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Public Bill Committee Debates

Home Information Pack (Amendment) Regulations 2007

The Committee consisted of the following Members:

Chairman: Mr. Mike Hancock
Cooper, Rosie (West Lancashire) (Lab)
Dorries, Mrs. Nadine (Mid-Bedfordshire) (Con)
Duddridge, James (Rochford and Southend, East) (Con)
Evans, Mr. Nigel (Ribble Valley) (Con)
Goldsworthy, Julia (Falmouth and Camborne) (LD)
Hall, Mr. Mike (Weaver Vale) (Lab)
Hewitt, Ms Patricia (Leicester, West) (Lab)
Hurd, Mr. Nick (Ruislip-Northwood) (Con)
Iddon, Dr. Brian (Bolton, South-East) (Lab)
Kemp, Mr. Fraser (Houghton and Washington, East) (Lab)
Kilfoyle, Mr. Peter (Liverpool, Walton) (Lab)
Öpik, Lembit (Montgomeryshire) (LD)
Shapps, Grant (Welwyn Hatfield) (Con)
Smith, Ms Angela C. (Sheffield, Hillsborough) (Lab)
Spellar, Mr. John (Warley) (Lab)
Watts, Mr. Dave (Lord Commissioner of Her Majesty's Treasury)
Wright, Mr. Iain (Parliamentary Under-Secretary of State for Communities and Local Government)
Mr. Weir, Committee Clerk
† attended the Committee

Third Delegated Legislation Committee

Wednesday 16 January 2008

[Mr. Mike Hancock in the Chair]

Home Information Pack (Amendment) Regulations 2007

2.30 pm
The Chairman: Welcome. Anyone who is inclined to take off their coats, please do not hesitate to do so without permission. The situation before us this afternoon is that we have two orders. I shall ask the Clerk to read the orders, and then I will seek your guidance.
Grant Shapps (Welwyn Hatfield) (Con): I beg to move,
That the Committee has considered the Home Information Pack (Amendment) Regulations 2007 (S. I. 2007, No. 3301).
The Chairman: With this it will convenient to consider the Housing Act 2004 (Commencement No. 10) (England and Wales) Order 2007 (S. I. 2007, No. 3308).
Grant Shapps: May I start by declaring a possible interest, which is that my wife recently took up a job with a local estate agent in the position of administrator? Of course, I declared that dramatically to the ombudsman, but I have been informed by the House that I should mention it whenever appropriate.
We have been here before, not only to discuss four-bedroomed home information packs, but also three-bedroomed homes, and now we are here to discuss one and two-bedroomed homes. What really makes this so interesting, even though we have covered the ground previously, is simply the fact that we have yet to see the information that the Minister and his right hon. Friend the Minister for Housing commissioned at the cost of £4 million to the taxpayer. Although I see the Minister sighing and expressing frustration that I am talking about this again, does he agree that it is about time that the results of £4 million of public money, which should have informed what we are debating today—the introduction of one and two-bedroomed HIPs—were made available?
It simply cannot be right for the Government to spend public money in anticipation of results that will help to inform the next course of action, and then when, we assume, they do not like the results, they simply bury that information. [Interruption.] The Minister is right to look so unhappy when I raise the subject, simply because the Government themselves told us that that was the reason for commissioning six trial areas of HIP experiments before bringing in the final statutory instrument that we are working on today.
As that information was not released, presumably because it was not favourable in nature, the Government commissioned European Economics to produce a report to tell them what the real information of the market place was not telling them. That was to try to give some kind of green light to the introduction of one and two-bedroomed HIPs. I would like to know today how much the European Economics report cost. I indicated in proceedings in the House yesterday that I would be raising this matter. Perhaps the Minister can tell us the answer today. We understand that the report was commissioned to provide the backdrop to the statutory instrument. The public have a right to know how much more money was spent on the European Economics study in addition to the £4 million.
We are now considering the introduction of HIPs for one and two-bedroomed houses. The delay in commencement led to first-day marketing, which is an exemption that allows people to market their home at an estate agent, whether or not they have a HIP in hand. That exemption is the only reason that HIPs can operate, as without it people would have to wait for a HIP before they could put their house on the market. The Government tell us that obtaining a HIP is a relatively trivial process that takes only three or four days. I would like to inform the Minister that I ordered a HIP for my own house last Friday—not that I am moving; I was just interested. I will keep him informed of progress, but it is now the following Wednesday and so far there is no sign of my HIP. I will of course write to him the moment it appears.
If I wanted to sell my house and the first-day marketing exemption did not exist, I would not be able to walk into an estate agent and put my house on the market until I had received that document. It is outrageous that the only reason this legislation works at all is because the Government have introduced an exemption that means that the main purpose of the legislation—to have a HIP up front—is no longer applicable.
The statutory instrument will extend the first-day marketing exemption until 1 June, but can the Minister tell us what will have changed by then that means that the legislation will suddenly start to work? Will HIPs suddenly be produced much quicker and will people no longer have the delay that I am experiencing after ordering a HIP for my own home? The Government tell us that HIPs arrive within seven to 10 days. However, sometimes they tell us it is three days and sometimes they tell us a HIP costs only £300 because they forget that they are collecting value-added tax. Generally, HIPs cost more than £300 at a commercial rate and that was certainly the case when I bought one. Organisations such as the Royal Institution of Chartered Surveyors have told us that, according to their statistics, the average time it takes to receive a HIP is more than two weeks. Will the Minister point to information that he believes is accurate on how long it takes to receive a HIP and tell us why that delay will have decreased in six months’ time? In addition, why will the exemption on first-day marketing not be permanently written into the legislation rather than being delayed until 1 June?
The SI will also exempt the need to have all the information on a leasehold property in a HIP. Leasehold properties are the Achilles heel of the HIP because they require a huge amount of information, which most solicitors say takes a great deal of time, energy and effort to pull together. That information should be included in a HIP, but the Government know that if they try to include it, every solicitor will tell them it takes weeks to prepare. The exemption in the SI ensures that when a leasehold property is sold or put on the market the only document that needs to be included in the HIP is a single piece of paper that is the lease document, rather than any of the other much more complex documents. Again, will the Minister tell us why and how by 1 June—in just six months’ time—all those problems will have disappeared? It seems that the legal market and the requirements to obtain legal certificates and information related to lease documents will be the same in six months’ time as it is now. I am not clear why he thinks the problem will be resolved in six months. Will it simply be that, in exactly the same way as when the four-bedroomed HIP was introduced in August and the exemptions on leasehold and first-day marketing were introduced, we will be back here again in six months’ time discussing another SI to extend the exemption on first-day marketing and leasehold documentation? All the evidence seems to lead to that conclusion.
There can be no doubt that the introduction of HIPs has been one of the most spectacularly incompetent measures that the Government have introduced in recent years. In recent days, that has been rivalled, but nonetheless this is extraordinary legislation. The idea that introducing all this bureaucracy and red tape somehow speeds the process of buying and selling homes is extraordinary. Curiously, the Government may be relieved about what is happening to the market for homes—perhaps this is why they like HIPs so much. Before HIPs were introduced, people would go into an estate agent and speculatively put their house on the market to see whether they could get a certain price for it. About 20 per cent. of people have stopped putting their houses on the market. That lack of supply might have held up prices and somewhat flattered the picture for the Minister.
Talking to estate agents, solicitors, surveyors, conveyancers or anybody else involved in buying and selling a house, apart from the Association of HIP Providers, one finds that people recognise that this policy is an absolute disaster. We can cure this problem. We can scrap HIPs and simply keep the energy performance certificates, which are quick and easy to do. I received my EPC within a couple of days. We should allow those to grow naturally without being burdened by the horrendous bureaucracy that surrounds them, which is called the home information pack. Let us split the two things. Let us make EPCs sail on their own and get rid of this utter incompetence which has surrounded the fiasco of HIPs. This is only one of a series of incompetent moves by this Government. I look forward to the Minister’s answers.
2.41 pm
Julia Goldsworthy (Falmouth and Camborne) (LD): It is a great pleasure to serve under your chairmanship this afternoon, Mr. Hancock.
From the remarks of the hon. Member for Welwyn Hatfield and judging by the reaction of the Minister, there is an element of “Groundhog Day” to the debate that has kicked off today. For me, there is no such sense because this is my first time speaking on this issue in my new role for the Liberal Democrats.
Although the regulations are quite straightforward, what we are seeing from the Government is another few faltering steps. They are desperate to get over the finishing line with HIPs, but are not quite making it. The regulations show how they delayed the introduction of HIPs for one and two-bedroomed houses. They are also having to make amendments so that first-day marketing and leaseholding are not affected until 1 June.
We have seen this approach throughout the chronology from May 2007, when a delay was announced in the introduction of HIPs. In August, we heard that they would apply only to four-bedroomed houses. In September, we found out that they would apply to three-bedroomed houses. Under the regulations of 14 December that we are considering today, they finally apply to all properties. That is except on the issue of leasehold, where a chink of light will be open for a further six months, when suddenly everything will become so much better.
What we are seeing is yet another concession. The argument that is the basis for this process is that there have been problems in obtaining information and that there have been issues about charging and inaccuracies: all issues that the hon. Member for Welwyn Hatfield raised. Regardless of whether those difficulties were caused by HIPs or whether the HIPs process has cast a spotlight on them, we need reassurance from the Minister that action is being taken to resolve them. There has been no indication of that in the statutory instruments that we are considering.
Both statutory instruments raise a whole series of questions that ultimately boil down to the issue of information. We are incredibly short of information. What impact has this massively drawn-out process had on the confidence of buyers and sellers? Has there been any assessment of people’s understanding of how the policy works and how it applies to them? Is there any evidence of confusion and distrust? We heard the Minister for Housing talk yesterday about anecdotal evidence, saying that the process was helpful. We have heard from the hon. Gentleman today that there is anecdotal evidence that there are problems in accessing information.
Do we know whether any home buyers are requesting to see the HIPs now that everybody is expected to provide one? My partner has a one-bedroomed property, which he put on the market the day before the legislation came into force. When he spoke to his estate agent and asked how many people are requesting this information, he replied, “I have not had a single person ask me for any information in regard to any property size.” All this anecdotal information is flying around, but what empirical evidence are the Government collecting on this issue? That is important for the confidence of people who are buying and selling properties.
There are also wider questions about lack of evidence. Do we have any material evidence on whether the legislation has made any difference to the speed of a purchase? How is that modelled with issues about the housing market slowing down and people becoming more cautious? How has it impacted on the conveyancing process? Are solicitors and surveyors reporting that they are asked for less information, or are we seeing a duplication of effort? Is there any empirical evidence showing the impact on the market? The Minister was careful to say yesterday that there has been no impact on either transactions or prices, but what impact has there been on when people choose to put their properties on the market? We may see some changes, and even if they are short term, in the context of an uncertain housing market, behaviour in December, for example, could have had a knock-on impact on confidence.
Is there any further evidence on the availability of assessors? The Government have said that they are confident that they can deliver to the required capacity with this applying to all properties. However, I wonder whether there are regional and even sub-regional issues. Are there particular areas that have been identified as a hotspot? I imagine that demands in the south-east will be different to those in places such as my constituency, which is more rural and where there are different issues in supplying the assessors. I wonder if there is any analysis of the differential impacts in different markets.
We have had no publication of the pilots, we have had no wider piloting before the regulations were rolled out, and once again we are being asked to consider orders without any empirical evidence. We do not know whether there are enough assessors to cope with all the properties, we do not know how HIPs have bedded in, and we have no explanation of how the leasehold properties problems will be resolved in the next six months. We are keen to see energy performance certificates succeed, but my concern is that the whole fiasco has undermined that.
While I am sorry to see this state of affairs, it is not surprising given the history, and that is why there are further problems today. I am not clear that there is any confidence in the process, so I do not feel that it is appropriate to support the orders. I can see that they try to improve a bad deal, but that does not leave us with anything other than a bad deal that has been, not even improved, but changed due to force of circumstances. That is not the state of affairs that I would wish things to be in.
2.48 pm
Mr. Peter Kilfoyle (Liverpool, Walton) (Lab): I hope that when the Minister responds to the Opposition, he can tell us one specific thing that will be of great interest to us on this side of the Committee. What work, if any, has been done on the impact of the extension of HIPs on housing market renewal initiative areas?
2.49 pm
As the hon. Member for Welwyn Hatfield has mentioned, we have debated HIPs many, many times.
Grant Shapps: It does not get any better.
Mr. Wright: I want to be on my feet for only a short time, as we have gone round the houses—[ Interruption. ] I am pleased to hear support from my hon. Friends; I do not want to spend too long on this.
We had an Opposition day debate on HIPs on 10 October and a statutory instrument on 18 October. At that point, we had already rolled out HIPs, beginning on 1 August 2007, for properties with four or more bedrooms, and by 10 September for those with three bedrooms. The Committee will be pleased to hear that we have had the chance to debate the matter in great detail, and I do not propose to have a repeat performance.
HIPs have now been rolled out to all remaining sizes of property to complete the picture. As has been said, we commissioned authoritative independent research from Europe Economics on the likely impact of HIPs on the market in the spring of 2007. That research predicted no impact on transactions or prices, although there was a predicted short-term impact as sellers changed the timing of their listings, as happened to the hon. Lady’s partner. The report concluded that the predicted impact on listings would be short-lived, and that the impact on the market would be marginal compared with wider factors.
In deciding to roll out the scheme to the remaining properties, we asked Europe Economics to reconsider its research in light of the change in market conditions over the summer. Those conditions are well rehearsed: Northern Rock, turbulence, and interest rate changes. Therefore, I think that it was reasonable and prudent for the Government to look again.
Europe Economics collaborated with Dr. Peter Williams of the National Housing and Planning Advice Unit, who is also a former deputy director of the Council of Mortgage Lenders. They considered whether changing housing market conditions meant that we should delay completion of roll-out still further. They concluded that there were strong arguments for rolling out as planned, and that further delays could actually cause greater uncertainties. That was consistent with the advice that we were getting from others.
With that advice in mind, and with all the evidence pointing toward a smooth roll-out of HIPs at that point, we announced the decision to introduce HIPs for all remaining property sizes from 14 December. All the evidence that we have so far indicates a smooth introduction across the market; early monitoring suggests that HIPs are taking, on average, seven to 10 days to prepare. The majority of property drainage and water searches are being delivered promptly within five days; and, as the hon. Member for Welwyn Hatfield has experienced, energy performance certificates are being prepared within two to four days on average.
Mr. Wright: The hon. Gentleman flogs a number of dead horses in his stable.
Grant Shapps: £4 million?
Mr. Wright: I am not being flippant about the spending of taxpayers’ money, but he asked my right hon. Friend the Minister for Housing that precise question in oral questions yesterday on the Floor of the House. May I just put on the record my right hon. Friend’s response, because I think that it is very clear in talking about the area trials and Europe Economics? She stated:
“The two reports looked into completely different things. The Europe Economics report looked into the wider impact on the housing market and, in particular, at the roll-out to three and four-bedroomed properties. The area trials were conducted by Ipsos MORI in an independent assessment and have been looking into and following through individual cases, including those where a home condition report was involved. That is obviously not part of the three and four-bedroom roll out, which was assessed by Europe Economics, as I said.”
That is the key point. She continues:
“We have not yet received a final report from Ipsos MORI. As soon as we do, we will of course publish it for scrutiny by the House.” —[Official Report, 15 January 2008; Vol. 470, c. 781.]
My right hon. Friend made the matter entirely clear to the House yesterday, and I am sorry that the hon. Gentleman was not listening.
James Duddridge (Rochford and Southend, East) (Con): Speaking as an ex-market researcher, that seems an awfully large amount of money for a relatively modest report. Given that the full report has not come out, will the Minister place in the House of Commons Library the statistical data that Ipsos MORI used, so that we can extrapolate from that? That would be very useful and would mean that Members of all parties could draw their own conclusions from the report early on. It seems ridiculous to pay all that money for the report and not to receive it in a timely fashion.
Mr. Wright: No, I will not, because I want to see the full report. There is a full process from initially putting a property on the market—or being interested in doing so—to completion. Naturally, it takes time, and Members will have experience of that. We want to assess the full report. I reiterate that as soon as we receive it, we will place it in the House Library for full scrutiny by Members. I do not think that I can be clearer than that, nor could my right hon. Friend the Minister for Housing have been yesterday.
Grant Shapps: I understand that the Minister has repeated the Minister for Housing’s words from yesterday. I was there and I was listening. It seems to me that they were in contradiction to—or, at least, extension to—the four dates provided last year for the results, all of which were by the end of 2007.
I understand that the Minister is asking us to be just a little more patient for those MORI results and the £4 million study, but he has yet to tell us how much the Europe Economics study cost. Perhaps he could answer that now.
Mr. Wright: I am coming on to that question, but the fundamental point is that in all our policy on home information packs, we have been careful to take on board stakeholder comments. The latest transitional measures do just that. In extending the first-day marketing provisions we have ensured that, for the next five months until 1 June, anyone looking to sell their house can do so immediately, provided that they have commissioned a pack and expect it to arrive within 28 days. That is good news for the consumers and the industry alike and comes as a direct result of stakeholder feedback, coupled with our monitoring, which suggested that first-day marketing arrangements are allowing the HIPs system to bed in more effectively and efficiently. I should have thought that Members from all parties would think that useful. The extra time will benefit buyers, sellers, estate agents and solicitors as HIPs become part of the familiar and established landscape of buying and selling.
Feedback from the industry also informed our decision to remove the requirement for leasehold documents, other than the lease, for a limited time only. We were keen, as we always have been, to base any decision on evidence, and it was apparent that more information was needed to enable this to happen. We therefore commissioned the deputy chief executive of the Land Registry, Ted Beardsall, who is also a member of our home buying and selling stakeholder panel, to advise on what else can be done to improve the provision of leasehold information alongside further consideration of the search process.
These transitional measures continue the smooth roll-out of HIPs and enable them to bed in across the market. That is entirely in line with the sensible, pragmatic and reasonable approach that we have taken all along in introducing HIPs. Importantly, the measures also mean that people still get the HIP early in the process, helping sellers to inform their decision to buy a property without delay and additional unnecessary costs. I sigh about this, because we are here again debating these transitional measures. However, they have been introduced at the behest of the industry and in the interests of the consumer.
Did the hon. Member for Welwyn Hatfield actually think about what he was doing before praying against this measure? It is clear to me, having spoken to stakeholders and the industry in particular, that they are clear that Parliament’s voting down the amended regulations would result in the earlier regulations being reinstated, which would mean that marketing could not commence for at least 14 days if any leaseholder or the documents were not available. That is clearly not ideal at the present time, as HIPs bed in and become part of the established furniture.
James Duddridge: The Minister mentioned stakeholders. It is right when we are considering such regulations and orders that we probe him to ensure that all stakeholders have been fully consulted. What he is saying is not really reflected by a briefing that I have received from the Royal Institution of Chartered Surveyors, which he will perhaps comment on. It says the following in evidence that it has sent to me:
“There continues to be a lack of timely, democratic consultation with industry on the HIP proposals and, with HIPs now in place, a complete failure to analyse publicly any market experience of HIPs.”
That seems directly to contradict what the Minister is saying about stakeholders. As a Committee member, I feel concerned about that. Perhaps the Minister will address the wider points and explain whether the RICS, which is a reputable organisation, is one of the stakeholders that he refers to.
The Chairman: Order. That was getting very close to a speech, Mr. Duddridge.
Mr. Wright: The hon. Gentleman makes an important point. All the evidence from all the meetings that I have had with stakeholders, including estate agents, has been interesting because they are saying that the phased roll-out has been useful and helpful in bedding down HIPs. But now that we have full roll-out, more innovation is taking place and we are seeing more estate agents embracing the HIP product and ensuring that they have things in place.
I am a sad and lonely individual. Over Christmas, I was looking in estate agents’ windows to see the number of offers of free HIPs, and so on. The market is responding, as we have seen, which is completely consistent with what I have been told by stakeholders.
Julia Goldsworthy: Has the Minister received reports of any complaints from homebuyers or sellers—about being locked in to estate agents by the offer of free HIPs—who have put their house on the market only to find that, if they seek to withdraw it, a charge is imposed?
Mr. Wright: The hon. Lady raises an interesting point. I shall look into that more closely, if I may.
I ask again: what does the hon. Member for Welwyn Hatfield think that he is going to achieve today? It seems that he aims to disadvantage both the industry and consumers by removing these latest amendments, which were introduced to maintain the policy of a smooth transition of HIPs into the marketplace.
I want to respond to two specific points before moving on. The hon. Gentleman asked how much the Europe Economics study cost. It was in the region of £50,000, but I can provide more precise figures later. My hon. Friend the Member for Liverpool, Walton asked about the impact on housing market renewal areas. It is early days for that, given the roll-out of one and two-bedroomed properties, but I will keep him informed. On the slightly wider point that was made—I hope that you will not rule me out of order, Mr. Hancock—I shall make a decision soon on the specific allocation of the £1 billion for housing market renewal that we announced for the next three years. My hon. Friend obviously has an interest in that, and I shall keep him informed.
In summary, HIPs are here, they are working well, and they are beginning to deliver the benefits that we envisaged.
Grant Shapps: I am most grateful for the Minister’s generosity in giving way. Now that we finally have an idea of how much the European Economics study cost, can he tell us whether the £50,000 that answered yes to HIPs was good value for money, compared with the £4 million that, presumably, answered no?
Mr. Wright: I wish that the hon. Gentleman would stop playing politics. It was entirely right and proper that we took a wide range of soundings from a diverse group of people with an interest in the matter to ensure that, because of the turbulence over the summer, we did not do anything to compromise the stability of the housing market. That is responsible government, and I am pleased to say that that is exactly what we did. I hope that Members recognise that, but I do not think that the hon. Gentleman does. I wish that he would stop flogging this dead horse. It does not become him.
James Duddridge: The phrase “dead horse” is appropriate.
The Chairman: Order. Let us not drift down to the dead horse stable, because that might delay us and, as the Minister said, he was hoping to be on his feet for only a short time. He certainly was, and that is a lesson that could be learned by others.
Question put and agreed to.
That the Committee has considered the Home Information Pack (Amendment) Regulations 2007 (S.I. 2007, No. 3301).

Housing Act 2004 (Commencement No. 10) (England and Wales) Order 2007

That the Committee has considered the Housing Act 2004 (Commencement No. 10) (England and Wales) Order 2007 (S.I. 2007, No. 3308.)—[Mr. Iain Wright.]
Committee rose at three minutes past Three o’clock.

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