§ Mr. Bowen Wells (Hertford and Stevenage)
I beg to move,That leave be given to bring in a Bill to extend competition in relation to services in connection with the transfer of ownership of houses in England and Wales, by amending section 22 of the Solicitors Act 1974.My proposed Bill would permit those who are not solicitors to prepare and register transfers or charges in respect of dwelling-houses the title to which is already registered under the Land Registration Act 1925. The Bill would therefore be restricted to houses for which the first registration and initial subdivision had been undertaken by a solicitor, or to what might be loosely referred to as secondhand houses, the title to which had not been altered since the first sale. It is estimated that the procedure might apply to about 70 per cent. of secondhand house transactions at present, the rest remaining on unregistered title whose conveyance would have to be undertaken by a solicitor. In short, it seeks to take advantage of the great progress that has been made as a result of the Land Registration Act 1925.
The objective of my Bill is to make it possible for an enforceable contract of sale between a vendor and a purchaser to be signed in the shortest possible time, which should average no more than one month and preferably a shorter period. You may think, Mr. Speaker, that the amendment of the Solicitors Act in the way that I have outlined and the objective of my Bill are unrelated, but I shall explain the connection later in my speech. There is a need for action to be taken on simplifying, streamlining and reducing the expenses involved in house transfer. First, there is the compelling statistical evidence that home ownership has increased dramatically since 1918, when 10 per cent. of the housing stock of England and Wales was owner-occupied. In 1979, 60 years later, the evidence given to the Royal Commission on legal services by the Registrar of Lands said that 53 per cent. of the housing stock was then owner-occupied.
The House, under the able direction of my hon. Friend the Minister for Housing and Construction, has enabled over 1 million people to own their homes under the right-to-buy legislation. The figures emphasise the urgent need to seek a quick and inexpensive method to permit home owners to buy and sell homes easily and safely, unencumbered by out-of-date practices that are no longer necessary.
The second administrative reason for modernising our methods is that the land registry system that was introduced in 1925 will, it is hoped, be extended to the whole of England and Wales by 1985. As the House knows, under that excellent system the title to property is guaranteed by the state. In 1804, when the solicitors first acquired the monopoly of conveyancing, the reason given was that title to property was often defective and the interests of the public could be safeguarded only by those properly trained and bound by a set of rules of good conduct which was enforceable by their profession. That monopoly was granted by King George IV in exchange for their agreement to collect stamp duty on his behalf. With the advance of the land registry system those considerations have almost completely disappeared, so there are good and sound reasons for reform from an administrative and technical point of view.
882 The most compelling reason for change is the heart-rending and traumatic experiences of many people who have had the misfortune to be impoverished and harassed by the practical effects of the present system. Let me read to the House a few extracts from the hundreds of letters that I received following the "You and Yours" programme on this subject on Radio 4, so that people can speak for themselves. A letter dated 13 April—eight months after my correspondent had decided to buy a house—said:My wife and I saw a house we wanted to buy in August 1982. We made an offer for it which was accepted. Since then we have `sold' the house we are living in three times. We hope to move in in less than three weeks' time but have yet to exchange contracts because of a series of little problems at various stages in the chain. This week's problem is an inability between two solicitors to agree on the completion date. Because contracts have not been exchanged yet any one of six parties (and seven solicitors) in the chain can change his mind and the whole series of transactions could collapse. Delays we can handle but this uncertainty is difficult to bear.Another letter said:After three months we thought we were ready to exchange contracts. Our purchaser withdrew and within days we received a bill from our solicitor for £200 and, not satisfied with sending us the bill so quickly, he tried to take the money out of our deposit for our purchase which we had only then handed over to him. We are now sure that our purchaser had already been buying another property when we signed contracts. The whole business has been a nightmare to us. It is a most traumatic experience to go through all those months of anxiety and then be left with nothing but a large bill.Those are two samples of hundreds of letters that complain of the long delays, expense, genuine nervous tension and exasperation which the present system induces. Therefore, it seems imperative for those of us who are representatives of our people to seek urgently an alternative method without sacrificing the necesssary safeguards that the present system affords.
I said that I would explain why introducing competition into transferring houses by permitting persons other than solicitors to prepare and register transfer of title will bring an end to the build-up of what I call daisy chains of house buyers. The only way to prevent the present practice is to effect an enforceable contract between the two parties quickly. If it were possible for building societies, banks, property developers, estate agents and others to effect transfer, they would compete with solicitors to provide a service to the customer.
It is perfectly possible under our present system to effect a quick contract if both parties want it but a solicitor would not advise such haste without first checking the title and making certain that it was unencumbered, that there were no planning proposals which might affect the property, and that the house was structurally sound. Other than the question of title, which is now successfully guaranteed by the Land Registry, all the other matters can be checked by anyone and they do not require legal knowledge. Indeed, under present law the contract of sale does not have to be drawn by a solicitor. All these functions could be carried out in one office, much to the benefit of the clients and avoiding the delay inherent in the present system.
Precontract preparation could be done by all buyers and sellers in the following ways. First, the vendors' agent or solicitor would prepare a contract of sale before the property was marketed. Secondly, the mortgagee would have to be warned of the impending redemption of the mortgage. Thirdly, the vendor or agent would make local searches and inquiries before the sale. Fourthly, the 883 vendor would commission a report and valuation inspection report, so avoiding multiple surveys. Fifthly, the purchaser would satisfy the estate agent that he had the money or a promise of a loan and income sufficient to purchase the property. Sixthly, the agreement would be a standardised form of mortgage.
In case the House thinks that such reforms are too radical, I refer hon. Members to the report of the Royal Commission on legal services published in 1979 in which such reforms were suggested. The Royal Commission favoured the retention of the solicitors' monopoly and even its extension to the contract of sale. It also suggested that the Law Commission or the Law Society should establish a standing conveyancing committee which would include practising lawyers, building societies, estate agents, consumer organisations and developers to consider the reforms. However, neither body of lawyers has taken any steps to effect the Royal Commission's recommendations.
With the computerisation of the Land Registry and the records of the local authorities, it should be possible to check all factors by simply pressing a few buttons on a computer. In the absence of any move to reform, which I understand the Law Society promised the Royal Commission that it would urgently undertake, I believe that we must open house transfers to the winds of competition so that those more concerned with serving the public will themselves effect the necessary reforms.
That is not foolhardy, because the titles are now guaranteed and people lending money for house purchases will make certain that their money is lent on sound title and contract of sale. As house purchase is normally the largest transaction undertaken by most people, purchasers will also be very concerned to ensure that it is properly and correctly carried out.
With the title guaranteed, the transaction becomes similar to hire purchase, over which agreements solicitors have no monopoly. However, there is a need to establish a system of bonding those who handle clients' money and for insurance against the possibility of mistakes.
I hope that my Bill will focus the mind of those in Government and in the professions so that reform will be introduced voluntarily, but quickly. That will be much to the benefit of the professional standing and public respect of the solicitors who now unfairly take all the criticism for the system's shortcomings.
When the burden of criticism is lifted from their shoulders, I am sure that solicitors will be able to attract a large share of the business. Above all, I hope that the Bill will prevent the worry, delay and losses caused by housing chains from which so many of our increasing number of home owners suffer when they buy and sell their homes. I have pleasure in commending the Bill to the House.
§ Question put and agreed to.
§ Bill ordered to be brought in by Mr. Bowen Wells, Mr. John Heddle, Mr. Richard Page and Mr. Robin Squire.