The Guinness Partnership Limited (202121165)

REPORT

COMPLAINT 202121165

The Guinness Partnership Limited

31 May 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:
1. the landlord’s handling of the resident’s Right to Acquire application (‘the RTA’), including its denial of the right; and
2. complaint handling.

Background

In January 2021, the landlord acknowledged the resident’s RTA application. The landlord explained that it would be undertaking eligibility checks. On 22 February 2021, the landlord sent the resident an RTA2 form confirming her eligibility and said she can expect to hear from it by 20 April 2021.
On 21 April 2021, the landlord wrote to the resident again to explain that it cannot transfer the property to her and denied her RTA. It said that a planning obligation affecting the property required an equity cap of 75% of any affordable housing units sold. It explained that as a right to acquire offers 100% equity to purchasers it would not be possible for it to meet this. The landlord decided to deny the resident’s RTA and apologised for being unable to progress her application.
The resident sought advice from the Ministry of Housing, Communities and Local Government (MHCLG) and her local council on the issue. She wrote to her landlord in June 2021 to say that the MHCLG indicated that the planning obligation does not supersede the right to acquire. The MHCLG also told her that it may be possible to apply to change or remove the restriction. The resident asked her landlord to reconsider her RTA. In July 2021, the resident also asked her landlord to remove the restriction or apply for it to be removed.
The resident made a formal complaint on 29 July 2021 as she had not received a response from her landlord, the landlord logged this on 7 September 2021.
On 25 September 2021, the landlord responded at stage one of its complaint process to say:
1. That whilst completing due diligence, it discovered it was unable to sell the property because of a restriction between the landlord, the council, and the developers of the building.
2. The restriction was that when a registered social landlord first seeks to sell a unit, it (the unit) should remain affordable housing and the level of ownership that could be sold was capped at 75%.
3. As the RTA allows housing association tenants to buy their home, owning 100% of the equity, the landlord would be unable to sell the property and meet this cap.
The landlord apologised that it did not disclose this information before April 2021. It referred to a telephone conversation between it and the resident on 24 September 2021 where the resident suggested she will look to remove the clause. The landlord indicated that, if this is successful, it would consider any future RTA applications. The landlord rejected making any application to change or remove the clause due to concerns about the legal costs involved.
The resident requested an escalation of the complaint in October 2021 and received a stage two response on 12 November 2021. The landlord stated that it could not proceed with the RTA as it could not change the criteria for the scheme. However, it said it would continue to support the resident if there were changes to the restriction. The landlord asked the resident if she had contacted the local council.
The resident referred her complaint to this Service dissatisfied with the landlord’s final response. She is asking the Ombudsman to reinstate her RTA.

Assessment and findings

The handling of the RTA application

The resident had the statutory right to acquire in certain circumstances as set out under the Housing Act 1985, as amended by the Housing and Regeneration Act 2008 and in accordance with the associated regulations. The landlord appears to have accepted that the resident met with these – that means the resident had the statutory right to acquire.
The issue in this case, however, is that the landlord entered a restriction on selling the property in favour of the local council, under a section 106 agreement. A section 106 agreement is a promise by developers to ensure that all or some of the properties built with be social housing and affordable in return for the local authority granting planning permission.
If a developer acts contrary to a section 106 agreement, the local authority could stop the sale by way of injunction. If the sale goes ahead against restrictions, the section 106 agreement is enforceable against those purchasers. Therefore, the local authority could seek an order of the court for the property to be transferred back to the developer or landlord.
In this case, the landlord is not a party to the section 106 covenant. There is no such provision which restricts the sale of the property in the way the landlord has suggested. Moreover, if the landlord owns the freehold or leasehold of the property then any such restriction to maintain 100% of the property, therefore, is already likely to be breached. Lastly, the local authority has stated, in its letter of 21 February 2022, that:

“The Council confirm that the obligations […] do not apply to an Affordable Housing Provider as stated in the proviso to this paragraph.”

This is compelling evidence that the landlord arrived at the wrong conclusion on whether it could sell the property to the resident. Secondly, that it did not fairly consider how it could put things right and consider other alternatives. The landlord must reconsider this.
Before confirming the resident’s eligibility, the landlord ought to have resolved the issue with the section 106 agreement and restriction first.
Where a mistake is made this Service expects landlords to apologise and put things right at the earliest opportunity. The landlord wrote to the resident in April 2021 to deny the resident’s RTA however the explanation it gave did not reflect on what had gone wrong or make any suggestions on how it might put things right. It would have been appropriate for the landlord to acknowledge the level of disappointment she was likely to experience.
Even if the landlord could not have sold the property at that time, it still could have:
1. applied to the local authority to have the covenant waived or set aside; or
2. offered the resident an alternative property she could purchase under the RTA.
The landlord also missed another opportunity to put things right by failing to address the letter the resident sent on 28 June 2021. The Service has seen evidence that the resident sent this by recorded delivery and that the landlord received it on 29 June 2021. Despite this fact the landlord requested another copy of this letter on 12 August 2021, and it did not respond until 25 September 2021. This was 88 days after the landlord received it, the excessive delay, and the request to resend an item it had already received would have caused the resident frustration and was unreasonable.
The landlord, in its response in September 2021, elaborated on the explanation for denying the resident’s RTA provided in April 2021. However, it failed to comment on the advice given by the MHCLG or consider the resident’s requests to reconsider the application and apply to change or remove the clause. This was unreasonable of the landlord as it failed to engage with the substance of the resident’s concerns.

The complaint handling

The landlord also failed to respond to the resident’s complaint in a timely manner. Despite the resident complaining on 29 July 2021, it did not log her complaint until 7 September 2021. This was around 27 working days after the resident made the complaint. It took the landlord around 40 working days to respond to the resident’s stage one complaint. The landlord’s complaint policy requires a response within ten working days. The resident requested an escalation in October 2021 but did not receive a stage two response until 12 November 2021 which again was another unreasonable delay. These considerable delays in complaint handling would have likely increased the distress caused to the resident.
The purpose of stage two of a complaint process is to allow the landlord to review its response at stage one against the evidence to see if this was correct or not. It allows an important opportunity for a landlord to put things right or confirm its original position however it must be fully reasoned. The response provided by the landlord again failed to comment on the advice given by the MHCLG or consider the resident’s requests to reconsider the application and apply to change or remove the clause. It did not explain why it would not be able to apply to change or remove the clause or whether there were other alternatives, for example offering an alternative property to the resident under the RTA provisions.
The evidence also shows that the landlord was intent on placing the burden on the resident to resolve any legal issues which was unreasonable. The RTA is a statutory right and landlords should not expect residents to obtain legal advice on the exercise of the right by the landlord.

Compensation

Given the matter remains outstanding still, the Ombudsman considers compensation is due. Under the Ombudsman’s Remedies Guidance (available on our website), compensation of £550 would be fair in all the circumstances, having regard to the distress and disappointment the resident experienced. Moreover, an award of £150 would be fair in all the circumstances, for the landlord’s handling of the complaint.

Determination (decision)

In accordance with paragraph 52 of the Ombudsman’s Scheme, there was maladministration in the landlord’s handling of the resident’s Right to Acquire application, including its denial of the right.
In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was service failure in the landlord’s handling of the complaint.

Orders

The landlord is ordered to, within 28 days of the date of this report:
1. Pay the complainant £700 compensation made up as follows:
  1. £150 compensation for the errors in the complaint procedure
  2. £550 compensation for failing to properly consider the resident’s right to acquire application, and the other alternatives available for the resident
2. The landlord must reconsider the Right to Acquire application again. In doing so it must consider the issues listed at paragraph 27.
In consider the application the landlord must:
1. seek competent legal advice on whether there is the restriction the landlord believes there is
2. following the legal advice on considering ways in which the resident may be able to acquire the property
Within 28 days of the date of this determination, the landlord must write to the resident with a fresh decision on the right to acquire application.
The landlord must provide evidence of compliance with these orders to this Service within 28 days of the date of this determination.

Recommendations

It is recommended that within eight weeks of the date of this report, the landlord:
1. reviews the training it provides to its staff on the RTA process and the need for comprehensive eligibility checks;
2. offers refresher training to staff on how to identify and log complaints appropriately;
3. consider the Housing Ombudsman’s training on complaints for its complaint staff; and
4. inform this Service of its intentions concerning these recommendations.