The Housing Plus Group Limited (202215056)

REPORT

COMPLAINT 202215056

The Housing Plus Group Limited

30 August 2023

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 the landlord’s handling of the resident’s staircasing application.

Background

The resident was the shared owner of a 2-bedroom flat on the ground floor of a residential block. The housing association landlord is the lessee of the block, and a superior landlord is the freeholder.
The resident contacted the landlord on 26 February 2021 and said she wanted to staircase her share in the property from 50% to 100%. The landlord clarified the process, which was initiated by the valuation of the property on 27 April 2021.
The resident pursued the landlord for an update, and there is evidence that the landlord pursued the matter with its legal team. The landlord said it could not get hold of the freeholder’s management company, which it said was responsible for providing the written consent. Meanwhile, in January 2022, the resident’s mortgage offer had expired, and she applied for a new mortgage, which was at a higher interest rate.
On 8 February 2022, the landlord received an update from its legal team. It said it had established that a different company was responsible for the written consent, which it had now approached to progress the matter.
The resident complained to the landlord formally on 1 April 2022 and said she started the process a year ago and was still waiting for documents from the landlord. She said her solicitor’s fee had increased due to the delay, the interest rate on her mortgage had gone up, and she paid a year’s rent where she should have been paying her mortgage. She said something clearly went wrong on the landlord’s part.
The landlord sent a holding letter to the resident on 20 April 2022 and 19 May 2022, where it apologised for the delay. It said it asked its legal team for an estimated time frame for completion, but it did not have a confirmation date to provide.
The staircasing process was completed on 25 May 2022. The landlord responded to the complaint formally on 22 June 2022 and said:
1. From its investigation, it concluded that no one party was to blame. It apologised for the faults on its part and said there were other contributory factors to the delay, which were outside its control. Other contributory factors included the Covid-19 pandemic and the complexity involved in obtaining the freeholder’s consent which took many months to be issued.
2. It was not possible to quantify what, if any, financial loss was suffered by the resident. It had authorised to complete the transaction based on the 2021 valuation; therefore, the resident benefitted from the house price increase without paying for it. It offered £600 in recognition of the distress and inconvenience the resident experienced.
3. “Lessons have been learnt and applied”.
The resident responded on 26 June 2022 and said the response was inadequate and the landlord’s assurances to progress the matter in-house had not materialised. She refuted the landlord’s suggestion that her solicitor had played a part in the delay and said £600 did not address the financial burden placed on her, which was:
1. 9 months of paying rent rather than a mortgage equated to approximately £1,730.
2. Mortgage rates went up, which was £21 more a month. Over the initial 5-year term of the mortgage on a fixed interest rate, this equated to £1,260.
3. Increased solicitor fees due to the delay.
The landlord responded in its final response letter on 25 July 2022 and said it recognised there were issues with progressing the application and that it could have done better; however, it maintained that a large part of the delay was attributed to chasing the freeholder’s consent. It said the resident could submit evidence of her increased mortgage rates for its consideration. It increased the compensation offer to £1,000. The resident submitted further evidence to the landlord on 26 July 2022. There is a gap in the evidence, and it is unclear whether the landlord responded.
The resident contacted this service on 17 September 2022 and said she would like this service to assess the cost she incurred due to the delay and to determine whether the landlord’s compensation was adequate.

Assessment and findings

Policies and procedures

The lease says written consent from the superior landlord is required before any party can dispose of or transfer interest in the estate.
The Landlord and Tenant Act 1988 imposes obligations on a landlord who receives an application for consent to assign. The landlord must pass on the application within a reasonable period to any relevant third party–such as a superior landlord or other parties whose consent is required.
The landlord’s compensation policy says its prime focus in dealing with complaints is to resolve and seek learning. “An offer of compensation is the exception, not the norm”; however, discretionary payments may be made to settle a complaint or as a goodwill gesture following a complaint. Should a complainant have incurred a material loss, compensation will reasonably reflect this.
The landlord operates a 2-stage complaint process. The landlord aims to respond within 10 working days at stage 1 and 20 working days at stage 2. Both stages may be extended if an investigation is ongoing with a holding letter to the resident explaining the delay.

The landlord’s handling of the resident’s staircasing application

When investigating a complaint, the Ombudsman applies its Dispute Resolution Principles, which include treating people fairly, following fair processes, and putting things right. The Ombudsman must first consider whether a failure on the landlord’s part has occurred and, if so, whether this adversely affected or caused detriment to the resident. If the Ombudsman found that a failure adversely affected the resident, the investigation will then consider whether the landlord has taken enough action to put it right and learn from the outcome.
The Ombudsman would expect that when a landlord receives a staircasing application, it would have procedures to progress the matter without unnecessary delays. If any unexpected delays have occurred, the landlord would be expected to minimise these as much as possible and keep the resident informed about what has happened, the action it has taken or would take to resolve, and whether the original timeframe for completion could still be met.
In this case, the freeholder’s written consent was needed to transfer the interest in the estate from the landlord to the resident. The Ombudsman considers that the landlord had a responsibility regarding the consent. This is because there was no contractual relationship between the freeholder and the resident, and it is also a duty placed on the landlord under the Landlord and Tenant Act 1988.
According to the evidence, the resident received the property valuation report and the paperwork on 27 April 2021, the start of the staircasing process. 2 months later, on 22 June 2021, the landlord was advised by its legal team that the freeholder’s written consent was needed to progress the application, which may delay the process. There is no evidence that this information was shared with the resident. It would have been reasonable for the landlord to forewarn the resident and her solicitor. Such pre-emptive action would have mitigated the resident’s distress that had started to accumulate.
On 27 July 2021, the resident’s solicitor contacted the landlord stating the resident was getting increasingly anxious and asked for an update. The landlord responded on 4 August 2021 that it was finalising the transfer documents and would dispatch these shortly. This suggests that the landlord had not yet approached the freeholder for consent at that time. The first indication that the landlord was awaiting the freeholder’s consent was on 30 November 2021 in an email between the landlord and its legal team.
The resident’s solicitor contacted the landlord on 9 December 2021 and said the resident’s mortgage offer would expire on 6 January 2022. He asked that the landlord apply pressure to get the consent issued. The landlord responded on the same day and said obtaining the consent had proven difficult. The records show that the landlord did pursue its legal team regularly. Meanwhile, the resident’s mortgage expired. She started the process of applying for a new mortgage which was at a higher interest rate than the first mortgage offer. The landlord should have been frank and provided a meaningful update to the resident and her solicitor. Had it done so, the resident could have saved the inconvenience of applying to 3 mortgages during the staircasing process. She may have chosen to wait until the consent was granted first.
On 7 February 2022, the landlord messaged its legal team. It said that the resident was frustrated by the lack of progress and asked whether it was legally obliged to compensate the resident for the ‘unreasonable’ delay and whether it could seek compensation from the management company. The legal team responded the following day. It said it had realised it was a different third-party company dealing with the freeholder consent. It had now contacted the correct company and was awaiting its response. Regarding the compensation, it said that as the management company it initially contacted was not responsible for issuing the consent, any complaint would prove unsuccessful.
The resident raised a first-stage complaint with the landlord on 1 April 2022. She explained her frustration and how she was adversely affected by the landlord’s delay. In accordance with the landlord’s complaint policy, it had sent holding letters to the resident advising that it did not have all the required information to fully respond to the complaint. Meanwhile, the staircasing process was completed on 25 May 2022, 3 months after the landlord contacted the correct company.
The landlord formally responded to the complaint on 22 June 2022, followed by its final response letter on 25 July 2022. The Ombudsman has carefully considered the landlord’s assertions which were:
1. ‘Covid caused business disruptions’ – however, the Ombudsman has seen no evidence to suggest this was the case at the time of the application. On 19 July 2021, virtually all restrictions were lifted as the UK entered Step 4 of Covid recovery.
2. ‘No one party was to blame for the complexity involved in obtaining the freeholder’s consent which took many months’ – As explained above, the landlord was responsible for getting hold of the freeholder. The delay was primarily because the landlord did not contact the company handling the consent on behalf of the freeholder.
Overall, the resident’s staircasing application was not handled appropriately. There was an extensive delay in the landlord’s handling, unrelated to the freeholder’s management agent. Once a few months passed, the landlord should have intensified its efforts and realised it could not get hold of the freeholder’s management agent. This should not have taken 9 months. The landlord has failed to act in a timely manner. In all the circumstances of the case, the Ombudsman is not satisfied that the landlord handled the matter appropriately.
The resident explained how the delay adversely affected her, causing significant distress, inconvenience, and financial loss. The resident’s feeling that something went wrong on the landlord’s part, in combination with the landlord’s lack of clarity and transparency, has caused the resident a great deal of distress and anxiety over a protracted period of uncertainty. Although the landlord did not have absolute control over the entire process, it could have mitigated a significant amount of the resident’s distress by being frank about what went wrong and ensuring its communications were maintained regularly, even if it had no updates for the resident.
Putting things right, the landlord acknowledged within its complaint responses that there were some failings in its handling of the resident’s staircasing application. As such, the landlord was obliged to take action to ‘put things right’ for the resident in line with the Ombudsman’s Dispute Resolution Principles. The landlord stated that one of the remedies was its decision to complete the transaction based on the 2021 valuation. Prior to the completion of the transaction, the landlord sent 2 holding letters in response to the resident’s formal complaint. There is no evidence that the landlord had considered this decision as an element of putting it right for the resident. Carrying out a second property valuation was a decision open to the landlord. However, there is no evidence that this was raised with the resident at any time prior to the completion of the transaction.
Having said that, the landlord offered a package of remedies which included:
1. Acknowledgement of its failures and an apology to the resident. This was appropriate because it demonstrated that the landlord accepted some responsibility for the service failure and recognised the impact on the resident. However, it remained somewhat vague about what caused the delay. It would have made its apology more meaningful if it had explained what went wrong.
2. A compensation payment of £1,000 for the distress and inconvenience caused by its handling of the staircasing application. This amount is at the top end of the Ombudsman’s remedies guidance in circumstances where maladministration by a landlord had adversely affected and caused a significant detriment to the resident and where the redress needed to put things right was substantial. The Ombudsman’s remedies guidance can be viewed on this service’s website.
3. In the final response letter, the landlord said it would be “willing to review the offer should the resident provide any evidence of increased costs as a result of the delay with the process”. This was appropriate and in line with the Ombudsman’s Dispute Resolution Principles.
Overall, the landlord has taken appropriate steps to acknowledge and apologise for the shortcomings in its communication and offered appropriate compensation. The landlord’s apology and its offer of compensation are appropriate redress to resolve the complaint. The landlord’s acceptance to reconsider the resident’s expenses is appropriate, and together, these measures amount to reasonable redress to resolve the complaint.
Had the landlord not taken steps to put things right for the resident, the Ombudsman would have found maladministration in the landlord’s handling of the resident’s staircasing application. On the consideration that the landlord remains committed to its offer of remedies in accordance with its final response letter, as detailed in paragraph 29 of this report, in the Ombudsman’s view, this amounts to reasonable redress that resolves this complaint.
Finally, although the landlord said that lessons were learned, measured, and implemented, no details were provided, and it is not clear what actions it would take to prevent similar issues from recurring. Recommendations havebeen made below for the landlord’s consideration.

Determination

In accordance with paragraph 53 (b) of the Housing Ombudsman Scheme, the landlord has offered redress to the resident prior to the investigation, which, in the Ombudsman’s opinion, resolves the complaint about the landlord’s handling of the resident’s staircasing application satisfactorily.

Recommendations

If it has not already done so, the landlord should pay the resident the £1,000 in compensation it offered during the complaint process in recognition of the distress and inconvenience caused by its handling of the resident’s staircasing application.
The landlord should specify to the resident what evidence it requires to ascertain the financial loss incurred. Once submitted, it should reconsider reimbursing the resident in line with the dispute resolution principles to put things right for the resident.
The landlord should specify in its formal responses what it learned from the handling of the complaint. It would benefit the landlord to ensure it does not repeat mistakes that could have been avoided. It would also benefit the resident as it demonstrates that the landlord carefully considered its handling of the complaint, and it would ultimately help improve the landlord and tenant relationship going forward.