§ As amended, (in the Standing Committee), considered. Order for Third Reading read.
§ 9. 36 am
§ Mr. Anthony Coombs (Wyre Forest)
It is with great pleasure that I beg to move, That the Bill be now read the Third time.
The Bill formerly entitled the Estate Agents (Property Misdescriptions) Bill. Significantly and fortunately, with unanimous support, the title was amended in Committee to widen the remit of the Bill and to provide even better protection to the public against significantly false or misleading descriptions by estate agents and others who are engaged in the practice of marketing property.
Despite the significant amendments agreed in Committee, it was reported in the Estates Times that the Committee sat for seven minutes. That is somewhat of an overestimate. I made a very short speech, after which the amendments were agreed, as were the clauses and schedules. It is evidence of the great good will that has been shown to the Bill throughout its passage through the House that the Committee stage was completed so rapidly.
It would be remiss of me not to mention the contribution to the birth of the Bill of my hon. Friend the Member for Coventry, South-West (Mr. Butcher). I have often referred to myself as the foster father of the Bill and to my hon. Friend as the natural father. Having seen the amendments to the Bill, I believe that the appropriate analogy is that I feel like somebody who has borrowed a fairly standard motor vehicle which, when I have given it back, has not only many extra mod cons, and a great deal of extra paint and chrome work, but a new engine. My hon. Friend is delighted with the progress of the Bill. He had hoped to be with us this morning, but, unfortunately, he is not yet well enough. We expect that he will join us next week, and we all send him our best wishes for a permanent and speedy recovery. [HoN. MEMBERS: "Hear, hear."]
The amendments made in Committee were a response to the suggestions in the constructive Second Reading debate just under two months ago. The aim of the Bill is to strengthen the position of house buyers and potential house buyers against misleading or false descriptions of property. It is unequivocally a consumers' measure, and I pay tribute to the Consumers Association for assisting me in introducing it.
I emphasise, as I did on Second Reading, that the Bill has the unanimous support of the property profession, because it bolsters the position of responsible estate agents and others who market property at the expense of those who are sloppy and who do not check their facts, thereby giving the property profession a bad name through their cowboy activities. The general secretary of the National Association of Estate Agents wrote to me:I believe that the Bill, as amended, is a victory for commonsense.Unlike the Estate Agents Act 1979, with which it dovetails, the Bill covers the legal profession. I was therefore pleased to receive a letter from the Law Society of England and Wales, which said: 535The Law Society therefore believes that the Bill strikes the right balance so far as it applies to solicitors.Part of my business life has been spent in property development and building and I believe that it is important that the Bill should strike a balance between rigorous protection of the consumer and being acceptable to the property profession.
The Bill is popular on both sides of the House. Hon. Members realise that, hitherto, the most important purchase of a person's life—a house—has not been protected from misdescriptions to the same extent as the most minor purchase—a penknife, for example—which would be protected by the Trade Descriptions Act 1968 and that it is sensible to cover the purchase of a house with a measure that is akin to that Act.
The right hon. Member for Swansea, West (Mr. Williams) dealt with this point forcefully on Second Reading. I mentioned the anomaly whereby, if somebody bought a do-it-yourself gas appliance which was not in situ in the house, it would be covered by the Trade Descriptions Act and would have to be accurately described. As the law currently stands, however, if the appliance were in situ in a house, it would not have to be accurately described.
Every year, 900 cases of property misdescription are reported. Since the Committee stage, I have heard of some which illustrate the efficacy of the Bill. A correspondent in Addlestone in Surrey pointed out that he was about to buy a house in Bourneside road, Addlestone, which was described as having a detached garage. My correspondent then discovered that there was no right of way to the garage, so he would have been unable to use it. The property was also described as being within walking distance of the station. The property was in Addlestone, but the station was in Weybridge. One would have to be a walker of Olympic dimensions for that description to be accurate.
A gentleman from Cambridge raised another important issue. He said that the description of the house that he wished to buy stated three times—therefore with some certainty—that the property benefited from 1.25 acres of land. Expecting to find a large amount of land around the house, he visited it, with all the inconvenience and cost that that involved, only to discover, after further investigation, that the house benefited from only 0.7 acres. The agents had exaggerated the size of the plot to the tune of over 80 per cent.
My third correspondent lives in Bristol. The agents stated that the roof of the house that she proposed to buy was new. It turned out that the roof was old and needed major repairs costing £3,000. My correspondent felt that the agent should not have described the roof as new. The agent apologised, so I would not class him as one of the deliberate deceivers or cowboys who are a small minority of those marketing property. Nevertheless, the damage was done to my correspondent's pocket.
The most serious case occurred in Frithville, Lincolnshire. A gentleman wrote:In February 1987 I purchased a property which was advertised by two agencies in this area as being in superb decorative and structural condition. I moved into the property in May 1987 and in June the property was declared structurally unsafe and liable to collapse at any time. Having paid £34,000 in May I have estimates for £55,000 worth of works which are required to make the property safe.536 I should have thought that that case alone convincingly showed the need for legislation so that at least the possibility of such problems being experienced again were minimised.
I have taken time to emphasise the type of problems that the Bill is designed to minimise, but I emphasise again that such problems are caused by a minority of poor agents and that, in my experience, the majority of people involved in the property profession attempt to do their job properly. Unfortunately, as in other areas of life, 95 per cent. of problems are caused by 5 per cent. of the people.
I told the property profession that I wished to ensure that the legislation dove-tailed with, rather than duplicated or, even worse, contradicted, regulations to be made under the Estate Agents Act 1979, to which the Minister referred on Second Reading and which, I am delighted to say, he has laid before the House. The regulations do not cover property misdescriptions so the Bill, if successful—as I am sure we hope that it will be—will be able to do its job in that regard. I have explained to people in the property profession that we are not in any way attempting to restrict a legitimate richness of language—that is the best way to describe it—in property marketing. Clause 1(5)(a) and (b) cover falsehoods and misleading statements. It is significant that, even if a statement is false, it must be false to a "material degree" and that, if a statement is misleading, although not false, it must be misleading in terms ofwhat a reasonable person may be expected to infer from it, or from any omission from it.The Bill does not cover possible interpretations of the word "panoramic", but relates to statements that are misleading and false to a material degree.
Clause 2 gives responsible estate agents the defence of "due diligence", which is identical to that in section 39 of the Consumer Protection Act 1987 and similar to section 24 of the Trade Descriptions Act 1968. The clause will protect professionals who may have been misled—deliberately or otherwise—by their clients who are not covered by that defence, as I explained on Second Reading. The defence of due diligence will be available to property professionals who had taken all reasonable steps and had reason to believe that the information they were given was accurate.
An issue that I mentioned on Second Reading, which is not specifically covered in the Bill, but about which there is a great deal of case body law under the Trade Descriptions Act, is that of disclaimers. We had to strike a balance. We did not want to allow disclaimers to be so wide that they would negate the purpose of the Bill—for example, if an agent issued a set of particulars with a disclaimer so that one had no idea whether they were accurate. That would have made the position worse rather than better.
However, nor did we wish to deny responsible property professionals the opportunity to put disclaimers on facts that they had no way of being able to say were true or false. The example usually given is the age of a property—it may be said to date from the late 18th century but the information is significantly misleading if it turns out to be much older or more recent. As long as they have taken reasonable steps to verify the information, they may add a disclaimer to the effect that they have no documentary evidence to support that claim. Although such disclaimers are not in the Bill, they would be acceptable in case law. 537 However, the Bill has teeth and will provide a criminal sanction punishable by a fine for the irresponsible property professionals who make statements that are misleading or false to a material degree.
I said that I would explain the ways in which the original Estate Agents (Property Misdescriptions) Bill was widened in Committee. When I first considered the measure, it appeared that, although valuable, it was too limited in scope. It initially covered only estate agents who were engaged in the sale of residential property. Therefore, many people engaged in the marketing of property—for example, commercial property—would not have been covered.
In Committee, we tabled amendments designed to extend the scope of the Bill to people involved in property development. I had and still have a great interest in that aspect, as I said then and as I have again said today. It seemed grossly anomalous that, under the original Bill, someone could pick up a set of particulars for a house from an estate agent and he would be protected from false and misleading descriptions, but if he picked up exactly the same particulars direct from a builder or from a property developer he would not be covered. The particulars would look similar, so the anomaly needed to be remedied.
People engaged in the refurbishment or building of a property will now be covered by amendment No. 1 to clause 1. That amendment extended the measure to other significant professionals engaged in the marketing of property, the most significant of whom are solicitors. There was a great deal of pressure and reasoned argument on Second Reading for including solicitors within the Bill's remit. The measure encapsulates solicitors by removing their exemption under clause 1 (2)(a) of the Estate Agents Act 1979.
A number of arguments were made against including builders and developers. The National House Building Council and others argued that they already operate schemes that offer compensation to purchasers who have been misled over the particulars of a property. I doubt whether that compensation would have been adequate to compensate the gentleman in Frithville to whom I have referred. In any event, those arguments rely on a comprehensive coverage of the industry. The Monopolies and Mergers Commission recently examined the 95 per cent. coverage of the housebuilding industry exercised by the NHBC and decided that there is a case for opening the industry up to competition to ensure that its role is not so comprehensive.
Competition will ensure that builders and developers provide the kind of guarantees currently provided by the NHBC and other validating bodies. It will also happily fit in with the new regime encapsulated in this Bill. The most powerful arguments for including builders were made by my hon. Friend the Member for Faversham (Mr. Moate) and the right hon. Member for Swansea, West. My hon. Friend the Member for Faversham said that builders more than anyone else know about site conditions, previous land use and land charges on a property. They are therefore better able to describe a property accurately than is someone who has been instructed to act on it.
The right hon. Member for Swansea, West said that it was only right that someone with a 100 per cent. interest in a property rather than someone with a 1.5 per cent. or 0.75 per cent. interest—or whatever the commission level 538 is—should be required under the measure to make accurate descriptions of the property when it is being marketed.
We then had to decide how wide to draw the scope of the people covered by the Bill. The words "wholly or substantially" appear in clause 1(5)(f). In other words, a statement is made in the course of property development business if, and only if, it is made in the course of a business concerned "wholly or substantially" with the development of land.
We included that provision in response to arguments made by my hon. Friend the Member for Walthamstow (Mr. Summerson) on Second Reading. He argued that if a greengrocer, who may well be a world expert on certain kinds of fruit, but not an expert in marketing property, decided to market his commercial property, it would be wrong to subject him to the criminal sanctions in the Bill. The words "wholly or substantially" cover people who are principally concerned with the marketing, building or refurbishment of a property.
It was said that banks and building societies should be included in the measure. To a certain extent, the line on whom one should or should not include in the Bill is subjective. Many banks and building societies have subsidiaries that act as estate agents and therefore will be caught within the terms of the Bill. However, neither I nor the Consumers Association has been able to discover one case, despite the fact that there are 900 reported complaints every year, in which a bank or building society was complained about. The fact that they are not included within the scope of the Bill will not create a loophole in the protection of consumers.
I have already referred to the inclusion of solicitors. The Law Society of England and Wales supports the measure. I have also had discussions with the Law Society of Scotland, because 85 per cent. of property transactions in Scotland are carried out by solicitors. In England, 250 solicitors engage in estate agency services.
There was initial concern about whether conveyancing services had been properly drawn to allow solicitors to produce property information forms before the conveyancing procedure. It was argued that solicitors did not want the property information forms to be regarded as marketing material which might be caught by the Bill and therefore might get in the way of the streamlined conveyancing procedures that the Law Society has rightly, and so constructively, introduced recently.
I have been able to reassure the solicitors on that score. Clause 1(5)(g) defines conveyancing services asthe preparation of any transfer, conveyance, writ, contract or other document in connection with the disposal or acquisition of an interest in land, and services ancillary to that".Clearly, the initial preparation of particulars on a property information form will fall within that definition and be regarded as conveyancing services. They will therefore be outwith the scope of the Bill.
That means that we are excluding them not by virtue of what they are, but by virtue of what they do. If a property information form used by a solicitor, who also acts as an estate agent, in the course of marketing a property, was not simply used as preparation for conveyancing, but was given to a potential purchaser as proof of the details of a property and an inducement to view the property, that property information form would then be regarded as being used as part of the marketing of the property, and it 539 would fall within the Bill's remit. Nevertheless, the Law Society believes that the Bill strikes the right balance about solicitors.
There were a number of arguments in favour of excluding solicitors from the terms of the Bill. I do not think that the first argument was strong, because it could be applied to any profession that exercises some self-regulation. Merely because a profession regulates itself—however rigorously—is not sufficient reason to exclude it from broader legislation designed to protect the public, where Parliament and the public think that appropriate.
The Scottish Law Society has argued—in my view it is a slightly esoteric argument, although the society thinks that it has substance—that solicitors should be regulated sui generis, although it agrees with the substance of the Bill and that solicitors should come within its remit when they are acting as estate agents. The society also argued that it was clumsy to exclude an exclusion and that it does not want solicitors to be drawn into the ambit of the Estate Agents Act 1979. I think that my arguments are reasonable and I hope that Scottish solicitors will view them as such.
First, the drafting is not clumsy—it is shorter and more precise than that suggested by the Scottish Law Society. Secondly, there does not seem to be an inviolable principle that people who regulate themselves and are generally dealt with under specific legislation should be outwith other legislation, should Parliament think it appropriate. The Financial Services Act 1986 contains provisions that apply directly to solicitors acting as financial advisers, rather than those provisions being applied through the self-regulatory organisations, just as the Bill will contain provisions that apply to solicitors acting as estate agents or marketers of property. Therefore, I do not think that the Bill breaches a significant principle on self-regulation and the legislation under which solicitors or any other profession operate. Once the Bill becomes law—as we all hope that it will—I think that they will find that they are able to work within it comfortably and sensibly.
§ Mr. Patrick Ground (Feltham and Heston)
Before my hon. Friend moves on to a different subject, will he answer one question? He is explaining why he amended the Bill to allow for the case of the ignorant greengrocer—who is knowledgeable about fruit but ignorant of property. Does he agree that often the only knowledge of defects resides in the owner of a property? Does he have any worries about having excluded the owner of the property and having imposed upon those marketing it a higher duty than that placed upon the owner?
§ Mr. Coombs
I am glad that my hon. and learned Friend has mentioned that subject. On Second Reading, I emphasised that the Bill's purpose was to extend to the marketing of property provisions that exist for virtually every other group under the Trade Descriptions Act 1968. The 1968 Act covers only those people marketing goods or services in the course of their trade. It does not extend to private individuals, just as this measure does not extend to the householder.
§ Mr. Alan Williams (Swansea, West)
Perhaps I can give an helpful example to the hon. Gentleman. When I was canvassing for the local elections yesterday, I was handed a copy of the South Wales Evening Post, which contained 540 a huge advertisement for David and Roy Thomas and Company, a local agent. It contains an advertisement for a house which is described asREDUCED FOR QUICK SALE:… well presented … The property has been well maintained".The person who handed me the advertisement had looked at the house a couple of months before, had gone to the expense of having a survey carried out, was told that there were £10,000-worth of dry rot and roof problems in the house and had turned it down. I telephoned the agents before I came to the Chamber and asked whether the work identified by that survey had been done prior to its readvertisement. None of the work had been done, yet they are still presenting information about a property that they know to be wrong, on the basis of a survey paid for by someone else. They are calculatedly and deliberately misleading people.
§ Mr. Coombs
I thank the right hon. Gentleman for that example. He will be pleased to know that I quoted him approvingly in earlier parts of my somewhat lengthy speech.
I shall briefly put to bed the arguments about why private individuals are not covered. As the Trade Descriptions Act argues that the law should impose a greater standard of care and professionalism on people whose business is the marketing of goods and services—or in the case of this Bill, is "wholly and substantially" the marketing of property—we feel that that principle should be extended to the Bill.
§ Mr. John Marshall (Hendon, South)
Does my hon. Friend agree that the real answer to our hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) is that those who advertise and seek to market property present themselves as having a property expertise that the owner frequently does not have? They are making themselves out to have the same expertise as those who market package holidays so misleadingly and as those who so misleadingly put National and Local Government Officers Association advertisements in local newspapers during local election campaigns.
No doubt my hon. Friend will be aware that a child in my constituency was described as frozen, going to a school that was leaking and had other defects, but the advertisement should have said that that child went to a school in the borough with the best A-level results in the country. That sort of misleading advertisement should be punished. I congratulate my hon. Friend on producing a Bill which will punish those who produce misleading property advertisements with the expertise that they claim to have. Surely the Bill is very positive and he deserves the congratulations of the whole House and not merely the dozen or so hon. Members who are here.
§ Mr. Coombs
My hon. Friend is extremely generous. I am sure that I do not deserve his congratulations, but the people who have been involved in bringing it about do.
The third area to which the Bill has been extended in Committee, as a result of arguments on Second Reading, is commercial property. Those arguments were most convincingly and comprehensively made by my hon. Friends the Members for Gloucester (Mr. French)—I wish to spare his blushes, and he will no doubt have one or two things to say about the Bill in a moment—and for Faversham.
541 The idea of extending the Bill to commercial property had general support on Second Reading, although a number of arguments against including commercial agencies were suggested, which were not very convincing. Before dealing with them, it is reasonable to say that the way that the original clause 1(3) had to be drafted would have caused some confusion and problems. It said that residential property would be included because it was covered by the original Bill by virtue of the use to which an agent could reasonably expect a property to be put by the potential purchaser. That would lead to several anomalies. One would have to look into the minds of people who market property to discover whether a property could reasonably come within the scope of the Bill, or whether it would he outside the Bill. The original definition was problematic, so it was best to eliminate the clause altogether.
The first argument against including commercial property was cost. A small minority in the commercial property profession argued that professionals would be put to a great deal of extra expense as a result of being required to provide particulars that were not inaccurate, false or misleading to a significant degree. I do not accept that argument. The vast majority of responsible commercial practitioners already ensure that the statements they make are accurate. They are prepared to undergo the cost of doing so, and they understand the legal implications of what accurate statements involve. They would not be inconvenienced by the new measure.
The second argument against including commercial property was that people who were engaged in the purchase of commercial property had professional advisers and were generally in a position to protect themselves through the civil code; therefore, they did not need the protection of the criminal code vis-a-vis property misdescriptions. One need only hark back to the small greengrocer mentioned by my hon. Friend the Member for Walthamstow to realise that, just because one buys a shop or other piece of commercial property, above which one may well live, one is not necessarily in the Onassis or Niarchos class of property buyer. Therefore, people should be protected by the law.
I was able to inform the property profession that the Bill related only to prescribed statements. It is not cast more widely. My hon. Friend the Minister has undertaken that there will be consultations with the property profession before regulations under the Bill are introduced. The Bill will cover only areas in which. with reasonable effort and preparedness, an agent or property marketing professional could avoid making misleading or false statements.
The Bill is not framed in such a way as to necessitate a full survey on any property that a professional markets. To do so would effectively extend free surveys to every potential consumer of commercial or other property by virtue of the criminal law, and that would be wrong. It would unnecessarily weight the measure far too much in favour of the consumer and against the property professional.
Thirdly, the property professionals wished to ensure that the treatment of commercial property should be consistent with that in the provisions of the Estate Agents Act 1979 if it was included in the Bill. That Act covers commercial property. The element of consistency between the two pieces of legislation, for which the property professionals have argued, would be maintained.
542 I should like to conclude my rather long-winded remarks——
§ Mr. Coombs
At a meeting to which I spoke recently, I was told that when I said "finally" I meant that I would continue for another 20 minutes. When I said "in conclusion" I meant that I would continue for another half an hour. Unfortunately, or perhaps fortunately for my colleagues, I cannot promise to repeat my performance.
My hon. Friend the Member for Coventry, South-West has done the House and potential house and property buyers a great service by introducing this important measure. Equally, he has done a great service to the responsible property professionals of the nation by ensuring that their values of integrity, accuracy and responsibility to their clients are rewarded at the expense of people who are just in the business for a fast buck and make statements that may move property but result in problems such as those identifed in letters to me from which I quoted earlier.
The original Bill's scope was too narrow. Support has been given by organisations and individuals who will come under the scope of the Bill by virtue of the amendments made in Committee. The British Property Federation is an example of an organisation that covers the builders and developers. The Law Society has spoken for solicitors. The Solicitors Property Bureau specifically deals with solicitors who are engaged in the sale of property and other estate agency activities. The support of those organisations shows that the balance is right and that we have ensured that the Bill serves not only the consumer but responsible property professionals.
I thank the organisations that have given support, especially the Consumers Association, but also the National Association of Estate Agents, the Institute of Valuers, the Royal Institute of Chartered Surveyors, the Law Society of England and Wales, the Law Society of Scotland and other organisations and individuals who have been of assistance to me.
I must also thank—although possibly sotto voce—Government officials who have been supportive and gave the Bill the necessary parliamentary time to reach Third Reading in record time. A contribution was also made by the Minister. I am sure that all hon. Members will say, "Hear, hear," to that. Throughout the passage of the Bill, he has been exemplary. The spokesman for the Opposition, the hon. Member for Edinburgh, South (Mr. Griffiths) has also been constructive, as have hon. Members from minority parties, mainly through their absence from the relevant debates. The Bill is a valuable measure, and I commend it to the House.
§ Mr. Douglas French (Gloucester)
I congratulate my hon. Friend the Member for Wyre Forest (Mr. Coombs) on an outstandingly competent and knowledgeable speech in moving the Third Reading of the Bill. I join in his comments about the receptive attitude of the Minister throughout the proceedings. It is refreshing to find a Minister who is willing to listen to common sense. The Minister distinguished himself in demonstrating that characteristic. We all regret the absence of my hon. Friend the Member for Coventry, South-West (Mr. Butcher) who originally promoted the Bill. When he sees the competent 543 way in which it has been piloted through the House, he will feel easy about staying away again, although, naturally, we hope that circumstances will not make that necessary.
I welcome the Bill, which was greatly improved in Committee. Short though the proceedings were, they covered important ground, and the Bill has come back to the Floor of the House better as a result, deservedly commanding the support of virtually all the professional bodies and independent practitioners who will be affected by it. Among legislators and practitioners, the Bill has wide support, which, assuming that it continues its path through to law, means that it will be well accepted and will greatly enhance the standing of the property world, particularly property sales.
Although, early in the proceedings, a few people expressed scepticism about the need for the Bill, the reasons are straightforward. First, would-be purchasers of property, particularly residential property, are caused inconvenience and cost by following the information given them by estate agents and other property sellers and, sometimes, travelling up and down the country to view properties in the belief that they have particular characteristics, only to discover on arrival or at a later date that the properties were not as described. Such inconvenience to the public should not be permitted; that is the prime reason why the Bill is necessary.
§ Mr. Ground
If that is the prime motivation for the Bill, why does the Bill not provide compensation for people who, as a result of misdescriptions, incur expenses and suffer inconvenience going to view properties, as my hon. Friend described? All they have from the Bill is the doubtful advantage of possibly bringing a criminal prosecution. That does not compensate a person who has suffered.
§ Mr. French
The Bill does not provide compensation directly, but the person who has suffered is not in any way prevented from bringing a civil action if he thinks that the breach, and the damages that he has sustained, are sufficiently serious. The Bill's prime purpose is to stamp out the unacceptable conduct of an estate agent or property seller. If it is successful in that, the damages that may otherwise be sustained will be avoided. The purchaser can still resort to a civil remedy if he so chooses.
§ Mr. Anthony Coombs
My hon. Friend made an important point about those who have suffered as a result of a misdescribed property being able to take civil action. If a criminal sanction has been applied to the person who made that property description, the civil action is likely to be expedited, and therefore the costs involved reduced. In other words, the case will be seen to have been considered, so the position vis-a-vis a civil action will be strengthened.
§ Mr. French
I accept that point. The Bill's purpose is not in any way to undermine the general, well-established principle of caveat emptor. The purchaser must still be alert to what it is he is being offered and how it is being described. If the sanctions were taken further, there would be a risk of undermining that principle.
The second reason why the Bill is important relates to valuation. Obviously, inaccurate information affects valuation. Anybody who purchases a property seeks to do so at a price that not only makes sense to him, but is 544 underpinned by the marketplace. Inaccurate information can undoubtedly lead to a higher valuation of a particular property than it deserves, and can therefore result in an ultimate loss to the purchaser either because he has paid too much or because he cannot recover the cost when he subsequently sells. That is an important dimension underlying the Bill.
Thirdly, the Bill is necessary because there is currently no penalty on estate agents who persistently and repeatedly misdescribe and rely on disclaimers to relieve themselves of any responsibility. As a result the practice has become much more widespread than it would otherwise have been. The introduction of some force of law should cause estate agents and other property sellers to exercise greater care than in the past. That will be in the interests of consumers.
My hon. Friend the Member for Wyre Forest said that the provisions of the Bill were extended in Committee to cover commercial property. The possibility was much debated on Second Reading and I do not propose to rehearse all the points that were made. In essence, it was argued that it would not be practical to have one set of rules for selling residential property and a different set for selling commercial property.
The example given on Second Reading—it is a good one because it is typical—was of a residential agent in a market town being asked occasionally to sell commercial property, such as a hotel or shop. It would be absurd if one set of rules applied to him when he prepared a description of a house and an entirely different set when he prepared a description of a commercial property.
As my hon. Friend said, it was felt that the provisions of the Bill were unnecessary for large commercial property, because purchasers of commercial property are more likely to employ professional advisers to make sure that they do not fall into any traps that might be caused by a misdescription. However, then there is the difficulty of deciding at what point to set the dividing line between large commercial properties which should remain outside the scope of the Bill and others which should come within the Bill's scope. In practice, such a dividing line would not be workable.
There is the question of mixed hereditaments. Which rules would apply to the sale of a shop or retail outlet on the ground floor with a flat upstairs? If the two parts of the building were sold separately, a seller might be able to get away with a wild misdescription of the shop, but not of the residential part. There are countless reasons why to exclude commercial property would not be practical. I am pleased that the wisdom of the Committee has prevailed and that commercial property now comes within the scope of the Bill. I hope that it will remain so for the rest of the proceedings. On Second Reading, the Under-Secretary summed it up neatly when he said:If we accept the principle that descriptions of property should not be false or misleading, it is somewhat illogical to draw a distinction that depends on the purpose for which the property is being offered, whether it is domestic or commercial."—[Official Report, 1 March 1991; Vol. 186, c. 1256.]I welcome the decision to extend the provisions of the Bill to solicitors. I am pleased that the Law Society's view now falls into line with this proposal. It is essential that the Bill should apply to solicitors, and to anyone else in the business of selling property. A solicitor is governed by the rules of the Law Society, but if he were conducting a transaction wearing the hat not of a solicitor but of an 545 estate agent, he would fall between the two stools of the Law Society's code of conduct and the Bill. That is anomalous and would confuse the public. Solicitors, builders and other professional people who sell property should be on an equal footing with estate agents.
The editor of Estate Agency News, David Perkins, put a number of points to me, one of which relates to clause 1(5)(c). He suggested that the word "plans" should be included after the word "pictures", on the ground that builders often sell houses "off plan", so that they cannot be viewed by prospective purchasers. The clause would thus read:a statement may be made by pictures, plans,and so on. I understand the reason for Mr. Perkins's suggestion, but the point is covered by the remainder of the clause, which adds:or any other method of signifying meaning".That is all-embracing. An estate agent, endeavouring to be clever, may not want to write down his descriptions or utter them, but can use gestures to convey meaning. I hesitate to suggest what the gestures might be, but even that is covered by the clause.
Clause 1(5)(b) deals with omissions—a subject which much exercised my hon. Friend the Member for Walthamstow (Mr. Summerson) on Second Reading. It is worth emphasising that under the Bill an agent is not obliged to give a comprehensive description of a property. My hon. Friend implied that, the moment an estate agent omitted any information, he fell foul of the Bill. That is not the case: the essence of the Bill is that he must not leave out any information that materially qualifies an item he has chosen to include.
A commonplace example is the description of a property as being in a "quiet, tree-lined avenue". If that property backs on to a large cement works that operates 24 hours a day, the estate agent is falling foul of the Bill by using the word "quiet". If the cement works is noisy, that contradicts his description. If he had limited his description to "in a tree-lined avenue", as long as that was an accurate description, it would not fall foul of the Bill.
A similar example is the description "in a peaceful, rural location". That is all right unless the property is next to a motor-racing track. The track may be in a rural location, but the noise that it creates will negate the description "peaceful". The estate agent must be careful, and not tell only part of the story. The adjectives that he uses must not be contradicted by any material fact about the property.
If an estate agent described a property as having a. "fine Welsh slate roof" but failed to mention that half the slates were missing, he would fall foul of the Bill because he would be contradicting the word "fine". The: adjective "fine" would apply to not only the quality of the slate but the roof, and it could not be a fine roof if half the slates were missing.
As cases carne before the courts, a body of case law would quickly be built up, but there are likely to be some grey areas. For instance, a property may be described as being "near the M25", which implies that the property is conveniently located for travel around the M25. However, if it turned out that the M25 ran through the back garden of the property, and nothing else in the description suggested that the property was in a peaceful location—which would be negated by having the M25 running through it—it could legitimately be argued that the description was accurate. That may be regarded as an 546 extreme and improbable, if not absurd, example, but the courts will have to wrestle with such detail. I anticipate that the way in which the provisions are applied by the courts will be quickly understood.
Another example is the property described as having "cliff views". In normal circumstances, that would imply that the cliffs and the sea could be seen from the windows of the property. However, if the property were standing on the edge of the cliffs at Dunwich—which is not far from an area well known to the Under-Secretary it would legitimately have a cliff view, but the prospective purchaser would find the reality rather different from the implication. We shall have to see how the provisions in that area take effect in the courts.
On Second Reading, I mentioned property dimensions. The success of the Bill greatly depends on a common code of practice being adopted on how features of properties shall be correctly measured. I am thinking of, say, the way in which large chimney breasts, bay windows or low eaves are measured features.
One cannot begin to dispute whether a description is accurate unless there is an accepted code of conduct for measuring it. I hope that all property practitioners—rather than the small number who currently do it—will, as a result of the Bill, base their descriptions on a code of practice such as the one produced by the Royal Institution of Chartered Surveyors. That gives careful guidance on how features should be measured. Then, those who are careless in their measurements or who deliberately try to mislead will not be able to say that they are measuring in one way if the accepted method is to measure in another way.
By that I mean that one could not present the full dimensions of a room going into the bay window if the bay formed only a small part of one of the walls. To measure in that way would create the impression that the room was much larger than it was. I strongly recommend that the code produced by the RICS would be reasonable. But if it is not to be that code, we need an alternative to it, so long as a code is used.
The issue of the dimensions of land, mentioned by my hon. Friend the Member for Wyre Forest, is more straightforward because, while it may not always be easy to arrive at a figure, a mathematical calculation is required to work out the area of land and there is an accepted way of doing that. Whether it is expressed in acres or hectares, there can be no dispute if the arithmetic is done correctly.
But one must guard against the use of expressions such as "set in half an acre" if it is not. Once the Bill is law, half an acre will mean half an acre. If the agent cannot be sure of his dimensions, he can resort to an expression which many estate agents now use—"standing in its own grounds"—as if there was anywhere else that a property could stand. That expression would get the estate agent off the hook of specifying a precise dimension.
The Bill will not make life easier for estate agents. Some may think that that will be no bad thing because, it may be thought, their lives have been rather too easy—if not now, at least a few years ago. The Bill seeks simply to give effect to the reasonable request that statements should be correct. If statements can be verified, then under the Bill the agent must verify them, unless he can show that it was reasonable for him to rely on information he was given.
Some statements that agents make are eminently verifiable if they take the trouble to verify them. To say that a property is freehold or leasehold is, in 99 cases out 547 of 100, easy to verify. If the agent expresses a view—which might be left to the acting solicitor—on the renewability of the lease, he must either make it clear that it is simply his view or, if he states that the lease is renewable, he must be sure that he is correct.
The same applies to the question of change of use. An agent may express a professional opinion about whether a property is likely to be eligible for change of use, but he must not state emphatically that it is eligible or that change of use will be granted, unless he is basing his statement on fact rather than on opinion.
Another example, also raised by my hon. Friend the Member for Wyre Forest, is the age of a property. An agent will not, under the Bill, be able to claim that it is a 15th-century cottage, unless, first, he is sure of his facts and, secondly, if only the chimney breast is 15th century and the rest is newly built around the chimney breast. He could, however, express the view that the cottage is "believed to date from the 15th century", because that is not a questionable statement of fact, so long as he or some other people connected with the property reasonably hold the view that the property is believed to date from the 15th century.
Although tucked away in the Bill, a provision that will have an important effect is that which states that the Bill relates to oral representations; the provisions are not limited to written estate agents' particulars but also embrace what the estate agent may say to the prospective purchaser during the course, for example, of viewing the property.
That is likely to prove a more difficult aspect of the Bill. With written particulars, documentary evidence can be produced. With an oral statement, one almost certainly will not have a written record. On the whole, the spoken word tends to be less well considered by those who speak it, particularly if they are estate agents anxious to secure a sale. The spoken word is less likely to be accurately remembered and it is less easily proved.
That is particularly relevant when comparisons are made between properties, and, as is well known, agents will seek to secure a sale by making comparisons. A classic device is to make a comparison between a property being offered to a prospective purchaser and a similar property over or down the road. The agent makes comparisons and gives information about what he believes that other property has fetched, or is about to fetch, on the market. That assists the prospective purchaser in reaching a decision about whether the valuation being placed on a property for his purposes is likely to be realistic and sensible.
I understand that, as a result of the Bill, agents will have to be careful about statements of fact relating to other properties as well as to the property in question. In its present form, the Bill should catch the agent who states that the virtually identical house next door has just been sold for £100,000 as evidence in support of the price that he is asking for the house that he is trying to sell. Assuming that my interpretation is correct and the Bill also covers that, the consumer will be greatly assisted.
§ Mr. Ground
Suppose the agent makes such an oral statement based on a statement made to him by another agent, which is the way estate agents learn of such matters. Would the agent be protected by the due diligence defence 548 in the Bill? If not, it would be a matter of concern if an agent relying on what another agent told him were guilty of a criminal offence.
§ Mr. French
My hon. and learned Friend makes an interesting point. I do not see why the information provided by another agent should necessarily be relied on to a greater extent than information provided by anyone else.
§ Mr. Ground
That is so, if the other agent was involved in a sale. My hon. Friend implies, perfectly understandably, that the other agent has an opportunity to have direct knowledge of the price at which the sale was concluded. That is covered by the provision that the second agent—that is, the agent now engaged in the sale—could show that it was reasonable in all circumstances to have relied on the information that he was given.
§ Ms. Harriet Harman (Peckham)
On a point of order, Madam Deputy Speaker. Are you aware whether a Health Minister will come to the House today to make a statement on the alarming developments in Watford general hospital? According to reports in today's newspapers—which have been confirmed by my office—because of the new internal market, Watford general hospital is looking to its balance sheet instead of to the interests of its patients. It has entered into a queue-jumping arrangement whereby patients in GP practices will jump the queue while the remaining 90 per cent. will be left further down the waiting list.
§ Madam Deputy Speaker (Miss Betty Boothroyd)
Order. The hon. Lady is making a speech after raising a point of order. Mr. Speaker has not been informed that a Minister plans to make a statement today.
§ Mr. Jeremy Corbyn (Islington, North)
Further to that point of order, Madam Deputy Speaker. You will be aware that the House will not sit on Monday and that there is chaos and crisis throughout the health service as market forces take over. If a Minister came to you now, or some time this morning, to seek to make a statement at some time today, would it be possible to interrupt our business so that this serious matter could at least be raised before the short weekend break that we are about to have?
§ Madam Deputy Speaker
As the hon. Gentleman and the House knows, when the Government seek to make a statement, Mr. Speaker is informed and the Minister then makes a statement either at 11 o'clock or, occasionally, much later just before the end of our proceedings. At the moment, no information has been given to Mr. Speaker that a statement is to be made.
§ Mr. Brian Sedgemore (Hackney, South and Shoreditch)
Further to that point of order, Madam Deputy Speaker. I should like to help you. The problem that we face on this side of the House is that, as you know, there has been one calamity after another in the health service this week. Despite several requests for statements, we have only had one. If it could be brought to the notice of the Leader of the House that we urgently need a comprehensive statement on what is happening, that would help to clear up these endless points of order that are being raised every day of the week.
§ Mr. Griffiths
Yes, Madam Deputy Speaker. Is it possible, in view of the record length of waiting lists and the current developments, to have a statement later today? If so, the Labour party is willing to make time for it in terms of the important Bills before us.
§ Madam Deputy Speaker
If it is a different point of order, I shall deal with the two points of order that have been made.
The hon. Gentlemen will know that Ministers are in place on the Treasury Bench and I am sure that the matter raised will be noted in the appropriate places. I shall now deal with the hon. Member's point of order, which is different.
§ Mr. Powell
My point of order is related, in so far as it has many consequences for the whole country. I am surprised to hear you say, Madam Deputy Speaker, that no Minister has told Mr. Speaker or yourself, as the Chairperson of today's proceedings, that there will be a statement about the outcome of yesterday's local election. Surely we should now be told the date of the general election.
§ Madam Deputy Speaker
The occupant of the Chair would also like to know the date of the general election, but it is not a point of order for the Chair.
§ Mr. John Marshall
On a point of order, Madam Deputy Speaker. Earlier this week, an advertisement appeared in various newspaperrs describing a pupil in my constituency as being in a school for six hours a clay in a freezing room where the walls were crumbling. That advertisement is inaccurate.
§ Madam Deputy Speaker
Order. The hon. Gentleman is very articulate. Will he put the point of order so that I can deal with it?
§ Mr. Marshall
Those who talk about the health service should show compassion for someone who has lost his voice.
§ Mr. French
May I pick up the point that my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) made before the interruptions? If the agent involved in the second sale obtained his information from an agent involved in the first sale, the agent involved in the second sale could rely on clause 2(2) if he could show that it was reasonable in all the circumstances that he should have relied on the information that he was given. If he obtains that information from an agent involved in an earlier sale, prima facie he could say that it was reasonable for him to rely on it. However, if the information given by 550 the first agent turned out to be wrong or inaccurate, the first agent would then be caught by the provisions of the Bill. It is perfectly clear from clause 1(1) that the provision applies whena false or misleading statement about a prescribed matter is made in the course of an estate agency business".It does not say that that misleading statement must necessarily be made before a translation is concluded. The misleading statement could be made after a sale or during a second sale, so that the first agent would then become liable if he had passed inaccurate information deliberately or misleadingly to the second agent.
The Bill does not seek to undermine an agent's duty to a seller. After all, an agent's prime responsibility is to do his best for the seller by whom he is engaged. It is his task to present the property in the best light possible and the Bill does not seek to inhibit him from fulfilling that task. It simply sets reasonable standards by which that task must be fulfilled and the agent must exercise his judgment to give correct, accurate and true descriptions, which are not misleading.
However, the doctrine of caveat emptor still applies. The Bill does not interfere with that. As my hon. and learned Friend the Member for Feltham and Heston said, the agent who commits an offence under the Bill is liable to a fine, but that does not provide the ground for action for damages by the imprudent purchaser. If, for example, the Greenwich tube line is destined to go under a property, or the channel tunnel is destined to go through the garden of a property, it is for the purchaser, with the help of his solicitor and the local authority search procedure, to discover those pertinent facts relating to the property's future. There is no obligation for the agent to know that that state of affairs prevails. If the agent knows, there may be an obligation on him to divulge that information, but there is no obligation on him to establish whether the property is liable to any such development. Equally, it is up to the purchaser, with the help of his surveyor, to discover whether the foundations of the property are shifting. The agent is under no obligation to discover such information, particularly if there are no grounds for suspecting that anything is wrong.
Equally, it is for the purchaser to discover whether the garden of a property floods every year, unless the agent describing the property refers to "a well-drained garden". The agent would then be making a statement without revealing another fact that substantially qualifies what he has said. Providing that the agent does not refer to a well-drained garden, he would not be caught under the Act and it remains for the purchaser, if he suspects that the land on which the property is located is liable to flooding, to establish whether that should affect the price that he pays for the property or his decision to buy it.
Some people have argued that the Bill is a bit of a killjoy, as it will finish off all those amusing estate agents' descriptions, exemplified traditionally, but rather untypically, by the late Roy Brooks. I doubt whether the Bill will have that effect, because the standard applied to the descriptions is what a reasonable man would understand by the words that are put before him. A false or misleading statement has to be about a prescribed matter, which under clause 1(5)(d) is any matter relating to land. Clearly, that leaves the estate agent with the freedom to refer to the nature of the seller of the property. That is how Roy Brooks made his reputation.
551 Some examples of Roy Brooks' advertisements are published in a little booklet called, "Mud Straw and Insults", which is a collection of his property advertisements. This one appeared in July 1970 under the headingTory Party agent going into fruit and veg"—after yesterday's results, there may be more examples of thatLess neurotic than Party members—even a wilting cabbage.It goes on to talk about the "forced sacrifice" of a much-loved Fulham home.
Other estate agents have tried their hand at that, but never quite reached the standard of Roy Brooks. That sort of fun at the expense of the profession or character of the seller remains entirely in order. I have another example:Chartered accountant and surgeon's young liberal daughter off to a Phoenician isle sacrifice period corner cottage in fash Camden Town.The only risk he would now take is that the cottage must be period and it must be a corner cottage. I will not go into whether Camden Town is "fash" these days.
A third example describes a flat in Richmond hill as theStrange habitat of a Roedean headgirl and parachutist".I believe that I am right in saying that the only Member of Parliament who is a former head girl of Roedean is the Minister for Overseas Development, my right hon. Friend the Member for Wallasy (Mrs. Chalker). You are nodding, Madam Deputy Speaker—possibly to indicate that you also held that honourable position.
§ Mr. French
I am sure that it would have been entirely appropriate for you to have held that position, Madam Deputy Speaker; none the less, it was held by my right hon. Friend the Member for Wallasey.
Descriptions included in the presentation of property details which do not relate to the land itself can be as wild as they wish, because they are not covered by the provisions of the Bill.
The Bill is not designed to make estate agents terrified to put words on paper or to open their mouths. It is designed essentially to catch those who misdescribe property in a reckless way. I suspect that, in practice, it will catch those who regularly do it recklessly and carelessly. Regular practitioners of wild and inaccurate statements will be caught under the Bill before very long. Of course, some will continue to sail close to the wind, and that is hardly surprising, but so long as the persistent offenders are caught, the interests of the consumer will be well served.
The Bill has been introduced in the interests of people making a major purchase such as a house, commercial property, office building or factory. If we compare the simplicity of the Bill with the enormous superstructure of primary and secondary legislation that has been built up around the Financial Services Act to govern the marketing of financial products, its merits become obvious. It has not been necessary to go into the enormous complexities which some people considered desirable in financial services legislation. We are achieving by the simple provisions of the Bill a similar result in respect of the marketing something of great value. I very much endorse the Bill and wish it a smooth passage through the House and the other place.
§ Miss Emma Nicholson (Torridge and Devon, West)
I am pleased to be able to support such an excellent Bill. It is timely and extremely relevant to my constituency and other rural areas.
I congratulate my hon. Friend the Member for Coventry, South-West (Mr. Butcher) and join other hon. Members in saying how sad we are that he has been ill. He was right to work on the Bill in the aftermath of having been the Minister with responsibility for consumer affairs. We are all glad that he is recovering rapidly and I understand with pleasure and happiness that he is due to return to the House next week.
I also congratulate my hon. Friend the Member for Wyre Forest (Mr. Coombs), who says that he is the foster father of this excellent legislation. I see from looking further down the Order Paper that he is also in loco parentis for the London City Ballet. Alas, I will have gone to Devon before he goes a pointe after what I hope will be a very light lunch that is correctly described on the menu, as are all the offerings from the many restaurants in the House of Commons.
I look forward to reading next Tuesday how my hon. Friend the Member for Wyre Forest pirouettes and arabesques round the important matter of the London City Ballet. Will he please incorporate my support, implicitly or explicitly, when he is talking about the excellence of London City Ballet? I was fortunate enough a few years ago to see the ballet perform in front of the royal family in Denmark. Its members are outstanding masters of excellence for the United Kingdom in the field of artistic endeavour. I shall be sorry to miss what I know will be a fine performance and I am sad, too, that I will not be in the audience to hear my hon. Friend speak on the subject.
I also join my hon. Friend the Member for Wyre Forest and others in congratulating the Consumers Association in particular—although other organisations have been mentioned—on its splendid continuing efforts. I have long supported and worked alongside the association, and this is another example of its work on behalf of the consumer. I saw Lady Wilcox, its chairman, last night and also last week and I am glad to support her work and that of her association and its director-general.
This Bill is about offering the consumer a fair deal and it is timely because of its introduction, in the best traditions, of fair dealing to descriptions of property, which are a cause of growing anxiety for consumers, who want accuracy of description of everything offered to them.
The Bill seeks to identify and strengthen among estate agents the fine marketing line between hyperbole and pessimism which was recently identified for me when I was seeking to move nearer my place of work, the House of Commons. I looked at a small property in south London, which the agent described to me as an elegant jewel of early Georgian architecture. Luckily I invested in a surveyor's report. The surveyor's blunt words to me were, "This house was gerry-built in the 18th century. I cannot think how it is still standing. If you buy it, be careful where you place a picture: the wall may fall down as the nail goes in." There was a delightful difference between hyperbole and pessimism—a difference well known in marketing terms to politicians here.
553 I know how strongly London Members must feel about the NALGO advertisement and I strongly support the view advanced by my hon. Friend the Member for Hendon, South (Mr. Marshall). I was even more concerned than he about the advertisement showing the baby said to have needed an incubator, but it could not have one because the hospital lacked one. Conservative Members will have seen in yesterday's papers the righteous indignation of the mother, who said that her baby had not needed an incubator and that she had been told that the photographic sessions were the prize for entering a photographic competition. She had not been told that her baby, the misleading statements about it and the hospital where it was born would be used wrongly to promote Labour party policies.
Fair dealing? I believe not. And the consumer, in the form of the electorate, will reward the Opposition in kind at the general election. Many votes were pocketed by the Opposition last night without fair dealing and under the influence of these massively inaccurate descriptions by NALGO.
§ Mr. Hugh Dykes (Harrow, East)
Are not those advertisements just part and parcel of Labour's cynical scaremongering about the health service in general, whereby it deliberately strikes fear into the hearts and minds of people?
§ Miss Nicholson
What I am saying, Madam Deputy Speaker, relates to a misdescription of a hospital—but I bow to the Chair's ruling——
§ Madam Deputy Speaker
Order. The intervention bore no relation to Third Reading, so I am asking the hon. Lady to return to Third Reading.
§ Miss Nicholson
Thank you, Madam Deputy Speaker; I will do so.
Under the leadership of the Consumers Association the individual is seeking ever more accurate descriptions right across the board, not just from estate agents. That is part of a growing trend supported and encouraged by the Government—providing accurate information about everything for consumers. I hope that we shall convert the Opposition to accurate description of most matters, although a complete conversion will be difficult.
Welsh slate was mentioned earlier, but the hon. Member who mentioned it has left the Chamber so I shall not have the chance to convert him to the idea that Devon slate would have been better in any case. Those of us who keep a close eye on accurate descriptions welcome the growing trend, promoted by the Government, of making such descriptions as accurate as possible. Last year, for instance, there was a case of contaminated animal feedstuff which highlighted the need for accurate labelling so that farmers knew what they were buying from their suppliers. It also highlighted the fact that under European legislation it is perfectly possible for a farmer to believe that he is buying maize pellets when he is actually being sold maize replacer pellets—meaning things in the pellets that the farmer cannot identify. At the other end of the line is the consumer whom the farmer seeks to serve, and the farmer in turn needs to have an accurate description of the product and of the animal feedstuff that he buys.
554 I was interested to learn about orange juice labelling, which the Ministry of Agriculture, Fisheries and Food recently investigated. It appears that even unsweetened juices can contain 5 per cent. sugar. For all those reasons it is critical that consumers have accurate information.
The phrase "chocolate flavour" can mean that no chocolate need ever have gone near the piece of merchandise labelled as such. These matters are all relevant to this Bill because they show that the Government are seeking all the time to strengthen and improve the accuracy of consumers' knowledge. That is why the Government are so right to support this Bill.
I am astonished that estate agents' descriptions have thus far escaped the provisions of the law and do not come under the Trade Descriptions Act 1968. We should all realise, however, that fair dealing does not form part of European legislation. I am especially aware of that because of the draft directive on computer software, on which a common position has been adopted which, on the face of it, is well in line with our Copyright, Design and Patents Act 1988; but as that Act works within the idea of fair dealing, the directive may have implications for our legislation that we would not want. I have conducted a lengthy correspondence and had meetings with Ministers in the Department of Trade and Industry on this subject.
It is critical, especially with property, that accuracy should be sought right down the line. The absolute minimum regulations which the Bill offers should be adopted without delay. On Second Reading, my hon. Friend the Minister said:Some people would advocate a more draconian and detailed regime".—[Official Report, 1 March 1991; Vol. 186, c. 1253.]Opposition Members have suggested that. The Minister has guaranteed that if the Bill proves insufficient, he and his colleagues will be prepared to consider further legislation.
I hope that we shall not have to go too far. I hope that best practice and professional codes of practice will prevail, as they do in other professions. It will be a great pity if we have to go into such fine detail that estate agents feel inhibited from trying to sell property. We rest on their excellent services and it is crucial that they work as far as possible to their own best practice as a profession.
Let us not think that there is anything odd about misdescription in this decade. Yesterday, I attended the Torrington May fair, which has been held since at least the 12th century and probably even earlier. The clerk of Torrington town council announces at three different points in the town that there is a free fair and that there will be free victuals. He ends by telling all those who are coming to sell victuals to the populace that their goods must be of proper quality and must be what they have described. Even in the 12th century, there was the problem of the over-enthusiastic seller and the willing buyer who may be sold a pup.
The Bill is especially important to the aim of accurate description because where one lives is not only the largest individual purchase that one will make in one's life—as an individual or perhaps as part of a company—but a vast psychological investment. It is unquantifiable. Ownership of a property—or a lease or contract if one rents a property—as Conservative Members know well, is utterly critical to human psychological health. That is why council house sales, which have been promoted by the Conservative party, have been so hugely successful. It is 555 our recognition that "me" and "mine" mean so much more than "us" and "ours" in terms of self-confidence alone that has made us go further in terms of property ownership than any other political party has done. It is to the credit of the Conservative party that this country now has the highest-ever property ownership and that we are moving on to consider the private rented property market for the same reasons.
The purchase of property is a huge psychological investment for an individual or for a family and it is the largest monetary investment that anyone will ever make. It is also an enormous investment in time. Purchasers who come to my constituency and to other parts of the south-west often have an idea of the life that they could lead in the country that may be unrealistic and which should not be fostered by over-enthusiastic national estate agents. I say at once that our local estate agents are fine examples of accuracy and excellence. Messrs. Gordon Vick, for example, was established several generations ago in Okehampton. If one looks in the window, one can see exactly what is on offer because properties are described accurately and carefully; the descriptions are not misleading.
Other national estate agents talk in their initial write ups of "panoramic views" of "water meadows". The water meadows may turn out to be the local sewage disposal works. Estate agents talk about "a rural setting", which may be very different from what the consumer expects. It is not always easy to match the consumer's expectations. I had an angry letter from someone who had just moved into a village in my constituency because the estate agent had described the property as "a rural idyll" with "exquisite green views". No sooner had the person moved in than the farmer, quite rightly, ploughed up the green field and planted rape. The letter was full of righteous indignation because the person now had a bright yellow view. I was asked what I, as the local Member of Parliament, would do about it. Everyone who lived in the village knew that the farmer would plough up the field. I do not know whether the Bill would enable me to attach any blame on the estate agent. I have described the case merely to show that the perception of people who come from the city about what they will acquire in the countryside is often far removed from reality.
In my constituency at present, strong points are made about access. We have the Okehamption bypass and, a little further north, the north Devon link road. It is important that when people buy a country place, whether large or small, and are told that they have easy access to national and international communications, they are not sent to see a house that is by the side of a motorway. Gardens full of rocks and stones in rural areas are sometimes described by national estate agents as "having a beautiful rockery".
One of our greatest problems at present is radon gas. Hon. Members may know that radon gas is now said to be a health hazard and that the Department of the Environment has invested considerable money in telling people which houses have radon gas beneath them. Our view is different from that held in the late 19th century, when radon gas in Bavaria was promoted to British Victorians as a health benefit. People were encouraged to go to Bavaria, to go down a mine that had natural 556 emissions of radon gas and to breath it in to enhance health. In today's world, radon gas is seen as a health hazard. A number of houses in my consituency are built on Dartmoor rock, which creates radon gas. One house is said to have the worst radon gas problem in the United Kingdom. It is the doctor's surgery in Chagford. I do not wish to introduce any indelicacy into the debate, but I must say that it is especially ironic that the room in which the radon gas is most prolific is the patients' wash room.
I have a question for my hon. Friend the Minister. Under the Bill, will estate agents be required to indentify whether a house has radon gas beneath it? That is a marketing point that any good estate agent—good in terms of wanting to sell the property—would ignore. However, it is a consumer purchasing point which any buyer would badly want to know. That is a serious point, but it shows how critical it is to build accuracy into the estate agents' code of practice. I am sorry that it had to come to legislation, even modest legislation. I should have preferred estate agents to recognise and honour a code of professional standards.
I end on a lighthearted note. I referred to a house in Okehampton which has exceptionally high emissions of radon gas. A family lives there and members of three generations of that family have lived to 100.
I support the Bill and I thank the Minister for his keen acceptance of it.
§ Mr. Patrick Ground (Feltham and Heston)
I accept that it is desirable to improve the accuracy of estate agents' descriptions, but I have some unease about elements of the Bill. If its prime motivation is to prevent people from wasting time and money viewing properties in which they would have no interest, it is a pity that there is no provision enabling courts to make compensation payments in such cases. There are many examples in criminal law where similar compensation can be given. That would be a good way of ensuring that people who suffer are given redress.
I am concerned that the Bill makes it a criminal offence for an estate agent to make an inaccurate statement even though it may be a misprint, typing error or arithmetical miscalculation. The aim of the Bill should be to prevent people from suffering as a result of misdescription, not to punish every human error that may be made. If compensation is not available in the criminal courts, perhaps we should consider providing for a civil remedy.
Many references have been made to the similarities between trades descriptions for the sale of goods and the sale of land. However, there are major differences between the sale of goods and the sale of land. A fundamental difference, which is not generally appreciated, is that, in the sale of property, there is no implied term of the suitability of that land for any use. The purchaser must take precautions to protect himself by relying on his own observations and the advice of his surveyor and his lawyer.
In some cases, the agent selling the property is not aware of its defects—even if they are defects of which the owner of the property perhaps ought to be aware. Under the Bill as drafted, an innocent agent may be caught, even though it is not reasonable to expect him to be aware of the facts.
I refer to a case in which I appeared at the Bar. A farm, which had been taken over by the Ministry of Defence during the war, was subsequently derequisitioned, 557 advertised and let to an enthusiastic young farmer, who took it on an agricultural tenancy and soon started to plough up the land. In the first few days, he hit a number of metallic objects, but this did not deter him. After a week, a great many of them had been discovered and he reported the matter to the police. The farm was rapidly shut down. The Ministry of Defence reappeared and hundreds of unexploded bombs were found within ploughing depth or just below it.
Understandably, the farmer thought that he had legal redress and he sued the landlord and the Ministry of Defence. He had no remedy, however, because there was no implied term that the land was suitable for agriculture. It is a fundamental basis of the law on the sale and leasing of property that such terms are not included. Parliament should perhaps consider that at some stage, but as long as that is the law, there are dangers of saddling an agent with liability for statements about property when he has no knowledge of its defects. In the case of the farm with unexploded bombs, it is difficult to see how the agent could have described the farm without committing an offence—of omission, at least—which would have fallen four square within the scope of the Bill.
The Bill states that an estate agent will not be caught if he shows that it was reasonable in all the circumstances for him to have relied on the information, having regard to the steps that he took, and those which might reasonably have been taken, for the purposes of verifying the information and to whether he had any reason to disbelieve the information. That gives the estate agent a difficult area of inquiry. With hindsight, people might be able to imagine all sorts of things that the estate agent in the case of the farm ought to have done to satisfy himself that the land had been satisfactorily cleared by the Ministry of Defence after its use as a bombing range during the war.
That is an example—perhaps an extreme example—of the hidden unknown risks in respect of which estate agents could be rendered liable under the Bill.
§ Mr. John Marshall
My hon. and learned Friend is referring to an interesting case. Can he tell the House whether, when the farm was put up for letting or sale, the estate agent knew that it had been a Ministry of Defence bombing range and whether he included that information in the particulars of sale?
§ Mr. Ground
I am afraid that it was a long time ago, and I would not wish to attempt to say exactly what particulars were given. I simply cannot remember. I am merely using the case to show that the Bill could create considerable problems for an agent letting land even if it had been given a certificate of clearance after its use as a bombing range.
§ Mr. French
In my hon. and learned Friend's example, what would he have expected the agent to include in his details that would have rendered the omission of the possibility of the bombs a material factor?
§ Mr. Ground
I simply do not know. That is a matter of speculation and I am not an estate agent, although I have done much work involving estate agents and surveyors. I fear that, if the agent in question had made any innocent representations about the quality of the land for farming without knowing of the existence of the unexploded bombs, he would have been caught by the Bill.
558 Under clause 1(5)(b), almost any statement made about the farming potential of the land would have been misleading. Clause 1(5)(b) states:a statement is misleading (although not false) if what a reasonable person may be expected to infer from it, or from any omission from it, is false.Almost anything that the agent said would have been false according to that provision. Therefore, there are real dangers which must be considered. I shall not oppose the Bill, but I merely draw attention to issues that need consideration. There is a danger of saddling an agent with a responsibility that is not borne by the owner of the property who will receive the full price for the sale or the full rent from the letting of the property.
§ Mr. Alan Williams
The main purport of the Bill is the descriptions that are given and what the estate agent says when selling, but it also provides the defence of due diligence. Anyone has the right to expect that a person selling something of such value would do that which it is diligent for a seller or a retailer—which is what an estate agent is—to do and the agent has a perfectly good defence as long as he has done all that is usually expected.
§ Mr. Ground
I accept what the right hon. Member for Swansea, West (Mr. Williams) says. If the agent knew that the land had been used as a bombing range during the war and he was a local agent, it is difficult to know what steps he would have been required to take under clause 2(2). What steps would reasonably have been expected to be taken to verify the information and to assess whether he had any reason to disbelieve that information? My example shows that there is a danger of saddling those marketing a property with a responsibility that is not borne by the owner of the property.
§ Mr. Anthony Coombs
I understand the principle behind what my hon. and learned Friend says, but in practice I do not think there will be a problem. Where there is a strict liability, the due diligence defence which relies on the idea of reasonableness—which will inevitably be considered from case to case—is the only way to deal with the problem. My hon. and learned Friend asked the rhetorical question, what steps should the agent have taken in the example that he gave? I should have thought that an agent marketing a property previously used by the Ministry of Defence as a bombing range might legitimately have inquired of the Ministry what certificate had been issued or what assurance could be given that the land was no longer active. Clearly, if the agent did not receive the reassurance that he required, he should mention that in his particulars; not to do so would possibly give a misleading impression as to the land's agricultural viability.
§ Mr. Ground
That is all very well, but what further steps should he have taken under clause 1 (5)(a) and (b)? Did the agent have any reason to disbelieve his information? That might be a difficult judgment to make in retrospect when hundreds of unexploded bombs are found. With hindsight, someone might suggest that further steps should have been taken. What my hon. Friend said does not entirely dispel the agent's worries.
559 The example that I have given is extreme, but there are many properties with defects which are not understood or known by the agent or the owner. Further thought should be given to the scope of clause 1(5)(b), about what is misleading as the result of an omission, and also about the "due diligence" defence, so that people who are inherently innocent are not saddled with a criminal offence or that, at least, if they are they have an adequate defence against it.
The requirements referred to in clause 1 about what will be the prescribed matters should be carefully considered in the light of differing liabilities imposed on the owners and on those marketing a property and the possible unfairness and injustices that might arise if matters are prescribed too widely, thus giving the property owners and those marketing the property wholly different responsibilities. I should like such issues to be further considered during the passage of the Bill.
I am also concerned about oral statements, especially the danger of relying on such statements made by another estate agent. It is well known that estate agents rely heavily on oral statements which they obtain from other agents about a property transaction, about prices and about the conditions of sale. Much valuation work is carried out on the basis of such oral information. A number of years ago, the courts discovered that oral statements were an unsound basis on which to value a property when they were not supported by the documents relating to the sale.
Such oral evidence should strictly be, and commonly is, disregarded. The only admissible documents are those recording the sale transaction and, if necessary, they can be obtained by means of subpoena. Often, when material is subpoenaed, a different picture emerges of the transaction than that which emerged from the estate agent's oral recommendations and second-hand information. To put oral statements about value within the ambit of criminal prosecutions is to make a serious extension of the criminal law.
Considerable difficulties could arise if it were necessary for an agent to rely on the defence that he had received oral information from another agent who was involved in the transaction and that he therefore had reasonable cause to believe it. There would be considerable difficulty in establishing that such conversations took place in the case of a criminal allegation. Further consideration should be given to whether we must extend misdescription to oral statements and whether purchasers might not be better advised to have statements in writing about matters that seriously affect the values of the property.
Although there has been intense deliberation about these matters, the Bill spent only seven minutes in Standing Committee. Not all the points that I have raised today have been fully considered. Although I welcome the general purpose of the Bill, I am slightly uneasy about certain aspects of it, and I hope that those points will be considered in future.
§ 12 noon
§ Mr. Hugh Dykes (Harrow, East)
I join other hon. Members in supporting this important and valuable Bill. Although I am no legal expert, I agree with many of the points made by my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) about the need for caution with regard to interpretation and judgment. I 560 imagine that those factors will be considered in specific court cases, although it would be nice to think that this legislation would be so effective that there would be no—or at least very few—such court cases. I am sure that the Government will consider many of the points made by my hon. and learned Friend.
I heartily congratulate the Bill's sponsor and I add my sympathy and commiseration to the sentiments expressed earlier about his absence today. We send him good wishes for a continued recovery. I thank the replacement sponsor and the Bill's other sponsors.
There is often jocularity when we consider estate agents. There is also always a violent argument about who has the lower reputation—politicians or estate agents. People who are hon. Members and estate agents presumably suffer doubly.
Presumably we should feel sympathetic towards estate agents because of the property recession. A rather cruel joke was circulating in the greater London area recently: "Why don't estate agents look out of their windows in the morning? Answer: because they would have nothing to do in the afternoon if they did." That shows just how slow and dull the property market has become.
The honourable and far-sighted members of the estate agents profession have tried to improve their operating conditions both through codes of conduct and by following legislation. They have tried to make the profession better and more reasonable, to use the word that has cropped up so often in this debate. However, there are still marvellous music hall jokes about estate agents and their fabulous descriptions of property ranging from "tantalisingly beguiling" to any other adjective one can think of.
I particularly liked the one about the young married couple who were looking round a house in the west country. Suddenly something was thrown through a window startling them. When they asked the agent what had happened, he said, "There you are, its only a stone's throw from the school." He should have been rewarded for his initiative and chutzpah.
However, these are serious underlying issues and they do not always respond to humour. I cannot resist recounting the apparently totally true story of the house hunter who, in despair, said to the estate agent, "But all the properties you have shown us today are far too expensive. Don't you have anything in the more modest price range that I first proposed?" Again, with enormous initiative and presence of mind, the agent said, rather witheringly, "Yes, I've got one on my books which would fit in with your rather modest price level. All I have to do is make sure that I move the wire-haired terrier by 25 ft. to accommodate you." On reflection, that story is perhaps so obscure as not to merit the humorous description that I was trying to apply to it.
In July 1988 an engineer in Petersfield in Hampshire discovered by chance, after taking the trouble to measure the dimensions properly, that the room measurements in the estate agent's details were different from the real size of the rooms. The agent was adding on the outer walls. There must be many such examples. Earlier this year, the property correspondent of the Evening Standard, Mira Bar-Hillel, who incidentally has supported my plans and those of other hon. Members for legislation prohibiting 561 demolition before obtaining planning permission—something towards which the Government are moving closer—referred to misleading descriptions. Copies of that article of 6 February are available in the Library.
In another case, a gentleman was purchasing a new estate house in a quiet cul-de-sac which was one of the principal features. However, the developer had applied for planning permission for an extension to the development for which the cul-de-sac was to be the main access road. There are many such examples.
My hon. and learned Friend the Member for Feltham and Heston wondered whether the Bill would be entirely technically successful. All distinguished barristers have a sense of doubt about such matters. It is difficult to legislate properly to cover all contingencies. My hon. and learned Friend also argued from the opposite side of the fence and said that we should provide a fair balance and give estate agents and property developers a chance to submit themselves to the legislation in respect of reasonable conditions and reasonable compensation arrangements.
No Bill can be perfect in that sense. It is perhaps a fault of our legislation that we sometimes have too much legislation, the drafting quality of which may be less than we expect. However, the Bill tidies up an area in which there are gaps. I hope that the Bill becomes an Act because I support it with great enthusiasm. I presume that the more dubious activities of the agents that do not have the full professional recognition of their trade association may be covered. Those agents often trawl an area, touting for business by knocking on doors of properties outside which there are many "for sale" signs.
Although it is not part of this Bill's remit, the public would welcome further tidying up of the procedure on "for sale" boards. The larger financial institutions that now control and own estate agents must be especially keen to have controls on the more dubious estate agents. Those agents are well-known for putting their feet in doors and scaring the vendor by telling him that the agent acting for him is no good and that the more dubious agents should be given the business instead. Those agents are prone to providing more exciting descriptions of property in order to get sales.
Estate agents sometimes fear that there are too many agents when there is not enough business to go round. Many have gone out of business recently and we sympathise with the enforced redundancies and hope that it is only a temporary phenomenon. However, in May 1988 The Times reported what was, in one sense, a delightful story. Two estate agents began fighting in the street over a property in Swindon. The slanging match turned into blows. One of the elements of the quarrel was the fact that one agent believed that the other did not have the necessary qualifications.
This Bill had a very short Committee stage, but it has widespread support. It is well constructed and balanced between all the competing considerations. Although I am not a lawyer, I do not share the anxieties expressed by my hon. and learned Friend the Member for Feltham and Heston. The Bill is excellent and I hope that it receives widespread support. I believe that my hon. Friend the Under-Secretary of State for Industry and Consumer Affairs will express the Government's support for the Bill and I support its Third Reading.
§ 12.9 pm
§ Mr. Alan Williams (Swansea, West)
May I seek to reassure the hon. Member for Harrow, East (Mr. Dykes), who has just made an interesting and amusing speech, that I followed the humorous anecdote that he described as "obscure". I have re-read the long title of the Bill, and there is no way in which the Kennel Club could be brought within it if the Bill were enacted.
I join other hon. Members in saying how sorry I am that the hon. Member for Coventry, South-West (Mr. Butcher), who originally promoted the Bill, cannot be here on Third Reading. I understand that he is due back shortly and I welcome his return. It would have been pleasant for him to be here for Third Reading, even if he missed the preceding stages.
I do not shed too many tears for estate agents and valuers, because the Government have already provided a generous compensation scheme. The hon. and learned Member for Feltham and Heston (Mr. Ground) spoke about the absence of a compensation scheme for purchasers, but the Government have just introduced an overwhelmingly generous compensation scheme for that sector of the market in their new proposals for replacing the poll tax—a scheme which will be an overwhelming bonanza for valuers. I understand that as much as £50,000 will be paid in fees to valuers to bring into force the proposals that the Secretary of State for the Environment has put before the House. I do not think that we need to worry about too many of them going bankrupt.
The Government are taking good care of estate agents and valuers, and we are trying to take care of the people who might be their victims. With due respect, I think that the hon. and learned Member for Feltham and Heston is in danger of making slightly heavy weather of a straightforward proposition, which is that it is ludicrous that one has more protection when buying a tube of toothpaste than when buying a £100,000 house. Under the Trade Descriptions Acts, one has protection for one but not for the other. That is all that we are trying to remedy. We are trying to ensure that that sector of retailing is brought into line with others.
One must bear in mind the fact that we are dealing with an area of the market in which the inducement to mislead is considerable, although I am sure that most agents resist it. With a selling fee of 1.5 or 2 per cent. they stand to make up to £2,000 on a house worth £100,000. The inducement to be over-generous when describing a property is considerable. With that sort of profit margin for estate agents, it is all the more reason to protect the person who is making what we have all described as the biggest purchase of his life. It seems absurd that a small purchase should have protection but that it should be denied on the biggest purchase of a lifetime.
On Second Reading, that absurdity was demonstrated by the fact that if I were to get in touch with someone and get them to install central heating in my house I would get a description of what it would do, its quality and its capacity, and I would be protected. However, if central heating had already been installed in the house when I bought it, and the estate agent had given me faulty information about it, I could take no action against the estate agent who made a false description, although I would have been able to take action against the installer if I had had it installed. That cannot be right and clearly has to be remedied.
563 I do not wish to speak at great length, because I want some time to be left for the debate on the next Bill on the Order Paper.
At an early stage in the presentation of the Bill, there was concern about whether solicitors as well as estate agents should be included when they were selling houses. That is important, and I am glad that it has been accepted. I know that the Law Society wanted to do something about the matter, but did not think that the Bill was the correct form and preferred to deal with the issue separately. However, advertising houses under the heading of a solicitor rather than an estate agent adds cachet and extra respectability and gives the public the feeling that they will have greater security when buying from someone who is a solicitor as well as selling houses.
That is why I was especially concerned about the example that I quoted in an intervention. Solicitors have to realise that they are getting into what the hon. and learned Member for Feltham and Heston described as a slightly risky area for their reputations. That can work the other way, because if solicitors end up getting a bad name as estate agents, it could damage their business as solicitors.
In that intervention, I quoted the example of an advertisement for a house that appeared on Thursday 20 April in the South Wales Evening Post, which said:REDUCED FOR QUICK SALE: … well presented …. The property has been well maintained".When I telephoned the firm of solicitors who are selling the property—David and Roy Thomas and Company—and asked whether the defects that had been identified in an earlier attempt to buy had been remedied, I was told that they had not been.
Since my intervention, I have been in touch with my informant, who told me that he had incurred the expense of going to solicitors, had lined up a building society, had gone through all the appropriate steps and was intending to buy the property. However, he found out that it required new windows and that there were major problems with the roof and the damp course among others. Therefore, he dropped out of the deal. Whether he incurred costs or not—I assume that he did—the people selling the property knew that the defects existed.
Weeks later, a firm—with the word "solicitors" in bold print on the top of the advertisement—is advertising the same property as well maintained. It may well be that they re-ran an old advertisement without bothering to modify it. Nevertheless, the public have a right to protection against that.
Many people—for example, first-time buyers—are at the margins of affordability when they buy a house. They scrape together every penny and go to the ceiling of what they can afford to purchase. If they waste money, by entering into negotiations via a solicitor and by employing a surveyor, only to have the deal fall through, it means that they will have incurred costs which will have to come out of the amount that they can afford for the next deal. That is why the hon. and learned Member for Feltham and Heston was correct to say that there should be provision for compensation. When a description such as "well maintained" leads people to employ a solicitor and a surveyor, but they subsequently find that the property is not well maintained, it is wrong that they should lose money as a result.
564 The hon. and learned Member for Feltham and Heston was concerned for the innocent estate agent, but we are merely bringing estate agents into line with other retailers. If an hon. Member buys a defective product from a shop in the high street, under consumer law, his initial claim is made via the retailer and not the manufacturer. The main claim is against the person who sells the product. That is the direct and easy route. It is where the initial guarantee lies. All that we are saying in the Bill is that the person who is retailing the house should operate on the same basis as people retailing other products. The sad fact is that one cannot have a replacement if the product is faulty. As the hon. and learned Member for Feltham and Heston said, one cannot have compensation, but he was wrong to feel that we are putting estate agents at a disadvantage compared with other people in the business of selling. Indeed, we are bringing them into line, but they are still on preferred terms, because they do not have to provide replacements, make good any loss or pay compensation for costs incurred as a result of their misdescriptions.
The hon. and learned Member quoted an example. If the estate agent selling the land on which the bombs were found had reason to suspect that the bombs were there, he had a duty at least to warn people of the use to which the land had previously been put. I suppose that the cautionary note to estate agents is that it is wise not to advertise property as bomb-free.
I give my full endorsement to this long overdue measure. It is modest in its objectives. It is clearly logical. It simply brings probably the sector of marketing which is most important to the individual into line with other sellers. It is right that that should happen. The public deserve that protection. They probably deserve the protections that apply to other products, but which this modest Bill does not provide.
§ Mr. John Marshall (Hendon, South)
I congratulate my hon. Friend the Member for Coventry, South-West (Mr. Butcher) on his good luck in the ballot and on his decision to choose this subject for his Bill. I join others who wished him a speedy return to the House. I am sure that his return will be speedier and happier once the Bill has received its Third Reading. I apologise to my hon. Friend the Minister for the fact that I cannot remain to hear his speech. Unfortunately, I must be in my constituency shortly.
The profession of estate agency includes some highly professional individuals, but also some unscrupulous, sheer, unadulterated rogues. It is a tragedy that, of course, the worst examples give the profession a bad name. It is as a result of the activities of a minority within the profession that estate agents are as highly regarded as Members of Parliament, purveyors of package holidays and those who sell second-hand motor cars.
The estate agency profession must examine some of the phrases that are used in some of its activities. When we think of estate agents, we think first of those beastly advertising boards that they put up outside the houses they wish to sell and then the way in which they describe those houses. Historically there have been estate agents such as the late Roy Brooks, whose descriptions of houses were so out-of-this-world that they gave one a sense of fun and a smile on a Sunday when reading them in The Sunday Times—or The Observer, if any hon. Member on this side of the House reads it.
§ Mr. Marshall
My hon. Friend the Member for Harrow, East (Mr. Dykes) confesses his sin. We shall forgive him.
When we read that a house is "a challenge to a handyman," we know that it is about to fall down. Even The House Magazine, one of the most respectable of papers, in only the last issue had a house described as a two-and-a-half-bed house. I assume that that means that it has two and a half bedrooms, not two and a half beds. I find the concept of half a bedroom amusing. Is it big enough for one's head but not for one's feet, or the other way round? Further on, a house is described as a house or office which sleeps seven. Does that mean that it has seven desks at which seven employees can fall asleep? Or does it mean that it has two bedrooms where four and three people could sleep? It is a vague description. All too frequently we see such unfortunate descriptions.
The profession includes a number of rogues and individuals who seem more interested in doing a sale than in maximising the return for the client. I always remember when I was selling a flat in the London borough of Ealing some years ago. Someone phoned me and asked why I had not accepted his offer. I said that it was simply because the estate agent had not put it to me. The estate agent had had two offers for the same amount and he decided which one to accept on my behalf. It so happened that the one that he accepted was made by someone with whom he had a contractural relationship in respect of other properties. Needless to say, when I heard that he had accepted that offer I told him that I accepted the other offer and that he could have the fun of tearing up the first contract and writing out another. Perhaps that taught him the lesson that he should not tangle with politicians who are determined to get their way sometimes.
§ Mr. Marshall
But I would be happy to tangle with you, Madam Deputy Speaker.
A problem with the estate agency profession which is not directly determined by the Bill is that there has been a growth in financial conglomerates. Estate agents are owned by building societies—I almost said owned by the Prudential, but we all know what happened in that saga—and merchant banks. Those estate agents are interested in selling not only properties but the insurance policies of the merchant bank. They want to do more than simply sell a home. What they seek to do may not always be in the interests of clients because they seek a second bonus. Someone may be persuaded to take that second: bonus when it may not be in his or her financial interests.
This has been a good-humoured and responsible debate. Everyone who has taken part has recognised the sincerity of the promoter and that of my hon. Friend the Member for Wyre Forest (Mr. Coombs), who has borne the responsibilities of a promoter without having his name on the Bill. The House owes him a deep debt of gratitude for his role. I also thank those who volunteered to serve on the Committee, even though it lasted only seven minutes. They spent longer going to the Committee than considering the Bill.
566 This has been a positive debate and I look forward to reading tomorrow that the Bill received an unopposed Third Reading because that is what it deserves.
§ Mr. Toby Jessel (Twickenham)
I warmly congratulate my hon. Friends the Members for Coventry, South-West (Mr. Butcher) and for Wyre Forest (Mr. Coombs) on introducing the Bill. It is important because the purchase or sale of a house is such a major event in the lives of our constituents and people throughout Britain. It is right that the law should enforce the same standards of honour and honesty in advertising by estate agents as apply to any other advertising. [Interruption.] I hope that my hon. Friend the Member for Wanstead and Woodford (Mr. Arbuthnot) will excuse me, but I find his conversation rather loud and distracting.
There will be some difficulties in the application of the legislation because there is so much habitual use of extravagant adjectives in house advertisements. I have just borrowed from the Library this week's edition of Country Life and turned to the long section at the beginning which has advertisements for houses. I see, for example, the following words: "delightful" house, "sympathetically restored". It may be delightful to some people, but not to others and it may be sympathetic to some, but not to others. The next one states, "An elegant, compact … house". It is certainly compact—it looks small from the picture—but it does not look elegant to me. Is that a misdescription? What would a court of law say if the description were challenged? The next one describes the house as "charming", but it does not look very charming to me. Then there is an advertisement that says, "in glorious rural setting", but from the picture the rural setting looks rather ugly. The next one states:A beautifully presented period country house.It does not look beautifully presented to me. It looks as if it has rather a lot of modern concrete around it. The next one states:A pretty farmhouse with splendid outbuildings in an idyllic rural setting.The outbuildings do not look splendid. On the facing page there is an advertisement stating:A most attractive Georgian farmhouse just outside a popular village.I do not know whether the village is popular or whether that could be argued in court if it were challenged. The farmhouse does, however, look most attractive. So the advertisements go on. There is copious use of such extravagant adjectives and one wonders how far they would give rise to difficulties in court if cases were brought for misleading advertisements. Nevertheless, in principle, it is right that estate agents must conform to the same honesty in advertising as any other advertiser.
I hope that the House will not mind if I show the need for the Bill with reference to an incident involving my house and the one next door. I live in my constituency close by Hampton Court in the house where Christopher Wren lived until his death in 1723. The neighbouring house, now called the Paper house, was formerly the residence of the head gardener of Hampton Court palace, but was joined to my house from 1820 to 1958, when they were split apart again and new leases began separately for each.
In the autumn of 1988, my long-standing neighbour sold Paper house correctly, honourably and properly.
567 Within two months, the new owner bumped up the price massively and put the house back on the market with a different estate agent who used false descriptions. I leave aside a few minor inaccuracies, such as the false statement that there was a right of private access to the River Thames. The advertisement said that Sir Christopher Wren lived in Paper house, which he never did, and that English Heritage had agreed to put up a blue plaque saying that he had lived there. English Heritage did not and never would do such a thing because it researches these matters carefully. The advertisement went on to say that King Charles II had a clandestine meeting with Nell Gwyn at Paper house, when there is not the slightest evidence that either he or she ever entered it. Indeed, anyone with the slightest knowledge of history would know that that claim was bunkum because not only was the affair completely overt, but as reigning monarch he would certainly not have stooped to visiting his gardener's house to carry out the affair. It was a wholly false description.
The house remains unsold two years later because the estate agent who advertised it so dishonestly was exposed in an article in The Daily Telegraph and the speculator, who got the estate agent to advertise so dishonestly, has burnt his fingers. The only misfortune is that the house remains unoccupied, which is not good for a listed building.
I hope and believe that the enactment of this useful Bill will stop this kind of dishonest activity by certain estate agents. It will compel them, by the sanction of law, to meet more closely the higher standards of the better estate agents so that this trade will, as a whole, become a credit to our country. I wish the Bill every success.
§ Mr. Nigel Griffiths (Edinburgh, South)
The House is pleased to hear that the hon. Member for Coventry, South-West (Mr. Butcher) has recovered from his illness and will be back next week to resume his usual place. I thank him for sponsoring the Bill, and for playing an important part in ensuring that it has been considered by the House and that the public will be protected.
I also pay tribute to the Consumers Association and the professional bodies involved and, unusually, to the Minister and the Government, who have uncharacteristically facilitated the measure—for reasons that I shall not go into, but on which people may care to speculate. There are also some unsung heroes: Mr. Bryan Davies, who steered the Estate Agents Act 1979 through the House, and my right hon. Friend the Member for Swansea, West (Mr. Williams), who, as the then Minister, did much to promote it and since demitting office has done much to ensure that the public are protected in this matter.
Sadly, because of the change of Government in 1979, some of the key measures to protect consumers, in the Estate Agents Act have never been applied. We have heard some useful contributions today, especially from the hon. Member for Wyre Forest (Mr. Coombs), who has done much work on the Bill in the absence of the hon. Member for Coventry, South-West. The contribution of the hon. Member for Gloucester (Mr. French) was much appreciated, as were those of the hon. Member for Torridge and Devon, West (Miss Nicholson), the hon. and learned Member for Feltham and Heston (Mr. Ground), 568 the hon. Members for Harrow, East (Mr. Dykes), for Hendon, South (Mr. Marshall) and for Twickenham (Mr. Jessel) and my right hon. Friend the Member for Swansea, West.
I listened with interest to the hon. Member for Torridge and Devon, West, especially to her eulogy on her local estate agents. I should be interested to hear from people who are buying and selling houses in Devon, or from anyone else, about any complaints against the agents acting for them, as we are monitoring the matter closely.
The fundamental question is: why do we need the Bill at all? More than a year ago, the Director General of Fair Trading reported to the Government two simple solutions that would not require a new Bill. He spelt out that all the Government had to do was to make the misdescription of property an undesirable practice under the Estate Agents Act and to extend the Trade Descriptions Act 1968 to cover property.
The sad truth is that for 12 years, the Government have done nothing to implement the sections of the Estate Agents Act that would ensure that all estate agents carried insurance cover for their clients' money and would be legally bound to carry bonding or insurance indemnity to compensate clients who had lodged money with them. The Government's failure to implement sections 16 and 17 has left the clients of certain estate agents with no proper protection.
For 12 years, the Government have refused to implement section 19 of the Act, which would give pre-contract deposits further protection. The 1979 Act provided that estate agents—who are responsible for the biggest and most important transaction in people's lives—should be fit and proper people in whom the public can place their trust.
Section 22 of that Act—again, not implemented—allows for minimum levels of competency. Without the protection of that section, the public have remained prey to the inexperienced, unqualified and unprofessional people who call themselves estate agents. Naturally, the three professional associations of estate agents set high professional standards, but without the implementation of section 22, there is no guarantee that those who call themselves estate agents are competent practitioners.
The failure over 12 years to implement comprehensive consumer protection measures has left the public almost defenceless to some of the outrageous practices that have been enumerated by hon. Members. For over a decade, Labour Members have been demanding that appropriate provisions of the Estate Agents Act be implemented, but for all that time the Government have refused. For over a decade, the victims of malpractice by estate agents have had their cases reported in the press, malpractices have been exposed by the Consumers Association and others and the Director General of Fair Trading has received a steady stream of complaints.
The director general takes action on breaches of the Act, but he says in his report:More frequently, however, the case reveals exploitation of loopholes in the Act.He spells out the areas where the Government have not taken effective action and they are plain for all to see. Misleading advertising is the first, and the public have had to wait 12 years for this measure to tackle an abuse that the Government should have stamped out a decade ago. The second is unfair contract terms, binding the client to one agent and forcing the client to pay commission even if the 569 house is sold privately. The third abuse is the manipulation of prices, including the disgraceful practice of persuading vendors to accept the lowest offer when the agent also gets commission for arranging the purchaser's mortgage.
The action that we have been demanding is straightforward. Subordinate legislation under the 1979 Act, delayed for so long, must cover misleading terms, the disclosure of personal interests, the bidding up of prices on the basis of false information, tie-in arrangements and forced services, information about prospective liabilities and a comprehensive list of trigger offences.
The Minister owes us an explanation of why the Government have dragged their feet over introducing the subordinate measures, which have only recently been brought before the House. I hope that he will outline the compensation that the Government intend should be available to victims of the misdescription of property. He must spell out when he expects all the legislation giving proper consumer protection to be in place, and give an assurance that the obstruction and delays that the Government have inflicted on such measures will be abandoned in favour of a real commitment to the house buyer and house seller.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh)
I wish at the outset to add my congratulations to those of other hon. Members to my hon. Friend the Member for Wyre Forest (Mr. Coombs) on the way in which he has steered the Bill through its various stages. Although the measure has not exactly had a rough passage, it has in many ways had an unusual one, having been taken over by my hon. Friend from its original promoter, even before Second Reading.
If that were not enough, the Bill also had changes made to its short and long titles and received a number of other amendments in Committee in what might have been record time, with the acquiescence of the hon. Member for Edinburgh, South (Mr. Griffiths), whom I congratulate on his contribution to the proceedings in Committee. In all of that, my hon. Friend has remained patient, considerate and competent and has steered the Bill along a true and unswerving course.
I join hon. Members in expressing concern about my hon. Friend the Member for Coventry, South-West (Mr. Butcher). We wish him a speedy recovery. I am sure that he will be fully back in harness before long.
In my two hon. Friends we have the father and, as has already been said today, the foster father of the Bill. Perhaps I could also claim a little credit as the midwife, because the Government have provided full drafting services throughout the Bill's passage. Contrary to what the Opposition spokesman implied on Second Reading, I have supported the Bill from the start and I was pleased that he changed his tune today. I have argued strongly in support of the Bill within and outside the Government in the short six months in which I have been Minister for Consumer Affairs. I shall not say whether I was present at its conception, but I am happy to reveal that I have provided a good deal of perinatal care. The result is a healthy Bill which will protect buyers of property without placing significant additional burdens on any of the parties involved. That is no mean achievement.
570 I should also like to thank those hon. Members who served, albeit for a short time, as members of the Standing Committee and who gave the Bill and the amendments to it such a smooth passage. I believe that the resulting Bill has benefited immensely from the Committee's work, and I should like to examine it in a little detail—particularly the changes that have been made since the Bill was last before the House.
I am grateful for the comprehensive survey that has been conducted by my hon. Friend the Member for Wyre Forest only this morning. One of the satisfying aspects of Friday morning business is that we can debate important Bills in a steady, almost leisurely, fashion, and that is entirely right. This morning we have even had time to give timely advice to NALGO about the need to avoid misdescriptions. As my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) said, all of us in public life, whether we are estate agents or not, have to tread a narrow path between hyperbole and pessimism. NALGO is guilty of both. I could not accuse estate agents of that.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. This may be a leisurely debate, but it still has to be in order. NALGO has little to do with property misdescription.
§ Mr. Leigh
I am grateful to my hon. Friends the Members for Harrow, East (Mr. Dykes), for Hendon, South (Mr. Marshall) and for Twickenham (Mr. Jessel) for their examples of lyrical descriptions that have been given by estate agents. It may be significant that all three of my hon. Friends are from the former county of Middlesex. Is there something in the air of Middlesex that makes estate agents wax lyrical? I am especially grateful to my hon. Friend the Member for Twickenham for his description of his neighbour's house. I know that his house is very fine and I am sure that his accurate description of his neighbour's house will ensure that it soon finds a buyer.
I said on Second Reading that I had considerable sympathy with the desire expressed by most hon. Members present that the coverage of the Bill should be extended. I welcome back to our debate the right hon. Member for Swansea, West (Mr. Williams), who made some pertinent remarks on Second Reading. I hope that he is satisfied with our achievements since Second Reading. Incidentally, although we have had a long debate this morning, the right hon. Gentleman, in his short and timely speech, summed it up in one sentence when he asked why we should be more protected when we buy a tube of toothpaste than when we buy a house. When we buy a tube of toothpaste we are protected by the Trade Descriptions Act 1968.
The Bill strikes the right balance following the rather limited scope of the original version—I accept the strictures of the hon. Members for Great Grimsby (Mr. Mitchell) and for Swansea, West on Second Reading. That limited Bill applied only to estate agents selling residential property and there seemed to be a suggestion by some that it should cover absolutely everyone who might ever be involved in property sales. The Bill now extends to the sale of commercial property as well as residential property. It 571 applies to builders and developers, as well as to estate agents. It also applies to solicitors when they are acting as estate agents. Perhaps I could look at each of these in turn.
As I said on Second Reading, if we accept the principle that descriptions of property should not be false or misleading, it is somewhat illogical to draw a distinction that depends on the purpose for which the property is being offered; in other words, whether it is for domestic or commercial use. I am, of course, aware of the point that has been made by commercial property agents: that it is traditional for the purchaser not to rely very much on the description of the property supplied by the vendor. I must admit that that surprised me, but perhaps I am a mere innocent in these matters. I also understand that it is customary for the potential purchaser to have the property inspected before committing himself to buying it.
I do not accept, however, that for those reasons commercial property should be excluded from the Bill. It is not the case that all purchasers of commercial property are sophisticated in the ways of the system. If the purchaser of commercial property is someone starting up in business for the first time, there is no reason to suppose that he should be any more sophisticated than an ordinary house buyer. Indeed, he may never have bought any property before and for him to buy premises that have been misdescribed will not get his business off to a very good start.
Furthermore, I consider that argument to be intrinsically flawed. It seems to me that it is tantamount to admitting that misdescription of property is common in the commericial field; that it is accepted; and that it is up to the purchaser to take precautions against it. I do not believe that that is a tenable argument, even if it may be true in certain circumstances. I have no wish to make life difficult for those selling commercial property, but, as the Minister with responsibility for consumer affairs, I do not see why they should be exempt from telling the truth or from taking reasonable steps to ensure that the truth is told. The Bill does not preclude disclaimers or qualifying statements and it contains a due diligence defence which is in fairly standard form.
I do not believe that it will be too difficult or expensive for a commercial property agent to comply with the Bill. If it means that the description of the property has to be curtailed somewhat or that caveats are included, so be it. If it is customary for the potential buyer to carry out his own inspection anyway, I cannot see that such changes will make a great deal of difference. Of course, it is also customary for the purchaser of residential property to arrange for a survey before committing himself to the purchase; nevertheless, the purchaser can still suffer detriment.
Nor will commercial property sellers be at any disadvantage compared with others in the market. The Bill now provides equal treatment for the main players and I really do not believe that those involved in the sale of commercial property have anything to fear from it.
It was clear from what was said on Second Reading that there was considerable sympathy with the idea that builders of new houses should be included in the scope of the Bill. My hon. Friend the Member for Wyre Forest acted entirely honourably as the promoter of the Bill and 572 as a property developer in saying that they should be included in the scope of the Bill. The House will have noted that and will be grateful to my hon. Friend.
I said that I thought that the arguments were persuasive, so I am pleased that we have found a way of amending the Bill to include not only builders of new houses, but builders of commercial property and builders who sell property that has been renovated and sales of developed land by property developers.
I am sure that that is right. To some degree, builders and property developers are in competition with estate agents and it seems only fair that they should be subject to the same rules when describing the property that they are selling. Furthermore, from the consumer's point of view, it would be confusing and unsatisfactory if there were to be protection from misdescription when buying through an estate agent, but not when buying direct from a builder. That would be equivalent to the car manufacturer being allowed to misdescribe his goods with impunity, while the used car dealer was caught by the Trade Descriptions Act.
The third main change to the coverage of the Bill that was made in Committee was its extension to solicitors. I recall that on Second Reading there was considerable support for that, but I said that I remained open minded about it. Meanwhile, my Department and my hon. Friend the Member for Wyre Forest have been consulting the Law Societies on that point. It seems that they have no objections in principle to the Bill applying to solicitors when they are doing estate agency work. They have, however, expressed some misgivings about whether the Bill would leave solicitors vulnerable to prosecution if they were inadvertently to misdescribe property when carrying out their legal work, as opposed to their property-selling work. But following the amendments made in Committee, there is now an exclusion from the main offence for misdescriptions made in the course of providing conveyancing services, which are defined in wide terms in the Bill. I am therefore confident that solicitors—and, indeed, authorised conveyancers—have nothing to worry about on that score.
We therefore now have a Bill which is considerably wider in its scope than the one to which the House gave a Second Reading on 1 March. A significant sector of the property market that would not otherwise have been covered has been brought within its control, but there will still be a few transactions that will not be caught and perhaps I should say something about them, in case any hon. Members are concerned that something may be slipping through the net.
The Bill now covers commercial property sales as well as residential property. It covers builders and developers, as well as estate agents, and solicitors when they are acting as estate agents. The Bill does not apply to private vendors, however, and I do not believe that it should. Some may argue that this leaves scope for a dishonest vendor to collude with an unscrupulous estate agent so as to get a better price for the property by misrepresenting it. Estate agents, however, may argue that they will be culpable for misdescriptions made by a private vendor, while the vendor cannot be brought to book.
I accept that those possibilities are feasible, although I do not believe that they represent a serious enough danger to warrant a departure from the well-established convention that consumer protection legislation of this sort does not apply to private individuals. Collusion between a vendor and an estate agent would cause a 573 criminal offence to be committed in any case and in the second instance the Bill provides a defence for the innocent estate agent. I therefore consider that these problems are more theoretical than practical and are unlikely to prove a real difficulty.
When we were discussing the scope of the Bill on Second Reading, there was sympathy for the idea that it should extend to everyone engaged in the business of marketing property. Banks and building societies were specifically mentioned. On the face of it, that seems a logical suggestion, but I believe that direct marketing of property by banks and building societies rarely happens in practice. I am convinced that the great majority of these sales go through estate agents and will therefore be caught anyway. That does not warrant trying to stretch and strain this Bill—as a former promoter of private Members' Bills, I am aware of the dangers of stretching them—to cover what is almost certainly a theoretical section of the market. As it is, the Bill is relatively short and simple—even after my hon. Friend's efforts and his success in extending it—and it covers almost the whole market. To try to make it go further would result in a significantly more complex piece of legislation with little additional benefit for anyone.
I shall deal now with offences and penalties and perhaps refer to some of the other aspects of the Bill that have given rise to comment, on Second Reading and since, or may still be the subjects of query or debate. My hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) asked why there was no compensation provision in the Bill. That is not usual, as he knows as a barrister in the criminal law, but compensation may be claimed under powers of the criminal courts legislation, or by means of civil action or misrepresentation.
Offences arid penalties are always a potential source of controversy in criminal law Bills. The fact that there has not been noticeable controversy in this case is a hopeful sign that we have got it about right. I believe that we have. I think that the provisions that the Bill makes for the nature of the offences, by whom they are committed, and the maximum penalties on conviction are reasonable and appropriate.
The possible alternative penalty of imprisonment is not to be available and I believe, on balance, that that is right. Because of the safeguards that are normally present in the property purchase system, someone will not often go through with the purchase of a property that has been seriously misdescribed—whether it be residential or commercial property—without the misdescription being detected. But that is not the only mischief at which the Bill is aimed. Potential purchasers of property can be seriously inconvenienced. The right hon. Member for Swansea, West made the point that large sums of money can be involved and that people can find themselves on the margins of their financial viability. People can incur serious financial loss even though they stop short of buying misdescribed property. But even in the worst case, when a purchaser buys a property that has been misdescribed because the fact has not come to light until afterwards, the maximum penalty of an unlimited fine on indictment is appropriate and should provide a sufficient deterrent against misdescription.
My hon. Friend the Member for Walthamstow (Mr. Summerson), in a significant speech on Second Reading, showed concern about the possible effect of the provision in the Bill that an omission from a statement could render it misleading. I am grateful to my hon. Friend the Member 574 for Gloucester (Mr. French) for his examples which so clearly exemplified a complex legal and practical problem. Both I and my hon. Friend the Member for Wyre Forest attempted to reassure my hon. Friend the Member for Walthamstow on that point and I hope that we have now succeeded.
It may be worth saying again that the Bill does not require anyone to make any specific statement. What it does require is that if a specific statement is made, it must not be misleading. I was grateful for the comments about tiles, sea views and about houses falling over cliffs and for many of the other examples with which my hon. Friends the Members for Gloucester and for Torridge and Devon, West amused and enlightened the House. It seems common sense to me that the omission from a statement of something relevant can give the recipient the wrong impression and can thus be misleading. The Bill is not novel or unexpected in that respect.
The Bill would not mean that the vendor or the estate agent would have to reveal everything that they know about the property. A definite statement must be made in the first place before any omission from it can be misleading. If the person marketing the property is unsure about the accuracy or completeness of a description, he can always play safe and leave it out altogether, as several hon. Members have pointed out today.
§ Dr. John Cunningham (Copeland)
On a point of order, Mr. Deputy Speaker. I apologise to the Minister for raising the point of order in the middle of his speech. It would have been preferable to be able to do it otherwise. I assure the Minister and you, Mr. Deputy Speaker, that it is not a deliberate attempt to disrupt his speech.
Yesterday, in exchanges in the Chamber, recorded in column 428 of the Official Report, between the Prime Minister and my right hon. Friend the Leader of the Opposition, references were made to the views of the British Medical Association, to the publications of the British Medical Association and to other matters. It is the case that what the Prime Minister said yesterday in the Chamber is not what is recorded in Hansard. The British Medical Association is extremely annoyed about the change in the facts and has approached us to have the matter raised here in the House of Commons. That is why I intervened in the Minister's speech.
Yesterday, in those exchanges, the Prime Minister, in referring to the position of the BMA, said—and I am quoting from what he actually said:And yet now say"—that is, the BMA—and I quote from their own magazine, 'Suddenly targets don't seem so bad after all.'Hansard, in column 428, records the Prime Minister as saying, when talking of the BMA,and, only last year, it opposed the GP contracts, yet, in GP Magazine, it now says: 'Suddenly, targets don't seem so bad after all'."—[Official Report, 2 May 1991; Vol. 190, c. 428.]The first point is that, yet again, the Prime Minister was obviously badly briefed or confused—or both. GP Magazine is not a British Medical Association publication; it is a completely independent publication which has nothing at all to do with the BMA. The BMA's publications are called the British Medical Journal, as is pretty widely known except, apparently, by 10 Downing street, and the BMA News Review. The Prime Minister not 575 only confused the publications, but totally misrepresented the views of the BMA. The BMA remains opposed in principle to contracts. It has repeatedly—
§ Dr. Cunningham
I am coming to the point of order, Mr. Deputy Speaker. It is important and I accept that it is somewhat complicated. The Prime Minister misrepresented the views of the British Medical Association. I have checked the recording and there is no doubt as to what happened. The facts have been changed in Hansard. That is a point of order for you, Mr. Deputy Speaker. The record has been changed. Column 428 of Hansard does not report what the Prime Minister said. The record has been changed to cover up the Prime Minister's confusion and his misrepresentation of the views of the British Medical Association.
I put it to you, Mr. Deputy Speaker, that this is a serious matter and it is unacceptable that statements, particularly those by a Prime Minister, made in the Chamber should be doctored and the record changed in material fact. It is not a question of brushing up the syntax or changing the language: the facts have been changed.
I ask you, Mr. Deputy Speaker, to inquire into the matter and have the record put straight.
§ Mr. Deputy Speaker
The matter for me is that the hon. Gentleman alleges that what is attributed to the Prime Minister in column 428 of Hansard is different from what he actually said. I accept that it is a serious matter. I shall arrange for inquiries to be made and ensure that Mr. Speaker is informed of the hon. Gentleman's point of order. No doubt those on the Treasury Bench will inform the Prime Minister.
§ Mr. William Cash (Stafford)
Further to that point of order, Mr. Deputy Speaker. Would not it be in order for us to know whether prior notice of the point of order was given to all parties concerned so that they or someone on their behalf could consider the question? It seems to me that the issue is being bounced along, probably to cover up the disgraceful behaviour of the Opposition in regard to their own advertisments on a similar subject.
§ Mr. Deputy Speaker
Order. The hon. Gentleman has asked whether prior notice was given, presumably to the Prime Minister's office. I cannot answer that.
§ Dr. Cunningham
I can confirm that the office of the Leader of the Opposition has notified No. 10 Downing street of our intention to raise this matter as a point of order. The abusive allegations of the hon. Member for Stafford (Mr. Cash) do not arise.
§ Mr. Jessel
Further to that point of order, Mr. Deputy Speaker. Is not the House entitled to know when the Prime Minister's office was informed? If it were informed——
§ Mr. Dennis Skinner (Bolsover)
Further to that point of order, Mr. Deputy Speaker. There have been incidents of this kind before, as you know, Mr. Deputy Speaker. Since 1976, when radio broadcasting began, similar incidents 576 have been considered by Hansard and by Mr. Speaker. The House is now televised so there are two separate methods of ensuring that what is said in the House is correctly transcribed in Hansard. I suggest that you, Mr. Deputy Speaker, pass this matter on to Mr. Speaker so that hearings can take place.
§ Mr. Deputy Speaker
Those involved in inquiring into the allegations will do exactly what the hon. Gentleman says. I do not question their competence to do so. Perhaps we should return to the debate on the Property Misdescriptions Bill.
§ Mr. Alan Williams
Further to that point of order, Mr. Deputy Speaker. I am grateful to you, Mr. Deputy Speaker. You have done exactly what you have to and you can do no more at this point. It is now a matter of checking with the Official Report and tape recordings. May we take it that on Tuesday, at the start of business, Mr. Speaker will make a statement informing the House of the exact outcome of the inquiries?
§ Mr. Deputy Speaker
It would not be wise for me to add to my ruling and it would be very unwise for us to start a debate on the matter. We should get back to the Property Misdescriptions Bill.
§ Mr. Jessel
Further to the point of order, Mr. Deputy Speaker. The fact that the speech of the Under-Secretary of State for Industry and Consumer Affairs was interrupted by the hon. Member for Copeland (Dr. Cunningham) to make a point of order suggests that the debate in the House was being suddenly jumped and that the Government were not being put in a position to reply to the matter.
§ Mr. Deputy Speaker
Order. I have made it clear that I am not prepared to accept a debate on the matter.
§ Dr. Cunningham
Further to that point of order, Mr. Deputy Speaker. The Conservatives appear to be gluttons for punishment. The issue would not have arisen in the first place if the Prime Minister and his office, knowing that they intended to change the record, had had the courtesy to write to my right hon. Friend the Leader of the Opposition to tell him.
§ Mr. Deputy Speaker
Order. If I allow the hon. Member for Copeland (Dr. Cunningham) to persist, I shall have to allow the hon. Member for Twickenham (Mr. Jessel) to do so. I do not think that we should try to debate the matter now.
§ Mr. Leigh
As you will recall, Mr. Deputy Speaker, I was referring to omissions under the Bill which we have been discussing since 9.30 am.
The purpose of the Bill is not to force people to give comprehensive warts-and-all descriptions, as has been reported in the press, but simply to prohibit misdescriptions, either by commission or omission. I do not believe that estate agents or others in the business of marketing property need have any fears about the operation of this aspect of the Bill.
In case there are any remaining worries about the characteristics of property that may be prescribed in due course by my right hon. Friend the Secretary of State, let me assure the House again that we shall consult widely on the list before making any order. There is no likelihood, therefore, that the final order will materialise out of the 577 blue. It is worth making the point that the Bill will not have any practical effect until the order has been made, so there will not be any period of uncertainty during which people will be unsure about what the Bill covers and what it does not. I have said that the list of particulars suggested by the Director General of Fair Trading in his March 1990 report on estate agency is likely to be the starting point, but that list is by no means set in concrete. We will be consulting widely with interested organisations and they will have a chance to comment before any final decisions are made.
I have been a little surprised that some people appear to have reservations about the effect of the due diligence defence in clause 2. That issue was covered especially by my hon. and learned Friend the Member for Feltham and Heston. Perhaps I could remind the House what the clause says. First, it says that in proceedings against a person for an offence of making a false or misleading statement about property, it shall be a defence for him to show that he took all reasonable steps and exercised all due diligence to avoid committing the offence.
The clause goes on to make provision for a particular case and says that a person shall not be entitled to rely on this defence, by reason of his reliance on information given by another, unless he shows that it was reasonable in all the circumstances for him to have relied on that information, having regard in particular to the steps that he took and those that might reasonably have been taken for the purpose of verifying the information and also having regard to whether he had any reason to disbelieve the information.
That provision is similar to, or identical to, the defence provided for in other consumer protection legislation. It is identical in all material respects to the defence in the Consumer Protection Act 1987 and it is similar to the one in the Trade Descriptions Act 1968. Hon. Members may have noted that it is liberally seasoned with the words "reasonable" or "reasonably". In other words, no one is expected to do anything that is unreasonable in the circumstances. It would not be right for me to attempt to give specific examples of cases where I thought that the defence would or would not be successfully made out, but the courts are reasonable and they are used to considering what is reasonable in all the circumstances. Moreover, trading standards officers are also reasonable and they have long experience of dealing with the courts on the question of due diligence.
My hon. and learned Friend the Member for Feltham and Heston queried whether an estate agent could rely on the due diligence defence when he relied on information given to him by another estate agent. It would be a question of fact whether the defence applied in those circumstances. It would have to be reasonable in all the circumstances for him to have relied on the information: regard would have to be taken of the steps that he took and might reasonably have taken to verify the information and whether he had any reason to disbelieve the information.
That type of defence is familiar territory in other types of business and I see no reason why it should cause practical difficulties in the property trade. I suspect that this, as with most of the previous points that have mentioned, is simply an example of fear of the unknown. That is perhaps understandable in an industry which has not previously been subject to the sort of controls that have been commonplace in other sectors for many years. I am confident, however, that those fears are groundless.
578 The Opposition spokesman made several points about the orders and I shall deal with them. I refer to the other draft legislation that is relevant to estate agents and is currently before Parliament in case there is any confusion about that legislation vis-à-vis the Bill. Since Second Reading, I have laid two orders under the Estate Agents Act 1979. The Estate Agents (Specified Offences) (No. 2) Order 1991 will broaden the power of the Director General of Fair Trading to prohibit unfit persons from carrying out estate agency work. Prohibitions can be made only if certain circumstances have arisen.
At present, one of the circumstances in which the director general can take action is where a person has been convicted of an offence involving fraud, dishonesty or violence, or an offence under the Estate Agents Act 1979. The new draft order specifies a number of other offences under such statutes as the Financial Services Act 1986, the Consumer Credit Act 1974, the Trade Descriptions Act 1968 and the Company Directors Disqualification Act 1986. If a person has been convicted of one of the specified offences and appears unfit to be an estate agent, the director general will be able to issue a prohibition order against that person. It is my intention that, if this Bill reaches the statute book—I have every confidence that it will—I will make a further order, adding the appropriate offences under the Bill to the list of specified offences for the purposes of the director general's powers.
§ Mr. Nigel Griffiths
Does not the Minister believe that he is closing the door after the horse has bolted? The property boom of the 1980s left many people vulnerable to the kind of malpractices that the Minister is now specifying. Why was not action taken then?
§ Mr. Leigh
I am responsible for consumer affairs and I have taken action under the various Estate Agents Acts. The hon. Gentleman knows that it takes time to obtain a legislative slot in Parliament for a wide variety of desirable consumer affairs measures. When we debate consumer affairs on Fridays or at Question Time, the hon. Gentleman always ask why we did not act before. He knows full well that these matters have been debated for many years. Some of the complex matters that we debate need to be revised under a general revision of the Trade Descriptions Act 1968. I cannot simply snap my fingers and promise the hon. Gentleman a revision of that legislation in the next five minutes. It must take its place in the legislative queue. However, we will be legislating on those matters. No one can deny that since I have taken over my duties I have proceeded as quickly as I possibly can to introduce protection for the consumer with regard to estate agency.
I have also laid the Estate Agents (Undesirable Practices) (No. 2) Order, which includes a number of provisions that would also extend the circumstances in which the director general can ban a person from engaging in estate agency, or can warn a person to desist from a specified undesirable practice. The Government had originally intended to include among the undesirable practices that of misdescribing property. However, it would clearly not be appropriate to make an order on misdescription of property while this Bill is before the House. When the Bill is on the statute book, it is my intention to consider the matter again. The draft orders will be considered by one of the House's Standing Committees next week.
579 Since Second Reading, I have also made the Estate Agents (Provision of Information) Regulations 1991. Those regulations require that information on the services being offered to prospective purchasers be given; that this information, as well as information about remuneration, be given at a time before the client becomes committed to the estate agent; and that the information be given in writing. The regulations also provide for the form in which certain terms used by estate agents in connection with their entitlement to remuneration are to be explained and for the prominence and legibility of those explanations.
As I have already said, the orders and the Bill will go a long way towards protecting consumers. I congratulate my hon. Friend the Member for Wyre Forest on the comprehensive and skilful way in which he has steered the Bill through Parliament. It is a very good Bill and it has minimal implications for compliance costs. It will deal with the dubious end of the market and ultimately it will be one of the best things to happen to estate agency for many years. I am sure that we all want to commend it to the House.
§ Question put and agreed to.
§ Bill accordingly read the Third time, and passed.