Monday, 21 September 2015

A Cautionary Tale for Right to Buy Conveyancing Lawyers

The Local Government Ombudsman (LGO) has criticised South Oxfordshire Council for omitting to properly inform buyers of ex-council houses under the right to buy scheme about the restrictions affecting their properties.

In two distinct complaints the home-buyers involved had purchased former council-owned houses some years ago. 

It is of course likely that the complainants had their conveyancing lawyers in their sights as well.

The homeowners both lived out of the area. When they bought their houses the council advised that as a condition of granting consent they would have to occupy the houses as their main residence and stipulated that they could not sell to a limited company or grant tenancies.

In 2013 the South Oxfordshire DC reviewed its policies and began to enforce a local residence connection on the sale of ex-council houses. When the complainants put their houses on the market and applied to the council's approval they were told that consent would not automatically be forthcoming to a buyer from outside the area. Whilst the council exercised its discretion and granted consent to buyers who were not local it was clear that the restriction could prevent the houses being sold in the future. The sales prices of both houses were affected because of the restriction.

The ombudsman determined that the Council were duty bound to provide full details of the potential restrictions notwithstanding that they may have chosen not to implement them at that time. The council argued that the onus was on the homeowners’ solicitors to check the full details and inform them of the restrictions.

Whilst there is nothing in the decision that indicates that the buyer’s lawyers did anything wrong, conveyancers need to consider their duties and ensure that their clients (including the lender as per the CML Handbook) fully understand the implications of potential restrictions that ex council houses could be subject to even where they have not been explicitly mentioned by the local authority.

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