was under review and the issuing of an EWS1 form could take months, due to further works requiring carrying out.
11. The resident complained on 15 March 2021. She said the landlord should have communicated better to her as a leaseholder, explaining that over the past few months she had researched a move and made an offer on a new property. She said she would not have looked to move, re-mortgage and incur costs if she had known the landlord would be unable to issue the EWS1, and she requested for £500 mortgage broker fees she had incurred to be reimbursed.
12. The resident has supplied to the investigation an invoice dated 1 March 2021, for the amount of £499. This states a £150 administrative fee is non-refundable after a mortgage application has been submitted to a lender, and the full amount is non-refundable after a mortgage offer is issued by a lender. The broker’s website addresses whether fees will be returned if an application falls through, and states that they retain the right to keep the fee if a mortgage offer has been achieved, but in most instances they are prepared to issue a credit note to carry the fee over to the next case (excluding the non-refundable £150).
13. The landlord provided a stage one response on 25 March 2021:
    1. It explained its approach to prioritising external wall surveys based on a building’s height or construction type.
    2. It explained it had instructed for assessments to be carried out to the resident’s block, expecting for an EWS1 to be then forthcoming, however some issues had been identified with the external walls which prevented a satisfactory EWS1 being issued. It explained these were being assessed further to determine what action needed to be taken, and it hoped to shortly update residents about the building status and how they may be affected.
    3. It said notices were put up in blocks and information provided on its website about the block’s EWS1 status. It noted there was considerable publicity and information about EWS1 requirements, and that it recommended leaseholders check their building status before progressing with a re-mortgage.
    4. It apologised that it was unable to provide an EWS1, and it recognised the impact on the resident, but said it was unable to provide reimbursement for the costs she claimed.
14. The resident expressed dissatisfaction with this on 26 March 2021:
    1. She disputed notices were put up as the block lacked a notice board, and provided photos of a location in the block to evidence this. She said that putting up a notice however was insufficient for such significant information.
    2. She said the landlord had not met a responsibility to keep her informed of important issues that affected her as a leaseholder, and also that the leasehold section of the website did not contain anything relating to EWS1.
    3. She said that if she had known the external walls of the block were under review, she would not have started a re-mortgage application and incurred costs, and she felt the lack of information and communication had been poor.
15. The landlord provided a follow up response on 30 March 2021, where it clarified that notices were put up in the block entrance lobby, and highlighted that the notice had confirmed that residents would be advised if further action was required.
16. On 14 April 2021, the landlord wrote to residents on the estate. This said it had recently carried out a survey of walls, cladding, insulation and fire breaks and the report said a satisfactory EWS1 form could not be issued because remedial work was required. It said it believed the work was relatively minor but it was engaging professionals to assess the report, so it could understand the issues and action required, and promised to update residents as soon as it could. It explained the EWS1 form was the record that confirmed the external wall system had been safety assessed in line with government guidelines and was required by mortgage providers before approving mortgages.
17. The landlord provided a final response on 21 April 2021 after discussing the complaint with the resident:
    1. It acknowledged her disappointment that it had not contacted her about the impact of the EWS1 programme, and that she said she would have avoided the cost and not engaged a mortgage broker had she been aware.
    2. It said it had provided information on its website, in its newsletter (which it linked to), and in shared areas. It also noted there had been significant media coverage about EWS1. It advised it was surprised EWS1 was not broached when she first approached the mortgage broker, and it would have expected them to be aware of the potential need for an EWS1 and to advise her to contact the freeholder before incurring any costs.
    3. It acknowledged the resident’s frustration and difficulties the issue had caused her, and said it was sorry she had been put to unnecessary expense. However, it disagreed it should reimburse her costs. It noted it was residents’ responsibility to satisfy themselves that they had all relevant information; she did not provide evidence she was misadvised by the landlord; and she had professional advice from a broker, who it suggested did not advise her of all the requirements for a mortgage before charging her.
18. On 17 May 2021, the landlord wrote again to residents on the estate, following up its correspondence of 14 April 2021 which it noted had said remedial work was required. It said it was working towards a swift, cost effective and undisruptive solution and needed access to some properties to check the layout and smoke alarms in place. It confirmed it would update residents as soon as it could.
19. On 27 July 2021, the landlord wrote again to residents to provide Section 20 Notices and to detail the required works, which on completion would allow the building to achieve a satisfactory EWS1. It confirmed it would update residents as soon as possible about timescales.
20. The landlord informs this Service that it initially communicated with residents via notices when conducting the assessments in their blocks, however this is now being done using letters delivered to each property. It has provided this Service with a copy of the notice it says was put up in the entrance lobbies at the resident’s block, which gave notice that external wall/cladding inspections would be taking place the following week.

Assessment and findings

21. The Ombudsman’s guidance note on fire safety and cladding sets out that, as the government’s expectations about this matter are only currently detailed in guidance, there is an element of discretion for a landlord as to how and when it chooses to comply. The Ombudsman’s guidance further advises that, when investigating a complaint relating to 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 residents regarding the situation and was this communication appropriate?
    3. how has it responded to the individual circumstances of the resident?
22. When the resident approached the landlord in March 2021, the government’s ‘Advice Note 14’ applied to the building as this recommended that building checks were conducted to all properties. This meant that the landlord was expected to carry out checks to ensure that the cladding system was safe and to carry out any necessary remedial works.
23. It is clear from the landlord’s correspondence with the resident, in addition to information on its website, that the landlord has been taking steps to comply with the government’s guidance in respect of the building by taking a risk-based approach to prioritise blocks for intrusive inspections. The Ombudsman recognises that the process to achieve compliance with government guidance is complicated and requires input from experts. Given this and the number of buildings owned by the landlord that require assessment, the Ombudsman is satisfied that the landlord has taken a rational approach to prioritising inspections.
24. The landlord demonstrates that it has had a positive approach, by for example publishing relevant information on its website since at least February 2020; using learning from other landlords; and adapting its communication approaches as time went on. The landlord also demonstrates that it considered the complaint, and made reasonable conclusions that a mortgage applicant would be expected to ensure they have all relevant information, and that a professional broker would be expected to offer relevant advice that reflects the current lending environment for properties like the resident’s.
25. However, the Ombudsman’s spotlight report on cladding emphasises the importance of effective communication from a landlord; the impact the absence of information can cause; and the need for landlords to be proactive to ensure that residents are provided with the right information to make informed decisions and avoid wasting time and incurring unnecessary costs if seeking to re-mortgage. The report also notes that landlords should consider individual circumstances involved.
26. In March 2020, the landlord sent the resident service charge correspondence which included a line that stated the landlord had now employed fire engineers to further inspect all of its taller buildings. The letter’s limitation of this update to a single line was, in the Ombudsman’s opinion, unsatisfactory, and lacked customer focus. The landlord had published information on its website by that time, in February 2020, that mortgage lenders were refusing to lend and the inspections could provide the certification accepted by lenders. The correspondence was therefore a missed opportunity to directly provide effective written communication beyond the single line to explain its relevance to leaseholders. The letter could have included an additional sentence that reflected the website at the time and explained how the inspections affected leaseholders; for example, that mortgage lenders were refusing to lend and the inspections could provide the certification accepted by lenders.
27. More significantly, the landlord confirms that from around November 2020, there were inspections of the resident’s block, and on 19 January 2021, its website was updated to confirm remedial work was required. The landlord did not write directly to residents until 14 April 2021 to advise this; explain a satisfactory EWS1 form could not be issued; and explain the impact on mortgages. In the Ombudsman’s opinion, the lack of a direct update to residents around 19 January 2021, and the three month delay in a direct update, was unsatisfactory. It was inappropriate that the landlord did not appropriately and directly update residents in a timely manner about remedial works required to the block, and that it instead relied upon them proactively viewing its website to find out this important information.
28. The landlord therefore did not consider the individual circumstances and the lack of provision, in an appropriate way, of timely, important information to the resident in January 2021, directly prior to February 2021 when she took steps to try to re-mortgage the property. This chronology shows that the landlord failed to provide in a timely, appropriate way some essential information that would have enabled the resident to make an informed decision immediately around the time in question, and would likely have avoided her wasting time and incurring unnecessary costs in seeking a re-mortgage. This means that the Ombudsman finds it appropriate to make a finding of service failure in this case and to make an order for compensation in recognition of the distress and inconvenience this will have caused.
29. This investigation notes that the mortgage broker’s invoice and website advises there is scope for some refund if a mortgage application falls through or an offer is not achieved. The financial impact on the resident is therefore not clear, as she had the option to discuss the matter with the broker and come to some arrangement. This investigation does not therefore consider it appropriate to order the landlord to reimburse the resident for incurred costs, unless she provides evidence that the re-mortgage application is permanently closed and that she permanently lost monies in relation to the matter.
30. This investigation notes that while the landlord has put in place processes to provide relevant information in the case of property sales, it is unclear to what extent those who may be considering a re-mortgage are directly targeted beyond information on websites. This investigation understands that a property sale may provide more opportunity than a re-mortgage to provide leaseholders with relevant information, however a recommendation is being made to the landlord to consider this aspect further.

Determination (decision)

31. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure in the landlord’s fire safety communication and its response to the resident’s request to reimburse costs for an unsuccessful re-mortgage.

Reasons

32. When informing leaseholders about inspections of its buildings in March 2020, the landlord missed the opportunity to effectively communicate and explain how the inspections affected leaseholders. More significantly, the landlord did not appropriately directly inform the resident in January 2021 about remedial works that had been identified which would impact provision of an EWS1 form and mortgages, and delayed doing so until April 2021. The landlord therefore does not demonstrate that it did all it should have done to warn the resident in a timely manner about lending issues and remedial works, given the circumstances and opportunity presented.

Orders and recommendations

Orders

33. The landlord to:
    1. Pay the resident £200 for the distress and inconvenience caused as a result of the service failings identified.
    2. Liaise with the resident and reimburse incurred costs in respect to the re-mortgage, if she evidences the re-mortgage application is permanently closed and that she has permanently lost monies in relation to the matter.
34. The landlord should provide evidence that it has complied with the above to this Service within four weeks of this decision.

Recommendations

35. The landlord to review how information about the impact of fire certification is proactively targeted at those who may be considering a re-mortgage. This could include considering taking the opportunity to include relevant information in service charge correspondence.
36. While the website should also remain an important source of information, the landlord could also review how it communicates for building / fire safety updates, and consider other communication methods such as emails, text alerts and mail shots, in addition to the service charge correspondence as noted above.