Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Written Evidence

Memorandum by Sitescope Ltd (DHB 16)

  This preliminary response to the Government's consultation on the Home Information Pack highlights some of the main issues that we will be covering in our full response. We thought it would be helpful to prepare a preliminary response given that the ODPM Select Committee has requested submissions by 15 May 2003—ahead of the deadline for the Government's consultation.


  The government's objective of ensuring that homebuyers and lenders have access to relevant environmental information about property being bought is well founded. However, the current proposals designed to meet that objective are seriously flawed and will make matters worse, not better, for property purchasers. The proposals appear to be based on a serious misunderstanding of what homebuyers and lenders require, and on the way in which environmental reports are created in a digital world. This misunderstanding leads to proposals that could result in an unnecessary monopoly being given to a public sector body (the Environment Agency) that will fail to deliver what homebuyers and lenders need, and destroy an existing commercial, competitive market that is already delivering innovative services at prices below those proposed by the Environment Agency. None of this is necessary.

  Sitescope has serious concerns about the Environment Agency becoming the sole provider of environmental search reports required to meet the requirements of the home information pack, and on the report standard outlined in the Government's consultation document. The proposals as they currently stand fail to provide critical information on factors effecting liability, valuation and health issues—such serious omissions will increase the potential risks to, and potentially mislead, homebuyers and undermine the credibility of the Government's home information pack.


  This response deals primarily with the questions which relate to environmental reporting and the provision of searches as raised in paragraphs, 5.33, 5.41 and 5.56 of the consultation paper setting out draft contents of a home information pack.

  Sitescope is the current market leader in the provision of environmental searches for residential property transactions. Its experience in actually providing accurate, reliable and appropriate environmental reports in a digital world gives it expert insights into both what is required and what is possible.

  We fully support the government's objective in streamlining the home buying and home selling process. Relevant environmental reports can easily be accommodated in such a streamlined process.

  We agree that "Environmental issues are of significant interest to consumers, and homebuyers are no exception" (5.29) and the key considerations include "the need to ensure that homebuyers are provided with accurate, reliable search information". However, homebuyers (or their advisers) must also be able to make use of this "accurate and reliable" information which should be appropriate or relevant to their needs.

  We also agree that there is "the need to encourage efficiency and competition and to avoid, where possible, a monopoly supplier situation" (5.42)

  It is perfectly possible to achieve all this, but the current proposals do not do so.


  We do not believe that the Government's consultation document adequately explores the issue of what sort of information should be contained in an environmental report. It does not deal with the broader issues of what sort of environmental information would be useful for homebuyers and lenders and instead focuses on the narrow "technical question" of whether the right questions are being asked. Particularly we would suggest that paragraph 5.4.2 should have stated "the need to ensure that homebuyers and lenders are provided with accurate, reliable and appropriate search information".

  In our view there are three main points that need to be addressed to ensure that homebuyers' and lenders' interests are properly protected with respect to any statutory specification of the content of an environmental report for the home information pack:

  (a)   Relevance—what should an environmental report do?

  With the exception of information on flood information, many of the questions asked and the answers given in the Environment Agency's report at APPENDIX J have little or no relevance for most homebuyers or their advisors. It is far from clear what purpose the proposed report would serve. In our view what is required is a report that covers a broader range of issues and includes an easy to understand conclusion. A relevant environmental report should provide a homebuyer with comprehensive information on factors effecting liability, value and health issues. The consultation document acknowledges, in our view correctly, that the report should be designed so as to provide information on complicated and technical issues in a way that helps the homebuyer and their advisors make a decision. The proposed Report from the Agency manifestly fails to meet this requirement.

  (b)   Utility—a lawyer's perspective

  The Law Society's warning card on Contaminated Land explicitly identifies past contamination of land as a key issue that needs to be considered by legal practitioners in every transaction. The most reliable and accurate method of establishing that this issue should be "no cause for concern"" in a particular transaction is by referring to comprehensive data on previous land use. The proposed Environment Agency's report does not contain such information. This is not a minor oversight. During the last 10-15 years there have been a number of independent studies which examine the relative importance of a range of data sets for evaluating environmental risk from industrial and commercial activities. The definitive guidance provided by the BSI, DoE, Environment Agency and Law Society all make it clear that the key risks stem from certain types of past land use and that large scale Ordnance Survey maps are the primary reliable and accurate source of such information. Data extracted from a examination of every square metre of the country shown on every edition of appropriate large Ordnance Survey Mapping since the 1840s is by its nature comprehensive, or as comprehensive as is currently possible. What is required is that the report contents should be determined by the use of established reliable and accurate methodologies and in accordance with good practice, and not limited to the output of a single organisation that is largely limited to using only its own data. The Agency's data is, as one would expect from a regulatory organisation, limited to that which it has recorded in exercising its functions and powers. Thus it only records that of which it is aware and does not constitute a comprehensive review of all relevant available data, unlike the data available from organisations which have analysed historic mapping on a comprehensive basis.

  (c)   Quality—will the Environment Agency provide a reliable report?

  The current quality of much of the data held by the Environment Agency is, in many instances, poor and little investment has gone into securing or maintaining high data quality. As a result, any implicit assumption that the closer to the source that the report is generated, the more accurate the information in the report must be, is incorrect. In addition, there are two further points—Competition Law would preclude the Agency's retail function being any "closer" to source than our competitive service and we receive data in electronic data base form from the Agency. This technology permits reliable and accurate copying—so being closer to source has no intrinsic "quality" benefit. What is required are appropriate data quality standards dealing with issues such as precision of grid references.


  The current proposals define the legal requirement for the home information pack as a specific environmental report provided by the Environment Agency. The effect is to give the Environment Agency a monopoly on the provision of the environmental report that a vendor will be required to provide. If the Environment Agency becomes the sole provider of environmental search reports, and the report standard proposed by the Agency in the consultation document is adopted, it will have profoundly negative impact on homebuyers by destroying a competitive and innovative pre-existing market for environmental reports—effectively reducing the amount of relevant information available to homebuyers. We also wish to bring to the Committee's attention the fact that the Environment Agency is currently the subject of a formal investigation by the Office of Fair Trading with respect to the provision of environmental reports.

  The consultation paper correctly recognises that the Environment Agency is likely to be the only source of certain data sets that are relevant to an environmental report. However, because digital data can be copied very quickly and error free, it does not follow that just because the Agency is the only source of such data sets that there is any advantage in making the Agency the only source of an environmental report that utilises those data sets. Indeed, because homebuyers, lenders and their advisors will find that environmental reports that utilise data from multiple sources meet their needs much more effectively, the requirement to provide an environmental report from one organisation that only utilises its own data is likely to be extremely counter productive.

  Indeed, this requirement to provide a specific Environment Agency report in the home information pack is perhaps the most serious consequence of the apparent misunderstanding about what buyers and lenders need and the capabilities of what a digital information infrastructure can provide. The opportunity exists to ensure that there is a continuing vibrant competitive market in the supply of innovative and user friendly environmental reports that utilise all the necessary data required to produce a report suitable for the home information pack. However, the current proposals will create a monopoly market for a product that will not meet the requirements of homebuyers, lenders and their advisors and are likely to destroy the existing competitive market in the supply of more comprehensive environmental reports.

  A vibrant market exists for environmental reports for homebuyers. There is substantial innovation which benefits both consumers and legal practitioners. Ten years ago the lowest cost meaningful environmental report for property buyers was in the region of £500—now our Homecheck service costs just £25.


  We understand from the Environment Agency that they are planning to charge £25 per report. Our existing report costs exactly the same but contains much more useful information, in an understandable and interpreted format, as well as professional advice from an environmental consultant if it is required.

  It should also be noted that the information contained in the Agency's report is available on the Agency's In Your Back Yard web service without charge. We do not see why the homebuyer should have to pay the Environment Agency for a limited amount of information which is, effectively, available free of charge elsewhere and is [largely] available to them for free (or at a nominal charge) under their existing freedom of information rights or existing government information policy.

  What is required is that homebuyers, lenders and their advisors are provided with value added reports and services which allow them to make an informed decision about property purchase or lending with the accurate and reliable knowledge of relevant or appropriate environmental matters.

  If the Environment Agency's report becomes standard, either homebuyers will have to put up with an inadequate report or pay about £200 to put together the components of what they can now buy for £25 from Sitescope. What is required is that the home information pack should be designed to homebuyers are provided with accurate, reliable search information while at the same time encouraging efficiency, innovation and competition


  There is a wealth of independent research which supports our view that the questions asked and answers given in the Agency's report do not provide the homebuyer with a useful environmental report. We do not see how granting the Agency a monopoly to specify the required content, and then be given the monopoly to provide the required environmental reports, would benefit the consumer or be consistent with Government competition policies.


  Many of the problems identified in the consultation paper are real. There is a need to ensure that an environmental report included in the home information pack contains accurate reliable and appropriate useful information, and is understood by homebuyers, lenders and their advisors. However, the solution proposed does not meet these concerns and, in many ways, is likely to make homebuyers, lenders and their advisors worse off than is currently the case. An alternative approach is both necessary and achievable, to ensure that the government's objectives are met in the most efficient way possible. This alternative approach should be based on the following principles:

  (a)   Relevant information

  The specification for environmental reports for homebuyers should meet the real needs of homebuyers lenders and their advisors. In practice, in our view, this can be best determined by relying on published guidance and the relevant experts working with the providers of established environmental reporting services.

  (b)   Excellence and value for money

  In line with Government policy, innovation and efficiency should be encouraged through market mechanisms. Excellence and value for money can be achieved by ensuring that competition in the supply of reports is facilitated, based on fair, reasonable and non-discriminatory access to the required environmental information where this is held by a single source.

  (c)   The necessary safeguards

  Any appropriate insurances, standards and codes of conduct that need to be implemented to protect the homebuyer, the lender, the home seller and their professional advisors are applied equally to all suppliers of reports.

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