Clause
67
Short
Title
Amendment
made: No. 67, in clause 67, page 41,line 18, leave out
subsection (2).[Mr.
McCartney.]
Clause
67
, as amended,
ordered to stand part of the
Bill.
Schedule
s
7
and 8
agreed
to.
New
clause
1
Lettings
'(1) Section 1 of the Estate Agents Act 1979 (c. 38) (estate agency work) is as follows. |
amended |
(2) In subsection (1) after "land", insert "or who wishes to let, rent or manage residential property". |
|
(3) In subsection (1)(a), after "such an interest", insert "or manage, rent or, as the case may be, let such a residential interest". |
|
(4) In subsection (1)(b), after "of that interest", insert "or the management, or, as the case may be, renting of that residential interest".'.[Mr. Prisk.] |
letting |
Brought
up, and read the First
time.
Mr.
Prisk:
I beg to move, That the clause be read a Second
time.
The
Chairman:
With this, it will be convenient to take new
clause
3
After
subsection 1(1) of the Estate Agents Act 1979 (c. 38)
insert
(1A) In
this Act the expression estate agency work also refers
to persons
(a)
developing and selling;
and
(b) directly
selling
residential
property to members of the
public...
Mr.
Prisk:
New clause 1 seeks to bring the business of
lettings agencies within the Bill and to regulate an industry that now
handles over £12 billion of peoples
money annually and yet, ironically, it is an industry that is without
the redress that we have all discussed in a number of debates about the
Bill.
That anomaly is
not understood by the public, especially when residential sales and
lettings are often handled by the same agencyby the same people
in the same office. Without including residential lettings in the
regulations set out by the Estate Agents Act 1979 and therefore in the
Bill, we would, in seeking to promote the arguments for redress schemes
and all the other changes that we have discussed, only be doing half
the job.
The
Conservatives are not the first people to seek this updating of the
law. Tenants groups, for example, want to see this change and
so do a majority of the principal property organisations, including the
Royal Institution of Chartered Surveyors; the National Association of
Estate Agents; the British Property Federation, and
the Residential Landlords Association. All these organisations wish to
see the law updated.
At present, lettings agents can
get qualified, but it is not obligatory. The British Property
Federation tells me that an average agent might handle in the region of
150 to 200 properties worth about £30 million in rent, and yet
there are no regulatory rules or codes of practice that he or she is
required to follow and no obligation to handle complaints appropriately
or to be part of a redress scheme, all of which we have applauded and
agreed on in the
Committee.
Of course,
many tenants get caught out. I know from my own citizens advice bureau
how some agents in this market behave. Indeed, the National Association
of Citizens Advice Bureaux tells me that roughly 4,500 negative
inquiries were made against lettings agents in any typical year in the
last few years. Very often, such concerns are raised by some of the
most vulnerable members of society. Indeed, the National Association of
Estate Agents, which is a reputable organisation, says that the
majority of complaints that it receives about its members concern the
lettings sector.
I am
sure that Ministers will say to uswe heardthe
beginnings of their argument earlierthat the Government are
putting in place, for example, the tenancy deposit protection scheme,
and that is being put into practice. That scheme is welcome, but it
only applies to deposits and it provides no mediation for the many
other kinds of disputes that arise, which we have discussed in other
debates. Therefore I believe that we need to go
further.
New clause 1
would amend section 1 of the Estate Agents Act 1979 to extend the
definition of estate agency work to include residential lettings and
management. Some of the scams that are perpetrated in this market
include, for example, charging both landlords and tenants for the same
service; charging for simple procedures that are already covered by a
landlords management fee, and charging exorbitant fees for
basic functions. There are a string of examples; perhaps the best known
are outlined on the
Guardian Unlimited website. For
example, someone was once charged £60 simply for the process of
administering VAT; £150 for a cleaning fee; £150 for a
credit check, and £100 for an administration fee. I think that
the hon. Member for Richmond Park referred to some of these examples
before. All of those charges were made without good reason.
It is true to sayI think
that the Minister alluded to this beforethat the national
approved letting scheme sets a minimum service standard and seeks to
ensure financial probity in this market. However, there is no
obligation on companies to join. Equally, although professional bodies
exist and maintain good standards, 60 per cent. of letting agents are
neither in NALS nor a member of those professional bodies. That is one
of the principal reasons why the industry continues to attract the
unscrupulous, and the industry recognises that.
The new clause would bring
residential lettings within the established legal framework. It would
ensure that residential sales and lettings were regulated in exactly
the same way; it would give trading standards officers and the Office
of Fair Trading the powers that have, as we all recognise, helped to
tackle the issue of rogue estate agents in respect of sales; and it
would mean that the improvements included in the Bill would apply to
the whole of the residential market rather than just half of
it.
As a Conservative,
I am instinctively cautious about arguing for more regulation. However,
as a chartered surveyor and a constituency Member of Parliament, I know
that we need to put lettings on the same regulatory footing as sales.
The fact that the National Association of Estate Agents, the Royal
Institution of Chartered Surveyors and the rest of the industry agree
shows that the measure is long overdue.
On lettings, let me put the
argument in the words of Shelter, which says
clearly:
Shelter
sees first hand the negative consequences of high letting agent fees on
people who are already struggling to pay private rented sector rents.
This bill provides an opportunity to improve regulation of this sector
and ensure consistency and affordability of letting agent
practice.
That is the
important issue that I wish to address through new clause 1, which
deals with bringing residential lettings in line with all the things
that we have said that we believe are good for sales. Through new
clause 3, we seek to extend what we mean by estate agency
work.
The Act is 28
years old. I mean the 1979 Act, not the Bill that we are discussing,
although I appreciate that, having sat for three days, some Committee
members might feel that it is indeed 28 years old. I suspect that I
might have contributed to that sense of slow passage of
time
The
Parliamentary Under-Secretary of State for Trade and Industry (Jim
Fitzpatrick):
No, surely
not.
Mr.
Prisk:
The Under-Secretary is very kind. However, the
Estate Agents Act 1979 which, I have to confess, I studied at
university, it was that long ago, has not allowed us to move forward
with the changes in the market over the past 15 or 20 years. There have
been significant deregulation and expansion in the mortgage field and
the growth in buy-to-lets and in direct sales by house builders and
developersjust across the road there is a significant
development, all of which was sold not through the estate agency market
but directly to home buyers. None of those things will be covered under
anything that we have discussed today, because they do not count as
estate agency work under the current definition of estate
agency.
Thanks to that definition any
individual who purchases from that block, or similar blocks that hon.
Members know of in their constituencies, will not be covered, so it
needs to be changed. We need to take the opportunity to modernise the
legislation and to make it relevant to the market as it is today. After
all, the long title of the Bill says that it
is
to amend the Estate
Agents Act
1979.
I made it
clear to Ministers on Second Reading and prior to this debate that I
would like to work with all members of the Committee, and with the
Government, to update the legislation and thereby to help all home
occupiers. The Government have made positive noises on the issue, and
those are very welcome. My aim is to ensure that we end up with the
best possible legal framework for the market.
New clause 3 tackles two
specific and important changes in the way in which people buy and sell
their homes, namely direct sales by house builders and developers and
the growing online market. The 1979 Act defines estate agency
through the principle that an estate agent is an intermediary. That
remains true in most transactions for most people. However, direct
sales by house builders and developers have become extremely important
in the new homes market, of which a substantial part is first-time
buyers. It is especially important for them, as consumers, to be
protected, as they would be if they were undertaking conventional
transactions.
The same
can be said of the increasing number of online property exchanges. I
tried to work out how many there were, and I managed to count to
over100 different web-based services. Although I appreciate
that many of them are merely portals, or shop windows, that do not seek
to effect a transaction, an increasing number do seek to effect
transactions between
persons.
The Minister
told us that the aim of the Bill is to ensure that home buyers and
vendors have redress, but because the Acts that it seeks to enhance
have been overtaken by market developments, the 1979 Act needs to be
changed if our discussions on redress are to have any real meaning for
members of the home-buying community, especially for first-time
buyers.
I do not
pretend that the wording of new clause 3 is perfect. It would add a new
clause that deals with non-intermediary transactions to the 1979 Act.
Section 1A relates to the many cases of homes being developed by house
builders and sold direct, without an agent being involved. I am told
that in the south-east that is now the norm for most new developments,
and unless we include them, much of the property market will continue
to be exactly as it is now, and nothing will change for many people
when the Bill is enacted.
Section 1A(b) of the new clause
refers specifically to internet sales, as at present it is unclear that
the Act applies to them. I fully recognise that there difficulties in
that part of the new clause, but it is important that it is considered,
and the Minister will want to allude to it.
On Second Reading, the
Minister said that it was important that the residential market should
be better regulated, and I entirely agree with him. Ensuring proper
redress is vital to all home buyers and tenants
and the new clause would help in that respect by ensuring that consumers
can seek redress for all residential transactions, not just those based
on a 28-year-old
definition.
In respect
of new clause 3, I hope that the Minister can offer us a little more
than the promised review of the housing market as a whole, although
that review is welcome as it has merits. My worry is that it has taken
28 years to get to the point of modernising the legislation and that it
may take three, four or five more years before any reforms take effect.
Depending on what the Minister says, I may therefore want to press the
new clauses to a
Division.
6
pm
Susan
Kramer:
I shall make a couple of quick comments. Liberal
Democrat Members addressed direct sales and lettings in earlier
amendments that tackled those issues in appropriate ways. We are glad
that our Conservative colleagues supported them in spirit, but they
would not support them in the context of the language of the
amendments. But we are not proud: our goal is to get proper protection
for people purchasing off-plan and those who rent as tenants. We shall
therefore support the new clause in a
Division.
Mr.
Wallace:
Many hon. Members have in their constituencies a
growing number of residential park homes, often on sites run by
excellent owners, but in a few cases by highly dubious and unscrupulous
owners. They safeguard their estate agency role in the residential home
sector or their letting role in the holiday home sector to an extent
that exploits sometimes vulnerable people and raises grave
concerns.
I have the
distinction of having 5,000 such sites in my constituency, more than in
any other hon. Members constituency. Constituents of the
Minister, the right hon. Member for Makerfield, are involved in a legal
case against an unscrupulous owner in my constituency. The 1979 Act
deals predominantly with those trading in land, and my constituents and
many others are exploited because the land is often owned by the park
owner but my constituents own the residential park home, which they
have purchased as some form of property. Between now and Report, could
the Minister see whether it would be possible simply to extend the
definition of estate agency work to include the growing
numbers of residential park homes so that my constituents are given
that protection?
There
is a park in my constituency near the village of Pilling where the
owner not only insists that the park homes are bought and sold
exclusively through him, but on a 15 per cent. commission on the
advertised price, not the sale price. He therefore advertises a home
for £70,000, sells it for £20,000 and still charges 15
per cent. of the £70,000, a price that he picked out of thin
air. I will not abuse privilege by naming this individual, but he
abuses the position of being the estate agent.
My hon. Friends new
clauses would help to clarify the situation and I hope that the Bill is
used to clamp down on such people and bring park homes within the fold
of other properties that people use as retirement homes or, with the
cost of housing as it is, as their main residence because they cannot
afford to buy in the areas where they would like to live. I ask the
Minister
to see whether an amendment to the Estate Agents Act 1979 could
give my constituents the protection they deserve and stop these
scurrilously criminal people who exploit the most vulnerable people
they can
find.
Mr.
McCartney:
I predicted this morning that things could get
sparky this afternoon and I thought that I would be proved wrong until
the last few moments when the hon. Member for Hertford and Stortford
said two things. First, he said that the Bill was 28 years out of date
and that the Government should do something about the
wastedI quote myselfyears. Apparently
the Conservatives are now the self-appointed representatives who are
looking after the interests of people in rented housing . Twenty
years ago on 11 June, I became a Member of this House. Almost
immediately, I was involved in hand-to-hand combat on the Housing Bill,
which took away the rights of all private tenants in England and Wales
to have security of tenure in order to stimulate the private housing
market. Hundreds of thousands of people who had absolute protection,
including the elderly and people with a disability, were put at risk of
a recurring tenancy agreement, not for a 12-month period but on a
six-monthly basis, with no appeal if the tenancy was withdrawn. There
was no redress scheme. There was also no redress scheme when it came to
the mis-selling of endowment policies.
The
Chairman:
Order. I think that endowment policies are a
little wide of the
Bill.
Mr.
McCartney:
I am not going to argue about that. My point is
that the Bill is about redress. We are trying to determine who speaks
up for people in the housing market. I cannot let those remarks go by,
given allthat we have been doing as a Government in this
regardand getting no support for it. Again, on redress,
it took this Government to get redress for the mis-sold endowment
policies. As a consequence, nearly £900 million has been
returned to the people who purchased them, who number nearly 430,000. I
take no lessons from the hon. Gentleman if we are to have a competition
to see who represents the best interests of house
buyers.
The debate
rests on new clauses 1 and 3, andcovers almost exactly the
same ground dealt with by amendments Nos. 24 and 25. The hon.
Gentlemans interest has come a bit late. The hon. Member for
Richmond Park said something very interesting, which I can confirm: in
the Grand Committee, and on Report and Third Reading of the Bill during
its passage through the Lords, the Earl of Caithness tabled amendments
to extend the Estate Agents Act 1979 to include lettings in property
managementwe rightly had that discussion on amendments Nos. 24
and 24. At no stage did the Conservatives support Earl of
Caithnesss amendments. When he put them to the vote on Third
Reading, they abstained. In the last debate, the hon. Gentleman was
competing to see who was the toughest of them all, but it is now about
who represents consumers interests. A cynical
manoeuvre.
Mr.
Prisk:
Will the Minister remind me of which political
party the Earl of Caithness is a member?
Mr.
McCartney:
I suspect that he might well be a Tory grandee,
but despite that, the Tories did not support him on the issue of
principle. When it came to the vote, they did not support
him.
I shall explain
again: the Government have taken actions to deal with problems in the
letting and property development sector. I do not want to go through
all of them because we had a really good debate on amendments Nos. 24
and 25 in which I thought that I showed not just empathy with what was
being said, but a desire to do something about it. We decided,
therefore, to set up the tenancy deposit scheme, which is very
important. It is one of the most difficult areas when dealing with
protections and
disputes.
Under the
Housing Act 2004, we did something about houses in multiple occupation.
On the Barker report, I mentioned today, for the first time, that the
OFT might consider a market study. However, if it does not look at the
issues and come forward with proposals, we will look at doing so
ourselves. I have prompted a reviewnot just a simple little
review, but a review of redress and regulation in the wider property
market. No Government have ever done that. The hon. Gentlemans
party had nearly two decades in which to do it, but did not. The only
review that did take place took away consumer rights in the housing
market.
It is
important that we start the review in the summer. We should not just
pick out what are thought to be the six consumer issues of the day. We
must be consistent and look at the market as a whole. The issues are
different and will produce different responses and answers. That is why
it is so important that the review takes place and that we come forward
with proposals.
The
Estate Agents Act 1979 does not cover lettings and new builds, so we
cannot simply introduce secondary legislation for letting agents and
property developers. That does not work in practice. However, I accept
that the hon. Members for Hertford and Stortford and for Richmond Park
have been consistent in respect of what we are trying to achieve. That
is why we put forward in good faith our proposals for the review. I
hope that that is
accepted.
I know that
the matter will probably be pressed legitimately to a vote; it is going
to be the big issue. However, I must make it absolutely clear that the
Government will look at the wider issues in consultation with the
industry and consumers. This is the first Government to provide such
redress schemes. No Government have ever gone so far with redress in
the housing market. None even came close to doing so. I shall,
therefore, resist the
amendments.
The hon.
Member for Lancaster and Wyre and I had a short discussion outside the
Committee on that subject and I asked him to write to me about his
concerns. I said that we would look at them in the review that is
taking place. However, on his specific issues, it might well be that,
as I said earlier, if somebody is operating as an estate agent under
the terms of the 1979 Act, they are covered already. If that person
looks like, sounds like and is like an estate agent, they are covered
by the regulations. It would be useful if the hon. Gentleman could put
that in writing to me, so that I can
respond.
Mr.
Wallace:
My point was that, in the 1979 Act, the
definition of estate agency work related to land, and whether
land encompasses the definition of a residential park
home, as opposed to bricks and mortar or a plot of
land.
6.15
pm
Mr.
McCartney:
The hon. Gentleman wants me to give a detailed
answer on a complex issue, where there might even be a legal case. I am
trying genuinely to be helpful, and if he writes to me, I will respond.
In any event, there are two ways to approach the issue: looking at the
specifics and the general review of what is taking place in the housing
market. The question may not fall into the specifics but into the
issues around the review of the housing market. Either way, I will try
to be as helpful as I possibly can to him and his constituents. Many
people are in a similar situation in other places, and I know that some
of the cases that he raised involve people in my constituency. However,
as of yet, they have not asked me to help them, so good luck to him. I
hope that he does a good jobI shall keep an eye on
him.
The hon. Member
for Hertford and Stortford raised several questions about the internet.
In December 2005, the OFT issued guidance on the types of activities
carried out by internet property retailers and said that their work was
unlikely to fall within the definition of estate agency work as
contained in the 1979 Act. However, if internet property retailers
undertake activities that fall within the definition, they will be
required to be members of a redress scheme. I shall write to Members in
more detail about
that.
I will review
what was said in previous sittings. If I have not responded to any
questions, I will write to Members so that they have answers before the
Bill goes back to the Floor of the House in two or three weeks
time. With that, I ask the hon. Gentleman to do something that I am
sure he will not do. I ask him to withdraw the amendment on the basis
that the Government will go ahead with a review. As a consequence,
there will be a more proactive and extensive review of market issues,
including those that he raised. I have an empathy with those concerns
and want to try to resolve
them.
Mr.
Prisk:
The Ministers mind has failed at the last
hurdle. Sadly, just when we thought that we would have a positive
debate all the way through, he could not resist the partisan nature of
it. If it is the case that changes were not made during the years of
the Conservative Government and, indeed, the subsequent 10 years of
this Government, that is something on which we should both reflect. I
do not seek to make a partisan point about
it.
It is a shame that
the Minister chose to be negative on the important issue of tenancy
rights. It may be that he is embarrassed that many Labour Back Benchers
actually support the principles that we are propounding. It may be that
he hoped that we had come to the end of the debate and was therefore
unwilling to engage in the matter. I hope not, because that would be a
shame.
Apparently there
is some sort of competition in the Ministers mind on the
question of tenants rights. I am not engaged in that process. I
am more interested in what we can do now, not in whether mistakes were
made 10, 15 or 20 years ago. Perhaps my party did do
something wrong 10, 15 or 20 years ago. If we did, we would be happy to
acknowledge that we did. It is a shame that the Minister lowered the
debate in that way.
We
have been offered a commitment to a review. I am sure that that will
really help the tenants who are struggling in the circumstances that I
described. I recognise that there is merit in looking at the housing
market as a whole. That would have considerable benefits, but a
commitment to a review does not amount to
much.
We did not get
from the Minister any reference, for example, to the anomaly whereby
the person who deals with someone who is buying a home will be treated
entirely different when they let someone a home. He did not deal with
the question about direct sales by house builders. The first-time
buyers who make up the majority of that market will find that, if they
buy a new home from a house builder, they are not protected by anything
that we have discussed in the Bill. They will not be
covered.
I had hoped
that we might have a little more positive thought. I had hoped that the
Minister might indicate that he would put into the Bill on Report a
clause that will give a future Secretary of State, whether of his party
or mine, an opportunity to amend the 1979 Act. That would allow a
considered review of the market but also the opportunity for the
Government to introduce in the next 12 months or so changes that would
make a real difference to tenants and estate agents. Instead, we were
given a commitment to a review. That is fine. If that is the
Governments position, we will listen to it. We will act in a
collaborative way, but the commitment is
inadequate.
I return to
the two points that Shelter raised, which are that the proposals that
we made on tenancy be included and that the definition of estate agency
be extended. Both would provide us with consistency and affordability
for the people involved. That is the aim. That is what Shelter sought,
and
Mr.
Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab):
Will the hon. Gentleman give
way?
Mr.
Prisk:
No, as I am drawing to a close.
That is where I think we could
go. On Report, we will have the opportunity to consider whether
positive changes could be made, improving this legislation, and,
therefore, it is my wish to press new clause 1 and new clause 3 to a
division.
Question
put, That the clause be read a Second
time:
The
Committee divided: Ayes 6, Noes
8.
Division
No.
6
]
Question
accordingly negatived.
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