§ 7.53 p.m.
§ Lord Whitty
My Lords, I beg to move that this Bill be now read a second time. The Bill is an important part of the Government's aim of ensuring that everyone has the opportunity and choice of a decent home. It complements the ambitious strategy set out in our April 2000 housing Green Paper and in December's follow-up statement, entitled Quality and Choice.. A decent home for all.
The Bill will help millions of householders in England and Wales by improving the home-buying and home-selling process and by strengthening the protection available to homeless people. It is a Bill that provides benefits: for people who are selling or buying their homes; for people who are seeking help when they have become homeless or who are threatened with homelessness; for people in housing need who are applying for social housing; and for existing tenants seeking to move within the social housing sector.
Before I describe in detail the provisions of Part 1, let me first explain the problem that needs to be addressed. Currently, we have one of the most inefficient systems for buying and selling houses in the world. That is not just rhetoric or an opinion; it is borne out by our research. For every three transactions that proceed successfully, one fails. That means that up to half a million transactions each year are aborted. That carries with it huge costs in wasted fees paid to solicitors, surveyors and lenders. We estimate the cost of aborted transactions at about £350 million a year. If one includes the cost of delayed transactions, the figure is higher. Those figures do not begin to reflect the frustration and misery suffered by those who are affected.
We do not intend to allow that to continue. Apart from the personal distress that is caused to many, an inefficient housing market is bad for the economy and for our society. Our system is in desperate need of reform.
The Bill will require anyone in England and Wales who is marketing a residential property to assemble a seller's pack before putting the property on the market. The information in the seller's pack is important to the home-buying decision. However, under the present process it is not available to buyers until after they have made an offer and had it accepted by the seller. That is one of the main reasons why so many transactions fail. A staggering 28 per cent of transactions fail after an offer has been accepted. Many more transactions have to be renegotiated as relevant information—for example, about a house's 346 condition—becomes available later in the process. Under our proposals, that information will be provided up-front.
Seller's packs will include home condition reports which will provide important information on homes for sale and they will cover the general condition of the property and take account of its age, character and location, how energy efficient it is, and any major repairs or other matters requiring attention.
The reports will help sellers to make decisions about how much to ask for their home and give them the option of having any necessary work done before they market the property. The reports will also help buyers to make an offer that reflects the true condition of the property and to identify potential future repair or improvement work for which they should budget.
By providing information up-front. the whole process will become more transparent, providing earlier certainty for sellers and buyers and reducing the risk of problems that lead to failed transactions and abortive costs. That is only part of the story. Other non-legislative measures which we are pursuing to improve the home-buying and home-selling process will complement that approach. Those measures include encouraging better preparation by buyers, for example, in obtaining "in principle" mortgage offers before making an offer on a property; encouraging faster mortgage offers and local authority searches; promoting better use of information technology; and encouraging lenders and insurers to develop products that help and protect buyers and sellers.
All of those measures are based on the most thorough research ever undertaken into the housing market in England and Wales, and follow a comprehensive public consultation in 1998 and a successful pilot scheme in Bristol last year. Some noble Lords may have received briefing from professional and representative bodies such as the Law Society and the Council of Mortgage Lenders. We take seriously the concerns expressed by such bodies. I am prepared to explain in detail how our policies address any criticisms that concern noble Lords. Let us remember that we are asking people to change the way in which they have been doing things for many years, so it is not surprising that there is some nervousness in the professions. Their jobs will change as a result of the reforms.
However, the real test of the Bill is how it affects not professionals but consumers. I believe that it will benefit consumers. Crucially, the Consumers' Association also believes that. There are many conveyancers, lenders and estate agents who are embracing the new approach enthusiastically and see it, rightly, as an opportunity for them, not a threat.
The proposals in Part 1 are based on extensive public consultation, research and piloting of the scheme. We will continue to work with the key professionals and consumers' representatives in developing the detail of our proposals, especially the home condition report and the supporting certification scheme, so that seller's packs can be introduced in 2003.
347 The proposals in Part 2 will extend the homelessness safety net, promote a more strategic approach by local authorities in preventing and managing homelessness and assist local authorities in offering greater choice to those seeking social housing. Our proposals are designed to protect the vulnerable, promote choice, create sustainable communities and tackle social exclusion.
Each year local authorities and other agencies expend huge efforts helping people who have become homeless through no fault of their own. One of the most important changes we want to bring about through the Homes Bill is to focus a greater amount of effort on the prevention of homelessness. Our proposals will require local authorities to adopt a more strategic approach to tackling the causes of homelessness and preventing its recurrence.
The Bill will require local authorities to review homelessness in their area at least every five years and put in place a multi-agency strategy for preventing and dealing with homelessness. That will require close consultation and co-operation between local authorities, registered social landlords and other voluntary and statutory agencies. They will be encouraged to work together to assess the extent and causes of homelessness in their areas, to identify the most effective solutions and to ensure that adequate advice, accommodation and support is available for those who need it.
Within local authorities, the Bill will encourage a more co-ordinated approach by requiring housing and social services departments to take the homelessness strategy into account when carrying out their responsibilities. We are also strengthening the existing safety net by removing certain measures imposed by the Housing Act 1996. These include the two-year limit on local authorities' duty to provide accommodation for unintentionally homeless households and the restrictions on authorities' use of their own housing to provide short-term accommodation for homeless people. Those rules are unnecessary and can limit an authority's ability to find sustainable housing solutions for homeless people.
The Homes Bill will ensure that local authorities offer everyone who is unintentionally homeless and in priority need somewhere suitable to live until they find a long-term home. Our proposals will give existing social tenants and new applicants improved rights and will facilitate greater choice for applicants seeking social housing that meets their and their families' needs.
Extension of choice to everyone is central to this Government's policy. I was very pleased last week when my right honourable friend the Minister for Housing and Planning announced that 27 local authorities would be funded to explore a variety of choice-based letting schemes over the next two years. Those pilots demonstrate real progress by local authorities and registered social landlords in working together in extending choice to existing tenants and new applicants for social housing.
348 Our proposals for protecting homeless people go beyond the Homes Bill. We are proposing-—by order under the 1996 Act—to extend the categories of homeless households who have a priority need for temporary accommodation. Evidence demonstrates that a high proportion of homeless people who end up sleeping rough come from institutionalised backgrounds. We are adding to the priority need groups such people who are homeless and vulnerable as a result of having spent time in local authority care, in prison or in the Armed Forces. There are three further groups we are adding to the priority need groups. Those are homeless young people aged 16 and 17; those aged 18 to 21 who have previously been in care; and people considered vulnerable as a result of fleeing domestic or other violence including racial violence. I hope your Lordships will agree that we must ensure a proper statutory safety net for vulnerable people, to protect them and to help them back to a settled way of life.
This Bill, taken together with the broader economic and social policies, the substantial increase in capital investment in housing and the wider policies set out in the Government's housing Green Paper, will help us to ensure that everyone has the opportunity of a decent home. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Lord Whitty.)
§ 8.4 p.m.
§ The Earl of Caithness
My Lords, we are all grateful to the Minister for his clear explanation of the Bill. Let me at this stage declare my interest as an estate agent in central London. I helped to found the firm in 1995. I have been a surveyor since I started in the land agency profession aged about 21.
I want to concentrate on Part I of the Bill, though if it proceeds I shall want to say more on the rest of it. Much of Part I is to be welcomed. Most responsible estate agents are already undertaking most of what Part I offers. If we are instructed to sell a house., we warn the solicitor that a sale is proposed and ask that the papers be prepared. That process is naturally speeding up with the advance of technology and does not need a Bill to encourage it.
I want to mention one comment the Minister made about the pilot scheme in Bristol. Everybody I have spoken to about that scheme said it was the most useless waste of time and a complete disaster; that it was an unreliable pilot scheme and should not be used for primary legislation.
Unquestionably this Bill will change the dynamics of house buying. I do not object. I welcome the change. I agree that house buying takes far too long and I shall look at some of those points in a minute. But what the Bill will also do, which is a key matter into which very little research has been done, is alter the relationship between a client and the agent. At the moment if the noble Lord, Lord Whitty, instructs me to sell his house for him, I believe what he tells me about the house. I will not be able to do that in the future. I cannot share that trust with him because I will be criminally liable 349 for anything that he tells me. Therefore everything he says will have to be confirmed in writing and signed by him. That will change our relationship enormously.
We must remember that when people move house they are facing perhaps the most expensive transaction they will undertake in their lifetime. For them to be confronted by an agent who says, "I am sorry, I cannot accept your word; you must put it in writing", will not get that relationship off to a good start.
What are the aims of the Bill? The Minister did not say that it was aimed to stop gazumping or "gazundering". That is one of the Government's policies. But this Bill cannot; in fact it will positively encourage gazumping because so many extra costs are being put on the vendor and he will be duty-bound to seek the best price that he can in order to recover some of those costs.
The Bill will help to speed up the process of buying and selling. I agree with the Minister in that regard. But that is happening anyway and it will not speed it up to the extent that he anticipates. Also, on that point, the Minister has possibly selected some of the wrong targets. There is nothing in the Bill about solicitors. Although agents may be to blame for some failed transactions, most of the failed transactions with which I have dealt are entirely the result of solicitors not producing documents on time, not answering letters on time and not fulfilling their duties. There is a wide discrepancy. Some solicitors are quite brilliant at conveyancing and others who take on the work to get the fees are not terribly good.
The Minister for Housing and Planning in another place said on 8th January,The Bill will help to ensure that most of the information needed by both parties—buyers and sellers—is on the table when marketing begins".—[Official Report, Commons, 8/1/01; col. 710.]That is a misleading statement. It is not true and I shall turn to the reason for that in a moment. So that cannot be a reason for introducing this Bill. Nor do I think it will stop transactions failing—a point the Minister stressed when he introduced the Bill. Transactions fail for a variety of reasons and having the information available at the beginning of the transaction will not do much to dampen that statistic down.
Let me turn to the reason for my objection to part of Part I; that is, the work of the surveyors and the home buyer's pack—the seller's information pack. I object to it for a number of reasons. The surveyor cannot serve both the vendor and the purchaser. He acts for either one party or the other. To change that vital role and ask the surveyor to perform an independent role between the vendor and the purchaser when the vendor is paying the bill will place the surveyor in an impossible situation.
I differ with the Government to a large extent in relation to the home condition report. The noble Lord, Lord Whitty, said that it was a good document and told us most of what we needed to know when buying a house. That was also a point made by the Minister for Housing and Planning in another place. The 350 document does not do that. That is the one thing that the home condition report does not do; it does not tell us where the major expenditure lies.
I hope that all noble Lords have seen a copy of the house condition report. It states that the services to the property, including electricity, plumbing, heating, gas and drainage will be subject to a visual inspection only and no tests will be applied. That is where cost is involved; that is, in the drains. There is an endless amount of settlement in houses in London. That would not be picked up in a home condition report. The report goes on to state that the home inspector will not be able to report in compliance with regulations relating to supply or operation of any services as that can only be ascertained by the application of tests. Similarly, the home inspector will not be able to confirm compliance with building or planning regulations.
A purchaser who accepts a home condition report could then fall foul of planning laws or building regulations and would incur considerable extra expense. He has been led to believe that this report will answer his questions. It will not. It is totally misleading to say that it will. The potential major costs of liabilities in houses are not included in a home condition report.
The home condition report is a simplistic little document. The surveyor has to give a report on the condition of various parts of the house, such as the painting or the look of the radiators. Such a report will be numbered from one to four. However, much will depend on the comment of the surveyor, which varies from very good to—I assure your Lordships—very poor indeed. The home condition report is a major defect in the Government's proposals. On that point I fundamentally disagree with my profession, the Royal Institution of Chartered Surveyors (RICS).
Let us consider the workload of a surveyor. It will probably take about half a day's work for a surveyor to carry out a home condition report. In a month of, say, 20 working days he will have done 40 surveys. Let us assume, quite reasonably, that he might expect five calls per survey from potential purchasers. He will receive 200 telephone calls, which he will need to return. He is not paid for that work. That is only one month's work. I am told that a survey will be valid for six months. The total number of calls with which he will be involved and which may require further research will be over 1,000. How will a surveyor possibly remember all those surveys without having to spend a huge amount of time looking them up to check what he said?
If a survey is valid for six months—I should be grateful for the Minister's confirmation of that—that is a disaster for a purchaser. The one thing that changes rapidly is the structure of one's home. If a survey is carried out in October and we have a good gale in November and a few tiles come off, the surveyor's report is wrong; it is out of date. Settlement due to global warming can happen at any time. Yet a purchaser and a lender are encouraged to rely on the home condition report. All that will lead to a mass of insurance claims, which will push up costs.
351 I turn to the qualification test for surveyors. I have spoken about that to a number of my friends in the building profession. They are horrified by the simplistic nature of the test they have been asked to undertake which, in their opinion, devalues the profession. I agree. I have been a surveyor all my working life. I could produce a home condition report, but I would not advise a single one of your Lordships, as a purchaser, to rely on it. When I bought my own property I obtained my own survey and am glad I did so. It revealed items which would be noticed by a professional surveyor looking in depth, but not by a surveyor producing a home condition report. That will not speed up the process. It will lead only to further antagonism.
Can the Minister tell us whether or not the surveyor will value properties? At present it is usual for that to be done by the lender's surveyor. If a vendor's surveyor is asked to do a valuation of a property, there will be a complete distortion of the housing market. That is the agent's job; to take into account the supply and demand, among other things, which the building surveyor will not do.
Another crucial point is the independence of the surveyor. Far too many agencies have their own in-house surveyors who will not be at arm's-length from the vendor or purchaser. It will be those surveyors who will recommend a particular mortgage company. The whole process will revolve around that estate agency getting fees from the mortgage company and the life endowment policy. That is an area which needs to be considered. What happens if the property does not sell? The Government are forcing a vendor to pay a surveyor upfront. If the property does not sell, that person will be discontented by what has happened and by the extra cost to which he has been put. Those are my main concerns on that subject. The rest of the proposals I could live with. They need tinkering, but we shall come to that if the Bill progresses.
I turn briefly to other problems in the same area. What about the problem of low-cost houses? I know that it is not true of central London, but in many parts of the country houses have been sold for as little as £2,500 or £5,000. Yet a building surveyor's charges will be around £500. That is a huge amount for somebody in those sort of properties to have to pay upfront. If we were to exempt the lower end of the market, would we not be classing this country into two tiers of citizens; those who can abide by what the Government want and those who are unable to do so? I wonder whether the Minister has considered the hybridity potential of bringing in two tiers and exempting the lower tier.
I move to the other end of the scale; that is, high-cost housing. Some of our clients have specifically asked us not to advertise a property or to prepare details but to sell it quietly. That may be for all sorts of reasons, perhaps concerning family or security. In future, we shall riot be able to do that. Their position will be significantly jeopardised. Before we can market the property we must have a seller's pack, which will be available to anybody. We shall not be able to market those properties in the way we have successfully done to date.
352 What about people with low or negative equity? The proposal for having to first pay for a costly home buyer's survey will lead only to more evictions because people will be unable to pay. The Bill also requires there to be no pre-sale information. That is a key part of the housing market at present. Let us suppose that the noble Lord, Lord Whitty, instructs me to sell his house. Let us also suppose that I know the very person who wants to buy it, but he is speaking to somebody else about another property. I would he unable to go to him and say, "I know that your ideal property, the one that you really wanted, will be coming onto the market in a month's time, or a couple of months' time." If I did that, I would be a criminal.
I believe that it is wrong to make agents responsible for what is legitimately the work of solicitors. The agent will become a criminal for not having the right title deeds. That is very much for the solicitor. I cannot ring up a mortgage company and ask for the title deeds to properties for sale. I instruct a solicitor to do that on behalf of the vendor. To put the agent in that sort of position would cause all sorts of trouble in future.
Finally, the idea that private sellers will be criminalised when they get things wrong introduces a new aspect of law. Many people believe that we agents are expensive and cannot market properties in the best way; that they can do so better themselves. I fully respect that; they are entitled to do that. However, under the Bill, people who do that will become criminals if they have not complied with every part of the law. It is no good saying that it will be up to the weights and measures departments of the local councils to be reasonable because we know how unreasonable they can be.
Part 1 of the Bill contains many potentially good measures which can help a long drawn-out process which is frustrating to many people. However, I believe that the Government are wrong in respect of the home buyer's survey. They are wrong in other areas and in many respects are targeting the wrong people. I advise every vendor to continue to get their own survey in order to protect their own interests. I strongly recommend that everyone uses solicitors for the legal work. As so many house sales are part of chains a solicitor with particular knowledge is required to hold that together and deal with the matter in the best way. None of those proposals will speed up the process as we would want.
I know that the noble Lord, Lord Whitty, is a reasonable man and I hope that he will take the Minister for Housing to one side and say, "Look, what we have got is a totally unworkable proposition. It will result in a lot of extra costs and a complete seizure of the housing market. Why do we not rethink it through and not take the Bill through a further stage in this Parliament or in another Parliament?".
§ 8.22 p.m.
§ Baroness Maddock
My Lords, as March began I wondered whether I would ever have the opportunity to make a speech on the Homes Bill. I had understood that the Government were anxious to get the Bill on to 353 the statute book. Indeed, they timetabled it through the other place after Christmas, but still it did not arrive in this House. I remember that in 1996 I heard the present Minister for Housing, Planning and Construction, the right honourable Nick Raynsford, promising that repealing the worst aspects of the Housing Act 1996 would be an absolute priority for any incoming Labour Government. Here we are, four years later. What is worse is that as we have no idea what will happen in the next few weeks we do not know whether the Bill will go any further.
In another place and more widely, we on these Benches have supported the review of the homelessness legislation in Part 2. We have also given our support to the intention in Part 1 to improve the speed of transactions in buying and selling homes. However, as I believe that there is a more pressing need for Part 2 than there is for Part 1, I intend to deal first with that part.
Part 2 had its beginnings in the 1970s when the nation was appalled by the picture of homelessness portrayed in the film "Cathy Come Home". In 1977, the late Liberal MP Stephen Ross, piloted a Private Member's Bill through Parliament which became the Housing (Homeless Persons) Act 1977.
In 1996, I had the good fortune—perhaps I should say misfortune—to try to defend and prevent legislation undoing the intentions of that Bill. Therefore, I particularly welcome the repeal of some of the worst aspects of the 1996 Act with regard to homelessness. I also welcome the extension of the categories who will be helped by the Bill to young, vulnerable people and to those fleeing violence. In 1996, I spoke about those fleeing domestic violence and I am pleased that the Bill recognises the fact that anyone fleeing any form of violence should receive top priority help.
I know that noble friends on these Benches feel much the same as me and also welcome the provisions which will give more flexibility to local authorities to determine their lettings policies. They will be able to have policies which best suit their local circumstances. We also welcome the requirement for local authorities to draw up a homelessness strategy. We as Liberal Democrats have long thought that a good idea and would rather go further. That is demonstrated in Liverpool where Liberal Democrats have a successful strategic housing partnership which is set up across all the housing partners in the city to plan policies across all tenures.
As regards homelessness duties, we welcome the fact that once again local authorities will be required to find permanent accommodation for homeless families. The 1996 Act took away that responsibility, resulting in increases in the number in bed and breakfast accommodation. That has been condemned on all sides of the House. At that time, not only were local authorities unable to look after people for more than two years, they were not allowed to use their own properties to do that.
354 We recognise that the private sector may still be used to help people in housing need. That is why we are particularly disappointed that the Bill contains nothing about the regulation of houses in multiple occupation. I know the arguments relating to that and I am sure that the Minister will tell us that provisions are on their way, but four years is a long time.
The Minister will know that many issues continue to concern us on these Benches. Given that we know not what will happen to the Bill after today, I shall go into those issues in more detail than I would normally at Second Reading. Some concerns are shared by organisations in the legal profession which give advice to homeless people, those who work in providing housing and those who work with homeless people. However, in another place the Government promised that they would examine some of the concerns that I shall raise. I shall deal with the last first.
It is vital that the statutory framework is always clear and robust so that it does not prevent local authorities denying people access to social housing in justifiable circumstances. In another place, the Minister stated that he did not believe that priority in allocation should be removed, for example, from people who were likely to be subject to a suspended possession order. I know that he did not intend that to happen and I hope that the Minister will confirm that, despite the difficulties, the Government will bring forward an amendment to address that issue.
The second point which the Minister in another place promised to examine was the requirement for a local authority to notify homeless applicants of their right to review and the time limit in which they can have that review. Those requirements were included in the 1996 Act and we believe that they should appear on the face of this Bill.
Finally in this part I want to deal with the power of the county court in relation to appeals on homelessness decisions. My honourable friend the Member of Parliament for Bath, Don Foster, tabled an amendment in another place which would direct a local authority to accommodate a homeless applicant pending decisions of appeal. At present, that power is in the hands of the High Court and it requires applicants to take out judicial review proceedings. Solicitors who deal with that will confirm that it almost never happens as it is greatly discouraged. Therefore, I look forward to hearing the Minister's response.
We shall want to return to other issues if the Bill moves to later stages. One such issue is the definition of suitability to be a tenant. The issues are controversial but we know that housing benefit does not always run smoothly and that tenants may incur a small amount of arrears through no fault of their own. Yet under this legislation the local authority can use that as an excuse to say that the tenant is not suitable. It is possible to change the legislation to do away with that.
We welcome the fact that under the Bill one particular category is to be helped: non-priority homeless people. That category has had some help 355 from local authorities. and that is to be increased under the Bill. But Shelter has recently produced a report which looks specifically at what has happened to single people. It is quite clear that although many authorities make an assessment of the needs of people, the wording of the legislation, which states that they have a duty to make such inquiries as are necessary, is not the same as a requirement to carry out an assessment of need. It would not be too difficult for the Government to change the legislation.
Another area of concern is the 21-day limit for people who appeal against decisions about their homelessness. As to this and the other point that I have made, these Benches, Shelter and the Law Society believe that a period of 21 days is not enough for vulnerable people who find it difficult to deal with bureaucracy.
Just as there is a problem of accommodation during appeals, there is also a problem during reviews, and it would be helpful if local authorities had a duty in this respect. One of the other matters about which I felt strongly when I was a Member of another place was the time during which people had to say "yes" or "no" to any accommodation that they might be offered by a local authority. At present, I believe that the limit is 24 hours, but it should be a minimum of three days. If people say "no" that is their last chance and they will not get anything else. I believe that it is unreasonable to expect them to make that decision in that time.
One other issue which has been raised by my honourable friend Don Foster is the role of registered social landlords in helping local authorities with their duties under the Act. This is a fairly contentious matter. Registered social landlords like their independence and do not want local authorities to be able to control 100 per cent of their lettings. But we know that that can be a problem as there are more and more large-scale voluntary transfers of local authority housing to registered social landlords. It is important to ensure that there is a balanced approach which is not to the disadvantage of vulnerable homeless people, which is what this legislation is all about. Many registered social landlords are regulated by the Housing Corporation, and in that respect I look forward to the contribution of the noble Baroness, Lady Dean of Thornton-le-Fylde.
I believe that there is a wide consensus among a number of bodies—the National Housing Federation, Shelter, the Chartered Institute of Housing, the Local Government Association and the Association for London Government—that Part 2 of the Bill should be enacted. We welcome the new powers and duties to assist homeless families and vulnerable people, but the Bill does not address how local authorities will help people in areas where social housing is under immense pressure at the moment, particularly in London and the South East where house prices are so high that for many they are unaffordable. Tonight I do not have time to go into how we would like to see that matter tackled.
I turn very briefly to Part 1: the seller's pack. My noble friends Lord Goodhart and Lord Phillips of Sudbury will speak to this matter in much more detail. 356 I make three observations. First, we believe that the pack will not achieve the original aim of the Government; namely, to deal with gazumping. Secondly, as has already been said, the pilot project undertaken is not sufficient to base legislation on it. Thirdly, the requirement for the seller's pack to contain a seller's survey, which is backed up by criminal sanctions for non-compliance, is totally unjustified. Practitioners on all sides believe that that will be very detrimental to house-buying. One positive aspect of the seller's pack that I applaud—I refer to my own particular interest—is the requirement for inclusion of the energy efficiency of the building.
I apologise for speaking at some length but, given the uncertainty of the future stages of the Bill, we on these Benches want to record matters at Second Reading that normally would he dealt with in much more detail in Committee. I sincerely hope that the parts of this Bill which deal with improving the provision for homeless people reach the statute book before a general election, but I do not feel at all the same about Part 1 which is concerned with the seller's pack.
§ 8.36 p.m.
§ The Earl of Listowel
My Lords, I join in the last wish of the noble Baroness, Lady Maddock, that Part 2 reaches the statute book before the next election. The sooner it helps people, the better. I declare an interest as a commercial and domestic landlord. Today more homeless households than at any time since the late 1970s are in temporary accommodation. The number in temporary accommodation at the end of December 2000 was in excess of 70,000, over 40,000 of whom were located in London. Most of those households comprise families. The number of homeless households in bed and breakfast in London alone is over 7,000, and that number has doubled in the past two years.
Homelessness harms children. Children suffer greater sleeplessness and disease and their education is often less successful, partly because they are moved from school to school. Their diet is often poorer. Your Lordships may remember my description of a visit last year to a family living in Newham. That family with four children under the age of 11 had been in bed and breakfast for 12 months and had lived on snacks and one takeaway meal per day.
Homelessness harms adults. Homeless adults are 20 times more likely to contract tuberculosis. Homelessness overwhelms, or reduces, the resources of the National Health Service. Homeless people find it hard to keep a GP and, therefore, are far more likely to use the accident and emergency services of hospitals.
When young people run away from home, leave local authority care incapable of looking after themselves, leave prison with nowhere to go, or are pushed out of the family home prematurely, they are vulnerable. Most young people do not leave home until about the age of 22. Boredom, hunger and peer pressure may encourage those young people into 357 opportunistic crime if they are on the streets. Similar factors, and possibly their own family history, may attract them to drugs. Occasionally, they may be drawn into the sex trade. Once on the streets, young persons can find the ethos much to their taste. I remember two young women who looked back fondly on their filthy, cold squat because of the camaraderie they had enjoyed there. The street can provide a kind of family to those whose experience of family life has been lacking.
It makes sense to minimise homelessness, with all its adverse effects, by anticipating it. That is why I applaud the introduction of a duty on local authorities to produce a quinquennial homelessness strategy. For the past three years, Leeds has operated a similar strategy for its homeless young people. Joe Kent is the project co-ordinator. His plan examines the key issues. It makes clear the action to be taken to address each issue, and it indicates where that action will join with that of other initiatives, such as the authority's supported housing strategy.
The key areas are the assessment of housing needs; the supply of information; the impact of the use of heroin and crack cocaine; the special needs of black and ethnic minorities; the particular problems faced by young homosexuals; ensuring that young people living in bedsits in the most deprived areas and young people with mild learning difficulties do not lose access to services; preventing young people becoming homeless through school programmes and the development of a family mediation service; determining what support for young people is and which young people need it; and how to provide support over the weekends, the evening and in the lodgings of young people.
A homeless strategy would also include consultation with users. In Leeds the consultation revealed that one care leaver suffered repeated break-ins to his ground floor flat and would have felt more secure on a second floor or higher; that young people placed in tower blocks faced theft from other tenants within the building and that a security camera on the main door provided inadequate protection; that people seen moving in were targeted for theft; and that the caretaker in one block "keeps things better".
A homelessness strategy would encourage local authorities to prevent homelessness and support the homeless into having and keeping homes. That is so much to be welcomed. At this point I should like to warmly welcome the extension of priority housing need to homeless 16 and 17 year-olds, young people leaving care and other people leaving institutions.
I turn to the problem of benefit delays and the consequences for allocations of lettings. That is also dealt with in Part 2 of the Bill. In some local authorities, Islington and Hackney, to name two of the worst, there are frequently delays of months in processing housing benefit payments of any complexity. The Government are taking steps to address the current scandalous situation. Past attempts have failed. It seems possible that these delays will continue. Benefit delays bring small charities, such as the Single Homelessness Project, 358 which has high exposure in failing boroughs, close to bankruptcy. They also cause great anxiety to many families in rental accommodation and can result in eviction. A person can find himself evicted for rent arrears. Those arrears can be either solely or, to a great extent, due to the local authority. Yet that person can be denied housing by a local authority because he has had rent arrears.
It is for that reason that we need to look carefully at the measures regarding suspension of allocations in the Bill and consider whether they unfairly penalise those without blame. We should also consider carefully the force of the new measures to provide advice and support to non-priority homeless people; for example, single people and childless couples. The quality and level of advice and assistance provided by councils is extremely variable and, in some cases, very poor. People are turned away without being interviewed. Assessments of vulnerability are inconsistent and, on occasion, contravene statutory guidance. Applicants generally receive no written notice of the authority's decision, nor are they informed of their rights to a review of that decision. I hope that in Committee we can amend the Bill to strengthen the duty of advice and support to non-priority homeless people.
As the noble Baroness, Lady Maddock, pointed out, the Bill omits the Government's manifesto pledge to license houses in multiple occupation. Such a licence would help to ensure that the lavatories and bathrooms were in a decent state and other matters which are very important to families living in that kind of accommodation—families with young children. The housing Minister has given a reasonable explanation for the delay but I hope we can now press on to that important legislation.
The second part of the Bill will help more of our citizens to feel part of a community, to be rooted and connected. I sincerely believe that the Government are, in bringing forward the Bill, reducing the extent of needless human suffering. The sooner people can benefit, the better. I hope that the second part of the Bill may enjoy the good will of all your Lordships.
§ 8.46 p.m.
§ Baroness Dean of Thornton-le-Fylde
My Lords, I first declare an interest. I am chairman of the Housing Corporation, the government-funded quango that provides investment and regulates what is called "the social housing sector".
The Bill has been welcomed across all opinions. In meeting people on housing estates or organisations of various partners we work with. I have yet to find someone who feels that they do not want Part 2 of the Bill. There is a great deal of support for it. As the noble Baroness, Lady Maddock, said, it is true that people would like amendments and changes in some areas. But the general summing-up to the Government is, "Well done. This is a Bill which is needed. We should like to see it enacted as quickly as possible".
Part 2 of the Bill deals with homelessness, its prevention and the allocation of accommodation, which includes the key issue of choice. The Bill 359 essentially puts the responsibility on local authorities to ensure that they have housing strategies and that they are carried through. I would be the first to accept that the housing organisations that we fund and regulate must have a key role in that. Approximately 1.5 million homes in Britain are owned by registered social landlords. Therefore, they are an important key factor within communities. It is to be hoped that the provisions in the Bill, when it becomes law, will be delivered. It is important that we work with not only local authorities but other parties. Many authorities are doing that. We welcome the requirement to have a homelessness strategy. Local authorities will have to set up such a strategy. Some already do. But it is important that we have one across the board.
The noble Baroness, Lady Maddock, said that the contentious issue was letting policy. She is absolutely right. That might be one of the few important areas where there is a slight difference between us. I cannot think of many others in social housing. I take the opportunity to put on the record how we are approaching this matter. We are not directly covered by the Bill. If one looks at last year's housing Green Paper and the restructuring of our organisation and our different approach to regulation and investment, they are all part of the whole. Homelessness is an essential part of that whole.
We are currently revising our 1997 Performance Standards and Regulatory Guidance. We give that guide to the housing associations that we regulate. We require them to meet those standards. We have already published a draft regulatory code which has been welcomed in the sector and by other stakeholders. We are also currently working on our Statutory Housing Management Guidance. That will be out for consultation in mid May.
The coming together of those developments will feed positively into what the Government are seeking and what the bodies supporting the Bill are seeking in Part 2. An essential requirement is not only a homelessness strategy but a prevention of homelessness strategy. We shall be working with local authorities to implement those strategies through the lettings policies of housing associations and how they sign up to the local policies with local authorities.
We shall also be looking at ways in which we can strengthen our regulatory requirements. For a housing association to be registered with the Housing Corporation it has to accept and apply, and confirm that it applies—we audit that housing associations apply—our regulatory requirements. Hand in hand with that, we are looking at our current funding conditions. 'We do not need to be convinced that the Bill is essential. We know that it is from our practical experience on the ground. When members of the Greater London Assembly—I notice that the noble Baroness, Lady Hamwee, is in her place—decided that housing would be their number one issue, we were delighted and asked whether we could join them in support of that work. We are working hard at the moment to develop that partnership. I am pleased to say that in the past few weeks we have funded the purchase of 740 previously privately rented flats to be 360 brought into the social housing sector in London. We want to do more of that because housing in London and the South East is a serious issue.
Homelessness creates so much human misery that we cannot afford not to do anything about it. That is why the Bill is so helpful. We need to ensure through our funding and regulatory processes that housing associations not only work with local authorities and the other agencies but that they are delivering what is required.
Noble Lords have mentioned the various groups of people who fall into the homeless category. From my personal experience with the Armed Forces Pay Review Body, I know that, traditionally, former Armed Forces personnel have been one of those groups. This afternoon I attended—I hesitate to call it a seminar a get-together of 50 teenage mothers or prospective mothers. None was over 22 and many of them—I did not ask their age—looked very young. The Teenage Pregnancy Unit, which came out of the Social Exclusion Unit report, is working with us. It was delighted to hear about the Bill. Teenage mothers are a vulnerable group who need support. They need not only housing but supported housing. Of course, not only the mothers are vulnerable but the babies too. The whole area of homelessness affects so many in our population. It is essential that we do something about it.
Part 2 of the Bill also covers housing allocations. Choice was one of the core elements of the housing Green Paper. We welcome it. We have no impediment at the moment in applying the current regulatory framework that will implement choice. But we will be strengthening that with guidance. In parallel with that, nearly 300 housing associations have wanted to be involved in pilot schemes on choice. I have heard the arguments from some housing associations. They ask how on earth one can have choice when they do not have enough houses in an area to go round. There are in fact some interesting developments that one can apply. The William Sutton Trust is working on this issue. The Leicester Housing Association, in conjunction with Harborough District Council, has been working on a scheme for the past year. It is modelled on the Delft scheme in the Netherlands. Although it is in a highly populated area, choice has worked. It can work. The William Sutton Trust and other housing association partners are working on choice-based allocations in high demand areas. We shall be monitoring it and we are helping to fund it.
In the North West, Ashiana, a black minority ethnic housing association—it used to be called North British—is having discussions with Bolton City Council and seven other housing associations to put the whole of its 28,000 stock into a system where the tenants have choice. A good deal is going on and we welcome it.
We feel that the Bill is well balanced. We feel that Part 2 is welcome and that we have to respond to it. Working with social landlords, we shall be tightening our regulations and we shall be looking at where we invest. That investment will go increasingly to areas 361 that have these strategies and work within partnership. We shall be monitoring that and ensuring that we deliver not only a welcome piece of legislation but one that will change the lives of so many vulnerable people in our community.
§ 8.56 p.m.
§ Baroness Byford
My Lords, I have a certain sympathy with anyone who attempts to make the process of house buying more simple. However, I am aware that very often one person's gain is another person's loss. It seems to me that some of the provisions of Part I will cause just that.
The central issue is the seller's pack, which is to be made mandatory for homes being sold for owner occupation. The contents of that pack are to be laid down by the Secretary of State, who will have the power to control both the form and the detail of the documents, their provision and the circumstances of their variation. All the data in the pack will be of interest to potential buyers and the Bill supplies an indicative list of the sort of things the Government feel should be there.
Most of the rest of the first part is concerned with fixed penalties, criminal convictions, enforcement powers and offences. I have to say that I find it offensive that citizens of this country should be liable to a criminal prosecution for not following what will be the only procedure allowed for selling their home. No choice—none at all.
Perhaps I should have begun my speech by declaring an interest. I have two cottages that are out for rent. On a farm in Suffolk we made some land available for social housing when we were approached by the local authority.
The Bill makes no reference to time, and in buying and selling houses, time is often critical. The Radio 4 programme "You and Yours" yesterday, 27th March, had an item on house purchase through the Internet. In the course of the programme an Internet service provider stated that on average houses advertised by his company stayed on the Net for 10 weeks. He added that this accorded well with estate agent surveys which put the average time to sell a house at nine to 11 weeks.
An average is constructed from a range of values. An average time to sell a house may well be 10 weeks but the range from which it is taken may well extend from a mere few days to many months. It would be well to recognise that houses which do not sell quickly are often removed from one estate agent and given to another. In that sense the actual time taken will not be reflected in any average as the first agent may have it for, say, 16 weeks and the second for, say, 12 before it is sold.
An average does not reflect the differences in areas or in price levels. I have known times when houses in the lower price ranges sold easily while the bigger ones took a lot longer. Equally, I understand that houses in parts of London are sold in days while in parts of the East Midlands similar models can stay on the market for many months.
362 Under the provisions of Clause 4, it will be an offence for an estate agent to tell anyone that a property is or may be coming on to the market until the seller's pack is available. My noble friend Lord Caithness referred to that. I believe that it should be known as a "buyer's pack" because everything in it appears to be designed for the advantage of the former at the expense of the latter. Moreover, the prohibition on telling anyone what is or is not for sale until the pack is ready can only add to the disadvantage. A number of friends and acquaintances of mine have sold their properties to people who visited estate agents before the details were available, but were sufficiently interested in the properties to go and take a look.
One of the items to be included in the pack will be a house condition report, similar to the present home buyer's survey and valuation. The Bill makes provision for buyers or mortgage lenders to sue a surveyor whose report is inaccurate or misleading. This is where the issue of time may become critical. If it takes nine to 11 weeks to sell the average property, and the agent may not tell anyone that the house is available for sale until the seller's pack is ready, how much time will elapse from the survey visit to completion? Would an average of 12 to 14 weeks seem reasonable?
What will happen when a deal progresses to the point where contracts are due to be signed before it becomes obvious that the buyer cannot complete for at least another 10 weeks? Will the seller have to pay for another condition report'? Will the seller be able to sue a buyer who wilfully or negligently fails to complete? As regards the business of buying and selling houses, I have never been sure about the process, but I can recall many instances involving family and friends where the proposed sale fell through at around the time the seller was due to sign the contract.
The Bill remains silent on the matter of how long the condition reports are to remain valid. It is also silent on when and how they are to be paid for. It is likely that a family moving for job-related reasons may be unable to raise the necessary fee for a house condition report. Equally, an elderly couple or widow whose home encompasses their entire savings may be forced to borrow money at interest in order to pay for the document, which many may feel will simply be replicated by the buyer.
The Leicestershire Law Society has written to me stating that it feels that both the buyer and the mortgage lender are unlikely to rely on the condition report. If that is the case—I suggest that the society has enough experience for that to be the case—the pack will simply cause a delay in the system. Delays will be occasioned by the double surveying of a particular property. The same letter from the society states that:The exercise in Bristol resulted in sellers shunning their packs".Other noble Lords have referred to the Bristol trial. If that is the case, the Bill before us would seem to be yet another attempt by the Government to impose unwanted legislation on one section of the populace. If people are given the chance to use their intelligence 363 and to decide whether the pack will be welcomed with open arms, why not simply give it legal status and let the market establish its use?
In its parliamentary briefing, the Law Society opposes the inclusion of a condition report on the grounds of the substantial extra expense incurred by the seller and a lack of trust in it on the parts both of the buyer and the lender. The Law Society strongly opposes the proposal to instigate criminal proceedings against those who, for whatever reason, fail to provide the pack. That suggests that the Government are unwilling to rely on market forces and indicates their lack of confidence in the measure.
Part 2 of the Bill tackles the issue of homelessness, to which other noble Lords have referred. The proposals seem to make sense, as far as they go, and I was pleased to see the inclusion of measures relating to young adults after they have left care, a matter to which the noble Earl referred in his remarks. However, the basic problem of where to house homeless people still remains.
Enforcement of standards of council housing occupation levels may do more than the Bill to house the homeless. But councils are being forced to produce strategies in all kinds of areas, and at times it is hard to imagine them being able to achieve anything in the face of the flood of consultations to which they have to respond, along with the strategies they have to prepare.
Perhaps I may turn briefly to the rural White Paper, which contained a section on affordable housing. I welcome the Government's recognition that there is a problem, but I should be glad of an assurance that they also recognise the problems faced by parish councils. It is quite common for parish councils to turn down planning requests for single large dwellings in villages on the grounds that three to four one or two-bedroom houses are more urgently needed and would be more appropriate. However, all too often their views are ignored at borough or district level and the planning restrictions overturned.
I have received reports of instances where both the parish council and the local planning department have recommended that planning permission should not be granted for a particular building, only to find that refusal overturned by councillors, most of whom are urban based. I know that on one occasion such a permission was granted by the casting vote of the planning chairman.
Another aspect to be borne in mind when considering rural development is that sites often comprise relatively small plots of land, to which the 25 per cent affordable housing rule does not apply. Will the Minister consider imposing a requirement to reduce the size of the plot to which the 25 per cent rule applies in rural areas and small villages? Paragraph 5.4.3. of the White Paper states that, currently, the derogation for villages comprising under 3,000 people is often not applied. If the Government target of 60 per cent of new ho using to be built on brownfield sites is to be met, I suggest that that should be made mandatory.
364 When a developer uses a half-acre plot to construct a five-bedroom detached house with a triple garage, he often then houses no more than the number of people who otherwise would live in a two-bedroom terraced house, of which he might have been able to fit six on to the same plot. Those six houses might then have been used to retain in the countryside young couples who otherwise have to move to the towns. The houses could also be used to re-home elderly people who otherwise would occupy three or four-bedroom houses in the village.
Again, I refer to the White Paper. Under "Exception policy", paragraph 5.4.4. states:The exception applies to additional affordable housing made available only for local people in perpetuity. Local authorities who include an exception policy in their local plan can grant planning permission for small sites within or adjoining villages which would not otherwise be released for housing. Again we would like local authorities to make more use of the exception policy".I hope that the Minister will refer to this when he responds.
Rural homelessness is often obscured by the fact that young people, in particular, go into towns looking for work and for somewhere to live, and to apply there for assistance. Similarly, old people left alone after the death, perhaps, of their spouse, will often move to town because their existing property is too big or too expensive and because there is nothing suitable for them locally. These are the very people who would use the village shop and the local pub and keep the heart and life in our rural communities.
I welcome the Bill with a slight cautiousness. Part 2 has much on which we can build but, as I have said, I have great reservations about some sections of Part 1.
§ 9.9 p.m.
§ Lord Goodhart
My Lords, I intend to speak only to Part 1 of the Bill. I have no qualifications to speak on Part 2, but I have some qualifications to speak on Fart 1. Since I started practising at the Bar—which is now, I am afraid, a little over 40 years ago—property law has been a fairly substantial part of my practice. I served for two years, from 1998–1990, on the Law Commission's standing committee on conveyancing. Throughout the period of my practice delays in house buying have been a constant problem.
We have seen some improvements. These are mainly due to the extension of compulsory registration of title to the whole country. That has enormously simplified the investigation of a seller's title to the land. In the old days, the investigation of unregistered titles could take weeks. I remember acting in a case which concerned land belonging to a City livery company, where the main problem was that the title deeds had been destroyed in the Great Fire of London. It was a little difficult to find anyone who could swear to having seen the deeds before they were destroyed.
The main effect of registration of title is to shorten the interval between contract and completion. That can now, in effect, be as short as the parties want it to be. The continuing problem is the delay between agreeing a sale in principle and signing the contract.
365 That was looked at very carefully and in great detail by the standing committee on conveyancing. We encouraged the Law Society's development of its transaction protocol, which provided for more information to be disclosed by sellers up front. Indeed, it amounts to something like a mini seller's pack. The use of the protocol has had a modest effect in speeding up house sales.
Speaking for myself, I would not object to a seller's pack containing information similar to that which is disclosable under the protocol being compulsory, although the enhanced use of information technology will mean that most of the relevant information will be accessed within a matter of minutes or even seconds. That is likely to start happening in two or three years.
I have three important reservations about Part 1. First, this is a minor, not a major, reform to the house-buying process and it cannot be expected to speed up house sales to any great extent. Secondly, remedies for failure to provide a seller's pack should be civil remedies, not criminal. Thirdly, I am afraid that I am not persuaded that the seller's pack should include a survey or, as described in the Bill, a home condition report.
Let me take each of these reservations in turn. First, the delay in producing the kind of information that would go into a seller's pack is not the main cause of delay in bringing house sales to a conclusion. The real causes of delay are the necessity to build up a chain of people willing to commit themselves to contracts for sale and purchase, and the delay in getting commitments from mortgage lenders.
Most buyers are also sellers and vice versa. Buyers do not want to buy a new house before they are certain that they can dispose of the old one because they cannot afford to hold two houses with the enormous interest costs involved in bridging finance. Equally, sellers do not want to sell their old house before buying a new one because they would then find themselves with nowhere to live and having to look for temporary rented accommodation.
There is a need to build up a chain and keep it together for long enough to get every member of the chain in a position to enter into a contract. That, frankly, can take weeks. There is no easy or obvious way around this problem, and this Bill certainly does not provide it.
The other main cause of delay is, as I have said, the delay in getting a commitment from lenders. These two problems are interlinked, because one of the reasons for delay in putting a chain together is the delay that some members of the chain may have in obtaining a mortgage commitment. Commitments by mortgage lenders could perhaps be speeded up, but again I do not think that the Bill is likely to do that.
I move on to my second reservation: the use of a criminal penalty. It is wholly inappropriate to enforce the obligations of the seller's pack through the criminal law. Criminal penalties would apply not only to estate agents—who could, I suppose, be expected to know the law—but to owners who market the 366 property without using agents. They will be extremely worried by the possibility of acquiring a criminal record by failing to include the necessary information in the pack.
There is a simple and obvious method of enforcement which uses the civil law and not the criminal law; namely, to give any potential buyer, whether or not he or she becomes an actual buyer, the right to recover any costs reasonably incurred by him or her in obtaining information that should have been in the seller's pack but was not. That is the right way to proceed and I intend to table amendments to that effect if and when the Bill reaches Committee stage.
Thirdly, and perhaps most importantly, there is the question of the inclusion of the home condition report or survey in the seller's pack. I strongly agree with the remarks of the noble Earl, Lord Caithness. It can be argued that the inclusion of a survey in a pack could speed up the process. If a survey were produced as part of the seller's pack, it could be said that the need for the buyer to have a survey carried out will be eliminated. The buyer, it is said, will not have to wait for his or her own surveyor's report before signing the contract. It can be argued, secondly, that the inclusion of the survey in the pack will make the process cheaper because there will not be the problem of wasted surveys—that is, potential buyers pay for a survey but do not proceed because they are gazumped or because the survey is so alarming that they back out. The first of these arguments is only doubtfully true and the second is almost certainly untrue.
The seller's survey would speed up the selling process only if lenders were required or could be persuaded to accept the survey as a substitute for their own valuation. But there are real difficulties with this. First, the Bill as drafted requires the survey to deal only with the physical condition and energy efficiency of the property. It does not require the survey to include a valuation. Of course, to do so would increase the cost. But the valuation is exactly what the lenders need. I do not think that lenders can be required to accept the home condition report as a replacement for their own valuation. But the brief from the Council of Mortgage Lenders indicates that lenders are most unlikely voluntarily to accept the home condition report, at least as the whole basis of a valuation; it could at best be used as part of the process.
Therefore, the inclusion of a home condition report would have little effect on speeding up transactions. It could, however—and I believe that in all probability it would—increase the cost. At present, only some 30 per cent of buyers get a survey of any kind done. Most buyers simply rely on the mortgage valuation. That valuation does not tell them all that they would like to know, but at least it tells them that the property is not subject to defects so serious as to mean that it is not good security for the mortgage. As I have explained. lenders are likely to insist on a valuation. So if all sellers have to produce a survey and lenders insist on their own valuation, the cost of a house sale is likely to escalate sharply. I believe that that will involve forcing buyers who do not now require a survey, because they are prepared to take the risk, to pay a higher price for 367 their houses through having ultimately to recompense the seller for the cost of having to produce the survey in the seller's pack.
I believe that there would be a greater cost because of the involvement of the lenders and their insistence on their own valuations, even if buyers who would now carry out their own surveys could be persuaded to rely on the seller's home condition report. That will certainly not happen unless the Bill makes it clear that a surveyor who prepares a home condition report will be liable to compensate any buyer for any negligent defects in the report. The Bill does not make that clear. General law suggests that a surveyor would not be liable to compensate a buyer unless the surveyor is preparing the report with a view to its use by a specific and identified prospective buyer. If the home condition report is to have any value to buyers the surveyor who prepares it must be liable to the buyer for any negligence in its preparation.
There are particular problems for sellers at the lower end of the market because survey costs are usually tapered so that a survey of a low-priced house costs more as a proportion of the value of the house than a survey of a high-priced house. I believe that a compulsory home condition report will increase and not reduce the cost of house sales. Frankly, it is no wonder that the Royal Institution of Chartered Surveyors is solidly behind this Bill. It will get from it the biggest bonanza in its history.
Part 1 of the Bill will not do as it stands. It will do little to speed up the process of buying and selling houses and too much to increase the cost. It will impose criminal penalties where civil remedies are more appropriate. It is certainly not something that ought to be rushed through in the dying days of the present Parliament.
§ 9.2 p.m.
§ The Earl of Longford
My Lords, it is always a special pleasure for me to follow the noble Lord, Lord Goodhart, for a number of reasons. His father was a notable professor. He also had a unique method of serving at tennis. He used the reverse side of his racquet. I do not know whether the noble Lord has inherited that method. I have never seen anyone else do it. In addition, when I was going through the most humiliating period of my life having been invalided out of the Army with no honour, the noble Lord's father and mother took pity on me and looked after me until I recovered. I am enormously grateful to him.
I am not going to deal with Part 1 of the Bill. I shall not detain the House for long. I have two reasons for speaking. For once and beyond question, I am coming out on the side of the Government. Most of the time I agree with them and vote for them. One has to make a contribution. Here I am 100 per cent behind the Government. It is a good show, and well done the Government.
I think of the lines by Macaulay about the great scholar, Warren Hastings. He said that there was a deep treasure of wisdom too often buried in the earth and paraded with inelegant and injudicious ostentation, but still massive, precious and splendid.
368 I am not in touch with the homeless in the way that applies to the noble Baroness, Lady Dean, the noble Earl, Lord Listowel, and others. I am out of date among the homeless. I have visited prisons so often and one cannot do that without being aware that many prisoners were homeless before they went into prison; and will be homeless when they are released. So there is some connection. My knowledge of the homeless goes back 30 years.
I had the great honour of starting the New Horizon Youth Centre over 30 years ago. It was very small to begin with: there was just myself and a secretary. We had a corner of an office provided. When she was in the office I had to sit in the corridor, and vice versa. We started at the lowest level. Nevertheless. today there is a staff of 18. Last year the centre looked after at least 1,200 people with, as I say, a staff of 18 and a good many volunteers. When St Peter asks, "Did you do any good down there'?", I shall reply, "At least I started the New Horizon Youth Centre". I am keen on caring for the homeless.
What do we make of the Bill? The New Horizon Youth Centre warmly welcomes the Bill for many different reasons. It provides a new vision from the top which we hope will be conveyed through local authorities. The Bill is not perfect. I hope that there will be an opportunity to amend it to make sure that local authorities look after the homeless in the way that is required by the Bill. However, on the face of it, no one could want more. There is an instruction to local authorities to do a great deal more for the homeless than they have ever done before. I warmly welcome the Bill.
§ 9.26 p.m.
My Lords, I shall address Part 1 of the Bill, not because I think Part 2 is unimportant but because I know that other of my noble friends have, or will, deal with those issues. In dealing with Part 1 of the Bill I must declare an interest as a practising solicitor who practises in the high street and therefore deals with conveyancing on, sometimes I think unfortunately, a daily basis.
Everyone would like to see home buying and selling, in the words of the Government's Explanatory Notes, made,faster, easier and more consumer-friendly".That includes the practitioners. Everyone considers it a stressful experience which is ranked with divorce and bereavement. It is an important matter to address. But it is equally a dreadful oversimplification to suggest that the seller's pack and the proposals in the Bill will deal with the problem. I endorse entirely what the noble Lord, Lord Goodhart, said about the failings of those measures in that regard.
If anyone thinks my scepticism arises from a desire to see the conveyancing process take longer than is necessary to ensure a higher fee income, I remind noble Lords that the majority of domestic conveyancing these days is undertaken for a fixed fee before the papers are seen in detail in circumstances where it is extremely difficult to increase that fee even by 369 agreement with the client. Therefore problems that arise fall not only at the purchaser's cost but also at the lawyer's cost.
The noble Lord, Lord Whitty, referred to the survey that the Government undertook as part of the justification for these measures. I make two points in that regard. The noble Lord, Lord Whitty, told your Lordships that our system was the slowest of, I think, the 10 countries surveyed. He did not tell your Lordships that it was also the cheapest of the 10. The much vaunted Scottish system, which is supposed to enable transactions to proceed more quickly, is often held up as an example, but 25 per cent of Scottish buyers go into temporary accommodation and 14 per cent have bridging loans. I cannot remember the last time that I acted for anyone who was willing or able to take up a bridging loan.
The majority of solicitors already use the voluntary system known as the transaction protocol which was introduced by the Law Society in 1990. Without going into too many details, this means that when the draft contract is submitted by the vendor—or the seller in the non-technical language that we are now all urged to use in these matters—the draft contract and details of title are accompanied by a schedule of fixtures and fittings and the seller's own replies to a whole series of inquiries which deal with such matters as fences, maintenance, alterations and planning. Leasehold properties have an additional questionnaire.
As my noble friend Lord Caithness said, in good practice that is already done in good time. When the client starts the process and advises his solicitor, the property information forms are given to the client to complete and the draft contract prepared so that it is ready to go out when an estate agent has found a suitable purchaser.
I endorse entirely the reservations expressed by other noble Lords against making a seller's pack compulsory backed by the sanctions of the criminal law and enforced by local authority trading standards. Essentially it is a private transaction, and the largest transaction that most people undertake at any time in their lives, and it is totally inappropriate that it should be a matter for criminal proceedings. That will have no practical or useful effect.
Like the transaction protocol, the pack will also include details of the title, registered or unregistered—a property information form similar to that which is already supplied. In addition to that information, searches are now to be included. In addition, the leasehold pack is to include the leasehold information forms, which we already have, and an appropriate search where necessary against the management company and details of insurance. In both instances, there is to be the home condition report and the home energy report.
I hope that the Government will think again about the requirement that a draft contract should be included. If they proceed with the scheme, perhaps they will consider a summary of terms. The draft contract should be prepared by the sellers' solicitors 370 and the buyers advised upon it by their solicitors before there is any chance that they might sign it. With great respect to my noble friend Lord Caithness, it would be particularly inappropriate if the seller's pack were to be prepared by estate agents—I understand that they may be responsible—who, as my noble friend reminded this House, in some instances not only sell the property but also secure the mortgage for the purchaser.
The home condition report presents real difficulties. Noble Lords have referred to them. I shall not go into the details of its inadequacies and the matters that it does not cover. My noble friend Lord Caithness dealt with that issue at some length. But we should remember that the proposal is that the report is to be relied on by both sides, and the lender. In briefing to your Lordships, the Council of Mortgage Lenders has said that it does not propose to accept that.
I believe that the cost will be considerable, on the introduction of the scheme, if it comes about, and once the claims start to be made against the surveyors. The cost of a seller's pack arising from the project held in Bristol was some £652. That is fine in theory, but it begs the question as to where the seller is to find the money at the beginning of the transaction. Alternatively, is it suggested that we should have a little more pro bono work and that the professionals involved should wait for payment at the end of the transaction and do the work on credit?
The inclusion of the searches in the home condition report make the proposals for the seller's pack significantly different from the practice followed by the vast majority of solicitors at present. But what difference will that make? Will the buyer rely on that home condition survey? He may have his own surveyor. He may object to the surveyor for the home condition report. He would be well advised to have a structural building survey in any event which will not be covered by this report.
We need to ask whether the issues addressed by the pack are those matters which cause the delay between the making of the offer and the signing of the contract. The seller's pack will still have to be examined by the buyer's solicitors before the buyer commits himself or herself. It is proposed that the pack can be prepared by anyone, including a layman—although it might be helpful if the lawyers were involved at an early stage. It is apparently unlikely that the Government will impose any serious conditions upon the quality of the pack. It has already been stated that we do not know what the lifespan of the pack will be. Will the surveyor's report last for six months? There are no proposals about that. If there is to be a cut-off date, will the sellers incur another cost when they have not sold their property? Those are real questions for real people when they come to sell their real home and not a matter of academic debate.
The factors that cause delays arise after the submission of the documents. I shall give the House a random selection of problems that have arisen when the documents are examined between the making of an offer and the exchange of contracts. No doubt they are 371 dreadfully boring compared with a glossy seller's pack with an agent's logo and an advert for insurance on the front.
Delays can be caused by the need to establish whether a road is to be adopted where, according to the planning consent, there is to be a bond under the Highways Act, but neither the developer nor the local authority has entered into it. A property with registered title may have no easements for the drains or the water. A prospective purchaser may choose to change his mortgagee—or his lender, as we must call them—because he prefers a different mortgage product. Problems can also be caused by one purchaser in the chain being unable to get a mortgage product. There are a host of conditions set out in the Council of Mortgage Lenders' handbook, any deviation from which has to be referred to the lender. Most lenders now operate through call centres without legally qualified people on the end of the telephone and you cannot speak to the same person two days in a row. It is not uncommon to find a defective lease for leasehold properties and deeds of variation may be needed from the management company and the landlord. There is to be no obligation in the seller's pack to point out such defects. It is clearly stated that the principle of "buyer beware" will continue to prevail.
I shall return briefly to the pilot scheme. It is already out of date. It did not include an environmental search in the cost, although that is now considered to be good practice in many areas of the country. That will mean additional costs and additional time. Given the experience of the pilot scheme, hopes for a faster, friendlier conveyancing process are ill founded.
The scheme was restricted to properties in the city of Bristol. In most instances, it involved only one property out of the two in the usual sale and purchase arrangement. There were 250 packs on offer, for which the Government had paid the legal costs and disbursements. Six firms of surveyors, seven solicitors and two licensed conveyancers were involved, together with 13 estate agents. At the time the property market in Bristol was buoyant. Most purchasers did not bother with the packs. Estate agents used them to move the properties that they were finding difficult to sell.
Surveyors and solicitors were given targets of five and 10 days to carry out their tasks. Special arrangements were made by the lenders to deliver the deeds and only two lenders, both local to the area, participated in the scheme. Bristol City Council agreed to accept applications for searches by fax. The Minister's department had paid the fees in advance and encouraged them all to be returned in three days. Those circumstances will not be replicated across the country.
A national scheme would also result in a shortage of surveyors. I am advised—no doubt the Minister will tell me if I am wrong—that that is to be overcome by a scheme of accreditation, which will take 12 weeks. Would you buy a house that had been surveyed by somebody who had undergone a 12-week test to 372 produce the report on which you were to place all your savings? I think that a very considerable number of people will require their own survey from a proper surveyor. In the pilot scheme, even the two local lenders insisted on dealing with their own valuation.
Delays arise from the difficulties that I have referred to and because, as the noble Lord, Lord Goodhart, said, there is a chain. People want to coincide their sale and purchase. They want to have their mortgage in place before they commit themselves. If they are properly advised, they will not be allowed to commit themselves until all the conditions attaching to their mortgage are complied with. They will definitely continue to tie in the purchase with the sale because it is too expensive and impractical to revert to the old practice of staggering the process and borrowing money in order to complete one stage before the other.
I may well be criticised by the Minister for being resistant to change. I submit that the legal profession has undergone enormous change, not least in the property-selling field. I should welcome faster, cheaper and easier processes but I do not welcome processes that add to purchasers' costs or that introduce criminality into this private transaction. What the processes seek to achieve is misguided and misplaced and will not make the system faster and easier, as the Government propose.
§ 9.40 p.m.
§ Baroness Gould of Potternewton
My Lords, I have informed my noble friends on the Front Bench that I, too, am critical of Part 1 of the Bill. I shall explain why in some detail. Before doing so, I give credit to the Government for introducing the Bill, for being prepared to tackle the problem of homelessness and for making an attempt—I believe that it is not the right approach—to regularise home ownership and the housing markets.
Some years ago, the then Secretary of State for the Environment, Tony Crosland, described housing policy as "whimsical". Its capriciousness remains to this day. I sought to establish whether some of the problems in the housing market that make it so capricious would be solved by the Bill. As the Minister said, Part 1 will help the 1.5 million individuals and families who buy and sell homes each year and speed up the process, which is currently the slowest in Europe. I am not too worried about the speed of the process but I am much more worried about its uncertainty. I am prepared to wait in order to know that there will not be a series of problems along the way and that the process will not fail to be completed.
The Minister reported that 40 per cent of people are dissatisfied with the current process and he referred to the half a million transactions each year that fail. There is no doubt that gazumping thrives and that 28 per cent of transactions fail after terms have been informally agreed. The Minister and other noble Lords referred to the uncertainty and stress that that causes and to the abortive costs that can run into many hundreds or, in some cases, thousands of pounds. Change was obviously necessary. I am not certain that Part 1 meets that need.
373 There is a need for greater transparency in the process. The seller's pack goes some way towards dealing with that problem. I therefore do not oppose the proposal as such because it will help the seller to decide on a realistic asking price and it will assist the prospective buyer to make a well-informed offer. From my own recent experience, the provision of a seller's pack alone will not resolve the many problems faced by sellers and purchasers. I have experienced problems in both capacities.
As the noble Earl, Lord Caithness, said, transactions will still fail. The proposal will not stop buyers from pulling out at the last moment—that has happened to me four times—the process will not necessarily be speeded up, and gazumping will not be eliminated.
I turn, as other noble Lords have done, to the question of the home condition surveyor's report. A property may look all right and one might think, "Okay, I can manage—perhaps—with a home condition surveyor's report". However, sometimes when one sees a property one thinks, "I am not sure about this property", and one chooses—I suspect that this happens in the majority of cases—to have a full structural survey report. I have done that on two occasions. We must be confident that what we are buying and spending this enormous amount of money on is going to satisfy our needs for a long period of time. We do not suddenly want the roof to fall in and be faced with large bills. I am absolutely convinced that a home condition survey report will not suffice for many properties, particularly old ones.
I would not accuse any seller of deliberately being dishonest about the flaws in their property or any estate agent—I look with respect to the noble Earl, Lord Caithness—of overselling the virtues of a property. But I am drawn to the adage that "he that pays the piper calls the tune"; and in this instance the piper is the seller. I am also drawn to the Explanatory Notes which make it plain that it is not intended that the Bill should alter the principle of caveat emptor—let the buyer beware. So I am worried about that aspect of the Bill.
In the statement from the Council of Mortgage Lenders, of which we all received a copy, it was said that there would be a need for the lender to retain the right to appraise the property. I should like to know how much negotiation took place with building societies to make sure that they are satisfied with the use of a seller's survey pack. Perhaps the Minister can tell us.
My noble friend also referred—I mention this in passing—to the fact that buildings societies would be asked to provide early mortgages and that offers can be obtained before a property is found. That is true. Offers can be made on the amount of salary one earns. But the lender will not issue that mortgage until after it has done the survey. So although we might think we have a mortgage offer, at the end of the process we may suddenly discover that that is not so. That aspect therefore is not as simple as was expressed.
374 Another problem singled out by the Government, quite rightly, as being one of the most traumatic experiences in the house buying process is gazumping. In another place the Minister quoted anecdotal evidence of the heartaches, frustrations and financial loss suffered due to that practice, to which I can again testify from experience. It usually occurs when house prices are rising, and mainly in the South East. But it can happen anywhere. To the people involved it is not merely anecdotal but a real disheartening and costly experience.
That is why I am surprised by the Government's position as set out in the 1998 consultation paper. They stated that,these problems are rare. They average fewer than one in 50 transactions".But using the Government's own figures, that could involve 20,000 people a year. For those 20,000 people it is a really serious problem. Therefore I do not consider gazumping to be a rarity. We will only abolish the pain of gazumping when legislation is introduced that makes acceptance of an offer to purchase a property a legal contract. Some reference was made to the Scottish system, which I know contains considerable flaws. Nevertheless, I should have liked to see an examination of that system to see whether or not those flaws could be ironed out. It certainly provides a level of security for both the purchaser and the seller.
Another cause of great distress is the buyer or the seller pulling out, particularly almost at the point of exchange of contracts. I understand the half-hour process in respect of contracts in a chain, and in one instance it happened to me literally half an hour before I was due to sign my contract. That was after I had waited three months for the purchaser to obtain his mortgage. I can assure your Lordships that that was an extremely distressing experience. At that point I wrote to my right honourable friend Nick Raynsford to ask whether the Homes Bill would do something about that situation. He replied,Our proposals will not prevent buyers pulling out at the last moment".It is a great pity that this Bill does not do something to cover that.
It may well be that the Law Society's transaction scheme; the proposed national land information service; the seller's pack with its information upfront, and, ultimately, electronic conveyancing may marginally reduce the time between oral agreement and exchange of contracts. However, it will not take away the disappointments of withdrawals; just perhaps make them happen a little sooner.
Other noble Lords referred to the Bristol pilot. I understand that the take-up of the packs was far from universal, despite the fact that all the cost was paid by the Government. One-third of the buyers insisted on undertaking their own surveys. The Bristol pilot must be questioned for two reasons: first, it had no control group; and, secondly, by any definition it was a narrow piece of research. In his opening remarks the Minister referred to other consultations which have taken place. 375 I should like to hear more about such consultations which would reassure me that the legislation was not solely based on the Bristol pilot. From the debate in the other place, it has been made clear that what might have been successful in Bristol may not be so in Brighton or Bradford, particularly not in areas of low-cost housing.
Perhaps I may ask a question on a point mentioned by other noble Lords. I refer to the fact that money has to be produced upfront for the seller's pack. Is it not a deterrent to people who might want to sell their property if they cannot afford the seller's pack? Are there any exceptions in order to enable and help people who might want to sell a property?
On behalf of all people like myself who have had bad experiences in the buying and selling of property, I believe that an opportunity has been missed to overcome many of the problems which we have faced and which others will continue to face in future irrespective of this legislation. Before leaving the question of the seller's pack, perhaps I may ask the Minister two practical questions on who the seller's pack will apply to. First, does the Bill exempt newly-built or converted properties from the home conditions report aspect of the seller's pack? Secondly, will buyers exercising their rights under the "right to buy" legislation receive a seller's pack from the vendor; than. is the local authority?
Having been negative about the first part of the Bill, I now wish to welcome warmly and endorse the Government's proposals in Part 2. I believe that my noble friend is correct when he states that the Bill will help to reduce homelessness and ensure a more appropriate provision of housing to homeless families. Other noble Lords applauded the repeal of Section 194 of the Housing Act 1996 which restricted local authorities from using their own housing stock as temporary accommodation, and Section 197, which limited a local authority's duty if it considered other suitable accommodation to be available in the area.
The noble Baroness, Lady Maddock, said that an amendment would be needed to the Bill. As a principle, I believe that the Bill is an immense step forward. More choice will be given to homeless people by allowing them to have a reasonable time to choose their permanent accommodation. That gives the homeless the same rights as others on the housing list. Fairness and a level playing field are essential in the access to and allocation of social housing.
The eighties and early nineties were years when homelessness increased. Many people at risk were denied access to priority housing. The causes of homelessness are diverse. There is no one reason for people becoming homeless. I am particularly concerned about the growing incidence of homelessness among women. It is clear that women face distinctive problems which increase their vulnerability to homelessness. Their weak financial position, for instance, puts them at a disadvantage in the housing market. Domestic violence is the most common reason for women in their thirties becoming homeless.
376 Not often realised is the fact that domestic violence is a common reason for homelessness among women of pensionable age. That is why we tend to see more older women sleeping on the streets. Women's Aid reports growing numbers of women seeking assistance. Shelter reported that in 1997 more than 36,000 women sought its help and that figure is growing, particularly among young women. The number of women admitted to Shelter projects rose from 25 per cent in 1987 to 44 per cent in 1997. It is particularly disturbing that 66 per cent of the young homeless experienced physical, sexual or emotional abuse and in some cases all three.
As other noble Lords have said, the Government are right to extend those in priority need to include young adults, the 16 to 17 year-olds, the 18 to 20 year-olds, care leavers and also those fleeing from domestic violence and from racial violence. Those at-risk groups were not only neglected in the past but In some instances they were punished for being vulnerable.
However, the Government have also recognised that increased obligations and extra duties will entail extra costs. I hope that the Minister can reassure the House that local authorities will be given the necessary resources to carry out this crucial work, particularly in areas where there is great housing need.
Finally, in supporting the proposal that local authorities have to undertake regular reviews and to publish a homelessness strategy, can we be assured that these strategies will be transparent and available to the public, which is not at present the case in many areas? I was delighted to hear the noble Earl, Lord Listowel, talk about Leeds, which is my home town, and the progress that is being made there. Can authorities be urged to ensure that free advice and information about the right to housing is as widely available as possible? That is not always the case.
The Opposition in the other place rejected this legislation, particularly the extra help to groups at risk, on the spurious ground that it would increase queue jumping. For too many years the treatment of homeless people was characterised by the ethos and values of the Poor Law. It is time that some of the damaging myths and stereotypes about homeless people were removed. I believe that this legislation goes a long way towards that goal. As has also been said, it is greatly welcomed by groups working in the field. The Government deserve commendation and approval for introducing Part 2 and I hope that the Bill receives the support of the House and is enacted with speed.
§ 9.58 p.m.
§ Baroness Hanham
My Lords, I hope that the Minister will be pleased to hear that I shall give him some small respite and shall not trespass on the Government's mounting grief over Part 1 of the Bill. I shall immediately declare an interest as a member of a local authority.
There appears to be general acceptance that, in broad terms, the provisions in Part 2 are welcome. Indeed, the good intentions are welcome. However, 377 some practical issues need to be taken into account, not least the capacity of local authorities to absorb the impact of the proposals. Sadly, national strategies do not always reflect the nuances of local areas—in this case, those must be housing pressures.
The impact of homelessness across the country varies from those authorities where there is sufficient vacant housing to those such as the London authorities where housing both in the statutory and affordable private sectors in relation to the number of people requiring it is a scarce resource. The housing waiting list has long ceased to have any meaning in that there are thousands of people who have registered hopefully but have come to realise that they have no real expectations of those hopes being fulfilled. This has been a debilitating factor both for them and the authority which has had to maintain it. I do not believe that the removal of the requirement to keep such a register will be mourned, for the reality is that, by and large, it is those who are in priority need under the current legislation who have absorbed the totality of accommodation that is available from all sources.
Those in priority need, particularly the homeless, have been a large percentage of those housed, and the additional priority categories that are added by the Bill—the young leaving care, the young homeless, former prisoners and those at threat of violence—simply mean that to maintain a register of any other than those in the priority categories becomes self-defeating.
The amount of accommodation that is available to London local authorities from all sources is nothing like sufficient for their needs now, so it is logical and sensible that they should have the ability to take a flexible approach and that there should be co-operation between those which are subject to pressure and those which have accommodation to spare, particularly if those are areas in which people with aspirations to live in London are willing to settle as an alternative. Such flexibility will help, but as most people who are homeless in London want to be in London that relief may be only marginal.
One of the major expectations in the Bill is that those who have been assessed for priority need, as well as those who are accepted as such, will be provided with temporary accommodation, not for a maximum period of two years as at present but until permanent accommodation is provided by the local authority. In the authority of which I am a member there are currently 930 households in that position. At best, about 500 to 600 households in total, including some from the current waiting list, are able to be housed annually. Often it is fewer than that. It is not unfair to say that in London there is a crisis over temporary accommodation. Any such accommodation is limited. Many boroughs such as mine have limited amounts of short-life property, as it has now been rebuilt or improved for permanent housing, and many households must still be placed unsatisfactorily in commercial hotels. The situation in relation to permanent housing is nearly as bad.
378 Permanent housing in London is in short supply and, even with the involvement of all other registered social landlords, the need cannot be met. Even with the extra money now being provided to enable the payment of a higher level of housing benefit in central London in particular, the costs of temporary accommodation run into millions of pounds. In my borough alone, the overrun on expenditure that is being borne by the council taxpayer now approaches £4 million annually. This is not helped by the fact that only 90 per cent of housing benefit is reimbursed. It is not hard to see that the provisions of this Bill will, therefore, exacerbate the financial difficulties. I very much endorse the observations of the noble Baroness, Lady Gould, about ensuring that if these provisions are enacted adequate resources are made available to local authorities to deal with this increasingly difficult problem.
It is odd that, as the Bill is drafted, there is no requirement for housing associations to help with the provision of either temporary or permanent housing within a local authority's housing priorities. I appreciate the remarks of the noble Baroness, Lady Dean, who is not in her place at the moment, about the involvement of the Housing Corporation in the whole of the Bill. It is true that some housing associations adopt their own priorities. But these may or may not accord with the local strategy of their local authority. I hope this area will receive further consideration in Committee, if indeed we ever reach such a stage.
Even with a requirement for housing associations to be involved—I fully accept that registered social landlords are mentioned, but housing associations are so fundamentally important to this matter—the implications that all those accepted as homeless have the right to a choice of where they wish to live is an expectation that may be hard to satisfy.
I recognise that in this respect London may be exceptional, but a requirement in legislation will, ultimately, be a requirement in law. London authorities will struggle to meet the burdens placed upon them as designated in the Bill. No one doubts the good intentions behind the Bill. It is right and proper that local authorities should help young people leaving their care into self-sufficiency, and, as any good parent would want, to see that they are properly housed. There are far too many young and vulnerable people sleeping on our streets. It must be of concern when people are threatened with violence and have to leave their homes because of it. At the very least, it is proper that they should be able to seek and receive practical advice and help.
I agree with the noble Earl, Lord Listowel, that there is variability in the value of the advice that is given by local authorities, but the constraints and limitations to the provision of accommodation of their choice for each and every person deemed to be in priority is, in London, a particularly tall order. To achieve the aspirations contained in these provisions will require a very flexible approach, probably even more flexible than the Minister at this stage appreciates.
379 The construction of a homeless strategy can be part only of a more general policy on housing and the use of housing resources. Increasingly, local authorities are becoming the conductor of the orchestra rather than the main players as statutory housing moves from local authority control to housing associations, co-operatives and tenants' management organisations—as a result also of voluntary transfer. Therefore, the responsibility is beginning to lie elsewhere. A housing strategy rather than just a homeless strategy would reflect the totality of the policies of all these bodies. I hope that this part of the Bill will be amended to reflect that situation.
There are concerns about the proposals in this part of the Bill. Although I recognise that good practice dictates that there should be co-operation between all agencies to prevent homelessness, most local authorities of any standard and stature have been carrying out that co-operation. To have this issue underlined by legislation will, for some, just gild the lily that is already there, although I appreciate that for others it might be a sharp shake in the right direction.
The authority which I have the honour to represent has been selected as a pilot for the lettings test. It is already a beacon council for looking after care leavers from the age of 16, and the housing and subsequent care that are provided. I do not boast, I am just proud that somewhere along the line there is a local authority that is acting properly.
While there is much good in this part of the Bill, there are areas over which caution needs to be exercised and an understanding that matters are different in one part of the country from another.
§ 10.9 p.m.
§ Lord Phillips of Sudbury
My Lords, I must declare an interest. As a solicitor, I have been directly involved in conveyancing over as many years as my noble friend Lord Goodhart. Although I ceased some years ago to do the nuts and bolts of conveyancing, I am still very close to it and will therefore confine my remarks to Part 1 of the Bill. I shall try not to repeat ground that has already been well covered.
The points made by my noble friend Lord Goodhart and others as to the criminalisation aspects of the Bill are wholly well founded. It is wrong in principle in a measure of this kind to contemplate criminal action. I am inclined to think that it is wrong in principle to try to force a method of proceeding in a contract of this nature, privately entered into between citizens. I do not think that the criteria by which the state should intervene in private transactions are satisfied in this case.
Perhaps I may make a few points on Part 1 of the Bill. I agree wholeheartedly with what the noble Lord, Lord Bowness, said very much from the coalface of conveyancing. I do not think that the speed of transactions will overall be much affected if the measure is carried into force as drafted. It may increase speed at the onset, although I am bound to say that these days any party to a conveyance needing swift 380 action will make sure that its solicitors are into the fray well before the 14 day period provided for in the Bill for the supply of the necessary information.
The chain is the problem. It is the absolute blocker on any attempt and wish on the part of both parties to a transaction to get through it quickly. The majority of transactions are part of a chain—quite often of two or three separate transactions. Chains do not merely affect buyers. They affect sellers in a different way. Sellers will put their house on the market, having, as they thought, secured the house to which they want to go. They will not enter into a contract, as their solicitor will advise them, until they have a contract to sell. Then, hey presto, they are disappointed up the line.
The difficulties of speed are insuperable unless one adopts a Scottish system or something like it. I believe that the points made by the noble Lord, Lord Bowness, on that are conclusive against it.
There are other causes for the failure of transactions besides that of the chain. There are issues of financing; there are issues of changed circumstances on the part of either of the parties, the health of the parties or the family circumstances of the parties. There are 101 reasons, which those of us who have been in this world know all too often rear their ugly heads and abort a transaction.
Perhaps I may say a few words about the cost. A great deal of the Government's justification for the Bill rests on two statistics which the noble Lord, Lord Whitty, gave in opening the debate. First, he said that the cost of aborted sales in a year was in excess of £300 million. Reference was also made to the 28 per cent of transactions—the noble Lord expressed himself aghast—which failed between acceptance of a deal subject to contract and exchange of contracts. One needs to know two things about that latter statistic. The vast majority of those failures are because of failures in the chain up the line or down the line. Only a small proportion of them are for what one might call dishonourable reasons—people finding a property they prefer, if they are buyers, or gazumping on the part of sellers. The figure of 28 per cent should be seen in that light.
I turn to the cost figure of £300 million-plus. I believe that the increased overheads which will attend all conveyancing transactions if the Bill becomes law will make that figure look rather modest. We are talking about a seller's pack, which, roughly estimated, will be £600 of work, mainly on the part of the surveyor but also on the part of the solicitor, plus the local search fee of £100 plus, as it is in most places now. In a high proportion of cases those overheads will be wholly or partly wasted. My noble friend Lord Goodhart referred to the fact that only 30 per cent of conveyances today are with the benefit of the survey that will be a compulsory part of every conveyance in the future. He gave the reason for that: the majority of purchasers are willing to rely on the much cheaper and obviously less comprehensive mortgage survey.
However, many other circumstances arise where people do not go to the expense and trouble of securing a full survey. If they are taking on a property with a 381 view to rebuilding or substantially reconditioning it, they will not worry about a survey. My own first two purchases were completed without the benefit of full surveys. On the first, I asked a friend who was a surveyor to walk around and take a look. I was content to rely on that. On the second, I secured only a basic, cheap survey because I thought that I knew what I was doing. Thank goodness, I did. From now on, however, in every case the "full works" will need to be undertaken—at vast expense.
We need to bear in mind the point that the overheads of both the seller and the buyer ultimately will be reflected in an increase in the cost of the property. There is no way around that. It will work its way through in a very short space of time. Even if we calculate additional overheads of only £200 per transaction, given that we see around 2 million conveyances per year, that will be £400 million in extra overheads. The figure of 28 per cent aborted sales comprising dishonourable conduct which the Government are seeking to check will form only a tiny fraction of the final figure.
I should like to comment on what I believe is the wholly unfair one-sidedness of this legislation. It puts all the burden, all the expense and all the criminality on to the seller. I do not see how that could be conceived as a balanced piece of legislation. In responding to that point, Nick Raynsford, the Minister for Housing and Planning, wrote to Charles Clarke, who in turn had sent him a letter from Standley Bushell, President of the Norfolk and Norwich Incorporated Law Society. This was one of the points raised by the society. The reply from the Minister was as follows:We are not imposing legal obligations on buyers, but we do consider that it is important that buyers are well prepared before starting on the home buying process, and would encourage buyers to obtain an In-principle' mortgage offer before making an offer on a property"—as if, in any event, an "in principle" mortgage offer would be sufficient for the purposes of entering into a contract. The Minister went on by stating:We anticipate that the new system will put pressure on buyers to come to the market prepared".How will this put pressure on the buyer? I should be grateful if the noble Lord, when he responds to the debate, could answer that point. That explanation will be the only justification for passing into law this one-sided piece of legislation.
I believe that it will have precisely the reverse effect. Rather than put pressure on a buyer, it will place a lever into the hands of an unscrupulous buyer that will be used unfairly. If someone has already invested £600 on the seller's pack, the buyer can then string out the process for as long as possible. In a flat market or a buyer's market, that could well lead to a situation where the buyer will be able to go back to the vendor and say, "I can no longer afford the price I agreed in principle some three months ago. By the way, I need a new search and the survey is out of date. I'm afraid that all I can offer is the asking price minus x".
382 Consider the situation where old-age pensioners put their only asset—their home—on to the market. Pensioners may have to deal with unscrupulous commercial landlords—such people are still about—who will be looking out for such vulnerable people. They will make play with this unbalanced and one-sided set of rules. I urge the Government to contemplate that.
If the Government response is that I should not worry because a defence is allowed against the offence of failing to provide a seller's pack under Clause 3 of the Bill, I have to say that that is no defence at all. It will be completely useless as a protection for someone caught in this position. Clause 6(3)(a) states that it is a defence for a person refusing to supply a pack to say that he or she thought that the person asking for it,was unlikely to have sufficient means to buy the property in question".You are not going to know that until some way down the line.
If someone comes to you, saying, "I want a pack", will it be sufficient for an interrogation then to occur between the would-be seller and the would-be buyer to ascertain whether the would-be buyer is "likely to have sufficient means" to buy the property? I do not think so. It is not a defence. It does not add up to anything worth having for a seller put into the position that he or she could be placed under this one-sided arrangement. This penalises sellers severely and unfairly, and to no purpose.
Quite apart from the point I have just made, there will be many circumstances where, for good reason, a seller withdraws a property from the market. Under the law, he or she has to provide this expensive pack even though no one is prejudiced by the withdrawal of the property from the market—that is say, no buyer has committed himself to expenditure. In those circumstances, as I said, a real harshness and unfairness will be imposed on the seller.
As I mentioned earlier, there are many circumstances in which such a situation could arise—family changes, a child coming home, a divorce, a pregnancy, illness, a loss of a job, a business that has gone downhill. It could merely be that the property has been on the market for six months, has gone stale, and the agent has said to take it off the market. In such circumstances, the seller will have wasted all this money and will have to get a new survey and a new set of searches when the property is put back on the market.
For all these reasons, and the reasons mentioned by other noble Lords, I believe that Part 1 needs substantial review. The trial in Bristol was not adequate. In any event, the framework provided is altogether too insensitive to cope with the myriad differences and variations which attend conveyances in this country. Frankly, unless the Bill seriously improves the conveyancing process overall, it is not worth having as regards Part 1. I say that while recognising that other parts of the Bill are of great utility. For those reasons, I hope that the Government will think hard about this matter.
§ 10.22 p.m.
§ Baroness Hamwee
My Lords, during the lifetime of the previous government we were accustomed to hearing a great deal of criticism from the then official opposition of the government's housing policy and the great gaps in it. I congratulate the Minister for bringing this measure to the House but, like others, I wish that we had seen it a good deal earlier. No doubt the imminence of the end of the parliamentary term concentrates the mind somewhat. These measures are rather late but, conversely, the seller's packs—I agree with nearly everything that has been said about them—come at the wrong time and inadequately.
I should declare an interest as a solicitor and a partner in a practice in London. I should like to declare more of an interest than perhaps technically I have to as a member of the Greater London Authority, where we do not have the power to provide housing but we do have a huge policy concern. I certainly have an interest in that capacity in the more normal sense of the word.
We have waited in vain for support to arrive for these seller's packs. There was perhaps some from the noble Baroness, Lady Gould, but her support could not be said to be a great deal more than lukewarm, if I can put it that way. Not to put too fine a point on it, speaking for all of us on these Benches, I, too, believe that Part 1 should be deleted from the Bill.
As we have heard, there has been a very limited pilot, which was not a true test because the Government paid for it. There is provision for the creation of a criminal offence when we have heard so often that the Government will not create new criminal offences lightly, with resource implications for its enforcement. I expected the noble Baroness, Lady Hanham, to refer to that when she was talking generally about the resource implications of the Bill. There are also resource implications there for local authorities.
It should not be forgotten that properties can change hands for £10,000, £25,000 or £50,000. The cost of these proposals for low-cost properties would be disproportionate or even unaffordable. A third problem is the chain, and I do not believe that that can be addressed through this measure.
A fundamental issue is the acceptability of the condition survey to lenders. I was surprised to hear that only some 30 per cent of purchasers arrange for their own surveys to be carried out. It is ironic. This problem is the opposite of what I had perceived as the current problem; namely, that a lender's valuation is often inadequate for the purchaser. The question of liability surrounds all of this.
We need to examine ways of improving the speed and certainty of conveyancing. I hope that that need can be met very soon by technological advances. The noble Baroness, Lady Byford, referred to the Internet. I believe that there will be a far wider application of Internet technology, as my noble friend Lord Goodhart mentioned, than simply to sales. I hoped to have read before this debate the paper that has come from the Lord Chancellor's Department on electronic 384 conveyancing; but unhappily, the Printed Paper Office did not seem to know about it, even though it was explained that it was in response to a Question from the noble Baroness, Lady Gould, and its publication was announced. Progress must lie in the world of technology, which is moving ahead so fast. The noble Lord, Lord Bowness, referred to this, as he did to the dangers of the seller's pack including a form of contract. Having had unfortunate experiences in this area, my observation is that some estate agents have difficulty in working out who their client is. They may well be too tempted to push a particular form of contract much too hard.
My noble friend Lord Goodhart and the noble Lord, Lord Bowness—indeed every speaker—gave what amounts to a devastating critique of this proposal from many different perspectives. On these Benches we would support whatever assists consumers, both buyers and sellers. But in our view the seller's pack will not increase either speed or certainty.
Those of us who have criticisms of Part 1 of the Bill must seem to be a self-centred, whingeing bunch to those who we hope will benefit from Part 2. The noble Earl, Lord Listowel, spoke powerfully about the effects of homelessness, as he always does. My noble friend Lady Maddock and others spoke about the need not merely for a homelessness strategy but for housing strategies. A report on the subject was published recently by the Association of London Government. It is worth quoting from the introduction to the report which expresses rather well the position on what should be—although I hate the term—joined-up policy making. It says:Achieving both sufficient housing to meet demand and balanced communities and sustainable development is the key challenge for London. Quality is as important as quantity. Minimising social polarisation and social exclusion must be a key policy objective. Increasing choice for all households is also critical. This requires an integration of housing. planning and broader social policy and corporate and inter-agency implementation of policy initiatives".Strategists increasingly demand partnerships—particularly, partnerships between local authorities and housing associations. We support further proposals for housing associations to assist local authorities to meet housing need. The noble Baroness, Lady Dean, whom I should never describe as an "anorak", made some interesting comments about the interaction of the two sectors.
All local authorities need the tools and mechanisms as well as the policies. We need affordable housing not just for those who cannot afford any housing at all but afforded in the right place to those who until quite recently one would have regarded as having a reasonable middle-sized income. There are other measures such as mortgage rescue packages.
While welcoming the proposals for a strategy, given the caveat that I have mentioned, I wonder if we are not still in a little danger of compartmentalising what local authorities need to do. It is not very long ago that Parliament passed the Local Government Act 2000 providing for every local authority to have the duty to prepare a strategy for promoting or improving the economic, social and environmental well-being of 385 their area. Housing is absolutely fundamental to that. For those who are in non-priority need—I find that almost a contradiction in terms—a duty rather than a power would be the ideal, but it is welcome.
I recently came across a reference in a report to two London boroughs which looked at how single homeless people were treated. In one borough a single woman fleeing domestic violence was told that she could not be seen unless she showed her passport. In another she was referred to the council tax office. I am told that others approaching London boroughs receive similarly unhelpful advice.
The comments go on to say,Despite this evidence, we are aware that some London boroughs do provide a decent level of service for single people, despite significant pressures on their services. This suggests that poor service is not just about levels of demand".I was also struck by the comments made by the noble Baroness, Lady Gould, about people being punished for being vulnerable. Why should a victim of violence be the one to lose his or her home? We support these proposals although we want to see improvements on matters such as the period for an applicant to consider an offer and so on.
Finally, there is the question of allocations. I am guilty of being one of those whom the noble Baroness, Lady Dean, referred to as not perhaps being adequately optimistic or understanding. At first I thought that it was unrealistic to talk about giving a choice when there is no selection. It is right to continue to make that an aspiration. Choice is about dignity and not categorising people for whom the services are provided as being in any way second class.
The noble Earl, Lord Listowel, referred to benefit delays. It is important and a real problem from many angles including deterring landlords from making property available in the private sector in the first place. He also spoke about the variable quality of advice. I have a great sense of déjà vu since we seemed to debate that during the passage of the last major housing Bill. It is hugely important. The assessment of need and tailoring advice and assistance is an enormous element in preventing homelessness and ultimately preventing rooflessness.
Part 2 of the Bill is part of the jigsaw for providing decent homes which we on these Benches regard as a basic human right. We wish that part of the Bill perhaps not quite a fair wind. I would like to see it picked up by a tornado and whirled into port. I hope that that same tornado will sink Part 1.
§ 10.34 p.m.
§ Lord Dixon-Smith
My Lords, only yesterday the noble Lord the Chief Whip persuaded us that today was the final Wednesday of the Session. If his remarks have any validity at all, this debate takes place in somewhat unusual circumstances. The future progress of the Bill—if it is to make any at all—will be subject to many conventions which I have tried to explore but with little success. As regards the kind of procedures which the Chief Whip may have envisaged, it appears 386 that anything might be possible, but, at the same time, nothing could be possible. We shall have to deal with that situation if it arises. However, in the back of our minds we must all bear in mind the fact that the Bill might have to make regular progress.
There has been remarkable consensus on all sides of the House that the Bill comprises good and bad elements. That is not unusual. Oppositions instinctively tend to find fault with legislation. However, two parts of the Bill are welcome. One has to welcome anyone who is brave enough to venture into the free market of the housing market with the idea of simplifying it, speeding it up and improving it. It is a rash attempt. If the Government have listened to the comments made tonight, they must now realise the rashness of their actions.
However, Part 2 has been generally welcomed. I add my voice to that welcome. In parts of the country homelessness constitutes a deep, chronic and worrying sore on the whole of society which everyone feels. It is, of course, particularly acute in a metropolis such as London. All the policies in the world will not solve that problem because invariably—this will be the case for as long as I can foresee—there is a shortage of available housing in London. The demand outruns supply and that, of itself, is a problem.
My noble friend Lady Byford made the same point with regard to rural areas. These problems are difficult to tackle if there is a shortage of resource. However willing local authority staff may be to aid the homeless, it is difficult when they know that the physical resource is not available. I recognise that local authority staff—we heard from my noble friend Lady Hanham many of the implications of the measure—must feel deeply frustrated when they wish to help people but are unable to do so for the perfectly sound reason of a lack of physical resource. I am sure that that is part of the reason why occasionally people are given a less than satisfactory response. However, Part 2 of the Bill may be capable of being adapted.
Part 1 of the Bill concerns the aspect of the housing world with which I am more familiar. However, I certainly have no interests to declare as a lawyer or an estate agent or anything else, which, for once, is a great relief to me. It seems to me that as regards Part I the Government have set up a target at which they have aimed but they have proved to be rather a bad shot. They seem to have missed what they seek to achieve.
One of the reasons for Part 1 of the Bill was that gazumping and gazundering were again becoming prevalent in the housing market. As we have heard from noble Lords around the Chamber, the Bill does not tackle that issue. In my judgment the Bill does nothing to shorten the procedure for making a housing transaction. Although if all goes well, the documentation is agreed and everyone acts with sweetness and light, the time for two parties to come to an agreement may be shortened, it is dependent upon the seller doing a great deal of preparatory work before sellers and buyers get together. The total time for the transaction will still be the same. The work done by the seller is part of the transaction time. I do not think that there will be any saving of time.
387 I agree with so much that has been said. The Bill also misses its target because as drafted it appears to suggest that all the problems in the housing market are caused by sellers. We have heard enough today to know that that simply is not so. There are problem buyers. The chain, about which we have heard from many noble Lords, is a serious difficulty.
We then have what I regard as a preposterous suggestion: that if a seller does not comply with the letter of this law he should be subject to serious criminal charges. At present, the housing market is flexible. I may say to an agent, "I'm thinking of selling my house". The agent may know someone who considers it a nice house. I do not understand why he cannot say to that person, "That house is coming on the market. Will you be interested?" In those circumstances, agreement is reached speedily and a transaction takes place. As the Bill is drafted, such flexibility will no longer arise. That is unreasonable. If one does not fulfil the procedures set out in the Bill, one can be fined up to level 5 on the scale of fines. That is the maximum criminal fine which a magistrates' court can impose. I find it amazing that someone who fails on a technicality in this area may be susceptible to a criminal charge at that level. I recognise that Schedule 1 refers to fixed penalties. I was attracted to the suggestion by the noble Lord, Lord Goodhart, of civil redress if we have to go down that road. So there is a problem there.
The home condition survey has to be undertaken by someone with a qualification yet to be established under regulations by the Secretary of State. It is interesting to note that such a measure was in the Estate Agents Act 1979. Clause 22 purports to deal with standards of competence of estate agents. For some good reason—I am sure that it exists but no one has ever explained it to me—that clause has never been implemented. If we have to devise a new qualification for home surveyors, will we ever get this measure to the starting post? There is a major problem there.
Reports will also have to be made on the thermal efficiency of a property. The number of people in this country qualified to do that work could probably be counted in tens, or at the most in scores. There are certainly not enough of them to do the work.
There are some fundamental flaws with Part 1. I wholly agree with the serious arguments that have been put suggesting that it should not make further progress. However, we have to face the fact that the Bill may have to progress in the normal way. I dread that prospect, because without a great deal more flexibility than the Government appear to have been prepared to show in the other place, I have grave doubts as to whether Part 1 could ever be put into sufficiently good order as to be satisfactory legislation that this House would be pleased to pass. That will be a potential difficulty in the future. I hope that we do not have to cross that bridge.
§ 10.46 p.m.
§ Lord Whitty
My Lords, as we have been in this Chamber solidly for two and a half hours, I do not 388 know what happened in Albania, but this has certainly been a game of two halves. I shall start with the second half.
We had a pretty wide welcome for Part 2, even if some noble Lords were more equivocal than others. Its general drift was welcomed by the noble Baroness, Lady Maddock and, to an extent, by the noble Baroness, Lady Hanham, with positive contributions also coming from the noble Earls, Lord Listowel and Lord Longford, who is no longer in his place—and quite right at this time of night. The noble Earl, Lord Listowel, gave graphic descriptions of why we need the provisions. My noble friend Lady Gould spelled out why women suffering from violence or the threat of violence, as well as other groups, need the new legislation.
I shall attempt to cover the questions that were raised. I accept that the use of bed-and-breakfast and temporary accommodation has increased and is at too high a level. That is largely a legacy of previous regimes and the treadmill created by the Housing Act 1996. We are tackling that through capital investment in housing. The Bill will ensure that suitable temporary accommodation must be provided for homeless households until a settled housing solution becomes available. That is one reason why an increase of £8 million for each full year has already been included in the revenue support grant settlement for local authorities. We are providing additional resources in both respects to meet the point made by the noble Baronesses, Lady Hanham and Lady Gould.
The problem is particularly acute in areas of high demand. The Government are very concerned about that. The backlog is mainly due to the insufficient supply of social housing. We are tackling that through increased capital grant, by doubling the Housing Corporation's investment programme and, by providing £250 million over the next three years for a starter home initiative to help key workers find accommodation.
The Bill creates some additional pressures, but it also provides greater flexibility for local authorities by removing the current restrictions on the way in which they allocate housing. The Bill facilitates but does not require choice-based letting schemes. We recognise that that will be much more difficult in some areas than in others. We also recognise that one has to treat differently the situation regarding temporary accommodation—the way in which to deal with those who are vulnerable and on the streets—and the allocation of permanent accommodation. There is a tendency to elide those matters. Although there is a read-across in that regard, the two matters have to be treated separately.
We agree that there should be strong co-operation between local authorities and registered social landlords. Registered social landlords are already under a statutory obligation to co-operate with local authorities. The Bill will require local authorities to consult registered social landlords. As my noble friend Lady Dean said, the Housing Corporation will strengthen its regulatory guidance, procedures and 389 funding arrangements to ensure that registered social landlords co-operate effectively with local authorities without the need for further statutory requirements. That co-operation is necessary if we are to achieve the aims of Part 2 and deliver improved facilities for the homeless.
The inclusion in the vulnerable groups of 16 and 17 year-olds, care leavers aged 18 to 21 and those who are vulnerable as a result of an institutionalised background—those from prisons, hospitals or the Armed Forces—will create additional dilemmas. However, that means that all groups are provided for and that there is a duty to do so.
This is an important proposal to secure the resettlement of people who might otherwise end up sleeping rough. It is important to distinguish between that effort and the long-term allocation of permanent housing. The proposal is not a recipe for queue-jumping or for altering the priorities that local authorities already give to different groups that are in need of social housing.
There may be pressure for reduced provision. The noble Earl, Lord Listowel, and the noble Baronesses, Lady Hamwee and Lady Maddock, suggested that the assistance for those with non-priority needs might suffer as a result of broadening the categories of vulnerable people. The Government have already included, during the Bill's passage through another place, provisions for strengthening the duty owed to homeless families or individuals with non-priority needs. We intend to follow that up by improving statutory guidance in that regard. The noble Baroness, Lady Maddock, raised several detailed questions in that context. I shall attempt to answer some of them now but I may have to write to her about most of them.
The noble Baroness asked about the minimum period of three days for considering a housing offer. The Government are concerned that a minimum requirement would become a maximum requirement, which many authorities might use as a yardstick. Local authorities must act reasonably and allow sufficient time for consideration. In certain circumstances, that will take more than three days.
The noble Baroness also asked about how to accommodate people who are pending review on appeal to a county court. We do not consider that it would be sensible to require local authorities to accommodate all applicants when an authority has decided that no duty is owed to it on the grounds that applicants are not in the priority categories. It is right for local authorities to retain discretion relating to accommodation in such cases. I shall write to the noble Baroness about the other four or five points that she raised.
The noble Earl, Lord Listowel, discussed the problems caused by housing benefit. We are well aware of those difficulties. Improving standards of administration is a key priority for the Government's reform of the housing benefit system. That was covered in our December housing statement.
390 A couple of other points that are not covered by the Bill were raised in our debate. The noble Baroness, Lady Byford, discussed housing in rural areas. We set out in the rural White Paper and in our planning guidance on housing—PPG3—new powers to ensure an adequate supply of affordable housing in rural areas. That is being addressed in a different context. We recognise that specific problems arise in relation to homelessness in rural areas.
The noble Earl, Lord Listowel, and the noble Baroness, Lady Maddock. raised the question of why there was nothing in this Bill in relation to multiple occupation. I accept that we have not included such a provision in the Bill but it remains a government commitment. We found neither the space nor the time to introduce the licensing of HMOs in this Bill. However, we do not intend to backtrack on that commitment. It makes greater sense to link licensing with other measures aimed at improving the quality of housing and it is our intention to come back to Parliament on those issues.
That deals with the points raised on Part 2, which was widely welcomed. Now we turn to Part 1. A real problem arises in relation to Part I. Everybody accepts that the present system does not work; almost everybody accepts that it should be speedier; some people consider it should be significantly cheaper and that there should be less uncertainty. However, the proposals that we put forward to achieve some of those aims are rejected.
The noble Lord, Lord Dixon-Smith, referred to a free market. If this were a labour market, many free marketeers and probably some of my friends in new Labour would describe it as sclerotic. It has huge rigidities. It is highly institutionalised and is far from transparent. We are attempting to address all those areas. The noble Lord, Lord Bowness, said that although it may be a bit on the slow side, it is cheap.
My Lords, with respect to the Minister, his survey said that; I did not. I only quoted it.
§ Lord Whitty
My Lords, that is at least one point on which we are in agreement. But the cheapness element only arises if we do not take into account aborted costs. One of the key aspects of the English market as distinct from other systems is the high level of aborted costs—£350 million is the figure that I quoted. I am not claiming that we will save all of those costs, but we can save a significant part of them. The noble Lord, Lord Phillips, said that of course there will be aborted costs—people move; people divorce; people change their minds; situations change; people decide that they want a different property after all. That is true. But that applies in other countries as well. Divorce and pregnancy have even been known to happen in Scotland. What is unique about the English and Welsh market is that the form of institutionalisation causes severe delays which are over and above those which 391 seem to apply in other systems. It is that problem that we seek to tackle. And nobody has actually put forward a better solution.
§ Baroness Byford
My Lords, I thank the noble Lord for giving way. He said that people change their minds abroad just as much as they do here. But in fact home ownership in this country is much higher than it is in other countries. Therefore to compare our figures with those of other countries is not a fair comparison. It does not detract from what the Minister says. But we should remember that home ownership is much higher in this country.
§ Lord Whitty
My Lords, that is true, and that would affect a comparison with the £350 million figure. But the time issue relates to individual transactions. There is no reason why, because we have a higher level of home ownership, we should have a longer period of transaction. If anything, one would have thought that economies of scale would be involved.
§ Baroness Maddock
My Lords, one of the other important matters is the chain. Because so many more people are m the housing market, the chain is much more of a problem in this country than anywhere else in Europe.
§ Lord Whitty
My Lords, that is a non sequitur. Simply because more people own their own homes does not mean that people should be involved in longer chains.
§ Lord Phillips of Sudbury
My Lords, I am obliged to the Minister for allowing me to intervene. I merely reinforce my noble friend's point. The fact is that if two or three transactions are inter-dependent, then they move like a convoy; that is, at the speed of the slowest transaction. If one of the transactions fails, then because of our prudent policy of not entering into a contract until one has a firm back-up contract, all of those transactions fall together. That is the fact of the matter. The Minister says that we have not come up with a better idea. With respect, I do not think that his Bill addresses the chain problem.
§ 11 p.m.
§ Lord Whitty
My Lords, by speeding up the process and putting upfront much of the information gathering, the likelihood of particular transactions falling through is reduced. Therefore, the impact on the chain is reduced. I accept that some noble Lords do not think that our proposition achieves that. However, I suggest that it does so better than the present situation. it may not be ideal but it goes some way to meeting the problems of the present market.
Other objections were raised. The noble Earl, Lord Caithness, began his remarks by stating that this changes the whole nature of the relationship between the agent and seller. Perhaps I may say to the noble Earl that it does not. The noble Earl is clearly a meticulous estate agent and surveyor. I may well take him up on his implied offer to help me when next I sell 392 my house. The fact of the matter is that he already has a duty under the Property Misdescriptions Act 1991. That Act requires estate agents to take reasonable steps to verify information provided by sellers. Therefore, the question of trust is already loaded on to the estate agent. The Bill does not change that basic situation.
Comment has been made that the Bill does not tackle gazumping. It does not do so head-on in the sense of banning it—there are misapprehensions about the Scottish situation—but it addresses gazumping indirectly by narrowing significantly the window between offer, acceptance and exchange of contracts, during which period gazumping frequently occurs. It is difficult to see how we could deal entirely with the problem of pulling out at the last moment or how we could ban gazumping completely. There will always be situations where it is reasonable that the seller should be able to offer the property to another buyer or to withdraw that property from the market. Nevertheless, if the proposals were accepted and operated across the market, I believe that the incidence of gazumping would be reduced significantly.
The noble Lords, Lord Phillips, Lord Goodhart, Lord Bowness and others all said that the seller's pack would add to rather than reduce the cost of buying and selling. There are a number of points to be made on that. First, the information in the pack is that which needs to be provided at some stage in the transaction in any event. The only additional item is the home conditions report. That is additional only in the sense that, as some noble Lords have said, in some transactions under the present system buyers do not commission their own surveys. Secondly, the overall costs are likely to be neutral between buyer and seller in many, if not most, cases. The seller's pack involves a shift in cost from the buyer to the seller. However, as the vast majority of sellers are also buyers, because of the chain, that balance will shift. Indeed, the only buyers who are not sellers are first-time buyers who face substantial costs. That will be shifted away from them. If we were to keep the whole burden of the cost on the buyers, it would continue to be detrimental to first-time buyers.
§ Lord Goodhart
My Lords, I am grateful to the Minister for giving way. Have the Government considered what would be a much simpler and cheaper way of achieving results than requiring the home condition survey and the seller's pack, which is to reverse the existing rules of caveat emptor; namely, the buyer is stuck with what he gets? If the buyer could sue the seller for any defects that had not been disclosed to him, that would, first, put the seller on his toes to ensure that he did make disclosure and, secondly, it would do so without this elaborate and bureaucratic system.
§ Lord Whitty
My Lords, the noble Lord referred to an elaborate and bureaucratic system. That would he replaced with one enforced by considerable litigation. We would have to hesitate before altering the general 393 presumption in every market under English law in relation to caveat emptor. I would be hesitant to go down that route.
§ Lord Whitty
My Lords, subject to statutory restriction, that is true. But where there is no statutory restriction, that is the presumption. Thirdly, in relation to costs—
My Lords, I am grateful to the Minister for giving way. I do not want to detain the House but I want to clarify an important point. Can he confirm that as things stand there will be no obligation on a seller in the pack to point out any defect in title and it must therefore be examined carefully by a buyer's solicitor? If a defect is found, the time spent will be the same as it currently is. If the buyer has to pull out, the effect will be precisely the same.
§ Lord Whitty
My Lords, the noble Lord's premise is right but his conclusion is not. It is right that there is not a requirement that defects in title should be pointed out and that it would be subject to the usual checking by the buyer's solicitor. The point is that the information required to be checked would be provided up front by the buyer before he goes to the market. That is where the time saving occurs.
I believe that I have made sufficient points in relation to the cost, except in relation to a point made by a number of noble Lords that the lenders will in any case require separate valuation surveys and therefore the apparent saving will not arise. Certainly, the lenders will continue to require separate valuation inspections but for the most part lenders are moving to a more simple system of valuation. Many have desktop methods of valuation assessment. The home condition report will assist them in that and will therefore provide cost savings either to the home buyer or to the lending organisation.
Many buyers will not regard the home condition survey, the seller's pack, as sufficient, as my noble friend Lady Gould said, and they will therefore commission their own survey as under the present system. But that is not an argument for not bringing as much of the information as possible to the market right at the beginning of the process instead of both sides having to proceed with the various professional bodies in parallel or in part in series through the lengthy process.
The noble Lords, Lord Phillips and Lord Dixon-Smith, asked how the seller's pack will bring pressure on the buyer to come to the market prepared. That is the other element of speeding up the process and bringing it up front. Because the seller's pack will provide up-front information the buyer can move quickly in relation to his own lender. He can establish an in-principle mortgage and that will rapidly smoke out any prospective buyer who is not serious. Therefore, both sides of the equation will be in a 394 position to share information and to move on the basis of that shared information at a much earlier stage than the process currently provides for.
There is the continuing problem in relation to the point made by my noble friend Lady Gould that buyers and lenders will not trust the home condition survey, but nevertheless they will have it at an early stage. If at that stage they consider it to be inadequate, they can take out their own additional survey. I believe that we will be able to rely on the home condition report to a large extent. It will be setting up a certification scheme for home inspectors to ensure consistency and high standards. A level of inspection will be similar to the current home buyer survey and valuation, which is the survey most commonly used by home buyers, and home inspectors will be liable to sellers, buyers and lenders so that they can enable all the key parties to any sale to have full confidence in their reports.
My noble friend Lady Gould asked about lenders. The Council of Mortgage Lenders has been consulted on this matter and is one of the main stakeholders involved in developing both the format of the home condition report and the associated regime which will underpin it. Therefore, the interests of lenders are fully engaged in the process.
The noble Earl, Lord Caithness, said that the home condition report was too simplistic. Like other noble Lords, he went on to query the Bristol pilot. The Government commissioned that pilot and paid for part of it. That pilot shows quite clearly that the seller's pack can be assembled quickly; and that it injects transparency into the process and gives buyers and lenders a clearer understanding of the property. It proves that the seller's pack increases certainty and that problems are resolved more rapidly than elsewhere.
My noble friend Lady Gould asked whether the Government relied entirely on the Bristol experiment. Part of the background to the Bill includes a study of international comparisons, the biggest study ever undertaken of the system of home-buying in England and Wales, a major consultation exercise involving about 1,000 responses, a study of 14 existing sellers' packs and, in particular, research into low value, low demand areas. It also included a litmus test of small businesses. We continue to look at the detailed implementation of the scheme. We have just commissioned a study to look at the role of insurance products. We shall consider other matters in the runup to implementation and the final regulations as regards the form of the seller's pack.
Two other main issues were raised: sanctions and how the scheme would operate in low value markets. It is claimed that criminal sanctions are completely inappropriate in this area. In order to be effective, the seller's pack must he backed by appropriate sanctions; otherwise, the temptation for people to attempt to market their houses without sellers' packs will be too great. In this context we have looked at whether we can use civil sanctions but have concluded that they cannot provide an effective deterrent. Civil sanctions can be 395 based only on the buyer taking action through the courts. The buyer will need to demonstrate that he has suffered financial loss in the process, which may not be easy.
Therefore, we have concluded that the long stop should be criminal sanctions. That is consistent with similar sanctions, for example, under the Property Misdescriptions Act 1991 and various obligations under the Landlord and Tenant Act. That does not mean that we have moved directly to criminal sanctions. Local trading standards officers will have discretion to take appropriate action where they find a person marketing a home without a seller's pack. That discretion will be vital in ensuring that action is proportionate, especially in cases where private sellers are ignorant of the law and make an honest mistake. There is a range of possibilities, from offering help and advice to a warning right through to the imposition of criminal sanctions.
§ Baroness Hamwee
My Lords, in drafting these provisions have the Government discovered whether criminal sanctions in the transfer of residential property are applied in any other jurisdictions?
§ Lord Whitty
My Lords, as the noble Baroness knows better than I, the distinction between civil and criminal law in other jurisdictions is a little more blurred than in this country, but certainly sanctions are applied in other regimes.
The final point on which I wish to touch is property in low value, low demand areas. Concern was expressed by the noble Earl, Lord Caithness, my noble friend Lady Gould and others about the effect on low value properties and whether they would come to the market. We have made it clear that we are prepared to consider measures where the seller's pack requirements would cause difficulty in particular areas or with particular types of property. We are preparing a consultation paper which will set out a number of measures that we might consider.
Under the Bill there is a possibility of having different instructions for different types of property. However, our research hitherto has shown that sellers' packs would offer benefits in precisely those low value areas about which people are concerned. As noble Lords have said, we must avoid the question of a two-tier market and of stigmatising properties in areas of declining demand and low value. That is quite a difficult area. However, there is the possibility under the Bill to provide separately for those areas.
Many points have been made tonight. Were we to have a normal process for the Bill, some could be explored in later stages. Many points misunderstand the benefit of this process and none provides a better solution to what, almost everyone is agreed, is the present problem with the housing market. Our proposals go some significant way to easing the pressure on the buying chain and will thereby bring some comfort and financial and time benefit to those engaged in 11-ie market. We recognise that other noble Lords think differently.
396 The noble Lord, Lord Dixon-Smith, referred, somewhat delphically to particular contingencies which might arise. They no doubt would he dealt with either within or without this Chamber. We may have to deal with those matters. However, despite the rather wide-ranging barrage of criticism of Part 1 of the Bill, no one has proposed anything better.
We are convinced that it is sensible to take the legislation forward. We shall consider how to deal with the matter at later stages. I very much welcomed the wide and heartfelt support for Part 2 of the Bill.
My Lords, before the Minister sits down, can he deal with the point raised by my noble friend Lord Caithness and, indeed, myself: what is the envisaged shelf life of the seller's pack and the home condition report—six months, one year or has it statutory immortality?
§ Lord Whitty
My Lords, as the noble Lord knows, none of us has statutory immortality. We are not proposing that the seller's pack should be required to be renewed. The only items likely to have limited shelf life are the home conditions report and possibly, in certain circumstances, replies to local searches. Since the home conditions report does not contain a valuation, and the question of a change in the market does not apply, and in most cases the physical nature of the property will not significantly have changed within a period that it is likely to be on the market, we are therefore not statutorily requiring renewal of the home conditions report. Should the seller decide that he needs to update that information or if the information is sufficiently old for buyers to be somewhat put off by the age of it, then clearly the buyer and his professional advisers might think it sensible to provide an updated report. But it does not seem sensible for us to put that in the statute.
§ Lord Phillips of Sudbury
My Lords, before the Minister sits down, he said three times that no one in the Chamber has come up with anything better than the provisions. Will he accept that it is the job of government to produce a Bill that makes things better? Does he further accept that he has not had a single speaker in this Second Reading debate supporting the proposals in Part 1 of the Bill?
§ Lord Whitty
My Lords, I certainly accept the noble Lord's description of the debate. I would, however, say that there are a wide range of people out there, including the Consumers' Association, many professions, and the majority of people we consulted in our various surveys who recognise the provisions as an improvement. There may be other improvements which can also be made. Indeed, we are pursuing some of them. We believe that this is an improvement. Although the House, as constituted today, does not accept that argument, we believe that we have support out there. We can make this work, and work to the benefit of both buyers and sellers.
397 On Question, Bill read a second time, and committed to a Committee of the Whole House.