This time it's personal

Winchester working men's housing Society was recently accused of severe maladministration in the handling of of a mutual exchange application when a couple complained that it had unreasonably rejected the application on the grounds of personal value judgments. The society was also found responsible for maladministration in charging a damage deposit to new tenants, lack of impartiality in handling complaints and its policy of granting existing tenants first refusal on vacant properties.

The couple were assured tenants and were entitled, under the Housing Corporation's charter, to exchange their home with tenants of other registered social landlords unless their landlord had "good reason" for withholding consent.

Severe maladministration was found in Winchester Working Men's Housing Society's handling of the application. Members of a subcommittee from the society visited the prospective exchange partner and prepared a report of their visit for the management committee. This contained highly subjective and unfavourable observations and concluded that she was not "a suitable person" for a tenancy. The management committee duly informed the couple that the exchange could not go ahead.

Eight weeks later, the society wrote to the couple to explain its decision. It said the exchange would have amounted to a breach of its charitable object to provide housing for "persons in necessitous circumstances". It quoted provisions in schedule 3 of the 1985 Housing Act, which allows exchange consent to be withheld where the proposed assignee's occupation of the property would conflict with the landlord's charitable objects. It also said the home in question was substantially larger than the woman reasonably required.

The ombudsman's investigation revealed that both arguments were indefensible. Its criteria for assessing "necessitous circumstances" were essentially those set out in the 1996 Housing Act. The ombudsman found that, although it is appropriate that RSLs use housing need as a basis for deciding which applicants were priorities for new tenancies, it had no relevance to this application. Absence of housing need should not result in consent being withheld unless there are specific and justifiable grounds. In the case of secure tenancies, these grounds are set out in schedule 3 and include cases where the home is designated for persons with a special need not applicable to the prospective exchange partner. It would be inequitable for social landlords to deviate from the grounds set out in schedule 3 in considering applications from assured tenants, unless there were compelling grounds for so doing.

Anyway, that provision was not applicable to this case, the ombudsman decided. Allowing the prospective exchange partner to move into the property would not have conflicted with the society's aims because most of its tenants, by virtue of the fact that they were occupying its properties, were unlikely to be in housing need.

The other side of the society's argument, under-occupation, was also untenable. As the prospective exchange partner had a son and a daughter and the property to which she hoped to move had three bedrooms, it was perverse to argue that the exchange would have given rise to substantial under-occupation. Furthermore, the investigation identified at least two allocations made by the society in recent years that gave rise to clear under-occupation.

The true reasons for the rejection of the application were the subjective observations in the report. The legal arguments produced later were invalid

The investigation concluded that the true reasons for the rejection of the application were the subjective observations in the subcommittee report, and that the legal arguments produced by the society two months later were invalid and inconsistent with its handling of other applications. It had no good reasons to reject the application. Its decision was found to be grossly unfair and it was criticised for having acted in a manner unbefitting a registered social landlord.

The investigation also revealed that the society had been operating a damage deposit policy for new tenants. This practice was in breach of the Housing Corporation's charter and its own charitable rules.

The probe also identified a lack of impartiality in the society's handling of this case. In particular, the chair presided over the management board meeting at which the application was rejected and later chaired the final hearing of the complaint against that decision.

The society's practice of giving existing tenants first refusal on vacant properties was also criticised, as such properties should be allocated in accordance with the housing need of their applicants.

The society was ordered to pay the couple involved in the exchange £2000 for the distress, inconvenience and loss of opportunity they had suffered. It was told to ensure its "necessitous circumstances" rule was not applied to future mutual exchange applications.