Summary: Dr X complains about the Council’s handling of a home appreciation loan. He says the Council pressured his parents into signing a contact for the loan and did not safeguard his parents. He also complains his parents were overcharged for substandard work. We find some fault with the Council’s actions. We have made recommendations.

The complaint

1. Dr X complains about the Council’s handling of a home appreciation loan. He complains:
• His parents were overcharged for substandard work by the contractors.
• The Council pressured his parents into signing a contract for the loan and work.
• The Council did not safeguard his parents who were elderly, vulnerable, and did not speak English.

Dr X says the Council’s actions have cost his parents financially and affected his mother’s mental health. He wants the Council to lift the charge applied to his parents’ home and to complete remedial work to his parent’s property.

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The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)

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How I considered this complaint

5. I spoke with Dr X and considered the information he provided.
6. I made enquiries with the Council and considered the information it provided.
7. I sent three draft decisions to Dr X and the Council and considered their comments.

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What I found

Policy and guidance

8. The Council’s Home Assistance Policy identified the forms of financial and other support available from the Council to help vulnerable homeowners to improve or adapt their homes. The policy notes that clients should seek their own independent financial advice before entering any of the Council’s loan agreements.
9. One loan provided by the Council is the home appreciation loan (HAL). This is an equity release loan managed in partnership with another council. Clients repay the loan when they sell the property, or on transfer of ownership. The Council also charges a fee to cover its costs of organising and overseeing the work.
10. The amount clients repay is decided by the value of the property in the future. This means if the property goes up in value when it is sold, the client will repay more. If the property sells for less than it was originally valued at, the client will repay the original amount borrowed.
11. It sets out the maximum loan available is £10,000 with the specific aim of removing significant hazards in the home. Priority will be given to the following hazards:
• Excess cold.
• Falls.
• Damp and mould.
• Electrics
12. HALs are targeted towards homeowners who are facing significant risk in their own homes from the hazards listed above and whose health will be improved through direct intervention, enabling them to remain safer at home for longer.
13. The Council also has a homes and loans booklet with guidance about its HAL. It notes that a person can borrow the money needed to repair, improve, or adapt their home. The loan is converted to a percentage of the current market value of the home at the time the loan is taken out. The loan is secured as a legal charge against the home.
14. Once the Council has agreed the loan, the contractor can start work. When the contractor has completed the work to the Council’s satisfaction, it will pay the contractor directly.
15. When the home is sold or ownership transferred, the Council will use the percentage to work how the client will repay.

What happened

16. In November 2015, the Council received a referral for Dr X’s parents, Mr Y and Mrs Z for financial help towards repairs to their home. The referral noted the property had a leaking roof, loose slates, severe damp throughout the property, and the bedroom and kitchen were in poor condition. It also noted they needed a new bathroom due to physical health problems.
17. In January 2016, the Council visited Mr Y and Mrs Z to explain the HAL scheme and choices for getting work completed to their home. There was a translator present from another organisation to help with communication with Mr Y and Mrs Z. The Council said it asked Mr Y and Mrs Z whether they wanted to involve their family with the HAL process. The Council said Mr Y and Mrs Z declined family involvement.
18. The Council drew up a schedule of works following an assessment of Mr Y and Mrs Z’s property.
19. In March 2016, the Council sought quotes for the schedule of works for Mr Y and Mrs Z. The Council received two quotes, one for just under £28,000 and another for just under £33,000.
20. In December 2016, the Council visited Mr Y and Mrs Z with a translator to complete the application for the HAL. The translator was a Council employee who spoke Mr Y and Mrs Z’s native language. The Council confirmed the translator knew Mr Y before agreeing to provide support. The records do not detail what the Council discussed with Mr Y and Mrs Z.
21. In January 2017, the Council said it visited Mr Y and Mrs Z to collect documents. There are no further records detailing what the Council discussed with them at this visit.
22. In April 2017, the Council sent Mr Y and Mrs Z the formal offer for the HAL, which they signed. The Council said the translator was present for this. There are no records detailing what the Council discussed with them at this visit. Dr X said the translator was not present when the contract for the HAL was signed.
23. The Council got Mr Y and Mrs Z’s property valued in April 2017 to calculate the percentage of the loan to value. The Council asked the surveyor for the anticipated value after completion of the full schedule of works. The Council used the anticipated value of the property to work out the percentage.
24. The Council registered the legal charge against Mr Y and Mrs Z’s property in April 2017. The documents provided by the Council showed the loan was noted to be £30,000, which represented 46.15% of the anticipated value of the property at the date of the deed. The Council wrote to Mr Y and Mrs Z in May 2017 to confirm it had registered the legal charge.
25. Works to Mr Y and Mrs Z’s property started in May 2018. The Council said its building control officer had oversight of the works. In the building control officer’s account, he noted he only visited the property once during progress of the work. The officer confirmed he later retired and so did not see the project through to completion. This meant he did not inspect any of the contractor’s later work or oversee the finished job.
26. The Council did not provide any contemporaneous notes or records of the Council’s oversight of the works.
27. In December 2018, the Council wrote to Mr Y and Mrs Z to confirm completion of the loan. In this letter, the Council noted the total loan was just over £23,000. This was 35.84% of the value of the property.
28. In July 2019, the Council commissioned a survey to assess the condition of the works undertaken at Mr Y and Mrs Z’s property. In the report, the surveyor noted there was no evidence the following works had been completed by the contractor:
• Replacing the plaster to part of the front bedroom.
• Repairs to shower plumbing.
• Repairs to wrought ironwork to bottom of stairs.
• Cleaning out and repair of leaking guttering.
• Replacing cracked/broken tiles.
29. The report noted the estimated value of the works completed was just over £7000.
30. In response to my draft decision, the Council provided the surveyor’s revised report. In the report, the surveyor accepted the works listed above had been completed. It also provided a new estimated value of the works completed of just over £10,000.
31. The Council also clarified the total loan included other costs not related to the works completed, such as administration fees. The Council said the final cost of the works came to just under £17,400.
32. Finally, the Council highlighted that the estimated value of the works was based on “pricing book prices”. The Council said book prices are a guide and do not always include overheads and profit. The Council said the surveyor confirmed he worked on book prices only as he was not in the business of procuring work. The Council said this was not an accurate way of assessing this job and was usually used by surveyors for reference only. The Council said cost of work can only be judged on actual costs.

Analysis

Council pressured Mr Y and Mrs Z into signing a contract for the loan and work

33. The Council’s home assistance policy shows that HALs are available to help vulnerable homeowners to improve or adapt their homes. It is used to put right significant and urgent health and safety hazards. In this case, Mr Y and Mrs Z were referred to the Council due to concerns about the condition of their property and Mr Y and Mrs Z’s safety in the home.
34. The evidence shows the Council first approached Mr Y and Mrs Z to discuss the possibility of a HAL in January 2016. There is evidence the Council visited with a translator to help the discussion. However, as there are no records to show what was discussed with Mr Y and Mrs Z, it is not clear what information the Council provided to Mr Y and Mrs Z about the HAL.
35. Mr Y and Mrs Z did not sign the HAL application form until December 2016. This meant there was a gap of around 11 months between when the Council first visited them to discuss the HAL to when the application form was signed. This suggests the Council gave Mr Y and Mrs Z an appropriate amount of time to consider the terms of the HAL and to decide if it was a product that was appropriate for their situation.
36. Therefore, I do not consider the evidence suggests the Council pressured Mr Y and Mrs Z into signing a contract for the loan and work.
37. I do note it was ultimately Mr Y and Mrs Z decision regarding whether the HAL was right for them. I also acknowledge the Council’s policy notes that clients are advised to seek their own independent financial advice before entering into any agreements.
38. However, as the Council was providing the loan, it would be reasonable to expect the Council to provide Mr Y and Mrs Z with appropriate information to help them make an informed decision.
39. The Council did not provide any records or detail of the discussions it had with Mr Y and Mrs Z between January and December 2016. This is fault as the Council should have kept accurate and detailed records of its discussions with Mr Y and Mrs Z. Without records, I cannot say, even on balance, whether the Council provided Dr X’s parents with appropriate information to enable them to make an informed decision about the HAL. Therefore, the fault has caused some uncertainty.

Parents were overcharged for the work completed by the contractors

40. The Council’s policy does not set out any requirements for the Council to get quotes from contractors. The Council’s homes and loans booklet suggests it is normally for the applicant to source their own contractor.
41. In this case, the Council’s records suggest the Council decided to get quotes for Mr Y and Mrs Z due to the language difficulties. It is also clear the Council selected the contractor who provided the cheapest quote.
42. Further, there is no evidence Mr Y and Mrs Z were unhappy with the contractor selected and the estimated total cost of the works. It would have been open to Mr Y and Mrs Z to get their own quotes from other contractors if they had concerns about the quote obtained by the Council.
43. Therefore, I am satisfied the Council acted appropriately by following a tendering process to get the most competitive price for the works to Mr Y and Mrs Z’s property.

Works completed to property

44. There is no evidence to suggest the Council maintained oversight of the works to the property. It is noted the Council’s HAL information booklet states the Council will only release funds to the contractor if the Council is satisfied with the works. This suggest the Council had some role in overseeing the completed work to ensure it is satisfied.
45. Further, the Council also charged Mr Y and Mrs Z a fee. The Council said this was to cover its costs of organising and overseeing the work. This again suggest the Council had some role in overseeing the completed work before releasing the funds to the contractor.
46. However, there is no evidence the Council did maintain oversight of the works to the property. While the Council said the works were overseen by a building control officer, the officer’s own account notes that he only visited the property once during progress of the work. The officer also noted he did not see the project through to completion and so did not inspect the finished job. The Council has not provided any evidence that another building control officer took over once the officer retired.
47. Therefore, I find fault with the Council for failing to maintain oversight of the works.
48. I have noted what the Council has said regarding the surveyor using book prices to estimate the cost of the works completed. I acknowledge the estimated value provided by the surveyor is based on book costs only. Therefore, I accept the estimated value might not be an accurate reflection of the value of the works actually completed by the contractor. Nevertheless, I am satisfied it is appropriate to consider the estimated value of the works as it has been provided by a qualified professional.
49. In my previous decision, I had noted there was a discrepancy of just over £13,000 between the estimated valuation of the works and the final loan. The Council has highlighted that the final cost of the works itself came to just under £17,400. Therefore, it is more accurate to compare the estimated cost of the works with the final costs of the works. The evidence shows that there is a discrepancy of around £7400 between the estimated valuation of the works completed and the final cost of the works.
50. Therefore, I consider the fault identified has caused some uncertainty. This is because it is not possible to say, even on balance, that if the Council had maintained oversight of the works, this would mean Mr Y and Mrs Z would have received works valued to be worth around £17,000.

Council failed to safeguard Mr Y and Mrs Z

51. Dr X said the Council had failed to safeguard his parents who were elderly and did not speak English.
52. There is no dispute that Mr Y and Mrs Z did not speak English well. Therefore, it was appropriate for the Council to use a translator when it met with them to discuss the HAL as they would have needed extra support to make sure they understood the information given.
53. Further, the Council helped Mr Y and Mrs Z get quotes for the works, as it recognised there were language difficulties, even though this is not usually something the Council has responsibility for. This suggests the Council was aware of the need to provide more support to Mr Y and Mrs Z.
54. Therefore, I am satisfied the Council did take steps to safeguard Mr Y and Mrs Z. This is because it appropriately ensured there was support available to help them to understand the HAL and to help them through the process and documents. However, as stated above, there remains some uncertainty regarding what information the Council provided during the process.
55. It should also be highlighted the initial referral was made because of concerns about the condition of the property. It is noted in the referral the property had severe damp and the kitchen and bedroom were in poor condition. This suggests, on balance, there was some risk to Mr Y and Mrs Z’s health due to the hazards present in the property.
56. The Council’s policy notes the maximum loan available is usually £10,000. However, in this case, the Council has loaned Mr Y and Mrs Z above the maximum. This shows the Council considered it necessary to exercise discretion to increase its loan to allow Mr Y and Mrs Z to complete the work needed to improve their home to a good condition.
57. Therefore, this is further evidence the Council acted appropriately to safeguard Mr Y and Mrs Z. If the Council had not offered the HAL, it was likely, on balance, Mr Y and Mrs Z would not have been able to remain safe in their home.

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Agreed actions

58. To remedy the injustice caused by the faults identified, the Council has agreed to complete the following:
• Apologise to Mr Y and Mrs Z for the injustice caused by the faults identified.
• Pay Mr Y and Mrs Z £150 to recognise the uncertainty caused by its poor record keeping.
• Pay Mr Y and Mrs X £2000 to recognise the uncertainty caused by its failure to maintain oversight of the works completed. In reaching this figure, I have considered the fact there is a potential for variance in the final discrepancy due to the estimates provided being based on book costs. However, despite this, I am satisfied there is still likely to be a high financial impact on Mr Y and Mrs Z. Therefore, this justifies a larger remedy than we would ordinarily recommend. The Council can choose to apply this payment to the HAL loan to reduce the overall loan amount (and so reduce the total amount Mr Y and Mrs Z will need to repay).
59. The Council should complete the above within four weeks of the final decision.

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Final decision

60. I find fault with the Council for failing to maintain oversight of the works. I also find fault with the Council’s record keeping. The Council has accepted my recommendations. Therefore, I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman