Housing

Part of Orders of the Day — Supply – in the House of Commons at 12:00 am on 21st June 1978.

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Photo of Dr Oonagh McDonald Dr Oonagh McDonald , Thurrock 12:00 am, 21st June 1978

This evening's debate has ranged widely over many of the aspects of the housing problem, but there is one matter to which I do not think attention has been drawn. I have not been here for the whole debate because, unfortunately, I had to be in attendance on the Finance Bill Standing Committee.

The subject which I am concerned about is gazumping. Governments of both major parties have regretted the existence of gazumping in the past but, regrettably, they have done very little about it. We now find that, as the housing market is becoming a seller's market, gazumping seems to be on the increase. I should like to give a particularly bad example from my constituency to support my contention.

A couple had arranged to buy a house from a building company. The company had completed the house last November. The company, P. T. Elimore Ltd., wrote to my constituents on 5th April accepting their £50 deposit as a sign of their intent to buy the property at a price of £16,925. The couple then received a letter on 19th May saying that the price of the house had been increased to £19,950—an increase of over £3,000 in a matter of a few weeks.

Obviously, it is a difficult problem for Governments to deal with, but part of the problem involves the length of time taken in actually completing the purchase and the fact that the price agreed between the buyer and seller when the property is under offer can be changed.

This is a problem which the Law Commission has considered twice—in a working paper in 1973 and again in the Law Commission's report in 1975. Having considered this matter, and having duly expressed its regret at the practice of gazumping, it simply recommended that no change in the law should be made, that no legal effect should be given to subject-to-contract agreements and that no civil or criminal liability should be imposed on the person who withdraws from such an agreement.

This is in spite of the fact that for most ordinary people—I am surprised that the Conservative Party does not attend sufficiently to this kind of problem—buying a house is a very expensive proposition indeed. To have to pay surveyor's fees for one's own surveyor and then, perhaps, surveyor's fees for the building society, and possibly to have to pay some legal fees to one's solicitor, only to find that the purchase has fallen through, can leave a person a couple of hundred pounds worse off. It can mean that a person is not in a position to buy the house that he had in mind, and it means, of course, that he has less resources at his disposal to buy the next house that he considers as a possibility.

The problem is that the Law Commission, which, of course, involves those who command a monopoly in conveyancing—the solicitors—is far too complacent. The solicitors not only command a monopoly but are themselves a closed shop, and all their efforts seem to be directed not towards providing a better service to the public but towards preserving their own position in the housing market and making sure that fees for conveyancing continue to flow into their pockets and to subsidise—it is alleged—other aspects of their legal work.

The Law Commission was much too complacent. It had plenty of other examples from other countries, some very near to home, of much quicker processes for conveyancing. In Scotland, for example, the average length of a completion is a week to 10 days. It can sometimes be done even more quickly than that. In the United States, at least in some of the states, I understand that a purchase can be completed in even less than one week.

When one looks at what a solicitor actually does in the process of conveyancing—apart from charging high fees—one finds that much of his work must surely be a repetition of work that has already been done. We have already heard that houses tend to be sold again, on average, within seven years Much of the information for which a solicitor looks must be the same information as was found by a previous solicitor when the house last changed hands.

The Law Commission did not really take seriously into account the possibility of speeding up the process of conveyancing. It did not really take into account the possibility of restricting and simplifying the way in which the solicitor got the relevant information together for completion of the contract. Nothing like that was done. Therefore, the evil of gazumping continues. Ordinary people, whom the Conservative Party particularly wants to be the people who buy their own houses—I certainly support that sort of freedom—suffer from the activities of the gazumper, and they suffer from the activities—or, rather, the inertia—of the legal profession, which is unwilling to change any of its ways and unwilling to find a speedier and more efficient method of house purchase in order to ensure that the possibility of altering the price before completion does not arise.

No doubt the Government, too, will have their part to play and ought to take more seriously the problem of gazumping. It is becoming widespread yet again. We suffered from it in 1972–73, the period of the last property boom, and now, as real incomes are beginning to rise and people are turning to house purchase, they are finding that once again they are bedevilled by this problem and that the resources for buying a new house can all too often be reduced or obliterated altogether when they find that yet again they have been gazumped.