Mr Don Foster (Bath, Liberal Democrat)

I beg to move, That the clause be read a Second time.

Mr George Stevenson (Stoke-on-Trent South, Labour)

With this it will be convenient to take the following: New clause 2—Proof of ability to pay sale price—

`.—(1) No person shall enter into an agreement to purchase aproperty without proof of his ability to pay the agreed sale price.

(2) A person who contravenes the provisions of subsection (1) shall be guilty of an offence and shall be liable on summary conviction to a fine of £700 in addition to forfeiting any sum paid under section 1(3).

(3) The Secretary of State may make regulations varying the sum in subsection (2).'.

New clause 3—Withdrawal from contract, etc.—

`.—(1) Subject to subsection (2), if one of the parties to a contract—

(a) withdraws from the contract; or

(b) otherwise frustrates or fails to complete the contract by the agreed date he shall forfeit any sum paid under section 1(3) and shall be liable for any costs in excess of that sum incurred by the other party in consequence of the contract.

(2) But subsection (1) does not apply where a purchaser has reasonable grounds for withdrawing from a contract.

(3) ``Reasonable grounds'' shall include but shall not be limited to—

(a) the discovery of a structural or other defect in the property which was not known to the purchaser at the time of the agreement;

(b) the discovery of a development proposal or other factor having a direct effect on the value of the property which was not known to the purchaser at the time of the agreement.'.

Mr Don Foster (Bath, Liberal Democrat)

I thank the Committee for ensuring that the previous sitting's deliberations finished before the debate on these new clauses. As hon. Members will be aware, both I and the hon. Member for Eastbourne (Mr. Waterson) were unable to be present at the end of our deliberations on Tuesday because of the business on the floor of the House. Consequently, it is only right to seek to move these new clauses as quickly as I can so that the Committee can move on to part II.

The three new clauses are based almost entirely on the work of the hon. Member for Hertford and Stortford (Mr. Wells) in his Property Transactions Bill 1999. That Bill had all-party support including, among many others, my hon. Friend the Member for Cheltenham (Mr. Jones) and the hon. Member for Workington (Mr. Campbell-Savours).

The purpose of the amendments is to address one of the two ghosts at the feast. When we come to part II, we shall discuss the other ghost, namely registered social landlords, but now we are discussing the ghost that is the issue of gazumping and gazundering, which was repeatedly mentioned on Second Reading and has already been raised in this Committee. The point has been made that, notwithstanding some of the good measures contained within the Bill, there is little that will address one of the key concerns of those involved in the stressful business of buying and selling houses. I acknowledge that the introduction of the seller's pack might ease the problem to a small extent, but I suspect that we need tougher measures than only the seller's pack if we are to tackle it successfully. That is what the three new clauses are designed to provide.

New clause 1 stipulates that a deposit must be paid by both vendor and purchaser and that an agreement for the sale of the property constitutes a binding contract; it also requires the vendor and purchaser to agree a completion date. New clause 2 requires that a purchaser entering into such a binding contract must be able to offer proof of his or her ability to pay the agreed sale price. New clause 3 stipulates, subject to various exclusions, the forfeiture of the deposit plus the other party's costs in the event failure to complete the contract by the agreed date.

New clause 1 recognises that when an offer has been made and accepted, both parties have already entered into a very costly process and both stand to lose money if the contract is not completed. Under the new clauses, if one of the parties to the contract withdrew, or frustrated or failed to complete the contract by the agreed date, he or she would forfeit the deposit made when the contract between vendor and purchaser was entered into. The 1999 Bill introduced by the hon. Member for Hertford and Stortford included the figure of £2,000. We think that that is probably appropriate but, for the avoidance of doubt, we have provided in subsection (5) for the Secretary of State to vary that figure by regulation. We think that it is important that both sides enter into such an agreement, but that the defaulting party should bear the costs of the frustrated party, as happens in many commercial transactions.

We believe that new clause 2 will help to speed up sales and remove a cause of contract failure. It will become an offence for buyers to enter into a binding contract—the sort set out in new clause 1—unless the proposed purchaser can demonstrate that he has the funds to meet the agreed sales price. For most buyers, that would mean having a mortgage offer in place. Subject to its being accepted by the lender, which takes us back to issues we have debated previously, the seller's pack could provide great assistance and ease that process to a considerable extent.

New clause 3 enforces a binding contract by stipulating that if the contract fails, the defaulting party becomes liable to forfeit his or her deposit and is liable for the costs of the frustrated party. As members of the Committee will understand, there will clearly be a number of exceptions to the rule—after all, during the process of the buying and selling houses, things can go wrong that are not the fault of either of the two parties, for example, the discovery of structural or other defects in the property that were not known to the purchaser at the time of the agreement.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

The hon. Gentleman has making some fundamental points very quickly; obviously a great deal more thought would be needed before they could be put into law. Nevertheless, a similar system to the one that he advocates exists in Scotland. Can he tell the Committee about the similarities and differences between the two systems? What are the pitfalls in the Scottish system that mean that it could not immediately be incorporated into the English system and thereby obviate the need for his amendment?

Mr Don Foster (Bath, Liberal Democrat)

There is indeed a similar, but different, system operating in Scotland. I am sure that the hon. Gentleman, who is diligent in his research, will be aware that there are also similar schemes in other parts of the world, notably in a number of American states. Like his hon. Friend the Member for Hertford and Stortford, whose research contributed greatly to the development of this Bill, we have looked at some of the defects of other systems, including those used in Scotland and America. The key issue is addressed in new clause 3, that is, the reasons why people are able legitimately to say that they are not at fault in the sale having been frustrated. It is important that new clause 3—or any Government substitute for new clause 3 that might be tabled—makes clear the reasons why it could be perfectly right and understandable for the deposits not to be paid back. That has been our aim. I repeat that the new clauses are to a large extent based on the work of the hon. Member for Hertford and Stortford, whose name appears above all three new clauses.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

I have a few comments to make on behalf of the official Opposition. We accord with the sentiments expressed by the hon. Member for Bath (Mr. Foster) and the same applies to some of the aims that he is trying to achieve. That is why my hon. Friend the Member for Hertford and Stortford put so much work into the subject. However, we have a problem with the way in which the new clauses are fashioned. I will deal with them one by one.

On the issue of paying over a sum of not less than £2,000, as my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) has already said, we cannot see why the hon. Gentleman is not in favour of going the whole hog as has been done in Scotland, where the deal amounts to an exchange of contract, rather than being subject to contract, as transactions in this country are. We seem to have got a fudged halfway house.

I think that is a very sensible idea to require a pre-contract guarantee note, or similar, from a mortgage lender, but I do not think that it is sensible to make it another legal requirement and to criminalise those who do not obtain it. It seems to be taking a sledgehammer to crack a nut. What if a mortgage company were dilatory about producing the pre-contract guarantee note and the house sale was lost as a result? That can easily happen in a property boom, when there may be several people interested in the same property. Therefore, through no fault of the potential purchaser, a property could be lost because a particular mortgage company took several days longer than it should have to ascertain the potential purchaser's financial situation and produce the required documents.

Mr Don Foster (Bath, Liberal Democrat)

I am following the hon. Gentleman's argument with considerable interest. However, let us take the new clauses in conjunction with part I and the introduction of the seller's pack. From the point at which the marketing of the property begins, the seller's pack will be available. Does he agree that it will contain information upon which the lender can base a judgment, which will significantly speed up the process?

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

Yes, but the seller's pack does not contain anything do to with mortgage guarantees by the purchaser. In the race that might occur between potential purchasers and interested parties—they would be on a level playing field if they were all prepared to accept the home condition report and other elements of the seller's pack, although many of them may not—the interests of a potential purchaser who happened to have a slower mortgage company than the others or whose financial situation might be a little more complicated, requiring financial guarantees and so on, would effectively be prejudiced. He would be threatened with a criminal conviction if he went ahead without a mortgage guarantee.

This is a big market, with 1.5 million property transactions, the majority of which involve mortgages. When the property market is particularly hot, mortgage companies may take longer and longer. A form of mortgage guarantee is already happening on a voluntary basis. Some mortgage lenders, which are extremely competitive and exist in many forms, are producing their own ideas and pilot schemes—fully-fledged schemes in some cases—which effectively give a potential purchaser a guarantee that, on the basis of financial information displayed, a certain sum of money will be advanced. That can be shown as evidence to a vendor that the potential purchaser has the cash to back up any offer that may be made. I believe that instances of such behaviour will increase. As is the case with much of what is being imposed in the seller's pack, that is already happening in the market, without the additional cost in most cases and certainly without the threat of criminal conviction. Therefore, we cannot accept that a mortgage guarantee note should be compulsory or that the absence of such a note should result in a criminal conviction. That is our problem with the second of the new clauses.

The third new clause would act as a heck of a deterrent for anyone venturing into the house buying market. The hon. Member for Bath is proposing that the deposit of not less than £2,000 should be forfeited and that someone involved in a frustrated sale should be liable for all the costs incurred by the vendor, which could be a considerable amount of money. If a sale has fallen through and the vendor is angry because his purchase of another house depends on that sale, he is unlikely to say, ``That's all right, these things happen and we won't impose any conditions.'' If he sees an opportunity, he is likely to press for every cost he can, from solicitors' costs to the cost of the inconvenience involved in showing people around the property and so on. It is a lawyers' charter, and we could be opening the floodgates to go the way of the United States, where the problems of home buying have completely clogged up the courts in the state of Massachusetts.

The process of buying houses could become even more litigious than it is now. Subsection (3) to new clause 3 talks about ``reasonable grounds''. The definition of ``reasonable grounds'' is another lawyers' charter. We had a short debate about the definition of ``reasonableness'' in an earlier sitting. The new clause states that the costs will not be incurred if there are ``reasonable grounds'' for the failure of a sale. The ``reasonable grounds could include

the discovery of a structural or other defect

On what scale of badness is that defect? If a piece of plaster is found to be flaking off the kitchen wall, is that a defect that merits the triggering of costs for the frustration of the sale. What if the defects are not known to the vendor? As we have discussed, problems with a house, of which a vendor may be blissfully unaware despite having lived there for many years, may come up in a survey, but are less likely to come up in a home condition report because they are to be less thorough. In fact, problems might not come up in either a survey or an HCR, but may appear later. A potential purchaser might then feel aggrieved and use it as an excuse, however minor, to get out of a purchase because he has seen something better and cheaper elsewhere and is looking for any excuse to get out of the original purchase. Would the discovery of some unsound plasterwork constitute a defect, thereby putting the vendor at fault for having misled the purchaser?

The legislation is fraught with problems that we can do without in what is already a very nanny-type Bill. I suppose that we should not be surprised that the Liberal Democrats are joining in the nanny state chorus that we hear so often from the Government, of which parts of this Bill are another example.

Although we support the problems highlighted by the hon. Member for Bath and identify with some of the solutions that he wants to apply, we think that he is going about it in the wrong way. He is taking a sledgehammer to crack a nut, and, as I have said, many of the issues are already being addressed by the market. The whole process of buying and selling houses is being improved, although not perhaps as quickly as we would like. However, within the confines of the cheapest house-selling market in Europe, improvements are being made at a satisfactory pace.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

Mr. Stevenson, it is good to welcome you back to the Chair.This is an important subject that has not yet really been covered by the Committee because it has not so far come within the scope of the Bill.

Should the current English system of privity of contract be amended in any way? I agree with my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) that the halfway house, proposed in all sincerity by the hon. Member for Bath, is the worst of all worlds.

Basically, when one proceeds with a transaction, one wants it to continue. There is no point in forcing a purchaser into a situation that they would subsequently regret. Therefore, if one wants to move away from the current English system of privity of contract, one should go the whole hog and move towards the Scottish system.

It would have been helpful if the hon. Member for Bath had described the Scottish system. In that way, we could have assessed the two systems and seen which was preferable. I will describe the Scottish system and then say what I think is wrong with the new clauses.

In the Scottish system, all pre-contract inquiries are completed and the documents prepared so that when a vendor accepts an offer, it becomes immediately binding. Any deposit paid cannot be forfeited back to the purchaser. Furthermore, if the purchaser does not complete the transaction, he can be sued for any subsequent losses incurred by the seller.

That seems to be a much better system, as it concentrates the mind of the purchaser. He will not make an offer unless he is absolutely certain that he has all the documents, guarantees and warranties that he requires. Only then will he enter into a binding offer because he knows that he will lose his money if he withdraws.

The problem with the hon. Member for Bath's solution, is that it is a halfway house. If a purchaser rescinds from the contract, he forfeits a small amount of money—£2,000—and is possibly subject to a fine on summary conviction of £700. Under the Scottish system, he would forfeit his entire deposit. For example, if he were buying a £100,000 house, he would forfeit his £10,000 deposit. That is a much greater deterrent. It also provides certainty in the system because the moment that offer becomes binding, the transaction has effectively gone through.

I am sure that the Minister must have thought about the Scottish system carefully. It has a number of merits. In view of the extensive consultation and the Bristol trial, I am not sure why the Minister has not considered adopting it. He did not explain that on Second Reading. It overcomes one of the chief objections to this part of the Bill—the problem with gazumping and gazundering—because as soon as an offer becomes binding, there is no chance of a greedy vendor accepting a higher offer.

The only way of getting out of a binding offer is if the information could not have been known when the offer was made. That is not normally something like a structural survey because it is up to the purchaser to make all the inquiries that he reasonably needs to carry out a structural survey and he should rely on the basis of that structural survey. Only fairly obscure matters like a defect in title, which could not possibly have been known about at the time of the offer, would enable a purchaser to resile from a binding offer.

As the Committee knows, I do not like the idea of criminal sanctions entering into what is essentially a civil matter. The Scottish system avoids that. Criminal sanctions should be used extremely sparingly because of their knock-on effects. It is not only the fine and the possible prison sentence at the time, but the problems that a person can encounter for the rest of his life such as in getting credit and a whole range of other issues that occur once he gets a criminal record.

I abhor the criminal sanctions that are already in the Bill, but I do not think that the method suggested by the hon. Member for Bath for imposing further criminal sanctions in these new clauses adds anything or helps the situation. I hope that the Minister can explain why the Government, who presumably considered the Scottish system, rejected it and decided to retain the present system of privity of contract under the English system.

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

This has been a curious debate and, in the carefully chosen words of the right hon. Member for Skipton and Ripon (Mr. Curry) at an earlier sitting, it could be concluded that we are holding the debate at the wrong time. I shall not repeat his elegant phrase, but I was astonished to see that it made its way into Hansard.

Mr David Curry (Skipton & Ripon, Conservative)

My phrase was not temporal, but spatial.

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

I was only commenting that I was astonished that it made its way into Hansard. I do not intend to repeat it. My point was that the debate should have come at the beginning of our proceedings on part I, because it is a debate about the ways to tackle the problems inherent in the current system of house buying and selling.

I agree with the hon. Member for Bath that there are problems. I agree with the hon. Member for East Worthing and Shoreham—[Hon. Members: ``Hooray.'']—whose constituency name I got in the right order today, that the new clause addresses real problems and that the proposals will not work and are unsatisfactory in a number of ways. However, I do not agree with him about our proposals in part I. I believe that they are an effective remedy to those problems, which makes the option that the hon. Member for Bath proposes unnecessary. I will also pick up on points made by the hon. Member for Cotswold about the merits and demerits of the Scottish system.

We all agree that a key problem in the current system is the lack of certainty. People find themselves in the process of buying and selling without being certain about the information that is necessary to reach an informed decision on how much to pay, the speed at which the transaction will proceed or whether the transaction will go ahead. The figures cited in the debate have highlighted the extent to which transactions fail in the existing system between an offer being made and contracts being exchanged. A high percentage of contracts fail under current arrangements. It is right to consider ways of trying to provide greater certainty for the transaction process and of avoiding problems of abortive costs that can all too easily arise.

Conditional contracts, which are the subject of new clause 1, set a completion date from which neither side can withdraw, except as allowed by the conditions. Such contracts are already available, on a voluntary basis, to anyone who wants to use them. Also available are agreements that provide for deposits to be paid and costs guaranteed in the event of the other side pulling out after terms have been agreed. The Royal Institution of Chartered Surveyors, the National Association of Estate Agents and others have had draft agreements on those lines available for some time. However, those agreements are rarely used because they all have potentially serious drawbacks, some of which were highlighted by the hon. Member for East Worthing and Shoreham.

It is true that some countries use conditional contracts. Our international comparison research confirmed that. However, that research noted a crucial difference between the home buying and selling culture of those countries and the culture in England and Wales. In countries where conditional contracts are common, buyers are more prepared to set a completion date and stick to it, even if it means completing before their existing home is sold. That has the obvious corollary that they must make alternative arrangements to accommodate themselves in the meantime. Sellers are more prepared to take temporary rented accommodation if they sell their existing home before their new home is bought. The culture here is entirely different. Buyers and sellers generally want to co-ordinate their transactions, and inevitably that means that the majority of transactions are caught up in chains.

Conditional contracts cannot work effectively in a chain where a completion date cannot be set at the outset. If the conditional contract allows flexibility over the completion date, the likely result is a detailed, over-complicated and ineffective agreement full of caveats to meet the various problems that might arise. If there is no flexibility over the completion date, buyers and sellers would no longer be able to co-ordinate their transactions. Buyers would be pushed towards expensive and risky bridging finance, and sellers would have to face the prospect of temporary rented accommodation that will not always be available. Buyers and sellers in England and Wales have made it clear that they do not want that, and it would be wrong, in our view, to force them into such arrangements.

We have also looked closely at the scope for introducing cost guarantees. We were attracted by that concept in opposition and we consulted on it in 1996. Initially, cost guarantees, with or without deposits, appeared to offer a potential solution to a situation where one party pulls out leaving the other side high and dry with a lot of wasted expense. However, on closer examination and on listening to the responses to our consultation, we acknowledged that there were practical drawbacks with cost guarantees. One issue is the apportionment of blame, where some or all of the transactions in a chain fail. Deciding where responsibility lies could create even more litigation than any other possible scenario. I must tell the hon. Member for Bath that new clause 3 is a minefield in that respect.

New clause 3 essentially says that the deposit is lost except where a purchaser has reasonable grounds for withdrawing from a contract. ``Reasonable grounds'' are then defined as

the discovery of a structural or other defect—

a point referred to by the hon. Member for East Worthing and Shoreham—or the

discovery of a development proposal or other factor having a direct effect on the value of the property which was not known to the purchaser at the time of the agreement.

The hon. Member for Bath responded by saying that it could work in conjunction with part I of the Bill. However, in reality, part I is designed to ensure that exactly that information is obtained upfront.

Mr. Don Foster rose—

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

I will give way in a moment. This is a complex point and I hope that the hon. Gentleman will bear with me while I explain it. Where there is no provision for a seller's pack and a home condition report in advance, the lack of those documents can be the very reason that buyers discover problems after they have made an offer, by carrying out searches or surveys themselves. That is the difficulty with any conditional contract: if an exemption is not allowed, such problems may arise, but if it is allowed, there is enormous scope for litigation.

Mr Don Foster (Bath, Liberal Democrat)

I entirely agree with the Minister, who misunderstood what I said to the hon. Member for East Worthing and Shoreham; or perhaps I did not adequately explain what I meant. My point is that the seller's pack, by providing early information, would provide an opportunity to speed up the decision of a mortgage company regarding ability to pay. The Committee's numerous debates on the subject of the seller's pack have revealed that the information it contains cannot always be relied on in the long term. Some information, including, for example, information on local searches, can become out of date.

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

The Bristol pilot study showed that no transactions with a seller's pack failed because of problems being uncovered at a later stage. Currently, however, 43 per cent. of failed transactions are attributable to matters related to the structure or condition of the property that are discovered after an offer has been made. That is clear evidence of the advantages of a seller's pack. We accept that a seller's pack will not reveal everything in every circumstance; that is why I said that in certain cases the seller's pack will point to the need for a further structural survey. However, the pack will provide far more information than is currently available and overcome the problems that so often occur in the existing system.

Mr Don Foster (Bath, Liberal Democrat)

I am surprised by the Minister's strength of feeling and the way he pushes the point, because he is merely repeating what I said rather more eloquently. We are in complete agreement.

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

I do not think so. The hon. Gentleman tabled a new clause that would open immense opportunity for litigation. Apart from the two grounds defined as reasonable, new clause 3(3) states:

``Reasonable grounds'' shall include but shall not be limited to—

those points. The proposal would provide enormous scope for litigation of exactly the kind that the hon. Members for East Worthing and Shoreham and for Cotswold identified. That is not a serious way forward.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

With great respect to the hon. Member for Bath, his amendment shows a misunderstanding of the property market. The two reasonable grounds that he identified are relatively obvious: a structural survey will fairly easily reveal a defect in a property and a local authority search will easily reveal a development in prospect. The more complicated legal matters, such as defects in title, rights of way and easements, are not so easy to discover and they can take time to determine. That is when the Scottish system allows people to withdraw. The grounds suggested by the hon. Gentleman are not the most valid ones.

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

I agree with the hon. Member for Cotswold; I was about to deal with the Scottish case because, as he rightly said, there is provision in the Scottish arrangements for withdrawal when certain matters, such as those that he mentioned, are involved, but they take quite a long time.

That brings me to the nub of the problem with the Scottish system: it works well within a relatively slow-moving market, in which people are prepared to undertake the up-front costs in advance of putting in a bid. There is probably a limited number of bidders and people can therefore take a calculated risk in expending money on a survey or other works in advance while knowing that it will be abortive if their bid is not accepted. However, in the fast-moving market in much of England and Wales, the risk is high. There are not many buyers in England and Wales who would be willing to incur expenditure on a survey and all the legal checks and searches necessary to give them confidence that they should put in a bid that will become unconditional if it is accepted, if there is the prospect of their bid failing because there are many other bidders in the market.

If there are many other people in the market, which is increasingly the case in parts of Scotland, including Edinburgh, there is a move away from the traditional Scottish system because of its inherent disadvantages. It is a question of horses for courses—a point made frequently during these debates. Although we accept that the Scottish system works reasonably well in the context of the Scottish market, we believe that it would not work well or find favour with the vast majority of buyers and sellers in the faster-moving market in England and Wales.

New clause 2 would require buyers to have proof of their ability to pay the purchase price before agreeing terms. It is very important that buyers are well prepared before embarking on home buying. They should consult mortgage lenders and secure an in-principle mortgage offer before they begin their property search—we think that that is good practice—and nearly all mortgage lenders provide that service. I noticed a recent press release from Legal & General which specifically highlighted the facilities available from that company. It said that obtaining agreements in principle

will increase greatly and become standard market practice once the Homes Bill becomes law and is introduced in 2003.

We regard that as good practice because the assistance of mortgage lenders, estate agents and conveyancers will make it possible for early in-principle mortgage offers to become widely available.

If buyers know at the outset the size of the mortgage that they can afford, they will be far less likely to make spurious offers that they cannot live up to and sellers and estate agents will be able to save a lot of time that would otherwise be wasted. Equally, it will give teeth to the provisions we have already debated that allow an agent to decline to issue a seller's pack to someone who he does not believe is in a position to proceed with the transaction. People who cannot demonstrate that they have the ability to raise the necessary finance could cause an unreasonable delay.

There are all sorts of benefits from that approach, but it will need to be handled carefully. It might not be in the buyer's interest when making an offer to reveal to the seller or seller's agent how much he can afford to pay, as that could prejudice his position in negotiations and encourage the seller to press the buyer for a higher offer. That, too, lends weight to the argument for the flexibility provided by the voluntary approach, rather than for imposing the sort of burden of proof proposed in the new clause.

We agree with the criticisms of the hon. Members for East Worthing and Shoreham and for Cotswold about the new clauses being excessively rigid, even if the underlying intention is good. The best way to deal with change, to bring about earlier certainty and to reduce the risk of gazumping and other problems without putting legitimate activities at risk is the introduction of the seller's pack. I ask the hon. Gentleman to withdraw his new clauses.

Mr Don Foster (Bath, Liberal Democrat)

In the spirit of brevity, I thank the Minister and the other hon. Members who contributed to the debate. I think it is interesting to reflect that, during on Second Reading, at column 737, Mr. Waterson said:

After all this time, and all their empty promises, the Government have failed to tackle the problem of gazumping.—[Official Report, 8 January 2001; Vol. 360, c. 737.]

Despite those brave words, I see not a single Conservative amendment to address that particular problem. I have tabled three new clauses in an attempt to ensure that we debate the issue and to give others an opportunity to contribute their own suggestions on tackling it.

The Minister has assured us at great length that the seller's pack is so wonderful that it absolutely must be applied to almost every transaction. However, the language he uses in responding to my new clause is somewhat different: he says that the culture in this country is different from anywhere else, so it is vital that we continue to use a voluntary approach. He is being incredibly schizophrenic. At least his words imply that the rest of part I will go some way to solving the problem and that mine is at least a legitimate argument.

Conservative Members have given no indication that they intend to address the issue—in fact, there appears to be some confusion among them. I noted with interest the comment of the hon. Member for East Worthing and Shoreham, who has come to the view that the problems no longer exist because they are increasingly addressed by the market. Perhaps he disagrees with his hon. Friend the Member for Eastbourne.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

The hon. Gentleman is being slightly disingenuous. Throughout our discussions over the past 10 days, we have given examples of how all the bodies involved in the property transaction market are making house buying and selling easier. The Law Society has its transaction scheme and mortgage lenders are speeding up their whole system, the internet is the speeding up searches, and so on. Things may not be changing quickly enough, but we are getting there without the need for any legislation.

Mr Don Foster (Bath, Liberal Democrat)

I am grateful to the hon. Gentleman. He is putting on the record the fact that despite the protestations of his hon. Friend the Member for Eastbourne on Second Reading, Conservative Members intend to take no action to address the issues of gazumping and gazundering. Since they have also made it clear that they will not even support the introduction of seller's packs, they stand charged as the party that raised an issue but was not prepared to do anything about it.

Members on both sides of the Committee have made cogent arguments showing that while the broad principles in the three new clauses make sense, there are concerns about specific details. I do not find all their arguments convincing. The Minister says about new clause 2, for example, that information from a mortgage society might be in a form that would mislead the seller into believing that he could bump up the price, thereby making life more difficult. Life does not have to be like that.

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

On a point of clarification—I am sorry if I did not make the point clearly enough—I was stressing that, although we believe that in-principle agreements will become commonplace, confidence in the market will apply. I cited an example that demonstrated that. A statutory scheme requiring a buyer to show a precise figure to the seller or the seller's agent could have an adverse impact on his negotiating position in respect of the property price.

Mr Don Foster (Bath, Liberal Democrat)

If a purchaser revealed to a vendor the fact that a mortgage company was in a position to offer the purchaser £100,000, say, when negotiating for a property priced at half that sum, the problem that the Minister describes may occur. However, the wording of new clause 2 taken in conjunction with new clause 1 makes it clear that the point at which the vendor has to demonstrate the ability to pay is the point at which an agreement is made on the precise sum of money in the contract. The vendor would have to show only that he was in a position to provide those funds. The showing of hands, as it were, would therefore not come until the point of contract at which the price has been agreed.

It is important that we have had a debate on the issue.

It is important that we have had a debate on the issue. I have had the opportunity to hear the concerns expressed by hon. Members on both sides of the Committee. I shall reflect on any alternative proposals that I might table at a later stage. I beg to ask leave to withdraw the motion.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

May I just one point?

Mr George Stevenson (Stoke-on-Trent South, Labour)

I am in some difficulty. We have had a fair debate and the hon. Member for Bath has sought the Committee's leave to withdraw the motion. I feel obliged to put that question.

Motion and clause, by leave, withdrawn.