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8.52 pm
Vera Baird (Redcar) (Lab): I congratulate the Government on this measure and on the fact that it moved from manifesto to Bill, taking in not only pre-legislative scrutiny but substantial responses from the Government. It is clear that the Government have two completely opposite kinds of housing problem to deal with. In the Tees valley, where my constituency of Redcar lies, the prevailing one is low demand and housing market decline. That can have a devastating effect on communities.
It is a problem that starts easily and spreads unstoppably like a disease before the eyes of the resident community. It takes just a few voids in older terraced houses that are not attractive now—they do not have gardens or parking spaces and are located badly. In Southbank and Grangetown, the two worst affected areas in my constituency, the houses were built next to the Dorman Long's steelworks, which is no longer there. For modern taste, they are a bit close to the remnants of that industrialisation.
There are some excellent people living in those areas: the chair of my constituency Labour party, two councillors and a doyenne of my women's forum. Last year, we were visited by Lord Rooker. We were able to show him into some very comfortable and pleasant sitting rooms in houses that were situated in what was growing into a hell.
Those voids are not taken up and they are then vandalised. The area's reputation declines and prices spiral downwards. No one will buy houses to live there now—they would be a poor financial investment and a poor personal one because the community is falling away. The area is beset by problems of vandalism, noise, antisocial behaviour and drug dealing. In short, it is a miserable environment.
Occasionally in the morning in the streets of Southbank and Grangetown, there are knocks on the door, usually at the home of elderly owner-occupiers who are trapped in that life and cannot sell their house for a price that would buy them another one. It is a landlord offering them a bit of cash in hand to sell up and to move out quickly. The only other kind of purchaser is a different kind of landlord; one who buys empty houses cheap—half a dozen at a time, and usually unseen—at an auction many miles away. The common link between the two is that both are interested only in letting the properties to people who are on housing benefit, whose rent is paid directly to the landlord by the local authority. The reliability of their rent income being assured, the landlord has no interest whatever in the reliability of the tenant, and tenants—in what is now a fairly debased area—are not, to put it mildly, often very reliable. The spiral of decline turns into a whirlwind.
In addition to the Bill, properly resourced housing market renewal is critical. The Tees valley has 59,000 houses, or 23 per cent. of its entire housing stock, at risk of this kind of decline. However, that steep decline is in patches. The Tees valley is not totally a conglomeration of ailing north-eastern Coronation streets. There are some very pleasant places to live where the housing market is robust. The answer is not demolition, but some demolition and renewal. These patches of decline
are close to more robust areas and are served by good facilities and public services. We need a change of mix and a new design to give fresh impetus to these urban cores.The Tees valley is not one of the nine pathfinders, but in the Centre for Urban and Regional Studies report—the genesis of the pathfinders—a good case was made out for us being the tenth. Even without that status, the Tees valley has set up a housing market renewal project with a board made up of stakeholder partners and is working on a costed action plan for housing market renewal with a delivery framework. Even without the resources of a pathfinder, we intend to have a template for integrated strategies across the local authorities and a framework that will make better use of existing resources. Clearly, we want to develop and present a persuasive case for help, with additional public funding from the next comprehensive spending review.
In a situation of decline such as I have described, how welcome is the licensing of houses in multiple occupation provision that is in the Bill? HMOs are scattered through these areas of decline, with concentrations of poor physical conditions, threats to health and safety and poor management. They house often the most vulnerable people who are hostages to landlords who sometimes cannot even be found to fulfil their obligations, let alone be called to account.
In assessing whether someone is a fit and proper person to be a landlord, certain offences have been taken into account, violence and harassment being among them. Sexual offences are not on the list; clearly they should be. No one should be licensed to be a landlord who has been guilty of a sexual offence.
I join in the chorus that three storeys and five occupants is too narrow a category of HMOs to be covered. Smaller HMOs are just as badly managed, to just as much detriment to many thousands of tenants. I ask the Government to keep an open mind about that.
We need to be clear about the consequences to tenants when there is a licensing breach, a failure to apply for a licence or a refusal by a local authority. Clearly, no rent is due, but tenants need information so that they are not persuaded that they are in breach of their agreement, and not subject to harassment or threatened eviction. There may be problems about interruptions to housing benefit claims and their reinstatement. Although there is no express provision for this in the Bill, I suggest that tenants should be consulted on the terms of licence and the character of landlords.
There should be a link—I cannot now find it—between the licensing provisions and the housing health and safety rating system in part 1. For instance, it seems eminently possible that an HMO with a category 1 hazard could still be licensed to be occupied. That would be unwise. I worry about the hazards identified under the HHSR system, because they are measured as hazards against the most vulnerable tenants, and remedying them can be suspended while those most vulnerable sort of tenants do not occupy the property. I would suggest, first, that landlords may be less ready to rent to vulnerable tenants; secondly, that the system underestimates the fluidity of tenant changes; and, thirdly, that it will store up an awful lot of category 1 and 2 hazards, which in due course will overwhelm the local authority's enforcement provisions.
Selective licensing of other properties is also capable of having a major effect on the sort of suffering that I have described. I suggest that care is needed to ensure that the criterion of designation for licensing—that it is likely to be in an area of low housing demand—does not just drive problem landlords and tenants into the immediately adjacent areas, which might, because of their proximity, be problematic. I also suggest that some of the procedures are cumbersome, requiring the sanction of the Secretary of State or a trip to the county court, when they could easily be left to the discretion of the local authority.
Although the right to buy changes are mainly aimed at areas of high demand and low supply, my area will welcome the suspension of the right to buy when there is a demolition notice. In north Grangetown where local housing trusts need demolition, there has been speculative buying for a quick profit, which has proved costly and held back redevelopment to the disadvantage of the bulk of other residents who needed the change.
I would advocate the addition of simplifying and streamlining the process where owners are absent, abandon low-value properties and cannot be found. I have many more suggestions for changes and for inclusions, but I have no more time. I hope that the Government will continue to be as flexible as they have been so far, so that a currently very good Labour Bill can be turned into an excellent one.
9.2 pm
Mr. David Kidney (Stafford) (Lab): It is a great pleasure to see how in recent years the Government's actions have demonstrated their commitment to raising the priority of housing policy, recognising how it touches everyone's lives. We have seen a welter of activities in recent years: the communities plan backed by substantial resources; the housing pathfinders, including one at north Staffordshire just up the road from my constituency; the key workers scheme; the home ownership taskforce report on low-cost housing, "A Home of My Own"; and now even the Treasury is involved in commissioning reports from David Miles and Kate Barker. Today we debate the Bill as a welcome demonstration of the Government's commitment.
My short contribution will concentrate on the requirements for home information packs and clarify why I support the Government's position on them. The packs will clearly affect all home owners who want to market their homes for sale, and a change in the law will definitely be noticed. We should bear in mind the fact that 70 per cent. of people are owner-occupiers and, according to Government research, 1.8 million of them in England and Wales put their houses on the market each year, so there can be no question of sneaking the legislation through. It will affect an important market.
The current process of buying and selling houses in England and Wales is cheap by international standards, but also long lasting. It involves many different stages: marketing the property, drawing up contracts, checking proof of title, making standard inquiries, applying for a mortgage and for a lender's valuation report, and various searches to local councils. Surprisingly, that list does not include obtaining a survey on the condition of the property by the person buying it. In fact, only one in five buyers obtains a survey.
During the lengthy process while all those activities are taking place, there is no binding contract—unlike in Scotland—between the buyer and the seller. So there could be several potential buyers chasing the same property, all incurring expenses in searches, fees and so forth. The seller is also likely to be in the same process as a buyer of another property. The Deputy Prime Minister's research shows that 60 per cent. of transactions are put together in chains of linked transactions, that the average chain has four such links and that the average time between accepting an offer and the exchange of contracts, which makes it binding, is nine weeks. So although there is no binding agreement during those nine weeks, either the seller or buyer can withdraw without any sanction at all. It is therefore no surprise to discover that the Deputy Prime Minister's research states that 580,000 transactions a year—30 per cent. of the total—failed. And of those failures, 28 per cent. were sellers who withdrew their property from sale.
I accept that some reasons for withdrawal—such as a change in employment circumstances or in the domestic situation, or even bereavement—are genuinely forced on the seller, but I am sure that a lot of withdrawals occur because the seller was not serious at the beginning. What an inefficient system we have landed ourselves with! There is a period of more than two months in which no one is sure whether it will be possible to deal with their transaction. And in addition to the period of uncertainty as to whether a binding agreement exists, there is a 30 per cent. chance that matters will not reach that stage. Nor should we forget the huge cost waste during that period, in terms of search and survey fees, which the Deputy Prime Minister's research estimates at £350 million a year.
It is true that estate agents generally get paid commission only when the sale takes place. However, lawyers tend to take payment for the services that they provided, whether or not a sale is achieved. So it is no wonder that the Consumers Association is at the forefront of support for home information packs. The current system may be tolerable for estate agents and lawyers, but it is nothing like what consumers should be able to expect. We should design it to focus on consumers' needs, which means that they should know very early on in the process the product that they are getting for their money, and what constitutes a fair price.
A home information pack allows potential buyers to see early on a condition survey, local searches and answers to standard inquiries, and it allows the seller and buyer to settle on a price at the outset. As a result, there should be no expectation of a later drip, drip of information, leading to both sides trying to renegotiate the terms of the sale. Usually, the result should be a shorter period of uncertainty between acceptance of the offer and exchange of the binding contracts.
I should like to quote the example of Maria Coleman—she has already been mentioned in today's debate—an estate agent in Bristol who gave evidence to the Select Committee. I know that she gave evidence because she wrote to tell me so, although I take it that she has not singled me out for this information, and that other Members have received a copy of her letter. I telephoned her last week in response, and spoke to her
for more than 20 minutes. I discovered that she introduced a system of home information packs in her estate agency in Bristol in 1996—before a Labour Government, and before the promise was made to introduce such a system. She did so precisely because she saw that it was consumer-friendly. Some eight years later, she has dealt with more than 700 transactions by providing an information pack at the outset.Maria Coleman says that in her experience, sellers and buyers routinely accept the surveyor's report as the basis of their negotiations. Surveyors accept liability to buyers, and all have professional indemnity insurance. Indeed, the premiums of the surveyors that she deals with have gone down during the period in which they have operated this system with her. She says that the surveyors routinely wait for payment until the sale has taken place. As a result, the failure rate in her practice has been slashed from the enduring national average of 30 per cent., to 3 per cent. She says that although 28 per cent. of sellers withdraw nationally, in her practice the figure is 4.6 per cent. It is no surprise that she says in her letter:
- "How great is that for the consumers?"
If we pass the Bill, estate agents and lawyers can change their practices to fit in and consumers will definitely benefit. We can reassure the estate agents and lawyers that they will have time to adjust to the new system because the Government need time to train up all the new surveyors we will need. The Bill is an important consumer protection measure. It has the support of the Royal Institution of Chartered Surveyors, and while one can assume that it sees its members getting more business, the Bill is also supported by Maria Coleman; since she is an estate agent, one might also think that that implies estate agents must benefit, but if so, how come the National Association of Estate Agents still holds out in opposition to the Bill?
The Bill also has the support of the Consumers Association, which is the undisputed champion of our consumers, which is why I back it. I have also had briefings from the Disability Rights Commission and the Royal National Institute of the Blind, which not only accept and support the idea of the home information packs but would like more information in
the packs about the accessibility of properties for the 8 million-plus adults in this country who have a disability. That is a good record to set against the estate agents and the lawyers who are holding out against the new system.
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