ENTITLEMENT TO REINSTATEMENT GRANT OR REPURCHASE (Hansard, 21 June 1984)

HC Deb 21 June 1984 vol 62 cc570-3 570

§ Mr. Ancram
I beg to move amendment No. 14, in page 4, line 37, at beginning insert `Subject to subsection (8) below'.

§ Mr. Speaker
With this it will be convenient to take Government amendment No. 24.

§ Mr. Ancram
These are minor drafting amendments.

§ Amendment agreed to.

§ Amendment made: No. 15, in page 4, line 37 [Clause 3], leave out 'they are satisfied that'.—[Mr. Ancram.]

§ Mr. Wyn Roberts
I beg to move amendment No. 16, in page 5, line 1, leave out from 'determination' to end of line 8 and insert `the applicant is entitled to assistance by way of reinstatement grant if—

(a) the authority are satisfied that each of the conditions mentioned in subsection (4) below is met, and

(b) subsection (5) below does not apply in his case,

and in any other case he is entitled to assistance by way of repurchase.'. This is essentially a drafting amendment to achieve a simpler statement of the circumstances in which repurchase is the appropriate form of assistance. The amendment will be helpful to those who administer these provisions.

§ Mr. Tony Durant (Reading, West)
The amendment applies to properties which could not be given a 30-year life following remedial works. In such circumstances repairs are uneconomic. Under the Bill, the suggested course of action is that local authorities should buy the properties back. The local authority in my constituency is concerned that one property in a row of houses might be so defective that it proves necessary to pull it down. Those living in the houses on either side of the house that is demolished will not know whether the property was sold on compassionate grounds because the occupant had to move somewhere else or whether it was in such a bad state that the council bought it back following a request from the tenant.
When circulars are issued on this matter I urge that the owners on either side of the property that is bought back should know why the property has been sold. They should know that it is in such a bad condition that it cannot be repaired. The demolition of the house will have an effect on their property. If it is pulled down and there is an empty space between the houses on either side of the demolished property, the walls of the remaining houses might be affected. There are many technical matters to be taken into consideration. It may not be necessary for repairs to be carried out to the remaining houses on either side of the demolished property but the demolition could have an effect on the owners of the adjoining properties and they should know about it.

§ Mr. Gow
In connection with any advice which the Department gives to local authorities, we shall certainly consider my hon. Friend's point most carefully.

§ Amendment agreed to.

10.15 pm

§ Mr. Craigen
I beg to move amendment No. 17, in page 5, line 18, after 'individual', insert `and his successors in title'.

571

§ Mr. Speaker
With this it will be convenient to take the following amendments: No. 18, in page 5, line 20, leave out 'on satisfactory terms' and insert 'for a period of not less than 20 years'. No. 19, in page 5, line 21, leave out 'lending institution' and insert 'building society'.
No. 20, in page 5, line 35, at end insert— '(e) The applicant obtains a reliable guarantee for the quality and performance of the work required for a period of not less than 20 years based on a survey by a competent surveyor or structural engineer'. No. 36, in clause 5, page 8, line 28, at end insert 'save that on completion of the work the applicant obtains a reliable guarantee for the quality and performance of the work for a period of not less than 20 years based on a survey by a competent surveyor or structural engineer.'.

§ Mr. Craigen
I have been reminded that today is the longest day of the year. I have no wish to prolong the debate, and I am sure that Ministers will accept that these amendments are in the interests of ensuring that there is value for money.
It is essential that, when the remedial work is carried out, there should be some guarantee of the longevity of PRC houses. I noted earlier the remarks of the Minister for Housing and Construction about his discussions with the building societies. Amendments Nos. 18 and 19 involve the building societies. They deal with the length of mortgages, and with the lending facility. The building societies might be a safer bet, in respect of the purposes for which the amendments were designed.
Amendments Nos. 20 and 36 are concerned with the professional way in which the work is to be carried out and guaranteed. Proper surveying and building works must be carried out, as I am sure that the Minister will accept that the degradation of concrete has sometimes occurred because of lack of diligence on the part of a clerk of works or because of a fault in the specification, rather than because of the Nature of the concrete. I hope therefore that the Minister will accept that some guarantee should be required by the public authorities in order to ensure that the houses will have a suitably long life after the remedial work is done.

§ Mr. Durant
The amendments are at fault for two reasons, although I have great sympathy with their motivation. The cost of such surveys would be pretty high, and, as we have heard, the local authorities already have cost problems to cope with. The guarantee for the quality and performance of the work for a fixed period would put freehold property in the same position as leasehold property, in that when the guarantee ran out the value would immediately drop. The question of a guarantee or certificate or some other form of documentation is important, and I support the general tenor of the amendments.
When speaking on an earlier amendment, the Minister referred to the building societies and the possibility of some system of warranty. I believe that that is what is required. I referred to this question on Second Reading. I hope that the Minister accepts that it is an important point. Someone may wish to stay in his house for a while. As the hon. Member for Truro (Mr. Penhaligon) has said, not everyone will wish to rush away from the property, and not all the properties are in a bad state. Someone might wish to move after perhaps ten years. They might have had the work done, so everything is in order, but all the people who did the work might have left—or they cannot be 572 found—and all the people in the council offices might be new, so there is no evidence to give a potential purchaser any confidence that the building has been done. I do not accept amendment No. 16, but I support the motivation behind it.

§ Mr. Gow
In Committee, the hon. Members for Glasgow, Maryhill (Mr. Craigen) and for Norwood (Mr. Fraser) raised this point, as did my hon. Friend the Member for Reading, West (Mr. Durant) on Second Reading. The House will know that the Government proposed that the main form of assistance under the Bill should be grant-aid towards the cost of reinstating the defective dwelling whenever the dwelling concerned could be repaired satisfactorily. The House will also understand that the key requirement if reinstatement is to be an effective means of assistance must be to ensure that the owner of the house can sell the house after it has been repaired at a defect-free value.
Without such an assurance of the property being mortgageable after repair, the problem that confronts the private owner today will remain unsolved. We have therefore provided that unless the authority that makes a grant is satisfied that, following completion of the reinstatement work, the house would be likely to be mortgageable in the private sector the owner will have the right to ask that the local authority buy the house.
We are trying to establish a test of how the dwelling would fare on the open market immediately after repair. Marketability depends to a large extent on mortgageability, and the test is cast in the form of whether the main private sector bodies that lend for house purchase would be likely to accept the freehold of the repaired house as security for a loan on the terms that mortgagees normally regard as satisfactory.

§ Mr. Craigen
Has the Minister discussed this matter with the building societies and got their view on the objective that I have tried to put across?

§ Mr. Gow
We have indeed had discussions with the building societies and with the National House Building Council. The discussions are continuing. I said in response to an intervention by the right hon. Member for Plymouth, Devonport (Dr. Owen) that we hope that, as a result of the discussions on which we are now engaged with the building societies, there will be a satisfactory solution that will give a real prospect in many cases of mortgageability being possible for the majority of people who are likely to want to remain in their present houses.
Amendment No. 17 is based on a misunderstanding. The authority concerned must make a decision as to whether assistance should be through reinstatement grant or through repurchase. It must make that decision when it considers the application. It is the mortgageability of the dwelling in its repaired state immediately after repair that the authority must take into account. When deciding whether the building will be mortgageable after repair, the authority should take into account the views of the lending institutions at that time. There is no logic in asking an authority to try to predict whether those institutions will lend on the security of the property in 20 or 30 years' time. However, building societies, when deciding whether to lend, take into account whether the dwelling is likely to be a marketable asset at the end of the mortgage term. In 573 that sense, the position is already taken into account in the provision as drafted. For those reasons, I hope that the hon. Gentleman will not press his amendment.

Mr. Fraser
We are trying to be constructive, as the Minister knows. If an adequate guarantee scheme of one kind or another is given, that will not be more satisfactory to owners and will save the Government much expense. Those savings could be used for other housing purposes and should not go back to the Treasury.
One of the most helpful ways in which we could deal with this matter is for, say, the National House Builders Council to give a guarantee analagous to those given for newly constructed houses, backed by its insurance arrangements and enduring for 30 years instead of the usual 10 years.
If the Minister can achieve that and if it is acceptable to the building societies, it will go a long way towards underwriting the market and underwriting confidence in the houses that are not beyond repair, where it is a case of repair to minor rather than major defects. We would be very happy to hear the Minister say that he is aiding that sort of settlement.

§ Mr. Gow
Perhaps I could repeat what I said to the House in reply to the intervention by the hon. Member for Truro (Mr. Penhaligon). We have been and still are in discussions with the Building Societies Association and the National House Builders Council about a proposal that the council should operate a scheme for improving requirements or methods of repair of PRC houses and provide a warranty similar to that offered by the NHBC in respect of new houses built by the private sector.
If we are able to bring these discussions to a successful conclusion, it would meet the underlying purpose of the amendments, which I fully understand. But I have to say that the NHBC's guarantee, as the right hon. Gentleman well knows, is for 10 years and not for the longer period that he mentioned.

§ Amendment negatived.

§ Amendments made: No 21, in page 6, line 1 leave out from 'Act' to end of line 15 and insert—

'(a) the work required to reinstate a defective dwelling is the work relating to the dwelling that is required to be done to the building that consists of or includes the dwelling in order to deal satisfactorily with the qualifying defect, and
(b) where there is work falling within paragraph (a) above, the work required to reinstate the defective dwelling includes—

(i) any work required, in order to deal satisfactorily with the qualifying defect, to be done to any garage or outhouse designed or constructed as that building is designed or constructed, being a garage or outhouse in which the interest of person eligible for assistance subsists and which is occupied with and used for the purposes of the dwelling or any part of it, and
(ii) any other work reasonably required in connection with work falling within paragraph (a) above or this paragraph.'.

§ No. 23, in page 6, line 38, at end insert— '(9A) Where a person who is eligible for assistance in respect of a defective dwelling dies or disposes of his interest in the dwelling to a person to whom section 2 of this Act applies (otherwise than on a disposal for value), this Act shall apply as if anything done or treated by virtue of this subsection as done by or in relation to the person so eligible had been done by or in relation to his personal representatives or as the case may be, the person acquiring the interest.'.—[Mr. Gow.]