The Property Ombudsman was asked to review a complaint from recent buyers of a property about providers of a search report that was conducted before completion. The report showed that there were no planning applications within 750m of the property. It omitted to include reference to the planning permission that had been granted for an estate of nine houses situated immediately adjacent to the property.
The buyers explained that they were not aware of the existence of the planning application for the estate when they purchased the property and said they would not have offered £11,000 over the asking price had they been aware.
The search provider said that the planning application and decision for the new build estate was not included in their report because the application was made twelve years prior and their findings only included applications made during the seven year period up to the date of the search. They said that the search had a seven-year cut-off point, since most planning decisions stipulate that work must begin within either three or five years of approval being given. They explained that the planning decision in this case was unusual in that it did not specify a date by which time the work must begin.
An extreme example
The search provider felt this was an extreme example where the time lapse between the original application, appeal and subsequent works was much longer than expected and that the lack of time limit to commence works meant that there was little chance of their report picking it up.
The search provider explained that as no applications were identified within seven years prior to the report being generated, the report did not include a dynamic text field which would have advised the buyers that the search was limited to seven years. However, they acknowledged that this was not ideal and made a goodwill offer to refund the search fee of £137.16, in resolution of the complaint.
The buyers rejected the offer of compensation and sought compensation of £11,000, which is the amount they offered over the asking price of the property.
The Ombudsman accepted that the search provider needed criteria to apply in order to determine the search parameters and considered that it was reasonable for the report to have a cut-off date before which planning applications would not be included. This would prevent out-of-date information from being routinely included in search reports and potentially obscuring more relevant information. The Ombudsman felt that seven years was a reasonable cut-off point, given the search provider’s comment that most applications contain the criteria that building must begin within either three or five years of approval being given.
Their findings only included planning applications made during a seven-year period…
The Ombudsman therefore did not conclude that the search provider failed to carry out the search accurately, within the parameters that were set. The application for the housing estate next to the property was made twelve years prior and approved ten years before the time period covered by the search. Although there was some activity in 2012, it was recorded under the existing record and did not generate a separate record. Therefore, the Ombudsman accepted why it was not picked up by the search.
Limitations of search
However, the Ombudsman explained that there was an expectation on the search provider to have put the buyers on notice of the fact the search only included applications during the last seven years. This expectation was in accordance with the requirement under the Search Code to state what sources of information had been searched, which reasonably included stating any limitations that were in place.
The report should have warned the buyers that there might have been applications which were ‘live’, but which had not been included because they pre-dated the time frame covered.
The search provider should also have advised the buyers to make their own enquiries if they had concerns about this possibility. The search provider said that there was a dynamic field which would have explained that the search was limited to seven years, but that it was not included since no applications were found within the last seven years. This was clearly unsatisfactory, since the buyers needed to be made aware of the limitations of the search, regardless of whether any applications had been identified or not. Had such a statement been included, the buyers might have been able to instruct their solicitor to carry out further investigations.
The Ombudsman recognised their strong feelings towards the reasoning behind their decision to offer the amount they did. Nonetheless, the discovery of the application for development of a new build estate, which they would have reasonably expected to be included in their search report, undoubtedly caused them distress.
The Ombudsman therefore considered that there was a flaw in the way information was presented by the search provider, in particular the lack of warning that the search was limited to applications made within the last seven years, that there may have been applications that predated this time frame and that the buyers should have made their own enquiries to satisfy themselves on this point.
The Ombudsman made an award for compensation of £1,000 for the aggravation, distress and inconvenience caused.