The Ombudsman's final decision:
Summary: There was no fault by the Council in how it handled the transfer of the freehold interest to Ms B. It did not know in advance that there would be additional costs and it told Ms B of this as soon as it was made aware. It did not delay in dealing with the transfer.
- Ms B complains that the Council took too long to deal with her enquiry to buy the freehold interest of her property. The delay meant that Ms B had to pay additional legal fees of around £1000.
The Ombudsman’s role and powers
- 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)
- 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)
How I considered this complaint
- I considered the information the complainant sent me and discussed this with her. I have considered the Council’s response to my enquiries as well as the Council file documents and correspondence with the complainant and the Housing Association. Both parties have commented on a draft of this statement.
What I found
- In August 2015, Ms B applied to the Council for the right to buy the freehold interest of her home. She had already bought the leasehold interest from the Housing Association (HA). The Council first asked Ms B to sign an undertaking that she would pay the Council’s costs of this. At that time, the Council estimated those to be £750. Ms B’s solicitor returned the undertaking with proof of her leasehold interest.
- On receiving the proof of leasehold from Ms B’s solicitor, the Council checked its documents and immediately realised that it was not the immediate landlord and that the HA remained an intermediary landlord. This meant it would have to get a Deed of Surrender from the HA before it could transfer the freehold to Ms B. Her solicitor confirmed that Ms B had agreed the surrender with the HA. The Council agreed to do this work but would need to charge additional costs and needed Ms B to agree this.
- Ms B agreed to the additional costs in October 2015, but was unhappy that her own solicitor would charge more too and told him to stop work. The next day, the Council wrote to the HA about the Deed of Surrender. Despite chasing it monthly, the HA only responded to the Council in April 2016. It said it would need to get a valuation and the approval of both its board and the Homes and Communities Agency. The Council sent the HA a draft Deed of Surrender.
- The HA took until October 2016 to get the required approval. The files are clear that the Council monitored the file and contacted the HA regularly asking for progress. It also sent the Council amendments to the draft Deed of Surrender and the Council sent this to Ms B’s solicitor for approval.
- The Council says that Ms B’s solicitor had agreed to draft the Transfer deed between her and the Council. However, Ms B had asked her solicitor to stop work and in February her solicitor told the Council he would not draft the Transfer deed. Ms B’s solicitor says he did not agree to draft the transfer. Within two days, the Council had sent a draft Transfer to Ms B’s solicitor. On the same day, it asked the HA to sign and return the Deed of Surrender. The Council had not completed the Deed of Surrender until that point because it was waiting for Ms B’s solicitor to provide the Transfer and the two transactions needed to happen simultaneously.
- The transaction was finally completed in May 2017, nearly two years after Ms B’s initial application. The Council’s fees had risen from £750 to £1250 due to the extra work in dealing with the HA. Ms B’s own solicitor’s costs had risen from the £100 quoted to £650 plus tax. Ms B also says the whole process has caused her distress and frustration. The HA has summarised its position:
- It acknowledges that it took longer than expected to complete the transaction.
- It said the Council failed to take into account that the HA had an intermediate leasehold interest when it agreed the fees.
- It acknowledges that initial delays were due to the HA not forwarding the Council’s correspondence to the correct team. But then it had to get a valuation and the HA Board approval because it is a charity: this was unavoidable.
- The HA says it had to chase the Council which took too long to complete the Deed of Surrender and this had to be done before the Council could move forward with the sale.
- It firmly believes that the delays and misinformation was caused by the Council.
- The Council assumed that it was her direct landlord and it did not know that the HA was an intermediate landlord.
- Ms B should have known this and her solicitor should have advised her that this would be more complicated and there would be additional expense. Even if the solicitor did not know this from the outset he would have been able to advise Ms B of the additional costs as soon as it was clear the HA was involved. Ms B could then have decided whether to continue with the purchase.
- It kept her informed of the delays throughout.
- It was difficult to engage the HA, and it took 12 months from initial contact for the HA to get the valuations and authority of its Board to proceed. Any delays were outside the control of the Council.
- Ms B had been contacting the Council’s legal department for updates. While it initially responded, it then told Ms B to direct all correspondence through its solicitor. It was not for the Council to correspond directly with Ms B as correspondence should usually take place through the solicitors.
Was there fault by the Council causing an injustice to Ms B?
- There are two issues: the length of time taken to complete the transaction, and that the Council quoted costs based on a freehold transfer but did not realise the costs would need to increase.
- The transfer of the freehold interest from the Council to Ms B took much longer than expected. However, the files are clear that this was not the Council’s fault. It acted in good time throughout. The files are clear that the delays were due to the other parties, in particular the HA obtaining approval (which took from September 2015 to October 2016).
- The only delay by the Council was in executing the Deed of Surrender between it and the HA, but this was because the Council was waiting to complete the transfer deed, and both transactions had to happen simultaneously. It is clear that the Council monitored the file and chased the HA and Ms B’s solicitor regularly. It also answered Ms B’s councillor’s queries about how it was handling the situation.
- In response to a draft of this statement, Ms B’s solicitor has said that it was for the Council to draft the Transfer deed and not the buyer, and that the solicitor approved the deed within days of receiving the draft from the Council. However, I note that in an email to the Council Ms B’s solicitor offered to forward the Transfer deed and so it was not unreasonable for the Council to expect it to do so. This added to confusion as to who would draft the deed.
- I have looked at how the costs to Ms B increased and how the Council handled this. Ms B’s solicitor says that the Council should have checked the ownership before giving a quote of the likely costs. It would then have realised that it had to arrange for the HA to surrender the leasehold and that the costs would increase.
- It is correct that the Council could have done this. However, even in this case, the Council told Ms B very quickly that the costs would increase. I appreciate that Ms B was to some extent committed but I am not persuaded that had she known of the increased costs from the outset she would have decided against purchasing the freehold. The Council could not have known that it would take so long to complete.
- Ms B’s solicitor did know the situation and would have been able to advise her that this would require more legal work and therefore the costs would increase. There was little fault in how the Council handled the matter of establishing what work was required: it established this early and informed Ms B very quickly. The fact that the Council did not tell Ms B from the outset that the surrender would be needed from the HA had little impact on her because she would always have been liable for these costs.
- I have completed my investigation. There was no fault by the Council.
Investigator's decision on behalf of the Ombudsman