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

Memorandum by Landmark Information Group Ltd (DHB 17)


  1.  On 7 April 2003, the Select Committee on the Office of the Deputy Prime Minister announced that it would be carrying out a pre-legislative inquiry on the draft Housing Bill published in March 2003. The Select Committee has invited written evidence by 15 May 2003.

  2.  This paper is the submission of the Landmark Group Ltd. (Landmark). Landmark has been in existence since 1995 as a major supplier of site specific information to Chartered Surveyors, Conveyancing Solicitors, Environmental Consultants and Civil Engineers. Landmark produces:

    —  Environmental Reports, satisfying the requirements of the Law Society's Warning Card on environmental risks, for both residential and commercial properties;

    —  Personal Searches meeting the accepted requirements of Standard Enquiries of Local Authorities; see APPENDIX G of the ODPM consultation paper (Contents of the Home Information Pack);

    —  Planning searches for both residential and commercial properties.

  Landmark has seen its business in these areas grow rapidly over the past four years. Landmark is one of the leading suppliers of environmental searches and its planning searches are unique in the market at present. Landmark produces over 500,000 reports and 750,000 site-specific maps each year and so is a significant contributor to the market.

  Landmarket is a sponsor of the Association for Geographical Information and a founder member of the Council of Property Search Organisations. Landmark would be happy to offer one of its directors to give oral evidence to the Select Committee.

  3.  Environmental Searches, Personal Searches and Planning Searches, drawing together information from a wide range of sources, offer consumer choice with respect to price, quality of service and speed of response. Landmark believes its reports offer customers better value, measured against these attributes, than Local Authorities or Central Governmental agencies generally provide. This has led to a rapid growth in Landmark's business over the past four years.

  4.  Landmark has a major interest in the provisions of the draft Bill requiring anyone marketing a home to assemble a Home Information Pack and in the contents of that pack. We are well placed to comment on whether the government's proposals will achieve their intended effect. Landmark's comments are restricted to this part of the Bill.


  5.  The Government's proposals for home information packs are designed to make it easier for people buying and selling homes. Landmark supports this objective. Indeed, our services are designed both to make it easier for people to buy and sell homes, and to build greater security and efficiency into the process. We believe the competitive marketplace in home information reports, which has developed over the past four to five years, has benefited the house-buyer in terms of speed, quality of service and cost.

  6.  In particular, Landmark welcomes the recognition in the consultation paper (Contents of the Home Information Pack) that an environmental search should be an integral part of the residential conveyancing process. Landmark pioneered such searches in 1999, and remains one of the leading suppliers of such reports. Market demand for such a report is indicated by the fact that around 45% of all home buyers today commission such a report from a commercial supplier through their solicitor.

  7.  In view of the high degree of market acceptance of environmental searches supplied by Landmark and its competitors, we regret the decision of the ODPM to include a sample Environment Agency Residential Property Search Report as APPENDIX J of its consultation paper (Contents of the Home Information Pack), without any reference to commercial alternatives, and we believe the ODPM now recognises that this was an error. However, the Committee would be well placed to discover how this came about.

  8.  Landmark welcomes any reform that will increase the availability of pre-sale information, and it is clear that the Home Information Pack could assist this process. However, in themselves they will not be sufficient to achieve the government's objectives. The main danger is that they will introduce unnecessary cost and delay before the property can be marketed. To minimise this risk, the Pack Specification should be as open as possible and not be too prescriptive on the detail. For example, it might be possible to ask the Council of Mortgage Lenders, the Law Society, the Council of Property Search Organisations, and the Royal Institution of Chartered Surveyors to be responsible for the accreditation of the suppliers of Home Information Packs. The Consumers' Association might also have a voice. The important principle is that the contents of the Home Information Pack should be dictated by the requirements of house buyers and their professional advisors and not by bureaucratic or political pressures.

  Secondly, if Home Information Packs are to be produced cost effectively, consistently and quickly, on a quality controlled basis, their production should be based on national data sets, organised for the purpose. This approach has enabled both public sector search providers (eg The Coal Authority) and commercial providers (eg Landmark) to deliver improved services and an almost instant response to search requests, without the burden of major cost increases.

  9.  With a few notable exception, Local Authorities and Central Governmental Agencies have failed to match the services of private search agencies because they have not taken this approach. Because of the way in which they are organised as multi-task public bodies they cannot do so. Experience with NLIS, for example, has demonstrated a wide range of performance among local authorities and other government departments. Some are already electronically enabled, whilst others have not yet begun that process and continue to delay modernisation.

  The Housing Bill should provide for data holders to make their data available on a wholesale basis to companies, like Landmark among others, that are in a position to provide such a service. This would stimulate the development of a truly competitive market to the benefit of home buyers.

  10.  Landmark welcomes newcomers (from the public or private sector) to what is a rapidly expanding market, provided there is no distortion of the market by anti-competitive practices. In Landmark's view, any attempt to impose the Environment Agency's report or any other public sector product on the conveyancing industry through statutory means, for example, by making it a mandatory part of the Home Information Pack, would be extremely regressive. It would not meet the needs of home buyers and sellers because:

    —  it does not offer a clear conclusion that states unambiguously whether the findings of the report will adversely affect the value of the property, or give rise to a potential future environmental liability (eg a remediation notice from the local council). All the principal commercial providers offer such a conclusion. Where necessary, Landmark offers guidance on steps that should be taken when a problem has been identified. Without such a conclusion, it is hard for most solicitors to evaluate the findings of a report in order to give appropriate advice to their clients; and so it will be of very limited use and inferior to the commercial products already on offer.

    —  All the principal commercial providers of environmental reports on residential property use old Ordance Survey maps, dating back to 1855, to identify potential contamination from past land use (eg hidden landfill, old mining operations, toxic industrial processes). This data is required to meet the recommendations of the Law Society's Warning Card, first published in June 2001, which set out the duty of care owed by conveyancing solicitors with respect to environmental risks and liabilities. Considering the past history of a site is regarded by the Law Society as a key part of the solicitor's due diligence.

  Our clear recommendation, with respect to specifying an appropriate Environmental Search for inclusion in the Home Information Pack, is that it should meet the requirements of the Law Society's Warning Card, no more and no less. As currently specified the Environment Agency's Property Search Report fails to pass this test.

  11.  The historical dimension is particularly significant; the Law Society's Warning Card sets out the duty of care owed by conveyancing solicitors with respect to environmental risks and liabilities. There are other omissions from the Environment Agency report, including the likely presence of radon ( a carcinogenic gas, typically found in areas over granite rock formations (eg Devon and Cornwall).

  12.  At the same time as it launched its report, the Agency sought to impose greatly increased charges for its data supplied to the commercial search agencies. These proposed increases were so large they could not be absorbed by Landmark and would lead to higher charges for the Reports which we provide. The Environment Agency should be required to explain why it is that, as the prospect of a mandatory Home Information Pack, of which its information will form a part, becomes more real, it is increasing its charges in this way.

  We do not believe that Government intends that the introduction of the Pack should have the effect of creating a tax on home sellers for the benefit of any Government Agency. However, on page 258 of the main Consultation Document (Housing Bill, Consultation on Draft Legislation) paragraph 40, the cost of local searches is estimated at £200. We believe that this is unnecessarily high and has been estimated on the assumption that some information supply monopolies will be preserved by the public sector, and that the efficiencies of aggregating data (see paragraph 6 above) will not be passed on to the home buyer.

  There is a danger that other public bodies, like local authorities, will take advantage of a mandatory Home Information Pack to increase the charges they make for information. There is at present no effective mechanism to control charges levied by local authorities on commercial enterprises wishing to re-use data. The great majority of authorities are helpful and supportive, but a small minority place significant obstacles in the way of such companies. For the proposed system to work, all local authorities must operate in the same way. It is worthy of note that Local Authorities fall outside the regulatory remit of HMSO, which regulates the re-use of Crown Copyright material. We believe conveyancing solicitors would attest to the value of an open and competitive market place. It would be a serious mistake to allow the introduction of Home Information Packs to create public monopolies or monopolies of any kind.

  13.  The Select Committee is well placed to consider this issue and Landmark would be happy to provide further evidence, either oral or written, should this be required.

  14.  The Government recognises the impact of the Home Information Pack on the operation of the market, but it is far from clear that the ODPM has conducted an effective cost benefit analysis which would enable these effects to be fully understood. The cost benefit analysis in the draft Bill is incomplete and the summary table is difficult to reconcile with the analysis. It may be the case that the government has an over-optimistic view of the extent to which Home Information Packs will reduce the number of aborted sales; sales are aborted for many reasons other than the process being inefficient. This is a point on which the Committee may wish to question the ODPM.

  15.  A further danger associated with the proposals is that the whole conveyancing process is in a state of flux at the present time. The Home Information Pack essentially responds to problems that surfaced during the over-heating of the housing market in the late 1980s. There is a danger that over-prescription with respect to the Home Information Pack will simply freeze the process around a solution that will already be outdated by the time it is introduced. To guard against this, the Bill should give greater responsibility for determining the precise content of the Home Information Packs to the professional and trade bodies that together have an overwhelming interest in preserving the integrity of the housing market (see paragraph 6 above).


  16.  In the ODPM consultation paper (Contents of the Home Information Pack), paragraphs 5.44 to 5.54, the government offers three Options (A, B and C) as to whom should be able to provide search information for the Home Information Pack. The earlier sections of this submission make it clear that Landmark believes the interests of home buyers and those of their professional advisors have been well served over the past few years by the development of a competitive market place for home information reports. We would therefore regard Option C as being completely contrary to those same interests. At the same time, we recognise a clear need to protect home buyers and their agents, both from unscrupulous operators who might provide inaccurate or misleading information and from operators, however well-intentioned, who are inadequately insured against liabilities that might arise from the provision of an inaccurate or misleading report. This means that Option A is equally unacceptable. The authors of the consultation paper would seem to prefer Option B. If these were the only choices, we would prefer Option B. However, in paragraphs 5.55 and 5.56, we are asked to offer other possible options.

  17.  Option B works only if the contents of the Home Information Pack are prescribed in detail in the final statute. We would prefer to see great flexibility, not so much in existing circumstances as to allow for easy modification in the light of future developments. We would prefer to see the objectives of the Home Information Pack clearly defined, together with the areas of information that have to be covered, but regulation of the precise contents should be left to the professional and trade associations enumerated in paragraph 6 above. It is very possible that over the next five to 10 years, the development of comprehensive data clearing houses (in the public, private and voluntary sectors) and the real-time aggregation of national data sets (again, in the public, private and voluntary sectors), will change requirements of home buyers and their professional advisors. We absolutely support the view that providers of Home Information Packs should be accredited, preferably by their own Trade Association, possibly the recently formed Council of Property Search Organisations (CoPSO), with the proviso that the levels of professional indemnity insurance and the Code of Practice imposed by CoPSO should be acceptable to other bodies involved in the conveyancing process (ie Law Society, Royal Institution of Chartered Surveyors, the National Association of Estate Agencts etc). The simple purchase of "adequate insurance" is necessary but not sufficient protection for the consumer. Failures in the property search process are mercifully rare, but when they occur they can be catastrophic and the aim should be to minimise their occurrence by promoting the highest possible professional standards among search providers.


  18.  We would like to emphasise the five points made in preceding paragraphs:

    —  Landmark welcomes the recognition that an Environmental Search is an essential component of the Home Information Pack;

    —  The Environment Agency's property search report is neither the only nor the most suitable Environmental Search for residential conveyancing;

    —  An appropriate Environmental Search should meet the requirements of the Law Society's Warning Card, no more and no less;

    —  Landmark supports Option B, with the proviso that suppliers of searches should be accredited by appropriate trade and professional bodies;

    —  Landmark warns against over prescription of the detailed contents of the Home Information Pack as this could inhibit innovation and evolution of information services that would benefit and protect home buyers.

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