Summary: Mr B complains that the Council will not enforce a planning agreement to prevent his service charge increasing. We have ended our investigation. This is because the Council has explained why it does not consider it can use the planning agreement to stop the service charge increase. Also, Mr B can appeal to the tribunal against the service charge increase. The tribunal is in the best position to decide the matter.

The complaint

1. The complainant, who I will refer to as Mr B, lives in a shared ownership property on a new housing development. Mr B says the freeholder is increasing the service charge. Mr B says this a breach of the section 106 agreement for the development that says homes must be affordable. Mr B complains the Council has not taken action against the freeholder to enforce the terms of the section 106 agreement.

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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’. We provide a free service, but must use public money carefully. We may decide not to start or continue with an investigation if we believe:

• it is unlikely we would find fault, or
• there is another body better placed to consider this complaint.

(Local Government Act 1974, section 24A(6), as amended)

3. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
4. We can decide whether to start or discontinue an investigation into a complaint within our jurisdiction. (Local Government Act 1974, sections 24A(6) and 34B(8), as amended)

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How I considered this complaint

5. I have considered Mr B’s complaint and the complaint correspondence, which the Council provided. I have also shared a draft version of this statement with Mr B and the Council and have considered the comments I received in response.

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What I found

What happened

6. Mr B bought a shared ownership property as part of a development which was required to provide affordable housing.
7. The Council and the applicant agreed a legal document, called a section 106 agreement, as part of the planning permission for the development. I will call this ‘the agreement’.
8. The agreement provides information about the shared ownership properties at the development. It says:

‘The Shared Ownership Units will be sold or leased on initial sales or letting on the following terms.’

The agreement then lists three types of property arrangement a) b) and c), before saying:

‘and that no more than 40% of net annual household income is spent on housing costs (where net income is 70% of gross income and that housing costs consist of mortgage, rent on unsold equity and service charges)…’

9. Mr B says the freeholder is now in the process of increasing the service charge for existing residents as part of changes made to the next phase of the housing development. Mr B says this means his property will no longer be affordable. Mr B says his housing costs are far higher than 40% of his income and it will soon be even more expensive. Mr B has asked the Council to take action under the terms of the agreement which he says is being breached by the freeholder’s actions.
10. In response the Council said officers in housing and legal services had looked at the part of the agreement relating to affordable housing. The Council said the operation referred to in the clause is provided to make sure units are affordable at allocation. The Council said it does not provide controls on subsequent increases in service charge that may happen. The Council added that Mr B’s lease agreement would set out how future service charges are applied.
11. Mr B says his property was sold as a home for life but this is no longer the case.

Analysis

12. The Council has responded to Mr B’s query by explaining its view that it cannot take action about the service charge increase under the terms of the agreement. The Council sought the advice of its housing and legal officers before making this decision. The information does not suggest the Council was at fault for the way it reached this decision. This means I cannot say the Council’s decision was right or wrong.
13. In any case, Mr B’s complaint is ultimately about the interpretation of terms within the agreement. We take the view that the tribunals and courts are in the best position to decide such matters. Mr B may put in an appeal to the Property Chamber First Tier Tribunal to dispute the freeholder’s increase to the service charge. The tribunal is in the best position to decide whether the service charge increase is in breach of the agreement and/or Mr B’s lease with the freeholder.
14. So, further consideration by the Ombudsman is not justified.

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Final decision

15. The information does not suggest the Council’s decision was affected by fault. Also, the issue in dispute is best decided by the courts. So, I have ended my investigation.

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Investigator's decision on behalf of the Ombudsman