Homes Bill

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Mr. Loughton: I know that the Committee is keen to make progress. I am grateful for the Minister's clarification, and note the Government amendments. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: I should point out—I am sure that the Committee is aware of it—that I have agreed with the usual channels that we shall sit today until 7.30 pm. If the adjournment is moved at or before that time, the Committee will rise and sit next on Thursday morning. However, if the adjournment has not been moved by 7.30 pm, I shall adjourn the Committee for an hour and a half.

Amendments made: No. 57, in page 7, leave out lines 43 and 44 and insert

    `also guilty of the offence and liable to be proceeded against and punished accordingly.'

No. 58, in page 8, line 3, leave out from `he' to end of line 6 and insert

    `is also guilty of the offence and liable to be proceeded against and punished accordingly.'

No. 59, in page 8, line 16, leave out from `he' to `guilty' and insert `is also'.

No. 60, in page 8, line 17, at end insert—

    `(6) A person who is guilty of an offence under this Part by virtue of subsection (1), (2) or (5) may be proceeded against and punished whether or not proceedings are also taken against the employer, body corporate or partnership in question.'.

Clause 11, as amended, ordered to stand part of the Bill.

Clauses 12 and 13 ordered to stand part of the Bill.

Clause 14

Acting as an estate agent

7 pm

Mr. Clifton-Brown: I beg to move amendment No. 53, in page 8, line 41, leave out from `Only' to `a' and insert

    `a person who in the course of a business is engaged in estate agency work and who has'.

The Chairman: With this it will be convenient to discuss amendment No. 48, in clause 15, page 9, line 18, at end insert

    ```estate agency work'' has the meaning given by section 1(1) of the Estate Agents Act 1979;'.

Mr. Clifton-Brown: It is worth pausing in order to probe the Government a little further on precisely what they mean by acting as an estate agent. It is a curious anomaly that anyone can set up as an estate agent; they need no training or experience to deal with what, for many, is the most expensive and important transaction in their lives.

Most estate agents are covered by one or more of the professional bodies and will have had extensive training; many will have had many years' experience and be able to handle such matters with a great deal of professionalism and the requisite judgment. However, cowboy agents, with no experience or training, can set up a stall overnight. They may be covered by section 22 of the Estate Agents Act 1979, but that deals only with ethical matters and not with minimum standards of competence. It would be interesting to know whether the Government believe that the Bill should impose minimum standards of competence. After all, the purpose of the Bill is to make buying and selling of houses quicker and more efficient. The cowboys are precisely the sort of people who ought to be rooted out.

I wish to probe the Government also on exactly what the Bill covers. For example, does it cover firms or individuals who are not estate agents but who have set themselves up to handle a particular sale and who then subcontract the work to an estate agent? In such circumstances, the firm or individual that started the process would be liable for producing the seller's pack, but if they were not skilled in the work of estate agency, how would they know whether the seller's pack was complete in all particulars? It would be useful if the Government were able to give us some idea of their thinking. I shall let the Minister reply before saying any more.

Mr. Raynsford: Clause 14 identifies who is to be regarded as a person acting as an estate agent for the seller of a residential property. The amendments would replace the definition of

    an individual, body corporate or partnership with a place of business in England and Wales

with the definition of someone engaged in ``estate agency work'', as set out in the Estate Agents Act 1979. I understand the motives that have led to the amendments, but, although the definition of an estate agent in clause 14 draws on the definition of estate agency work used in the 1979 Act, for several practical reasons it is not appropriate to use that definition in the Bill. I hope that when the hon. Gentleman hears the explanation he will accept it.

In considering why the 1979 Act definition is not appropriate for the Bill, we need to remind ourselves of the link between marketing and the requirement to provide a seller's pack. First, the 1979 Act definition includes several other actions by estate agents that do not involve marketing. It could include acting for a buyer, which would not come within the ambit of the Bill. It could also include acts preparatory to the marketing of a property, which might even include the preparation of a seller's pack. Both those activities do not relate to marketing and are therefore outside the scope of the Bill.

Secondly, the 1979 Act definition omits several situations that we would want to include in the scope of the Bill. For example, section 1(2)(a) specifies that the Act does not apply to things done

    in the course of his profession by a practising solicitor or a person employed by him.

However, under the new provision it will be possible for a solicitor to prepare a seller's pack. Indeed, it is likely that some solicitors will be inclined to become involved in a range of services, so that they can provide a seamless service to customers. While solicitors' property shops are not yet as common in England and Wales as they are in Scotland, we believe that their numbers may increase as a result of the business opportunities offered by the seller's pack.

Clause 14 contains a definition of estate agency work that we have developed to be appropriate to the Bill. It draws on and is close to the definition in the Estate Agents Act 1979, but it also reflects the requirements of the Bill. I realise that there might be some virtue in maintaining a single definition for the same profession in the 1979 Act and the Homes Bill. However, the definition that we have used makes it abundantly clear to estate agents which of their activities might cause the obligations under the Bill to apply. There is nothing confusing about the definition, which closely echoes the definition in the 1979 Act, but which is preferable in the context of the Bill.

Mr. Clifton-Brown: The National Association of Estate Agents is worried by the two different definitions. Will the Minister explain more precisely why the definition under section 1(1) of the Estate Agents Act 1979 could not have been used in the Bill? It would have made matters simpler for everyone involved in the estate agency business and for trading standards officials trying to enforce the Bill.

Mr. Raynsford: As I pointed out, the definition in the 1979 Act includes several activities that do not come within the ambit of the Bill. To include them would be confusing, because it might imply a potential liability with respect to an offence. In fact we have carefully avoided that. For example, section 1(1)(a) of the Estate Agents Act 1979 mentions acting

    with a view to . . . effecting the introduction to the client of a third person who wishes to acquire

a property. The hon. Gentleman's example, which he gave in an earlier discussion, of an estate agent acting perfectly properly within the ambit of estate agency work, would not come under the Bill. That is why the distinction is necessary.

As to the hon. Gentleman's argument that estate agents should be licensed, the Government, like their predecessor, do not favour regulation except where it is absolutely necessary. The Department of Trade and Industry is keeping an open mind on whether estate agents should be formally licensed. At present, the Department is not convinced that that would deliver a significant increase in the level of consumer protection. The Director General of Fair Trading already has powers to act against estate agents who breach the requirements of the Estate Agents Act 1979 and he has shown that he is prepared to use them where justified.

It would be helpful if I clarified a point that was twice raised on 18 January by the hon. Member for Cotswold. It concerns the position of an estate agent who introduces a client seeking to buy a property to another estate agent who is marketing a property, or to a seller. I have taken further advice. Where an estate agent acting for a potential buyer seeks to introduce him to another of his clients who is trying to sell a property, the agent will have to have a seller's pack in his possession. The requirement to have a pack will be by virtue of the fact that the estate agent is acting for the seller rather than because of the business relationship with the buyer. So where an estate agent acting for a buyer seeks to effect an introduction to a seller for whom the agent also acts, there will have to be a seller's pack.

However, an estate agent who acts only for the potential buyer is not required to have a seller's pack as he is not marketing anything nor is he acting on instructions from the seller. I hope that that clarifies the matter. The hon. Gentleman will now be aware of the distinction. I am grateful for the opportunity to set the record straight on that important matter, not least for the National Association of Estate Agents, who will be able to read our proceedings in the Official Report.

It is a common occurrence for more than one agent to be instructed by a seller to market the same property, a situation that is known as multiple agencies. Once the Bill comes into force, each agent so instructed will be required to have a copy of the seller's pack in his possession. That is logical.

However, the National Association of Estate Agents has raised the circumstance where an agent acts solely as a sub-agent for another and therefore has no relationship with the seller, that being solely the responsibility of the main agent. In such circumstances, it would be excessively onerous to require the sub-agent to have a seller's pack. Therefore, where the marketing is carried out by the main agent through sub-agents, the agent would have the obligation to hold the seller's pack at all times without the requirement applying to all sub-agents. That seems a practical and sensible way forward. I hope that it will comfort those worried about how the obligations of the Bill will apply on that complex issue.

 
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