Summary: There was no fault in the Council’s decision to waive a requirement of a section 106 agreement, in respect to the sale of a property. There was also no fault in its decision the same requirement had been met in respect to the sale of another property. The Ombudsman has therefore completed his investigation.

The complaint

1. The complainant, to whom I will refer as Mr N, is represented by his father, Mr F.
2. Mr F says his son had recently expressed an interest in purchasing two properties, both of which were subject to a section 106 agreement. The agreement included a requirement for the properties to be marketed to defined key workers, for a period of six weeks, before being placed on the open market.
3. In the case of Property 1, the Council agreed to waive this requirement. This meant the vendor had already accepted an offer, from a non-key worker, before Mr N, who is a key worker, was able to view it.
4. In the case of Property 2, Mr F says he believes the buyer is also not a key worker, and complains the Council disagrees.

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The Ombudsman’s role and powers

5. We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. 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)
6. 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

7. I reviewed correspondence between the Council, the vendors’ representatives, and Mr F.
8. I also shared a draft copy of this decision statement with each party for their comments.

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What I found

9. Properties 1 and 2 form part of the same development. When it was given planning permission, the Council made a s106 agreement with the developer. This included two conditions:

• whenever the properties were marketed for sale, for the first six weeks the vendor may only entertain offers from defined ‘key workers’ (those working in certain public services, with a salary below a set level), before they were placed on the open market; and
• the properties must be sold at 75% of the open market value, which was to be agreed with the Council at the time.

10. Property 1 came into the possession of a mortgage lender. In October 2017, the bank’s estate agent contacted the Council, asking for both conditions to be waived. The Council said, because the property was empty and in possession of a mortgagee, it would agree to waive the key worker requirement. It would not waive the ‘75%’ requirement.
11. In May and June, Mr F contacted the Council. He said Property 1 had been placed on the market in April, and Mr N had expressed an interest in viewing it after 12 days. However, he was informed at that point an offer had already been accepted from a non-key worker. Mr F queried how this had been allowed to happen.
12. Mr F also said Mr N had expressed an interest in Property 2, which was subject to the same s106 condition. Again, he had been told an offer had already been accepted. Mr F said he did not believe the buyer qualified as a key worker under the defined eligibility criteria.
13. After discussing this with the Council, Mr F submitted complaints about the Council’s handling of the s106 agreements for both properties. He questioned the Council’s decision to waive the key worker requirement for Property 1, asked for an explanation how this had been allowed to happen and questioned whether it was “above board”.
14. Mr F also complained Property 2 had been sold to someone who did not qualify as a key worker, within six weeks of being marketed, and again asked how this had been allowed to happen. He also questioned why Property 2 had been valued significantly higher than Property 1, despite the properties being very similar.
15. On 18 July, the Council replied. With respect to Property 1, it said it had agreed to waive the key worker requirement because of the particular situation at the time. The Council explained it had the legal power to do this. It acknowledged Mr N’s interest in the property was not known at the time it agreed the waiver, but said he would not have necessarily been the one to purchase the property, even without the waiver. The Council also said the waiver did not prevent Mr N from making an offer on the property.
16. The Council said it had taken a “pragmatic approach to bringing an empty home back into use”, which was in line with Council policy and a matter of professional judgement. Nevertheless it apologised if the matter had caused Mr F any distress.
17. On Property 2, the Council said it had not granted a waiver in this case, and that it was still investigating whether the buyer qualified under the criteria. It said it would look to take formal action if it considered the agreement had been breached.
18. On 30 July, Mr F submitted a further complaint. He argued the circumstances described by the Council did not justify the waiver for Property 1, and that a quick sale would still have been possible. He questioned the Council’s professional judgement. Mr F also questioned why the Council had replied to his complaint about Property 2, if its investigations were still ongoing.
19. The Council replied on 6 September. It repeated it was a matter of professional judgement for the Council to decide whether to grant a waiver for Property 1, and that it had considered it warranted under the circumstances.
20. For Property 2, the Council said it had now received confirmation from the buyer’s solicitor, who had been in contact with his employer, that he qualified under the key worker eligibility criteria.
21. On 21 February 2019, Mr F referred his complaint to the Ombudsman. He complained the Council’s decision with respect to Property 1 was not in the public interest, and requested evidence the buyer of Property 2 met the eligibility criteria.

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Legislative background

22. New development can place extra burdens on the existing infrastructure and resources in the area (such as volume of traffic). It can also deal with existing problems in an area (such as a lack of affordable housing) and allow opportunities to be realised (such as archaeological study). Councils may require developers to make some reasonable financial or practical contribution to the community to address these types of issues.
23. For example, a developer seeking planning permission to build a new private sector housing estate may be willing to contribute to the cost of more facilities at a local school and provide affordable housing. This is usually achieved by making planning permission conditional on the developer first entering into an agreement or obligation, commonly referred to as a ‘section 106 agreement’.
24. Once a developer signs an agreement, it is a legally binding contract. The terms of the agreement can be enforced by either party against the other.

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Analysis

25. Mr F complains the Council agreed to waive the key worker requirement of the s106 agreement, which he says precluded Mr N from putting an offer on Property 1.
26. The Ombudsman’s role is to review authorities’ adherence to procedure when making decisions. If the authority has followed the correct procedure, taken into account relevant information, and given logical reasons for its decision, the Ombudsman cannot generally criticise it. The Ombudsman cannot make decisions on authorities’ behalf, and he cannot uphold a complaint simply on the basis a person disagrees with an authority’s decision.
27. In this case, I appreciate why Mr F is dissatisfied with the Council’s decision. Although the waiver did not actively prevent Mr N from entering an offer, it increased the level of competition.
28. But it was the Council’s decision to make the agreement in the first place; and it is the Council’s decision whether to maintain or waive it. There is no law, policy or statutory guidance preventing the Council from making this decision, where it sees fit, and it has explained its reasons for doing so.
29. This is fundamentally a matter of Council policy, and the professional judgement of those employed to implement it. The Ombudsman has no power to intervene in this. I do not dismiss Mr F’s view the public interest would have been better served by maintaining the requirement, but this is not evidence of administrative fault on which I could uphold a complaint.
30. I do note, from the Council’s internal communications on the matter, it questioned the fact Property 1 was not marketed until April 2018, when the waiver was agreed – to assist in obtaining a quick sale – in October 2017, seven to eight months earlier. This could be seen to bring the waiver’s purpose into question.
31. However, the Council’s role in this was minimal. It was not involved in the marketing or sale of the property, and had no responsibility to monitor the situation after it had granted the waiver. I cannot find fault by the Council for this reason.

Property 2

32. Mr F believes the buyer of Property 2 did not qualify under the key worker eligibility criteria, and so its sale to him before six weeks was in breach of the s106 agreement.
33. The Council has investigated this. The buyer’s employer, through his solicitor, confirmed he met the criteria, and the Council says it is satisfied with this evidence. This, again, is a decision the Council was entitled to make.
34. For reasons of confidentiality, the evidence obtained by the Council is not disclosable to Mr F.

Other issues

35. Mr F has raised some other points, which I will briefly address.
36. Mr F questions the valuation of Property 2. He says it was valued at £60,000 more than Property 1, despite being virtually identical, and the Council accepted this.
37. Given Mr N bought neither property, I cannot see what injustice this could be said to have caused him. Any injustice arising from a flawed valuation would be to the vendor and/or buyer alone. I have no grounds to investigate this matter as part of a complaint from Mr N.
38. Mr F says he had himself expressed an interest in one of the properties several years ago, but was told it could not be marketed to him at that time because he was not a key worker. Mr F questions why he was not offered a waiver.
39. The waiver for Property 1 was a matter raised by the estate agent. The Council did not proactively seek to grant a waiver, it agreed it in response to the estate agent’s request.
40. If, in Mr F’s case, the estate agent did not suggest seeking a waiver for him, this is a matter for him to take up with the agent. There is no suggestion the Council was even aware the property was being marketed at that time, let alone that it denied him a waiver, and so there is no evidence of fault by the Council here.
41. Mr F questions the fact the Council’s complaint response said it would learn from his complaint and valued his feedback. Mr F says this implies the Council acknowledges it was at fault.
42. In its second response, the Council said this was a general comment about complaints, and was not intended to imply it accepted fault.
43. The Ombudsman’s view is that councils should see their complaints process as an opportunity to learn and improve services. It is encouraging to see the Council embracing this principle.
44. However, I agree it is unhelpful to make a comment like this when the complaint in question is not being upheld. As Mr F says, it implies an acceptance of fault.
45. I do not consider this of such significance it justifies a formal finding of fault in this case. But I would ask the Council to note this point, and consider carefully when to include similar comments in its complaint responses.

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Final decision

46. I have completed my investigation with a finding of no fault.

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Investigator's decision on behalf of the Ombudsman