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Clause 137


Duty to have a home information pack

Lords amendment: No. 128.

Keith Hill: I beg to move, That this House disagrees with the Lords in the said amendment.

Madam Deputy Speaker (Sylvia Heal): With this we may discuss Lords amendments Nos. 130, 135, 137, 143 and 144 and the Government motions to disagree thereto.

Keith Hill: It is a matter of great regret to me that the issue of home information packs has remained so contentious between the parties, especially when there has been such broad consensus about the Bill and we have been able to work so well together. That applies not least to work between the Government and the Liberal Democrats in improving the Bill, especially the provisions on empty homes and tenancy deposits.

The amendments would replace a compulsory home information pack scheme with a voluntary one. The notion of voluntarism is seductive and there was much talk in the other place of the reforms being an unjustified restriction on people's right to buy and sell homes as they please in a market that functions perfectly well as it is. However, those of us who inhabit the real world know that that is not the case. The home buying and selling process does not function properly. Hundreds of thousands of people every year are put through the wringer because of the inadequacies of the current system. Hundreds of millions of pounds are wasted on transactions that get nowhere. That is money that ordinary, hard-working families can ill afford to lose.

Three out of 10 sales fall through between offer acceptance and exchange of contracts and more than half of all sales experience some sort of problem during that period. It is no wonder that, whenever they are asked, people say that they are hugely dissatisfied with the current system. Nine out of 10 people said that in one independent survey last year. That is hardly a ringing endorsement for a system that is supposed to work well.

I do not doubt that some people are doing very nicely out of the system. Every cloud has a silver lining and the abortive costs to consumers from all those failed transactions represent a nice little earner for others. Needless to say, they are not the people for whom the reforms are designed, although many in the industry welcome what we are doing and are keen to get on with it. For them, the reforms are overdue and liberating, enabling them to offer the sort of service that their customers want.

Mr. David Kidney (Stafford) (Lab): Will my right hon. Friend give way?

Keith Hill: Of course I shall give way to my guru on home information packs and so much else.

Mr. Kidney: Surely my right hon. Friend does not suggest that the lawyers and estate agents who object to the home information packs are the ones who benefit from an inefficient system.

Keith Hill: As I was wont to say in my previous incarnation as deputy Chief Whip, my hon. Friend may say that but I could not possibly comment.
 
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Opponents of compulsion should recognise that relying on voluntarism would mean things staying much as they are. That is because a voluntary HIP system will not achieve the universal acceptance needed to make it work properly. The amendments are really about removing part 5 from the Bill, thus leaving the housing market unreformed and damaging not only to individual buyers and sellers, but to the national economy. Too many people are disadvantaged for us to ignore the problems and settle for the status quo. We are determined to offer consumers a genuine prospect of change. That cannot be done through relying on voluntarism and good will alone.

Peter Bottomley (Worthing, West) (Con): Will the Minister give way?

Keith Hill: I shall, but I have much to say and relatively little time in which to say it. I also want to allow other hon. Members to speak.

Peter Bottomley: The Minister is trying to reverse a Lords amendment and get the House's approval for that and I am grateful to him for allowing me to ask a question. If I approach someone who is not planning to sell a home and ask them whether they will sell it to me, is it lawful for them to do that without providing a home information pack?

Keith Hill: The answer to that is an unqualified yes.

Of course, there are a few agents who have sought to progress on the basis that I have described. They report none of the dire consequences predicted by the Opposition, although they are frustrated that others can reap the benefit of their efforts without having to do very much. In a buoyant housing market, that is not surprising. In a downturn, they might need to work harder, but unless they pull in the same direction, more effort can be ineffective.

All markets work most efficiently when all the parties are well informed, and the housing market is no exception. Nobody disputes that. The home information pack will deliver that for home buyers and sellers. We do not need a Bill just to have a voluntary system of home information packs. Sellers and estate agents are free to provide them now if that is what they want. However, despite the evidence that they can greatly reduce the chances of transaction failure, they have not gained a sizeable foothold in the home buying and selling process. There are very good reasons for that.

The main problem with a voluntary scheme is chains. If any link in the chain is without a pack, the whole chain would suffer if that were to be the cause of problems. If packs are not made compulsory, one individual who decides to opt out can wreck the process for everyone else. We also know that estate agents in the high street are fiercely competitive, and without compulsion, most of them will be tempted to offer the easy option. Without the level playing field that a compulsory scheme will bring about, most estate agents, even those sympathetic to HIPs would look at what their competitors were
 
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doing and would not act for the greater good of consumers if they felt that it would put them at a commercial disadvantage.

There have been accusations that the introduction of compulsory HIPs will mean a huge reduction in the number of properties going to the market and that that will result in massive house price inflation. That would be scary if it were true, but it is just the usual scaremongering. The introduction of similar changes in Denmark and New South Wales had no effect on the market. That view is also supported by research commissioned by the UK's largest estate agency group—the Countrywide group—which suggested that there would be little impact on the number of homes sold. The Countrywide study found that, even if sellers had to pay up front for the pack, 87 per cent. would still offer their home for sale. It concluded that the pack would take out of the market only the people who were not serious about selling anyway.

Mr. Simon Thomas: According to my understanding of the proposals, the Minister will decide at what stage to commence this part of the Bill. Will he tell us how he would do that, because that decision would have an impact on the market? Will he introduce the provision throughout the United Kingdom overnight, or will it be piloted in certain areas—perhaps in Wales; why not?—and what ideas does he have about ensuring that it will actually work?

Keith Hill: The hon. Gentleman has been a good supporter of this proposal, and he is articulating a reasonable concern about its implementation. After all, there are few things in life more important than a person's home and their acquisition of it. I can give him an absolute assurance that we shall not bring this system in until we are absolutely clear that it is going to work. We envisage various kinds of dry run to ensure that it is working properly and I hope to talk about that in due course, in a way that I hope he will find helpful.

I was saying that there had been accusations that the introduction of compulsory HIPs would mean a huge reduction in the number of properties going to the market, and that the evidence was that there would be no such reduction. Indeed, I pray in aid on this matter no less a figure than Kate Barker of the Bank of England's Monetary Policy Committee, who has spoken about the problems of the current home buying and selling system and about how HIPs will help. In her recent report on housing, she said:

She went on to say that HIPs would address that market failure and should reduce the risk of transaction failure and speed up the buying and selling process, provided that they were properly researched with the industry and consumers. We certainly intend to do that. She finished by saying of HIPs:


 
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7.15 pm


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