3. Mr L complains about the length of time HE took to redeem his Help to Buy (HTB) equity loan.
4. Mr L paid £858 in interest payments and this has affected his finances. His told us his family will be unbale to afford things like travel, childcare and home furniture.
5. Mr L wants the interest paid back from November 2022 until January 2023.
Mr L’s complaint
6. Mr L is not happy with HE’s response to his complaint as he said it caused a delay when he tried to redeem his HTB equity loan. He says he has not seen any quoted policy or KPI which states the time frame for a redemption to be processed. Mr L thinks five months is too long to process the HTB equity loan. He also says he thinks five months is too long to get a response to his complaint. We recognise this was a frustrating experience for Mr L to go through, especially given the stressful conditions of selling and remortgaging a home.
7. Mr L disagreed with HE’s complaint response which stated he had not submitted an EWS1 form or a valid market commentary in the valuation report to explain why the valuation of his property dropped from £520,000 to £400,000. He tells us he already submitted a market commentary explaining the drop in value as well as evidence that his property did not require a EWS1 form.
8. Mr L believes that all the required evidence was submitted to Target (who were acting on HE’s behalf as administrator of the scheme) when he made his redemption application on 21 September 2022. Furthermore, Mr L explains Target asked questions on 11 November which he said were answered on 13 November. Mr L says Target waited until 27 November to send his answers to HE.
9. Mr L disputed that he initiated a sublet process or application, as he did not fill out any paperwork or speak to his solicitor about this. He stated he asked for information about this as an option, as he wanted to know what options he had to redeem his HTB equity loan. He tells us he would not have sublet his property at that time as it would mean he would continue paying interest on the HTB loan at unreasonable amounts.
10. Mr L also disagrees with the following statement:
"Homes England are not responsible for any delay resulting from a surveyor providing you with a Valuation Report for your property that fails to meet the terms of your Equity Mortgage."
11. He says this implies the delay was caused by himself as the valuation required further review by HE. Mr L explains he completed a legitimate valuation which was caried out by an Royal Institution of Chartered Surveyors (RICS) surveyor. He asks if an organisation cannot be held accountable for its own delay what is the point in the complaints process. Mr L also quoted the following from HE’s complaint response:
• Target are responsible for a delay of 5 working days during the Redemption Request 2022/2023.
• On 10th February 2023, Homes England approved your redemption, 10 weeks from original receipt of 27th November 2022.
12. Mr L informed us he contested the above timescales. He said he could see no valid or justified reason for the delay in HE’s response. Mr L think Target and HE have profited from the delay and failure to follow their own procedures.
HE response
13. HE sent its complaint response to Mr L on 19 June 2023. It provided an overview of his complaint which included issues relating to his title deeds, ground rent and service charges. HE was not able to consider this as part of its complaints process, as it related to legal issues, and it advised Mr L he should raise this with his conveyancing solicitor.
14. HE explained there were also several matters relating to building repairs and maintenance issues with his property. This was something HE could not help with and it suggested he raise these concerns with his conveyancer.
15. HE responded to Mr L’s complaint about it approving his application for the HTB equity loan as he disputed the price, and it was unsellable. HE explained it did not set property prices and could not intervene in this process and could not comment on the saleability of his home.
16. HE responded to the length of time it took to redeem Mr L’s HTB equity loan. It explained that Target managed Mr L’s loan redemption. It informed Mr L it was his and his solicitor’s responsibility to provide Target with all the relevant information to redeem the HTB equity loan. This included having a valuation of the property which met the terms of the HTB equity loan. HE said it reviewed Target’s call notes and emails from 4 May 2021 to 23 February 2023 as part of the consideration of his complaint.
17. HE included information about Mr L’s previous attempts at redemption. HE relayed the events of the redemption which was requested on 7 October 2022. It explained Mr L wanted to remortgage his home and asked Target to confirm it had his valuation report and solicitors’ form. Target said that as the valuation report showed that there was a substantial drop in the value of his property (from £520,000 to £400,000), and he was no longer selling his home, it needed to be sent to HE to review. HE mentioned cases of this type did not have a time scale to be completed, as each case was reviewed on a ‘case by case’ basis.
Administrative Background 20. To help put this complaint, and our decision, into context, it may help to explain more about the HTB Loan Scheme.
21. The was a government scheme for first-time buyers (it has now closed for new applicants). It provided a loan, called an equity loan, that the successful applicant could put towards the cost of buying a new build property. HTB could not be used to buy a home that had been lived in before. The applicant could not have an equity loan without having a repayment mortgage in place for the duration of the equity loan.
22. Successful applicants could borrow up to 20% (40% if in London) of the market value of a new build. The market value is:
• the value of the home, as determined by an independent organisation called the Royal Institution of Chartered Surveyors (RICS), or • the price a home sells for, whichever is higher.
23. During the term of the equity loan the applicant only pays interest on the amount borrowed. They do not pay off any of the loan itself but can choose to pay all or part of it off at any time.
24. Scheme participants must repay the equity loan in full when they pay off their repayment mortgage, sell their home, or reach the end of the loan term, normally 25 years. HE could also ask the participant to repay the loan in full if they have not kept to the conditions of the equity loan contract.
25. If wishing to repay, the participant was required to get a market valuation report from an RICS surveyor. Repayments are based on the equity loan percentage and the market value of the participant’s home at the time they want to make a repayment. If the participant sells their home, they will need to pay the equity loan percentage of the market value or agreed sale price if it is higher.
26. HE published a Terms and Conditions document in relation to HTB Equity Loans. As part of this, it defines the Market Value of a property as the price at which the sale of the Property would have been completed unconditionally for cash consideration on the date at which the Property is valued on an arm’s length sale in the open market, assuming:
• a willing seller and willing buyer • that prior to the date at which the Property is valued the Property has been fully exposed to the market and there has been a reasonable period (having regard to the state of the market) for the proper marketing of the Property and for the agreement of price and terms and for the completion of the sale • if the Property or any part of it has been destroyed or damaged it has been fully restored • the Property is in good repair and condition well maintained as at the date at which the Property is valued • that no account is taken of any additional bid by a purchaser with a special interest • that both parties to the transaction have acted knowledgeably prudently and without compulsion • that all the covenants on the part of the Borrower in this Mortgage have been fully complied with; and • that the Property will be vacant upon the completion of any disposal of the Property.
Were there any indications of maladministration when regarding the time HE took to redeem Mr L’s HTB equity loan?
27. Before we decide if we should conduct a detailed investigation of a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. We have done this and have not found any indications that something has gone wrong.
28. Having considered the information within Mr L’s complaint form, his supporting evidence and HE’s response to Mr L’s complaint, we have not seen any indications that anything went wrong.
29. When Mr L submitted his redemption request to Target in August 2022, the value of his property had dropped from £520,000 in December 2021 to £400,000 in August 2022. HE have an obligation to protect public monies and Mr L was required to provide relevant information to HE to administer his redemption request. One such aspect of this was the submission of a valid RICS valuation report that explains why there has been an alleged sudden £100,000 drop in the value of Mr L’s property.
30. The redemption requirements form part of the terms of the HTB terms and conditions, a copy of which was provided to Mr L and explained to him by their solicitor when he took out the product in 2017.
31. As part of the HTB process, HE requested confirmation of this from Mr L’s solicitor and a contract was signed confirming the HTB terms and conditions on 28 July. The procedure for repaying the Equity Mortgage is contained in clauses 7.1, 7.1.1 and 7.1.2 of the Borrower’s Equity Mortgage and are as follows: ‘7.1 If the Borrower wishes to redeem this mortgage before an event specified in clause 5 the following procedure shall apply: 7.1.1 The Borrower shall apply in writing to the Lender. 7.1.2 Within fourteen (14) days of service of the notice as specified in 7.1.1 the Borrower shall apply (at its own cost) to the Valuer (whose decision shall be final) to determine the Market Value as at the date of receipt of such application and within five working days of receipt of such determination by the Valuer the Borrower shall serve a Valuation Notice on the Lender.'
32. The following definitions in the Equity Mortgage are applicable from clause 1 ‘Interpretation’ are: ‘Valuer means an independent qualified valuer appointed by agreement between the parties or failing agreement by or on behalf of the president for the time being of the Royal Institute of Chartered Surveyors on the application of either party.’‘Valuation Notice means notice of the determination of the Valuer of the Market Value.’‘Market Value means the price which the Property would fetch on the open market on a sale by a willing vendor to a willing purchaser on the assumption if not a fact that all the covenants on the part of the Borrower in this mortgage have been fully complied with and in the event of damage to the Property that it has been fully reinstated and disregarding any additions or improvements made by the Borrower with the written consent of the Lender provided that in the case of a Disposal where the Disposal price (disregarding any part of that price attributable to any additions or improvements made by the Borrower with the written consent of the Lender) is greater than the Market Value then the Market Value shall be substituted with such Disposal price when calculating the Repayment Sum’.
33. As such, a requirement of the HTB terms and conditions is that HE require an un-affected valuation of a property. If damage of any kind (which includes legal defects) has not been fully repaired by the owner, then it should be valued as if it had been fully repaired.
34. A borrower (Mr L) must apply to a valuer within 14 days of a redemption application being provided, to determine the market value on the date the redemption application was made. As such, Mr L was in breach of this condition of he applied to a valuer before applying to HE in writing in October 2022.
35. Additionally, a borrower needs to send the valuation report to HE within five working days of a valuer determining the market value. Mr L was in breach of this condition as the desktop valuation report was dated 18 August and Mr L did not provide it to HE until 22 September. HE also have to carry out appropriate enquiries and investigations of customers valuations, and will ask for additional information where it is required. The onus is on the customer to provide this information to HE.
36. The Customer Information Pack states: '1 Obtain a Valuation If your property is affected by novel issues in relation to its valuation e.g. its external cladding, we reserve the right, in accordance with the terms of the equity loan, to agree the RICS Valuer you intend to use, with you, before you instruct them.'
37. As Mr L’s property was affected by novel legal issues and outstanding repair issues, he was required to obtain HE’s agreement to the appointment of his surveyor before the valuation took place.
38. Customer's whose properties are affected by novel issues are required to submit a surveyor's declaration form, completed by the surveyor, which sets out Homes England's requirements for the valuation and their acceptance of them. The surveyor’s declaration form is provided to the customer when HE agrees to the surveyor the customer wishes to appoint. We have not seen that Mr L complied with this requirement.
39. On 15 October, we have seen that Target requested an EWS1 form as well as market commentary in the valuation form as part of the review of documents. HE said Mr L submitted these documents to Target on 27 October. On 2 November, Target sent Mr L’s file to HE to review. as Mr L had not submitted these documents until 27 October we cannot see there was a delay caused by HE here.
40. On 11 November, HE reviewed Mr L’s file and asked for clarification regarding the valuation date. HE also wanted to see evidence Mr L was able to remortgage his property as he had previously explained that it was unmortgageable. On 13 November, Mr L provided answers to these questions to Target.
41. Target sent Mr L’s replies to HE on 27 November for review. HE said its offices were closed over the Christmas period from 23 December until 3 January 2023. We consider that this was a reasonable time for the documents to be passed over and also that as it was the Christmas period this would have meant less staff were available.
42. On 17 January, Mr L called Target as his mortgage offer was due to expire on 20 January and he wanted to move to a bigger property as his wife was pregnant with their second child. Target suggested subletting the property and sent the relevant forms on the same day, it advised this usually took 3 – 5 days to approve. We have not that this would have meant it took longer for Mr L to redeem his HTB loan and could see that HE were working with him to try to arrange this.
43. We have found that on 20 January, Mr L requested consent to sublet his HTB property.
44. On 10 February, HE approved Mr L’s redemption and Target called him to confirm it had sent Mr L and his solicitor his redemption quotation and legal pack.
45. HE considered Mr L’s complaint about the delay in the HTB equity redemption request. It said there was a delay from 7 October until 13 November 2022 as it awaited answers to questions from Target and this five-week delay was not because of HE. We have seen that HE were correct here in asking for clarity of Mr L’s property as the questions it asked were related to the terms and conditions of the HTB mortgage. We understand this would have been frustrating for Mr L to experience as he wanted to move the process forward.
46. On 27 November, Target sent Mr L’s response from 13 November to HE for review. It identified a turnaround of 10 working days against a target of 5 working days and said Target was responsible for this.
47. HE said it approved Mr L’s redemption request within 10 weeks (excluding Christmas to New Year when its offices were shut). We would not consider that overall, this was an excessive delay as Mr L had issues with his valuation report as well as how he was going to repay his HTB equity loan. Including novel issues such as errors in a lease, onerous ground rent and/or service charges, building condition and maintenance issues, and/or a significant drop in value affecting a property.
48. We have also seen that HE and Target’s service were impacted during this period because of an increase in the Bank of England’s interest rates. We consider that this would also have affected the time it took for Mr L to redeem his HTB equity loan and recognise this was less than ideal for Mr L. We consider this was a reasonable explanation and offered further insight into why Mr L’s HTB equity was not redeemed sooner.
49. In conclusion, we have found that the delay and complications regarding the redemption of Mr L’s HTB equity loan was in part due to Mr L’s failure to meet his contractual obligations (as outlined above) — and also due to a lack of staff at Christmas and busy periods with the Bank of England rise in interest rates.
50. We have found the actions of HE to be in line with our Principles for Good Administration, ‘getting it right’. This principle sets out that we expect public bodies to have regard to relevant legislation when making its decisions. It also states that it should spend public money with care. We have seen that HE has done this for the reasons outlined above.
51. We recognise this is unlikely the outcome Mr L was seeking, and we understand that his complaint has caused him distress. We would like to thank him for giving us the opportunity to investigate the concerns in his complaint.
1. We have carefully considered Mr L’s complaint about HE. We have seen no indication that anything went seriously wrong.
2. We recognise Mr L’s frustration regarding the time it took to redeem of Help to Buy equity loan. We have not seen any indications that HE caused this delay.