Summary: We will not investigate this complaint about the Council’s failure to secure an agreement under section 38 of the Highways Act 1980 with the developer of the complainant’s new home. The Council cannot force a developer to enter into such an agreement. There is not enough evidence of fault in the Council’s actions to justify an investigation.

The complaint

1. Mr X complains the Council failed to secure a bond from the developer to cover bringing the road where he lives to an adoptable standard.
2. He says the Council refuses to engage until the utilities are adopted by the utility companies, but it continues to charge full council tax despite not providing services.
3. Mr X wants the Council to take immediate responsibility for adopting the roads on the development where he lives. He says it should fully fund the work necessary to bring the roads to an adoptable standards. He also wants it to reimburse residents for the time, effort and financial loss incurred in pushing the road adoption.

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The Ombudsman’s role and powers

4. We investigate complaints about ‘maladministration’ and ‘service failure’, which we call ‘fault’. We must also consider whether any fault has had an adverse impact on the person making the complaint, which we call ‘injustice’. We provide a free service but must use public money carefully. We do not start or continue an investigation if we decide:

• there is not enough evidence of fault to justify investigating, or
• we cannot achieve the outcome someone wants.

(Local Government Act 1974, section 24A(6), as amended, section 34(B))

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How I considered this complaint

5. I considered information provided by Mr X and the Council.
6. I considered the Ombudsman’s Assessment Code.

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My assessment

7. Mr X bought a house on a new development. The developer did not enter an agreement with the Council under section 38 agreement of the Highways Act 1980. The developer has since gone into liquidation and the property owners must sort out the issue under the Private Street Works Code in the Highways Act 1980.
8. There have been publicised instances where residents move into new houses, and the developer declared bankruptcy before completing the roads serving those properties. Councils can be reluctant to adopt these roads and become legally responsible for their maintenance, due to the often unfinished or poor condition. The residents can be liable for road upgrades which are expensive.
9. There is no legal requirement for councils to adopt an unfinished road, or to bring it up to adoptable standard, unless a developer makes certain agreements and has paid financial bonds to the council. However, councils in England and Wales can:
• make a voluntary advance agreement with a developer to adopt a prospective road, once built, under section 38 of the Highways Act 1980 (potentially including a bond); or
• require a developer to pay a bond (which can be used to make up roads if a developer defaults on the building work) under sections 205 to 218 of the 1980 Act.
10. If there is no section 38 agreement or bond in place, a council can bring a road up to adoptable standard in agreement with the people who own property fronting (the frontages). This is outlined in sections 205 to 218 of the 1980 Act. This means the road is adopted by the council.
11. I understand Mr X says the Council is at fault because it should have required the developer to enter a section 38 agreement. However, it cannot force a developer to do so. Also, an agreement under Section 38 of the Highways Act gives a council with a right to act if a developer defaults on the agreement in some manner. However, a council does not have any obligation to do so, and any decision is at its discretion.
12. The Government has published a guidance document on road adoption. It advises house-buyers to check if a section 38 agreement is in place when buying a new-build home. This states that at the time of purchase on a new property there may be no legal agreement in place that roads and pathways will be adopted. The buyer should not assume that a road will be adopted by a local authority to be a highway maintained at public expense. It also provides advice on what to do in case of a dispute.
13. I understand Mr X is concerned he must pay full council tax despite not receiving all the services. However, council tax is not a payment for services and the Council is not able to provide a discount under such circumstances.

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Final decision

14. We will not investigate Mr X’s complaint because there is not enough evidence of fault in the Council’s actions.

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Investigator's decision on behalf of the Ombudsman