London Borough of Tower Hamlets (17 013 918)

Category : Housing > Council house sales and leaseholders

Decision : Not upheld

Decision date : 17 May 2018

The Ombudsman's final decision:

Summary: The Ombudsman found no fault on Mr D’s complaint about the Council’s failure to properly calculate a rent rebate following a 25-month delay in completing the purchase of his house under the right to buy scheme.

The complaint

  1. Mr D complains the Council failed to properly calculate the rent rebate following its 25-month delay in completing the purchase of his house under the Right to Buy Scheme: as such, he paid rent on his property for longer than he needed.

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The Ombudsman’s role and powers

  1. 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)
  2. The law says we cannot normally investigate a complaint when someone could take the matter to court. However, we may decide to investigate if we consider it would be unreasonable to expect the person to go to court. (Local Government Act 1974, section 26(6)(c), as amended)
  3. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. 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)

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How I considered this complaint

  1. I considered all the information provided by Mr D, the notes I made of our telephone conversation, and the Council’s response to my enquiries, a copy of which I sent him. I sent a copy of my draft decision to Mr D and the Council. I considered their responses.

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What I found

  1. Mr D rented his home from the Council which he wanted to buy under the right to buy scheme. The right to buy scheme allows eligible council and housing association tenants to buy their home with a discount.
  2. In October 2016, the Ombudsman upheld his previous complaint against the Council. This was about the way it processed, and cancelled, his right to buy application. As a result, the Council reinstated his application the following month. The Council offered the property at the initial valuation, not the second one. This meant an £80,000 reduction.
  3. In early November, officers instructed the Council’s legal department to re-open the case and complete the sale. The Council sent an email to Mr D confirming its decision to reinstate his application. The email advised him to complete a notice of delay (RTB6) if he wanted to claim a rent rebate. Mr D refused to do so.
  4. The sale of the property was completed in March 2017.
  5. The Council accepts there were delays with the process. Mr D and the Council are unable to agree on the amount of refunded rent he should receive from February 2015 to March 2017. February 2015 is the date the Council requested completion by before cancelling his application.
  6. In May 2017, the Council exercised discretion and offered him £1,521.90 as a goodwill gesture. This was equivalent to 3 months’ rent. It told him he failed to follow the correct procedure for claiming a rent rebate due to delay as he should have served the Council with a notice of delay. The Council told him a tenant can serve this if:
  • a council failed to send a notice in reply to a right to buy notice; or
  • a council had done, but failed to issue a section 125 offer notice within 4 weeks; or
  • an applicant considered the delays were preventing him/her from going about their right to buy in a timely way.
  1. Mr D calculates the rebate at £8,440.50 covering a period of just over 25 months. He calculated the rent paid, the interest saved, and service charges he would have paid.
  2. The Council made a discretionary offer which it considered reasonable. This was £6,166.32 based on 777 days of delay. The main difference between Mr D’s figure and the Council’s figure was the calculation of the annual leasehold charge. Mr D calculated this at £2,550 and the Council at £3,765.23.
  3. Mr D then sent the Council his revised calculations. These amounted to £18,643.28. He added an increase of 50% as the delay was more than 12 months. He added this because this is allowed under the right to buy legislation in certain circumstances. The Council rejected it saying the 50% increase did not apply to his case. It only applies when a notice of delay is served by an applicant. Mr D never served one.
  4. The Council sought advice from the government’s Right to Buy Agent service. This service helps councils and housing association tenants who are interested in buying their home under the right to buy scheme. It offers free and impartial advice. The Council provided a copy of the agent’s email it received.
  5. The advisor noted:
  • he did not have the full circumstances about the first complaint to the Ombudsman;
  • the Council said the delay procedure was not followed;
  • it was not necessary to apply the 50% increase of the total rent paid;
  • a total period of delay of 777 days (57 in 2014/15; 366 in 2015/16; 354 in 2016/17); and
  • the Council’s calculation of the rebate was justified.

Legal process

  1. Under the Housing Act 1985 (as amended), the law states the landlord (the Council) must deal with a tenant’s right to buy application within specific timescales. The process is as follows:
  • A tenant must complete an application to buy the property under the scheme;
  • The Council sends the tenant a section 124 notice (RTB2) within 4 or 8 weeks, depending on how long the tenant was with the landlord. The notice confirms whether the tenant and property are eligible under the scheme;
  • Within 8 or 12 weeks, depending on whether the property is freehold or leasehold, the Council must send the tenant a formal offer letter (section 125). It sets out the date by which the tenant must respond to the offer; and
  • If the tenant has not responded by the date in the offer, a council sends a reminder letter giving a final 28 days to respond. The law deems the application withdrawn if there was a failure to respond to the notice.
  1. If a council failed to meet these timescales, the tenant can serve an ‘initial notice of delay’ (RTB6). The council then either progresses the sale within 1 month or sends a counter notice which explains why it cannot go any quicker, for example. If the council fails to respond at all, the tenant can then serve an ‘operative notice of delay’ (RTB8). A council may have to refund rent monies paid during the delay period.
  2. If the tenant failed to meet deadlines, the Council can cancel the application. This is what happened in Mr D’s case because he did not, according to the Council, respond to its revised section 125 offer. Our previous investigation found he had.
  3. The law provides that where a tenant served an operative notice of delay on the landlord, payments towards rent after the notice period within which the Council could serve a counter notice are taken off the purchase price. Where the payments were made after 12 months, a sum equal to 50% of all payments is deducted from the purchase price (section 153B Housing Act 1985 (as amended)).
  4. The law also provides tenants with the right to take disputes about right to buy to the county court (section 181 Housing Act 1985)

Analysis

  1. Although the law provides Mr D with a right to take a dispute about rent rebates to the county court, I have exercised discretion to consider his complaint. This is because from February 2015 to November 2016, there was no right to buy application as the Council had cancelled it. There is doubt as to whether any notice of delay Mr D could have served when the Council later reinstated the application would have considered this period. This could possibly leave him without a remedy for that period.
  2. The Council does not dispute the period of delay. If the fault found by the previous investigation had not happened, it is more likely than not that completion of the purchase would have taken place between February/March 2015. He would not have had to pay rent, for example, from that period through to March 2017, although he would have had to pay the mortgage.
  3. I found no fault on this complaint and make the following findings:
  • With the cancellation of his application at the end of 2014, or at the start of 2015, Mr D could not have served a notice of delay on the Council.
  • I am not satisfied Mr D’s claim for a 50% increase is justified. This is because, on balance, I consider it unlikely the Council would have taken more than 12 months from February 2015 to complete the sale had the fault not occurred and had Mr D served an operative notice of delay at the time . An increase of 50% would, therefore, place Mr D in a better position than he would have been in.
  • I considered the Council’s calculations. The email to Mr D dated 28 June 2017 broke down the period of delays from 2014 to 2017. This amounted to 777 days. It also broke down the actual rent and charges for each period. The figure it agreed as ‘interest accrued’ was slightly higher than Mr D’s calculation. The email noted Mr D calculated leasehold service charges on the assumption of £100 a month over the entire period. The email broke this down to actual yearly charges made during the period for a property in the same block. This led to a difference between the 2 calculations of just over £2,000.
  • I also considered the approach to delay taken by section 153B of the Housing Act 1985. This provides for the off-setting of rent paid during the period against the purchase price. It would not, for example, have taken in to account savings a tenant might have made by paying a lower mortgage instead of rent during the period.
  • Mr D considers the Council’s initial offer of £1,521.90 the correct approach. The offer states the Council exercised discretion to ‘award you three months’ rent rebate’. This was for the entire period of delay, not a 3-month period. The Council’s offer the following month was more detailed, giving a breakdown of each element, and their calculation.
  • On balance, I am satisfied the Council acted properly when it offered Mr D £6,166.32. It provided him with a detailed breakdown of how it calculated the amount which is in line with the approach of section 153B of the Housing Act 1985.
  • Mr D claimed he incurred legal fees of £3,900 in bringing the case to the Ombudsman and incurring 2 sets of conveyancing fees. He accepted he has no evidence showing this as his documents were shipped abroad. The Ombudsman provides a free service. Usually, a complainant does not need a solicitor or other professional adviser to help them make a complaint to the Ombudsman. Even if Mr D had evidence in support, it is unlikely that the Ombudsman would recommend reimbursement of legal fees for this purpose unless there were exceptional circumstances. Mr D would also have had to pay one set of conveyancing costs anyway had the sale proceeded promptly. He could not provide evidence of any fees incurred.

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Final decision

  1. The Ombudsman found no fault on Mr D’s complaint against the Council.

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Investigator's decision on behalf of the Ombudsman

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