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Dover District Council (20 001 279)

Category : Housing > Other

Decision : Upheld

Decision date : 30 Oct 2020

The Ombudsman's final decision:

Summary: Ms X complained the Estate Agent, working on behalf of the Council, incorrectly told her she could purchase a 25% share of a new build shared ownership home when the minimum share purchase price was 40%. The Ombudsman finds the Council was at fault. That has caused Ms X a financial loss through surveyor fees and caused her avoidable distress. The Council has agreed to reimburse Ms X’s surveyor fees and pay her £150 to remedy the injustice caused.

The complaint

  1. Ms X complained the Estate Agent (the Agent), working on behalf of the Council, incorrectly told her she could purchase a 25% share of a new build shared ownership home.
  2. She said the Agent advertised the 25% share price on its website and verbally confirmed it with her on several occasions between October 2019 and January 2020. It then told her the minimum share she could purchase was 40%.
  3. Ms X said the Agent’s actions had caused her a great deal of stress, upset and meant she had needlessly paid for a surveyor to value her own 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’. 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)
  2. We investigate complaints about councils and certain other bodies. Where an individual, organisation or private company is providing services on behalf of a council, we can investigate complaints about the actions of these providers. (Local Government Act 1974, section 25(7), as amended)
  3. When considering complaints, if there is a conflict of evidence, we make findings based on the balance of probabilities. This means that we will weigh up the available relevant evidence and base our findings on what we think was more likely to have happened.
  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)

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How I considered this complaint

    • I discussed the complaint with Ms X.
    • I read the Council’s complaint response.
    • Ms X and the Council now have an opportunity to comment on my draft decision. I will consider their comments before making a final decision.

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What I found

  1. Help to Buy: Shared Ownership is the Government’s scheme to help people purchase a home when they cannot afford to buy a property on the open market. Purchasers can buy a share of the property between 25% and 75% its full market value.
  2. To be eligible for Help to Buy, applicants must have an annual household income of less than £80,000 and be unable to buy a house without assistance. Help to Buy agents complete an initial financial assessment at the application stage to assess the maximum share an applicant can afford and their ability to maintain those payments over the long-term.
  3. The scheme is primarily targeted at first time buyers. However, in exceptional circumstances existing homeowners can access the scheme if they have already sold their property or are in a position to sell their property at the same time as buying through shared ownership.
  4. If a shared ownership owner wishes to sell their property, they must have the property valued by a Royal Institute of Chartered Surveyors qualified surveyor.

What happened

  1. In 2019, the Council began building new homes that it intended to sell under the Government’s Help to Buy: Shared Ownership Scheme. It appointed a Help to Buy Estate Agent (the Agent), to sell the properties on its behalf.
  2. The Agent advertised the properties on its website as being available to purchase from a 25% share upwards.
  3. Ms X visited the Agent in October 2019. Ms X said the Agent confirmed shares in the properties started at 25% and that prospective purchasers could put down a refundable £500 deposit. Ms X identified a flat she wished to purchase. The Agent asked her to return in November 2019 as the development was not ready to accept deposits. Ms X said she had regular contact with the Agent throughout December 2019 to the extent she discussed worktop and cupboard finishes for the flat. However, the Agent was still not accepting deposits for the flat.
  4. As Ms X already lived in a shared ownership property, she started the process of selling that in late December 2019. She paid £209 for an RICS surveyor to complete a market valuation of her property and had a potential buyer.
  5. Ms X said that in January 2020 the Agent told her there was a price increase on the flat she had expressed an interest in. By the end of the month the Agent told her purchasers needed to buy a minimum 40% share. That meant Ms X could not afford to buy the flat she had expressed an interest in.
  6. Ms X contacted her Councillor about the increase in the flat prices and the percentage increase in the shared ownership. They raised it at a Council meeting in February 2020. In that meeting, the Council said it had planned to sell the properties at a minimum 40% share to ensure the financial viability of the scheme. It said the Agent were instructed to market the flats at 40%, but that an employee of the Agent made “two offers to prospective purchasers that included an outright purchase price of 25%”.
  7. Ms X complained to the Council. The Council upheld her complaint. Ms X asked the Council to consider allowing her to continue to purchase the property with 25% shares, and as she had lost her prospective buyer, to hold the sale of the flat until she was in a position to proceed. The Council did not agree to Ms X’s request and offered an apology as a remedy.

My findings

  1. The key principle of the Ombudsman is that as far as possible, we put the complainant back in the position he or she would have been in but for the fault we identified.
  2. The Council has accepted it was at fault for incorrectly marketing the new properties at 25% shared ownership instead of 40%. That fault has caused Ms X an injustice.
  3. Firstly, Ms X has suffered a financial injustice. As Ms X already lived in a shared ownership property, she paid a surveyor to value that, and start sale proceedings so she could purchase the new flat. On the balance of probabilities, it is likely Ms X would not have started the sale process of her own property, if the Council had told her the correct % share value of the new flat she wished to purchase, because she could not afford the 40% contribution.
  4. Secondly, Ms X has experienced avoidable distress, upset and frustration after verbally agreeing the prospective purchase flat with the Agent.
  5. The Council has apologised to Ms X however, that does not remedy the injustice caused. Where a council’s actions have caused a person avoidable distress, the Ombudsman may recommend the council make a symbolic payment to remedy the injustice caused.

Agreed action

  1. Within one month of my final decision the Council has agreed to:
    • Reimburse Ms X for the surveyor costs she incurred selling her property.
    • Pay Ms X £150 for the avoidable distress caused by the Agent’s actions.

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Final decision

  1. The Help to Buy Agents acting on the Council’s behalf incorrectly advertised and advised Ms X about the price of a shared ownership property. The Council has agreed to our recommendations to remedy the injustice caused. Therefore, I have completed my investigation.

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Investigator's decision on behalf of the Ombudsman

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