Do Housing Associations working in the private residential sector offer enough protection to their customers?

publication date: Jun 6, 2014
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

The housing private sector needs to do more to protect consumer interests

I was on Radio 4's You and Yours last Friday chatting about the issues raised by Wandle Housing who tried to ‘gazump’ it’s shared ownership buyers. What concerned me most, was there appears to be an issue with the level of customer care and protection for private clients when dealing with housing associations.  

Firstly, it is really is astonishing that any developer could think it was OK to ‘email’ prospective purchasers that they were going to lose the property they thought they were about to exchange on unless they paid 30-50% more, especially as some only reserved a few months earlier.

Sadly, it doesn’t appear to be a one off either, I saw another post by someone who had shared ownership prices put up by 10% by Origin Housing just a few weeks after they had reserved.

Origin Housing's Director of Development, Gareth Jones, says "We have been working closely with all of our local authorities to make sure that pricing for affordable housing is just that, affordable, and we have been particularly focussing on shared ownership prices in Central London. In this case, in trying to make purchase costs as affordable as possible, in error, we set an initial valuation that didn’t cover our building costs, which we are required to do, so reluctantly had to increase the sales values. This was communicated fully to all purchasers affected and despite offering a full refund they have all proceeded to purchase at the revised price. As a provider of housing for both rented markets and for sale, we strive to provide high quality housing and be accessible should any issues arise.”

Who can private clients complain to?
The second worry is that having looked into who shared ownership people can turn to if they are being let down by a housing association was basically no-one. I had thought it would be the Homes and Communities Agency their regulator, but they have said it’s not them as they only look after social tenants, not ‘private clients’.

So the only way to object was either to go straight to court with all the costs associated and/or to start a protracted complaints procedure with Wandle which would have taken months to go through and for the buyers, been ‘too late’. If this didn’t work, the only option is to go to the Housing Ombudsman, who, looking at their cases don’t seem to offer much in the way of compensation, it’s also not overly clear whether they would even of taken this case or not.

Click here for more information on the Housing Ombudsman cases 

Does the Wandle story suggest problems with Housing Associations operating in the private sector?
The underlying issue I’m starting to pick up with housing associations in the private sector is that although it’s essential for them to be able to raise funds via private investment, operating mixed private, affordable and social housing schemes, it appears the level of protection some offer private clients isn’t necessarily as much as you would get in the private sector.

It’s apparent that Wandle must have felt it was ‘OK’ to do what they did because it was partly a requirement of the funding regulations, but also because legally they could. The idea of honouring the prices from reservation – particularly as the delays were not the buyer’s fault – just wasn’t on the agenda. And there seemed to be little thought about what their actions would do to the company’s reputation and consumer trust which are essential in the private sector. Worst still this particular case was potentially damaging not just for Wandle but for all housing associations and shared ownership itself.

Clearly the importance of ‘doing the right thing’ on behalf of the client versus ‘the legal position’ wasn’t understood well enough. It is also apparent that it doesn’t appear they even though to approach the regulator to discuss the issue and see if there was a way to resolve it prior to causing the distress to the buyers in the first place.

Surely, if Housing Associations are going to provide services to the private sector and secure benefits from the taxpayer in doing so, they should be setting the highest standards of customer service and care, not just doing what the ‘law’ says they should do ie the minimum required.

For example, what Wandle have done shouldn’t be possible in the private sector for the bigger builders as most comply with the Consumer Code for Homebuilders and other ‘best practices’ they follow. This means when people reserve a property off plan, they keep the price for 28 days until exchange happens and if there are any delays after exchange, the price is maintained as a legal requirement.

It’s not just housing associations – councils need to offer the best standards too! 
With housing associations and councils now setting up letting agencies to work with private clients too, it’s vital that they offer the best customer care and know all of the rules they should abide by. The best letting agents in the private sector belong to ARLA and/or NALs (and RICs if surveyors). They offer Client Money Protection and professional indemnity insurance and spend thousands of pounds making sure they know the latest rules and regulations and have the knowledge and experience of dealing with private landlords and tenants.

What’s the solution to provide private sector clients the best care to consumers? 
Ideally the Homes and Communities Agency or GLA – the current regulators of housing associations and their funds - should be open to complaints from shared ownership, leaseholders and right to buy purchasers, not just to social tenants.

I think that housing associations would be much more motivated to solve or ideally avoid complaints if they knew their regulator was going to receive them. I also think it would give the regulators a better idea of which housing associations have really got the skills and experience to bring mixed use sites to the market.

If this doesn’t happen for any reason, then it’s essential for housing associations to sign up at least to the highest codes of conduct and self-regulation which exists in the private sector.  

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