Court decides sale of properties to social landlord not breach of purchaser's contract

In a recent High Court case, Fernhill Properties v McCambridge [2015] NICh 9, the court decided that a purchaser of an apartment was not entitled to withdraw from the contract because the vendor had subsequently sold other apartments in the block to a housing association.

The purchaser had paid a deposit but did not wish to proceed with the purchase. In his evidence he  said that he would not have bought if he had known that one quarter or two thirds of the apartment block was to go to social housing. The purchaser gave other reasons for not proceeding with the purchase, but his objection to the sale of units to a social housing provider formed a substantial part of his case.  

Did purchaser suffer detriment due to sale of units to social housing?

The Judge visited the block and also heard from various witnesses regarding the impact of social tenancies in the building. A police officer in the area said that it did not appear that the apartment block had a higher that average incidence of criminal offences.  A surveyor stated that the existence of social tenancies in the block would not materially affect the value of units as landlords operating in the private sector would expect 50% of tenants in city centre areas to be in receipt of benefits, just as many of the housing association tenants were.  However, another expert witnessed stated that the provision of social housing would have a "more than negligible negative impact on value" but could not say to what extent. 

The Court held that there were no grounds to inhibit the vendor from dealing as he wished with other properties he owned. To impose such a duty would be in breach of common law principles and the vendor’s rights under the ECHR.

The Judge stated that it did not seem to him, having visited the property and heard the witnesses, that the sale of the apartments to a social housing provider amounted to a fundamental breach of contract even if the great majority of apartments ultimately ended up in the ownership of a housing association .