The Ombudsman's final decision:
Summary: The Council gave Mr X incorrect information about the potential to convert a property to a House in Multiple Occupation (HMO). Mr X bought the property and lost out as a result of the Council’s error. We recommended the Council meet a proportion of the costs Mr X incurred as a result of the error.
- Mr X complains the Council failed to provide accurate pre-application advice for a property he went on to purchase. The Council’s advice was that the property complied with planning policies for conversion to a House of Multiple Occupation (HMO). When Mr X applied for planning permission for a change of use, it was refused. It transpired the information the Council’s provided had been wrong. Mr X lost out financially as a result of the Council’s error. He also complained the Council failed to properly respond to his complaint and his proposals to rectify the matter.
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 spoke to Mr X and considered the information he provided. I considered the Council’s response to the complaint and information available on the Council’s planning website. I also considered the Ombudsman’s jurisdiction and our guidance for remedying complaints.
- Mr X and the Council had an opportunity to comment on my draft decision. I considered the comments received before making a final decision.
What I found
Council Policy and its Supplementary Planning Document (SPD) on HMOs
- In 2014 the Council introduced supplementary planning guidance about HMOs. The document provided advice on proposals to change the use of existing properties to HMOs or to build new HMOs.
- The Council removed permitted development rights that normally allow a change of use between residential use (Use Class C3) and small HMOs (Use Class C4). It aimed to prevent over concentration of HMOs in a given area.
- The Council policy stated it would only grant permission for a new HMO if no more than 10% of properties in a 100m radius of an application site were already HMOs. Its policy also stated a new HMO could not be next door to another HMO.
- The Council stated it would not charge a planning application fee for a change of use to a HMO because it had chosen to remove the usual permitted development rights that would allow this.
- The SPD stated officers would use the guidance to provide informal pre-application advice to applicants and to determine planning applications. It set out the data that officers would use to identify the percentage of properties in HMO use. The SPD stated officers would use its local land mapping system to determine how many residential properties were within 100m. They would then use the Council’s sources of identified HMOs to determine how many there were in a 100m radius. The Council would use housing records for licensed/accredited HMOs, council tax data, planning application data, applications for lawful development certificates and planning officer knowledge (particularly from enforcement cases).
- The SPD stated this would “provide the Council with the best insight available into the numbers and location of HMOs within the city. However, it is important to emphasise that despite best efforts it will not be possible to provide a 100% accurate count, as there may be existing properties in HMO use that are unknown to the Council.”
- In April 2019 Mr X emailed the Council to ask it to confirm the number of HMOs within 100m of various properties. He provided the property addresses. The Council responded to confirm that one of the properties on his list had 8.24% HMOs within 100m, so it met the 10% threshold set out in the Council’s policy. (I refer to this as Property A in this statement). The Council also confirmed that if Property A was converted to a HMO it would not result in two HMOs being adjacent to each other.
- Mr X purchased Property A in June 2019 and in July 2019 he submitted a planning application to convert the property to a six-bedroom HMO.
- When the Council was considering the planning application it discovered the advice it gave to Mr X in April had been wrong. The Council accepted it was completely at fault and this had been an error on the part of the officer concerned; the officer had given wrong information because he based it on the wrong property. In fact, 21% of properties within 100m of Property A were HMOs.
- In August the Council refused Mr X’s planning application. The refusal was for two reasons. The first was the breach of council policy concerning the concentration of HMOs within 100m. The second related to inadequate living conditions for the two downstairs bedrooms Mr X proposed in his plans.
- Mr X appealed the refusal decision to the Planning Inspectorate. The Planning Inspectorate dismissed Mr X’s appeal. The Planning Inspector noted the breach of the Council’s policy about the concentration of HMOs. However, he only found one of the downstairs bedrooms had unreasonable living conditions. Mr X made a costs application, but the Planning Inspectorate dismissed it because the Council’s refusal of planning permission was in accordance with its policy and based on the merits of the application.
- Mr X complained to the Council. He stated the Planning Inspectorate’s decision showed that a five-bedroom HMO would have been a viable use of the property, if it had not been for the over concentration of HMOs. He stated he had purchased the property after the Council told him, incorrectly, that the property would not breach the policy about over-concentration of HMOs. So, he sought reimbursement for the costs he incurred in buying and selling the property. He wanted the Council to put him back in the same financial position he would have been in, had he not purchased the property.
- In response the Council completely accepted the information it provided to Mr X was wrong, and this had been an error by the officer concerned. However, the Council told Mr X that when it gives pre-application advice this is caveated as being “without prejudice” and it does not guarantee planning permission will be granted. It apologised for its error but declined to meet any of the costs Mr X incurred. Mr X found the Council’s position unreasonable. As a result, he brought a complaint to us.
Was there fault by the Council
- There was clearly fault by the Council in this case, which the Council accepts. An error was made by the Council and in no part by Mr X. So, our role in this case is primarily to consider whether the fault by the Council led directly to an injustice to Mr X, what that was, and to consider what the appropriate remedy should be.
- I understand the Council’s position that, generally, pre-application advice would be issued with a warning that it is advice only and cannot guarantee planning permission. However, it does not appear such a warning was given when providing advice to Mr X. In addition, the situation here is different to general advice requests. It seems to me the only way a member of the public would know if a prospective property would meet the HMO concentration policy would be to seek advice from planning officers. As the information cannot reasonably be verified elsewhere, the public have to rely and act on the basis of the information the Council provide.
- There is evidence Mr X sought a property specifically to convert to a HMO; he asked the Council to confirm whether a number of properties would meet the HMO concentration policy. He then purchased Property A when the Council advised him it would meet its HMO policy requirements. The incorrect information Mr X received meant his property could not be used as a HMO as intended. This is an injustice to Mr X.
- I found that Mr X has been put to additional time, trouble and inconvenience as a result of the error the Council made. I also recognise the property he purchased cannot be used as intended, and I accept Mr X is unlikely to have purchased the property had he known this.
- Mr X sought all the costs he incurred purchasing the property, the costs he will incur selling the property and costs he incurred while he owned the property (mortgage interest and lost interest on his savings) in addition to the costs of plans he had drawn up for his planning application. The costs are around £26,000. He argues he would not have purchased the property and would not have incurred any of these costs had it not been for the incorrect information the council provided. However, a refund of all costs incurred would leave Mr X with an asset and investment, with no costs at all. The property could still be rented out to produce an income or it may be sold for a profit (or a loss) now or at a future date. There are many variables which may influence the final outcome. This makes it difficult to quantify the overall impact of the fault and the fairness of basing a remedy on a refund of all the costs Mr X incurred.
- That said, Mr X has undoubtedly been caused an injustice. The property he bought cannot be used as the type of investment he intended. He also had to pursue a complaint about the matter. I recommend the Council pays Mr X £15,000 to recognise the error and to address the difficulties created for Mr X as a result.
- This remedy is based on refunding Mr X’s buying and selling fees and plans drawn up for HMO conversion. But, we do not consider other costs Mr X sought, should form part of the remedy. For example, the costs of the mortgage interest while Mr X owned the property and interest he did not receive on the funds he used to purchase it. Mr X argues he would not have incurred these costs but for the incorrect advice. However, the property remains an asset and some of the costs he seeks to recover are costs associated with the property as an investment, which he still has.
- To recognise the error made by the Council led to Mr X incurring costs to purchase an investment property that cannot be used as Mr X intended, the Council agreed to pay Mr X £15,000. This should be paid within four weeks of this decision.
- There was fault by the Council that warrants a remedy. I have now completed my investigation and closed my file.
Investigator's decision on behalf of the Ombudsman