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Council House Sales (Sutton)

Volume 130: debated on Monday 28 March 1988

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Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]

12.1 am

I am grateful to my hon. Friend the Under-Secretary of State for the Environment for attending to answer this debate. You, Madam Deputy Speaker, will be aware that my hon. Friend the Member for Carshalton and Wallington (Mr. Forman), with the full approval of my hon. Friend the Under-Secretary, wishes to catch your eye at the end of my remarks.

The right to buy has been one of the most significant social advances that we have seen for generations, and millions of people have availed themselves of this enormous benefit. Indeed, many more still wish to do so. I am concerned that perhaps bureaucratic procedures may be thwarting many of my constituents in Sutton, Cheam and Worcester Park from achieving their undisputed right —a chance to purchase their property.

I have introduced this subject after monitoring closely the growing number of people who have either been to see me at my fortnightly advice bureau or who have written to me at the House over a period of the better part of two years. It would be helpful if my hon. Friend the Minister could encourage dialogue between her officials and the officials of the London borough of Sutton, through the chief executive, to try to identify the perception of both sets of officials of some of the problems. I cannot make any allegations because I do not know all the facts. What I do know is that, undoubtedly, there is mounting frustration among my constituents. I hope that the debate will enable us over the next few months to ascertain exactly what those facts are because they are very urgent and very important.

I shall quote one letter from my constituents, Mr. and Mrs. Willis, to whom I spoke yesterday. They wrote to me on 3 November 1987 and said :
"Further to correspondence in July and August this year, I thought I would let you know that we are now into November and still unable to get our price for our maisonette from the London Borough of Sutton.
I know someone who is also experiencing the same treatment, has in fact brought this matter to the attention of Margaret Thatcher."
Of course, that is a considerable step to take. The letter continues:
"They are now blaming the hurricane and damage in the Borough for holding up our price. However many more excuses are we to put up with before we get an answer?
I realise you are getting the same outcome to the question as we are but perhaps you can check with Mrs. Thatcher about what is happening to our so called 'Right to Buy.'"
Obviously, I wrote, as any hon. Member would have, to the local authority on 5 November, and I shall quote some parts of its reply of 3 December, which I shall pass on to the Minister. The legislative changes which may, in some ways, have added to the burdens of local officials are always uppermost in the minds of many people and need clarification.

On 3 December, the director of housing in Sutton wrote to me as follows:
"Mr. and Mrs. Willis' right to buy was confirmed on 28 August 1986 and the appropriate work regarding an estimated service charge undertaken in accordance with the practices at that time. Unfortunately before it was possible to provide a priced offer in accordance with the Housing Act 1985, Section 125, the Housing & Planning Act 1986 became effective which introduced new legislation relating to service charges.
The legislation requires that all offers to sell leasehold properties made after 7 January 1987 shall contain a quotation relating to service charges to be levied for the five years following the sale, the major elements of which will then be binding upon the Council. Consequently, in the event of an under-estimate it will not be possible to recover a full contribution from a leaseholder with the shortfall being met by the Housing Revenue Account, ultimately to fall upon those people who remain tenants. Conversely, any overestimate would not only tend to depress the value of the property but could also dissuade a purchaser from proceeding … Unfortunately, the technical manpower existing within the Housing Division could not be released from other duties and accordingly the appointment of a Leasehold Surveyor was sought. It was not possible immediately to attract an applicant of a suitable calibre and the post was not filled until 10 August 1987. At that time the Leasehold Surveyor started work on the surveys but was, of course, faced with a substantial back-log."
This seems to show that there has been difficulty in understanding the legislation. Sutton council appears to downgrade the sale of houses as a matter of general policy and overall philosophy. The case of Mr. and Mrs. Willis reflects the problem facing many others. I spoke to Mrs. Willis yesterday. She has still not had a price quoted.

Mr. K. R. Brand came to see me on 14 March. By June, he will have been kept waiting for nearly two years. A price has not been agreed, and he makes the point that it would surely be fair to take into account the number of years that a prospective purchaser has had to wait, when the council has been dilatory, as part of the five-year period during which a new purchaser is prohibited from selling on the property.

Mr. Parnell applied on 3 March 1987. He has had no valuation and no survey. He is 53 and makes the point that every month of delay is a disadvantage at that age.

There are dozens and dozens of similar cases on my constituency files, and I am sure it is the same on the other side of the borough. Many constituents have written to me registering their frustration. On 10 June 1987 I wrote to the chief executive, referring to the delays. He replied on 27 July:
"Any delay in the sales of Council houses to tenants is regretted, but is due to staff shortages in the Valuation and Legal Department. There is sufficient of a shortage of legal staff in the South East area that the Council is having difficulty in both recruiting and retaining staff, qualified and unqualified. We are seeking solutions to the problem and I am optimistic that recruitment will improve.
Although there have been some delays on sales of Council houses, there have been substantial delays in connection with the sale of Council flats, due to the Council's inability to obtain a surveyor to do the necessary structural survey. Recently, the Council decided to employ a private firm to do the necessary work and I anticipate that the backlog of sales of flats and maisonettes will be cleared over the next 3–5 months."
That letter was written in July 1987. It appears from those statistics that the situation is getting worse. Allowing for the problems facing the council over the sale of leasehold properties, there are still delays for those without that complication. I am told that Sutton has bid for increased staffing for the year 1988–89, with 98 full-time and 17 part-time staff being recruited. I am told that that has a price tag of about 1·3 million. Time and again the impression given to my constituents is that no amount of recruitment has helped them with their right to buy, thus enabling them to become part of the property-owning democracy.

I think that even more staff will be taken on by the council to assist in the empire-building that is perhaps going on in some of the committees in the borough. Many residents have said to me that Sutton has adopted a slowit-down approach to the right to buy. Only time will tell whether that is the case, but 1 and many others wonder whether the abortive policy to abolish grammar schools absorbed and exhausted the energy resources and the time of the officials in the 18 months between 1986 and 1987. Of course, abolition of the grammar schools remains a reality for my constituents while the council is in office. It may well be that potential purchasers were held up while the attention of the council was diverted to other priorities. We must look at that possibility.

I do not say that Sutton is the worst council in the country about the right to buy, because at the moment we do not know the facts. I hope that my hon. Friend the Minister will commence a dialogue with the council. Let us have a look at how the Sutton officials see the working of the legislation and at whether Sutton can use the private sector to speed the system, because surveying, valuation and conveyancing are critical. I am anxious to help my constituents and I am certain that my hon. Friend is anxious to implement Government policy as widely as possible.

On 7 March I wrote to the chief executive of the council about the delays and he was good enough to reply on 25 March in a letter that arrived this afternoon. I shall make certain that my hon. Friend and her officials see that letter because it is a lengthy and important document. There are a great many observations on the difficulties surrounding leasehold properties. I am certain that the chief executive will be happy for me to pass on the letter as a means of getting things moving for many of my people who are angry and frustrated.

I hope that as a result of this debate we can set in train a detailed analysis by the Department of the Environment and the London borough of Sutton to try to determine precisely why these delays have been growing over the past 18 months. At the moment they show little sign of diminishing and perhaps we can try to find some system whereby we can speed the plough. I am told that several hundred people in both parliamentary constituencies in the borough have been frustrated and that their anger is mounting as each day adds a new dimension of anxiety and frustration to their lives.

12.13 am

I am grateful to you, Madam Deputy Speaker, for calling me in this important Adjournment debate. I support the excellent speech by my hon. Friend the Member for Sutton and Cheam (Sir N. Macfarlane). He is right to express concern on behalf of his constituents and I feel justified in taking a few minutes to do the same on behalf of my constituents.

As my hon. Friend said, the policy of council house and flat sales has been one of the great success stories of the Government under the Housing Act 1980. I recall that it was working very satisfactorily for some years in Sutton while the Conservatives were in control of that local authority. Since May 1986, when the alliance managed to gain control of the council, progress seems to have slowed, and that is not satisfactory for my constituents.

Council officials say that there has been a problem in calculating the service charges that would have to be paid by tenants when they become owners. Equally, it is said that there are difficulties in recruiting enough trained surveyors to expedite valuation and other related work. However, many of my constituents, who have been frustrated, and had their patience sorely tried, suspect that the local authority may have been deliberately dragging its feet because of some kind of nod and wink from its new political masters in the alliance party. This serious charge needs to be refuted convincingly. The best way for the council to do that would be to demonstrate in practical terms to my constituents and those of my hon. Friend that it is able to speed things up, and to begin that process soon.

I can give the House three brief examples. Two of my constituents who came to see me recently had been waiting since July 1987 to buy their flat, and so far, they had not even had the survey done. Another couple, who are not in the first flush of their youth, came to see me about their right to buy, for which they had applied in April of last year. They were still waiting in July of last year, but I understand from a recent phone call to my office that they will at last be able to discuss a firm offer this week, in March this year. Another constituent and her handicapped son have been waiting since February. That sounds better, but in their case, the story from the council officials was that the officials must await the consent of the Secretary of State under the terms of the Housing Act 1985 and the Housing and Planning Act 1986 before they can meet my constituents' wishes.

The point made by my hon. Friend, which I endorse, is that if these are genuine technical reasons for delays, the officials in the Department of the Environment and in the London borough of Sutton should get together urgently and in a constructive spirit, to sort out ways to overcome these difficulties. On the other hand, if, as I suspect and fear, there are some political reasons for this situation and the foot-dragging, that is inexcusable, and the practice must be brought to an end as soon as possible.

My hon. Friend has already made it clear that the desire for home ownership, whether of a house, a flat or a maisonette, is a laudable one, which has been greatly assisted by the legislation introduced by the Government. Such legislation is the law of the land, with the full force of Parliament and the House. Parliament's will should be respected in this as in all matters, and I urge my hon. Friend the Minister, tonight and subsequently, to use all her authority in the Department to see that Parliament's will is carried out.

12.17 am

I am grateful to my hon. Friends the Members for Sutton and Cheam (Sir N. Macfarlane) and for Carshalton and Wallington (Mr. Forman) for introducing this debate on so important a topic.

The right of tenants of local authorities and other public sector bodies to buy the homes they live in has, of course, long been a vital element of our housing policy. This has been reaffirmed three times at the polls. There are now very few of any political persuasion who disagree with US.

Since 1979, when we were voted into office, no fewer than 1·1 million council, new town and housing association houses and flats have been sold in Great Britain. Nearly three quarters of these have been sold under the right-to-buy legislation which we introduced. Right-to-buy sales run at around 100,000 a year—when one comes to think of it, that is a lot of houses—half as many again as all the houses in my hon. Friend's borough. In some years, even more have been sold.

Of course, the discounts that are payable have helped. Without them many people could not afford to buy their homes. These start at 32 per cent. for a house and increase by 1 per cent. a year to a maximum of 60 per cent. where the buyer has been a public sector tenant for 30 years or longer. For flats, the discount starts at 44 per cent. and increases by 2 per cent. a year to a maximum of 70 per cent. for buyers who have been public sector tenants for 15 years or longer. These are very generous discounts. They are justified by their results and on account of the rent that the tenants will have paid over the years and that will have been set against the loan charges for building the house or flat.

Most people, indeed the vast majority, would opt for home ownership if given the chance. Two thirds of homes in England are now owner-occupied—double the figure in the 1950s—which puts us almost at the top of the league among comparable countries.

Almost as important is the relative freedom of owner-occupiers to sell their home when they want to, move away and buy another one. That is important because it increases personal choice — which is a good enough reason in itself—and also because it is a more efficient way of matching supply with demand than any allocation policy ever can be.

Despite the enormous success of the right to buy in widening home ownership, there are some who would like to become home owners, but who are not interested in buying their current home—perhaps because they have a growing family in a flat and would prefer to be in a house —but need a little help to be able to buy on the open market. That flat could, in areas with acute homelessness problems, mean that another family can be kept out of bed-and-breakfast accommodation. My right hon. Friend has therefore announced that we are to bring forward powers to enable local authorities, with the Secretary of State's consent, to offer incentive payments to tenants who are willing to give up their tenancy to buy in the private sector, so freeing vacancies for those whose circumstances are such that they need rented accommodation.

Sale of council housing stock also benefits councils in two ways. It relieves them of the burden of management and maintenance, which can be very expensive. That saves money and allows housing departments to concentrate on those tasks where their skill and knowledge are at a premium. It also unlocks capital resources that enable councils to provide for those for whom purchase is not a realistic option; and it enables them to deal with the arrears of maintenance and refurbishment of their existing housing stock. We all know what a tremendous job this is. Receipts from sales since 1979 already total more than £4·5 billion. That augments the amounts that councils borrow to finance their capital programmes and allows them to undertake work that would not otherwise be possible.

I therefore take a very serious view when I am told that some authorities are not as quick as they might be in processing right-to-buy applications from tenants. That right is given to them by Parliament and delay is tantamount to denying it. There are a few authorities—only 11 of them—whose performance is monitored by the Department in monthly progress reports. There are others with which I have had meetings to find out the cause of the delay and to try to overcome it. More recently, we have written to all the non-monitored London boroughs, including Sutton, for information on the state of their dealing with right-to-buy applications. As a last resort, my right hon. Friend can intervene and take over sales, but that power would naturally be used only as a last resort.

The law sets time limits for certain parts of the sale procedure. The landlord must normally respond to a tenant's claim to exercise the right to buy within four weeks, confirming or denying that the tenant is entitled to buy. If the tenant does have the right to buy, the next step is for the landlord to serve notice giving the purchase price, and estimates of any service charges payable. This further notice must be served within eight weeks if the sale is freehold and 12 weeks if it is a leasehold sale. If the property is a flat rather than a House, the sale will, of course, be on a long lease. When the landlord has served notice of the purchase price, the tenant may decide against buying. If, however, the tenant decides to go ahead it is necessary to sort out the legal details. There is no statutory timetable for that process, but when all the details have been settled the landlord is under a duty to complete the sale.

My hon. Friend the Member for Sutton and Cheam suggested that, in cases where the landlord has held up a sale under the right to buy, there ought to be a corresponding reduction in the period during which the purchaser is liable to repay discount. As the House will know, a tenant who exercises the right to buy must undertake to pay back discount if the house or flat is disposed of within three years. My hon. Friend's proposal, as I understand it, is, that if the landlord had held up the application for, say, six months, the tenant would be free to sell two and a half years after buying the property without paying back any discount.

That is an interesting idea, which I would like to think about further. We already propose a different change in the law to enable tenants to take more effective action if their application gets stuck. Amendments to the Housing Bill are being prepared for that purpose. The tenant will first have to serve notice on the landlord calling on it to proceed with the next stage in the process within a certain time. The tenant must allow at least a month. The landlord may, of course, deny that it is holding up progress, or it may simply take whatever action is needed. Otherwise, however, the tenant may serve a further notice.

The effect of this will be that the landlord has to treat the rent paid by the tenant from the date as an advance payment toward the purchase price of the house. Once the landlord has taken the next step in the process, the rent paid from that time on will go back to being treated in the usual way; but if there is further delay the tenant may repeat the process. The effect will be that, when the sale is eventually completed, the sale price will be reduced by an amount equal to the rent paid during any period when the application was held up. The tenant will thus be compensated by having that rent converted, in effect, into mortgage repayments.

I understand that some authorities face more problems than others. In some areas, especially in London, it is not easy to recruit staff of the right qualification and caliber —especially people such as lawyers, surveyors and valuers whose skills are in great demand. Sometimes it is possible to buy those services from the private sector and l urge Sutton council to give that very serious consideration. That may not be the only answer, however, and I would also urge the council to ensure that it is making the most effective use of existing resources and giving this important work the high priority it deserves.

Specialist advice is needed particularly for estimates of service charges, which can be a major worry for tenants buying flats. Although those requirements add to the council's work in processing applications, it is right that purchasers should have those safeguards. Making the position clear at the outset also reduces the risk of disputes in the future.

Authorities could be tempted to set charges high to avoid any risk of loss that would have to be borne by the housing revenue account, and also to reduce the amount of detailed professional work. That could mean that charges are so high as to put off anyone buying—which is the last thing we want. As we know from experience of the private sector, service charges for flats can be high anyway. There is a statutory requirement to assume, in valuing the flat, that the estimated service charges will be paid in full. High estimates will thus reduce the price.

Sutton's performance is not monitored and it is not one of the authorities I asked to come and see me. I am therefore all the more concerned to hear that the delays are so serious, both in the length of time and in the number of people affected. Obviously hon. Members will know more of what goes on in their constituencies than we in the Department can hope to know.

The Minister will be aware that many years ago we used to publish a list of those authorities that were poor performers in the processing of planning applications. I believe that my hon. Friend now has responsibility for that. Does she believe that the time is now ripe for a similar performance status to be applied to this problem?

I shall certainly bear that in mind. As my hon. Friend has said, we rate the performance of authorities with regard to planning applications. I am concerned by what my hon. Friends have said, and I would be happy if they could give me more information.

The council's problem, we understand, is one of staff needed to calculate service charges. As my hon. Friend the Member for Sutton and Cheam has said, a substantial backlog had built up by the time a new leasehold surveyor had been appointed and started work. We share the council's hopes that that work will soon be brought up to date. We do not know what other types of staff have been recruited by the council but naturally I should regret their being put on to other work while the arrears in right-to-buy work persist. My officials are ready to meet the council to discuss problems if that would be helpful.

I am grateful to my hon. Friends for initiating this interesting and useful debate. I shall consider seriously the points that they have raised and I look forward to receiving the documentation to which my hon. Friend the Member for Sutton and Cheam referred.

Question put and agreed to.

Adjourned accordingly at half-past Twelve o'clock.