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Sir Nicholas Lyell: Apart from trust--indeed, a purchaser may be prepared to give trust to a reputable surveyor--are there not two huge problems? First, the reputable surveyor, in respect of any house of any complexity, is bound to hedge around his opinion with a good many caveats, or he will be laying up great legal problems for the future. Secondly, is there not great worry for the seller if he--every hon. Member is likely to be a seller at some time--cannot sleep quietly in his bed in years to come, having made the transaction?
Mr. O'Brien: The insurance market will demand of professionals that they hedge their survey around with conditions. Indeed, that is the case today, but it means that little reliance can be placed by the purchaser on the seller's survey. Will the purchaser be able to rely on that survey as a matter of contract and be able to sue for damages should it be traceable and should a claim of misrepresentation be made? I fully endorse the contention of my right hon. and learned Friend that it is highly questionable whether the seller's survey will serve the interests of any sensible and relatively well-informed purchaser of a property--I accept that that may not apply to all purchasers.
We should focus our attention on the aspect of the housing market that the Bill will affect, which is properties of a certain value more than 10 years old. They are the majority of properties and are likely to be part of sale and purchase transactions involving purchasers who have some information about the risk they are taking and their need to contain that risk. Purchasers will rightly still want to engage their own surveyor and have a full structural survey or whatever type of survey they need to define the areas of risk that they are prepared to accept.
Furthermore, most properties are bought with mortgage finance, and it is highly likely that finance houses will continue to insist on a survey for their own purposes. Such a survey will be of a different value and risk to that of the purchaser. It is likely that there will continue to be purchasers' surveys and mortgagees' surveys, and this added survey by the seller. The Minister said that it was not fair of the Opposition to complain about the added costs that that will entail. It is highly doubtful that he is right. It is very likely that this survey will be an extra cost in the totality of the transaction, and will possibly be a brake on housing transactions. The economic and quality aspects will therefore suffer.
It is important to point out that in addition to the purchaser's need to have certainty because of the risk of buying the property, he needs certainty in the transaction and the process. Recently, at first against my better judgment, I went through the process of purchasing a
property by auction. I am surprised that the Minister has not found a way of enabling current best practice to be used, which in this country--in England and Wales for the purposes of the Bill--is for purchases through the auction process, because all the risk has to be assessed beforehand.
Mr. Deputy Speaker: Order. The hon. Gentleman has had his time.
8.53 pm
Mr. Keith Darvill (Upminster): I rise to speak in favour of the Bill. I especially welcome the provisions on homelessness in part II, but I want to concentrate my comments on part I, about which I have some reservations. Before I do so, I declare an interest, which is disclosed in the Register of Members' Interests, as a solicitor and a partner in a firm of solicitors that undertakes residential conveyancing. I have conveyed property since 1973, and I am a member of the Law Society.
In principle, the measures to speed up the conveyancing process are to be welcomed. However, we must guard against over-promoting the proposals as a panacea for the problems inherent in the system of moving home, which are caused not by the conveyancing process but by the nature of our housing economy.
The conveyancing process in England and Wales is often compared with that of other countries, and is said to be slow. Indeed, I heard my hon. Friend the Minister for Housing and Planning say on a Radio 4 programme this morning that the process is slower than in other countries. When those comparisons are made, like is not necessarily compared with like.
I shall deal with the reasonable point about uncertainty, which is perhaps the nub of the problem that the Bill attempts to address. There is uncertainty during the period between the decision to move and the exchange of contracts. There are numerous reasons why that period can be extended, and these proposals will not change or eliminate those reasons for delay.
As a result of the high proportion of home ownership and the low proportion of private rented accommodation in England and Wales, few people who have to move home can consider moving into temporary accommodation between selling and buying. I suggest to my hon. Friend the Minister that, if comparisons are to be made with other countries, the level of home ownership and the availability of reasonably priced rented accommodation should be given the most attention.
The main consequence of this feature of our housing economy is the creation of long chains of transactions, all parties to which move at the slowest possible rate. We should ask whether part I will help to speed up the process, notwithstanding the differing circumstances in England and Wales. My answer is that it will help, but only marginally, and at a cost--financially and otherwise--to those moving home. Moreover, it may have undesired consequences. We need to scrutinise that part of the Bill in detail in Standing Committee.
Let me give an example of the undesired consequences that I mentioned. An unscrupulous seller might obtain a seller's pack and hawk it around. An estate agent or
solicitor could give his vendor client a copy of the report, and, if that was hawked around, further gazumping might take place.I said that part I would help marginally. Why "marginally"? For one thing, most solicitors and licensed conveyancers already use a form of seller's pack. The Law Society transaction scheme and the protocols that go with it mean that the seller's solicitors provide a contract, copies of title documents, copies of pre-contract inquiries, fixtures and fittings lists, planning and building regulation documents, warranties and guarantees and, in respect of leaseholds, copies of leases, details of service charges and other information. What they do not supply in most cases is information about the local search, and what they do not supply in all cases is information on the home condition survey, for which the Bill will provide.
As most local authority land charges departments are much more efficient nowadays, it is surely more appropriate for the purchaser's solicitor to apply for local searches--partly because of the need, in some instances, for the purchaser's solicitors to raise additional inquiries, and partly because of the need to requisition searches at the appropriate time, to minimise the risk of their becoming out of date. That is a risk in all cases, whether the purchaser or the vendor applies for the search.
Given the extension of information and communications technology, in the foreseeable future--probably before 2003, when the legislation will come into effect--local and land registry searches will be available at the touch of a computer keyboard. I think we can almost ignore them as a factor leading to delay and uncertainty, although they are relevant to the question of cost and who is to bear it. Incidentally, it has always been possible to undertake personal searches if circumstances dictate the necessity.
We must consider the major innovation--dare I say imposition?--in the Bill. I refer to the vendor's obligation, proposed in clause 8, to provide a home condition report. That seems reasonable on the face of it, and indeed it has some benefits, to which my hon. Friend the Minister alluded. However, I have serious reservations.
First, there is the cost of the report. According to the Royal Institution of Chartered Surveyors, it would cost about £500. That includes other costs, such as the cost of the local search. I estimate that the cost to a seller requiring a home condition report, a local authority search and the preparation of the package in the first place--by licensed conveyancers or by solicitors--would be nearer £700. Admittedly, in the case of normal transactions most solicitors will have already asked their purchaser clients to provide money on account, so the overall additional cost will not be quite as much. In any event, the Bill proposes that the vendors bear the cost.
Secondly, according to these proposals there could be three different surveyors looking at a property in each transaction: the seller's surveyor, the buyer's lender's valuer and the buyer's own surveyor. Most solicitors I know advise their clients to have a full structural survey, certainly if the property is more than 10 years old. That cost could be minimised by seeking the co-operation of the Council of Mortgage Lenders and accredited surveyors so that, for example, a buyer could consider a "top-up" full structural survey with a discount. Indeed, there could be arrangements for the valuation element, as the Housing Federation has said.
Overall costs could be minimised. When we debate the regulations, or when we examine the Bill in Standing Committee, we should give that option serious consideration. It could deal with some of the attacks on the provision.
My third concern is that the report could become out of date. Other hon. Members have already alluded to that, but it is a difficulty. The fourth problem is that people with negative equity and financial difficulties will have an additional, perhaps unnecessary, burden placed on them, but we must consider that in relation to the overall balance of the benefits. Fifthly, in some cases, the cost to the seller may deter him or her from putting the property on to the market in the first place.
In addition to those five points, there is the issue raised by the hon. Member for Eddisbury (Mr. O'Brien) relating to the NHBC certificate. That point should be dealt with in the regulations because it is valid. Properties that are 10 years old or younger already have the benefit of the NHBC guarantee.
The Standing Committee can make some significant improvements to the Bill. As long as there is sufficient consultation with the professional bodies during consideration of the Bill, particularly the Council of Mortgage Lenders, real progress can be made.
My other serious concern--it has been referred to already by the hon. Member for Woking (Mr. Malins)--is about the imposition of criminal sanctions, particularly those proposed in clauses 10 and 11. I agree that there needs to be some sanction if seller's packs are to become universal and thus provide the marginal but worthwhile benefit that flows from them, but the question is: what sanction could there be?
There is an alternative method: a certification process. Already when registering property at HM Land Registry, solicitors have to provide in transfers a certificate that stamp duty has been paid, for example. It seems that, as all properties have to be registered at HM Land Registry, it is possible for a system to be devised whereby, on registration, the professional bodies certify that a seller's pack has been provided. That would deal with the need for criminal sanctions but ensure that, in all cases, a seller's pack had been provided. It seems a much more sensible way forward. I should like the Minister and the Department to give that proposal serious consideration because I think that it is a way forward. It would be a much better system than that proposed in the Bill.
If a purchaser had an in-principle mortgage certificate it could significantly improve the speed of conveyancing and conveyancing transactions. It could be secured at the same time as the seller's pack. The combination of the two would, I believe, lead to much faster conveyancing transactions. However, we must have a sense of balance.
In my view--I have undertaken many conveyances over many years--the average transaction takes about 12 weeks, which is a sensible period. Occasionally, there is a need to move quickly, but when we think of all the ancillary matters that go with moving house, to move in a couple of weeks is too quick in most cases. That is particularly true where there is a chain of transactions.
It is the period of uncertainty that, in certain cases, allows gazumping or other difficulties to arise. That is particularly so in the summer months when families look to move home in time to get their children into school. In the heat of May, June and July, when families look to
move and to get their children into the house for September, it can be particularly fraught. Although the proposals may go some way towards dealing with that problem, they will not eliminate it.I warmly welcome the Bill. Nevertheless, I feel that it could be improved with careful consideration.
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