Home Group Limited (201912966)

REPORT

COMPLAINT 201912966

Home Group Limited

15 June 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 complaint is about the landlord’s response to the resident’s concerns regarding the administration of the sales procedure in respect of the property which she owned.

Background and summary of events

Background

The resident was the shared owner of the property (the property) which the complaint concerns. The landlord is the freeholder.
The property is part of a “scheme for the elderly” (the scheme).
The property was sold in December 2020.
The resident’s son (the representative) makes the complaint on the resident’s behalf. The representative has provided a Lasting Power of Attorney naming him as the resident’s attorney.

Summary of events

In spring 2018 the representative contacted the landlord to inform it that the resident had permanently moved into a care home and would therefore be selling the property. The representative noted that the proceeds of the sale would be used to fund the resident’s care costs.
On 20 April 2018 in correspondence to the resident regarding the sale of the property the landlord explained that “all prospective purchasers [would] be offer checked and need to be approved by [it] ahead of a formal notification of sale being issued”.
In July 2018 the landlord marketed the property and in August 2018 a buyer was identified to purchase the property (buyer A). The Ombudsman understands that buyer A was eligible to purchase the property automatically as they were ex–armed forces.
In early October 2018 buyer A decided that they no longer wished to proceed with purchasing the property.
On 11 October 2018 the representative wrote to the landlord setting out that buyer A had informed him that they decided to withdraw from the sale of the property as it had been slow in responding to their requests for “basic information”. Within their correspondence the representative asked the landlord to clarify the nomination period for future marketing of the property.
On 19 October 2018 the representative confirmed to the landlord that he wished to continue to use its marketing service to sell the property.
In February 2019 the landlord wrote to the estate agent which the representative had instructed to market the property, following the end of the landlord’s extended nomination period. Within the correspondence the landlord confirmed that anyone wishing to purchase the property must be assessed and approved by it before any sale could be agreed. The landlord also set out the eligibility criteria for applicants who wished to purchase the property. This included confirming that an applicant’s total household income must be under £80,000 and they must be unable to afford to buy a property suitable for their family size on the open market.
In March 2019 a second buyer (buyer B) confirmed that they wished to submit an application to purchase the property.
On 2 April 2019 the representative wrote to the landlord setting out that he was concerned to learn that buyer B’s application to purchase the property was rejected by it as they did not meet the following condition – “applicants must be unable to afford to buy a property suitable for their family size on the open market”. In summary the representative said:
1. Buyer B had an “obvious need” for the property, due to mobility issues following a stroke, as it had been adapted.
2. The application process should not take into account how much money buyer B had.
3. The landlord’s application process and eligibility requirements restricted the “number of potential buyers to a very small pool”.
4. Despite the resident owning 70% of the property, she had no say in how the property was sold.
5. The resident needed to sell the property quickly.
The representative concluded by asking the landlord to reconsider buyer B’s application to purchase the property or for it to consider buying back the resident’s 70% share.
On 6 April 2019 the representative wrote to the landlord setting out that the local authority had a “legal charge on the property” in order to fund the resident’s care costs.
On 8 April 2019 the landlord wrote to the representative regarding the sale of the property. In summary the landlord said:
1. Its decision to refuse buyer B’s application to purchase the property was “based solely on the scheme eligibility criteria”.
2. It was governed by Homes England and therefore must adhere to its rules and procedures contained within the Capital Funding Guide (CFG).
3. Older persons shared ownership properties were designed to help people in housing need who were unable to afford to purchase a property on the open market. The landlord explained that applicants for the scheme were therefore subject to eligibility and affordability requirements which included an age restriction and financial assessments.
4. According to the evidence provided at the application stage it was “apparent” that buyer B was able to purchase a similar property on the open market which meant that they were not eligible to purchase the property. The landlord confirmed that buyer B did not meet the eligibility criteria for the scheme as set out in the CFG, section 3.1.2 which stated “shared ownership applicants must have a household income of less than £80,000, and be otherwise unable to purchase a property suitable to meet their housing needs on the open market”.
On the same day the representative responded. In summary the representative said:
1. He was unaware of “help to buy” in relation to the property as the lease did not mention this.
2. Buyer B had a “long term disability” and because the property was adapted it was suitable to meet their housing need. The representative stated that the landlord had not considered that buyer B was eligible to buy the property under the HOLD scheme. (Note – the HOLD Scheme gives people with long-term disabilities an opportunity to purchase a shared ownership home and live independently).
3. Buyer B had family living nearby the property which was one of the eligibility requirements for the property.
4. The landlord appeared to want to give priority to buyers who did not exist.
The representative concluded by confirming that he would raise the matter with his MP.
On 11 April 2019 the landlord wrote to the representative. In summary the landlord said:
1. The resident owned a 70% share in the property. The landlord confirmed that shared ownership was a help to buy scheme.
2. The section of the CFG which related to older persons shared ownership was section 3.7.7 which set out:
  1. Applicants with sufficient equity to be able to purchase a suitable property on the market should not be assessed as eligible.
  2. There is no cap on the level of savings or investments that an applicant can retain for this purpose. The provider should make a judgement on this on a case-by-case basis according to the individual circumstances of the applicant, but the overall expectation remains that older persons shared ownership applications will use the majority of their capital to fund the purchase of the property.
3. The evidence demonstrated that buyer B had sufficient equity to purchase a property on the open market which meant that they could not be assessed as eligible.
4. It was not obligated to facilitate the HOLD scheme for buyer B as their situation precluded them for purchasing the property due to the amount of equity held.
On 26 April 2019 the representative’s MP wrote to the landlord following recent contact he had made regarding the sale of the property. In summary the MP requested that the landlord clarify:
1. When the changes to conditions for sale were imposed.
2. Why were leaseholders not informed of the changes.
3. Limits on capital and income for an applicant.
The MP concluded by confirming that if the property could not sell the local authority would put the property up for auction “within a year” as they had an interest in it. The MP also stated that they believed that it was “deeply unfair that [the resident was] having to pay service charges and contribute to the sinking fund, despite no longer living on the estate”.
On 10 May 2019 the landlord responded to the MP. In summary the landlord said:
1. The restrictions relating to the sale of the property were stipulated in the property’s lease. The landlord noted that the property’s lease had not changed.
2. The resident’s eligibility was assessed on purchasing the property.
3. Shared ownership was a help to buy scheme.
4. It was regulated by Homes England and it must adhere to its rules and procedures as set out in the CFG. The landlord reiterated sections 3.1 and 3.7.7 of the scheme in relation to the property.
5. The representative first raised concerns regarding the sale of the property following buyer B’s unsuccessful application. The landlord reiterated that buyer B was not eligible as their application demonstrated that they had suitable funds to purchase a similar property on the open market.
6. It had provided detailed information to the representative’s estate agent regarding general eligibility criteria. The landlord confirmed that the guidance stated:
  1. The limit on total household income was £80,000
  2. Applicants must have sufficient funds to either purchase the 70% share outright or to obtain a mortgage. The landlord noted that if applicants could purchase the share outright they must not be able to purchase a similar property on the open market. The landlord added that if an applicant’s savings exceed 100% value of the property they would need to demonstrate why their financial circumstances prevented them from purchasing a property on the open market.
  3. Applicants must be unable to afford to buy a property suitable for their family size on the open market.
  4. Applicants must have sufficient funds to cover the costs of buying.
7. The estate agent should contact it with information of potential buyers as soon as possible so it may complete pre-screening to avoid potential disappointment.
In summer 2019 the landlord held a meeting with leaseholders and a representative of the MP regarding resales. The Ombudsman understands that the landlord reiterated that applicants to purchase a property within the scheme had to meet eligibility criteria as set out in the CFG.
On 20 August 2019 the MP wrote to Homes England regarding the sale of the property and to seek clarification regarding the eligibility criteria of applicants including amount of savings and definition of similar properties. Within their correspondence the MP noted that historically the landlord had not applied the help to buy criteria when approving sales for other properties within the scheme. The MP advised that none of the current leaseholders were requested to disclose financial information to prove eligibility when purchasing their properties.
On the same day the MP also wrote to the landlord to request clarification regarding the sale of the property. The MP requested clarification on the following matters:
1. While they noted the landlord’s claim that no changes had been made to the lease regarding shared ownership they were aware of one leaseholder who purchased a property in the scheme five years ago but was not asked about their savings or capital.
2. It was unfair that applicants should primarily be expected to be first time buyers as the scheme was for older people.
3. There had been a fall in interest for retirement properties so it was unfair that the landlord was applying rules to a market that did not exist.
4. Conflicting information had been given regarding maximum savings an applicant may have to be eligible to purchase a property.
5. It was unclear which similar properties the landlord had identified on the open market.
On 10 September 2019 the landlord wrote to leaseholders regarding resales. In summary the landlord said:
1. Shared-ownership was help to buy.
2. The percentage of the property owned by the leaseholder was classified as “affordable housing”.
3. It was happy to support promotional activities by jointly marketing a property alongside an estate agent. The landlord noted that during this period of “reduced demand” it was able to pass on all leads to estate agents and would waive its resale fee when marketing on a joint basis.
4. It was happy to pre-screen any interested applicants to establish if they would in principle be eligible to purchase the property before they take further steps to instigate a sale.
5. It had not made any changes to the restrictions within the lease but it had made some changes to the application process since the current leaseholders purchased their properties. The landlord confirmed that this was in line with the terms of the lease which set out “it is intended to demise all the dwellings… to elderly retired persons or such other persons of pensionable age as shall qualify for a tenancy in accordance with the objects of and criteria established by the landlords from time to time”.
6. After reviewing its process it acknowledged that the application process was not fit for purpose and it had therefore “revised the customer journey” so that the information supplied was “explicit and informative”.
7. Homes England expected it to follow the guidelines set out in the CFG. The landlord noted that the requirements had previously been explained.
8. It considered each applicant to purchase a property on a case-by-case basis.
9. It could not justify approving an applicant because they needed a property like those within the scheme.
10. It did not expect applicants to be first time buyers.
11. It understood that some applicants may have savings which exceed the 100% value of the property. In considering such applications it applied discretion on a case-by-case basis. The landlord noted that it took a “holistic approach to assessing applications and so if an applicant’s specific circumstances required them to having savings/ capital in excess of this limit [it] would take this into account”.
12. It recognised that it must do more to support sales of the 70% owned homes within the scheme. The landlord confirmed that it would keep in mind that applicants for properties were usually downsizing and may need a higher level of savings to maintain the costs of home ownership and care in the future when reviewing future applications.
On 11 September 2019 Homes England responded to the MP. In summary Homes England said:
1. The scheme was a leaseholder scheme for the elderly where applicants purchased a 70% fixed equity amount but did not pay any rent on the unowned element.
2. It was the responsibility of the landlord to assess the suitability and eligibility of each applicant to the scheme, ensuring they could sustain the cost of home ownership including any future care costs.
3. Its role was to set out the broad eligibility criteria for such schemes but it was not within its remit to determine the outcome of individual applications. Homes England noted that its affordability guidance required applications to demonstrate that they were unable to purchase a suitable home for their purpose on the open market and that the purchase was considered affordable and sustainable.
4. Properties within the scheme were only eligible for persons aged 55 or over.
5. Applicants to purchase a property within the scheme did not have to be first time buyers.
6. It did not set an upper limit for the amount of savings an applicant was allowed to hold. Homes England noted that it was expected that each applicant would be assessed according to their own individual circumstances by the landlord. Homes England confirmed that it had contacted the landlord who advised that it considered that an applicant with “more than twice the value of the 70% share they [were] looking to purchase [was] able to purchase on the open market”.
7. With regards to guidelines on similar properties, it expected suitable to be defined as any home that meets the needs of the applicant currently and in the future.
On 27 September 2019 the representative wrote to the landlord regarding the sale of the property. In summary the representative said:
1. Following the MP’s enquiry he had learnt that it was the landlord “who [had] made the catastrophic decision to apply a cap on buyers’ savings and it [was the landlord] who [were] applying the wrong rules to the over 55’s”.
2. While the landlord had only rejected buyer B the restrictions it had imposed was putting off other buyers.
3. He was aware that another property on the scheme had sold five years ago without consideration of the eligibility criteria.
4. The delay in the sale of the property was impacting on the resident significantly, including financially and on her health.
On 1 October 2019 the landlord responded to the representative. In summary the landlord said:
1. It had not had sight of Homes England’s position on its assessment of applicants to the scheme.
2. No changes to the restrictions within the lease had been made however it had made changes to the application process since the resident purchased the property.
3. It acknowledged the impact the lease terms and sale of the property was having on the resident.
4. It had offered to jointly market the property with the estate agent to generate a buyer.
5. It was sorry for any miscommunication regarding a buyer’s journey.
6. It would explore granting permission for the resident to sublet the property while the property was on the market.
On 7 October 2019 the representative responded to the landlord. In summary the representative said:
1. The landlord’s offer to sublet was not suitable as it would result in more work and would not bring a successful sale any nearer.
2. The resident’s care fees could only be cleared on the sale of the property.
3. He was aware that the resident may surrender her shares under the terms of the property’s lease but it was not clear when she would receive the money for her shares if she did so.
4. The landlord had set a cap on an applicant’s savings, not Homes England. The resident stated that every potential buyer had too much capital if they sold a property as the cost of the property was “low”.
5. It was unsatisfactory that the landlord had delayed in advertising the property on the help to buy website.
6. The resident was unable to sell the property to a market which did not exist. The representative stated that the market was created by the landlord.
The representative concluded by confirming that he would like the landlord to admit that it “made an error of judgement regarding the market and eligibility and revert to selling as [it] used to”. The representative confirmed that he would pursue the matter.
In late 2019 the representative referred his concerns to the Ombudsman for consideration. The Ombudsman explained that it could not adjudicate on the representative’s concerns until the matter had been explored under the landlord’s internal complaint procedure. The representative confirmed that he would raise a formal complaint with the landlord.
The Ombudsman understands that in early 2020 a third buyer withdrew from the sale of the property. It is not clear from the evidence why the buyer withdrew.
On 4 May 2020 the representative wrote to the landlord to raise concerns relating to the sale of the property. In summary the representative said:
1. In April 2019 he had asked the landlord if it would be willing to buy the resident’s share of the property however it had not responded. The representative asked the landlord to clarify the process.
2. Following the leaseholder meeting in August 2019 the landlord had agreed to review documents relating to the sale of another property in 2015 to determine if eligibility criteria had been applied, however it had not done so.
3. He had reviewed the lease and it did not state that the property was brought under any specific rules or restrictions.
4. Homes England had confirmed that it did not set an upper limit on savings an applicant may have, and it was not clear why the landlord had chosen to do so.
On 6 May 2020 the landlord responded. In summary the landlord said:
1. It would not be able buy back the resident’s share of the property. The landlord said that following receipt of the resident’s intention to surrender the lease it had taken all “reasonable steps to procure the grant of a new lease to a suitable person”. The landlord confirmed that it would continue to liaise with the estate agent to progress any new applications.
2. “Historic transactions [bear] no direct relation to current processes”.
3. It showed “great flexibility” when applying the clearly defined criteria set by Homes England when considering applicants for the property.
4. It had not made any changes to the restrictions within the property’s lease however it had made some changes to the application process since the resident had purchased the property. The landlord noted that none of the leaseholders were informed of the change in the application process and therefore it was aware that its communication had fallen short.
5. It had reviewed the customer journey to ensure that the information provided was explicit and the application process met Homes England’s guidelines.
6. “There [was] in fact a limit put in place by Homes England”. The landlord confirmed that the CFG stated that “applicants with sufficient equity to be able to purchase a suitable property on the open market should not be assessed as eligible”.
7. “It always exercised flexibility and doubled the purchase price to ascertain a provisional upper limit for [its] headline eligibility checks”. The landlord confirmed that even if the higher upper limit for savings, equity and investments was reached the application would not be rejected. The landlord explained that it considered the amount of income needed by the applicant to cover basic costs of living and to allow for any shortfalls between their actual and required incomes over a period of time in line with their age. The landlord confirmed that therefore there were scenarios where there was no cap on savings and investments which an applicant may have. The landlord set out that it will make a decision on a case-by-case basis, but the “overall expectation remained that the applicants [would] use the majority of their capital to fund the purchase of the property”.
On 26 May 2020 the representative made a formal complaint to the landlord regarding the sale of the property. In summary the representative said:
1. He started the process to sell the property in July 2018 and during this time he had been “driven to [his] wits end when dealing with [the landlord]”.
2. Buyer A pre-qualified as he was ex-services however withdrew as he was fed up with the landlord. The representative stated that the landlord’s “tardiness” in responding lost buyer A.
3. Following buyer A withdrawing he asked the landlord regarding the possibility of the resident surrendering the lease however it did not respond.
4. Buyer B was rejected as they would have “too much savings after purchasing” the property. The representative stated that prior to buyer B the landlord had not previously rejected an applicant for a property in the scheme due to the amount of savings they had.
5. He did not agree that the landlord was following Homes England’s guidance in setting an upper limit on equity as Homes England had confirmed that it had set the cap itself.
6. The landlord had suggested that the resident sublet the property however this was not permitted under the lease.
7. It was an “arrogant and ignorant attitude” by the landlord to state that past sales were not relevant. The representative noted that in the past properties in the scheme had sold very quickly.
8. Despite the landlord agreeing to look at information relating to the sale of a property within the scheme five years ago it had not done so. The representative suggested that the paperwork would have shown that no cap on the applicant’s savings was imposed.
9. The landlord’s actions had impacted on the resident financially and caused distress and inconvenience.
10. He would like the following outcomes:
  1. An apology from the landlord for “unnecessary stress”.
  2. A written statement clearly stating that the criteria to purchase the property “remains at over 55’s, local connections, own no other property or landlord on completion of purchase”.
  3. £10,044.20 which was interest charged from 1 October 2018 to 24 November 2019 in respect of the local authority’s legal charge on the property.
  4. £661 which was the administration fee to the local authority in respect of the legal charge on the property.
  5. £180 for valuation fees.
  6. £1173.09 for service charges incurred since October 2018.
  7. £500 for distress and inconvenience.
  8. Interest on all the amounts above at a rate of 8%.
On 16 June 2020 the landlord provided its stage one response. In summary the landlord said:
1. “Despite the tireless efforts of [the resident’s] estate agent and [itself]” the property had not sold.
2. Many of the representative’s enquiries did not get answered promptly or clearly enough to support and enable decisive action on the sale of the property.
3. It was sorry for the delay and obstacles the resident and representative had faced.
4. Its priority when selling homes on an affordable home ownership scheme was to meet the terms set out within the lease and look after its new and existing customers fairly and responsibility. The landlord noted that Homes England expected this of it.
5. It had learnt that its sale process for its retirement properties could “be disruptive and cause delays”. The landlord confirmed that it was working to improve processes.
6. As previously explained there were restrictions for prospective buyers on having sufficient capital to purchase a property on the open market outright and cover their future housing and care needs without the need for a subsidised property.
7. The lease allowed a leaseholder to surrender their share with the consideration payable once the property had resold, which was an indeterminate length of time. The landlord confirmed that it would like to offer the resident, as a gesture of goodwill and on an entirely without prejudice basis, an immediate surrender of the lease and payment for the relevant consideration that she was entitled to. The landlord noted that the consideration was subject to a number of deductions including outstanding service charges, its sales fee, sinking fund contribution and the cost of any works to the interior of the property to put it in equivalent condition as at the start of the lease.
The landlord concluded by asking the representative to confirm if the resident accepted its offer and if so, it would take steps to start the process.
On 19 June 2020 the representative requested to escalate the complaint as he considered the landlord’s decision and offer “unacceptable”.
On 29 July 2020 the landlord provided its final response. In summary the landlord said:
1. It was clear that communication had been an issue throughout the process to sell the property for which it was sorry.
2. The criteria to purchase an older person’s home under the affordable home ownership initiative at the scheme was as follows:
  1. Buyers and occupiers must be aged 55 or over.
  2. Buyers must not already own a home or need to sell any existing property owned before purchasing.
  3. Buyers would need to be able to secure a mortgage or have sufficient savings to pay for the share in full.
3. The criteria used to include the condition that buyers should be unable to purchase a home suitable for their needs without assistance. The landlord noted that a financial assessment was used to determine this.
4. Property sales and transactions often failed due to a wide range of reasons. The landlord stated that it was however sorry for any impact its actions had on buyer A withdrawing from the sale of the property. The landlord noted that buyer A withdrew because of delays in its response to a service charge enquiry. The landlord confirmed that it was taking steps to improve the timeliness of communication.
5. On 2 April 2019 the representative sent an email asking “would you be willing to buy out our share of the property so we can finally move on?”. The landlord confirmed that it failed to respond for which it was sorry.
6. It was “duty bound to adhere to the funding regime and assist those with the greatest need” to purchase a home. The landlord confirmed that where an applicant presented “a financial circumstance that [did not] require the benefit of a discounted home” a view was taken on their eligibility. The landlord advised that it recognised that in “this financial climate” an applicant’s circumstances were not so easily assessed and determined as when the tenure first began. The landlord confirmed that it now placed greater emphasis on “an individual’s overall need and the locality alongside the ability to sustain the cost of home ownership”.
7. Its method and practice in determining eligibility was based on the CFG.
8. The over 55 retirement market had changed in recent years which had resulted in it making some fundamental change to its practices which came into effect in November 2019. The landlord noted that it had a record on file that it made the representative and estate agent aware of the change at that time. The landlord clarified that the change was “to a greater emphasis being placed on a prospective buyers’ overall need, being a non-home owner at the point of purchase and evidence of them having funds to purchase the property”.
9. No changes had been made to the property’s lease.
10. It was able to waive lease obligations in exceptional circumstances and therefore it had suggested subletting as an option to the resident.
11. Recent comparable sales evidence had proved that there was demand for affordable retirement properties within the local area. The landlord noted that a property within the scheme had recently sold within days of being listed.
12. Documentation had not been retained in relation to the sale of a property in the scheme in 2015 as it was not required to do so. The landlord noted that had the information been available it would have been unable to share it due to data protection rules.
13. It was sorry for the ongoing impact the situation was having on the resident and representative.
14. Its offer to immediately buy back the resident’s share of the property was instead of compensation. The landlord reiterated its offer, advising that it would hope to conclude the process within three months if the resident agreed. The landlord confirmed that on further consideration of the complaint it would waive its sales fee (£240) and reimburse the valuation fee if the resident choose to surrender her share.
15. It was not liable for any costs which the representative was requesting compensation for in respect of the charge on the property by the local authority.
16. It was not liable for the management and service charge payments which the representative requested refunding.
17. It would like to offer the resident discretionary compensation of £250 comprising £100 for delays, £75 in respect of “service failure” and £75 in respect of time and effort pursuing matters.
As the representative was not satisfied with the landlord’s response he referred the complaint to the Ombudsman for adjudication.

Assessment and findings

Scope of investigation

The representative has suggested that due to the complaint, the resident’s health has deteriorated. Whilst this may be the case, it is beyond the expertise of this Service to reasonably determine a causal link between the landlord’s administration of the sale of the property and the deterioration of the resident’s health. The Ombudsman has therefore made no comments in relation to this. Should the representative wish to pursue this matter, legal advice will need to be sought.

The landlord’s response to the resident’s concerns regarding the administration of the sales procedure in respect of the property which she owned.

The Ombudsman understands that the resident was in a very difficult situation through no fault of her own, and that she needed to sell the property in order to meet her care costs. The Ombudsman appreciates that in such a situation the resident would be keen to sell the property as quickly as practical, whilst the landlord was also required to ensure that the relevant criteria (as set out in the Capital Funding Guide) were met.
The Ombudsman has reviewed the property’s lease. The Ombudsman understands that the property is affordable housing for “elderly retired persons” with the leaseholder owning a 70% share in the property.
The CFG contains the rules and procedures under which the landlord must deliver affordable housing. In relation to shared-ownership housing and retirement properties the Ombudsman notes the following points:
1. Shared ownership aims to help people that are in housing need and who are otherwise unable to purchase a property on the open market (3.1.1).
2. In order to be eligible to purchase a shared ownership property, applicants must have a household income of less than £80,000 and be otherwise unable to purchase a property suitable to meet their housing needs on the open market (3.1.2).
3. In relation to older persons shared ownership (3.7.7):
  1. Applicants who are currently homeowners will need to sell their existing property before using the scheme.
  2. The help to buy provider will not carry out the usual sustainability assessment, but in determining eligibility must take into account the level of equity available from the sale of any existing property along with any additional savings. Applicants with sufficient equity to be able to purchase a suitable property on the open market should not be assessed as eligible.
  3. Applicants may need to retain a higher level of savings or investments than other applicants to provide ongoing income (in which case it should be taken account of in the headline eligibility check) to cover ongoing living and care costs. There is no cap on the level of savings or investments that an applicant can retain for this purpose. The provider should make a judgement on this on a case-by-case basis, according to the individual circumstances of the applicant, but the overall expectation remains that Older Persons Shared Ownership applicants will use the majority of their capital to fund the purchase of the property.
  4. For extra care schemes, providers can use an additional degree of flexibility when making this assessment, to take into account the higher ongoing costs of the care being provided.
In April 2018 the landlord informed the representative that as part of the sales process prospective purchasers would be offer checked and require approval by it prior to a sale being agreed. While the landlord did not go into detail regarding the approval process it was appropriate that the landlord informed the representaive at the start of the process that applicants would need to meet certain criteria to be eligible to purchase the property to manage his expectations.
The landlord wrote to the estate agent in February 2019, upon instruction by the representative, setting out the eligibility criteria for applicants who wished to purchase the property. This was appropriate to ensure that the estate agent could inform prospective buyers of the conditions that they would need to meet and to explain that the landlord would undertake checks on their eligibility. The Ombudsman notes that the landlord’s communication was prior to buyer B’s application in March 2019.
In considering this complaint the Ombudsman cannot determine if the landlord’s decision to refuse buyer B’s application to purchase the property was appropriate and made in accordance with the CFG as this would require assessment of buyer B’s application and personal details. Under paragraph 39(l) of the Housing Ombudsman Scheme, the Ombudsman will not consider complaints which concern matters raised by a complainant on behalf of another without their authority. In determining the case the Ombudsman can however look at how the landlord responded to the representative’s concerns that it had misapplied the eligibility criteria in determining buyer B’s application to purchase the property.
In responding to the representative’s concerns that it had incorrectly refused buyer B’s application the landlord explained that it had made its decision in line with the CFG and referred to the relevant provisions within the guidance, which the Ombudsman has identified above. In the Ombudsman’s opinion it was appropriate that the landlord shared how it had made a decision on buyer B’s application to be transparent and to demonstrate that its decision had been made within a prescribed framework which had been set by its regulator – Homes England.
The landlord disputed the representative’s view that it had misapplied the CFG in considering buyer B’s application on the grounds that they had too much savings as the guidance required it to consider an applicant’s capital as part of the application process. In the Ombudsman’s opinion it was reasonable that the landlord had a “provisional upper limit” for the amount of savings an applicant may have to assess an applicant’s eligibility to purchase. This is because the CFG set out the overall expectation was that an applicant would use the majority of their capital to fund the purchase. Despite having an upper limit, the landlord explained that it would use its discretion to progress an application where the threshold was exceeded as it understood that some applicant’s circumstances would require them to have savings in excess of the limit. In the Ombudsman’s opinion it was appropriate that the landlord explained that it exercised discretion as the CFG set out that the provider should make a judgement on a case-by-case basis.
The Ombudsman notes that Homes England did not state within its correspondence to the MP on 11 September 2019 that the landlord’s approach to assessing an applicant’s eligibility was incorrect or wrong, including its view that an applicant with more than twice the value of the share they were seeking to purchase was able to purchase on the open market.
The landlord also disputed the representative’s concerns that it had not undertaken eligibility checks on historic applicants to the scheme as under the terms of the lease it was required to do so. While the Ombudsman cannot comment on the landlord’s historic assessment of applications, due to the reliability and availability of information in addition to data protection issues, in the Ombudsman’s opinion the landlord’s response was reasonable. This is because the terms of the lease clearly set out that the property was affordable housing and therefore it had a responsibility to ensure that it was allocated appropriately. The Ombudsman accepts that the landlord will have updated its processes and procedures to determine eligibility to the scheme since the resident became the leaseholder in 1985 in order to ensure that its approach continued to be fit for purpose and suitably robust.
In considering the complaint the landlord acknowledged some shortfalls in its service provision in relation to the sale of the property. Namely:
1. Delays in responding to buyer A’s service charge enquiries.
2. Poor communication.
From the available evidence the Ombudsman has identified instances of poor communication by the landlord. This included failure to respond to the representative’s enquiry regarding surrender of the property’s lease. The Ombudsman has not been provided with information in relation to buyer A’s application but accepts the landlord’s position that it did delay in providing information to them. Where a landlord acknowledges a service failure the Ombudsman will then consider if the landlord has offered redress to put things right. In this case the landlord offered £250 compensation and to immediately buy back the resident’s share of the property without having to pay its sales fee of £240.
In the Ombudsman’s opinion the landlord’s offer of redress was reasonable and proportionate to the circumstance of the case. While there were shortfalls in the landlord’s service delivery, as identified above, the Ombudsman has not identified any evidence that the landlord prevented a sale from progressing following the withdrawal of buyer A. The Ombudsman has reached this conclusion as:
1. The landlord demonstrated that in considering applications to purchase the property it was taking into account the requirements of the CFG.
2. Homes England did not raise any concerns regarding the landlord’s application of the CFG within its correspondence to the MP.
The Ombudsman also considers that the landlord’s offer was reasonable as the Ombudsman cannot be certain that buyer A’s sole reason for withdrawing from the sale was due to communication delays by the landlord. The Ombudsman notes an email from buyer A’s solicitor dated 10 October 2018 stating “I write to advise that our client is no longer proceeding in this transaction”. The email did not provide any further details.
The landlord’s offer to immediately buy the resident’s shares was good practice as it demonstrated that it acknowledged that the timescale to sell the property was having an adverse impact on the resident in relation to her care home costs and the local authority’s charge on the property. In the Ombudsman’s opinion the landlord’s offer showed that it was looking at the resident’s individual circumstances in order to deliver a suitable resolution. The Ombudsman considers that it would have been useful for the landlord to have made the offer sooner to bring matters to a close at an earlier time, however its decision to not do so does not amount to a service failure as it was not obliged to make the offer.
In the Ombudsman’s opinion it was reasonable for the landlord to decline to reimburse the costs which the resident had incurred due to the charge on the property. This is because the arrangement was an agreement between the local authority and the resident which was made independently of the landlord. It was also reasonable for the landlord to refuse to suspend the resident’s service charge costs while she was not staying in the property as it was a cost she was required to pay under the terms of the property’s lease regardless of whether she was living in the property.

Determination (decision)

In accordance with paragraph 55b of the Housing Ombudsman Scheme the landlord has made an offer of redress, which in the Ombudsman’s opinion, resolves the following complaint satisfactorily:
1. The landlord’s response to the resident’s concerns regarding the administration of the sales procedure in respect of the property which she owned.

Reasons

While the landlord demonstrated that in considering applications to purchase the property it was taking into account the requirements of the CFG there were some shortfalls in relation to the service it provided in respect of the sale of the property, namely failure to respond to buyer A’s service charge enquiries and poor communication. The landlord identified the shortfalls in its service delivery and offered suitable redress in respect of the failings through its offer of compensation and offer to immediately buy back the resident’s share in the property. The Ombudsman will not make a finding of maladministration where a landlord has offered suitable redress to resolve a complaint.

Recommendations

The landlord should pay the resident the £250 compensation which it offered during the complaint procedure if it has not already done so.