A decision by the leader of Haringey Council to abandon a housing development after agreeing to purchase a private property on the earmarked land has been criticised as "flawed" by the Local Government and Social Care Ombudsman.
Haringey was also accused of “not being even-handed” when negotiating with property owners whose homes were on the land the development was planned for.
The issue was referred to the Ombudsman by a man who complained that the council had left him in limbo for six years while it decided whether to buy his house in order to start the development.
The man lives in a row of terraced homes, which are part private-owned and part owned by the council. The council contacted him in 2014 about its intentions for housing development on land which included his home.
By 2017 the development had been formally adopted by the council in its Local Plan.
In August 2018, the man entered an agreement that gave a developer the right to buy his home for £1.75 million should he wish to sell it, as no progress had been made since the council initially contacted him. Two days later, after he had signed the agreement, the council contacted him about the possible purchase of his home.
The next month, the Cabinet agreed to buy both the neighbouring property and the man's home.
The council went on to buy the neighbour's home for £2.15 million in June 2019, but the man was not able to sell his house because of the agreement with the developer.
In early March 2020, the then council leader, Councillor Ejiofor, met with some of the council tenants and other political representatives and decided not to proceed with a version of the development, which included the terrace of houses.
The Ombudsman's investigation raised concerns about the way the council dealt with the two sets of neighbours.
It found that while there was no contact with the man about purchasing his property, the council must have been in discussions with his neighbours about the purchase of theirs.
The Ombudsman reached this conclusion after finding records of the council arranging a valuation of the neighbour's property in early August 2018.
Had the council been in contact with the complainant at the same time it was in negotiations with his neighbour, he "would have been able to make an informed decision about whether he should enter into the option agreement," the report said.
The report added: "All the information we have seen shows the Council was not being even-handed in the approach it was taking with [the complainant and his neighbour]".
The council could not provide the Ombudsman with any information about why the neighbours were treated differently.
The man said he only entered into the option agreement with the developer because he had not heard anything from the council. This option agreement partly informed the councillor's decision not to go ahead with the development of the row of terraces.
The Ombudsman's investigation also found flaws in the way the councillor made the decision without proper scrutiny and analysis of all options and consideration of the consequences.
The report said the council had already invested a significant amount of public money in the purchase of the neighbouring property - despite that home's value only being so high because it was a key part of the larger housing scheme. There was no briefing paper or discussion, the decision was entirely the councillor's, taken at the time of the meeting.
Following the investigation, the Ombudsman recommended the council apologise to the man and pay him £1,000 for the stress and uncertainty its actions caused.
In addition, the Ombudsman has urged the council to reconsider its proposals for the site's development. These should be discussed by full Council or Cabinet. If the decision is to proceed with development, the council should provide a remedy to the tenants who were wrongly assured they would be able to stay in their properties, the Ombudsman said.
Michael King, Local Government and Social Care Ombudsman, said: "Transparency should be at the heart of council decision-making. Without this, people can lose confidence that their local authority is acting in a fair and equitable way.
"In this case because of the council's poor communication and lack of even-handedness, the man was left in limbo with the uncertainty of not knowing whether his home would be purchased by the council.
"I now urge the council to look again at the plans for the development and reconsider all options available."
Cllr Peray Ahmet, Leader of Haringey Council, said: “This report details a series of events, all of which happened before I became the Leader of the Council. Rest assured I am determined to understand fully what happened and consider all necessary actions.
“On behalf of Haringey Council, I would like to apologise to Mr X and our council tenants for the uncertainty and stress they have experienced. In the future I will ensure we pay closer attention to ensuring that all those affected, or potentially affected by redevelopment schemes, receive regular communication from us throughout."
Cllr Ahmet added: “I believe in the importance of open, transparent and accountable processes and acknowledge that the council may not have met its own high standards in this case.
“Initial measures have already been taken to strengthen our internal governance around property acquisition and I’ve asked the new CEO to review as a priority the arrangements for future property transactions. I will want assurances that these are both fit for purpose and transparent.”