Central Bedfordshire Council (15 003 792)

Category : Housing > Private housing

Decision : Upheld

Decision date : 31 Mar 2016

The Ombudsman's final decision:

Summary: there was some fault in the way the Council administered an Empty Home Loan which Mr X and Ms Y used to renovate a property they owned so they could let it to a tenant. The Council has provided a suitable remedy for the anxiety and distress caused by its errors.

The complaint

  1. Mr X and Ms Y complain about the way the Council handled their application for an Empty Home Loan to renovate an empty property they own.
  2. They complain it took too long to deal with their enquiry and approve the loan. They consider the Council should accept some responsibility for the poor quality of work done by the building contractors and damage to their property.
  3. The overall cost of the project increased significantly. Mr X and Ms Y engaged new contractors to put right defective work and damage to the property. They lost rental income due to the delay in getting the works done to a satisfactory standard. They had to pay Council Tax on the property as a second home while it remained empty. The delays and difficulties caused them stress and anxiety, and put them to considerable time and trouble, at a time when Mr X was being treated for a serious medical condition.

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What I have investigated

  1. I decided to investigate the Council’s handling of the case since the Council approved the start of works in July 2014. I have not investigated that part of the complaint about delay in dealing with the initial grant enquiry and approving the loan in 2013 for the reasons given in paragraphs 63 and 64.

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The Ombudsman’s role and powers

  1. The Ombudsman investigates complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. She 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, she may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1))
  2. The Ombudsman cannot investigate late complaints unless she decides there are good reasons. Late complaints are when someone takes more than 12 months to complain to the Ombudsman about something a council has done. (Local Government Act 1974, sections 26B and 34D)

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How I considered this complaint

  1. I have spoken to Ms Y and considered all the correspondence she sent me. I have considered the Council’s response to my enquiries and its procedures on Empty Home Loans.
  2. I sent my draft decision to Mr X and Ms Y and the Council and considered their comments.

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What I found

  1. Mr X and Ms Y own a residential property in the Council’s area. They applied for financial assistance to help them renovate the property so they could let it to a tenant.

The Empty Home Loan Assistance scheme

  1. The Council’s Empty Homes Loan (EHL) Assistance scheme provides financial assistance, in the form of an interest-free loan, to owners who want to bring long-term empty properties back into use. Following an enquiry from a potential applicant, a Technical Officer in the Private Sector Housing team inspects the property to determine its condition and its eligibility for a loan. The officer prepares a schedule of works and handles the loan application and approval process.
  2. The Council may approve a loan to cover 75% of the cost of eligible works up to a maximum of £15,000 (or £20,000 if the Head of Service agrees the case is exceptional). The owner must fund the other 25% from their own resources. The loan is registered as a charge on the property. The owner or a tenant must occupy the property when the works are completed. The loan is reclaimed if the property is sold within 30 years (for loans over £8,000) or 10 years for loans below £8,000.
  3. For loans over £2,000, the Council usually requires estimates from three contractors (unless the work is urgent when a senior manager may authorise one reasonable estimate).
  4. The owner is free to obtain quotations from any building contractors using the schedule of works prepared by the Technical Officer. The Council also has a list of contractors which it provides to applicants on request. There is a disclaimer on every page stating that the Council does not accept responsibility for any damage, loss or injury arising from works undertaken by contractors on its list. It also states publication of the list does not imply any guarantee or recommendation of the contractors. Applicants are advised to carry out their own enquiries and checks to make sure a contractor is suitable to carry out the work. It also says the builder works for the applicant not the Council. It reiterates that the list is for guidance only and is not a list of Council approved builders.
  5. The Council‘s EHL procedure says a “work in progress visit” will be made at the discretion of the Technical Officer. For loans over £5,000, there should be at least one such visit. But the Council does not provide a Clerk of Works service to supervise the building works because the contractors work for the applicant.
  6. The Technical Officer must visit the property and confirm the work has been completed satisfactorily before paying for invoiced works. When the Technical Officer is notified of completion, there should be a visit within 10 days to check the works are satisfactory. The Technical Officer should take up any problems with the client or contractor.

The background to the loan application and approval

  1. Mr X and Ms Y first enquired about an EHL in April 2013. A Technical Officer visited the property in early May. Ms Y agreed to get a quotation from a roofing contractor, “Company B”. The Technical Officer said she would seek quotations from two other contractors on the Council’s list.
  2. On 12 June the Technical Officer sent the Council’s list of contractors to Mr X and Ms Y. In her email she said some of the contractors on the list could install a flat roof. She did not recommend a specific contractor.
  3. In late July the Technical Officer sent a schedule of works to Ms Y. It listed the works as:
    • repairs to joists and insulating and renewing the flat roof;
    • removal of asbestos in the property;
    • repairing and improving drainage to shower tray;
    • electrical safety inspection and undertaking any necessary works;
    • replace double glazed windows in the bedroom and living room.
  4. The Council received Ms Ys’ EHL application form in late August.
  5. The Technical Officer sent a revised schedule of works to Ms Y in late August to include the replacement of the existing boiler. The Council says Ms Y asked for this to be included although it has no written record of her request. The revised schedule says “all works to be undertaken by a Gas Safe registered contractor and a test certificate to be provided on completion”.
  6. The Council received a quotation from Company B for £12,726. The Technical Officer invited quotations from two contractors on the Council’s list. But only one – “Company A” - submitted a quotation of £11,604 for all the works in the schedule. Based on this quotation, the loan was £7,999 and Ms Y’s contribution was £3,605.
  7. On 30 August Ms Y confirmed by email she was satisfied with the revised schedule of works.
  8. On 8 October Ms Y confirmed she wanted Company B to do the roof works.
  9. On 9 October the Technical Officer confirmed the Council had approved a loan of £8,590 (75% of Company B’s quotation). It would pay 75% of the loan when works were completed and the remaining 25% when the property was occupied. The letter confirmed Ms Y’s contribution would be £4135.50.
  10. In November the Technical Officer contacted Ms Y to ask if she wanted to proceed with the loan. In December Ms Y asked to see the quotations. In February 2014 Ms Y called the Technical Officer to say she had changed her mind and wished to proceed with Company A’s lower quotation. She wanted to keep the loan under £8,000 (to benefit from the 10 year repayment condition).
  11. Works did not start immediately because testing revealed there was asbestos in the property. The Council arranged for the asbestos panels to be removed and disposed of in late April. Ms Y paid a charge for this service.
  12. In July 2014 the Council gave approval for the works to start.


The works start

  1. Mr X and Ms Y complain there was delay by Company A in agreeing a start date. The Council’s procedure says the applicant and the selected contractor should agree on a start date for the works. The Council is not involved in these discussions.
  2. The contractors started internal works on 9 September.
  3. In September Company A asked the Council to approve an extra £3,380 to carry out extra works in the bathroom. These works were not specified in the schedule of works and so they were not included in their quotation. Ms Y asked the Council to increase the loan to include this sum.
  4. The Council issued a new approval notice for the EHL on 22 September. The cost of the works had increased to £13,572.
  5. Mr X and Ms Y were dissatisfied with several aspects of the work done by Company B. The main issues were:
    • the boiler was not correctly installed and the work was not done by a registered Gas Safe engineer - it had to be tested and was later replaced;
    • the property was not adequately protected when the flat roof was removed – this caused rainwater ingress which damaged the boiler, walls and carpets, and wooden flooring;
    • the contractors did not use appropriate materials to insulate and renew the roof and the work was not done to an acceptable standard – the Council’s Building Control surveyor confirmed it was defective. Mr X and Ms Y engaged new contractors to replace the roof;
    • the plastic fascia boards were damaged during the works;
    • tiles were not laid properly in the bathroom and an unsuitable bath panel was fitted.
  6. On 8 October the contractors contacted the Council to request an additional sum of £1,500 to insulate the roof to comply with recommendations made by a Building Control inspector. A manager approved the additional expense but asked the Technical Officer to write to Company A to express concern this was not budgeted for in the original quotation.
  7. Throughout October and November Mr X and Ms Y had further discussions and meetings with the Technical Officer, the Building Control Surveyor and a representative from Company B and a loss adjuster. In December 2014 a building surveyor inspected the roof and found that, although some additional insulation had been fitted, it still did not meet acceptable standards. The Building Control Surveyor did not sign off the work and issue a completion certificate.
  8. By October 2014 Mr X and Ms Y had lost faith in Company A’s ability to make good the damage. Ms Y took legal advice and pursued a claim for compensation with the roofing sub-contractor’s insurers. The claim includes making good damage caused by water ingress to the property, replacement of damaged items and loss of rental income due to the delay. The insurers offered a settlement of £10,000 which Ms Y has rejected. She is still negotiating a suitable settlement figure.
  9. Ms Y paid for a roofer to do patch repairs to prevent further water ingress. New contractors stripped and replaced the roof in 2015. A new boiler has been installed by a Gas Safe registered engineer. Ms Y also engaged new contractors to complete works in the bathroom.
  10. The Council paid Company A £1,482 (£1,235 plus VAT) in August 2015. This covered the following costs:
    • investigating pipework in the bathroom (£120);
    • removal of asbestos (£230 – reduced from the original charge because some asbestos was not removed);
    • window replacement (£220);
    • electrical inspection certificate (£165);
    • bathroom suite and tiles (£500)
  11. The Council did not pay Company A for the roof works or the boiler installation because it was not satisfied with the quality of the work. It withheld the rest of the approved loan and used it to pay the new contractors who replaced the roof and installed a new boiler. The loan has increased to £14,974.

My findings on Mr X and Ms Y’s complaints

Is the Council responsible for the contractors’ actions?

  1. Ms Y says the Technical Officer recommended Company A during a telephone conversation. She therefore considers the Council must accept some responsibility for the quality of the contractors’ work at the property. In some letters Mr X and Ms Y referred to Company B as the Council’s contractors.
  2. Ms Y told me she spoke to the Technical Officer at an early stage and accepted her offer to send the Council’s list of contractors. Ms Y says the Technical Officer told her the Council had used Company A in the past and they were very experienced. Ms Y took this to be an endorsement and says it influenced her decision to choose Company A to do the work.
  3. The Council’s EHL procedure says officers must make it clear that contractors on the list are not recommended or guaranteed by the Council. They are contractors who have carried out grant or loan works in the past. Officers can also tell applicants the Council has checked the contractors have the necessary insurance and health and safety policies in place.
  4. The Technical Officer categorically denies recommending Company A to Ms Y. She says she simply sent Ms Y the Council’s standard list of contractors. I have seen the email she sent to Ms Y with the list of contractors. It simply refers to the list and said some contractors on the list were able to install a flat roof. She did not refer to any specific companies.
  5. The Technical Officer says clients may ask officers for their opinion on a particular contractor. But she would never recommend a particular company. The Council says the Technical Officer joined the Council in March 2013 so she had no previous knowledge or experience of Company A or its work.
  6. I have seen no evidence that the Council recommended Company A to Ms X.
  7. The guidance sent to EHL applicants clearly states that the contractor works for the applicant. It includes a disclaimer that the Council is not liable for any damage caused by contractors. The EHL procedure says the Council does not supervise the works or take on the role of Clerk of Works. It advises applicants to check the contractor is suitable to carry out the proposed works.
  8. The contractor must ensure a competent qualified person installs a gas boiler. The Council’s revised schedule of works flagged up the requirement for the boiler to be installed by a Gas Safe registered engineer. But as the Council did not supervise the works, or employ Company B, it was not responsible for checking the contractors, or its sub-contractors, were suitably qualified and competent to undertake this work.
  9. As Company A and its sub-contractors were not carrying out the works as the Council’s agents or contractors, I do not consider the Council is responsible for the quality of its work or any damage to the property. Ms Y is pursuing a separate claim for compensation with the insurers.

Inadequate scrutiny of Company A’s quotation

  1. Ms Y complains that the Council failed to properly scrutinise Company A’s quotation. If it had done so, it would have identified the quotation significantly under-estimated the cost of replacing the roof. It should also have noticed that Company A failed to include VAT in the quotation. She says she assumed the Council had tested and checked Company A’s quotation. This influenced her decision to select them because she wanted the loan to remain below £8,000.
  2. The EHL procedure requires the Council to get three quotations for eligible grant works over £2,000. In this case the Council had only one quotation for all the eligible works from Company B. It did not invite new quotations when the schedule was amended to include the boiler replacement. So it was not able to compare quotations to ensure Company A’s was accurately priced. The Council also overlooked the fact that Company A had not included VAT. The Council accepts the process was not robust and it missed an opportunity to question the reasons for Company A’s low quotation.
  3. That was fault. However if the Council had asked Company A to review its quotation it seems likely Company A would have revised its quotation upwards. Ms Y may have proceeded with Company A’s higher quotation or she may have decided to use a different contractor. In either case the overall cost of the scheme would have been greater. Ms Y would have needed a bigger loan and the 25% contribution would have increased correspondingly.

Inspection of works and the payment made to

  1. Following complaints about the quality of the work the Council arranged for a building control surveyor to inspect the property. The Technical Officer and Building Surveyor liaised with Mr X and Ms Y and Company A about proposals for remedial work. The Council withheld most of the loan because these inspections confirmed the roofing work and boiler installation were not satisfactory.
  2. I see no evidence of fault here given the Council’s limited role. It did not have a duty to supervise the works while they were in progress. Its role was to decide whether the contractors had satisfactorily completed works and whether they should be paid when they submitted an invoice. It offered some assistance to Mr X and Ms Y when the contractors did not carry out the works to an acceptable standard.
  3. It was not fault for the Council to pay Company A for the bathroom works and fees for the electrical test and drainage investigation.


The Council’s proposals for a remedy

  1. The Council repeated its offer to waive the normal requirement for Ms Y to contribute 25% towards the cost of the works. It will increase the loan to £14,212 to cover the full cost of the works.
  2. The Council has already paid the new roofing contractor £3,250 to cover the cost of replacing the damaged fascias. The Council has met this cost and it was not added to the loan.
  3. In response to my initial enquiries, the Council offered to pay £500 compensation to recognise their distress and time and trouble in pursuing the complaint. It also offered to reduce the loan repayment period from 30 years to 10 years. If Ms Y and Mr X keep the property for 10 years, the Council will remove the charge on the property.
  4. Ms Y and Mr X did not consider this remedy was adequate. They declined the Council’s offer and asked the Ombudsman to continue with the investigation.
  5. The Council says senior managers are reviewing the level of customer care and support officers given to applicants in more complex cases.

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Agreed action

  1. The Council has agreed to pay £500, in addition to the £3,250 it has already paid for the replacement fascias, and to vary the loan conditions to reduce the repayment period to 10 years. That provides a fair and proportionate remedy for the injustice caused by the faults I found. It is up to Ms Y and Mr X to decide whether they wish to accept that offer.
  2. In reaching this conclusion I have taken into account that Ms Y and Mr Z are pursuing a claim for other losses, including loss of rental income, from the sub-contractor’s insurers. This is appropriate because the Council is not responsible for the poor quality of work or damage to the property by the contractors or their sub-contractors.

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Final decision

  1. I have completed the investigation and found the failure to properly scrutinise Company A’s quotation, to challenge the failure to include VAT and seek additional quotations, was fault. That caused Mr X and Ms Y some anxiety and distress because the total cost of the works exceeded the amount they expected the scheme to cost.
  2. I am satisfied the Council has offered a suitable remedy for the injustice caused by its fault.

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Parts of the complaint that I did not investigate

  1. I have not investigated the quality of work or competence of the building contractors. They worked for Mr X and Ms Y and were not acting as the Council’s contractors or agents.
  2. I did not investigate the handling of the grant enquiry and application before July 2014. These events happened more than 12 months before Ms Y and Mr X first contacted the Ombudsman in 2015. This part of the complaint is late and I see no good reason to investigate it now.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman

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