Manchester City Council (18 009 719)

Category : Housing > Council house sales and leaseholders

Decision : Not upheld

Decision date : 20 Nov 2018

The Ombudsman's final decision:

Summary: Ms X complains about the purchase price offered by the Council under the Right to Buy. The Ombudsman has discontinued our investigation because there is no fault causing injustice to Ms X and we cannot achieve the outcome Ms X wants.

The complaint

  1. Ms X complains about the purchase price offered by the Council under the Right to Buy. She says the Council applied the “cost floor” rule to her purchase but it did not apply this in other cases. She would like to the Council to waive the cost floor rule and reduce the valuation on her property.

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The Ombudsman’s role and powers

  1. 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’. We provide a free service, but must use public money carefully. We may decide not to start or continue with an investigation if we believe:
  • it is unlikely we would find fault, or
  • the fault has not caused injustice to the person who complained, or
  • we cannot achieve the outcome someone wants, or
  • there is another body better placed to consider this complaint.

(Local Government Act 1974, section 24A(6), as amended)

  1. 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)
  2. We can decide whether to start or discontinue an investigation into a complaint within our jurisdiction. (Local Government Act 1974, sections 24A(6) and 34B(8), as amended)

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How I considered this complaint

  1. I spoke to Ms X and considered her complaint. I reviewed the documents provided and considered the relevant law. I gave Ms X and the Council the opportunity to comment on a draft of this decision and I considered the comments provided.

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What I found

  1. The Right to Buy refers to a council tenant’s right under the Housing Act 1985 (the “Act”) to buy their home at a discount.
  2. The discount applied may be reduced under the “cost floor” rule set out at section 131 of the Act. This rule says the discount cannot reduce the purchase price to less than the costs incurred by a council in respect of the property.
  3. The Housing (Right to Buy) (Cost Floor) (England) Determination 1999 (the “Housing Determination”) explains these costs include the amount a council has spent on the construction, maintenance and repairs to a property. It does not include any costs the council can recover from a tenant as a service charge or improvement contribution.

Disputes about Right to Buy

  1. Applicants have the right to ask the County Court to settle any dispute about the Right to Buy except in relation to the valuation of the property.

Disputes about property value

  1. The District Valuer (part of HMRC) decides any dispute over valuations subject to time limits.

What happened

  1. Ms X applied to buy her council flat.
  2. The Council valued the flat at £96,000. The 70% Right to Buy discount reduced this price to £28,800. But, the Council said it had incurred costs of £43,679 on the flat. This meant the purchase price for Ms X was £43,679 in accordance with the cost floor rule.
  3. Ms X found the Council had not applied the cost floor rule on the sale of neighbouring properties. She complained to the Ministry of Housing, Communities and Local Government who advised her to complain to the Council.
  4. Ms X also complained to the Council about the property valuation, as similar flats had been valued at a lower price.
  5. The Council told Ms X it had failed to apply the cost floor rule on previous occasions in error. However, on realising its error it is now applying the rule correctly. It recognised that other leaseholders had benefitted from its error but this did not cause injustice to Ms X. It told Ms X she could appeal to the District Valuer if she was unhappy with the property valuation.
  6. Ms X complained to the Ombudsman. She said she did not have the finances to go to court and did not want the additional stress given her poor health. She said she did not go to the District Valuer because this would be pointless given the application of the cost floor rule.

Findings

  1. I would normally expect Ms X to go to court to resolve any dispute about the application of the cost floor rule, but given her personal circumstances this would not be reasonable.
  2. The Council accepts it failed to apply the cost floor rule in the past. It has recognised its mistake and it is now applying the rule. While I understand Ms X feels this is unfair, the Council’s fault in relation to other Right to Buy applications has not caused her injustice. I will discontinue my investigation into this matter because the Council’s fault has not caused injustice to Ms X.
  3. Ms X considers the Council may have applied the cost floor rule incorrectly because it received a grant to fund improvements to her block of flats. She refers to the Housing Determination in support of this view. However, I note the Housing Determination does not say this. I will not investigate this point further as I consider it unlikely I will find fault.
  4. Ms X considers the Council has charged too much in respect of her kitchen as it is now dated. However, the cost floor rule refers to the costs incurred by the Council and so the age of the kitchen is not relevant. I will not investigate this point further as I consider it unlikely I will find fault.
  5. Ms X also complains the Council’s property valuation is too high. However, she also recognises this is not relevant given the price is currently determined by the cost floor rule. I will not investigate this matter further as the District Valuer is the appropriate body to consider disputes about the property valuation and investigating this point would not achieve the outcome Ms X wants.

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Final decision

  1. Subject to further comments by Ms X and the Council, I intend to discontinue my investigation. This is because there is no fault causing injustice to Ms X and we cannot achieve the outcome Ms X wants.

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Investigator's decision on behalf of the Ombudsman

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