Clause 5Exceptions
Homes Bill
3:15 pm

Mr Nigel Waterson (Eastbourne, Conservative)

I beg to move amendment No. 3, in page 4, line 26, at end add

`save that this section shall not apply to residential properties owned by local authorities or registered social landlords.'.

The amendment is a probing one which would remove from the provision properties owned by local authorities or registered social landlords. It follows from a debate in which my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) raised the issue in the context of a sitting tenant and the sale of a council house. The amendment is designed to clarify the matter. The clause is drafted broadly on the basis of vacant possession being available.

Two examples were posited by my right hon. Friend, the first of which is that of a sitting tenant who has been living in the council house for, say, 20 years and who wants to buy it under right-to-buy legislation. Would that transaction require the full rigour of a seller's pack? The Minister's view was that even though the tenant had been living there for 20 years, the house might have all sorts of problems that had not been noticed, so a seller's pack was important. He said:

The local authority will provide the seller's pack as part of its response to the right-to-buy notice and the private landlord will be obliged to prepare a seller's pack.—[Official Report, Standing Committee D, 16 January 2001; c. 65.]

My right hon. Friend's second scenario was that of a person who had not himself lived in the property for 20 years, but whose family had lived there. Again, the Minister made it absolutely clear that local authority sales, whether or not a sitting tenant was involved, would still have to prepare a seller's pack in the usual way.

There are several issues extending beyond the amendment, which I may speak to as part of a short stand part debate. Amendment No. 3 is a rather blunt instrument, but it is only one of the avenues by which the legislation could be made to address the undoubted problem of low-demand, low-value areas. I do not know whether the Minister has had significant representations from large landlords of social housing in areas with very low demand where there is a desire to sell properties in due course, about whether the amendment might be one way in which to exempt properties in areas where the sheer cost of the seller's pack may deter people altogether from getting into a sale. That is a separate issue. The amendment itself is very much a probing amendment.

We certainly do not contend that, as a matter of principle, tenants of social housing should be excluded from the benefits of seller's packs—of course, we do not think that there are many benefits to be gained from a legally required seller's pack system, but I shall not weary the Committee by repeating the reasons for our view. None the less, I should be grateful for the Minister's comments.

Mr David Curry (Skipton and Ripon, Conservative)

I assume that this is where the whole question of exemptions becomes central. My hon. Friend the Member for Eastbourne is right to table the amendment as a probing one. Since our debate the other day, I have reflected on the issue and I now think that there is a strong argument in favour of seller's packs being provided by local authorities. In an earlier sitting, the Minister raised the possibility of an exemption for properties valued at £10,000 or less. Some local authority properties will be sold under the right to buy for less than £10,000, although there may not be many such properties left, their tenants will probably be of long standing and improvements are unlikely to have been made recently to such properties. That last point substantiates my argument—after all, improvements made over the last 10 years are likely to be reflected in the price. However, I can see no argument why a local authority selling a house valued at less than £10,000 should be exempt from the need to provide the seller's pack.

There are large landlords: the authority in Birmingham has 93,000 social houses, and other big metropolitan authorities have between 30,000 and 40,000 houses. Even where that housing has been transferred, it has been to registered social landlords who are in the same moral position as a local authority. Therefore, I would like the Minister to make it clear that local authorities would be able to sell properties without a seller's pack, whatever the value. There is no reason why the city councils of Birmingham, Leeds or Newcastle should be exempt from that requirement.

There is a further danger inherent in numerical exemptions—that is, setting a threshold of £10,000, for example. I shall not refer again to Acacia avenue or the eponymous pub, but it is possible to conceive of a person deciding to sell a property for £9,750, because a price of £10,000 or £10,001 would incur a cost of £500 to produce a seller's pack. The individual therefore decides to sell the property for slightly less than £10,000 and split the difference, enabling him to put £250 into his back pocket and sell it formally under the £10,000 threshold. It is perfectly possible to envisage such a case.

In a funny way, this is a sort of arse-over-tit Bill. [Laughter.] I am sorry to use that expression. The discussion on Second Reading was about the necessity for exemptions at the bottom end of the price range. In practice, cases for exemption lie almost entirely at the top end of the range. Anyone willing to shell out £500,000 without ascertaining the information in the seller's pack must be out of their tiny minds.

At a much lower level, the Bill makes most sense as a regeneration measure. Houses at the bottom end of the scale are particularly in need of regeneration and require the security provided by the certificate of viability that the Bill would create. I hope that the Minister will be extraordinarily miserly in considering exemptions for that reason. People enter the market for the first time without experience of house purchasing, and they may need some sort of security.

My sentiments are that it would be much more sensible to exempt everything from council tax band D upwards. I would concentrate the Bill on areas in which it will contribute to regeneration of neighbourhoods and help to bring properties into use that might otherwise be regarded as hopeless cases. I hope that the Minister will concentrate hard on that particular aspect of the proposal, which may be the right thing to do, if for different reasons to those that he may originally have envisaged.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)

The hon. Member for Eastbourne rightly made the point that we had covered some of these issues on Tuesday, and the right hon. Member for Skipton and Ripon returned to a number of issues that he had previously raised. I thank the hon. Member for Eastbourne for his amendment, which has served a wider purpose than he probably anticipated when he tabled it.

I can assure the hon. Gentleman that the purpose for which he tabled it is not relevant. The amendment was prompted by concern that council tenants would be denied benefit because they were not buying vacant possession. In practice, when council tenants buy a property, they do so with vacant possession. They cease to be tenants and obtain vacant possession of the property. Therefore, if that was the concern that prompted his amendment, it is not material. The amendment is additionally not material because the position of council tenants is governed not by the Bill, but by the right-to-buy provisions, to which I shall turn shortly.

I am glad that the hon. Gentleman tabled the amendment, however, because it has highlighted that there could be a difficulty with some properties, as sometimes happens when people buy a house that has a separate flat in the basement with a sitting tenant. In such cases there could be definitional problems, and we intend to look further at that. I thank the hon. Gentleman for a useful contribution to the debate, even if not quite along the lines that he had originally intended.

As I made clear on Tuesday, the principles underlying the Bill should apply to local authorities and registered social landlords. I was delighted to hear from the right hon. Member for Skipton and Ripon that, on reflection, he recognises that that is appropriate. Where authorities and social landlords act as seller, marketing vacant stock, the Bill will apply to them. Where they are selling under the right to buy, slightly different circumstances apply. The local authority is already required under the right-to-buy legislation to give the tenant a description of any known structural defect affecting the dwelling and, for flats, any defect affecting the building in which the flat is situated. Existing legislation also requires information to be provided up front about the terms of the conveyance, any lease or service charges and any improvement contributions that may be required. Thus, local authorities are already under substantial obligations with regard to the provision of up-front information.

The pack of information required to be provided under the right to buy is governed by the Housing Act 1985. Our intention is that those arrangements should be made fully consistent with the principles underlying this Bill. We will consult closely with local government, the Housing Corporation and the National Housing Federation as we draw up the detail of the seller's pack. That consultation will enable us to clarify what legislative changes may be necessary for right-to-buy transactions. We do not know whether changes will be necessary and it is quite possible that no changes will be needed. However, any changes will be to the 1985 Act rather than the Bill. In the meantime, as I have already explained, it would be nonsense to exclude local authorities and RSLs from the ambit of the Bill when they put their properties on the market.

Turning again to the points made by the right hon. Member for Ripon and Skipton—sorry, I keep getting that wrong, but I shall not repeat his elegant phrase to describe my inability to get Skipton and Ripon in the right order, as it might not go down well in the Yorkshire dales. He asked whether, if there is an exemption for low-value properties—I stress that we do not say that there definitely will be an exemption—a council property subject to a large discount might come below the threshold, thus depriving the tenant of the seller's pack. As I stressed on Tuesday, the tenant might be the person most in need of the information. I am giving an instant response to him because this is an important point, but I will check it further. My understanding is that value is value before discount, and that the discount that would apply in respect of right to buy would not be material to a valuation. The fact that a tenant of long standing qualifies for a relatively large discount would not of itself bring a property down to below a threshold. I accept entirely that there is a problem where local authorities are subject to right-to-buy applications in very low-value areas. I should like to reflect further on whether, if an exemption figure applies, it should apply to local authority properties. I hope that that sets the right hon. Gentleman's mind at rest on the issue.

I stress once again that the figure of £10,000 that I mentioned on Tuesday was an illustration. I do not rule it out, but there is no intention at present to adopt a cut-off point at that or any other level. We are considering the issues carefully and we will consult with the full range of interested parties. I accept whole heartedly his concerns about the regenerative benefits of provisions that help people to acquire properties in low-value areas. We certainly would not want to damage that process.

Finally, on the right hon. Gentleman's point about people adjusting the price to come just below the cut-off point, that is one of the problems of having a cut-off point. We will need to consider that when we decide whether there should be an exemption and at what level it should be pitched. He is probably right that there is less need for a seller's pack for £1-million houses, as buyers of such properties can protect themselves perfectly well, but in practice it will happen in any case because someone buying such a property would expect to have a pretty clear indication of its quality before investing such a sum. The requirement to have a seller's pack will not impede transactions in that section of the market.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

When considering at what level to promote possible exemptions from the seller's pack, will the Minister bear in mind my point that exempting properties will in itself stigmatise them? The Minister has a problem both ways. The cost of the seller's pack obviously a large proportion of the cost of low-value properties, but at the same time exemption will stigmatise them.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)

Indeed. As the hon. Gentleman will recall, I pointed out on Second Reading that it is precisely those people buying properties with a relatively low intrinsic value who will benefit the most from a seller's pack. They might buy a property only for unexpected costs for repairing the roof or the structure of the building to wipe out its entire value. That was why I was extremely cautious in my response to pressure from my colleagues who were seeking an exemption. I made the point, which was also made very effectively by the right hon. Member for Skipton and Ripon, that we did not want to stigmatise people in low-value areas by such a procedure.

While I acknowledge the arguments regarding an exemption, we are not fully convinced that exemption is the right way forward. We are considering the point carefully and we shall consult on it because we do not want to inhibit sales, which might the effect of exemptions. On mature reflection, we shall draw conclusions as to whether an exemption would be appropriate and, if so, at what level it should be set.

Mr David Curry (Skipton and Ripon, Conservative)

If the house condition survey discovered evidence of quite recent modernisation, improvements or alterations, and the seller were not able to produce a receipt from a recognised builder to prove that he had paid VAT, could any sanction follow on from production of a seller's pack? Could the seller be required to demonstrate that he paid VAT on the works?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)

I cannot envisage circumstances in which that information would be germane to the seller's pack. There are quite legitimate circumstances in which a single builder whose turnover is below the threshold would not legitimately require to charge VAT. Equally, as we know, cowboy builders offer to do work on the side without a bill and with payment made in cash with the clear purpose of evading VAT. It is to deal with precisely that problem that the Government have set out proposals for a quality mark scheme, which we are developing in trials in Birmingham and Somerset. In the context of the seller's pack, information would relate to the condition of the property, not to the person who carried out the works on it, and I do not think that the information to which the right hon. Gentleman refers would come to light in any way. I hope that I have put his mind at rest on that.

Before I conclude, I ask for guidance from the hon. Member for Bath regarding his colleague, the hon. Member for Carshalton and Wallington (Mr. Brake)—I probably got that constituency name the wrong way around, too; I have problems with double-barrelled constituencies. The hon. Gentleman revealed to the Committee on Tuesday that his wife was expecting a baby imminently. We have noted his absence this afternoon and if that is because he is attending the birth, we all want to send our quickest congratulations.

Mr Don Foster (Bath, Liberal Democrat)

Given the date I mentioned, the Minister will be well aware that my hon. Friend's wife is now three days late. The event to which the Minister refers is imminent, but my hon. Friend sent his apologies today—I communicated them to the Chairman earlier—because he is speaking on a debate on the Environmental Audit Committee's report.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)

The Committee will wish to send its best wishes to Mrs. Brake. On that note, I urge the hon. Member for Eastbourne to withdraw his amendment.

Mr Nigel Waterson (Eastbourne, Conservative)

We would associate ourselves with the Minister's concern: how things are going is a matter of constant worry to us. It may even be possible to adjourn to attend on the happy event. Perhaps, for once, the usual channels can sort that out.

I am always pleased when one of my amendments hits a target, even if it is not the target at which I originally aimed. I remember as a small boy playing a game called ``Destroyers'', with lots of little squares on the sheet of paper, in which hitting any target is something. In Opposition, one will take anything as a minor triumph. Of course we are happy, with the help of the Minister and the many new converts to the excellent Tory right-to-buy legislation, to bring about any improvement that we can to it, even if we do so unwittingly. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr Nigel Waterson (Eastbourne, Conservative)

The amendment having been fairly narrow, I wish to debate just two issues in the stand part debate. One is short and technical. The other is longer, and is basically a whinge. The first point, raised by the Law Society, was whether the Bill would apply where a property was bought with vacant possession but with the express purpose of letting to tenants. I assume that I have to qualify that question by saying that we are not talking about a right-to-buy case, for which, as the Minister explained, there is a different set of rules.

The whinge, which is slightly longer, relates to a point that I have made before and I raise it now rather than make a separate point of order. Clause 5 is the first of several—in company with clauses 7, 8 and 31—in which the Minister proposes to take powers to enable his right hon. Friend the Secretary of State to make regulations. On 10 January, I wrote to the Minister asking whether draft regulations would be available for the Committee stage. The Minister courteously responded on 15 January and sent copies, I think, to all members of the Committee. The letter was long and detailed and definitely courteous, but the basic answer was no.

A more outgoing letter followed on 16 January, enclosing a helpful note prepared by the Department about the ambit of the likely regulations. With respect, that note, while helpful, raises more questions than it answers. I will not list them in detail but, since the letter was despatched, we have discovered other bits and pieces that will need to be addressed. I think that the Minister conceded in one of our debates that the question of derelict properties might have to be considered in regulations. There is also the vexed question of friends and family and so on, which I gather is going to be dealt with.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

On a point of order, Mr. Gale. I return to the point of order that I made in a previous sitting. I have just seen the Minister's Parliamentary Private Secretary communicate with the lady in the red sequinned top. Your co-Chairman ruled strictly that that was out of order. I ask you again whether it is in order to communicate with that lady and whether it is in order for that lady to sit on the Press Bench.

Mr Roger Gale (North Thanet, Conservative)

My co-Chairman has ruled on that. As I understand it, provided that the Press Bench is not occupied by members of the press, it may be occupied by others. I have since received remonstrations by some members of the press who regard that as a hard-fought-for privilege. While we do not propose to raise the matter, the Press Gallery may wish to raise it with the House authorities.

So far as communication is concerned, the point of order gives me an opportunity to go slightly wider than the hon. Gentleman's question. As you know, I have always deprecated private conversations or communication in Committee Rooms. There is plenty of space on the Green Benches outside. If people on the Front or Back Benches wish to have private conversations, then, out of courtesy to the Committee and the Chair, they should go outside to do so.

Mr Nigel Waterson (Eastbourne, Conservative)

Thank you, Mr. Gale. I was in the middle of saying that issues have arisen since the letter I mentioned was written. I dare say that others will arise as debates develop and that those, too, will be encompassed in regulations. I appreciate that it is not always practically possible for Committees to have draft regulations beforehand, but sometimes it is. Clause 5 is a perfect illustration of the type of clause under which, should the Bill become law, substantial regulations will probably be made. We hope and expect that the points we raise will inform the drafting of regulations, but I can only reiterate that the Opposition, the Liberal Democrats and even Government Back Benchers are seriously hampered if the likely contents of regulations remain unseen by us.

All we can do, despite the general indication given to us of some of the matters to be covered in regulations, is hope and expect that the Minister and his officials will take some note of the points that we raise. They are not frivolous and are often practical, and they have been brought to our attention by professional bodies and others. That is my whinge.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)

The hon. Member for Eastbourne raised two issues. The first was a technical point about properties bought with vacant possession but with the express purpose of letting. Under the Bill, a property put on the market with vacant possession will be subject to a seller's pack, irrespective of the intended usage.

The hon. Gentleman's second point was about regulations. I repeat that we want to take full account of the views expressed in the House, in Committee and in another place. We want to ensure that any detail that cannot reasonably be put in the Bill now, but that will be necessary to guide the implementation of the scheme, will be embodied in regulations, which should be practical, effective and easy to interpret. We have already debated—on Tuesday and this morning—some of the borderline definitional issues that are difficult to interpret.

It is important to produce effective guidance on regulations, especially in respect of exemptions. We have not yet committed ourselves to exemptions and we are aware of the disadvantages. The hon. Member for Cotswold rightly pointed to the potential danger of stigmatising low-value properties through low-value exemptions. Equally, however, the absence of an exemption might inhibit the market is some low-value areas. As I said, we intend to pay attention to all the views expressed in Committee, in the House and in another place. We shall also work with professional bodies such as the National Association of Estate Agents and others, so that the regulations will be well informed and produce the requisite effect.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

The Under-Secretary has already explained that an introductory agent will have to produce a seller's pack. If one person is selling the house to another, unconnected person—not a friend or relative—and both parties use agents, would the vendor's agent have to produce a pack?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich and Woolwich, Labour)

We are once again getting into complex and technical territory. It is important to deal with the complexities, which is precisely why we want further opportunity to reflect on them before making binding commitments. My hon. Friend the Under-Secretary has already said that he would reflect further to check that the answer he gave was correct.

Our concern is that anyone marketing a property—which may not be the case in the hon. Gentleman's example—must be subject to the seller's pack procedure. Although parts of the industry may deplore it, under some agreements several agencies are involved in the same sale. In those circumstances, it would be absurd if only one agent had to produce a pack and the others could sell without it. Agents involved in the marketing of properties will therefore be subject to the provisions.

In certain circumstances, marketing of a property may not be relevant—an agent could be putting two people together and acting on behalf of a potential buyer—and the pack provisions might not apply. In common with my hon. Friend the Under-Secretary, I want to reflect further and I undertake to write to the hon. Gentleman about the matter.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.