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A little-noticed private Member's Bill--the 1999 Property Transactions Bill, an all-party measure opposed by the Government but supported by, among others, the hon. Member for Cheltenham (Mr. Jones) and the hon. Member for Workington (Mr. Campbell-Savours), who was present earlier--proposed a solution to gazumping and gazundering. It is of course impossible to prevent such practices entirely, because someone whose house is on the market can always withdraw it and then reintroduce it at a much higher price three or four months later; but experience world wide makes it clear that it is possible to prevent them by treating the buying and selling of property in the same way as the buying and selling of any other commodity. My hon. Friend the Member for Woking (Mr. Malins) made that point. For instance, if I go to an antiques sale, say that I will buy a piece of furniture, and give the seller a certain price--even orally--that is enforceable in law.
Constituencies such as mine and that of the hon. Member for Reading, East--and of many other Members throughout the country--face two problems. One is gazumping and gazundering; the second is the whole question of daisy chains, as they are called in the property market. The result of such chains is that a long period may elapse between offer and completion, a fact to which many Members have alluded.
In my view, the private Member's Bill would have solved some, although not all, of the problems. Most of those who object to the idea of an enforceable contract--in Reading, East, 50 per cent. of professionals objected to it--are worried about the fact that no penalty would be involved in some circumstances. There might be sensible reasons; indeed, there might be tragic reasons. A buyer or seller might die during the course of the contract. We should recognise that when an offer has been made and accepted, both parties have already entered into a costly process.
That means that both parties stand to lose if the contract is not fulfilled. If one party had to withdraw because of a death, or for any other reason, it would surely be sensible to wipe out the contract, and for one to pay the other's costs. That obvious method is used in other transactions in the commercial world. It seems fair and just to both sides.
The Property Transactions Bill provided for that, but went along with the Government in many ways: the vendor would prepare the house or property for sale in a particular way and provide the local authority searches. However, he would not compulsorily order a survey. That has been described as probably not worth the paper it is written on; it is certainly not worth the fee that the surveyor will exact for providing it. If the survey is not satisfactory for the lender, we may get two or three other surveys. As other hon. Members have said, it seems to be a wonderful thing for surveyors, but it is a disgrace to their profession that they should even support the measure if it is likely to have that effect.
I believe that the buyer has to prepare himself. He should have to provide evidence to the vendor that he or she can purchase the property. If it is a matter of taking out a mortgage, the lender, whoever it is--bank, building society or whatever--should provide a certificate to the effect that it will provide finance up to a certain level, so that the vendor can be certain that he is dealing with a genuine sale. In that way, we would speed up considerably the process of buying and selling.
In many ways, the Homes Bill goes some way towards speeding up sales, but, for the reasons that my hon. Friend the Member for Woking has mentioned, it is wrong to make it a criminal act not to provide a pack. The arrangements should be voluntary, and based on best practice. There should be some sort of reward if the seller is prepared to do a considerable amount of work and incur costs to enable the project to go through much more easily.
In the Property Transactions Bill, we provided that, if the party to a contract withdrew from the contract or otherwise frustrated or failed to complete the contract by the agreed date, he should forfeit any sum paid that he would have had to pay as a deposit when the contract between the buyer and seller was entered into. Should such legislation be put on to the statute book, even by amendment to the Homes Bill, we would speed up the transaction of buying and selling a property and make it easier and cheaper, to the great benefit of all those involved.
I do not believe that that would give rise to great difficulties. The reason why I say that is that that is the law throughout the United States of America and, in a different way, in Scotland. It avoids some of the stressful conditions that the hon. Member for Reading, East has graphically described.
I make one comment about part II, which deals with homelessness. It seems to me that the Bill does not tackle the fundamental problem that we have in the constituency of Hertford and Stortford, which is that there is no accommodation available for ordinary people who wish to obtain social housing because their income is too low to purchase. That is because the transactions between the council and the homeless take up all the available spaces. The result is that honest people in low-income jobs, some waiting to get married--they have come to me and said that they will not get married until they can provide a marital home--cannot obtain social housing; and they are not prepared to have children so that they get into the category that would get them on to the council house list.
If the other categories that the Bill proposes are added, the position will become hopeless. Those people will have to continue to live with their parents, or find some way to have accommodation by friends or relatives discounted. I do not see how they can get a house in my constituency at present, given that the price of the smallest hovel is well above the affordable price for people on average earnings plus. We are in a difficult situation with regard to the homelessness provisions.
Mr. Hammond: I agree with much of what my hon. Friend says, but is not the difficulty with his idea of the binding contract that any buyer who is himself dependent on a related sale will not be able to make an offer until that sale is exchanged? That would dramatically narrow the market, with all sorts of unpredictable consequences.
Mr. Wells: That is exactly what I want to achieve: I want to eliminate the daisy-chain process. Under my proposals to make the contract absolutely enforceable, except in unforeseen circumstances, the daisy chain would be eliminated. It does not exist in Massachusetts or anywhere else. It is only in this country that we have telescoping transactions, which are difficult to manage for the solicitors and estate agents involved. We would eliminate those daisy chains and have a purchase and a sale agreed in short time. Then the process could go on. It is simple to make it enforceable in law. It is the sensible way and would not lead to the huge bureaucracy that the Homes Bill will establish. As for enforcing the sales pack, it will be difficult, and I suspect bureaucratically expensive, with all those licensed traders enforcing the Bill.
It is by now widely known that, in Brighton and Hove, many problems affect people who want to become owner-occupiers for the first time and, indeed, people in the private rented sector. Part I will at least help to ease the house-buying process for some of those people, but a major problem that we have is the influx of second home buyers and renters, mainly from London, who are willing to pay high prices to purchase or to rent; I will refrain from mentioning by name any of those incomers. Often, it makes it difficult for local people to enter the housing market or the private rented sector.
It seems that many of the problems faced by my constituents are a legacy of the previous Government's policies. The right to buy scheme severely reduced the amount of council housing available to my constituents. Only 15 per cent. of housing stock in the Brighton and Hove council area is council housing, compared with an English average of nearly 21 per cent. Many people who exercised their right to buy, particularly their right to buy flats, and who became council leaseholders found as they became older that they could no longer afford the upkeep of those premises.
Many vulnerable people were robbed of security by the ill-funded schemes for so-called care in the community that were introduced by the previous Government. The previous Government also squeezed funding for the Housing Corporation, thereby reducing further the availability of other types of social housing. Additionally, under the previous Government there were such high mortgage interest rates that, in the early 1990s, we had record repossessions. Coupled with a high unemployment rate--which at times in the past 10 years was higher than 30 per cent. in the heart of my constituency and is still 5.2 per cent.--high interest rates made it very difficult to enter the housing market. The single room rent restriction for 18 to 24-year-olds also has hit young people. Some people have been forced out of home ownership, and others have never been able to afford even to begin it.
In 1999-00, 3,460 people presented themselves as homeless to my council, but it was able to accept only 925 of them. Many of those people came from the private rented sector. My authority's housing strategy has been developed on a multi-agency basis, as the Bill requires. The strategy is pro-active, seeking to ensure that problems are tackled before people become homeless. It seeks
As I said, a major problem for us is the high proportion of people living in the private rented sector. In 1999-2000, almost 40 per cent. of those who presented as homeless in Brighton and Hove were from the private rented sector. The housing advice service dealt with 431 cases of potential homelessness, and it acted to prevent all of them. The Government have also supported our rent in advance and deposit scheme, which safeguards tenants and landlords. Therefore, in my local authority's area, the type of multi-agency strategy that the Bill calls for is already in place and working.
I welcome the widening of the definition of priority need, especially to 16 and 17-year-olds. I also welcome the greater choice that the Bill requires in making allocations, and acknowledge the £8 million annually that the Government are allocating to help with that process. I also welcome the promised increase in Housing Corporation-approved development programme funding that the Government have announced. The increase should boost the funds available to the corporation, in two years, to £1,236 million.
With my local authority area's large number of private rented properties, we should be able to make much better use of the private rented sector as part of our strategy to prevent homelessness. However, I think that that can happen only with reform of the housing benefits system, particularly of the single room rent restriction on under 25s and the system of local reference rents for over 25s. For so many of my constituents, precisely those housing benefit restrictions make entering the private rented sector so difficult.
I welcome the reference in the Government's policy statement "Quality and Choice", which was published shortly before Christmas, to tackling the issue of the single room rent. There is little detail in the document, but I know that a consultation process will be beginning, if one has not already started. I emphasise to Ministers the urgency for constituencies such as mine of conducting and completing that review. Since I was elected to the House, I have been pestering my ministerial colleagues--in the Department of the Environment, Transport and the Regions and the Department of Social Security--on the issue, and I am glad that the message has got through.
Last June, in response to the housing Green Paper, various agencies got together with the council in Brighton and Hove to make a submission to Ministers on precisely that issue. I shall soon be handing to Ministers a revised version of the submission, which I hope they will consider very seriously.
The mismatch between the sums available in housing benefit and actual housing costs is a great problem for very many of my constituents, particularly my younger constituents, and is contributing to the homelessness problem in my constituency. Shortly before Christmas, I received a letter from Mr. John Holmstrom of the Brighton Housing Trust, who chairs the young homeless group in Brighton and Hove. He says that introduction of the single room rent restriction has made it almost impossible for the agencies working with young people in my constituency to find them suitable rented accommodation. The local reference rent is having a similar effect on older people.