Lancaster City Council (05B13863, 05C16360)

Regeneration and improvement    Maladministration causing injustice

10 October 2007

The complaint

Mr and Mrs M, and Mrs N complained that the Council misled them when it purchased their properties. They said there were led to believe that the properties were to be demolished, but they alleged that the Council was negotiating to sell them on for considerably more money. They said that, if they had been aware that the houses were not going to be demolished, they would not have sold them to the Council. When they tried to buy similar properties in the areas, prices were far in excess of what the Council offered.

What happened

The complainants owned properties in a terrace in a Council area that had been targeted for regeneration. During 2002 the Council had secured funding under a Government initiative, the ‘Home Zone Challenge Fund’. One of the options was the demolition of the terrace to make way for parking. The Council had invited the property owners to sell their houses, which they were reluctant to do. They said they felt obliged to sell voluntarily, as they said they were told they would risk getting a lower price for their homes if the properties had to be compulsorily purchased.

Later in the year, when it became clear that the redevelopment budget would not cover all costs, the boundaries of the ‘Home Zone’ were reduced, so this particular terrace was no longer included for works. The properties were sold to a housing association for renovation, at a higher price than the Council paid for them.

The Ombudsman’s view

The Ombudsman did not share the complainants’ view that the Council had set out to mislead them. However, he found that the Council had failed to keep any written records of its discussions with the complainants and had not confirmed anything in writing. It did not fully explain to them that they could get an independent valuation of their properties and failed to advise them about the implications of compulsory purchase orders. He also found that the Council did not take the principles of the ‘Crichel Down Rules’ into account when it sold the properties. These provide that, when circumstances change after property has been purchased for a public purpose, the public body must act fairly to the person affected by the original purchase.

The Ombudsman said:

“Had the complainants been properly advised of their rights at the outset as they should have been, I believe there is a strong likelihood that they would not have sold when they did, or indeed at all.”

Outcome

The Ombudsman recommended that the Council: 

• pay to the complainants 75% of the profits made on the sale of their houses: in the case of Mr and Mrs M, £21,000; in the case of Mrs N, £13,125;
• pay £500 to each complainant household in recognition of their considerable time and trouble in bringing the complaint;
• consider making home loss payments of £3,100 plus interest to each of Mr and Mrs M’s children; and
• review its procedures to ensure, as far as possible, that the maladministration identified does not recur.

Date Updated: 13/01/09