Housing and Regeneration Bill


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Clause 242

Certificates for new homes
Question proposed, That the clause stand part of the Bill.
Grant Shapps: Thank you, Mr. Gale. We can broadly welcome sustainability certificates, although we will be interested to see how they work. There is a lot of detail in clause 242 and subsequent clauses about how these certificates should operate. The Government should be wary, following their experience of introducing another kind of certificate in the form of HIPs. I know that the experience will be a scar borne by the Minister and his right hon. Friend the Minister for Housing for years to come.
The certificates do not appear to have a cost or even an estimated cost attached to it. I imagine that that is because it would vary widely depending on the kind of new home. The scope of the sustainability certificate—I do not want to stray into clause 243—is quite broad. There is a long list of different areas that it may cover.
I want to pick the Minister up on clause 242(8) and the unusual drafting language. It says:
“The seller is not required to comply with a requirement imposed by virtue of this section if the seller has a reasonable excuse for not complying with the requirement.”
I wonder whether the Minister could clarify—I congratulate the drafters for not writing this in gobbledegook—what a reasonable excuse would entail?
Lembit Öpik: I share one of the concerns that we have just heard, and it relates to certificates as a whole. The certificates represent a comprehensive effort by the Government to enshrine sustainability considerations in the housing market. It is worth remembering that the overwhelming majority of property that will accommodate the British population in 2050 has already been built. As such, our real challenge is not to ensure that new housing stock is sustainable, although that of course is important, but to bring existing stock up to sustainability standards. This can be done at a high price today, but hopefully at a much lower price in the future. My worry is whether a certificate will really do what the Government want it to do.
I am slightly confused, for example, by the wording of clause 242. It seems to require compulsion, but also to allow mitigating circumstances. It makes me believe that those people who have a good story to tell about their houses will get a sustainability certificate, and the owners of those houses which leak energy like a sieve will probably not seek such a certificate.
I have two questions, therefore, for the Minister. First, how can we be sure that the sustainability certificates will not be self-selected by those who want to talk positively about their sustainable house and that there will be no compulsion for those with less sustainable houses to come clean about that. Secondly, how confident can we be that these certificates will make a positive impact, given that the home information packs have everything apart from solid data behind them to prove their efficacy for the housing market and for a potential purchaser?
Mr. Wright: This is an important part of the Bill. We have spent a lot of time in Committee talking about more homes and better designed homes. This part of the Bill talks about greener homes, and is absolutely essential to achieve the world-beating ambition that my right hon. Friend the Minister for Housing has set the industry of making sure that all homes built after 2016 are zero carbon. It is an important point. As the hon. Member for Montgomeryshire said, we do need to address the fact that homes “leak energy” because—as I have pointed out to the Committee already—27 per cent of all of the UK’s carbon emissions come from domestic dwellings, and we need to address that.
This will improve the energy efficiency of both the fabric of homes and of the type of energy supplied. In December last year, we published a new planning policy statement on climate change. It puts climate change at the very heart of the planning system by ensuring that new communities are located and designed in a way that reduces the need for travel and makes best use of low-carbon and renewable energy. In addition, since October 2007, a stamp duty land tax exemption for zero carbon homes has been in place, so that houses can act as an incentive for developers to build zero carbon homes. We will also shortly introduce new minimum standards in building regulations to make new homes more water-efficient.
Clause 242 allows the Government to make regulations to ensure that anybody building a new home has very clear information on the sustainability of that new home. This will be in the form of either a sustainability certificate showing that the home meets higher sustainable standards than a home that has been built to minimum regulatory standards in building regulations, or a written statement that the home does not have a sustainability certificate. These certificates or statements must be provided free of charge to the home buyer. It is important that we are making sustainability assessments, and I stress the word “assessments”, mandatory for all new homes. We are making the provision of clear, transparent information on sustainability mandatory and this can include statements of non-assessment, which are self declarations and do not involve employing an assessor.
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In England, it is proposed that the sustainability rating system will be the code for sustainable homes. This code was introduced in April 2007 and is an assessment and rating system that provides a framework within which house builders can improve the overall sustainability of new-build homes. The Code provides a mechanism by which builders can be recognised for going beyond the building regulations for energy and other aspects of sustainability.
The lack of credible information on the sustainability of new homes is limiting our efforts to encourage the market to provide more sustainable homes. Home buyers currently have limited information on the environmental performance and wider sustainability of new homes. I strongly believe that this clause will ensure that information is available on all new homes to allow purchasers to make informed choices.
Sir George Young: As I understand it, this only applies when the property is sold for the first time. If I buy a property from somebody who bought it when it was new, do I also get the sustainability certificate, or has it dropped out of the equation once the first transaction has been completed?
Mr. Wright: This rating for new homes is a snapshot in time. The right hon. Gentleman might purchase a new property and make changes, put a new bathroom in, or whatever. If he goes on and sells it, the environmental impact on his home would be captured in the energy performance certificate as part of the home information pack.
Sir George Young: I may not know whether or not that property had a sustainability certificate when it was built.
Mr. Wright: I am sorry, I did not quite catch that.
Sir George Young: If I buy the property from somebody who bought it as new, I may not know whether that property had a sustainability certificate when it was built or not.
Mr. Wright: I imagine that the rating would be part of the selling pack. It could be that the house had a code rating 3, for example.
Can I clarify one thing? I have been passed inspiration. I want to make something clear, in case I have misled the Committee. We are not making assessments mandatory, we are making rating mandatory. There could be a statement of non-assessment where the property has not been given a rating. I hope that that is clear.
Before I go on, I would like to make a point that links in with the HIPs issue, which I have debated on many occasions with the right hon. Gentleman. Information for purchasers of new properties is absolutely vital to drive up environmental standards. I draw the attention of Members to fridge ratings. The market moved considerably when easy-to-understand ratings for fridges and other electrical appliances were provided. Everyone is very clear about what a fridge rating A means and what a fridge rating C means and it is rare these days, because the industry has responded to the system, to see a fridge rating E or whatever. I think that the market will respond to the fact we are making sustainability ratings for houses mandatory in a very positive manner.
Lembit Öpik: What I am concerned about—the Minister’s inspiration has reinforced my concern—is the schizophrenic nature of this clause. He is saying that every new property must have a rating, but it is not compulsory to have an assessment. I do not understand how one can have a rating without an assessment.
Mr. Wright: That would be a zero rating. I will give him an example. A buyer is choosing between two flats—one with a code certificate, showing a rating of, say, one, six or five stars; the other with a statement of non-assessment, which would be a zero star certificate under the code. That buyer will be able to see—this is the point that I was making about refrigerators—that they are choosing between a sustainable home that is more economical to run, and will reduce their impact on the environment, and a home that was probably built, as that zero star certificate indicates, to minimum regulatory standards.
There will be a big push towards sustainability assessments, because they will enable that home buyer to make an informed choice and we hope that they will choose a home that will have a minimum long-term impact on the environment and—probably more pertinent to them—on their wallet. There are also benefits from other sustainability improvements that will be put into the code.
Grant Shapps: We are all in agreement about the need to do these things. At the same time, hon. Members on both sides of the House recognise the necessity not to make things overly bureaucratic and the balance may be there in clause 242. However, there is some concern in the industry. I note that the Home Builders Federation has said that there is scope for duplication between energy performance certificates and the sustainability certificate. The federation is concerned about whether there will be sufficient numbers of assessors to implement the certificates, although I imagine that that is not a huge problem at this stage, as the measure will come in over a period of time as new homes are built. But the National Housing Federation is calling for a
“sensible integration of the EPC and the Code rating.”
Again, it is difficult to see how that could be achieved, given that one is a 1 to 6 rating and the other is an A to F. It could be confusing to a potential purchaser, who might have a sustainability rating of 4 but an energy rating of E. How would they determine which one to follow?
Mr. Wright: I understand the hon. Gentleman’s point, but the approach in the legislation was developed in close consultation with the industry. For example, it is possible—and this is something that we raised in spring and summer—that there would be a need for a rating of zero, and an assessor would have to go out and provide a zero-rated assessment on the property. We listened to the industry, which said that such a requirement would entail a disproportionate amount of cost and effort, so it was not necessary. That is why it is possible to have a self-assessed zero certificate, which reduces costs. Listening to stakeholders and the relevant industry bodies has paid dividends, as we will see much greater synthesis of EPCs and the code in future. However, I do not want to pre-empt anything regarding future-proofing.
It is important to point out that we listened closely to the industry, which raised concerns about costs. However, it is very much up for the initiative, which is a means of achieving our ambitious target of making sure that we have zero-carbon homes by 2016. We want to make sure that we make as much progress as possible on improved sustainability and minimising environmental damage, while addressing the industry’s very real concerns about costs.
Mr. Hurd: I fully support the emphasis that the Government have placed on higher energy efficiency standards for new homes. However, I also back the concerns that my hon. Friend the Member for Welwyn Hatfield expressed about the clarity of message to the consumer, who is bombarded with messages on climate change. The psychology of their reaction to such messages is now at quite a delicate stage. The Minister spoke about the evolution and integration of the two measures. Would it not be better to get it right now, and give just one simple certificate and one simple message to the marketplace about properties’ sustainability and energy efficiency?
Lembit Öpik: It is important to probe the Government on the measure. I understand what the Minister is saying, but I remain concerned that the Government have put together something that, in reality, will be bureaucratic for the general public. Most people do not buy houses very often, and they already have to deal with the complexities of the home information packs. Why do the Government not seek a more user-friendly approach consistent with, for example, the A to F-rating on white goods? It does not matter how efficient a house is, it is the absolute energy usage which determines how much carbon it produces. We do not need to say, “It is a huge house, but it is efficient”. We simply need to know how much energy it uses in relative terms. Could the Government consider before the Bill’s Report stage whether it is possible to simplify the measure, as it could end up a quagmire?
Mr. Wright: I am always happy to consider matters raised by the hon. Gentleman and other Committee Members. There may be a communication issue; the code is very clear about the sustainability rating, which ranges from one to six. One star means that a building has just achieved code standards, and six stars are the highest possible rating. People will acknowledge and appreciate the fact that, as in the star rating for fridges, if they buy a six-star home they are acquiring cutting-edge technology and an exemplar in sustainability. “Six stars are the best you can get” is a very simple message. I accept that there is an issue communicating that, but we can do it.
Grant Shapps: That creates confusion in the consumer’s mind. The code and the EPC are almost working in opposite ways. Under the code, six stars are the best result, whereas with an EPC, one wants to go the other way, towards an A, to be excellent. Is confusion not built into the system?
Mr. Wright: No, I disagree completely. If hon. Members talked to any normal people—I do so frequently, although not in the House—and asked them what an A meant, or what a star meant, they would know that an A or a six-star rating, as opposed to four, three or two stars, was a good thing. The hon. Gentleman would accept that that is the case: it is not confusing, as it taps into the mindset of what consumers think anyway. When people do GCSEs and A-levels and attain A-grades, it is considered a good thing, so I do not think that there is any difficulty with the measure.
Lembit Öpik: That was probably a useful exchange, as it clarified which, in my view, was not clear. If the Minister thinks that a six-star rating is as clear as an A, why not call it an A? People would understand it. They have got used to such a rating with white goods, and it would create a consistent message. However clever I pretend to be, I am sure that I would be confused if one thing says “six stars” , which is a lot, and something else says, “A”, which does not sound like a lot. There is a simple solution and I hope that the Government make a small housekeeping change to create consistency in what they are trying to achieve.
Mr. Wright: I am sympathetic to what the hon. Gentleman is saying, but a six-star rating is higher than an A-rating under the EPC. However, I concede that an important point has been made, and I will look at it. The challenge is communicating the difference to consumers, and making sure that they are fully aware of how the ratings work. May I emphasise that the central point, which is that consumers tend to believe that an EPC A-rating is generally a good thing, and that an F or G-rating is generally a bad thing. As for the ratings for new homes, one star is not particularly good, and six stars is the best one can get. In that respect, I do not think there is any confusion, but I concede that we may need to do further work on consumer behaviour. None the less, I maintain strongly that the arrangement should remain.
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Mr. Raynsford: May I support the Minister in saying that we are dealing with a huge spectrum of housing? In the existing housing stock, a substantial proportion of houses is sadly in poor condition, and necessary but elementary improvements would only bring them to a low level in comparison with what has been achieved with new housing. For the best house builders, achieving code level 6 by 2016 is highly ambitious.
As for the timetable, I understand that clause 242 will be introduced at a time of the Government’s deciding—I cannot see a date in the Bill. How do the Government intend to plan the introduction of the provisions to coincide with the ratcheting-up of standards between now and 2016, and specifically the achievement of code levels 3 and 4? I imagine that that would be within the time scale that the Government envisage for implementation, and I would be grateful for guidance on the timetable.
Mr. Wright: We will continue to consider the timetable for implementation. It is important that we continue to talk to the industry about the matter to ensure that we hit those targets. The targets for 2010, 2013 and 2016 were devised in full consultation with the industry, and the industry is up for them. It has set itself ambitious targets, and we want to ensure that they are achieved. We will continue to work closely with the industry to ensure that that is the case.
Mr. Raynsford: Although some of industry leaders are definitely up for it—there is no question about that, and the HBF is supportive—some parts of the industry are dragging their feet. They are not committed, and would be only too happy to have an opportunity to renege on the commitments given on their behalf by industry leaders. It is terribly important that the Government give a clear indication of the commitment and the time scale for achieving it so as to allow those who are reluctant little or no opportunity for backsliding.
Mr. Wright: That is an important point. By giving the market much more certainty over the direction of travel and what we need to achieve with zero-carbon homes, developers, manufacturers and others can make the investment decisions necessary for the industry to adapt to the changing regulatory environment that will result from improvements to building regulations and other measures. As a result of the measures in the Bill, particularly chapter 1, the industry can make those investment decisions now. However, I fully take on board what my right hon. Friend said about providing certainty.
By applying technical guidance in the code, people will have a better idea of how to attain improved energy efficiency. The provisions underline our serious intent to make zero-carbon performance a building regulation requirement from 2016. The clause allows regulations to be made to ensure that a sustainability certificate or a statement of non-assessment is given to everyone who buys a new home, whether off plan, or after the home is completed or newly constructed. People given an interim certificate when buying off plan will be guaranteed a final post-construction certificate confirming that what was designed was indeed built.
The Homes and Communities Agency will continue the commitment of the Housing Corporation and English Partnerships to build homes to code level 3. Houses built to that code will be 25 per cent. more energy-efficient than those required under the 2006 building regulations. A typical flat built to those standards will reduce carbon emissions by 450 kg a year. I believe that I said on Second Reading that that is equivalent to emissions over 1,500 miles from an average motor vehicle.
On devolved functions, the Minister for Environment, Sustainability and Housing in the Welsh Assembly Government, recently announced the adoption of the code for sustainable homes for Assembly Government-funded social housing, although the level has yet to be determined. Regulations to introduce a certification scheme for Wales will be the subject of consultation when the Bill is introduced. The hon. Member for Welwyn Hatfield made a good point about clause 242(8), which refers to “reasonable excuse”. His argument was well reasoned, but it is impossible to foresee every possible circumstance in which a duty holder might be prevented from fulfilling the duty to provide a sustainability certificate or a statement to the effect that there is no certificate. Any excuse offered to an enforcing authority during a review of a penalty charge notice, or on appeal following confirmation of a notice after such a review, is to be judged objectively, in view of what is reasonable in the individual circumstances and given the background to the case. I am sorry that I cannot provide the further clarification that the hon. Gentleman desires, but I hope that I have reassured him.
Grant Shapps: The Minister has done so, and I thank him for his explanation. I commend the draftsmen on the very sensible and clear language in the Bill. However, I remain slightly confused about how clause 242(8) works in conjunction with subsections (1)(a) and (1)(b). Subsection (8) states:
“The seller is not required to comply with a requirement imposed by virtue of this section if the seller has a reasonable excuse for not complying”.
Does that mean that they do not have to comply with the requirement in subsection (1)(a) to produce a sustainability certificate, or with the requirement in subsection (1)(b) to provide a written statement saying that a certificate does not need to be produced? I cannot see why somebody would not at least carry out the requirement under subsection (1)(b). There seems to be a contradiction in the Bill.
Mr. Wright: I think that I followed the hon. Gentleman’s argument, and I suggest that it is an either/or situation. The seller is required to provide either a sustainability certificate or a written statement to that effect. Subsection (8) deals with non-compliance conditions, and it is either the sustainability certificate or the written statement that need not be supplied. However, I understand the logic of the hon. Gentleman’s argument about why a seller would not provide a written statement, which returns to the point about “reasonable excuse” that he made earlier.
Grant Shapps: So effectively a seller could comply either with subsection (1)(a) or with subsection (1)(b). If they failed to comply with either of those provisions, they would simply need to comply with subsection (8), in which case they would comply with subsection (1)(b) in the process. That seems a circular procedure. Have I understood it correctly?
Mr. Wright: No, I suggest that the hon. Gentleman has not. The onus is clearly on the seller to provide the certificate, or a written statement to that effect. If they do not do so, they must provide a reasonable excuse. That will be tested, perhaps by the enforcing authority or through the courts. I hope that that answers the hon. Gentleman’s question. It seems clear in my mind, but I apologise to him if I have not articulated it correctly or well enough for him. However, I hope that it provides him with reassurance.
Question accordingly agreed to.
Clause 242 ordered to stand part of the Bill.
 
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