Homes Bill

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The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin): I beg to move Government amendment No. 54, in page 3, line 44, at beginning insert

    `with a view to marketing the property,'.

I hope that the amendment will be uncontroversial. A person acting as an estate agent is required under clause 4 to have a seller's pack before he communicates the fact that a property is or may become available to any person in England and Wales. A strict interpretation of the clause might mean that estate agents who mentioned anything to employees, spouses, friends and so on would be committing an offence. Amendment No. 54 would trigger the seller's pack requirements only when the communications are part of a direct attempt to market the property in question. I ask the Committee to support the amendment.

Mr. Clifton-Brown: Before I respond to the Minister, may ask you, Mr. Gale, whether you are minded to have a clause stand part debate?

The Chairman: It is difficult for me to determine that, because it depends how wide the discussion on the amendment ranges. The amendment is a narrow one and a narrow debate is likely to arise from it, so if the Committee wants a clause stand part debate, it can have one.

Mr. Clifton-Brown: I am grateful for your guidance, Mr. Gale.

The Conservatives welcome the amendment in so far as it goes. It begins—I emphasise the word—to clear up the confusion that might arise when an estate agent starts to market a property. The Minister provided a narrow definition in referring to when an agent communicates to his employees, spouses, friends and so on. As someone with direct experience of marketing properties, let me tell the Minister what often happens in practice. A person wishing to sell a house will invite one or more agents to discuss the proposition—a process that can take some time because fees, marketing and other matters have to be negotiated. Not until that process is concluded and the client has chosen which agent will market the property will any agent be in a position to proceed. During the phoney marketing phase or pre-marketing phase, an agent will need to discuss that property with other employees and members of his firm. That is only natural, but it is not to say that he would then start a marketing campaign. The Minister must state at exactly what point an estate agent is deemed to be marketing a property.

3.15 pm

I want to return to a proposition that I put to the Minister this morning, as I have taken further advice and I believe that what he told me earlier may be wrong. It is about the circumstances in which a property is put on the market by an estate agent. Another agent, having seen the first agent's advertising and marketing says, ``I am retained by a client who is looking for precisely that type of property.'' He tells the other agent, ``I have a client who is interested in purchasing the property,'' or he may approach his client directly. The Minister told me this morning that in those circumstances, the introducing agent would be required to produce a seller's pack.

My advice is that that may not be correct. I should be grateful if the Minister confirmed his previous answer, because one or two experts on the matter believe that he may have been wrong. Depending on what the Minister says, my colleagues and I may or may not try to catch your eye in the stand part debate, Mr. Gale.

Mr. Mullin: I shall take the hon. Member for Cotswold's second point first. I believe that what I told him this morning is correct, but I shall check it. If I learn anything to the contrary, I will let the hon. Gentleman know.

The hon. Gentleman talked about several agents being invited to tender for business and asked at what point they would be deemed to market a property. Clause 1(6) clarifies the position: marketing occurs when a property is

    advertised or otherwise the public or to a section of the public.

I shall not detain the Committee further on a matter that we have discussed exhaustively.

Amendment agreed to.

Clause 4, as amended, ordered to stand part of the Bill.

Clause 5Exceptions

Mr. Waterson: I beg to move amendment No. 3, in page 4, line 26, at end add

    `save that this section shall not apply to residential properties owned by local authorities or registered social landlords.'.

The amendment is a probing one which would remove from the provision properties owned by local authorities or registered social landlords. It follows from a debate in which my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) raised the issue in the context of a sitting tenant and the sale of a council house. The amendment is designed to clarify the matter. The clause is drafted broadly on the basis of vacant possession being available.

Two examples were posited by my right hon. Friend, the first of which is that of a sitting tenant who has been living in the council house for, say, 20 years and who wants to buy it under right-to-buy legislation. Would that transaction require the full rigour of a seller's pack? The Minister's view was that even though the tenant had been living there for 20 years, the house might have all sorts of problems that had not been noticed, so a seller's pack was important. He said:

    The local authority will provide the seller's pack as part of its response to the right-to-buy notice and the private landlord will be obliged to prepare a seller's pack.—[Official Report, Standing Committee D, 16 January 2001; c. 65.]

My right hon. Friend's second scenario was that of a person who had not himself lived in the property for 20 years, but whose family had lived there. Again, the Minister made it absolutely clear that local authority sales, whether or not a sitting tenant was involved, would still have to prepare a seller's pack in the usual way.

There are several issues extending beyond the amendment, which I may speak to as part of a short stand part debate. Amendment No. 3 is a rather blunt instrument, but it is only one of the avenues by which the legislation could be made to address the undoubted problem of low-demand, low-value areas. I do not know whether the Minister has had significant representations from large landlords of social housing in areas with very low demand where there is a desire to sell properties in due course, about whether the amendment might be one way in which to exempt properties in areas where the sheer cost of the seller's pack may deter people altogether from getting into a sale. That is a separate issue. The amendment itself is very much a probing amendment.

We certainly do not contend that, as a matter of principle, tenants of social housing should be excluded from the benefits of seller's packs—of course, we do not think that there are many benefits to be gained from a legally required seller's pack system, but I shall not weary the Committee by repeating the reasons for our view. None the less, I should be grateful for the Minister's comments.

Mr. Curry: I assume that this is where the whole question of exemptions becomes central. My hon. Friend the Member for Eastbourne is right to table the amendment as a probing one. Since our debate the other day, I have reflected on the issue and I now think that there is a strong argument in favour of seller's packs being provided by local authorities. In an earlier sitting, the Minister raised the possibility of an exemption for properties valued at £10,000 or less. Some local authority properties will be sold under the right to buy for less than £10,000, although there may not be many such properties left, their tenants will probably be of long standing and improvements are unlikely to have been made recently to such properties. That last point substantiates my argument—after all, improvements made over the last 10 years are likely to be reflected in the price. However, I can see no argument why a local authority selling a house valued at less than £10,000 should be exempt from the need to provide the seller's pack.

There are large landlords: the authority in Birmingham has 93,000 social houses, and other big metropolitan authorities have between 30,000 and 40,000 houses. Even where that housing has been transferred, it has been to registered social landlords who are in the same moral position as a local authority. Therefore, I would like the Minister to make it clear that local authorities would be able to sell properties without a seller's pack, whatever the value. There is no reason why the city councils of Birmingham, Leeds or Newcastle should be exempt from that requirement.

There is a further danger inherent in numerical exemptions—that is, setting a threshold of £10,000, for example. I shall not refer again to Acacia avenue or the eponymous pub, but it is possible to conceive of a person deciding to sell a property for £9,750, because a price of £10,000 or £10,001 would incur a cost of £500 to produce a seller's pack. The individual therefore decides to sell the property for slightly less than £10,000 and split the difference, enabling him to put £250 into his back pocket and sell it formally under the £10,000 threshold. It is perfectly possible to envisage such a case.

In a funny way, this is a sort of arse-over-tit Bill. [Laughter.] I am sorry to use that expression. The discussion on Second Reading was about the necessity for exemptions at the bottom end of the price range. In practice, cases for exemption lie almost entirely at the top end of the range. Anyone willing to shell out £500,000 without ascertaining the information in the seller's pack must be out of their tiny minds.

At a much lower level, the Bill makes most sense as a regeneration measure. Houses at the bottom end of the scale are particularly in need of regeneration and require the security provided by the certificate of viability that the Bill would create. I hope that the Minister will be extraordinarily miserly in considering exemptions for that reason. People enter the market for the first time without experience of house purchasing, and they may need some sort of security.

My sentiments are that it would be much more sensible to exempt everything from council tax band D upwards. I would concentrate the Bill on areas in which it will contribute to regeneration of neighbourhoods and help to bring properties into use that might otherwise be regarded as hopeless cases. I hope that the Minister will concentrate hard on that particular aspect of the proposal, which may be the right thing to do, if for different reasons to those that he may originally have envisaged.

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