Clause 3 - Duties of responsible person where a property is on the market
Homes Bill
10:00 am
Mr Nigel Waterson (Eastbourne, Conservative)
I beg to move amendment No. 35, in page 2, line 42, leave out
`shall have in his possession, at all times during that period'
and insert
`upon reasonable demand shall make available'.
Mr Roger Gale (North Thanet, Conservative)
With this we may discuss the following amendments: No. 38, in page 3, line 6, leave out `as it stands'.
No. 39, in page 3, line 8, leave out `at that time'.
Mr Nigel Waterson (Eastbourne, Conservative)
By good fortune, we move straight to the point that the hon. Member for Bath has been champing at the bit to debate. There are three amendments. Subject to your discretion, Mr. Gale, Conservative members intend to deal with them in a narrow fashion because there are issues that we wish to raise in the stand part debate. We have not had a stand part debate, apart from the accidental one that just occurred. I hope that you will weigh that in the balance when the time comes.
Mr Nigel Waterson (Eastbourne, Conservative)
Amendment No. 35 replaces the requirement for the seller to have the pack in his possession at all times with what we think is a much more sensible provision, namely to make it available upon reasonable demand. Otherwise, the responsible person—usually the estate agent, but possibly the seller himself—would have to take his seller's pack into this fictitious pub, no doubt on the corner of Acacia avenue, which is becoming rather overcrowded. No rational person would dream of visiting it for a quiet, relaxed drink because of the frenzied buying and selling of properties. Do Ministers really suggest that the seller should have the pack, which will become ever more voluminous with all the stuff that they insist on putting in by law, in his possession or about his person at all times during that period? Should the seller have the pack by his bedside table at night on the off chance that what I termed the conveyancing gestapo might ask to see it during one of its regular trawls through the pub?
It is ridiculous that the seller should have to have the pack with him at all times. It is sloppy drafting and I want to know what the Minister thinks. I cannot, for the life of me, see any objection to our amendment, which is a sensible departure from the text of the Bill.
Amendments Nos. 38 and 39, which delete the words ``as it stands'' and ``at that time'' respectively are probing amendments. They are both curious groups of words that leap off the page. The responsible person's obligation to provide a potential buyer with the pack is fine as far as it goes, but why ``as it stands'' and ``at that time''? The Minister needs to tell us more of what he envisages. Presumably, the words mean that the seller's pack will not be a static document but will be changed and updated as time goes on. If that is the case, and I assume that it is because the Minister is nodding, it opens up a series of possibilities that number among our objections to the Government's proposals.
We made the point—as did professional bodies and organisations—until we were all blue in the face, that the concept of seller's packs is not objectionable. A lot of people provide them already, but we do not think that they should have the force of law. We also debated new properties, and developers putting together seller's packs. It makes sense for those who want a rapid sale to put together some of the basic documents that they know they will be asked for anyway, sooner rather than later.
The practical difficulties arise with the local search—we will say more on that later—and the home condition report. Both documents have a definite shelf life. The local search might have a life of about three months. If applicants were particularly unlucky, the local search in the seller's pack could be rendered out of date if, shortly afterwards, a massive new development were approved by the local planning committee. That information would be found in subsequent searches.
Perhaps more importantly, there is the home condition report. It is far from being a full structural survey, but it is something, Ministers presume, on which most buyers will place great reliance in making such large purchases. However, the report will become out of date, for many reasons. A very hot summer can produce problems with subsidence; a wet spell can also cause trouble. Some areas, and not only those that recently experienced major flooding, have had problems with the rise in the water table and old springs coming to life, sometimes after centuries. Properties that were perfectly sound four or five months ago might present problems, if surveyed now, to a potential buyer. Those are some of the reasons why seller's packs are a neat concept on paper but are far removed from the real world.
We share the view of various professional bodies that we should exclude at least those two items; we will debate that in detail. The drafting of the clause implies that the Minister accepts that seller's packs will be amended and updated, which is fine in the practical world. Are Ministers not persuaded that, in the real world, seller's packs will not be as beneficial as the Government think and not worth the extra time, effort and expense involved? The last two amendments are probing ones and I am keen to hear what the Minister—or any other member of the Committee—has to say.
Mr Tom Brake (Carshalton and Wallington, Liberal Democrat)
I welcome you to the Chair, Mr. Gale.
I support the Conservative amendments. In relation to amendment No. 35, I was going to spin a detailed story about a sole estate agent on holiday abroad who goes to the beach, where he meets the trading standards officer to whom reference has been made, who recognises the local estate agent, approaches him and asks to see all the seller's packs for the properties currently advertised in that agent's window. I will not elaborate on the story because the Minister has said that although agents will be required to have a seller's pack in their possession at all times, they will have 14 days in which to deliver it. However, those two requirements seem contradictory. How can an agent be required to have a seller's pack in his or her possession at all times while having 14 days in which to provide a copy? I hope that the Minister will be able to explain what appear to be two highly contradictory requirements placed on agents.
Turning to amendment No. 38, of course it is important to discourage sellers from delaying a sale by embarking on a series of possibly spurious searches or inquiries that might delay the handing over of a seller's pack. However, what if the seller is a pillar of the community—a Member of Parliament, doctor, accountant, or even an estate agent—who becomes aware that a significant change is about to occur in the local area, such as the local authority having granted permission for one of the many new incinerators that are to be built to be located close to the property that is being sold? I am sure that that person would want to reflect the changes in the seller's pack, so that the buyers would not come knocking on the door in a few months' time or get in touch with the local press about the dud that had been sold to them.
There will be circumstances in which the people providing the seller's pack will want to be able to update it, which would be to the benefit of the person purchasing the property. Will the Minister make clear whether that will be allowed or whether the seller's pack must be handed over as it stands, irrespective of changes such as work of a major structural nature having been carried out to enhance the property,? I hope that it is not the case that the pack cannot be changed.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
To help the Committee, I shall start by explaining the structure of the clause, particularly the two separate obligations correctly identified by the hon. Member for Carshalton and Wallington (Mr. Brake) which are laid on the person or persons responsible for marketing the property. They are necessary and complementary, not contradictory, as he implied. I hope that when he understands the logic behind the clause, he will accept that.
The first of the obligations, set out in clause 3(2), is that the person responsible for marketing the property should have a seller's pack in his or her possession at all times when the property is on the market. The second obligation, set out in clause 3(3), is to make available to a potential buyer, on request, and subject to a payment of any reasonable fee required to cover the cost, a copy of the seller's pack or any document from the pack.
Clause 3(5) allows up to 14 days to comply with the second obligation. That is necessary to allow reasonable time for a copy to be obtained, or for the photocopying operation to be undertaken if necessary—that answers the question that the hon. Member for Bath asked my hon. Friend the Under-Secretary—and to allow for sickness and holidays. A sole estate agent who went on holiday would put his business at risk if he did not make arrangements to cope with customers' requirement during that period. One assumes that a sole estate agent would not desert the office for a period of greater than 14 days, as he would endanger his business as well as risk not complying with the requirement.
Mr Tom Brake (Carshalton and Wallington, Liberal Democrat)
Will a sole estate agent be required to arrange for someone to be present on his premises at all times who will have access to the seller's pack if a request is made for one?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
No. Let me distinguish between the two separate obligations. A sole agent will be obliged to ensure that he can meet the requirement to provide a copy of the pack within 14 days. He will be subject to the obligation to have in his possession—I will come on to the definition of that in a moment—a copy of it at all times.
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I have a simple question. Will the Minister make clear whether 14 days means 14 working days, or does the period include bank and public holidays?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
It means 14 days.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
Yes, there are no excluded days.
Perhaps the best way to explain the need to require a responsible person to have the seller's pack in his possession is to describe the sort of loophole that would arise if the first of the two obligations did not apply. Let us assume that a property in Penzance is put on the market by a responsible person living in London. That can and does happen, say, if the seller is selling the home of a deceased relative or an agent is acting in respect of a property located some distance from his office. If there were no requirement to have a seller's pack in his possession, a responsible person, in the strict clause 2 sense, might be tempted to begin marketing without a pack, in the knowledge that if anyone asked for a copy he would have 14 days to put one together and could not be easily approached because the property was a long way away from the agent's office. We want to avoid such a loophole.
The objective is to ensure that the seller's pack is compiled and is therefore available when the property is being marketed. That is the reason for requiring the responsible person to have a copy of the pack in his possession. The ancillary reason relates to enforcement, to which we shall return later. A trading standards officer can check that the requirement is being complied with simply by visiting the agent and asking for a copy of the seller's pack. Without that obligation, it might be difficult to establish that there has been a breach of the legislation. The aim is to ensure that the obligations in the legislation are met. I shall come on shortly to possible misinterpretation of the requirement to have a pack in one's possession at all times, which I know has aroused concern.
Mr Nigel Waterson (Eastbourne, Conservative)
Before the Minister leaves that point, given that an estate agent can take a full 14 days to produce the seller's pack, with the result that that a potential buyer can be deprived of it for 14 days in any event, why does it add anything to have the separate obligation he describes?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
The hon. Gentleman cannot have heard what I was saying in response to the earlier intervention. That will enable the trading standards officer to call on the agent's premises and ask for a copy of the seller's pack, which should be available because the property is being put on the market. It is simply a reinforcing measure, designed to ensure that the Bill's provisions are put into effect.
Mr David Curry (Skipton and Ripon, Conservative)
Let us pursue the Minister's analogy. Let us say that in a couple of months' time, the electorate make a horrible mistake and I have to sell my constituency house in North Yorkshire. In the light of the Minister's improbable scenario, I may decide to entrust it to an estate agent and put it on the market in Kennington. Why should that be a better option than putting it on the market in Ripon? Is the Minister seriously suggesting that the trading standards officer of Lambeth council is going to investigate whether a seller's pack is available in an estate agent's office in Kennington for the sale of a small cottage in North Yorkshire? That seems implausible. If a potential purchaser asks for the details but the agent does not have the seller's pack, is he going to head off to Lambeth town hall to complain to a trading standards officer? It is a belt-and-braces approach, but it is not very practical.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I hope that I can satisfy the right hon. Gentleman by explaining how profoundly practical it is. The provision is designed to cover circumstances in which evasion might otherwise be covered up. I suspect that his feared scenario may well be forthcoming after the next general election, although I hope that the right hon. Gentleman, whom I have known for many years and for whom I have considerable respect, does not himself have to face the scenario he describes. However, if he did, he might find it easier to put his Ripon property in the hands of a national estate agent whose offices are in London.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I shall not pursue the analogy any further. In those circumstances, it might be difficult for the potential buyer of the Ripon property—which might be desirable, despite its former use—to obtain the necessary documentation that the seller's pack would provide. I accept that that will not happen in the vast majority of cases, but it will in some, so safeguards should be in place. The key safeguard is that an aggrieved person can ascertain whether the law has been complied with simply by visiting the agent responsible for the marketing to establish whether a seller's pack is available. If not, the law has not been complied with.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
In a moment.
All sorts of interesting defences based on speculation and the theoretical mislocation of the seller's pack could be resorted to, which is why the person responsible for the marketing must have a copy of the seller's pack in his or her possession at all times.
Mr. Curry rose—
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I will give way to the hon. Member for Carshalton and Wallington, but I shall give way first to the right hon. Gentleman who wants to follow up his previous point.
Mr David Curry (Skipton and Ripon, Conservative)
To return to the trading standards officer, under best value regimes through which the effectiveness of local authority services are tested, should trading standards officers be proactive and therefore descend from time to time on estate agents to verify whether the seller's packs are in place, or should they act only in response to complaints?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
Trading standards officers will act in accordance with the concordat that governs their general operations. They will tend to act on complaints, except when they have reason to believe that one particular person is breaking the law, in which case they may decide to visit. I would expect a reasonable trading standards officer not to behave in the wholly fanciful way suggested by the hon. Member for Eastbourne—arriving in jackboots to investigate whether seller's packs are available. A good officer would respond to complaints: if a complaint were received that a property had been put on the market without a seller's pack, the officer would call on the agent to find out. If a series of complaints were received that a particular agent was not complying with the law, the officer may well choose to make an unannounced visit to ascertain whether properties being advertised by that agent had seller's packs. That is how I assume trading standards officers are likely to behave.
Mr Tom Brake (Carshalton and Wallington, Liberal Democrat)
I apologise for returning to the same point; perhaps it is because of our late nights. The Minister referred to the aggrieved person who might request the seller's pack. Let us return to the beach scenario and say that the estate agent takes a three-week, not a two-week, holiday. To judge from what the Minister said, a sole estate agent will be required to arrange for someone to be present in his office so that when the aggrieved person or the trading standards officer turns up asking to see the seller's pack, someone will be there to receive him and to produce the documents. The defence that the estate agent is on holiday will not be good enough. I thought that the Minister said that it would not be a requirement for a sole estate agent to have someone on the premises; in fact, on the contrary, that will be a requirement, so that, when the trading standards officer turns up on the first day of the estate agent's holiday in Benidorm, the person present can give the seller's pack to the aggrieved party.
Mr Roger Gale (North Thanet, Conservative)
Order. The interventions are becoming shaggy dog stories. Interventions must not be speeches.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I fear that the hon. Gentleman does not have a deep understanding of the way in which businesses operate if he thinks that an estate agent, a sole practitioner, can go on holiday for three weeks without making provision for his office to be staffed during that time. If such a person does not make such an arrangement, he is unlikely to have a business when he comes back.
The obligation is on the agent to have a copy of the seller's pack in his possession and to respond to a request for that pack within 14 days. If he were to be abroad for some time, to satisfy the second obligation he would have someone able to deal with the business in his absence, which is a normal, common-sense business arrangement. The proposal will not require a person to be on his premises with a copy of the seller's pack at midnight on Sunday evening. That would be taking the matter too far.
The formulation proposed in the amendment—an obligation to make the pack available on reasonable demand—is another way of closing that loophole. We considered that solution but, on balance, concluded that requiring a responsible person to have a copy of the pack in his possession was a more appropriate option. Having gone to the trouble and expense of compiling a seller's pack, it is reasonable to assume—without making it a legal requirement enforced by the criminal law—that a responsible person would make the pack available for inspection by a potential buyer. That is why we did not follow the route suggested in the amendment; our alternative is a more satisfactory way of achieving our aim. I do not denigrate the Opposition's reasonable approach, but hope that they accept that there are good reasons for preferring our option.
We are considering the wording of clause 3(2), as
in his possession, at all times
could be interpreted as the agent having to carry a pack with him wherever he goes. That is not our intention. We will introduce an amendment at a later stage to clarify the position. The matter is complex, as we do not want to open another loophole; equally, however, we do not want people to be subject to an unreasonable misinterpretation. I hope that the hon. Gentleman will accept that as an indication of our good intention to achieve the purpose without opening another loophole.
Mr David Curry (Skipton and Ripon, Conservative)
What else could the phrase mean but that the pack must be in the estate agent's possession wherever he goes?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
There is concern that it could be interpreted in a slightly fanciful way.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
The common-sense interpretation is that if, for example, the right hon. Gentleman were to leave the Committee Room for a temporary break to have a cup of coffee, he would not be required to take the seller's pack with him to comply with the requirement.
The right hon. Gentleman will understand, because he was a Minister and he knows the problems, that there could be an over-detailed interpretation of the proposal. For that reason I have undertaken to reconsider the issue. We shall, if it is necessary, table an appropriate amendment at a later stage.
Under clause 3(3), (4) and (5), a responsible person will be under an obligation to provide a copy of the seller's pack or an extract from it within 14 days of a request being made by a potential buyer on payment of any fee required to cover reasonable costs. Failure to comply with that obligation will be an offence. Clause 3(3) makes an allowance that the copy that is required to be provided is to be of the seller's pack or of the requested extract from it as it stands when the request is made. The hon. Member for Eastbourne asked what that meant. The allowance, which the amendments would remove, is most important to ensure that the obligation does not impose an undue and unreasonable burden.
As I said, we envisage that the contents of a seller's pack might change over time. Under clause 7(8)(a) the Secretary of State may provide in regulations for the time at which any document is to be included in the seller's pack. We have in mind to use that power to allow properties to be marketed with an incomplete seller's pack when, through no fault of the seller or the seller's agent, a prescribed document or information is not available or cannot be supplied within a reasonable period. It would be unreasonable to prevent the property being marketed when, for technical reasons, one document was not available; some flexibility is necessary. In such cases, the missing item or items must be indicated in the seller's pack and inserted when and if they become available. The contents of the pack could also change if the seller chose to update certain information.
The hon. Member for Eastbourne, who raised the matter, may suggest a lurid interpretation of the cost involved, but in the most likely instance—a search—we hope that the introduction of the national land information system will make it possible to find out almost immediately whether there has been any change. It would be a simple, straightforward and cheap way of obtaining that information, thus obviating the need for an update—provided, of course, that the reply is that there has been no change. That is why it is appropriate to consider updating; it is not an open door to large, additional costs.
Mr Tim Loughton (East Worthing and Shoreham, Conservative)
I understood the clause as drafted to refer to the documents available in the pack. The Minister said that the Secretary of State may specify documents that may not need to be included at that stage; presumably, that does not include important documents such as the survey. The Minister of State used the phrase ``when and if'' those documents become available. Will he qualify the ``if''? Let us take the damp-proofing guarantees, for example, which are just the sort of documents he refers to. At what stage will it be deemed inappropriate to search for or to provide a replacement for a missing certificate?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
The hon. Gentleman makes a fair and reasonable point, of which the damp-proofing certificate is a classic example. There is an obligation for documentation such as guarantees to be assembled, provided that the seller has that documentation available. As the hon. Gentleman knows, a guarantee may have been issued a long time ago and lost. The seller may believe that the document will be found and put a note in the pack stating that it will be provided when it turns up, but he may fail to find it. A guarantee of that nature will not be fundamental, because it is an ancillary element; the lack of such a document would enable the buyer to decide whether the price to be offered should be reduced for that reason, but it would not make the pack fundamentally deficient. The hon. Gentleman suggests that the house condition report is fundamental, and that the absence of a document would mean that a satisfactory pack could not be assembled, but it is in the nature of documents such as guarantees that they may not be found. That is why the word ``if'' is used, although it is in the seller's interest to provide those documents as soon as possible.
Mr Tim Loughton (East Worthing and Shoreham, Conservative)
I am grateful for the Minister's explanation. Let us suppose that it is specified in the pack that the seller is likely to or will provide some guarantees, including one on damp-proofing, but the guarantees do not turn up by the time contracts are exchanged or the sale completed and do not subsequently turn up, even though the vendor has given the impression that they exist and that documentation could be provided. What legal rights has the purchaser? He has completed the transaction, but has not been able to take possession of the additional guarantees that he was led to believe would be forthcoming in the seller's pack. What specific redress does he have? The price has been settled, so no reduction can be negotiated.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
The hon. Gentleman makes a fair point, but he is pushing a little too far. As I said, the purchaser could judge what price to offer if the documentation does not become available. Any solicitor advising such a purchaser would advise him to be wary of promises regarding documentation that has not materialised. If the solicitor acts properly and professionally, he will advise the purchaser to take a view on what discount might be made in the offer price in the light of the absence of the documentation. Of course, the caveat emptor principle still exists: the buyer would have taken the decision knowing full well that the documentation was not available, even though it had been promised. The buyer would be taking that risk—but at least he will in a position to know that the documentation is absent. That is one of the advantages of our provisions stating that the pack must mark the absence of documentation that it should otherwise contain. The buyer will act having reasonable knowledge about the absence of information, and will be able to form a judgment based on it.
Mr Tom Brake (Carshalton and Wallington, Liberal Democrat)
Does the Minister intend to state what documents will be absolutely necessary in the seller's pack? I am worried that technical reasons might be used to excuse the presence of any number of documents including, for instance, a home condition survey.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I ask the hon. Gentleman to be patient. The contents of the seller's pack are the subject of regulations to be made under a later clause, so we will have a full debate on them. I would not want to incur your wrath, Mr. Gale, by moving too far ahead of our logical procedures. I undertake to return to the subject when we reach the relevant point.
Mr Don Foster (Bath, Liberal Democrat)
In the event that the sale is protracted, common sense and the Minister's comments make it clear that there will be opportunities for the seller's pack to be updated to contain new additional information. Will the vendor be required to notify those who received earlier versions of the seller's pack that amendments and updates to it have been made, or does the Minister think—I would be tempted to share the view—that it would simply be a matter of good practice on the part of the vendor to do so?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
It certainly would be a matter of good practice. I can envisage circumstances, such as if the property had been on the market for a long time, in which the agent would simply not have a means of contacting people who had expressed an interest but not left forwarding addresses. It would be difficult to impose an absolute obligation, but informing people where possible would be good practice.
Under amendments Nos. 38 and 39, if the contents of the pack changed between a copy of the pack being requested and being provided, the responsible person would be obliged to provide a copy of the revised pack—and all within the 14-day deadline; the pack could change on day 13, for example. If a copy of the new or revised document could not be obtained and provided within 14 days of the original request, the responsible person would have committed an offence. To put people in a position in which they could be in breach of the law in such circumstances would be wholly inappropriate and unreasonable. In such circumstances, the responsible person will be expected to make every effort to ensure that the copy documents are fully up to date, but that should not be made a formal obligation subject to criminal sanctions.
In view of what I have said about the circumstances in which we intend to allow properties to be marketed with an incomplete seller's pack, I hope that hon. Members will consider not moving amendment No. 29 when the Committee turns its attention to clause 7, when, as I told the hon. Member for Eastbourne, we shall return to the subject in detail. For now, I hope that the hon. Member for Eastbourne will withdraw amendment No. 35.
Mr Nigel Waterson (Eastbourne, Conservative)
I am grateful to the Minister for that long and fairly complex series of explanations. I shall seek the leave of the Committee to withdraw the amendments, but first I reiterate that if the official Opposition are unable to talk the Government out of the lunacy of making it subject to law, we should not heap too many obligations on people who are going about their ordinary business—even hapless estate agents in Benidorm. A great deal more work needs to be done on the possession point.
I hope that the Minister will not think me churlish, given that he has undertaken to reconsider subsection (2). On first reading, the phrase
in his possession, at all times
leaps off the page. I am surprised that it passed quality control checks in Whitehall. It certainly should be reconsidered. Presumably, a vast body of law, including drugs legislation, states what does and does not constitute possession. The Minister would be well advised to get away from that, or at least to table an amendment on similar lines to ours. I have a hunch—I could be wrong—that a Government amendment will emerge sooner or later that is not dissimilar to amendment No. 35. The Minister has been good enough to say that he will reconsider the matter, and we are pleased about that.
Amendments Nos. 38 and 39 have done their job as probing amendments in that they have brought out the inherent absurdities of the legislation. The Minister tried to shrug it off, but dating the seller's pack and so on will only add to the cost—in some cases, unnecessarily. The Minister had no choice but to accept the fact that not only will the packs need to be updated, but that some documents will not become available in good time—some, as my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) pointed out, may not become available at all. I do not remember ever buying a property when the damp-proofing guarantee was produced on time—indeed, sometimes it could not be found. It is a mystery why anyone should bother issuing them.
Cracks are beginning to appear in the Bill. It is envisaged not only that people will have to scrabble around putting the seller's pack together, but that they will not always be able to put it all together because papers, some of them important, will be missing. For instance, the home condition report may not be available at the start because the seller wants to use the services of a particular surveyor—perhaps one he has used before—who turns out to be on holiday. It is a serious matter because, in many cases, the seller's pack may not be complete.
However, we shall return to those points at some point. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I beg to move amendment No. 61, in page 3, line 27, at end insert—
`(7A) Subsection (7) does not apply to anything provided at the request of a potential buyer under subsection (3)'.
We come to the first of the Government amendments. As the hon. Member for Eastbourne was somewhat churlish in the opening moments of this sitting by suggesting that it was unreasonable of us to table the amendments, I remind him that, on Tuesday morning, he said:
Every Bill involves consequential and drafting amendments that are tabled by the Government, and we have no difficulty about that.—[Official Report, Standing Committee D, 16 January 2001; c. 6.]
I assure him that amendment No. 61 is a consequential and technical amendment that removes unnecessary duplication. It is the first of a small number of Government amendments; they are all technical, and they do not reflect any change in policy or substance.
In case the Committee would like further enlightenment about amendment No. 61, I shall explain that clause 3(7) seeks to ensure that if a person supplies something purporting to be a copy of the seller's pack to a potential buyer, the documents supplied are accurate copies. The duty imposed by the subsection also applies regardless as to whether the potential buyer asks for them or not. Clause 3(3) already provides for those duties in cases in which copies of documents are requested by potential buyers. The amendment therefore removes a provision that is an unnecessary duplication. I hope that all hon. Members will recognise that the amendment is helpful and simplifies the Bill.
Mr Nigel Waterson (Eastbourne, Conservative)
I have never claimed to be the sharpest tool in the box, but I did have difficulties with the amendment. I am relieved to see that I am not the only one. The note supplied to me by the Law Society begins
God knows what they are trying to do with this one.
So I am not alone in finding the amendment opaque. However, out of my abiding respect for the Minister, going back many years, I shall accept his assurance—simply because I still do not understand what the amendment is supposed to do. With respect, perhaps if the Minister had spoken more slowly, it would have made a difference. I do not understand his explanation. Let the record show that I am entirely relying on the Minister's seller's pack, as it were. I reserve the right to sue him, or at least return to the issue, if it turns out that my confidence was misplaced.
Mr Don Foster (Bath, Liberal Democrat)
I endorse every single word uttered by the hon. Member for Eastbourne with one notable exception, which is founded on the fact that there appears to be a secret deal between the Law Society and the hon. Gentleman, since I have not received a copy of the brief he mentions. Questions will be asked. As for the amendment, despite the Minister's explanation and having looked at the amendment again, I still do not understand it and will therefore have to take it on trust, in the same way as the hon. Member for Eastbourne has.
Amendment agreed to.
Mr Nigel Waterson (Eastbourne, Conservative)
I beg to move amendment No. 1, in page 3, line 28, leave out subsection (8).
Mr Roger Gale (North Thanet, Conservative)
With this it will be convenient to take amendment No. 2, in clause 4, page 4, line 12, leave out subsection (5)
Mr Nigel Waterson (Eastbourne, Conservative)
In stark contrast to the previous amendment, amendments Nos. 1 and 2 are important. Amendment No. 1 seeks to remove clause 3(8). We shall return to the detail of enforcement and penalties later, but the subsection seeks to make it clear that a person to whom the clause applies—someone under an obligation as a responsible person to have a seller's pack in his possession—shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale if he fails to meet that obligation.
Before we go any further, it might be instructive to look at level 5. I have not practised as a criminal lawyer in recent years but, other offences punishable with the same level of fines include those under the Restriction of Offensive Weapons Act 1959 covering the manufacture, sale, lending or giving of a flick knife. It strikes me as bizarre that we are talking about a maximum penalty similar to that which applies to the manufacture or possession of a flick knife. I vaguely recall that that legislation was enacted in response to an epidemic of people carrying and using flick knifes. I do not think that the Minister, even at the height of his hyperbole, would suggest that we might face a similar breakdown in law and order in the conveyancing world, requiring that kind of draconian punishment.
We strongly oppose the imposition of criminal sanctions for breaches of the legislation. I start from my usual position, which is that we do not believe that any of the provisions should have the force of law. Sensible people will use a version of the seller's pack in certain circumstances, and if that is what they want to do, that is fine. We believe in the principle of caveat emptor. We would also strenuously argue that where ordinary people are going about their ordinary business and seeking to enter into free contractual relations, that is really a matter for the law of contract.
One of the proposals that we might discuss later was raised by the hon. Member for Upminster (Mr. Darvill) on Second Reading. He clearly has a great deal of knowledge and experience of the subject, which is no doubt why he is not a member of this Committee. He made the point that another possible enforcement mechanism might be that one cannot register a property one has bought unless one has complied with the provisions of the legislation. That has a neatness about it that might appeal to rational Ministers. It is comparable to the state rather neatly ensuring that people pay their stamp duty by requiring that they cannot register their property unless they have done so.
That is a neat way of dealing with a problem of enforcement, which does not involve the great panoply of criminal sanctions, or the forces of the trading standards officers. It would appear that those officers are not only to be required to bring prosecutions when complaints are made—presumably by disgruntled, would-be buyers—but will have a more proactive role in trawling through public houses and elsewhere to ensure that people are not subverting the provisions of the Bill, as well as making spot checks at the offices of estate agents to ensure that they have the seller's packs.
Mr Don Foster (Bath, Liberal Democrat)
In view of the hon. Gentleman's remarks about what will have to happen to the work of the local trading standards officers, has he reflected further on the Minister's statement to the Committee that the average cost of the whole exercise to a given local authority is likely to be £5,000 a year?
Mr Nigel Waterson (Eastbourne, Conservative)
I share the hon. Gentleman's scepticism of that figure. It sounds like a suspiciously round figure. The amount will vary enormously. There will be some councils in low-demand, low-value areas—of which we will hear more—where there will be hardly any extra expenditure because hardly any buying and selling will be going on, and not many people will be prepared to invest in a seller's pack just to see if their property has any value. However, there will be other places, such as Westminster, where there will be a tremendous cost because there is a vigorous and active property market at the worst of times—the same would be true of Lambeth, for example. The Minister's figure is not helpful or defensible, and it does not represent the disproportionate costs for different local authorities around the country.
We, and bodies such as the Law Society, consider it abhorrent that ordinary, law-abiding people—particularly people who are not acting through agents, but are trying to sell their own properties—might be made criminals through no fault of their own. We have had endless debates about the fine distinctions that may have to be made in regulations concerning informal discussions, dealings with individuals and so on. It is no good the Ministers airily waving their arms around and saying, ``Nobody would bring a prosecution in such a circumstance, nobody would pursue that, and, if someone nipped out for a cup of coffee that would not amount to not having been in possession of a seller's pack.'' Those are not matters for the Committee, and they are certainly not matters for Ministers. Such matters will be adjudicated on in the first instance by the trading standards officers, who are hard-pressed, in short supply and have many other duties to perform. They will subsequently be adjudicated on by a court of law.
Why should a person be made a criminal for trying to sell his own house? Is there any other country in the developed world where one could be made a criminal for such a reason? We have heard a lot about Denmark and New South Wales, and it would be interesting to hear what sanctions, if any, operate there or in other jurisdictions where there is an equivalent to seller's packs. The creation of criminal offences is disproportionate to the circumstances that need to be dealt with. No Governments, whatever their colour, should create new criminal offences unless there is an overwhelming case for doing so.
I rely also on a point that has been made before—it has almost been mentioned enough for us to give it a letter, so we can refer to it simply as argument Z—that if seller's packs are so much to be commended and will make such a difference, people will adopt them out of enlightened self-interest. Buying and selling property is a private contractual matter between willing buyers and sellers, who reach a price and agree the terms through their lawyers, for the disposal of a piece of property. It has nothing to do with the state—particularly the nanny state.
Amendment No. 2 would delete the criminal offence of not handing a pack to a would-be buyer, subject to certain defences, under clause 4. We consider the criminal sanction an inappropriate reaction to such a breach. How could the seller be sure that a person was a potential buyer? Some strange defences arise, which I shall not deal with now, but judgment and the view that a person takes at the time must come into the matter. Criminal sanctions are disproportionate to the problem that the Bill is intended to tackle. The proposal for such sanctions in the Bill is perhaps the greatest of our concerns.
Mr Tom Brake (Carshalton and Wallington, Liberal Democrat)
I support the amendments. If the seller's packs will be as useful and in as much demand as we are told, they will sell themselves and become common in the industry. They will become best practice, so I do not understand the need for fines.
It appears that the Government intend to introduce a list of exceptions. They have already suggested that, for technical reasons, it will be acceptable for certain parts of the seller's packs to be unavailable. By making their use mandatory but allowing technical exceptions they are opening many avenues for challenge. Perhaps doing away with fines and introducing seller's packs on a voluntary basis might simplify matters with respect to the possibility of legal challenge.
Finally, will the Minister would clarify the upper limit of a level 5 fine?
Mr Geoffrey Clifton-Brown (Cotswold, Conservative)
I support the argument of my hon. Friend the Member for Eastbourne, who succinctly described the worst aspect of the Bill. We have already heard numerous scenarios that suggest that the Bill will be difficult to implement. I understand that the measure is intended to speed up property transactions, but the more burdensome the requirements of the seller's pack become, the slower the transaction is likely to be. It will take longer to prepare the pack and for purchasers' solicitors to check it.
Another consideration is that, the more burdensome the seller's pack, the more cursory will be the information. Estate agents and others involved will ask, ``What is it that we've got to provide solely to comply with the Act?'' A seller's pack that gives an accurate and complete picture is needed, because that is what purchasers and their solicitors want when they buy a property. However, if the obligation is too burdensome and criminal sanctions are involved, those involved—human beings being what they are—will naturally provide minimal and cursory information. I say that the spirit of offering helpful advice to Ministers in their consideration of what to include in regulations.
There is a worrying trend in this country toward making criminal sanctions available to additional groups of public servants. There must be something wrong with a country that does that. After all, we are talking not just about the fine levied at the time: when a person contravenes the regulations, not only will he have to pay the fine, but he will receive a criminal record. The knock-on effect on a person and his family can be huge, resulting in people being unable to get credit or suffering various other problems. We should use regulations that involve criminal sanctions very sparingly. A matter that essentially involves civil contractual law should not in any way be extended into criminal sanctions. To do that would be wholly reprehensible.
Another aspect relates to trading standards officers. They receive good and extensive training in how to deal with many matters, but they are not trained to be specialists in property transactions. When they see a complicated extract of title, how will they know whether a full and complete extract has been supplied? They will have to undergo new training. Then, there will be huge arguments about whether a seller has provided full and complete information. Litigation will follow and there will be court cases about whether the trading standards officer considers that the estate agent has provided the full information to comply with the law.
I hope that the Minister will reconsider the matter. A fine at level 5 is £5,000—a substantial sum. Through our constituency cases, we all know that some officials are more zealous than others. I can fully envisage circumstances in which over-zealous trading standards officers, perhaps because they have a grudge against an estate agent, make that agent's life very difficult. As I said, the imposition of criminal sanctions would be wrong. My hon. Friend the Member for Eastbourne has suggested a neat alternative mechanism, whereby a person could not register a property until he had paid a penalty, which is similar to the arrangements regarding stamp duty. Such penalties would essentially be civil fines, which would be a much better way of imposing sanctions under the Bill.
I do not think that I will be the last person to raise the issue of criminal sanctions. Eminent lawyers in the other place will shred this part of the Bill when they get hold of it. If the Minister does not respond satisfactorily today, people in the other place will want answers.
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I am happy to rise to that challenge. Let me put this important issue in context. As the prelude to reform, we conducted the most extensive research ever into the home buying and selling process in this country. The results of that research and the following consultation exercise show that the proposed changes are warmly supported not only by the public, who will benefit, but by many professionals, who see enormous advantages in having information up front, at the start of the process.
Our proposals are the result not of theoretical analysis but of very detailed research, followed by a pilot study and accompanied by detailed discussions with many people. The public are fed up with the present system, which is slow, inefficient and extremely expensive. Although the costs may seem to be low, as the hon. Member for Eastbourne said in a previous sitting, about £350 million—a huge sum—is incurred by the failure of 28 per cent. of transactions between acceptance of an offer and the point at which contracts are normally exchanged. That is a scandal that the public want to eliminate. They want a more efficient system and that is what we seek to deliver.
Despite all the support from the public—I have no doubt that the packs will be popular—their benefits will not become universally available unless they are made mandatory. Even if the overwhelming majority, say 95 per cent., of the public adhered to the system, there would always be freeloaders who wanted to enjoy the benefit of a seller's pack when buying a property, but did not offer one for the property that they are selling. Not only is that cheating, but it puts the whole process at risk. It requires only one sale not to have the benefit of a pack for problems to emerge when a buyer conducts surveys and searches; the whole chain, involving many people, can be disrupted. The failure of one individual to participate in the process can have knock-on consequences for many others. I fully understand the argument of the hon. Member for Carshalton and Wallington that if the packs are so popular they should sell themselves, but it requires only one person cheating the system for personal benefit to wreck not only one transaction, but many.
Mr Tom Brake (Carshalton and Wallington, Liberal Democrat)
Is it not ultimately the decision of the person in the chain who decides to proceed whether or not the person from whom he or she is buying has a seller's pack?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
The hon. Gentleman has not understood my point. It is precisely where an individual decision to allow progression to take place without a seller's pack that all the problems inherent in the current system are likely to re-emerge. Unless buyers were very foolish they would, on the advice of their lawyers, undertake searches that might reveal something problematic, thereby possibly initiating the process with which we are all so familiar of the price being renegotiated, a row developing and the sale collapsing—affecting not just that sale but all the others in the chain. To use the analogy of motor insurance, while the vast majority of responsible, sensible people want to arrange such insurance, some freeloaders try to evade it. That is why we have a sanction against people driving a car without being insured. Seller's packs are an exactly parallel case.
The amendments would remove the sanctions that we have put in place, leaving civil proceedings as the only means of redress for a person who suffers as a result of a failure to comply with the seller's pack obligations. We looked closely at civil sanctions as one of the enforcement options discussed in our consultation paper, but concluded that they could not offer effective safeguards. They would depend on a buyer suing the person who had marketed the property without a seller's pack, and to require buyers to incur the costs and effort of initiating such action would impose an unreasonable burden on them. In most cases, they simply would not bother, so there would be no effective sanction against someone who was systematically breaking the law. While I understand the readiness of the hon. Member for Eastbourne to reach for a writ at the first opportunity—I refer to his comments on the previous amendment—the vast majority of members of the public would not feel similarly inclined. The inevitable result would be that the law fell into disrepute through lack of enforcement.
Criminal sanctions would not have to rely on action by the buyer, as local trading standards officers could initiate enforcement action. As I made clear to the right hon. Member for Skipton and Ripon (Mr. Curry), their response would depend on the circumstances, and they would have a large measure of discretion. Our view that criminal sanctions are the right way to ensure compliance is supported by the Consumers Association and the National Association of Estate Agents. The NAEA's members will be most affected by and are most likely to be prosecuted under these arrangements, so their support is a telling recognition of the need for our approach, as the system would otherwise fall into disrepute and would not work.
Mr Don Foster (Bath, Liberal Democrat)
I am listening with great care to the Minister. I shall reflect long and hard on his argument. He has implied that the only alternative to criminal sanctions is civil proceedings and he has pointed out the difficulties associated with that. Other hon. Members, including some of his hon. Friends, have proposed alternatives to civil proceedings. Will he explain why they would not work?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I am glad that the hon. Gentleman has raised that because it was the hon. Member for Eastbourne who mentioned the speech by my hon. Friend the Member for Upminster on Second Reading in which he sketched out an alternative approach. I invited my hon. Friend to the Department last week and we had a lengthy, constructive and detailed discussion about a number of the issues, including alternative sanctions. I pointed out to him that there were defects in his proposals, such that they would work in most cases but not in every case. Individuals might not be able to satisfy the requirements of the Land Registry, which would result in a delay. The whole process be put at risk because people could not depend on the validity of the documentation. That is the crucial point.
As I made clear in my response to the hon. Member for Carshalton and Wallington, once there are people who are not participating or cases in which it is not possible to ensure compliance, the whole system begins to break down and the effect across a whole chain has far-reaching consequences. That is why we want a simple, standard procedure that applies across the board with an understood and straightforward enforcement mechanism.
Several hon. Members rose—
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
I see three hon. Members wishing to speak. I give way first to the hon. Member for Eastbourne.
Mr Nigel Waterson (Eastbourne, Conservative)
Will the Minister deal specifically with the suggestion that has been made by the hon. Member for Upminster and others that there should simply be a bar on registry? I do not quite understand the practical difficulty with that. I use the analogy of stamp duty. I do not expect the Minister to deal with the matter on the hoof—he may want to write to the Committee about it. Secondly, although the matter is not strictly for the Minister, given the experience and expertise that his hon. Member for Upminster could bring to these matters, why is he not a member of the Committee?
Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)
The selection of hon. Members to serve on the Committee has nothing to do with me. I have already made it quite clear that I responded quickly to the points raised by my hon. Friend the Member for Upminster; I met him and discussed his concerns in detail. I have been willing to talk to other hon. Members outside the Committee because I believe that that is the right way to handle those matters. We are genuinely looking for the best way forward and we have considered alternatives. I made it clear earlier that we had considered civil sanctions as one possible mechanism, but that we had come to the conclusion that that was not the best way forward.
The fear that criminal sanctions are being applied inappropriately and that they are completely out of proportion does not stand up if one looks at the issue carefully. There are a large number of precedents for the application of the criminal law to enforce civil obligations. Let us take a few housing examples: the Landlord and Tenant Act 1985—an Act for which the previous Government were responsible, though it had earlier precedents—sets out obligations to provide a rent book, to provide information in a rent book and to provide information to leaseholders about service charges; those are all civil duties, but they are enforceable under the criminal law. The obligation to provide information to a prospective buyer does not seem very different.
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Two o'clock.