A case that The Property Ombudsman was asked to review came from a buyer who stated that the agent had failed to disclose that there was a basement beneath the property to which unauthorised alterations had been made by the sellers.
The property was a ground floor flat. The buyer said that the agent should have disclosed the existence of the basement, which the sellers had converted into two rooms, running power cables and water pipes into the basement. These alternations were unauthorised. The buyer had discovered the conversion when lifting the lino in the kitchen after moving in; she discovered a trapdoor that led to the two-room conversion.
Based on the information contained in the agent’s company file, the Ombudsman was satisfied that they were aware of the converted space beneath the property. The sellers initially appeared to have wanted to advertise this as part of the property for sale. However, following advice from building control about the space, it was agreed that mention of this would be removed and would not form part of the sale. An email on file from the sellers to the agent stated “We are now planning on boarding over the 'sub floor' storage space 2 'rooms' so will NOT be marketing this as part of the flat. Could you please remove this from the marketing text and any photographs etc. The sales details were amended accordingly, as was the asking price, prior to being published. The trap door which gave access to the stairs down to the basement was boarded up and flooring laid over this.
In coming to a judgement on this complaint, the Ombudsman considered the agent’s obligations under the TPO Code of Practice and the Consumer Protection from Unfair Trading
Regulations 2008 (the CPRs). The CPRs require an agent to disclose any information of
which they are aware or should be aware of in relation to the property in a clear,
intelligible and timely fashion and to take all reasonable steps that all statements that
they make about a property, whether oral, pictorial or written, are accurate and are not
misleading. All material information must be disclosed and there must be no material
omissions which may impact on the average consumer’s transactional decision and
where information is given to potential buyers or their representatives, it must be
accurate and not misleading.
The agent advised that discussions with the local authority deemed the space to be nothing more than a “subfloor” and not habitable or useable space. This was why, they said, it was not marketed as such or included in any sales details.
The space beneath the property did not form part of the buyer’s title deeds. The Ombudsman’s view was that, if the space beneath the property was not included on any title deeds, it did not form part of the property that was available for purchase and could not have been included in the sales details as forming part of the property for sale
In this case the basement ‘sub floor’ was a substantial space, accessed by a staircase and which had been connected to the property’s electric and plumbing services. It was clearly worthy of further detail and acknowledgement. Due to the size of the space and the conversion that had been undertaken by the sellers, the agent should have made prospective buyers aware of this so that all relevant information about the property was disclosed. Had the buyer known about this vast space it is likely that they would have wanted the survey to include inspection of the same. There was no other way the buyer would have become aware of this space; it did not form part of the survey, was not mentioned by the sellers within the Property Questionnaire and the buyer’s solicitor could not have discovered it as it was not conveyed under the title deeds.
The buyer expressed concerns about the safety of the conversion and structure following the conversion. It was the sellers and not the agent who carried out the work and they also had a
responsibility to disclose this. If there is found to be anything awry with the standard of the conversion, this was the sellers’ responsibility and it was considered that the buyer would need to pursue the sellers for any damage that had been caused to the property as a result of the conversion works they carried out.
The buyer said that her conveyancing solicitor considered that there was an argument that the basement would belong to her property under The Law of the Tenement, as the title deeds were silent on ownership of the basement and no other flat has access to the basement area. Ownership was not a matter that the Ombudsman could establish but was mindful of the potential for this to be added to the deeds for this property, which may benefit the buyer. However, it was also noted that the local authority had advised that the space was not habitable and so that benefit of the space was limited.
The agent had not complied with their obligation to make the buyer aware of the existence of the basement space. If they had done so, she would then have known about the works that had taken place and been aware of the risks; she could also have asked her solicitor about ownership at that stage, and the survey carried out as part of the Home Report would have included this space.
While the Ombudsman appreciated the buyer’s concerns about the existence and conversion of the space there were some difficulties in quantifying the award as the implications were unclear. If the area was added to the title, the buyer may potentially benefit from the same, albeit there would be works required to bring it up to standard.
The buyer requested significant compensation (around £20,000) to bring the basement rooms up to a standard to satisfy building regulations or for the agent to remove all the basement alterations (cost unknown). The Ombudsman was unable to make an award for financial loss as this could not be quantified and was not the agent’s responsibility. However, it was recognised that the buyer had experienced and may continue to face significant aggravation and would want to rectify any issues discovered with the space (there had already been a water leak) which may include legal and inspection costs.
The complaint was supported and an award of £5,000 in compensation was made in full and final settlement.