Somerset Council (23 017 567)
- The complaint
- The Ombudsman’s role and powers
- Advance Payments Code
- Section 38 agreement
- Private Street Works Code (PSWC)
- Advice Note: Highways Adoption: The Adoption of Roads into the Public Highway (1980 Highways Act): August 2022
- How I considered this complaint
- What I found
- Agreed action
- Final decision
The Ombudsman's final decision:
Summary: We found fault on the complaint of Mr J, Ms K, and Mrs L. The Council failed to secure a bond under the Advance Payments Code of £5,300 against one property. The agreed action remedies the injustice caused.
The complaint
- Mr J complains on his behalf and Ms K, and Mrs L about the Council failing to secure a financial bond from a property developer, as required under the Advance Payment Code, to cover future construction costs on a private road next to new buildings to protect residents should the developer fail to complete them: as a result, the cost of any necessary future works to this road will now be the responsibility of home owners fronting it as the developer has gone into liquidation.
The Ombudsman’s role and powers
- If we are satisfied with an organisation’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)
- 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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
- When considering complaints, we make findings based on the balance of probabilities. This means that we look at the available relevant evidence and decide what was more likely to have happened.
Advance Payments Code
- The Advance Payments Code (APC) forms part of the Highways Act 1980 (sections 219-225). It secures a payment of the costs of street works in private streets next to new buildings. This ensures the Highway Authority responsible for street works can carry out the roadworks if the developer cannot do so.
- Where there is a proposal to erect a building for which a developer needs to send a council building regulation plans, and the building will front onto a private street which the street works authority have the power to require works, then no work shall be done on erecting the building unless the owner of the land has paid to the street works authority, or secured a satisfactory payment, for the cost of such works.
- The aim is to relieve home buyers fronting such streets from road charge liabilities under the Private Street Works Code if the developer defaults. A street is private unless or until it is adopted as a public highway or subject of a legal agreement which provides for it to become a highway maintainable at public expense.
- A council will serve an appropriate Notice setting out the sum needed within 6 weeks of formal notification of Building Regulation Approval being granted.
- One of the exemptions to the APC is a section 38 agreement.
Section 38 agreement
- Under section 38 of the Highways Act 1980, a council (as Highways Authority) can adopt newly built roads and paths as part of a development. It is used when a developer wants to build a new estate road for industrial, residential, or general traffic which may be offered to the Highways Authority for adoption as a public highway. It can include associated drainage, lighting, and supporting structures. A council cannot force a developer to enter into this agreement.
- The adoption of a highway means the Highways Authority agrees to carry out the maintenance of a road at public expense. Before agreeing to do so, it will need any new roads to be built to a required standard. The agreement may also need a financial bond from the developer to cover costs to the Highways Authority should the developer fail to carry out the works or, do them to a required standard, or fails to maintain them during the initial maintenance period, which is often 12 months.
Private Street Works Code (PSWC)
- A Council, as Highways Authority, is not responsible for maintaining a private or unadopted road. Responsibility for the cost of their maintenance rests with the frontages, who are the owners of properties which front such roads. This is the case even if they do not own the road.
- A Council can order the frontages to carry out repairs to a private or unadopted road which are needed to ‘obviate danger to traffic’. A council can construct or make up private streets (sections 203-237 Highways Act 1980). It has powers to get the money needed to do this from those frontages on a private street and from any APC deposits paid for buildings on it.
Advice Note: Highways Adoption: The Adoption of Roads into the Public Highway (1980 Highways Act): August 2022
- A Highways Authority has the power to ‘make up’ private streets (section 205-218 Highways Act 1980) to an adoptable standard. It uses the PSWC to complete the action whereby a private street becomes maintainable at public expense. The PSWC is used in rare circumstances mainly due to costs and time incurred by those who will ultimately benefit from the adoption.
- Most local authorities only use this power where: they were approached by 80-100% of the frontages; the frontages understand and commit to fund all works, less any sum held by way of bond through an APC, along with all legal, administrative and technical processes; they have legal title to the land over which the street runs and the frontage property gains benefit/access from the private street; the private street links directly to an existing adopted street; the private street complies, or can comply with, its layout and constructional adoptable standards; the private street, if adopted, would provide enough wider public benefit.
How I considered this complaint
- I considered all the information Mr J sent, as well as the Council’s response to my enquiries. I sent a copy of my draft decision to Mr J and the Council. I considered their responses.
What I found
- More than 20 years ago, there was a proposal to carry out development within the curtilage of a farm. There were several new plots proposed for the site and the development was done over an extended period. Mr J, Ms K, and Mrs L now live in properties built on the site fronting a private road.
- The Council is the Highways Authority which has a duty to maintain the public highway network in a condition which is safe for users. Responsibility for the cost of maintaining a private unadopted road rests with the frontages (the owners of properties which front on to such roads).
- Mr J complains the Council failed, during the development, to ensure:
- there were payments (bonds) under the APC for all frontages; and
- the APC bonds obtained were either not secured, obtained only for certain frontages, or were insufficient where they were secured.
- He is concerned these failures will, and have, cost the frontages financially.
- The Council said it only ever received two notifications from the Building Regulation Authority (another council). Both were Initial Notices. One was for a dwelling at Plot A and the other for five new builds at Plot B. The Council issued two APC notices, APC Bond 1 for £5,300 (Plot A) and APC Bond 2 for £104,251(Plot B).
- The Council’s calculation for APC Bond 2 included the earthworks needed. It explained calculations were often an estimate of potential costs. This is because they are often an estimate of potential costs as they are calculated before construction drawings are approved. Bonds do not automatically mean the Council would adopt the road. Nor do they mean there may be additional monies payable by the residents.
- It accepted never securing APC Bond 1.
- It agreed to reduce APC Bond 2 about 12 months later. It was reduced to £54,590 which was secured and remains valid. The Council reduced the bond needed as the earthworks were done at this point. It explained while details were discussed, the few final outstanding issues were not resolved by the developer. Despite several requests to provide revised drawings, the developer never sent them.
- Mr J complained about this reduction because there was little work done during that period. The reductions increased the exposure of frontages to any potential liability for the maintenance of the road. There were now almost twice the number of plots than covered by APC Bond 1 and 2.
- The Council accepted there was an error in the Notice issued by Somerset County Council, its predecessor, which only referred to one property instead of five new builds.
- The Council did not receive any further Notices from the Building Regulation Authority. As it had not been told about other development on the site which required the depositing of building regulation plans, it could not secure money from the developer under the APC in advance. As such, the PSWC applied. It argued it was not its role to keep checking how many properties were built or converted.
- The development company was removed from the Registrar of Companies earlier this year. This means neither the residents nor the Council can bring legal action against it to recover money for the road works, including drainage and lighting, which are needed.
- The Council confirmed it would not voluntarily carry out a Private Street Works scheme. It would adopt the road if it was brought up to an adoptable or appropriate standard so that it would not have to use the Private Street Works powers.
- Mr J also complained the Council failed to secure a section 38 agreement with the developer. The Council discussed details with the developer, but there was no final agreement. The developer failed to provide revised drawings despite several requests. I have seen evidence of correspondence with the developer’s agent requesting drawings about the highway and technical issues raised were still outstanding. There was a site inspection in 2023 which recorded works the developer still needed to do. The Council said these works were significant.
- The Council understands the ownership of common areas have been transferred to a new management company run by the residents. It remains a private unadopted road with no section 38 agreement.
- It explained while it has the power to carry out works itself under a PSWC, the Council would not voluntarily use its powers to force a scheme on residents. This is because doing so under the PSWC can be complicated, cumbersome, and expensive. It referred to Department for Transport Advice Note on Highway Adoption which also notes this and states the PSWC is rarely used, mainly due to costs, and the time it takes to those who will benefit.
- Currently, the developer does not want to carry out any works despite previously saying he would complete the road once house building was complete. A list of outstanding works needed/remedial works, along with confirmation no new lighting units have been provided, was sent to the developer.
My findings
- I found the following on this complaint:
- The APC is triggered when the application/plans under building regulations for a development are deposited. It is important to note these plans are not deposited with the Council but, with the Building Regulation Authority.
- Once notified of the application, the Council can serve an APC notice within six weeks of either the application’s approval (Full Plans) or acceptance of the application (Initial Notice, Building Notice). The timescale for deciding whether to serve an APC notice is short.
- The APC notice is registerable as a local land charge which means it will be revealed when buying a house through a local authority search.
- The evidence shows the Council received the Initial Notices for Plots A and B. In response, the Council issued two APC notices which required the securing of bonds.
- There was a failure by the Council to secure APC Bond 1. It is unable to say why this did not happen. I am satisfied this failure amounts to fault. There is an injustice to the frontage of the property which benefited from APC Bond 1. This is because there was a lost opportunity to have it properly put in place to limit any future potential liability for the upkeep of the road. It would also cause some distress for the owners as they do not know whether any future liability would be reduced by the amount APC Bond 1 was supposed to secure.
- The Council agreed to the reduction of APC Bond 2, explained why it did so, and provided copies of evidence in support. I found no fault on this complaint. The Council was entitled to reach this decision after proper consideration of the evidence and the changed circumstances after the passage of time. It had more detailed information when it made this decision than it had 12 months earlier.
- The Council did not receive notification from the Building Regulation Authority about any further developments on site. This meant it could not consider whether it needed to issue further APC notices. I found no fault on this complaint as there was no failure by the Council to issue any further APC notices.
- While the Council accepted there was an error in the Notice issued by Somerset County Council, its predecessor, which only referred to one property instead of five new builds, I am not satisfied this failure caused fault to the residents who purchased the five properties. This is because the Council secured APC Bond 2 for these properties.
Agreed action
- I considered our guidance on remedies.
- I also considered residents purchasing their properties would have used the services of solicitors. During this process, they were entitled to make local authority searches as well as specific highway searches to do with responsibility for maintenance of the road. The highway search, for example, would have allowed purchasers to ask the Council for evidence the developer entered into an agreement with the Council about the private highway. Local authority searches can also show APC notices issued and the amount of the bond registered. This is a relevant consideration for the purchaser of the property with the benefit of APC Bond 1. This is because I would expect the conveyancing process to have discovered information about APC Bond 1 and whether it had been secured.
- The Council agreed to take the following action within four weeks of the final decision on this complaint:
- Send a written apology to the owners of the property which had the benefit of APC Bond 1 for its failure to secure it and to explain the actions it will now take to resolve this error.
- Act to ensure it understands why this failure happened and what it can do to ensure it is not repeated on future cases.
- The Council agreed to take the following action within six weeks of the final decision on this complaint:
- Set aside £5,300 for the property which had the benefit of APC Bond 1 and ensure this is recorded so future purchasers of the property can discover this is in place and legally binding.
- Identify all the properties covered by APC Bond 1 and 2 and send written confirmation to each.
- The Council should provide us with evidence it has complied with the above actions.
Final decision
- I found fault on the complaint made by Mr J, Ms K, and Mrs L against the Council. The agreed action remedies the injustice caused,
Investigator’s decision on behalf of the Ombudsman
Investigator's decision on behalf of the Ombudsman