A case that The Property Ombudsman was asked to review came from buyers concerning the accuracy of the information within the local authority search compiled by the search provider (SP).
The buyers said that the search contained inaccurate and misleading information about the proximity of a scientific research centre. They calculated that the site (which develops ultra-low emission vehicles) is 104 metres away from the property and explained that they were unaware of the proposal to build the research centre until after they had purchased the property.
The buyers explained that they made their decision to purchase the off-plan property based on the information contained within the SP’s search report. They believe that the construction of the research centre has a direct impact on the value of the property and were seeking compensation from the SP for omitting to include the planning application in the search. They calculated their losses, in respect of the impact of the site on property prices, to be around £40,000.
Under Paragraph 2 of the Search Code, the SP was expected to act with integrity, and carry out the Search with due skill, care and diligence, which included accurately reporting the most up-to-date available information and risks associated with the Property from the sources consulted.
The SP did not dispute that the planning application in question was not included in the Search, despite the site being located within the 500-metre search radius. However, they said that they could not be held responsible for this omission as they obtain their data from a third party provider, who record the location of planning applications using grid references listed in the planning application forms which are submitted to the local authority. In this case, the grid references supplied in the application form placed the development at the northern boundary of the site, which fell outside the search radius.
The SP further explained that, as the planning data they use is not sourced or stored by them, they are unable to verify the accuracy of the information before it is included in their reports. They added that it is made clear in the search report that they rely on commercially available data and that further enquiries should be made of the local authority if the existence or absence of a planning application, consent or similar may have a material impact on the decision to purchase a property.
The Ombudsman considered that search providers are reasonably entitled to rely on the data which is provided to them by third parties when compiling a search report, and took no issue, in principle, with the process of recording the location of a planning application on the basis of the grid reference which has been supplied in a planning application form. It would not be feasible for them to verify the accuracy of the stated location of all planning applications.
However, the SP was aware that large projects may not be revealed when using the grid reference methodology to determine the location of the planning application, yet did not take steps to ensure that the buyers were also aware of this risk. It was not considered reasonable for the SP to rely upon a general disclaimer that direct enquiries of the local authority should be conducted if planning was likely to have a material effect on the buyers’ purchasing decision.
The buyers provided photographs of the development which were taken after work to the site had commenced and clearly the construction of the building has had a considerable impact on the enjoyment of the property. They were also concerned about the storage of large quantities of fuel and the increased pollution which the site will likely cause. A proposal to build a large vehicle research centre in very close proximity to a residential property would affect the purchasing decision (that is, whether to reduce their offer or to withdraw completely) of most prospective buyers.
There was no specific information contained within the report to put the buyers or their legal representative ‘on notice’ that planning for a large development may have been submitted to the local authority and not included in the search. As a matter of best practice, the SP should have provided details about the methodology used to locate planning applications in the search report and should have explicitly stated that as the location was determined on the basis of information which had been supplied by a third party, it was possible that planning applications may have been submitted to (and approved by) the local authority but were not included in the search. The SP’s failure to do so in this case led the buyers to believe that there were no current plans to develop the field next to the property and that the information provided in the search was an accurate reflection of the planning applications which had been submitted to the local authority within a 500 metre radius of the property.
The Ombudsman considered that an award of compensation was merited to reflect the considerable aggravation and inconvenience which the SP’s failure to properly equip the buyers by providing information about their methodology in the search, had caused the buyers. However, no award was made for any loss in property value. This had been calculated merely by reference to an estate agent’s opinion of the likely property value. The Ombudsman is unable to make a compensatory award for unproven or supposed losses.
The Ombudsman made an award of £1,000 in compensation in full and final settlement of this dispute.