Summary: Miss B complains that the Council incorrectly told her she could buy the rest of her ‘shared ownership’ home at a discount, then, after realising its mistake, withdrew the discount. This meant she could not afford to proceed with the purchase. She says the Council’s error meant she spent money on conveyancing fees which she would not otherwise have spent. The Council has already made a suitable offer to remedy her injustice, so we have discontinued our investigation.

The complaint

1. The complainant, whom I refer to as Miss B, lives in a house under a ‘shared ownership’ arrangement. She owns half the house, and the Council owns the other half.
2. Miss B complains that the Council incorrectly advised her that, because of how long she had lived there, she was entitled to a significant discount when buying the rest of her home. It told her she could buy the Council’s share for around £92,000. It subsequently changed its mind and said this would actually cost her around £151,000.
3. Miss B says she could not afford the higher price, so had to pull out of the purchase. She said she incurred costs associated with the aborted purchase which the Council should refund.
4. Miss B also says the Council breached their contract by changing its mind about how much the purchase would cost her. She says it should honour the original agreement and allow her to buy the house at the lower price.

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The Ombudsman’s role and powers

5. The Ombudsman investigates complaints about ‘maladministration’ and ‘service failure’, which we call ‘fault’. We must also consider whether any fault has had an adverse impact on the person making the complaint, which we call ‘injustice’. We provide a free service, but must use public money carefully. We do not start or may decide not to continue with an investigation if further investigation would not lead to a different outcome. (Local Government Act 1974, section 24A(6))

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How I considered this complaint

6. I considered information from Miss B and the Council. Both parties had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

What happened?

7. In March 2021, after Miss B asked to buy the Council’s share of her home, it told her it had valued the property at £302,500. This meant the Council’s share was worth £151,250. However, it told her that, as she had owned her share since 2011, she was due a discount. It said she could buy its share for £92,262.
8. The Council said that, in line with the terms of Miss B’s lease, she should confirm her agreement to buy the Council’s share of the property within four weeks, and should complete the purchase within a further six weeks.
9. Miss B confirmed her agreement straight away, and by early April had instructed a solicitor and arranged a mortgage. However, in May, after contact from Miss B’s solicitor, the Council’s legal team realised an error had been made. It told Miss B that she was not, in fact, eligible for a discount. It said she could still purchase its share of the property, but for the full value.
10. Miss B said she could not afford to continue without the discount, and ended the purchase process. She then complained to the Council, which offered her £500 for her unnecessary costs, but refused to allow her to complete the purchase at the discounted rate. It said she did not complete the purchase within the time limits specified in her lease, and therefore the original agreement was no longer valid.

My findings

11. As a general administrative principle, I would ordinarily expect a council, when realising it has made a mistake, to correct the mistake and remedy any injustice caused.
12. In Miss B’s case the Council’s mistake – an incorrectly-applied discount – originally looked as though it would work out to her benefit. This does not mean the Council should have ignored it when it found out about the error. But it does mean the Council needed to take action to remedy Miss B’s injustice.
13. Because of the Council’s error, Miss B paid fees to a solicitor which are now of no benefit to her because she is no longer buying the property. It is my view that she was also caused some avoidable distress by the Council, which failed to correctly manage her expectations about how much the purchase would cost her.
14. The Council has offered Miss B £500. This is enough to refund her for the solicitor’s fees and to recognise her distress.
15. Because of this, it is unlikely further investigation would lead to a different outcome, and I will discontinue my investigation.
16. Although Miss B suggests that the Council’s failure to honour its original agreement amounts to a breach of contract, this is a legal matter on which I am not qualified to comment. If Miss B wants to pursue this, she should seek legal advice.

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Final decision

17. I have discontinued my investigation. The Council has already made a suitable offer to remedy Miss B’s injustice.

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Investigator's decision on behalf of the Ombudsman