Mr. Nigel Griffiths, supported by Mr. Thomas McAvoy, Mr. Harry Cohen, Dr. Norman A. Godman and Dr. John Reid presented a Bill to make it an offence to charge value added tax at a higher rate than that in force at the time of supply of the goods or services upon which the tax is charged : And the same was read the First time ; and ordered to be read a Second time on Friday 10 May and to be printed.--[Bill 153.]
Property Misdescriptions Bill
As amended, (in the Standing Committee), considered.
Order for Third Reading read.
9. 36 am
The Bill formerly entitled the Estate Agents (Property Misdescriptions) Bill. Significantly and fortunately, with unanimous support, the title was amended in Committee to widen the remit of the Bill and to provide even better protection to the public against significantly false or misleading descriptions by estate agents and others who are engaged in the practice of marketing property. Despite the significant amendments agreed in Committee, it was reported in the Estates Times that the Committee sat for seven minutes. That is somewhat of an overestimate. I made a very short speech, after which the amendments were agreed, as were the clauses and schedules. It is evidence of the great good will that has been shown to the Bill throughout its passage through the House that the Committee stage was completed so rapidly.
It would be remiss of me not to mention the contribution to the birth of the Bill of my hon. Friend the Member for Coventry, South-West (Mr. Butcher). I have often referred to myself as the foster father of the Bill and to my hon. Friend as the natural father. Having seen the amendments to the Bill, I believe that the appropriate analogy is that I feel like somebody who has borrowed a fairly standard motor vehicle which, when I have given it back, has not only many extra mod cons, and a great deal of extra paint and chrome work, but a new engine. My hon. Friend is delighted with the progress of the Bill. He had hoped to be with us this morning, but, unfortunately, he is not yet well enough. We expect that he will join us next week, and we all send him our best wishes for a permanent and speedy recovery. [Hon. Members :-- "Hear, hear."]
The amendments made in Committee were a response to the suggestions in the constructive Second Reading debate just under two months ago. The aim of the Bill is to strengthen the position of house buyers and potential house buyers against misleading or false descriptions of property. It is unequivocally a consumers' measure, and I pay tribute to the Consumers Association for assisting me in introducing it. I emphasise, as I did on Second Reading, that the Bill has the unanimous support of the property profession, because it bolsters the position of responsible estate agents and others who market property at the expense of those who are sloppy and who do not check their facts, thereby giving the property profession a bad name through their cowboy activities. The general secretary of the National Association of Estate Agents wrote to me :
"I believe that the Bill, as amended, is a victory for commonsense."
Unlike the Estate Agents Act 1979, with which it dovetails, the Bill covers the legal profession. I was therefore pleased to receive a letter from the Law Society of England and Wales, which said :
Column 535"The Law Society therefore believes that the Bill strikes the right balance so far as it applies to solicitors."
Part of my business life has been spent in property development and building and I believe that it is important that the Bill should strike a balance between rigorous protection of the consumer and being acceptable to the property profession.
The Bill is popular on both sides of the House. Hon. Members realise that, hitherto, the most important purchase of a person's life--a house--has not been protected from misdescriptions to the same extent as the most minor purchase--a penknife, for example--which would be protected by the Trade Descriptions Act 1968 and that it is sensible to cover the purchase of a house with a measure that is akin to that Act.
The right hon. Member for Swansea, West (Mr. Williams) dealt with this point forcefully on Second Reading. I mentioned the anomaly whereby, if somebody bought a do-it-yourself gas appliance which was not in situ in the house, it would be covered by the Trade Descriptions Act and would have to be accurately described. As the law currently stands, however, if the appliance were in situ in a house, it would not have to be accurately described.
Every year, 900 cases of property misdescription are reported. Since the Committee stage, I have heard of some which illustrate the efficacy of the Bill. A correspondent in Addlestone in Surrey pointed out that he was about to buy a house in Bourneside road, Addlestone, which was described as having a detached garage. My correspondent then discovered that there was no right of way to the garage, so he would have been unable to use it. The property was also described as being within walking distance of the station. The property was in Addlestone, but the station was in Weybridge. One would have to be a walker of Olympic dimensions for that description to be accurate. A gentleman from Cambridge raised another important issue. He said that the description of the house that he wished to buy stated three times--therefore with some certainty--that the property benefited from 1.25 acres of land. Expecting to find a large amount of land around the house, he visited it, with all the inconvenience and cost that that involved, only to discover, after further investigation, that the house benefited from only 0.7 acres. The agents had exaggerated the size of the plot to the tune of over 80 per cent.
My third correspondent lives in Bristol. The agents stated that the roof of the house that she proposed to buy was new. It turned out that the roof was old and needed major repairs costing £3,000. My correspondent felt that the agent should not have described the roof as new. The agent apologised, so I would not class him as one of the deliberate deceivers or cowboys who are a small minority of those marketing property. Nevertheless, the damage was done to my correspondent's pocket.
The most serious case occurred in Frithville, Lincolnshire. A gentleman wrote :
"In February 1987 I purchased a property which was advertised by two agencies in this area as being in superb decorative and structural condition. I moved into the property in May 1987 and in June the property was declared structurally unsafe and liable to collapse at any time. Having paid £34,000 in May I have estimates for £55,000 worth of works which are required to make the property safe."
Column 536I should have thought that that case alone convincingly showed the need for legislation so that at least the possibility of such problems being experienced again were minimised.
I have taken time to emphasise the type of problems that the Bill is designed to minimise, but I emphasise again that such problems are caused by a minority of poor agents and that, in my experience, the majority of people involved in the property profession attempt to do their job properly. Unfortunately, as in other areas of life, 95 per cent. of problems are caused by 5 per cent. of the people. I told the property profession that I wished to ensure that the legislation dove-tailed with, rather than duplicated or, even worse, contradicted, regulations to be made under the Estate Agents Act 1979, to which the Minister referred on Second Reading and which, I am delighted to say, he has laid before the House. The regulations do not cover property misdescriptions so the Bill, if successful--as I am sure we hope that it will be--will be able to do its job in that regard. I have explained to people in the property profession that we are not in any way attempting to restrict a legitimate richness of language--that is the best way to describe it--in property marketing. Clause 1(5)(a) and (b) cover falsehoods and misleading statements. It is significant that, even if a statement is false, it must be false to a "material degree" and that, if a statement is misleading, although not false, it must be misleading in terms of
"what a reasonable person may be expected to infer from it, or from any omission from it."
The Bill does not cover possible interpretations of the word "panoramic", but relates to statements that are misleading and false to a material degree.
Clause 2 gives responsible estate agents the defence of "due diligence", which is identical to that in section 39 of the Consumer Protection Act 1987 and similar to section 24 of the Trade Descriptions Act 1968. The clause will protect professionals who may have been misled--deliberately or otherwise--by their clients who are not covered by that defence, as I explained on Second Reading. The defence of due diligence will be available to property professionals who had taken all reasonable steps and had reason to believe that the information they were given was accurate.
An issue that I mentioned on Second Reading, which is not specifically covered in the Bill, but about which there is a great deal of case body law under the Trade Descriptions Act, is that of disclaimers. We had to strike a balance. We did not want to allow disclaimers to be so wide that they would negate the purpose of the Bill--for example, if an agent issued a set of particulars with a disclaimer so that one had no idea whether they were accurate. That would have made the position worse rather than better.
However, nor did we wish to deny responsible property professionals the opportunity to put disclaimers on facts that they had no way of being able to say were true or false. The example usually given is the age of a property--it may be said to date from the late 18th century but the information is significantly misleading if it turns out to be much older or more recent. As long as they have taken reasonable steps to verify the information, they may add a disclaimer to the effect that they have no documentary evidence to support that claim. Although such disclaimers are not in the Bill, they would be acceptable in case law.
Column 537However, the Bill has teeth and will provide a criminal sanction punishable by a fine for the irresponsible property professionals who make statements that are misleading or false to a material degree. I said that I would explain the ways in which the original Estate Agents (Property Misdescriptions) Bill was widened in Committee. When I first considered the measure, it appeared that, although valuable, it was too limited in scope. It initially covered only estate agents who were engaged in the sale of residential property. Therefore, many people engaged in the marketing of property--for example, commercial property-- would not have been covered.
In Committee, we tabled amendments designed to extend the scope of the Bill to people involved in property development. I had and still have a great interest in that aspect, as I said then and as I have again said today. It seemed grossly anomalous that, under the original Bill, someone could pick up a set of particulars for a house from an estate agent and he would be protected from false and misleading descriptions, but if he picked up exactly the same particulars direct from a builder or from a property developer he would not be covered. The particulars would look similar, so the anomaly needed to be remedied.
People engaged in the refurbishment or building of a property will now be covered by amendment No. 1 to clause 1. That amendment extended the measure to other significant professionals engaged in the marketing of property, the most significant of whom are solicitors. There was a great deal of pressure and reasoned argument on Second Reading for including solicitors within the Bill's remit. The measure encapsulates solicitors by removing their exemption under clause 1(2)(a) of the Estate Agents Act 1979.
A number of arguments were made against including builders and developers. The National House Building Council and others argued that they already operate schemes that offer compensation to purchasers who have been misled over the particulars of a property. I doubt whether that compensation would have been adequate to compensate the gentleman in Frithville to whom I have referred. In any event, those arguments rely on a comprehensive coverage of the industry. The Monopolies and Mergers Commission recently examined the 95 per cent. coverage of the housebuilding industry exercised by the NHBC and decided that there is a case for opening the industry up to competition to ensure that its role is not so comprehensive. Competition will ensure that builders and developers provide the kind of guarantees currently provided by the NHBC and other validating bodies. It will also happily fit in with the new regime encapsulated in this Bill. The most powerful arguments for including builders were made by my hon. Friend the Member for Faversham (Mr. Moate) and the right hon. Member for Swansea, West. My hon. Friend the Member for Faversham said that builders more than anyone else know about site conditions, previous land use and land charges on a property. They are therefore better able to describe a property accurately than is someone who has been instructed to act on it. The right hon. Member for Swansea, West said that it was only right that someone with a 100 per cent. interest in a property rather than someone with a 1.5 per cent. or 0.75 per cent. interest--or whatever the commission level
Column 538is--should be required under the measure to make accurate descriptions of the property when it is being marketed.
We then had to decide how wide to draw the scope of the people covered by the Bill. The words "wholly or substantially" appear in clause 1(5)(f). In other words, a statement is made in the course of property development business if, and only if, it is made in the course of a business concerned "wholly or substantially" with the development of land.
We included that provision in response to arguments made by my hon. Friend the Member for Walthamstow (Mr. Summerson) on Second Reading. He argued that if a greengrocer, who may well be a world expert on certain kinds of fruit, but not an expert in marketing property, decided to market his commercial property, it would be wrong to subject him to the criminal sanctions in the Bill. The words "wholly or substantially" cover people who are principally concerned with the marketing, building or refurbishment of a property.
It was said that banks and building societies should be included in the measure. To a certain extent, the line on whom one should or should not include in the Bill is subjective. Many banks and building societies have subsidiaries that act as estate agents and therefore will be caught within the terms of the Bill. However, neither I nor the Consumers Association has been able to discover one case, despite the fact that there are 900 reported complaints every year, in which a bank or building society was complained about. The fact that they are not included within the scope of the Bill will not create a loophole in the protection of consumers.
I have already referred to the inclusion of solicitors. The Law Society of England and Wales supports the measure. I have also had discussions with the Law Society of Scotland, because 85 per cent. of property transactions in Scotland are carried out by solicitors. In England, 250 solicitors engage in estate agency services. There was initial concern about whether conveyancing services had been properly drawn to allow solicitors to produce property information forms before the conveyancing procedure. It was argued that solicitors did not want the property information forms to be regarded as marketing material which might be caught by the Bill and therefore might get in the way of the streamlined conveyancing procedures that the Law Society has rightly, and so constructively, introduced recently.
I have been able to reassure the solicitors on that score. Clause 1(5)(g) defines conveyancing services as
"the preparation of any transfer, conveyance, writ, contract or other document in connection with the disposal or acquisition of an interest in land, and services ancillary to that".
Clearly, the initial preparation of particulars on a property information form will fall within that definition and be regarded as conveyancing services. They will therefore be outwith the scope of the Bill.
That means that we are excluding them not by virtue of what they are, but by virtue of what they do. If a property information form used by a solicitor, who also acts as an estate agent, in the course of marketing a property, was not simply used as preparation for conveyancing, but was given to a potential purchaser as proof of the details of a property and an inducement to view the property, that property information form would then be regarded as being used as part of the marketing of the property, and it
Column 539would fall within the Bill's remit. Nevertheless, the Law Society believes that the Bill strikes the right balance about solicitors. There were a number of arguments in favour of excluding solicitors from the terms of the Bill. I do not think that the first argument was strong, because it could be applied to any profession that exercises some self-regulation. Merely because a profession regulates itself--however rigorously--is not sufficient reason to exclude it from broader legislation designed to protect the public, where Parliament and the public think that appropriate.
The Scottish Law Society has argued--in my view it is a slightly esoteric argument, although the society thinks that it has substance--that solicitors should be regulated sui generis, although it agrees with the substance of the Bill and that solicitors should come within its remit when they are acting as estate agents. The society also argued that it was clumsy to exclude an exclusion and that it does not want solicitors to be drawn into the ambit of the Estate Agents Act 1979. I think that my arguments are reasonable and I hope that Scottish solicitors will view them as such.
First, the drafting is not clumsy--it is shorter and more precise than that suggested by the Scottish Law Society. Secondly, there does not seem to be an inviolable principle that people who regulate themselves and are generally dealt with under specific legislation should be outwith other legislation, should Parliament think it appropriate. The Financial Services Act 1986 contains provisions that apply directly to solicitors acting as financial advisers, rather than those provisions being applied through the self-regulatory organisations, just as the Bill will contain provisions that apply to solicitors acting as estate agents or marketers of property. Therefore, I do not think that the Bill breaches a significant principle on self-regulation and the legislation under which solicitors or any other profession operate. Once the Bill becomes law--as we all hope that it will- -I think that they will find that they are able to work within it comfortably and sensibly.
Mr. Patrick Ground (Feltham and Heston) : Before my hon. Friend moves on to a different subject, will he answer one question? He is explaining why he amended the Bill to allow for the case of the ignorant greengrocer--who is knowledgeable about fruit but ignorant of property. Does he agree that often the only knowledge of defects resides in the owner of a property? Does he have any worries about having excluded the owner of the property and having imposed upon those marketing it a higher duty than that placed upon the owner?
Mr. Coombs : I am glad that my hon. and learned Friend has mentioned that subject. On Second Reading, I emphasised that the Bill's purpose was to extend to the marketing of property provisions that exist for virtually every other group under the Trade Descriptions Act 1968. The 1968 Act covers only those people marketing goods or services in the course of their trade. It does not extend to private individuals, just as this measure does not extend to the householder.
Mr. Alan Williams (Swansea, West) : Perhaps I can give an helpful example to the hon. Gentleman. When I was canvassing for the local elections yesterday, I was handed a copy of the South Wales Evening Post, which contained
Column 540a huge advertisement for David and Roy Thomas and Company, a local agent. It contains an advertisement for a house which is described as
"REDUCED FOR QUICK SALE : well presented The property has been well maintained".
The person who handed me the advertisement had looked at the house a couple of months before, had gone to the expense of having a survey carried out, was told that there were £10,000-worth of dry rot and roof problems in the house and had turned it down. I telephoned the agents before I came to the Chamber and asked whether the work identified by that survey had been done prior to its readvertisement. None of the work had been done, yet they are still presenting information about a property that they know to be wrong, on the basis of a survey paid for by someone else. They are calculatedly and deliberately misleading people.
I shall briefly put to bed the arguments about why private individuals are not covered. As the Trade Descriptions Act argues that the law should impose a greater standard of care and professionalism on people whose business is the marketing of goods and services--or in the case of this Bill, is "wholly and substantially" the marketing of property--we feel that that principle should be extended to the Bill.
Mr. John Marshall (Hendon, South) : Does my hon. Friend agree that the real answer to our hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) is that those who advertise and seek to market property present themselves as having a property expertise that the owner frequently does not have? They are making themselves out to have the same expertise as those who market package holidays so misleadingly and as those who so misleadingly put National and Local Government Officers Association advertisements in local newspapers during local election campaigns.
No doubt my hon. Friend will be aware that a child in my constituency was described as frozen, going to a school that was leaking and had other defects, but the advertisement should have said that that child went to a school in the borough with the best A-level results in the country. That sort of misleading advertisement should be punished. I congratulate my hon. Friend on producing a Bill which will punish those who produce misleading property advertisements with the expertise that they claim to have. Surely the Bill is very positive and he deserves the congratulations of the whole House and not merely the dozen or so hon. Members who are here.
The third area to which the Bill has been extended in Committee, as a result of arguments on Second Reading, is commercial property. Those arguments were most convincingly and comprehensively made by my hon. Friends the Members for Gloucester (Mr. French)--I wish to spare his blushes, and he will no doubt have one or two things to say about the Bill in a moment--and for Faversham.
Column 541The idea of extending the Bill to commercial property had general support on Second Reading, although a number of arguments against including commercial agencies were suggested, which were not very convincing. Before dealing with them, it is reasonable to say that the way that the original clause 1(3) had to be drafted would have caused some confusion and problems. It said that residential property would be included because it was covered by the original Bill by virtue of the use to which an agent could reasonably expect a property to be put by the potential purchaser. That would lead to several anomalies. One would have to look into the minds of people who market property to discover whether a property could reasonably come within the scope of the Bill, or whether it would be outside the Bill. The original definition was problematic, so it was best to eliminate the clause altogether.
The first argument against including commercial property was cost. A small minority in the commercial property profession argued that professionals would be put to a great deal of extra expense as a result of being required to provide particulars that were not inaccurate, false or misleading to a significant degree. I do not accept that argument. The vast majority of responsible commercial practitioners already ensure that the statements they make are accurate. They are prepared to undergo the cost of doing so, and they understand the legal implications of what accurate statements involve. They would not be inconvenienced by the new measure. The second argument against including commercial property was that people who were engaged in the purchase of commercial property had professional advisers and were generally in a position to protect themselves through the civil code ; therefore, they did not need the protection of the criminal code vis -a-vis property misdescriptions. One need only hark back to the small greengrocer mentioned by my hon. Friend the Member for Walthamstow to realise that, just because one buys a shop or other piece of commercial property, above which one may well live, one is not necessarily in the Onassis or Niarchos class of property buyer. Therefore, people should be protected by the law.
I was able to inform the property profession that the Bill related only to prescribed statements. It is not cast more widely. My hon. Friend the Minister has undertaken that there will be consultations with the property profession before regulations under the Bill are introduced. The Bill will cover only areas in which, with reasonable effort and preparedness, an agent or property marketing professional could avoid making misleading or false statements.
The Bill is not framed in such a way as to necessitate a full survey on any property that a professional markets. To do so would effectively extend free surveys to every potential consumer of commercial or other property by virtue of the criminal law, and that would be wrong. It would unnecessarily weight the measure far too much in favour of the consumer and against the property professional.
Thirdly, the property professionals wished to ensure that the treatment of commercial property should be consistent with that in the provisions of the Estate Agents Act 1979 if it was included in the Bill. That Act covers commercial property. The element of consistency between the two pieces of legislation, for which the property professionals have argued, would be maintained.
Column 542I should like to conclude my rather long- winded remarks--
Mr. Coombs : At a meeting to which I spoke recently, I was told that when I said "finally" I meant that I would continue for another 20 minutes. When I said "in conclusion" I meant that I would continue for another half an hour. Unfortunately, or perhaps fortunately for my colleagues, I cannot promise to repeat my performance. My hon. Friend the Member for Coventry, South-West has done the House and potential house and property buyers a great service by introducing this important measure. Equally, he has done a great service to the responsible property professionals of the nation by ensuring that their values of integrity, accuracy and responsibility to their clients are rewarded at the expense of people who are just in the business for a fast buck and make statements that may move property but result in problems such as those identifed in letters to me from which I quoted earlier.
The original Bill's scope was too narrow. Support has been given by organisations and individuals who will come under the scope of the Bill by virtue of the amendments made in Committee. The British Property Federation is an example of an organisation that covers the builders and developers. The Law Society has spoken for solicitors. The Solicitors Property Bureau specifically deals with solicitors who are engaged in the sale of property and other estate agency activities. The support of those organisations shows that the balance is right and that we have ensured that the Bill serves not only the consumer but responsible property professionals.
I thank the organisations that have given support, especially the Consumers Association, but also the National Association of Estate Agents, the Institute of Valuers, the Royal Institute of Chartered Surveyors, the Law Society of England and Wales, the Law Society of Scotland and other organisations and individuals who have been of assistance to me.
I must also thank--although possibly sotto voce--Government officials who have been supportive and gave the Bill the necessary parliamentary time to reach Third Reading in record time. A contribution was also made by the Minister. I am sure that all hon. Members will say, "Hear, hear," to that. Throughout the passage of the Bill, he has been exemplary. The spokesman for the Opposition, the hon. Member for Edinburgh, South (Mr. Griffiths) has also been constructive, as have hon. Members from minority parties, mainly through their absence from the relevant debates. The Bill is a valuable measure, and I commend it to the House.
Mr. Douglas French (Gloucester) : I congratulate my hon. Friend the Member for Wyre Forest (Mr. Coombs) on an outstandingly competent and knowledgeable speech in moving the Third Reading of the Bill. I join in his comments about the receptive attitude of the Minister throughout the proceedings. It is refreshing to find a Minister who is willing to listen to common sense. The Minister distinguished himself in demonstrating that characteristic. We all regret the absence of my hon. Friend the Member for Coventry, South-West (Mr. Butcher) who originally promoted the Bill. When he sees the competent
Column 543way in which it has been piloted through the House, he will feel easy about staying away again, although, naturally, we hope that circumstances will not make that necessary.
I welcome the Bill, which was greatly improved in Committee. Short though the proceedings were, they covered important ground, and the Bill has come back to the Floor of the House better as a result, deservedly commanding the support of virtually all the professional bodies and independent practitioners who will be affected by it. Among legislators and practitioners, the Bill has wide support, which, assuming that it continues its path through to law, means that it will be well accepted and will greatly enhance the standing of the property world, particularly property sales.
Although, early in the proceedings, a few people expressed scepticism about the need for the Bill, the reasons are straightforward. First, would-be purchasers of property, particularly residential property, are caused inconvenience and cost by following the information given them by estate agents and other property sellers and, sometimes, travelling up and down the country to view properties in the belief that they have particular characteristics, only to discover on arrival or at a later date that the properties were not as described. Such inconvenience to the public should not be permitted ; that is the prime reason why the Bill is necessary.
Mr. Ground : If that is the prime motivation for the Bill, why does the Bill not provide compensation for people who, as a result of misdescriptions, incur expenses and suffer inconvenience going to view properties, as my hon. Friend described? All they have from the Bill is the doubtful advantage of possibly bringing a criminal prosecution. That does not compensate a person who has suffered.
Mr. French : The Bill does not provide compensation directly, but the person who has suffered is not in any way prevented from bringing a civil action if he thinks that the breach, and the damages that he has sustained, are sufficiently serious. The Bill's prime purpose is to stamp out the unacceptable conduct of an estate agent or property seller. If it is successful in that, the damages that may otherwise be sustained will be avoided. The purchaser can still resort to a civil remedy if he so chooses.
Mr. Anthony Coombs : My hon. Friend made an important point about those who have suffered as a result of a misdescribed property being able to take civil action. If a criminal sanction has been applied to the person who made that property description, the civil action is likely to be expedited, and therefore the costs involved reduced. In other words, the case will be seen to have been considered, so the position vis-a-vis a civil action will be strengthened.
Mr. French : I accept that point. The Bill's purpose is not in any way to undermine the general, well-established principle of caveat emptor. The purchaser must still be alert to what it is he is being offered and how it is being described. If the sanctions were taken further, there would be a risk of undermining that principle. The second reason why the Bill is important relates to valuation. Obviously, inaccurate information affects valuation. Anybody who purchases a property seeks to do so at a price that not only makes sense to him, but is
Column 544underpinned by the marketplace. Inaccurate information can undoubtedly lead to a higher valuation of a particular property than it deserves, and can therefore result in an ultimate loss to the purchaser either because he has paid too much or because he cannot recover the cost when he subsequently sells. That is an important dimension underlying the Bill.
Thirdly, the Bill is necessary because there is currently no penalty on estate agents who persistently and repeatedly misdescribe and rely on disclaimers to relieve themselves of any responsibility. As a result the practice has become much more widespread than it would otherwise have been. The introduction of some force of law should cause estate agents and other property sellers to exercise greater care than in the past. That will be in the interests of consumers.
My hon. Friend the Member for Wyre Forest said that the provisions of the Bill were extended in Committee to cover commercial property. The possibility was much debated on Second Reading and I do not propose to rehearse all the points that were made. In essence, it was argued that it would not be practical to have one set of rules for selling residential property and a different set for selling commercial property.
The example given on Second Reading--it is a good one because it is typical --was of a residential agent in a market town being asked occasionally to sell commercial property, such as a hotel or shop. It would be absurd if one set of rules applied to him when he prepared a description of a house and an entirely different set when he prepared a description of a commercial property.
As my hon. Friend said, it was felt that the provisions of the Bill were unnecessary for large commercial property, because purchasers of commercial property are more likely to employ professional advisers to make sure that they do not fall into any traps that might be caused by a misdescription. However, then there is the difficulty of deciding at what point to set the dividing line between large commercial properties which should remain outside the scope of the Bill and others which should come within the Bill's scope. In practice, such a dividing line would not be workable.
There is the question of mixed hereditaments. Which rules would apply to the sale of a shop or retail outlet on the ground floor with a flat upstairs? If the two parts of the building were sold separately, a seller might be able to get away with a wild misdescription of the shop, but not of the residential part. There are countless reasons why to exclude commercial property would not be practical. I am pleased that the wisdom of the Committee has prevailed and that commercial property now comes within the scope of the Bill. I hope that it will remain so for the rest of the proceedings. On Second Reading, the Under-Secretary summed it up neatly when he said :
"If we accept the principle that descriptions of property should not be false or misleading, it is somewhat illogical to draw a distinction that depends on the purpose for which the property is being offered, whether it is domestic or commercial."--[ Official Report, 1 March 1991 ; Vol. 186, c. 1256.]
I welcome the decision to extend the provisions of the Bill to solicitors. I am pleased that the Law Society's view now falls into line with this proposal. It is essential that the Bill should apply to solicitors, and to anyone else in the business of selling property. A solicitor is governed by the rules of the Law Society, but if he were conducting a transaction wearing the hat not of a solicitor but of an
Column 545estate agent, he would fall between the two stools of the Law Society's code of conduct and the Bill. That is anomalous and would confuse the public. Solicitors, builders and other professional people who sell property should be on an equal footing with estate agents.
The editor of Estate Agency News, David Perkins, put a number of points to me, one of which relates to clause 1(5)(c). He suggested that the word "plans" should be included after the word "pictures", on the ground that builders often sell houses "off plan", so that they cannot be viewed by prospective purchasers. The clause would thus read :
"a statement may be made by pictures, plans,"
and so on. I understand the reason for Mr. Perkins's suggestion, but the point is covered by the remainder of the clause, which adds :
"or any other method of signifying meaning".
That is all-embracing. An estate agent, endeavouring to be clever, may not want to write down his descriptions or utter them, but can use gestures to convey meaning. I hesitate to suggest what the gestures might be, but even that is covered by the clause. Clause 1(5)(b) deals with omissions--a subject which much exercised my hon. Friend the Member for Walthamstow (Mr. Summerson) on Second Reading. It is worth emphasising that under the Bill an agent is not obliged to give a comprehensive description of a property. My hon. Friend implied that, the moment an estate agent omitted any information, he fell foul of the Bill. That is not the case : the essence of the Bill is that he must not leave out any information that materially qualifies an item he has chosen to include. A commonplace example is the description of a property as being in a "quiet, tree-lined avenue". If that property backs on to a large cement works that operates 24 hours a day, the estate agent is falling foul of the Bill by using the word "quiet". If the cement works is noisy, that contradicts his description. If he had limited his description to "in a tree-lined avenue", as long as that was an accurate description, it would not fall foul of the Bill. A similar example is the description "in a peaceful, rural location". That is all right unless the property is next to a motor-racing track. The track may be in a rural location, but the noise that it creates will negate the description "peaceful". The estate agent must be careful, and not tell only part of the story. The adjectives that he uses must not be contradicted by any material fact about the property.
If an estate agent described a property as having a "fine Welsh slate roof" but failed to mention that half the slates were missing, he would fall foul of the Bill because he would be contradicting the word "fine". The adjective "fine" would apply to not only the quality of the slate but the roof, and it could not be a fine roof if half the slates were missing.
As cases came before the courts, a body of case law would quickly be built up, but there are likely to be some grey areas. For instance, a property may be described as being "near the M25", which implies that the property is conveniently located for travel around the M25. However, if it turned out that the M25 ran through the back garden of the property, and nothing else in the description suggested that the property was in a peaceful location which would be negated by having the M25 running through it--it could legitimately be argued that the description was accurate. That may be regarded as an
Column 546extreme and improbable, if not absurd, example, but the courts will have to wrestle with such detail. I anticipate that the way in which the provisions are applied by the courts will be quickly understood. Another example is the property described as having "cliff views". In normal circumstances, that would imply that the cliffs and the sea could be seen from the windows of the property. However, if the property were standing on the edge of the cliffs at Dunwich--which is not far from an area well known to the Under-Secretary it would legitimately have a cliff view, but the prospective purchaser would find the reality rather different from the implication. We shall have to see how the provisions in that area take effect in the courts. On Second Reading, I mentioned property dimensions. The success of the Bill greatly depends on a common code of practice being adopted on how features of properties shall be correctly measured. I am thinking of, say, the way in which large chimney breasts, bay windows or low eaves are measured features.
One cannot begin to dispute whether a description is accurate unless there is an accepted code of conduct for measuring it. I hope that all property practitioners rather than the small number who currently do it--will, as a result of the Bill, base their descriptions on a code of practice such as the one produced by the Royal Institution of Chartered Surveyors. That gives careful guidance on how features should be measured. Then, those who are careless in their measurements or who deliberately try to mislead will not be able to say that they are measuring in one way if the accepted method is to measure in another way.
By that I mean that one could not present the full dimensions of a room going into the bay window if the bay formed only a small part of one of the walls. To measure in that way would create the impression that the room was much larger than it was. I strongly recommend that the code produced by the RICS would be reasonable. But if it is not to be that code, we need an alternative to it, so long as a code is used.
The issue of the dimensions of land, mentioned by my hon. Friend the Member for Wyre Forest, is more straightforward because, while it may not always be easy to arrive at a figure, a mathematical calculation is required to work out the area of land and there is an accepted way of doing that. Whether it is expressed in acres or hectares, there can be no dispute if the arithmetic is done correctly.
But one must guard against the use of expressions such as "set in half an acre" if it is not. Once the Bill is law, half an acre will mean half an acre. If the agent cannot be sure of his dimensions, he can resort to an expression which many estate agents now use--"standing in its own grounds"- -as if there was anywhere else that a property could stand. That expression would get the estate agent off the hook of specifying a precise dimension.
The Bill will not make life easier for estate agents. Some may think that that will be no bad thing because, it may be thought, their lives have been rather too easy--if not now, at least a few years ago. The Bill seeks simply to give effect to the reasonable request that statements should be correct. If statements can be verified, then under the Bill the agent must verify them, unless he can show that it was reasonable for him to rely on information he was given.
Some statements that agents make are eminently verifiable if they take the trouble to verify them. To say that a property is freehold or leasehold is, in 99 cases out
Column 547of 100, easy to verify. If the agent expresses a view--which might be left to the acting solicitor--on the renewability of the lease, he must either make it clear that it is simply his view or, if he states that the lease is renewable, he must be sure that he is correct. The same applies to the question of change of use. An agent may express a professional opinion about whether a property is likely to be eligible for change of use, but he must not state emphatically that it is eligible or that change of use will be granted, unless he is basing his statement on fact rather than on opinion.
Another example, also raised by my hon. Friend the Member for Wyre Forest, is the age of a property. An agent will not, under the Bill, be able to claim that it is a 15th-century cottage, unless, first, he is sure of his facts and, secondly, if only the chimney breast is 15th century and the rest is newly built around the chimney breast. He could, however, express the view that the cottage is "believed to date from the 15th century", because that is not a questionable statement of fact, so long as he or some other people connected with the property reasonably hold the view that the property is believed to date from the 15th century.
Although tucked away in the Bill, a provision that will have an important effect is that which states that the Bill relates to oral representations ; the provisions are not limited to written estate agents' particulars but also embrace what the estate agent may say to the prospective purchaser during the course, for example, of viewing the property.
That is likely to prove a more difficult aspect of the Bill. With written particulars, documentary evidence can be produced. With an oral statement, one almost certainly will not have a written record. On the whole, the spoken word tends to be less well considered by those who speak it, particularly if they are estate agents anxious to secure a sale. The spoken word is less likely to be accurately remembered and it is less easily proved.
That is particularly relevant when comparisons are made between properties, and, as is well known, agents will seek to secure a sale by making comparisons. A classic device is to make a comparison between a property being offered to a prospective purchaser and a similar property over or down the road. The agent makes comparisons and gives information about what he believes that other property has fetched, or is about to fetch, on the market. That assists the prospective purchaser in reaching a decision about whether the valuation being placed on a property for his purposes is likely to be realistic and sensible.
I understand that, as a result of the Bill, agents will have to be careful about statements of fact relating to other properties as well as to the property in question. In its present form, the Bill should catch the agent who states that the virtually identical house next door has just been sold for £100,000 as evidence in support of the price that he is asking for the house that he is trying to sell. Assuming that my interpretation is correct and the Bill also covers that, the consumer will be greatly assisted.