Summary: Mr X complains the Council did not follow the correct process when dealing with his Right to Buy application. We have concluded our investigation having made a finding of fault by the Council. There was no basis for the Council to have cancelled Mr X and Ms Y’s Right to Buy application in these circumstances and the Council has agreed to the recommendations we proposed.

The complaint

1. Mr X complains the Council did not follow the correct process when dealing with his Right to Buy application. Mr X says the Council requested information it did not require and closed his application when he did not provide it. Mr X says the value of the property has since gone up and he is now paying additional rent. Mr X would like the Council to process his application in accordance with the RTB process, honour the value of the property when he first applied, and to reimburse any rent paid after it closed his application.

Back to top

The Ombudsman’s role and powers

2. 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)
3. 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)

Back to top

How I considered this complaint

4. As part of my investigation, I spoke with Mr Z, a representative for Mr X, about the complaint. I also considered information that Mr X and the Council provided. Mr X and the Council had an opportunity to comment on my draft decision.

Back to top

What I found

Relevant legislation - Right to Buy

5. The ‘Right to Buy’ (RTB) refers to rights granted under the Housing Act 1985 to tenants of social landlords, including councils, to buy their home at a discount provided they meet certain criteria.
6. Under the scheme, a tenant receives a discount on the property value based on the time they have been a tenant. There is a maximum discount.
7. There is a strict procedure for RTB applications:
• The process begins with completion of an application form. On receiving the application, the Council must either accept or decline the application within four weeks.
• If accepted, the Council must make an offer called a ‘Section 125 Notice’ within eight weeks of accepting the application for a freehold property, or twelve weeks for a leasehold residence. The offer will set out the price of the property, the years of tenancy and the discount applied.
• The applicant has up to twelve weeks to accept the offer. If the applicant fails to respond, the Council will issue a reminder giving a further 28 days to reply. If the applicant does not accept, the Council may issue a notice to ‘drop’ the offer. The applicant must then re-apply if they later want to buy.
• Any disagreement with the price can be appealed within three months of the offer, via an independent valuation by the District Valuer. The applicant then has twelve weeks to either accept the valuation, issued via a ‘Section 128 Notice’, or withdraw from the sale.
• If either party disagree with the independent valuation, they may appeal to the District Valuer within 28 days of the S128 Notice.
• Once the applicant accepts an offer, the Council may send a ‘First Notice to Complete’ which gives the applicant 56 days in which to complete the sale.
• If the sale does not complete within 56 days, the Council may issue a ‘Final Notice to Complete' allowing a further 56 days, or longer if specified. If the applicant does not complete the sale within the timescales, the Council may cancel the application.
8. The Ombudsman can investigate complaints about delay in the process. For example, if the Council has delayed in amending plans when there was clearly a mistake. This may arise when there are disputes over boundaries. The Ombudsman may uphold a complaint where it is evident the Council took too long to resolve any such disputes.
9. However, when a council delays a sale, the applicant can complete a ‘Notice of Delay’ (RTB6) form and issue it to the Council. If the Council fails to take action within one month or does not serve a counter notice (RTB7), the applicant may serve an ‘Operative Notice of Delay’ (RTB8) form. After serving this, the sale price may be reduced by the amount of rent paid during the period of delay. We expect complainants to have used this process before we investigate a complaint.
10. As described above, there are set timescales for certain parts of the RTB process, and an applicant can serve an RTB6 if those timescales lapse. The guidance ‘Right to Buy: a guide for Local Authorities’ also advises, “if the tenant decides to go ahead you [the Council] have to complete the sale of the property as soon as all the details have been settled. There is no set time limit for this, but the tenant can use the delay procedure if they think your delays are generally holding up the purchase”.
11. Once the applicant serves an RTB8 notice, the guidance says “… rent paid during the delay period will be treated as an advance payment towards the RTB purchase price. This does not happen automatically; the tenant must continue to pay rent and any amount relevant to the delay will be deducted when the sale is completed…. The refund is calculated from the date of their operative notice of delay (RTB8) and ends when the delayed action is taken”.

Discretion to investigate

12. As per the Housing Act 1985, the County Court can decide any question about RTB, and so it is reasonable in normal circumstances to have expected Mr X and Ms Y to have used that right. However, there is a possibility of a systemic fault potentially affecting many RTB applicants in the Council’s area. I have therefore found that there are sufficient grounds in the public interest to exercise 26(6)(c) discretion to investigate this complaint.

Back to top

What happened

13. I have included some of the key events below. This is not intended to be a complete summary of all events that took place.
14. In August 2021, Mr X and his partner Ms Y, submitted a RTB application to the Council. The Council registered Mr X’ and Ms Ys application and sent back an acknowledgment letter.
15. The Council wrote to Mr X and Ms Y, sending the pre-sale letters with a request to complete and return the RTB additional information form, an Anti-Money Laundering declaration form, and to provide proof of identity and address. The Council explained that it needed this information so it could confirm the identity of the tenants and that the property was used as their principal home. In additional to the identify and address information the Council wanted, it also requested financial documentation from Mr X and Ms Y including payslips and bank statements.
16. The Council says Mr X and Ms Y did not return any of the information it requested.
17. In September 2021, the Council issued an RTB2 Notice to Mr X and Ms Y, but informed them that it required the information previously requested within 10 working days so it could progress their application.
18. After the 10 days had passed, the Council says it contacted Mr X and Ms Y to confirm whether they still were still interested in purchasing the property. The Council says that Ms Y informed it they wanted to cancel their application and reapply at a later date. Mr X and Ms Y dispute this; they say the Council cancelled their application because they did not provide the information it requested.
19. In October 2021, Mr X and Ms Y complained to the Council that it was preventing the progress of their application by requesting information it did not need. Mr X and Ms Y advised the Council that it already held their identity documents on file.
20. In December 2021, the Council responded to Mr X and Ms Y’s complaint, advising that it had required up to date identity and address documents to confirm their identity and to ensure the property was being used as their principal home.
21. The Council also said that in order to comply with Money Laundering Regulations, it was required to put control measures in place to carry out due diligence checks on Right to Buy applicants. The Council told Mr X and Ms Y that the legislation gave it a right to request information the information it did to determine how they will fund their Right to Buy purchase.
22. In January 2022, Mr X and Ms Y submitted a second RTB application. In February 2022, Mr X and Ms Y sent the Council the additional information form, supporting documentation and the Anti-Money Laundering declaration form the Council requested.
23. In March 2022, the Council sent Mr X and Ms Y a Section 125 Landlord Offer Notice, advising them of the information it required should they accept the offer. In April 2022, Mr X and Ms Y accepted the Council’s offer and provided it with the information it requested.
24. In June 2022, the Council wrote to Mr X and Ms Y to inform them that the Housing Act 1985 did not permit them to purchase the property under their proposed funding structure. Mr X wrote back to the Council to advise it that he would be purchasing the property using cash gifts from members of his family.

Analysis

Was the Council at fault in its request for financial information from Mr X and Ms Y?

25. After receiving Mr X and Ms Y’s RTB1 application, the Council requested financial information from Mr X and Ms Y, such as bank statements, pay slips and a P60. The Council advised Mr X and Ms Y that it was permitted to request this information in order to ensure it was complying with Anti Money Laundering Regulations.
26. The Council says that tenants are required to complete and return additional information and Anti-Money Laundering forms so that it can understand how tenants will fund their Right to Buy purchase. The Council says the Housing Act 1985 and the Money Laundering Regulations supports its right to request the information it did.
27. I have not found anything within the legislation that permits, requires or supports the Council’s decision to request the financial information it did from Mr X and Ms Y. Further to this, I cannot see how such information would have been appropriate at this stage of the RTB process. Mr X and Ms Y would not have been aware if they were eligible to purchase the property and would not have known the property value to conclude how they would fund the purchase.

Was the Council at fault in its request for identity and address information from Mr X and Ms Y?

28. After receiving Mr X and Ms Y’s RTB1 application, the Council requested identity and address information from Mr X and Ms Y. When Mr X and Ms Y submitted their first application, they did not provide the Council with the identity and address information it requested.
29. The Government has published guidance for local authorities on Right to Buy. As per the guidance, where a tenancy is issued in joint names, one of the tenants must be living in the property as their only or principal home. The Council says its request for this information is to obtain basic information to ensure it is selling the property to secure tenants and to ensure at least one of the tenants is using the property as their only or principal home.
30. I therefore conclude that the Council was not at fault in requesting this information, as it required the information in order to determine the eligibility of the applicants.

Was the Council at fault when it closed Mr X and Ms Y’s application?

31. There is conflicting information about the events that led to Mr X and Ms Y’s application being closed. The Council says that Ms Y requested the Council close the application. Mr X and Ms Y dispute this; they say the Council closed their application because they did not provide the information it requested. I have seen the RTB7 form issued by the Council, where it states that it called Mr X and Ms Y to inform them that it had cancelled their application as it had not received the required documents to process their applications. I therefore conclude that it was the Council who cancelled Mr X and Ms Y’s application.
32. Despite Mr X and Ms Y not sending information the Council needed to confirm their eligibility, it issued an RTB2 in September 2021, confirming Mr X and Ms Y of their right to buy the property. In the Council’s decision to issue the RTB2, it was therefore of the view that Mr X and Ms Y were eligible to purchase the property.
33. The Government guidance issued on RTB, states that once an RTB2 has been sent to the tenant informing them of their right to buy, it must send a section 125 offer notice which gives the purchase price and the terms and conditions of the sale. The tenant will have a time limit of either 8 or 12 weeks depending on the type of property. Later in September 2021, the Council cancelled Mr X and Ms Y’s application.
34. I have not found anything within the relevant legislation nor the guidance that permits the Council to have cancelled Mr X and Ms Y’s application in these circumstances, and this is fault leading to an injustice. As a result of the Council’s actions, Mr X and Ms Y had to submit a new application and may now be subject to a higher purchase price. Further to this, cancelling Mr X and Ms Y’s application has caused much distress and inconvenience.

Back to top

Agreed action

35. In order to resolve the complaint and prevent these issues happening again, the Council has agreed to the below recommendations.
1. Should Mr X and Ms Y proceed with their second application, the Council will use the property value from the date their first RTB1 application was submitted. The appropriate deductions for any rent paid since the applicants first application should be applied in line with the legislation.
2. The Council will award Mr X and Ms Y an amount of £200 in recognition of the stress and inconvenience caused through cancelling their original application.
3. The Council will explain what it will do to ensure it is only requesting information necessary to determine the eligibility of applicants. The information the Council requests should be proportionate and in line with legislation and guidance on the matter. The Council should amend any internal guidance to reflect this.
4. The Council will undertake a review to determine whether any other applications have been closed in similar circumstances; it will provide its findings to the Ombudsman. The Council will explain what action it will take with any applications it finds were wrongly closed.
36. The Council has agreed to complete action b within one month of the Ombudsman’s final decision and action c and d within three months of the Ombudsman’s final decision. Action a is subject to Mr X and Ms Y completing their second Right to Buy application as per the usual time limits afforded within the process.

Back to top

Final decision

I have concluded my investigation having made a finding of fault by the Council. There was no basis for the Council to have cancelled Mr X and Ms Y’s Right to Buy application in these circumstances and it has has agreed to the recommendations proposed.

Back to top

Investigator's decision on behalf of the Ombudsman