Council House Sales (Valuation) (Hansard, 19 June 1986)

§ Mr. Ian Gow (Eastbourne)
Sometimes an hon. Member is able to bring to the attention of the House a particular case which reveals a failing in legislation, and where the Minister, by adminstrative action, can remedy an injustice not just for the citizen who has sought help from his Member of Parliament but for thousands of others as well. The House is considering such a case this evening.
My hon. Friend the Minister, to whom I owe a great deal, will be able, by administrative action, to help not only my constituents Mr. and Mrs. Lee, who have journeyed to Westminster for the debate, but many others in a similar situation. Mr. and Mrs. Lee live at 23 Colwood crescent, Eastbourne. Mr. Lee is a skilled mechanic, working six days a week. His wife looks after their four year old son Daniel. They are a super family. Their house at 23 Colwood crescent is owned by the Eastbourne borough council. Last year, Mr. and Mrs. Lee sought to exercise the right conferred on them by Parliament to buy their own home. On 2 August 1985, the borough secretary wrote to my constituents placing an open market value of £17,500 on the house, from which Mr. and Mrs. Lee were entitled to deduct 39 per cent. because of their nine years' tenancy. Quite properly the borough secretary said in his letter: As mentioned in my previous letter, the above property is a prefabricated reinforced concrete house of the 'Parkinson' type. I must point out that should you decide to proceed with the purchase of the property, you will not he entitled to assistance from the Housing Defects Act 1984. When Mr. and Mrs. Lee received that letter they consulted their Member of Parliament about the value of £17,500 which had been placed on their defective house. On 9 August that Member of Parliament wrote to the borough secretary in the following terms: Is it really the view of your Council that, if it was to place this house on the market, the price which it would realise (freehold and with vacant possession) is £17,500? Have you asked Estate Agents for their advice as to the price which they think that they would be able to obtain for your Council, at the present time, if it was minded to sell the house with vacant possession? The borough secretary replied on 19 August as follows: It is correct that the Council considers the value of the property to be £17,500. I have not sought any advice from Estate Agents on this matter. If Mr. and Mrs. Lee consider that the valuation is incorrect, perhaps you would remind them of their rights under Section 11 which I did point out to them in my letter of 2nd August. Mr. and Mrs. Lee did indeed exercise their right of appeal to the district valuer. On 28 February 1986 he issued his determination, from which I quote: The property was inspected on 16 January 1986 and is a semi-detached, 3 bedroom house of prefabricated reinforced concrete construction with a tiled roof and was built in the 1920s. … Representations either verbal and/or written from the landlord and the tenant have been considered together with all relevant valuations and available market evidence. Accordingly I determine the market value in accordance with the Act as at 10 April 1985 at £16,250. … No structural survey has been made". So the district valuer decided not to make a structural survey even though he knew that this was a prefabricated reinforced concrete house of the Parkinson type.
1300 Mr. Lee came to my surgery on 5 April and handed to me the district valuer's determination dated 28 February. Three days later, on 8 April, I wrote to the district valuer as follows: My constituent Mr. Glen Lee … came to see me on Saturday morning. He handed to me your letter to him dated 28th February 1986, and I have before me a copy of your Determination of the same date. In the sixth paragraph of your Determination you say that you have considered 'all relevant valuations and available market evidence'. So that I may advise my Constituent, could you please make available to me those 'relevant valuations and available market evidence' which you considered? Why did you make no structural survey of this property? Surely, when you know that this is a Parkinson type house, there is a overwhelming case for a structural survey to be carried out? The district valuer replied to my letter of 17 April: I am looking into the questions you have raised and will write again as soon as possible. On 21 April the chief valuer's office wrote to me as follows: It would not be appropriate for him"— that is the district valuer— to give you the information which you now request. The DV has made his statutory determination using his professional knowledge and taking into account all relevant matters of which he was aware. … I regret that I consider further discussion of any individual cases subsequent to a determination would serve no useful purpose. I was dissatisfied with that reply from the assistant chief valuer. Three days later, on 24 April, I wrote to the chairman of the board of Inland Revenue, Sir Lawrence Airey, in the following terms: In my opinion, the two specific questions which I asked … of my letter dated 8th April were reasonable questions to be put by a Member of Parliament, who has been consulted by one of his Constituents. May I ask, please, that you should re-consider the Assistant Chief Valuer's decision not to answer those two questions? Meanwhile on 29 April, the private secretary to my hon. Friend the Minister for Housing, Urban Affairs and Construction had written to me about a possible approved method of repair for the Parkinson type of house. The private secretary said: The NHBC the National House-Building Council— tells us that two firms are now preparing schemes for the repair of Parkinson houses but that none has yet been submitted for appraisal. We have approached both of those firms … direct. Both are engaged in other, commercially more attractive, repair schemes and although they are proceeding with the development of schemes for Parkinson houses, they doubt that these will he submitted for approval until the summer. This means that they could not be approved, if that was indeed the outcome, before the autumn. I sent a copy of that letter dated 29 April to the district valuer on the following day. I asked him to confirm that when he placed a value of £16,250 on the property he had taken proper account of the information contained in the private secretary's letter. That is relevant, because the building societies are extremely reluctant, and in many cases refuse, to lend on the security of an unrepaired, prefabricated reinforced concrete house. That reluctance or even refusal of building societies is even greater where there is no approved method of repair. I have not received a reply to my letter dated 30 April 1986 to the district valuer, although, in fairness to him, I should say that he has written that he hopes to be able to reply shortly. The answer is simple, had he taken into account that fact of which I believe he was unaware when he made the 1301 valuation—namely, that there is no approved method of repair and there will not be one until the autumn of this year.
Another option was open to my constituents. If they were dissatisfied, as they were, and in my view rightly, with the valuation which had been placed on the house originally by the borough council and then the reduced value of £16,250 by the district valuer, it would have been possible for them to have achieved their ambition and hope of becoming owners rather than tenants if the borough council had been willing to move them and their son, Daniel, to another council property and to move into 23 Colwood crescent a family that did not want to exercise the right to buy.
I wrote to the chairman of the housing committee of the Eastbourne borough council on 8 May in the following terms: The District Valuer has now re-determined the value of the property at £16,250. Mr. and Mrs. Lee and their Member of Parliament believe that that figure of £16,250 is still much too high; that is to say that if your council was to offer the property for sale with vacant possession, we do not believe that it could find a purchaser who would pay £16,250 for the property. As you know, Building Societies are most reluctant to lend, if they will lend at all, on the security of an unrepaired prefabricated reinforced concrete house …
However, the purpose of this letter is to ask whether your Council will please re-consider its decision not to offer a transfer for Mr. and Mrs. Lee. Many of your tenants do not wish to buy their home, or cannot afford to buy their home. Because of the problems, which are self-evident, in Mr. and Mrs. Lee buying their present home, would it not be reasonable for a tenant who did not wish to buy or who could not afford to buy to live at 23 Colwood Crescent, and for Mr. and Mrs. Lee and their son to move into another of your properties, not made of pre-fabricated reinforced concrete? On 14 May I received an acknowledgement from the chairman of the housing committee saying that the request which I had made for a transfer would be considered at the meeting of the housing committee on 28 May. To my regret, the chairman has not replied to me, even though the housing committee met as long ago as 28 May.
On 20 May I received a letter from the deputy chairman of the Board of Inland Revenue: The District Valuer, who does not act for either party, is required to give his valuation of the price which the property would realise at the relevant time if sold on the open market … the District Valuer is put in the position of an independent expert here. The legislation makes no provision for appeal, nor is the District Valuer required to render an account of how his professional judgment was informed and exercised … There is no invariable rule on the necessity for structural surveys in the valuation process. Those are the facts of this case. All that Mr. and Mrs. Lee ask is that they should be enabled to exercise that right to buy which the House has conferred upon them. They have the misfortune—not from their choice, but because of the accident of events—to live in a prefabricated reinforced concrete house owned by Eastbourne borough council. They have a choice—either they can buy their present house at the value determined properly under what is now section 127 of the Housing Act 1985— The value of a dwelling-house at the relevant time shall be taken to be the price which at that time it would realise if sold on the open market by a willing vendor or the council could, and I believe should, accede to Mr. and Mrs. Lee's request for a transfer to a house of conventional construction.
As to the second option of a transfer, I readily concede that that does not fall within the responsibility of my hon. Friend the Under-Secretary of State or of any of his 1302 ministerial colleagues. That is a matter for the borough council. But it is within my hon. Friend's responsibility to deal with this question of a valuation. I believe that in a case of this kind, when it is known that the property is defective and is of a Parkinson type—a type designated under the Housing Defects Act 1984—it is surely right that there should be a structural survey.
Reflect on this: it would be inconceivable for someone buying that house on the open market, knowing of its defects, to proceed without a survey. If that is the standard on which anyone buying in the private sector would insist, there should be no lower standard where the public sector is involved.
I believe that the district valuer should be willing to disclose in cases of this kind the evidence on which he has based his valuation—in this case £16,250. There is no need to give names or addresses. My constituents, Mr. and Mrs. Lee, could have been satisfied, although I think it most unlikely, if the full evidence on which the district valuer had based his valuation had been made known to them and to their Member of Parliament. It is not truth that shrinks from disclosure, it is only the possibility of a valuation which could not be sustained by the facts and the true evidence which shrinks from disclosure.
The deputy chairman of the Board of Inland Revenue was right when he said that under what is now the Housing Act 1985 there is no provision for appeal against the determination by the district valuer. That is so. However, I say to my hon. Friend the Minister that it is always possible to seek a judicial review of conduct of this kind by a district valuer.
The action which I hope that my hon. Friend will take is, as I said, administrative. It does not require legislation In a case like this the Inland Revenue should ask district valuers to make a structural survey. The Inland Revenue should make available the evidence on which it bases the valuation which is fixed by the district valuer. It is all the more important that that evidence should be made available at the request of the prospective purchaser where there is no right of appeal against the decision of the district valuer.
It may mean that when the story of these times comes to be written the case of the Lee family will not receive even a footnote in the history books. However, their case is one which deserves the sympathetic consideration of the Government. The case of Mr. and Mrs. Lee is reproduced over and over again in other constituencies, and I hope that my hon. Friend the Minister will be able to gibe me the assurances for which I ask. I remind my hon. Friend that there remains one last protection for a citizen who has been treated unfairly and that is to petition the courts for a judicial review of an administrative decision of this kind.

§ The Parliamentary Under-Secretary of State for the Environment (Sir George Young)
I begin by saying how fortunate Mr. and Mrs. Lee are to have such a diligent Member to champion their case in the House. No one who listened to what my hon. Friend the Member for Eastbourne (Mr. Gow) said could fail to be moved by the story of Mr. and Mrs. Lee, who are simply trying to exercise a right given to them by Parliament and purchase a house at a price that they feel to be fair.
Some of the questions put to me by my hon. Friend fall outside my ministerial responsibility. As he will know better than me, part of the responsibilities he referred to 1303 relate to the Treasury. The particular points he put to me, that it should be mandatory to make a structural survey and that evidence should be disclosed by the district valuers, are matters which fall to my colleagues at the Treasury to whose attention I shall bring those observations.
My hon. Friend's contributions on the subject of the right to buy are always particularly welcome in view of his knowledge and experience as a former Minister for Housing and Construction. Indeed, he is the architect of the Housing and Building Control Act 1984, which made important improvements in the right-to-buy scheme.
I know, from the work I have done with my hon. Friend, how concerned he has always been to ensure that right-to-buy valuations should be fair. I hope to refer to some of the steps that he took as Minister for Housing and Construction to test their accuracy.
There has been a debate on this matter in the context of the Housing and Planning Bill, which provides for an increase in the discount on a flat sold under the right to buy. The case which my hon. Friend has raised, that of Mr. Glen Lee, concerns a house rather than a flat, a house built of prefabricated reinforced concrete — PRC for short. But the same issue arises — how to establish a fair valuation for a type of property that rarely changes hands on the open market.
My hon. Friend asked some specific questions about the valuations and about making evidence available. In view of his interest, and because I knew that he was going to ask the specific point, I have made some inquiries. I think that my hon. Friend understands that I am not able to reveal the prices at which other Parkinson houses in the area have changed hands because that would be a breach of confidence.
However, I understand that other sales have taken place at prices higher than the value that the district valuer has determined for Mr. Lee's house. That is not conclusive evidence in itself. We do not know how far those prices took account of the nature of the properties, but they do provide a useful input for the district valuer's valuation. Those facts were taken into account, together with other information about the local property market.
Listening to my hon. Friend's speech, it was not quite clear whether he had in his possession a letter to him dated 18 June from the district valuer/valuation officer, dealing with some of the points that he had put in his earlier letter. I am not sure whether my hon. Friend has that letter which begins: I hope this reply will reach you in time for Thursday's debate.

§ Mr. Gow
No.

§ Sir George Young
It is a misfortune of the post that the copy has reached me but the original has not reached my hon. Friend.

§ Mr. Gow
What date is it?

§ Sir George Young
It is dated 18 June and is marked "FIRST CLASS POST".
That letter answers the specific questions that my hon. Friend has put. He asked about the repair schemes for Parkinson houses and that is referred to at the end of the letter where it says: As to the matter of repair schemes for Parkinson houses, naturally the property Press is looked at constantly to 1304 monitor progress on all PRC houses and although I am aware that steps have started to prepare schemes for Parkinson houses, my determination is related to 10 April 1985 which was before applications were invited for approval. The letter also deals with other points. I hope that my hon. Friend will receive it in his post tomorrow morning.
In the correspondence my hon. Friend asked what evidence had been taken into account in this determination. The second point that he put to me was why no structural survey had been carried out. I think that my hon. Friend has seen the response given in the correspondence. I am advised that structural surveys of non-traditional houses are of little practical value unless destructive survey techniques are used. Those involve the removal of linings and renderings which could cause considerable damage to the property and so might not be acceptable to the prospective purchaser.
But the district valuer had taken into account the report of, at the time, a recent survey of the property which had been carried out by the local authority's structural engineer. The district valuer also considered a report produced by the Building Research Establishment on the structural condition of Parkinson-framed houses.
It seems to me, listening to the debate, that the most fruitful course, given that there is no appeal against the district valuer's valuation, is to pursue the question of a transfer. As my hon. Friend said, it is not a matter within my power to compel Eastbourne borough council to offer a transfer to Mr. and Mrs. Lee and I was distressed to learn that my hon. Friend had not had the courtesy of a reply from the chairman of the housing committee. But if the debate has served any useful purpose, it might increase the pressure on the borough council to offer a suitable property, I hope not of PRC construction, to Mr. and Mrs. Lee. The discount is, of course, transferable should they move to another local authority home. That would be an honourable way out.
An alternative approach is for Mr. and Mrs. Lee not to complete the purchase—they are under no obligation to do so—and if they feel, as my hon. Friend does, that the valuation is unrealistic, and that subsequent events will prove that to be the case, they can reapply at a later date and have another valuation put on the property. They will be entitled to a higher discount as the years roll by. The points concerning the Treasury will be referred to my hon. Friend the Minister, and I know that he will want to write and deal with the specific comments made.
One cannot be complacent about the valuation of property sold under the right to buy. My hon. Friend outlined a real difficulty when the district valuer is required to determine the value of a property that is of a kind that does not change hands often. In such a case, the valuer must make the best use he can of such market evidence as is available. The Government do not think it appropriate to set up a special system of forced sales, which my hon. Friend put forward as one solution to deal with the question of the valuation of flats, particularly in high-rise blocks. There would also be difficulties in arranging for a test sale of a comparable property whenever there is difficulty in valuing a PRC house such as Mr. Lee's.
But we are monitoring re-sales of former council properties in selected areas in order to look for signs that the original valuations were excessive, and will certainly look very carefully at any evidence that there is a significant problem. As my hon. Friend will know from the 1305 exercise that he initiated in the London boroughs of Wandsworth and Ealing, the initial valuations by the district valuer were proved to be roughly in line with market valuations when other flats in the same block were put on the market. I realise that my remarks will not be of any great consolation to Mr. and Mrs. Lee, and that is as much a matter of sorrow for me as for my hon. Friend. 1306 But if the possibility of a transfer can now be vigorously pursued with Eastbourne borough council, my hon. Friend's initiative may not have been in vain.