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Mr. Love: Is the hon. Gentleman aware of a survey of 2,500 people conducted by the Countrywide Assured Group plc? The survey showed that only 6 per cent. of sellers would not put their house forward for sale if a seller's pack was introduced.
Mr. Malins: I was not aware of the survey. However, if 6 per cent. of potential sellers are seriously upset and worried, their problems must be considered very carefully. The £700 payment will be a heavy burden in particular sectors of the market.
The seller's pack worries me not only because of its expense. How full will the survey have to be? I gathered from the Minister that it will not have to be much more than a condition report, as opposed to a survey. How full should such a report be? How long will it be valid? That is another fair question. If someone put his house on the
market in January with a seller's pack and found no buyer, took it off the market in March and put it back on in June, would the survey and the documents still be valid?Will the surveyor doing the survey owe a duty of care to the seller, to the buyer only--there are no contractual obligations between the surveyor and the buyer--or to both? Many lenders are unlikely to provide a mortgage advance based on the seller's survey. In practice, both a seller's survey and a buyer's survey will be necessary, and perhaps a lender's survey as well. There will be a great deal of work for the surveying profession and a lot of money will be spent unnecessarily.
Making it a criminal offence to put a property on the market without a seller's pack is a wholly abhorrent concept. As is known, I sit as a recorder in the Crown court and as a district judge in the magistrates court. I believe that the criminal law should be used rarely, especially in what I regard as essentially civil and contractual matters. Such a provision is unjustified, especially as the seller may unwittingly omit some element from the pack, and the buyer may not want to rely on it anyhow. In any event, it is a great mistake to make criminals out of law-abiding citizens who may make an error, even though they enter into normal contractual arrangements in good faith.
Failure to supply a pack under clause 3 carries a potential penalty in the magistrates court of a level 2 fine, which is £2,000. Weights and measures authorities are to be given extensive powers, if necessary to enter buildings by force to take possession of documents and to have a defendant whipped off to the magistrates court and given a criminal conviction. Property buying and selling is often carried out under huge emotional stress and strain. It is wholly unrealistic and, I am afraid to say, heavy-handed and unfair to bring the full might of the criminal law to bear on the world of conveyancing.
I have little left to say in view of the time, but I want to raise the important point of the commercial freedom of the person concerned. Some people have expressed the view that market forces may dictate that the cost of the seller's pack will be underwritten by estate agents or lenders as part of a lock-in arrangement. That will make financial sense for lenders who have to fund the cost of preparing the pack only if they can lock a seller into whatever overall package they are offering. In those circumstances, a seller would potentially lose an element of control over the sale of his own property, because he would be prohibited from putting it on the market without a seller's pack. The seller's pack prepared by the agent or the institution would clearly be the property of the agent or lender, and according to many would be retained by the estate agent or lender and not made available to the seller.
If the seller decided to change agent or lender, presumably a fresh seller's pack would have to be prepared on whatever terms were dictated by the new agent or lender. That is another potential problem.
Mr. Hammond: Is there not a further problem in that third parties will be willing to finance the packs only for properties that are likely to sell fairly quickly? That would once again disadvantage some of the poorest and already most disadvantaged in society.
Mr. Malins: My hon. Friend is right. The provisions of the Bill could be divisive in relation to different sections of society and different properties.
I began by saying that all of us welcome moves to improve the process, but two areas worry me greatly. I hope that the Government will focus heavily on the selling survey, about which I have many doubts, and on the sense or otherwise of bringing the full panoply of criminal proceedings to bear on a civil transaction.
6.34 pm
Jane Griffiths (Reading, East): Thank you, Madam Deputy Speaker, for calling me to speak in the debate on this important Bill. I shall be brief, given the number of hon. Members who want to speak. I should like to address my remarks to part I, although other parts contain equally important provisions.
It is such a truism that buying and/or selling a home is one of the most stressful incidents in a person's life that it has become a cliche. Anything that can speed up, streamline and reduce the stress of that process is welcome. That is why I particularly welcome part I.
I hope that the House will find it illuminating to consider the issue from the opposite end of the property spectrum to that described by my hon. Friends the Members for Bassetlaw (Mr. Ashton) and for Burnley (Mr. Pike). My constituency is prosperous and there is a shortage of housing. There is a desperate shortage of affordable housing, and that is causing some of our public services to crack at the seams. I had the privilege of introducing a debate on this topic in Westminster Hall before the Christmas recess.
In 1997, when the Government began to review the process of buying and selling a home, I consulted estate agents, solicitors and others in Reading, East to find out their views on the present process and how it could be improved. I am pleased to reveal some of the details from that consultation that still hold good. I have also returned to some of the people who responded to find out their views on the Government's current proposals and the Bill. Therefore, although I am expressing my own thoughts, they are informed by the views of people involved in the house buying and selling business in my constituency, and by people who buy and sell their homes.
Some 89 per cent. of respondents to my survey said that they thought that it took too long to buy a house. In response to a follow-up question about what could be done to speed the process up, many respondents said that the details required for buying a house should be prepared by the vendor beforehand. The then manager of Roger Platt estate agents said:
- Get the vendor to apply for a local authority search and to obtain a survey report, which can be passed on to the purchaser.
My survey also asked solicitors and estate agents--the professionals in this process--whether further legislation should be kept away from home buying and selling. Professionals in any field tend to resist legislation, but only 22 per cent. of respondents said that legislation was not necessary, and 78 per cent. believed that there was a crying need for further legislation on the home-buying process. That shows clearly that those who have denigrated this part of the Bill or have said that it is not necessary do not have the support of professionals in Reading, East who buy and sell homes.
There was a similar majority--72 per cent. to 22 per cent.--in favour of introducing a bond paid by the seller once an offer has been accepted. The aim of that was to prevent gazumping. Many said that it should be paid by both buyer and seller, to cover times when the market was flat as well as when it was booming. I am informed that the market in my constituency is currently described as steady, although house prices are high and may have peaked.
I note that specific proposals to prevent gazumping are not included in the Bill; instead caveat emptor remains the case--forgive my pronunciation. I ask that some thought be given to caveat vendor--seller beware. When the market is slack, it is not unknown for a buyer to spin out the purchase, and just before finalising the transaction threaten to withdraw unless the seller accepts a lower price. My survey showed support among all the people involved in the process in Reading, East for action to tackle those problems. I ask my right hon. Friends to give that further thought as the Bill progresses.
To illustrate my point, I shall use the example of a constituent who was caught up in this process. Three years ago, Mrs. Evans made an offer to buy a property at £72,950--it is not possible to buy a one-bedroom flat for that price in Reading these days. Her offer was accepted and she paid £700 in fees. Three months later, she received a phone call telling her that she would have to pay £79,000 or the property would not be available. That was defended by the estate agent, who said that it was the seller's duty to obtain the best possible price. The Evanses had to pull out, because they could not afford the extra £6,000. They lost the £700 that they had paid in fees, and were faced with the stress and anxiety of going through the process again, possibly losing further money paid in fees--all that at a time when Mrs. Evans was nine weeks short of giving birth. I am sure all Members are aware that at such a time there is no need for any extra pressure or stress.
In my consultation, I asked whether a bid should be legally binding once it had been made. I was thinking along the lines of the way in which such matters are conducted in Scotland. The responses of people working in house buying and selling in my constituency were split evenly. The division crossed professions, in that both solicitors and estate agents were for and against the proposal.
The consultation revealed the strong view that the problems experienced in a rising market or a prosperous area were not separate from those experienced in a falling market or a less prosperous area. I am sure that that is so, especially after hearing what some of my hon. Friends have said about the difficulty of disposing of houses in their constituencies, and about housing surpluses. I believe that the difficulty is the same whether there is a surplus or a shortage of housing, and that the Bill is welcome because it deals with some of the problems.
So far, no one has mentioned the fact that both buyers and sellers--especially first-timers--often do not fully understand the process. Moreover, it is in no one's interest to explain it to them. As a result, people may waste money by not responding when they should, or by doing something ill-advised. It was suggested to me that the national bodies representing solicitors, estate agents, surveyors and mortgage lenders should establish a code of practice, and I think we should consider that.
There are a lot of estate agents around, regardless of which constituency or part of the country we are discussing. So, when someone wants to sell a house, who should that person go to? How should he or she choose the person who will do the job? A constituent told me that it had taken 18 months to sell a flat in central Reading. He had employed three estate agents at different times, and the quality and quantity of their work had varied enormously; but he had had no way of knowing that that would be the case before choosing them.
Reputation is important to estate agents. Estate agents whom I visited suggested the publication of performance tables showing how many of the houses taken on by agents were sold, and how long the sales took. I find that idea rather attractive. Such tables would have the added benefit of driving up the standard of service from estate agents.
As has been said, it takes far too long for transactions to be completed. The time taken here is among the longest in Europe. The stress involved in buying a house, and the financial cost to both buyer and seller, would be reduced if the time were shorter. It was felt in my constituency that if a prospective buyer could be given a certificate by a mortgage lender stating the amount that the lender would in principle be willing to provide, that would help to accelerate the process.
That would also deal with a concern expressed to me by the National Housing Federation, which fears that the defence for refusing to provide a seller's pack on request would be the belief of the seller or an agent that the prospective buyer did not have the means to buy the property. If the prospective buyer had a certificate from a lender stating that the lender was willing to provide the money, the seller or agent could not refuse a request for a seller's pack.
The recommendation for an improvement in the home buying and selling process requiring legislation came from an individual estate agency, which had anecdotal evidence that some large chains of agents were discriminating against prospective buyers who did not take out mortgages with the company that was linked to the agency involved. Such behaviour damages not just prospective buyers but prospective sellers, because prospective sellers cannot ensure that their details are before all prospective buyers.
In offering suggestions aimed at improving and speeding up the home buying and selling process, I repeat that they come from people involved in the process, and result from use of the current system. I hope and believe that all Members agree that that system is not ideal, and must be changed.
I have returned to some of the organisations and individuals involved in my consultation, and have talked to them about the Bill. A small independent estate agency in my constituency, Austin and Company, said that the seller's packs were an excellent idea, because they would make people think before marketing their homes. People--especially in areas where the market was rising, as it has in the south-east of England over the past few years--might otherwise put their homes on the market at an unrealistic price.
The Roger Platt estate agency wondered what would happen when people could not afford the pack--people who could not keep up mortgage payments and were selling ahead of repossession, for instance. Several years
ago, that applied to many of my constituents. Others might be selling because of negative equity, although, mercifully, that is much rarer than it was in my part of the country. What would happen in such circumstances? We have received some initial clarification, but I should like to know more.The provisions stating what a seller's pack should contain include a non-compulsory provision for a mining search. That provision is--
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