Homes Bill

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The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): The moment has come. I propose to keep very quiet about the fact that I possess a third-class law degree attained more than 30 years ago and that I have not had a single legal thought since I left university.

Suffice it to say that the professor who taught me property law, who was alleged to be one of the leading academic specialists in the country, made only one attempt at conveyancing in his life—on his own house—and had to call in a solicitor to help him out of the mess in which he had got himself. I therefore make no great claims for any expertise that he may or may not have passed on to me.

Our starting point for debating the amendments should be a clear acknowledgement of the deficiencies in the present home buying and selling process, which cause misery and wasted costs to hundreds of thousands of people each year. I am afraid that the amendments would perpetuate those deficiencies, although I appreciate that that was certainly not the aim of the hon. Member for Bath and his colleagues.

The results of the most extensive research ever conducted into the home buying and selling process in this country show that the process is painfully slow by international standards and just about the slowest in Europe. It is horribly inefficient and operates in a disjoined fashion, with professionals spending most of their time sitting around waiting for someone else to do something. The process is enormously wasteful and prone to problems and delays: 28 per cent. of transactions fail after an offer has been accepted—a failure rate that costs home buyers and sellers £350 million per annum in wasted costs. The most telling statistic and the one on which we must focus is that a staggering 40 per cent. of consumers are not satisfied with the present process. The results of that research, carried out by independent consultants, were presented in a major consultation, together with options for reform. The responses revealed a clear consensus on the way forward: home buyers and sellers need more information and they need it up front, at the start of the process. Part I seeks to make that a reality.

The seller's pack needs to be compulsory to ensure that everyone benefits from it. We are in no doubt about that. Voluntary arrangements would not work.

Mr. Foster: If the Government proposed that the seller in every single sale had to abide by the scheme, I would understand the argument, but we have just completed debate on a previous set of amendments that dealt with a range of exceptions to the rules that the Government are introducing. The Minister for Housing and Planning has already told us of the dangers of the list argument, but the Government are beginning to create a list on which there are already three items. On Second Reading, the Under-Secretary gave a clear indication to his hon. Friends, several of whom had raised concerns about sales in low-value house price areas, that further exemptions might be made, thus adding to the list. The approach being adopted by the Government is not a universal one, so the Minister's argument falls.

Mr. Mullin: As my hon. Friend the Minister of State has outlined, there are a number of modest exceptions for purely practical common-sense reasons. However, the exceptions envisaged in the amendments would drive a coach and horses through our proposals, so we cannot go along with them. They would introduce a voluntary seller's pack system by the back door and allow sellers to avoid the seller's pack obligation by ensuring that the marketing material made it clear that the property was being sold without a seller's pack. That would probably be the worst of all worlds. Given the choice, it is inevitable that some sellers—perhaps a sizeable proportion—would choose to market their home without a seller's pack, perhaps in an effort to avoid costs or in the hope of avoiding disclosure of information, for example, about a problem with the condition of the property that a home condition report would identify. That would be unfair to buyers who had provided a seller's pack for their own sale.

More harmful, the amendments would result in an unsatisfactory two-track transactions process whereby sales without packs would slow down connected sales with packs.

Mr. Loughton: I challenge the Minister's logic. He said that that system would be unfair to those vendors who had chosen to go to the extent of having a seller's pack, but if sellers' packs are so attractive and advantageous and if they will solve the problems, surely those who choose to have them will have a positive marketing advantage over those who market their houses without them. What is he afraid of? The market would work in his favour.

Mr. Mullin: One of the things of which we afraid is that there would be a number of free riders trying to sell their house without undertaking the costs involved in producing a seller's pack, while hoping that the people from whom they were buying next on the chain had got such a pack. Life is like that, as I am sure the hon. Gentleman has noticed during the course of his short career. In a chain, that would cancel out those benefits the Bill is designed to achieve. We would end up with a system that fostered waste, uncertainty and delay, and that is the opposite of what the Government intend.

Amendment No. 16 carefully limits its effects to cases in which the seller, rather than an estate agent, carries out the marketing. We recognise that consumer protection law is often concerned with the activities of businesses rather than individual consumers, but the best interests of consumers—that is, responsible home sellers and buyers—would not be well served by the amendment; indeed, they would be seriously damaged. Currently, about 5 per cent. of sellers carry out their own marketing rather than use an estate agent. That figure is likely to increase as sellers are attracted by opportunities to market their homes over the internet—there is a growing number of websites offering sellers that facility. The effect of the amendment would be that considerably more sellers would choose to market their homes themselves to avoid the cost of compiling a seller's pack.

Let us not forget that there are real benefits for sellers who market their home with the seller's pack: getting the information available up front helps the seller to decide on a realistic asking price, greatly reduces the risk that the buyer will want to re-negotiate the terms in the light of information—for example, regarding defects in the building revealed by the survey, which under the current arrangements would not be disclosed until some time after terms had been agreed—and offers certainty by shortening the period between acceptance of an offer and exchange of contract. Those are important benefits. Of course there are equal, if not greater, benefits for buyers. When a property is marketed to the public or a section of the public, such information should be available regardless of whether an agent or the seller is marketing the property.

I shall therefore ask the Committee to resist the amendments. Before I do, I shall address the two points made by the hon. Member for Bath. First, he said that he was helping us out, in the event that we wanted to exempt some low-value properties. As my hon. Friend the Minister of state said, we are still thinking about it, but, with all due respect, we do not want to be helped out in that respect at this stage in our deliberations.

On the hon. Gentleman's second point about the use of the criminal law and the concerns expressed by the Local Government Association, may I draw his attention to paragraph 57 of the explanatory notes, which makes it clear that the trading standards officer has discretion to use a range of options available to him. He does not have to crash in with a criminal prosecution at the first sign of any difficulty. He can, if he wishes, give advice or a warning, offer a formal caution, serve a fixed penalty notice, or commence a prosecution in the magistrates court. The idea that some poor punter who has made an accidental error, or who is not familiar with the procedure, will be subject to the full rigours of the criminal law, is illusory.

Mr. Waterson: It is becoming ever more apparent that the Minister was lucky to get a third-class law degree. It is not open to Ministers of the Crown to wave their arms around and say ``Well, some poor punter who makes a mistake won't be dragged away by the conveyancing gestapo.'' Those responsible for enforcement will have a degree of discretion. If one happens to come across the sort of person one sometimes encounters—not, I hasten to say, in Eastbourne—a jumped-up official who takes his responsibilities too seriously, it does not matter whether one is an innocent punter or not. It is not open to Ministers to make such decisions.

Mr. Mullin: The fact is that trading standards officers are a professional body of people who have been doing a good job for many years and who have a range of discretions available to them. I do not think that they will take kindly to being described as ``gestapo''. I therefore ask that this amendment be withdrawn.

Mr. Foster: Mindful of the time, may I just say to the Minister that if he has a good product, he should have confidence in it? It appears that the Government do not have much confidence in their product. I am amazed that the Minister draws my attention to paragraph 57 of the explanatory notes, which sets out the range of the discretionary routes that local authority trading standards officers can follow. The implication of that is that he is not the slightest bit interested in what the local authority trading standards officers, as represented by the Local Government Association, have to say on that point.

I remind the Under-Secretary that he and his hon. Friend the Minister of State were very keen to pray in aid trading standards officers when they were telling us that the average cost per council was going to be only an amazing £5,000 per council. I can assure him they are not saying that in relation to the current issue. However, if the hon. Gentlemen do not want to be helped out now, I am sure that it will be better to allow more time for ministerial reflection and more time in which to work on them. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Further consideration adjourned.—[Mr. Robert Ainsworth.]

Adjourned accordingly at one minute past Seven o'clock till Thursday 18 January 2001 at fifteen minutes to Ten o'clock.

The following Members attended the Committee:
Stevenson, Mr. George (Chairman)
Ainsworth, Mr. Robert
Brake, Mr.
Buck, Ms
Clifton-Brown, Mr.
Curry, Mr.
Foster, Mr. Don
Hope, Mr.
Iddon, Dr.
Kings, Ms Oona
Loughton, Mr.
Love, Mr.
Mullin, Mr.
Raynsford, Mr.
Turner, Mr. Neil
Waterson, Mr.

 
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Prepared 16 January 2001