The Guinness Partnership Limited (202012435)

REPORT

COMPLAINTS 202123806 and 202012435

Plymouth Community Homes

And

The Guinness Partnership Limited

3 March 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 landlords have 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 landlords 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 Ombudsman conducted a joint investigation because the residents had a tenant/landlord relationship with both landlords. In respect of the previous landlord, the residents are ex-occupiers so had a legal relationship with the landlord when the matter arose.

Section 25 of the Scheme says that the following people can make complaints to the Ombudsman about members:

1. a person who is or has been in a landlord/tenant relationship with a member landlord. This includes people who have a lease, tenancy, licence to occupy, service agreement or other arrangement to occupy premises owned or managed by a member;

 if the complaint is made by an ex-occupier, they must have had a legal relationship with the member at the time that the matter complained of arose;

The complaint

1. The complaint is about Plymouth Community Homes and Guinness’ communication with the residents about their tenancy status both prior to, and after, a mutual exchange.

Background and summary of events

Background

2. There are three landlords involved in this case. One of the residents had a temporary tenancy agreement with Plymouth City Council (the council) that started in 2001. That property was a two-bedroom house. By 2009, when her husband became a joint tenant, they had a secure tenancy agreement.
3. In 2011 the property transferred to Plymouth Community Homes (PCH) by way of a large stock transfer. At that point the residents had an assured tenancy with protected rights. The tenancy agreement that the residents signed in mid-2011 states that it is an “Assured (non-shorthold) Tenancy Agreement – Transferring Tenants”. Paragraph 13.1 of the tenancy agreement states that, as long as the residents qualified under the legislation, they had the Preserved Right to Buy.
4. In December 2016 the residents did a mutual exchange to move into a three-bedroom property with their two children and became assured tenants of their current landlord, Guinness.
5. “Your Right to Buy Your Home: A guide” published by the Government explains the legislation relating to the Right to Buy scheme, tenants can buy their home at a price lower than the full market value. This is because the length of time they have spent as a tenant entitles them to a discount. In relation to the Preserved Right to Buy, the guide says that if a tenant was an assured tenant of a registered provider, such as a housing association, in normal circumstances they do not have the Right to Buy. However, if they were previously a secure tenant of a local authority and became an assured tenant because ownership of their home was transferred to a registered provider, they may have what is known as the Preserved Right to Buy. This only applies if they were living in their home when it was transferred. It can also apply if the tenant then moves to another property owned by the new landlord. But it does not apply if they move to a property owned by a different landlord.( https://www.gov.uk/government/publications/your-right-to-buy-your-home-a-guide–2/your-right-to-buy-your-home-a-guide#preserved-right-to-buy).
6. Guinness’ Right to Buy procedures say that it should send a RTB2 to the resident when a Right to Buy the property application has been denied. This notice also explains that there is no right of appeal to a residential property tribunal.
7. PCH has a three-stage complaints procedure. It aims to respond within ten working days at stage one and within twenty working days at stage two. Stage three is a panel hearing.
8. Guinness has a two stage complaints procedure. It aims to respond within ten working days at both stage one and stage two.
9. Guinness’ compensation policy says that a goodwill gesture is a payment or other gift that is made to the customer by way of apology when it feels it could have delivered a better customer experience. This is not a payment for loss of service or for an expense.

Summary of events

10. Prior to the large transfer of stock from the council to PCH, the council sent residents a consultation document. This explained how the transfer would affect them and stated that “key tenancy rights would be protected including the Right to Buy …”. It noted later in the document that tenants would have the Preserved Right to Buy and that “this right remains with tenants or any member of their family who succeeds them, even if they later move to another home which is owned by the association, as long as it is not exempt from the Right to Buy. Also, if they have the Preserved Right to Buy and later move to a council home in another area, they would still have a right to buy and any discounts would include their time as a tenant of PCH. The Preserved Right to Buy would not transfer with tenants if they move to a home with a different registered social landlord”.
11. The consultation document went on to say that introductory tenants did not have a Right to Buy with the council, but PCH had agreed to give transferring introductory tenants a contractual right to buy (in the tenancy agreement) which gives the Right to Buy their home on the same terms as the Preserved Right to Buy.
12. In the summer of 2011, the residents signed an assured tenancy agreement with protected rights with PCH as transferring tenants.
13. On 5 October 2016 Guinness responded to a question from the residents about whether or not they would be able to take the Right to Buy with them if they did a mutual exchange. In response Guinness confirmed that, “if you currently hold a secure tenancy with your current landlord, then you will be able to take the Right to Buy with you”. It said if they did not have a secure tenancy then they would not take the Right to Buy with them.
14. On 10 October 2016 PCH received a mutual exchange application form from the residents. The signed declaration stated that they had read the provided information on mutual exchanges. On the application form the residents had written next to “I have an assured tenancy” the words “secured tenancy”.
15. On 25 November 2016 PCH wrote to the residents saying that their mutual exchange had been approved. It also said, among other things, “You may lose the Right to Buy. We advise that you take legal advice on this matter”.
16. Under a deed of assignment dated 5 December 2016, the residents moved out of the property owned by PCH.
17. Over three years later, on 5 August 2020, the residents asked PCH how much Right to Buy discount they had accumulated at the point they had left PCH. It responded the following day explaining that “… PCH tenants have the Preserved Right to Buy if they were Plymouth City Council (PCC) tenants at the time of Stock Transfer (Nov 2009) and have been continuous tenants of PCH since that date. I believe you have transferred to a Housing Association/Trust property. As a consequence of this transfer, you no longer have the RTB …”.
18. On 17 September 2020 Guinness told the residents that they were not eligible for the Preserved Right to Buy on the grounds that they had not had a secure tenancy with PCH.
19. Following further emails from the residents, on 20 September 2020 PCH told Guinness that they had held a secure tenancy from 2001 until 2016.
20. On 21 September 2020 the residents told Guinness they wanted to appeal its decision to reject their Right to Buy application. They said that they had had a secure tenancy at the time of the mutual exchange and both Guinness and PCH had confirmed that they would have the Preserved Right to Buy. In a separate email that day, the residents said that their tenancy agreement also confirmed they had the Right to Buy at section 13.1 (paragraph 3).
21. On 22 September 2020 the residents told Guinness that PCH had confirmed that they did have a secure tenancy with it at the time of the mutual exchange; she asked that Guinness therefore progressed their Right to Buy application.
22. On 27 September 2020 Guinness sent an email to the residents saying that, because they were granted a secure tenancy agreement before 1 April 2012, they had “kept the Right to Buy” when they completed the mutual exchange and therefore could buy the property. Guinness apologised for the inconvenience the miscommunication had caused adding it would be in touch about the progression of their Right to Buy application.
23. On 12 November 2020 Guinness wrote to the residents confirming their Right to Buy the property and said it would issue its offer letter by 7 January 2021.
24. On 21 January 2021 Guinness wrote to the residents saying, after a review of guidance issued by the Ministry of Housing for Communities and Local Government along with the information the residents had provided, it could not proceed with their Preserved Right to Buy application. Guinness explained that, to be eligible for a Preserved Right to Buy, the residents must have previously held a secure tenancy with a local authority and became an assured tenant because ownership of the property was transferred to a registered provider.
25. Guinness gave the background to the residents’ tenancy agreements noting that the residents had had an assured tenancy with PCH. When the mutual exchange was completed, they were again granted an assured tenancy. Guinness said that the residents had never held a secure tenancy but, even in the event that they did have such a tenancy, the Right to Buy would have been lost when the mutual exchange took place and the landlord changed. Guinness apologised that it had previously provided incorrect information about the Preserved Right to Buy. It attached a letter denying the residents’ Right to Buy application but said, as assured tenants, they might have the Right to Acquire and provided an application form.
26. On 20 January 2021 Guinness issued a PRTB2 notice to the residents which denied their Preserved Right to Buy application. This notice explained that to be eligible, the residents must have been on a secure tenancy with the local authority before your property was transferred to the trust/housing association; the supporting information that was provided confirmed that they had never been granted a secure tenancy.
27. On 22 January 2021 the residents made a formal complaint to Guinness.
28. On 1 February 2021 PCH again confirmed to the residents that they had had a secure tenancy. It explained that they had become secure tenants when PCH became their landlord as a result of the stock transfer regardless of what tenancy they had had before with the council.
29. On 5 February 2021 the residents wrote to Guinness chasing a response to their complaint. They said that they never would have moved if they had known they would lose their Preserved Right to Buy.
30. On 16 February 2021 Guinness wrote to the residents at the first stage of its formal complaints procedure. The main points were:

1. Their Right to Buy application was denied on the basis that, when they had completed the mutual exchange from PCH, they had lost the preserved right to buy.

2. It had retracted that decision as PCH had confirmed that they had had a secure tenancy with it. Guinness said it had taken the view that the secure tenancy had transferred over when the mutual exchange took place.
3. After the formal offer, the Right to Buy application went to its governance team for final checks which investigated and then confirmed the original decision to deny the Right to Buy application was correct. It noted that the governance team had reached the view that a secure tenancy could not be carried over on a mutual exchange.
4. It explained the options open to the residents which included an appeal to the first-tier tribunal or a legal claim against the landlord.

31. Guinness offered a goodwill gesture of £150 and apologised for the errors made, the incorrect advice given in 2016 and the delays in reaching the denial decision. It also explained how the residents could escalate the complaint.
32. On the same day the residents told Guinness that it had not captured their complaint accurately. They said they had only progressed the mutual exchange because PCH had confirmed that they could bring their Right to Buy with them as they had a secure tenancy. They said, they would not have progressed the mutual exchange had they been given accurate information. The residents made clear that their complaint was that “on three separate occasions we were advised we could buy the property if we had a previous secure tenancy – at no point had anyone explained that we lost our right to buy the moment we completed our mutual exchange, therefore, we feel mislead and misadvised …”.
33. The residents said they were seeking compensation for the monies they had lost including the money they had spent on renovating the property as they had always intended to buy it. They accepted they had lost the Right to Buy the property. Guinness acknowledged the escalation the same day.
34. On 12 March 2021 Guinness wrote to the residents with the final response to them under its formal complaints procedure. The main points were:

1. There were several occasions where conflicting information was given in 2016 and then again in September 2020, when the residents were advised that they qualified for the Right to Buy the property.

2. The reason for denying the Right to Buy was, to be eligible, they must have had a secure tenancy with the local authority before the property was transferred to the housing association. It noted that that was not accurate and was later corrected in further correspondence to clarify that the Right to Buy was lost when they had completed the mutual exchange.
3. It apologised for this error and re-offered the goodwill gesture of £150 to apologise for the errors made and the incorrect advice given in 2016 as well as the delays in the denial decision being reached.
4. The residents now fully understood that the mutual exchange removed their Preserved Right to Buy and it said it fully appreciated the substantial financial impact that this had had on their family.

35. Guinness signposted the residents to the Ombudsman.
36. On 29 April 2021 the residents sent a “letter of claim” to Guinness (which they subsequently withdrew).
37. In an internal email dated 8 June 2021, PCH’s legal officer noted that all PCH tenants were either assured or assured shorthold; transferring tenants were given assured tenancies with extra contractual rights. He noted that PCH’s computer system refers to them as secure tenants, which he “pointed out years ago but was told it cannot be changed”.
38. On 17 July 2021 the residents made a formal complaint to PCH saying that its mis-advice had meant that they had lost their Right to Buy discount and had also incurred legal costs.
39. On 20 July 2021 PCH responded saying that the residents had had a secure tenancy agreement with the council that changed to an assured tenancy agreement when PCH with a Preserved Right to Buy. It said that the residents had lost their Preserved Right to Buy when they had completed the mutual exchange. PCH said that it had advised them to take legal advice; and quoted from Government guidance on Preserved Right to Buy which stated that this would be lost if residents moved to a different landlord. PCH said it appreciated that it had provided information regarding the secure tenancy that was “inexact”; however, it said that was not the reason they had lost their Preserved Right to Buy, that had happened when they had mutually exchanged.
40. On 30 July 2021 PCH told the residents they were unable to lodge a formal complaint because the reason for the loss of their Preserved Right to Buy was due to Government legislation and therefore fell outside its complaints policy.
41. On 1 August 2021 the residents responded to PCH clarifying that they had believed Guinness had made an error with their Right to Buy; however, after taking legal action they now understood the error lay with PCH. The residents said that, if PCH had not told them they were secure tenants, they would not have completed the mutual exchange. They said they had lost over £100,000 and said that an apology was not sufficient.
42. On 13 August 2021 PCH responded at stage one of its formal complaint procedure. The main points were:

1. Under the Housing Act 1985, a protected right to buy does not transfer to a new property with a new landlord.

2. It said that it was not responsible for the advice given to the residents prior to them proceeding with the mutual exchange in 2016 adding that there was documentation within their possession (or possible for them or their instructed solicitors to acquire) to advise them on whether or not the protected Right to Buy existed on the new property.
3. It apologised about the way in which its computer system “stores information” which meant it told the residents that they had a secure tenancy. It added it had taken action to correct that.

43. PCH did not uphold the complaint and explained how the residents could escalate the complaint.
44. On 20 August 2021 the residents asked for that escalation explaining that it had been “crucial” to them that they did not lose their Right to Buy due to its monetary value and, to their knowledge, they had received sufficient clarification that they would retain it. They said PCH had clarified their tenancy status as secured on numerous occasions (telephone conversations took place and records should be obtainable) and so the mutual exchange took place. The residents also said they subsequently received verbal and written confirmation that they had been secure tenants and provided details of those. The residents added that, if PCH had given them correct information, they would not have moved and would never have taken legal action against Guinness. They said they were seeking their legal costs as well as the Right to Buy discount they had lost.
45. On 28 September 2021 PCH responded at stage two of its formal complaints procedure. The main points were:

1. The residents should have held, or obtained, a copy of their tenancy agreement, which would have clearly confirmed they had an assured tenancy with PCH.

2. They had been clearly advised they might lose their Right to Buy and that they should obtain legal advice on the matter.
3. They apologised that PCH had subsequently given misinformation that they had held a secure tenancy and it was correct that an apology was made for that.
4. However, that misinformation did not lead to the loss of the Right to Buy; the only circumstance in which they would have kept the preserved Right to Buy would have been if they had remained PCH tenants.  It was for that reason that it had advised them to seek their own legal advice before making up their mind to move to another landlord.

46. PCH refused compensation and did not uphold the complaint. It explained how the residents could progress the complaint to a panel.
47. The residents subsequently asked for that escalation explaining they had been told that their assured tenancy was a secure tenancy and that had not been addressed.
48. On 11 November 2021 a PCH Board Member wrote to the residents following the panel earlier that month. The main points were:

1. It did not mis-advise the residents as it had offered no advice regarding the Right to Buy entitlement; however, it did misinform them that their tenancy was secure. This was due to a fault on its IT system which showed all tenancies as secure tenancies when they were not.

2. It had identified a “housing transfer offer” document which went out to all tenants of the council; this contained clarity on what would happen should the stock transfer take place and noted that the tenancies would be assured.
3. The Tenants Handbook on the transfer to PCH referred to an assured tenancy. The panel said it felt that there was significant information available which clarified their tenure which was confirmed by their tenancy agreement, signed by both residents in 2011, which clearly stated that it was an assured (non‑shorthold) tenancy agreement.
4. The panel noted that the residents had not taken legal advice after receipt of the letter from PCH in November 2016 suggesting that they did so (paragraph 15) as they had felt that it was a generic letter. The panel believed that, had the residents done so, it would have become apparent that they had an assured tenancy with a Preserved Right to Buy. The panel said it believed that the resident’s failure to seek independent advice prior to the mutual exchange led to them losing their preserved Right to Buy status.

49. The panel did not consider that compensation was appropriate; it did not uphold the complaint.
50. PCH subsequently told the Ombudsman that it had fully corrected the tenancies on its computer system by December 2021.
51. When the residents approached the Ombudsman, they said that they were seeking compensation to reflect the Right to Buy discount they had lost, their legal fees for the action initiated against Guinness, the cost of the improvements they had made to the property which they had made believing they were able to purchase it as well as for the distress and inconvenience caused to them.

Assessment and findings

52. The residents believed they had a secure tenancy with PCH and demonstrated this in their amendment of their mutual exchange application (paragraph 14). It is not disputed that PCH’s computer system erroneously had the tenancy recorded as secure; therefore, it is highly probable that the resident’s explanation that PCH had confirmed to them that they had held a secure tenancy prior to the mutual exchange was accurate. This, along with Guinness’s assurances that if the residents had a secure tenancy, they would retain their Preserved Right to Buy, meant that the residents entered into the mutual exchange believing that they had retained this right.
53. However, the tenancy agreement signed in 2011 following the transfer of stock from the council to PCH, is clear that the residents had an assured tenancy with PCH, not a secure tenancy. The tenancy agreement makes it clear that, as long as they qualified under the relevant legislation, the residents had the Preserved Right to Buy (paragraph 3).
54. The consultation document which was sent to all residents prior to the stock transfer set out the limits of the Preserved Right to Buy scheme. This explained that this right would not transfer with tenants if they moved to a home with a different registered social landlord (paragraphs 10). This meant that, on moving from PCH to Guinness, the residents lost the Preserved Right to Buy.
55. There was clear misinformation given by PCH to the residents here about their tenancy; however, the residents had signed the assured tenancy agreement which set out that the Preserved Right to Buy did not apply in all circumstances. Th tenancy agreement explained that there were criteria to satisfy in relation to the Preserved Right to Buy; that the residents had to qualify “under the relevant legislation”. Information had previously been provided to the residents about the limits of the Preserved Right to Buy in the consultation documents; information was also readily available online and on PCH’s website. Given the importance of the Preserved Right to Buy to the residents, it would have been reasonable for them to have sought independent advice on whether their Preserved Right to Buy would have been retained on moving to Guinness.
56. It was also reasonable for PCH to suggest to the residents that they seek legal advice as they might lose their Right to Buy. Residents complete mutual exchanges for a variety of reasons and not every resident is interested in, or has the intention of, buying their home. Therefore, it was appropriate that the landlord signposted the residents to seek further advice if the Right to Buy was a significant factor.
57. In responding to an enquiry from the residents in 2020, PCH gave correct information to the residents saying they had lost the Preserved Right to Buy when moving to Guinness. Soon after Guinness also confirmed to the residents that they had lost the Preserved Right to Buy because they had previously had an assured tenancy, rather than a secure one.
58. However, PCH’s subsequent correspondence misled the residents and Guinness by again erroneously confirming that they had held a secure tenancy in September 2020 and February 2021. By this time the resident’s Right to Buy application to Guinness had been turned down on the ground that they had not held a secure tenancy. The residents started legal action against Guinness on the basis of having had confirmation of such a secure tenancy from PCH. While Guinness had put forward the option of an appeal to a First Tier Tribunal, this option was not available to the residents (paragraph 30.d). Given the continued misinformation from PCH, this legal action was an understandable step by the residents to try to resolve matters. In taking this action, the residents became aware that their Preserved Right to Buy had been lost on completion of the mutual exchange.
59. The error on PCH’s computer system was fundamental to the misinformation given to both the residents and Guinness. As PCH was founded in 2011 it was never able to issue secure tenancies or have any secure tenants. It should have been aware of this and, even if it had not resolved the IT error, then it should have made its staff aware of this problem to ensure that correct information about tenancies was given to residents. The evidence shows that PCH was aware of this error and seemingly did not take steps to correct this error over a long period of time (paragraph 37). This was a systemic problem and might may have caused problems to other PCH residents in relation to succession as well as the Preserved Right to Buy. It was not appropriate for PCH to have taken ten years to correct this critical error within its system. This inaction also was not in line with the Ombudsman’s Despite Resolution Principles: Be Fair, Put Things Right and Learn from Outcomes.
60. In relation to the failures identified, the Ombudsman’s role is to consider whether the redress offered by the landlord put things right and resolved the complainant’s complaint satisfactorily in the circumstances. In considering this the Ombudsman takes into account whether the landlord’s offer of redress was in line with the Ombudsman’s Dispute Resolution Principles.
61. Compensation for the loss of the Right to Buy discount nor the cost of home improvements is not appropriate because the residents had information available to them that set out clearly out that their Preserved Right to Buy would be lost if they changed landlords. This information should have been sufficient for them to have sought advice before proceeding with the mutual exchange.
62. PCH has apologised to the residents for the way in which its computer stored information which meant that they were given incorrect information. However, it did not consider the impact of the misinformation on them – the evident distress and inconvenience caused as well as the clear frustration at being told their Right to Buy application could go ahead only for it to be subsequently (and properly) denied. Nor did PCH consider whether or not the continued misinformation about the resident’s tenancy status had led to their legal action, which this Service has determined to be a reasonable step that the residents took to resolve matters. An order has therefore been made for PCH to reimburse the legal fees incurred by the residents.
63. While compensation is not appropriate for the home improvements and Right to Buy discount, PCH’s misinformation to the residents in 2016 and then in September 2020 and February 2021 evidently caused them great frustration, distress and inconvenience. This meant that they were given false hope about their Right to Buy status which ultimately proved to be unfounded after legal action was taken. Compensation is appropriate for that six-month period when the residents were given misleading information about their tenancy as a result of the IT error.
64. Guinness did not have first-hand knowledge of the resident’s tenancy status and therefore were reliant on information from PCH. However, it also interpreted the Preserved Right to Buy rules incorrectly on more than one occasion. In its complaint handling, Guinness offered the residents compensation of £150 acknowledging the errors made, the incorrect advice given in 2016 (paragraph 14) and the delay in the Right to Buy application being refused.
65. Further errors by Guinness have been identified in this report: suggesting that the residents had the right to appeal the Right to Buy refusal to the First Tier Tribunal and stating that it would issue its Right to Buy offer letter before full consideration had been given to the application. Again, these mistakes evidently caused further frustration and inconvenience to the residents and an order for additional redress has been made, below.

Determination (decision)

66. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was maladministration by PCH in respect of its communication with the residents about their tenancy status both prior to, and after, the mutual exchange.
67. In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by Guinness in respect of its communication with the residents about their tenancy status both prior to, and after, the mutual exchange.

Reasons

68. PCH gave the residents misinformation relating to their tenancy over a long period of time. While the residents had access to other documents that contradicted this information, the misinformation meant that the residents – not unreasonably – sought legal advice to resolve the matter; they also suffered evident distress, frustration and inconvenience. PCH failed to fully consider the impact of its misinformation on the residents. Further, PCH was aware of an error on its system which meant all tenancies were recorded as secure; however, action was not taken to rectify this error over many years. That failure to put matters right further supports a determination of maladministration.
69. While Guinness was reliant on information from PCH, it also made mistakes and offered compensation during its complaint handling of £150. Further errors have been identified in this report and additional compensation ordered.

Orders – PCH

70. PCH shall take the following action within four weeks of the date of this report and shall provide the Ombudsman with compliance with these orders:

1. A senior manager to apologise to the residents for the communication errors identified in this report.

2. Obtain evidence of the residents’ legal costs of the action they started in April 2021 and refund those costs in full.
3. Pay the residents compensation of £600 for the distress, inconvenience and frustration caused by the errors identified in this report.
4. Carry out staff training on the Right to Buy/Preserved Right to Buy to prevent similar misinformation being given in the future.

Orders – Guinness

71. Guinness shall take the following action within four weeks of the date of this report and shall provide the Ombudsman with compliance with these orders:

1. Apologise to the residents for the errors identified in this report.

2. Pay the residents compensation of £250 (this includes the sum of £150 previously offered) for the additional errors identified in this report.
3. Carry out staff training on the Right to Buy/Preserved Right to Buy to prevent similar misinformation being given in the future.