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Session 2008 - 09
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Public Bill Committee Debates

The Committee consisted of the following Members:

Chairman: Joan Walley
Bottomley, Peter (Worthing, West) (Con)
Clapham, Mr. Michael (Barnsley, West and Penistone) (Lab)
Crabb, Mr. Stephen (Preseli Pembrokeshire) (Con)
Flello, Mr. Robert (Stoke-on-Trent, South) (Lab)
Goldsworthy, Julia (Falmouth and Camborne) (LD)
Harris, Mr. Tom (Glasgow, South) (Lab)
Holloway, Mr. Adam (Gravesham) (Con)
Jackson, Glenda (Hampstead and Highgate) (Lab)
Ladyman, Dr. Stephen (South Thanet) (Lab)
Lloyd, Tony (Manchester, Central) (Lab)
Riordan, Mrs. Linda (Halifax) (Lab/Co-op)
Shapps, Grant (Welwyn Hatfield) (Con)
Teather, Sarah (Brent, East) (LD)
Watts, Mr. Dave (Lord Commissioner of Her Majesty's Treasury)
Wright, Mr. Iain (Parliamentary Under-Secretary of State for Communities and Local Government)
Yeo, Mr. Tim (South Suffolk) (Con)
Gosia McBride, Committee Clerk
† attended the Committee

Third Delegated Legislation Committee

Monday 26 January 2009

[Joan Walley in the Chair]

Home Information Pack (Amendment) (No.3) Regulations 2008
4.30 pm
Grant Shapps (Welwyn Hatfield) (Con): I beg to move,
That the Committee has considered the Home Information Pack (Amendment) (No.3) Regulations 2008 (S.I. 2008, No. 3107).
Being back in the room is almost like being in a recurring bad dream. That is not because of your chairmanship, Ms Walley, but because we are once again debating regulations relating to home information packs with the same Minister. On each occasion, he does his best to explain why the next piece of creeping HIPs legislation, which will make it harder for people to put their homes on the market and sell them, is, in fact, not bad for us or the market place.
The Minister’s latest boss—the third in a year—the new Minister for Housing, before being indoctrinated into the views of her predecessors, perhaps got it right when, just after taking over the post, she said to the Communities and Local Government Committee: “I fully accept that” HIPs
“are perhaps not the perfect vehicle one might wish to see.”
While she made it clear that HIPs have many shortcomings, she did not include among them the fact that they do not involve questionnaires for the seller, so why have the Government changed their view to see that as a sudden problem?
The Government’s research, which was commissioned by the Department for Communities and Local Government and slipped out last October on a Friday afternoon, concluded that there was a “very limited understanding” of the purposes of HIPs and that there was a “low level of knowledge” about them among the public. The report stated:
“A large proportion of participants stated that the requirement of HIPs made the buying and selling process more complicated.”
Despite that, these latest regulations seem to show that the Under-Secretary of State for Communities and Local Government, the hon. Member for Hartlepool, and the Minister for Housing have decided that the problem with HIPs is that they are not cumbersome enough and that the way to make them work is to put yet more bureaucracy and red tape in the way of someone wishing to sell their home.
I ask the Minister to address that point directly and to explain how, in a housing market that is struggling more than any on record and when house prices are falling quickly like rocks to the bottom of the ocean, the solution can possibly be to make the process yet more cumbersome by introducing yet more bureaucracy that makes it harder rather than easier to sell one’s home. That belief is not some obsession of Conservative Front Benchers, as he might try to describe it, but almost universally held. Almost no one out there, as far as I can tell, thinks that HIPs are useful or that introducing additional HIPs legislation will make it easier for people to buy and sell their homes.
The independent Carlsberg review, which reported last year, stated that HIPs were the “worst of both worlds” and specifically warned against the kind of gold-plating that the regulations implement. It has been widely reported that buyers have shown little interest in HIPs and that sellers find it frustrating that, in a slowing market in which fewer homes are being sold, the same information has to be repeated by way of searches when the previous searches become out of date. The Council of Mortgage Lenders recommends to lenders that no search should be more than six months out of date.
Will the Minister tell us how a questionnaire for the seller, which will also be liable to become out of date due to the time it is taking to sell homes in the current market, will be of any assistance to anyone whatsoever? It is a tragic irony that at the exact time when a Government should be making it easier for people to sell their homes in this dire market by removing bureaucracy, this Government think that the answer is to make the process still more complicated.
4.35 pm
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): It is a pleasure to serve under your chairmanship, Ms Walley.
I have a sense of d(c)j vu when I debate home information packs with the hon. Member for Welwyn Hatfield. We have been here a number of times before. He has prayed against the regulations, and this is about the seventh or eighth time we have debated the concept of HIPs. However, perhaps we should concentrate on the regulations under discussion today.
The regulations will implement changes that were announced on 8 December by the Minister for Housing. I believe strongly that they will enhance the content and quality of HIPs for consumers and ensure that they can be seen at the start of the home buying and selling process. The hon. Member for Welwyn Hatfield will be delighted to hear that the changes finalise the implementation of HIPs, thus providing the industry and consumers with clarity and certainty. That will help to build much-needed confidence into the operation of the housing market. The hon. Gentleman talked about the current state of the housing market.
Peter Bottomley (Worthing, West) (Con): Will the Minister pretend that he has written his speech and use the word “purchaser” rather than “consumer”?
Mr. Wright: What an interesting point. It is important that purchasers, consumers, house buyers or whatever we call them would like to see relevant information up front when buying a home, which is the biggest single investment that most people are likely to make. That will allow them to weed out the properties that they do not wish to consider, and the process will provide further information on those that they wish to take forward as part of the house buying and selling process. In a nutshell, that is what the HIP provides.
I am disappointed and bemused that the hon. Member for Welwyn Hatfield opposes an approach that I think is sensible although, to be fair to him, he has at least been consistent. It is perfectly rational and sensible to ask whether we can provide information up front to house buyers. House buying and selling has involved far too much delay and procrastination, and that has cost consumers millions if not billions of pounds. We must do something about that and HIPs are an important part of our approach.
Mr. Tom Harris (Glasgow, South) (Lab): If I am out of order by broadening this debate too far, I am sure that you will let me know, Ms Walley.
In the time that my hon. Friend has occupied his office, has he given any thought to the alternative system that has run well in Scotland for many years? Simply put, before buying, the buyer—or the purchaser—forks out money for a full survey from a surveying company. That seems to have worked extremely well. Was that considered before HIPs were introduced?
Mr. Wright: When we were bringing forward reforms to the house buying and selling process, we considered what my hon. Friend suggests. There are radically different processes for buying and selling homes in Scotland and in England and Wales. It was decided that HIPs were more consistent with the culture in England and Wales. Taking the different cultures into account, HIPs are a good compromise.
Home information packs have been operational for a number of years. They are beginning to produce real benefits for house buyers and sellers. Despite a slowing market, HIPs are speeding up transactions. A recent survey of 16,000 transactions showed that when a HIP was available, exchanges were completed, on average, six days earlier.
Mr. Adam Holloway (Gravesham) (Con): If HIPs are so marvellous, why do we not see widespread support for them among house buyers?
Mr. Wright: There has been widespread support among house buyers who have seen HIPs. With the regulations introduced by the Minister for Housing, we are trying to improve the situation. The key point is that estate agents often provide the HIP and it goes into a drawer. Once we provide information to the house buyer up front, we will see the benefits.
The energy performance certificate is a key aspect of the HIP. People are concerned about high energy bills at the moment. The energy performance certificate can give real practical solutions on how to cut energy bills and ensure energy efficiency.
Grant Shapps rose—
Mr. Michael Clapham (Barnsley, West and Penistone) (Lab) rose—
Mr. Wright: I will give way to the hon. Member for Welwyn Hatfield and then to a great advocate of energy efficiency: my hon. Friend the Member for Barnsley, West and Penistone.
Grant Shapps: I absolutely agree with the Minister about energy performance certificates, but I cannot understand why they could not have been introduced here, as they have been in Northern Ireland, without the need for a HIP. Incredibly, the Minister claims that consumers, as I think he now calls them, are pleased with HIPs, yet page 9 of the Government’s research, which slipped out last year, says:
“A large proportion of participants stated that the implementation of HIPs made buying and selling more complicated”.
Will the Minister explain how they have made things easier?
Mr. Wright: Will the hon. Gentleman intervene to tell me the proportion of people who have said that? While he tries to find that information, I give way to my hon. Friend the Member for Barnsley, West and Penistone.
Mr. Clapham: I want to raise an issue that was brought up in a letter that appeared on my desk a few weeks ago. As the Minister knows, before a property can be sold, an energy evaluation is required for the HIP, but the type of energy installation does not need to be listed. This case relates to what the Minister said about the increased cost of energy. A chap was about to sign the contract and had not been told by the estate agent or his solicitor that the installation in the property used liquid petroleum for heating, which is extremely costly. Many villagers in my constituency use liquid gas. A villager in Hood Green who wrote to me recently said that he expected his energy costs to be in the region of £1,400 this year. Given that situation and the increasing cost of energy, will the Minister consider whether we ought to list the type of energy installation?
The Chairman: Order. To remain strictly in order, I hope that the Minister will keep his comments to the regulations before us.
Mr. Wright: Thank you for keeping me in order, Ms Walley.
My hon. Friend makes a valid point. Ensuring that consumers have relevant information to help them to make informed choices on whether to take a transaction forward or whether to make energy improvements is a key issue. The energy performance certificate provides that information at the moment. A household could save an average of £300 a year on its energy bills.
Grant Shapps: The Minister is being very kind by giving way again. He is introducing a range of measures to toughen up HIPs, and he was rightly interested about the proportion of people who thought that they were a good idea in the first place. I have found independent YouGov research, which was commissioned last year, showing that only 5 per cent. of those surveyed said that HIPs had delivered benefits.
Mr. Wright: I completely and utterly disagree with what the hon. Gentleman says. All the evidence suggests that when consumers actually see the HIP—seeing it is key—they recognise that it can provide the relevant, up-front information that they need to make the biggest financial decision of their lives: whether to purchase a home. Some 18 months ago, the hon. Member for Welwyn Hatfield said that HIPs were bringing down the property market, but in times of rising house prices—and, frankly, falling house prices—HIPs have had no impact on transactions. There are wider considerations than the introduction of HIPs. The HIP is an extremely important first step towards achieving our objective of having better informed buyers within a buying and selling process in which consumers can expect to receive a consistent, good-quality service from property professionals and better value for money.
The hon. Gentleman says that no one is in favour, but key stakeholders, such as the Royal Institute of Chartered Surveyors and Which?, have welcomed the work underway across Government on how to ensure that the consumer gets a fair deal when buying and selling a home and the commitment to look further at how the content of the HIP can be expanded or improved to benefit consumers. The steps that we are taking, which were announced my right hon. Friend the Minister for Housing on 8 December, will make a huge difference. However, if consumers are to benefit fully, it is vital—I cannot stress this enough—that they see and use the HIP early in the process. To allow that to happen, my right hon. Friend announced that the existing temporary regulations that allow for a delay in providing a HIP—the first-day marketing provision—and the use of insurance cover for property searches, which we discussed in Committee last month and were originally due to expire at the end of December, will be extended until only 6 April 2009.
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Prepared 27 January 2009