Homes Bill

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Mr. Raynsford: That is an interesting point and when the hon. Gentleman studies the proposed format for the home condition report he will see that it is proposed that, in addition to the descriptions, inspectors should give a rating on a scale of one to four in respect of all the indicators. If I may summarise, rating 1 will indicate that the item is in acceptable state of repair; rating 2 will mean that minor maintenance may be required; where rating 3 is given, significant repair or maintenance is required; and rating 4 will indicate that urgent repair is required. I hope that the hon. Gentleman will accept that, given that obligation, it will not be possible for an inspector simply to gloss over a crack. The inspector would have to indicate whether it was something purely cosmetic, which might rate 2, or something more serious, rating 3 or 4. There really will be an attempt to grade the severity of the problem.

I do not minimise the difficulties. The new format will be complex; it will require a lot of preparation and training and it will need to be properly enforced. However, I ask the hon. Gentleman to accept that it is our intention to ensure, as far as possible, that the measures are objective and will give a fair indication of the condition of the property without the scope for evasion that sometimes mars the benefit to customers of survey reports at present.

5.15 pm

Mr. Don Foster: Earlier in our deliberations, the Minister said that the work of the certification body would be largely a paper exercise. How often does he envisage that representatives of the certification body will check the accuracy or otherwise of the documentation?

Mr. Raynsford: That is a fine point of detail on how the certification scheme will operate. It would be wrong for me to anticipate what will be decided. An expert body involving all the stakeholders is discussing the matter, and it will make recommendations. We shall consider them carefully before making a decision. It would be wrong of me to anticipate its conclusions.

Mr. Foster: Given that in our earlier deliberations the Minister was clear about the cost of the certification body and the average cost that would be added to surveys, the Government must have some idea of the percentage of reports that would be backed up by a visit from the certification body. One would expect the cost of such checks to be a major element in the body's expenses, and it must have been taken into account in the figure that the Minister cited earlier.

Mr. Raynsford: The hon. Gentleman probably misunderstands the basis on which the certification proceeding will be set up. It is not designed to be a double checking mechanism that will check inspectors' work on properties. However, as I said this morning, there will be an obligation for every report to be registered. That will be open to checks, so there will be an option to verify whether one inspector seems to be adopting an approach that appears to be out of line with that of other inspectors. That circumstance might well justify further intervention by the certification body. What the precise criteria should be and how those checks should be carried out are details for the certification body to consider. I ask the hon. Gentleman to accept that we are keen that it should be a rigorous and thorough arrangement, but it must be informed by the views of the specialists and experts who are working with us to develop the system.

Mr. Clifton-Brown: Normally, someone commissions a surveyor to undertake a survey. Under the Bill, the seller will commission a survey, but the buyer will pay for it and the surveyor will be liable to the seller, the buyer and the lender. Under those circumstances, if the buyer or the lending institution wishes to raise further inquiries with the surveyor, will the surveyor be liable to answer them? If so, who will pay for the extra work involved?

Mr. Raynsford: Perhaps I can clarify the procedure. If I heard the hon. Gentleman correctly, he implied that, although the seller would commission the survey, the buyer would pay for it; but that is not our intention. The seller will commission the survey when preparing the seller's pack and he will have financial liability for it. Depending on the arrangement reached with the estate agent who puts together the seller's pack, it may be paid for at the time or on completion of the sale, but it will be commissioned and paid for by the seller. The seller will have the option to seek further information, but that option could be available to other parties. In certain circumstances, and provided that they are satisfied that the particulars are available and that the surveyor is on an approved panel, lenders may choose to go to the same surveyor for further information in the course of a valuation. I see no reason why such an arrangement could not be made to work. There would obviously need to be safeguards, but it would be sensible.

Equally, on seeing a home condition report, a buyer may seek a further more detailed survey from the same surveyor on the basis that that will probably be more economical than starting out with an entirely different structural survey from a separate surveyor. Again, that is one of the options. Our aim is to ensure that the home condition report provides information of real use to all three parties—seller, buyer and lender—on which they can rely. Also, it should provide a cost-effective way to secure additional information, if that is necessary.

Mr. Clifton-Brown: I want the matter to be absolutely clear. If buyers or lending institutions request information over and above that required by the home condition report, will they be liable to pay for it?

Mr. Raynsford: If they seek extra information from the inspector, that is a matter entirely for them. It is separate and ancillary to the home condition report, and the seller has no liability. Whether the surveyor chooses to charge for it will depend on his relationship with the lender. If the inquiry is a minor matter from a lender who puts a lot of business a surveyor's way, the surveyor may choose not to charge for it. The judgment will be the surveyor's, but the liability will be entirely on the person commissioning the extra information.

I hope that we have now covered all the issues that we need to. I urge the Committee to reject the amendment.

Amendment negatived.

Mr. Don Foster: On a point of order, Mr. Gale. I did not want to interrupt the flow of debate but, like the hon. Member for Eastbourne, I may need to attend the debate on the Floor of the House shortly. I apologise if I have to leave early.

The Chairman: I am grateful to the hon. Gentleman. All members of the Committee understand the difficulties of attending to duties in Committee and on the Floor of the House at the same time.

Mr. Raynsford: I beg to move amendment No. 56, in page 7, line 12, leave out `affects' and insert `limits'.

I shall be brief, lest the threat of the hon. Member for Bath is realised and the Opposition Benches are denuded of Liberal Democrats to participate.

Amendment No. 56 is designed simply to clarify the Bill. Clause 8 states:

    Nothing in this section affects the power under section 7 to make provision about home condition reports in the regulations.

That is not an elegant way to express the purpose, and the substitution of ``limits'' for ``effects'' makes the intention clear and allows no ambiguity. I hope that everyone will agree that that is a sensible and appropriate amendment. In line with my earlier comments, I commend it as an improvement to the Bill with no change in substance or policy.

Amendment agreed to.

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

Mr. Loughton: It has become clear as we have talked to the amendments to clause 8 that there are still many questions to be answered, many schemes to be finalised and many details to be given. It is obvious that we are unhappy about the use of the home condition reports. We believe that the HCRs will be too brief, too general and will prove inadequate for many purposes. The measure is far-reaching, given that it could affect more than 1 million private residential sales and that the survey take-up is less than 20 per cent. of the 1.5 million sales at the moment. As things stand, buyers of property will be given a misleading picture as to the thoroughness of the home condition report, as opposed to a fuller survey of the sort that the seller is now perfectly at liberty to commission.

We feel that there is some lulling of the purchaser into a false sense of security. We also want to stress—

5.25 pm

Sitting suspended for a Division in the House.

5.40 pm

On resuming—

Mr. Loughton: I was about to point out a further problem with home condition reports, which is the lack of what I might call shelf life, and the Government have said nothing to suggest that the reports should be time-limited. They are effectively condoning a system under which a house sale could be based on a home condition report carried out six months, a year or even 18 months ago, since when fundamental changes might have been made to the building's soundness—not least, in today's climate, through flooding.

That weakness raises the question of cost. During the frenetic activity that went into the producing the Bill, the Department of the Environment, Transport and the Regions told the various interested parties that it anticipates that the costs involved will rise considerably, even to European levels, where commission rates are typically between 6 per cent. and 8 per cent. That would have a serious impact on the house sales economy.

It is important that people should know that a home condition report will not provide a property valuation. It will not be a structural or building survey, and the buyer may still want a rather more detailed structural survey to be made; if it is deemed to be necessary, which would certainly be the case with older property. That would be in addition to the cost of the home condition report.

The home inspector's inspection will be visual only. We are led to believe that no part of the property will be opened up or damaged to allow a more detailed inspection. In particular, the home inspector will not raise floorboards or floor coverings, will not lift wall finishes or other contents or remove vegetation—I presume that that means mould growing on the walls. However, we are assured that the home inspector will come manned with a 3m ladder, so that will be all right. The reports will contain many flaws, particularly about the outside of the building. Only significant defects to boundary fences and walls, retaining walls, paths and driveways that are part of the property will be reported on, and the home condition report will not deal with the condition of external features or amenities such as tennis courts and ponds.

We are dealing with something that is betwixt and between; the home condition report will not be a cursory tick box valuation, but nor will it be a full survey. It will be a halfway house, but it will increase the cost of the transaction considerably. It will not lead to a full investigation of the property, as some have been led to believe. It will be woefully inadequate. I fear that the home condition report, which is at the heart of the Bill, shows the weakness in the changes that the Government are keen to thrust upon us. We want to reiterate our concern that the Bill is fraught with problems.

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Prepared 23 January 2001