Unjust enrichment?

5 March, 2019
by: Cripps Pemberton Greenish

Islington Council is bringing proceedings against a resident to whom it sold a two-bedroom flat under its Right to Buy Scheme in 2013 for £340,000.  The resident had rented the flat for 13 years before buying it, and his long tenancy qualified him for a £102,700 discount.

The Council says that it did not realise the flat had a second bedroom, having relied upon a desktop valuation and, if it had, the cost of the flat would have been £700,000.  The resident is now being asked to pay the Council the difference or face eviction, as attempts to settle without involving the court have proved unsuccessful.

The resident claims that the extra bedroom was shown on his lease and, in any event, as it is a box room, doubling the price of the flat cannot be justified.  The Council says it has no choice but to bring proceedings as it cannot sell the premises below market value under its Right to Buy Scheme, and accordingly it acted outside its jurisdiction when selling the flat at an undervalue.  The Council is therefore arguing that its decision to sell the flat at the 2013 price  is  void, and further that the resident has been unjustly enriched by its error.

Undoing a property sale is not straightforward, and it appears that false misrepresentations have not been made: rather, the Council’s case is based upon it having had no power to sell the flat at all.  A court date is yet to be set and it will be interesting to see how this develops.