South Oxfordshire DC has come under fire from the Local Government Ombudsman (LGO) for failing to properly advise buyers of ex-council houses under the right to buy scheme about the restrictions affecting their properties.

In two separate complaints the home-owners involved had purchased former council-owned houses in 2007 and 2010 respectively. Neither of them lived within or had a connection to the local area at the time. 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 council reviewed its policies and began to enforce a local residence connection on the sale of ex-council houses. When the complainants put their houses up for sale and applied for the council's approval they were told that consent would not automatically be given to a buyer from outside the area. Whilst the council exercised its discretion and grated consent to buyers who were not local it was clear that the restriction could prevent the houses being sold in the future. Revised offers for the properties were made and they ultimately ended up being sold for less than the previous market value.

The LGO considered the position and held that there was no evidence that the council had even considered a local residence test when the houses had been purchased. The council nevertheless had an obligation to provide full details of the potential restrictions notwithstanding that they may have chosen not to implement them at that time.

The council was told to obtain a valuation of the two properties on the basis of the partial restriction which the council had made the complainants aware of when they purchased them and on the basis of the full restriction. The council was told pay 50% of the difference to the complainants.

This is another cautionary tale for local authorities who need to consider their duties and ensure they are giving full information when it comes to the sale of ex council houses. This could be the tip of the iceberg in terms of potential claims from the owners of other ex-council houses and it will be interesting to see how the position develops. Professional advisers should also take care to ensure that their clients fully understand the potential restrictions that ex council houses could be subject to even where they have not been explicitly mentioned by the local authority.