The Ombudsman's final decision
Summary: We found no fault by the Council on Mrs R’s complaint about it failing to tell her, when she exercised her right to buy its property, about underpinning works it did almost 30 years before. It was fault not to address her request for her complaint to go to the second stage of its complaints procedure properly. The agreed action remedies the injustice caused.
The complaint
Mrs R complains the Council failed to tell her when she exercised her right to buy its property in 2014, about underpinning works it identified 20 years earlier which were never checked: as a result, this is causing her a great deal of stress and anxiety as she is unable to sell it without completing expensive works.
The Ombudsman’s role and powers
If we are satisfied with an organisation’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) 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)
Right to buy guidance Under the government’s Right to Buy scheme, a secure social housing tenant can buy their home, if they meet qualifying criteria, at a lower price than market value. A discount is applied based on the length of time spent as a tenant. The law about Right to Buy is found in the Housing Act 1985.
The landlord of the property over which the secure tenant has claimed the right to buy, shall serve the tenant with a notice. The notice shall include a description of any structural defect known to the landlord which affects him. (section 125 (4A), Part V The Housing Act 1985)
How I considered this complaint
I considered all the information Mrs R sent, the notes I made of our telephone conversations, and the Council’s response to my enquiries. I sent a copy of my draft decision to Mrs R and the Council. I considered their responses.
What I found
Mrs R bought her house in 2014 under the right to buy scheme. She rented her home from the Council for about ten years. Recently, she decided to sell her home. When she put it up for sale, a potential buyer found the property was underpinned 28 years ago. Underpinning is the reinforcing of the foundations to an existing building where the original ones are not strong enough.
The buyer, through a local authority search done before completing a purchase of a property, discovered the underpinning (the works) were not checked and approved by building control as required under building regulations. The buyer pulled out of the purchase. She is worried she has a property she cannot sell and might have lost value. She would like the Council to buy it from her.
A local authority search has two parts to it: A local Land Charge Register (LLC1) search sets out charges or restrictions on the land, such as whether it is a listed building for example. It also covers planning agreements and conditions made on consent; and The second part (CON29) gives information about public highways and planning decisions which might affect the property, as well as outstanding statutory notices and breaches of planning or building regulations, for example.
A ‘personal search’ does not provide the information needed to answer the second part of the search. It is done by a search agent linked to the Council but is not supplied directly by the Council itself.
Mrs R sent me a copy of the local authority searches carried out on behalf of the potential buyer which alerted the buyer to the works done in 1994. The results referred to underpinning and said, ‘WORKS NOT INSPECTED BY US AT THE TIME’.
Mrs R believes she should have been told this when she bought her house. Although she did not have a structural survey done when she bought it, she claims this would not have picked up the works as this could only be found during excavations.
When she bought the house, she had personal searches done. I have seen a copy of one of the ‘Register of Local Land Charges’. The watermark in the document says, ‘Personal Search Only No Con29 Replies with this search’.
The Council explained it has no record of the works which were done 28 years ago. Her right to buy file has no information in it about the works. It explained as seller of the property, it had no duty to her for any defects with it, regardless of whether these were apparent. This is why buyers get surveys which her solicitor should have explained.
The records showed the Council sent her an Offer Notice before she bought her house. This noted no structural survey was done and advised her to get independent advice about the property’s condition. The Offer Notice, which contained a ‘description of any structural defect known to it’, set out no information about any known structural defects other than signs of rising damp in part of the property. While it was required to identify structural defects at the time of the sale, it argued there was no evidence to show there were structural defects. Instead, it argued the evidence shows the works were successful and addressed previous problems. It also said the requirement was to disclose known structural defects targets by certain properties identified by the Housing Act 1985 or non-traditional builds.
The Council does not consider the Offer Notice defective legally by its failure to disclose the works as the property was free from defects when Mrs R bought it.
In its stage 1 response to her complaint under its complaints procedure, the Council said Mrs R was aware of the works. The day after receiving its stage 1 response, Mrs R told the Council she wanted to go to stage 2 of its complaints process. She pointed out she was unaware of the works when she bought the house, it was not the quality of the works she complained about but the fact she was unaware of them when she bought it, and the Offer Notice did not tell her about structural defects.
About a week later, the Council sent her its stage 2 response. This did not address the points she raised.
As a result of this complaint, the Council confirmed it took, or will take, the following action: It reviewed her original complaint because of the later information she sent and accepts it should have done this sooner; In the past, instead of getting building control approval, its property services team would send initial plans for approval. They would not ask for a formal inspection and certificate from them. The property services clerk of works, or the relevant contractor if the works were outsourced, would usually decide whether works were satisfactory. This explains why there was a full plans application approval on building control records but no completion certificate. It no longer operates this way and follows the process for inspection and issue of completion certificates as for other works. It accepts this was not ideal practice but notes anyone could have made a personal search and raised enquiries with building control. Building control does not keep records of personal search enquiries as far back as 2014; It offered her £150 to remedy any distress or inconvenience caused by the procedural failings at stage 1 and 2 of its complaints procedure: It introduced a new procedure for all right to buy sales. Now, before sending an Offer Notice, it checks the records of property services, South Tyneside Homes, and building control to check if they know of any structural defects which were completed satisfactorily. Any works disclosed will now be included in the Offer Notice to avoid similar complaints in the future; It is willing to provide any potential purchaser of her property with ‘such reasonable assistance as they may require' to explain the absence of the completion certificate for the works and the fact building control is unaware of any issue with the works since 2014; and Alternatively, Mrs R can get the pile cap exposed and building control will inspect it and issue the completion certificate. In response to my draft decision, the Council confirmed an officer recently visited her property. The works were exposed. The officer was satisfied with them and sent Mrs R the completion certificate.
My findings
The Council accepts the practice it followed in 1994 when dealing with building control approval for works on its own properties was not ideal. It was a result of this practice that left Mrs R without a completion certificate for the works. Unsurprisingly, after 28 years, the Council’s records for these works are incomplete.
I note in 2014, when Mrs R bought her house, she did not arrange to have all necessary searches done before completing her purchase. Had she done so, the search would have identified the works and the Council’s failure to inspect and issue a completion certificate. At this point she could have either abandoned the purchase or, asked the Council to take steps to ensure she had the necessary assurances and paperwork to avoid future problems when she decided to sell it.
I also considered Mrs R’s argument the Council should have disclosed the works on the Offer Notice as it required it to declare any known structural defects with the property. I am not satisfied the Council needed to disclose the underpinning works in these circumstances. This is because the works done in 1994 remedied any defect present at the time. There is nothing to show Mrs R was concerned about any structural issues in the ten years before deciding to buy. This suggests the works had done what they needed to do. Put simply, there was no existing structural defect it needed to declare.
While there is no information explaining why these works were done, I note what amounts to a structural defect has been considered by the courts and would be an issue Mrs R would need to consider taking legal action on if she feels the Council made the wrong decision.
For example, in the case of Ryan v London Borough of Islington (2009) EWCA Civ 578 which involved subsidence, the council argued subsidence was not a structural defect. This was because a structural defect covered something where the defect was in the original design, or construction, of the property from the start. While the court noted this argument, it made no finding on it on the facts of the case.
In City of London v Various Leaseholders of Great Arthur House (2021) EWCAS Civ 431, the Court of Appeal approved the formulation of the Upper Tribunal of a ‘structural defect’: “structural defect is not confined to a so-called inherent defect but must be something that arises from the design or construction (or possibly modification) of the structure of the Building. It is to be contrasted with damage or deterioration that has occurred over time, or as a result of some supervening event, where what is being remedied is the damage or deterioration.”
The Council accepts there were failings in the way it dealt with her complaint under its complaints procedure. I note it failed to review and address the points she raised in response to her stage 1 response, for example, when it considered it at the second stage. This is fault. It caused her some injustice as she had the uncertainty of not knowing whether her points were properly considered when the Council reached its decision. Nor does she know whether they would have made any difference to the eventual outcome.
Agreed action
I considered our guidance on remedies, the Council’s offer of £150 to Mrs R for the acknowledged failure with the complaints procedure, and an officer inspecting the works and issuing her with a completion certificate. The certificate means there should be no problem with future potential purchasers about these works.
The Council agreed to carry out the following action within four weeks of the final decision on this complaint: To send Mrs R a written apology for the failure identified in the way it dealt with her formal complaint.
Pay £150 to Mrs R to remedy the injustice the fault caused.
Remind officers of the need to properly review and address complaints raised.
Final decision
I found fault on Mrs R’s complaint against the Council. The agreed action remedies the injustice caused.
Investigator's decision on behalf of the Ombudsman