HC Deb 12 April 1978 vol 947 cc1387-9
16. Mr. Hugh Jenkins

asked the Secretary of State for the Environment what is his policy in considering the approval of compulsory purchase orders by local authorities in relation to properties subjected to gazumping.

Mr. Freeson

There are no powers of compulsory purchase in relation to such properties.

Mr. Jenkins

What does my hon. Frend intend to do about gazumping? Is he aware that the practice is spreading? If he does not intend to make it illegal, will he give local authorities some powers or at least take powers himself to deal with the problem?

Mr. Freeson

There are already fairly wide powers of compulsory purchase as well as powers to purchase properties in particular circumstances. I do not think that, as a general policy, compulsory purchase legislation should be introduced into the question of the negotiation of private sales of properties between individuals. The answer lies in maintaining the kind of stability in the housing market to which we referred earlier today. The Law Commission looked at the legislative aspect and concluded, in a report made two or three years ago, that legislation was not the right way of handling the problem.

Mr. Michael Latham

Any question of increasing the price after the parties involved in a property sale have reached agreement is morally indefensible, but will the Minister continue to tread very carefully and keep to what he has already said? Does he agree that gazumping is the greatest symptom of inflation, rather than the cause of it?

Mr. Freeson

I accept that general principle. It is not just a problem of the seller's asking a higher price after negotiations have been well advanced, so that the buyer withdraws from the negotiations; it can work the other way round in certain circumstances. If one were to legislate, one would have to go against buyers who withdraw from the purchase during negotiations because they decide to take their transactions elsewhere.

Mr. Rossi

Will the right hon. Gentleman consider discussing one of the two following methods with professional bodies concerned in house purchase and sale as a possible means of alleviating the problem of gazumping? They involve either requiring a vendor to deposit with the estate agent replies to preliminary inquiries to local searches and possibly a certificate of structural soundness in order to narrow the time within which gazumping can take place, so that a willing buyer can enter into a contract quickly and with little risk, or, alternatively, requiring the vendor who withdraws in order to sell to a higher bidder to indemnify the disappointed purchaser for his surveyor's fees and other costs that he may have thrown away in consequence, out of the additional profits that the vendor has made from the higher price.

Mr. Freeson

First, to operate such a system on either count would be highly bureaucratic and, if anything, would slow down the procedure rather than speed it up. I do not think that I can deal with these matters fully by exchanges in Question Time. I shall carefully study the hon. Gentleman's remarks and consider the matter.