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“the Government is working with industry to encourage the successful voluntary take-up of Home Condition Reports, retaining the option of a mandatory approach to ensure widespread take-up, and thus maximising the benefit for consumers.”
The industry out there is baffled by the Government’s approach and by the changes that they have made. The public are bemused and the Minister, despite her eloquence, sounds somewhat bewildered about what to do next. Will the hon. Lady please make sure that whatever comes out of the changes, we do not lose sight of the need for improved energy conservation, improved transparency and a reduction in stress?
Between 1 million and 1.5 million houses are sold each year. The best moment to make changes to those homes to reduce their carbon impact is when they are empty, when they are being bought and sold, and when, for the most part, householders are in the best frame of mind and have greatest access to finances to make those changes. We must therefore ensure that energy certificates are used as a market tool, so that if energy efficiency is bad, that is reflected in the price, and to give a prompt that instead of a new kitchen,
some extra insulation in the loft might be better value for money. Without home energy efficiency certificates, there will still be substantial problems with compliance.
On transparency, I am sure the hon. Member for Surrey Heath (Michael Gove) would be the first to say that markets work best when they are informed markets. Home sellers should not concentrate on baking bread in the kitchen on the day that the buyer comes round so that the house smells right— [Interruption.] They should make sure that the house is properly insulated and has the right equipment to maintain energy efficiency. [Interruption.]
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am sorry to interrupt the hon. Gentleman— [Interruption.] Order. I do not want a running commentary from a sedentary position. It is interrupting the debate.
Andrew Stunell: Thank you, Mr. Deputy Speaker—but I would be happy to take a further intervention from the hon. Member for Wolverhampton, South-West (Rob Marris).
If we had a more transparent market in which people knew what they were buying and understood what they were selling, stress would be reduced. A survey was conducted at the beginning of this year on the most stressful events in people’s lives: divorce accounted for 17 per cent.; bereavement accounted for 28 per cent.; and buying, selling and moving house, which are stressful experiences, accounted for 44 per cent. We need to make sure that we take steps to deal with that issue.
So far as the Government’s announcement goes, we know that they have listened to their critics, but they are obliged to say what will happen next, and I do not believe that they have fulfilled that obligation today.
Mr. Ian Liddell-Grainger (Bridgwater) (Con): Does the hon. Gentleman agree that one problem faced by Ministers is that they have not conducted any full-blown tests? We have been given promise after promise about test after test. The latest idea is a test in Cambridge with university students. Can the hon. Gentleman think of a worse group of people on whom to conduct a test?
Andrew Stunell: That is a challenge—but I will not attempt to name a worse group of people. However, I will talk about pilots, because some significant points need to be sorted out. On a practical level, a Statutory Instrument Committee is considering regulations on HIPs tomorrow, so will those regulations be changed? When will the rest of the information needed to make the pilots effective be introduced? And what is the plan for the pilots?
A central question, which the Minister did not address in a straightforward way, is whether the pilots will be free. A home condition survey provided free is a very different animal from one for which people must volunteer to pay. One of the significant points of criticism is that HIPs might depress the volume of sales, and that will depend on whether people have to pay for the service.
Mr. Charles Walker (Broxbourne) (Con): If the home owner does not pay, who will fund those surveys?
Andrew Stunell: The hon. Member for Surrey Heath has suggested that some of the £3 million of promotional money should be used. I am not arguing that the surveys should be free. I am simply saying that previous discussion suggests that the Government thought that they were testing the mechanics, such as whether the envelopes could be opened quickly enough, when they needed to measure the impact on the market of a completely new vehicle for house buying and selling. The pilots need to be conducted on the right financial basis, and the Government should tell us where the pilots will conducted, how representative they will be and the scale on which they will be conducted.
How long the pilots will run is not as critical as it used to be. When the Minister made her announcement last night, it must have been in her mind that she could not use a pilot scheme that ran for a month or two in the winter, when sales are depressed, to gauge whether the scheme is functional. She has referred to market research that will be conducted this summer before the pilots start, and I welcome any moves to make the pilots as realistic as possible. We also need to know what will be used to judge success or failure in the pilot schemes.
As has already been asked, what will be the fate of those who started out on HIP training programmes? This afternoon, I heard that Reading university is currently running a course attended by 480 students, who have paid £8,500 each to be on it. When the Office of the Deputy Prime Minister was changed into the Department for Communities and Local Government a few weeks ago, the students on the course asked for, and were given, a specific assurance that the change in the structure of the Departments would not affect the implementation of the HIPs, and the students continued on the course on that basis. The Government have an obligation to say what they intend to do about that matter and how they see the job prospects for those students either under a voluntary scheme, which might one day be a mandatory scheme, or during the pilot exercises. What future do they intend them to have?
Mr. Walker: Surely this is the lesson to be learned by Reading university and others: for God’s sake, do not start running training courses until a Bill has been enacted or an idea has become law.
Andrew Stunell: I do not know whether Reading university should take the rap. There has been a serious attempt to recruit people to meet a Government deadline, which has now been changed, and the question is whether the whole scheme has been changed or abandoned. What are the prospects for those students? It may be that so few people have participated in training programmes that the work available from the voluntary scheme will be sufficient. We need to hear from the Government exactly what will happen.
Mr. Liddell-Grainger: The hon. Gentleman is making a valid point. People did not undertake the training because they were not sure whether the Government were committed to HIPs, which has proved to be the case. He is right: the Government have let down those students, so surely they should pay.
Andrew Stunell: I have raised a number of specific questions, and I believe that the Government have an obligation to respond to them. If the Government say that they will not pay, we need to know their reasoning. They might believe that there will be a sufficient job market for those people, but if that is the case, let us hear about it. At the moment, the people who were naive enough or enthusiastic enough to take the Government at face value find themselves in the front line without a bayonet, while Ministers are safe in the rear pointing at maps and waving their arms.
Mrs. Curtis-Thomas: For the sake of clarification, may I ask whether the hon. Gentleman is saying that his party supports the home condition report?
Andrew Stunell: Our amendment makes it clear what we do and do not support. When the legislation was being considered, we made it clear in this Chamber and in Committee what should have happened. My point is that much as I would like the situation to be different, it is not, and the Government must determine how they will sweep up the broken glass that they have left behind.
I want briefly to comment on what the hon. Member for Surrey Heath had to say. He was as eloquent as ever, and he spoke forcefully in favour of one specific Conservative policy, which is outright opposition to HIPs—that is one of the rare issues on which the Conservatives currently have a policy. However, I felt that his point about housing stability was wildly inaccurate. When I last bought and sold a house, it was in the middle of the housing slump induced by his Government and his Chancellor. If he represents himself as speaking on behalf of a party that has a record of achieving housing stability, it significantly devalues his eloquent contribution to the debate.
Mr. Clifton-Brown: Will the hon. Gentleman give way?
Mr. Clifton-Brown: I am grateful to the hon. Gentleman; perhaps this will give the House a chance to have a breather.
I have looked at the hon. Gentleman’s amendment carefully. Given that it refers to
“the nature and date of introduction of the compulsory scheme”,
it is clear that the Liberal Democrats support the compulsory introduction of a home condition report scheme. It goes on:
“and further calls on the Government to limit the scope of the scheme to that required by the EU Directive, rather than the current ‘gold-plated’ alternative.”
Can he outline exactly what the Liberal Democrats mean by that?
Mr. Deputy Speaker: Order. With no disrespect to either hon. Gentleman, that amendment was not selected, so it would not be in order to go into detail about it.
Andrew Stunell:
I am sure that if the hon. Gentleman refers to the Hansard record of proceedings in
Committee and in this House, he will see that we opposed the introduction of the compulsory scheme.
I want to comment briefly on the use by the hon. Member for Surrey Heath of the Oxford study of the impact of HIPs, which has been hopelessly oversold. He and I attended a meeting where some of these points were discussed. The downside predicted by that study depends on an assumption about a reduction in transactions. I noted from the information given at the same time by the authors of the study that the reduction, or rather fluctuation, in the number of transactions owed far more to issues such as interest rates and the price differential between different parts of the country than it did to a one-off cost. In criticising the Government’s proposals, it is important that we do not shoot at non-existent targets.
Now that the frenetic rush towards June 2007 has ended, we need to take a long, hard look at the best and quickest way of smoothing the process of home sale and purchase, saving on costs for buyers and sellers alike, breaking the potent monopolies of agents and lawyers, and providing a strong incentive for energy efficiency and an improvement in the performance of our building stock. We need to bring a welcome and necessary transparency to the process of buying and selling a house, which is too opaque for most buyers and many sellers.
Home information packs have had a bumpy and fractious ride. Liberal Democrat Members ask the Government and the industry to step back and take a deep breath, to engage with the Opposition Members who one day soon will inherit their legacy, and to develop a viable durable scheme that is truly fit for purpose.
Mr. Deputy Speaker: Order. Many more hon. Members are seeking to catch my eye than those of whom we have had previous notification. There is no time limit, but I would appreciate it if hon. Members would bear in mind that there is quite a demand to speak in this debate.
3.12 pm
Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): Let me start by drawing attention to my registered interests as chairman of the Construction Industry Council, chairman of the NHBC Foundation, and a director of Hometrack.
I suspect that today’s debate will not be seen as one of the finer moments in the history of housing policy or, indeed, of our democratic processes. A long overdue reform that held out the prospect of radically transforming and simplifying the home buying and selling process, cutting out waste and abortive costs and reducing the scope for failed transactions, disappointment and heartache has been seriously put at risk as a result of cynical, short-sighted opportunism from the Conservative party and a deeply regrettable loss of nerve on the part of Her Majesty’s Government.
Let us go back to first principles. It is no coincidence that the home buying and selling process in England is widely recognised as one of the most stressful activities that individuals and families experience in the course of
their lives. At the heart of it lies the curious presumption that prospective buyers should make an offer without the benefit of essential information about the property that they are proposing to acquire. That is of course completely at odds with the normal principles of consumer protection.
In theory, the problem is reduced by the fact that the offer remains conditional until the buyer has had the opportunity to carry out the necessary checks to satisfy himself that what he is proposing to buy is worth the amount he has offered. However, that is precisely where so many of the problems that bedevil the system arise. The surveys and searches undertaken for the buyer may well reveal hidden problems or potential risks that may in turn either halt the process or prompt renegotiation of the price, which in itself inevitably means further delay and risk. While all that is going on, the seller may well have second thoughts and either withdraw the property from the market or accept an offer from another source—the infamous practice of gazumping. When that happens, all the costs that the prospective buyer has incurred in surveyors and lawyers’ fees will prove abortive. About £1 million is lost every day in that way, which is just senseless waste.
It is not surprising that many prospective buyers choose not to incur that expenditure but seek to minimise their outlay by not commissioning a survey and relying instead on their lender’s valuation. In consequence, they may well end up with far less basic information about the home they are buying than about even the most ephemeral consumer product. Yet it is often the largest financial transaction in their lives, and bearing in mind the fact that they will have to live with the consequences for very many years, it is clearly an unsatisfactory process.
That is where the concept of home information packs comes in. They would ensure that all prospective buyers have access at the outset to detailed information about the property, its condition, any restrictive covenants that apply to it, and potential planning implications that may affect its value or amenity. In that way, the buyer is better equipped to make an informed decision on whether to make an offer, and if so, how much to offer. Furthermore, the scope for subsequent delay, complications and abortive costs is greatly reduced.
The introduction of home information packs would not only result in a simpler, quicker, fairer and more transparent process, but encourage a more efficient market in which some of the current unjustified costs would not survive. For example, lenders continue to require prospective buyers to meet very substantial costs for the valuation of the property—£350 or more is typical. Yet we know that automated valuation models provide an alternative for a fraction of the cost and are increasingly demonstrating a high degree of accuracy. The introduction of HIPs and a more transparent and competitive market would rapidly accelerate the process of change to AVMs with substantial cost benefits to the public.
The special pleading by the Council for Mortgage Lenders on this subject is one of the more regrettable examples of a defence of vested interests instead of the promotion of the public interest. I am sorry that the
Opposition and the Government appear to have given more heed than deserved to its representations.
There is a very strong case for the introduction of HIPs. Today’s debate should have been about how we can achieve that in the most effective way and with the least possible delay. Instead, we have an Opposition gloating in their ability to frustrate and derail something that is clearly in the public interest, and a Government who are backtracking from one of their manifesto commitments. What could possibly justify that? What are the arguments against HIPs, apart from the vested interests of certain groups, including some estate agents and mortgage lenders who do very nicely out of the current arrangements and do not want changes that will threaten them? There are four arguments against HIPs that should be addressed, although I do not believe that any one of them survives serious scrutiny.
First, there is the issue of cost, about which there has been a great deal of speculation and little serious analysis in the media. The figure of £1,000 has been widely bandied about, with the assumptions that packs will cost that amount to produce and that that will be an added financial burden on home sellers. Neither of those assumptions bears serious examination. Even if the cost to HIP producers were to be £1,000 per pack—most serious commentators believe that it will be significantly less—that is not what the seller would be asked to pay when they put their home on the market. There would be stiff competition to secure the HIP business and the potential commercial benefits that would flow from it, and that would drive down the charges made to individuals commissioning HIPs. A cost of about £350 is much more likely to have been the outcome, with some providers already holding out the prospect of offering the packs for free.
Furthermore, the largest potential producers have already made it clear that they would not charge sellers up front for the packs but would only set the charge against the proceeds of the sale when completed. At the same time, we should not forget that most sellers are also buyers, and any costs that they incur from the HIP would be offset by the benefit they get from the provision of the pack on the properties they are considering purchasing, as well as the removal of the risk of abortive costs for surveys and searches. Then there is the benefit for first-time buyers, which my hon. Friend the Minister for Housing and Planning identified.
The second possible objection to HIPs is their scope. There are obvious balances to be struck. If the home condition report is too comprehensive, there will be cost implications, but if its coverage is limited, its value is reduced if not undermined altogether. The proposals that have formed the basis of the scheme up to now appear to be basically right. They mean to provide the information that could be expected from a mid-range survey, while recognising that, in some special cases, additional information might be required. Whether that is the correct balance could have been further assessed in the course of testing the scheme. Some fine tuning would have been possible in the run-up to introduction and as the scheme proceeded. However, it is clear that neither the position adopted by the Opposition nor that of the Government is credible.
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