Peter
Bottomley: The Minister has quite understandably reverted
to using the word “consumer” because it is probably on
the papers that he is consulting. Is the consumer the seller as well as
the possible purchaser, or only the possible
purchaser?
Mr.
Wright: That is a very interesting point. In about 80 per
cent. of transactions, house buyers are also house sellers, so there is
an important degree of interchange.
Let me go back
to first-day marketing. As I said, there has been a great deal of
speculation and, frankly, concern—I would say misplaced
concern—about the impact on the housing market of removing
temporary first-day marketing. I would like to address the myths.
Ending the first-day marketing concession will not stifle recovery in
the housing market by scaring off sellers wishing to test the market.
Sellers are already required to commission and to pay—or to
arrange to pay—for a full HIP, and only then can the marketing
of the property begin. I strongly believe that ending the concession
would not introduce a cost deterrent or have an impact on speculative
listings beyond the existing solution. As I have suggested already, we
know from the research carried out by Europe Economics that the
introduction of HIPs has had no adverse impact on transactions or house
prices. Sarah
Teather (Brent, East) (LD): The Minister said a moment ago
that RICS welcomed the Government’s work. I am looking at the
joint submission that it made to the consultation. RICS, along with the
Law Society and the National Association of Estate Agents, put in a
completely separate proposal that would mean that the searches would be
made much later in the process. It seems to be opposed to the removal
of the 28-day marketing rule, which the Minister proposes through the
regulations.
Mr.
Wright: Gillian Charlesworth, the director of external
affairs for RICS, following the announcement on 8 December, welcomed a
so-called “joined-up” move by Government. She
said: “This
is the sort of approach we have been calling for. We are pleased to
note that the Government is clearly listening to the responsible end of
this
industry”. It
is important that RICS is supporting what we are doing.
Let me move on
to the point made by the hon. Member for Welwyn Hatfield about
additional bureaucracy or delays in the system. Feedback from the
industry shows that the basic HIP—the index, the
energy performance certificate, the property information questionnaire,
the sales statement and the evidence of title—that will be
required on the first day of marketing takes an average of three to
five days to compile. It is clear that first-day marketing works
against the interests of consumers. It means that they do not get to
see HIPs and therefore cannot use the details to inform their decisions
about a property. Removing the concession will mean that sellers who
order and pay for a pack will get the product that they actually pay
for. They will get the basic HIP at the point of marketing. Buyers will
know that a HIP should be available for all properties they may wish to
consider, and local trading standards will be better able to identify
and tackle effectively any cases of
non-compliance.
Grant
Shapps: I want to go back to the point made by the hon.
Member for Brent, East. It is important if it is to remain on record.
The Minister just said that RICS is happy for first-day marketing to
disappear. That is in fact untrue. In answer to question 5 of the
Government’s consultation, the NAEA, RICS and the Law Society,
in the proposal they submitted,
stated: “No
— the 28 day period should remain for the reasons mentioned
above.” RICS
did not approve of the abandonment of first-day
marketing.
Mr.
Wright: I was very careful in saying that RICS supported
the wider package that was announced on 8 December. In her
concluding remarks about that announcement, Gillian Charlesworth threw
down the gauntlet to the Government—I am happy to state
that—and
said: “The
challenge now is to ensure that by April we have a HIP that does what
the Government claims, and brings genuine benefit to home buyers and
sellers. We believe it is essential to have the right structures and
products ready and in place for when the market
improves”. RICS
is adopting a sensible approach, which enables us to work with the
industry to ensure that the HIP is improved and provides tangible
benefits to both the home buyer and the
seller. The
second big point about the regulations is the property information
questionnaire. As I have mentioned to the hon. Member for Welwyn
Hatfield many times, we know that when consumers see a HIP they find it
useful. Consumers have also made it clear that the HIP needs to be more
consumer-friendly, by including simple, helpful information about a
property that is easy to understand and relevant to their needs. The
new property information questionnaire being introduced as mandatory
for the HIP from 6 April, provides just that level of information. The
questionnaire has been designed to be simple and quick for sellers to
complete, and to give
buyers the basic information they want about properties they are
considering, before they invest significant time and money in the house
purchase process. Including the property information questionnaire
enhances the consumer focus and content of the pack, which also
provides home owners with important information and advice. The PIQ
does not replace the current legal process, nor was it ever intended
to. It ensures, however, that there is simple information on issues
that matter to potential buyers, such as flood risk, electrical safety
and building regulations. It ensures that such simple but relevant
information is available to buyers from the start, and is
with them as they walk around a property for the first
time. I
cannot stress enough how much it is in the interests of buyers that
they receive such information as early as possible, to increase
certainty and to help to inform their decisions on whether to make
offers. It is also in sellers’ interests to provide such
information, as it reduces the chance of issues that might compromise
the sale coming to light further down the line. In a nutshell, that is
the key point. Purchasing a house is the biggest single investment that
somebody will make, and we want to provide as much relevant information
as possible about the basic things that will interest a home
buyer—for example, flood risk and electrical safety—and
information, advice and support on energy efficient measures. That
saves the consumer money, time and hassle, and I hope that the
Committee will support the
regulations. 4.53
pm
Sarah
Teather: It is a pleasure, Ms Walley, to serve under your
chairmanship, for what I think is the first
time. I
have listened carefully to the Minister but I am not very convinced.
When the market is depressed, adding bureaucracy is not a sensible
solution. There seems to be a significant chance that delay in being
able to sell a property will mean that the information in the HIP is
out of date, and a ban on first-day marketing will only make that
situation a great deal worse. We should not penalise people for testing
the
market. I
have some points about the PIQ. The National Association of Estate
Agents has expressed frustration that the Government did not work with
it and RICS from the beginning; the Government came up with their own
draft and then asked them to comment. If it is absolutely necessary to
have the PIQ, a much better version could have been produced if the
Government had worked with those bodies from the start. The Minister
said that the PIQ is not intended to replace the legal process. No, it
is not, but it does seem intended to duplicate it, and many lawyers
have said that they will have to ask all the same questions that people
will already have to answer in the PIQ, and indeed in the rest of the
HIP. I am particularly concerned about some questions in the PIQ that
request a lot of detail. Many people do not have information about
their lease, for example, and that will add to the time period before
they can market their property, because of the ban on first-day
marketing. Another
point that was raised with me by the National Association of Estate
Agents is that there appears to be some sloppy drafting. There has been
a change to the declaration. The original draft produced by the
Government
said that people have to sign to confirm that it was a truthful and
accurate representation. The wording was changed slightly to add the
words “to
the best of my
knowledge”. That
is a welcome addition, but there are a number of declarations in the
PIQ and they do not all say the same thing—we probably need to
check the wording to ensure that they are all the
same.
Mr.
Wright: I am looking through the leaseholder section of
the property information questionnaire. The questions are not complex,
but they cover the basic rudimentary information that someone
interested in a leasehold property would want, such as how long the
lease has left to run, how much the current annual ground rent and
service charges are and whether subletting or keeping pets is allowed
under the lease. That is the sort of thing that interests people and it
may enable them to decide earlier on in the process not to go down that
road. That seems incredibly sensible and helpful for the
consumer.
Sarah
Teather: Perhaps it is a long time since the hon.
Gentleman bought or sold a house. I do not know whether he knows how
many years are left on his own lease. He may be surprised by how little
information someone who has lived in their property for a certain
number of years may have easily to hand. My point is not that the
information is not interesting or that it is not important in the
buying process, but that it can be difficult and time-consuming to get
hold of it, which will delay the process of being able to market the
property. That is the point I am trying to make. If there is all that
time between a person deciding to sell their property and finding all
the information needed to complete the HIP, a lot of the information
will have become out of date.
Mr.
Wright: Surely the point is that the information will have
to be provided at some point in the house buying and selling process.
Is it not better to provide it up front so that potential buyers have
the relevant information early on in the
process?
Sarah
Teather: Is it not better that someone should be able to
test the market to find out whether they have any chance of selling the
house or whether anyone will be interested in buying at that time? That
is all that I want to say on the matter. I understand that the
Conservatives are likely to vote against the proposal. I am inclined to
support
them. 4.57
pm
Peter
Bottomley: It would be helpful if the Minister could give
us an idea of roughly what proportion of homes put on the market are
sold within six months or a year. Clearly that figure will have changed
due to market conditions. I do not blame the Government completely for
that, although the timing of their introduction of HIPs could have been
calculated to have had a very bad
impact. I
disagree with one point that the hon. Member for Brent, East made. One
of the key questions that any estate agent would ask before marketing a
property would be how long the lease was. It is easy to get that
information from the Land Registry. That helpful point is reflected in
the questionnaire, so I congratulate the people who drafted that
aspect.
I want to ask
the author question. Who thought up the idea of HIPs? Is there any
competition to claim credit for them? I used that test when the
community health councils were abolished, and I could not find the
person who had thought them up. I asked who was competing for the
credit for the national health service IT programme. When we had the
modernising medical careers programme and the Medical Training
Application Service—the computerised system for the
doctors’ training scheme—I asked who claimed the credit.
A former Secretary of State was heard to say that she was horrified to
discover how everything had gone wrong. I wonder when we will read
about this in memoirs or a profile in The House Magazine.
Secretaries of State with responsible for housing have delegated this
matter to their Minister of State and then let an Under-Secretary do
the best that they can in Committees such as this. Who is competing for
the credit and who will say in their memoirs, “I’m sorry,
we made a
mistake”? Nearly
every home that I have bought was not on the market. I have knocked on
the door, or tried to rent somewhere to be told that I could not rent
it but I could buy it. I am not saying that that is common, but I am
glad that there is a provision that if a house is not on the market,
one can still arrange to buy it without sending the seller round to do
the HIP. I will be grateful if the Minister confirms that that is the
case. If someone knocks on his door and asks whether they can buy his
house or flat and he decides to say
yes—
The
Chairman: Order. I should remind the hon. Gentleman that
we are dealing with amending regulations, not the concept of
HIPs.
Peter
Bottomley: Perhaps I will be allowed to revise my
comments. If I knock on the Minister’s door and say that I want
to buy his house or flat, will he be allowed to sell it even though he
has not completed the property information questionnaire? Such
questionnaires must be completed whether the home is new or
old. I
will take the Minister through some of the detail. If the seller has to
say in which month and year the house was last bought, how will that
affect people such as my wife’s grandparents, who built a house
and left it to my father-in-law, who has now passed it on to his son?
That house has never been purchased. Would it be sufficient to state
that the house has never been purchased? For many questions, there is
the option of saying “yes”, “no” or
“I don’t know”. One does not have the option of
answering “I don’t know” to the question of when
the house was last purchased. To what extent does the property
information questionnaire have the force of statute? Does it allow for
flexibility in appropriate
circumstances? When
I intervened on the Minister about the term “consumer”,
it was not just to be funny. Are HIPs in the interests of the seller,
the buyer or both? The information provided by people selling cars is
as comprehensive as they can manage, but they do not need to fill in a
car information questionnaire produced by the Government. I argue that
people find that they can get a competitive advantage by providing
information. People copy each other; we are imitative. When we find
things that work, we do the same. Therefore, the Government should
have said of the property information questionnaire and HIPs,
“Here are some people who have been doing it. They seem to have
been selling homes six days faster. If you are trying to sell your
house without delay, why don’t you do the same?” The aims
of the prescriptions and regulations that have been considered today
and on other occasions could have been achieved without saying that
things must be done in a certain way and to the Government’s
time scale. There would then have been no need to extend this or that
regulation or to introduce
exemptions. The
second bullet point of paragraph 4.4 on page 1 of the useful
explanatory memorandum states that the regulations amend schedule 5 of
the principal regulations so that certain documents move from being
“currently required” to being
“instead
authorised for inclusion in
HIPs”. What
does that mean? Does it mean that they are changing from being optional
to being required, or that they overlap with the property information
questionnaire? Am I reading the paragraph
wrongly? Two
bullet points below that, the explanatory memorandum states that the
regulations “Further
extend the temporary period in paragraph 4(a) of Schedule 6 of the
principal Regulations during which information gaps in personal
searches may be covered by insurance where local authorities have
refused access to the relevant
records”. Will
the Minister remind us how often and for what reasons local authorities
refuse access to the relevant records? Are those the ones that are
required or those that people might have chosen to have? Is there an
explanation of why that exemption continues? If he cannot reply today,
perhaps he will write to Committee
members. I
thought it might be useful to discuss the points in the explanatory
memorandum in sequential order. Paragraph 7.2, which is on page 2,
states: “The
package of measures being brought forward through these amending
regulations is
intended”— I
congratulate the writer on their
grammar— “to
address...ensuring that the HIP is ‘fit for purpose’
and gives consumers a better
product.” That
is almost the first admission from Government that HIPs have not been
fit for purpose. I wish that Ministers had acknowledged that when hon.
Members, including me and some of the Minister’s colleagues,
were arguing against HIPs on the Floor of the House of Commons. If some
of the suggestions that we made at the time had been incorporated in
the legislation, it would have saved a lot of
bother. Paragraph
7.24 on page 5 includes mention of avoiding
“the HIP duties
arising in respect of...properties being sold with vacant
possession”. If
having HIP information was so good, it would be useful, to use the
Minister’s adaptation of language, to call those duties
“HIP opportunities”. HIPs may also be required as a duty
under regulation, but if one is trying to dress them up in a way that
sounds nice to people—whether the consumer is the seller or the
potential purchaser—it might be better to talk about
opportunities rather than just duties. Using the word
“duties” sounds as though there is an imposition on
people, rather than a process that someone would willingly choose, if
they thought of it, to help to sell their property.
I should like
to make two points about paragraph 7.25, in which the
Minister has kindly provided a summary of five occasions when the
Select Committee on the Merits of Statutory Instruments has reported on
the policy issues raised in the regulations. First, the
Committee: “expressed
concerns that...findings...raised questions about the extent
to which the scheme had delivered the objectives which were identified
for
it.” When
does the Minister expect that a Minister will say to what extent the
scheme has achieved the objectives set out for
it? Secondly,
the Committee
said: “practitioners
in the housing market remained split in their response to HIPs and
recommended that the Government kept the implementation of the policy
under review, providing full information about the practical effects of
its
introduction.” The
serious point is that the issue has never been whether a potential
purchaser would need to have such information when they are about to
buy a house. In my experience, albeit anecdotal—I will not take
it any further than that—most people look for the information
when they are about to make a final offer, not when they are initially
sparring about whether the price is right or discussing whether a
property is the right sort for them to think of buying. Most of the HIP
and questionnaire information will not determine whether someone views
a property or begins to take a serious interest in
it. For
the sake of brevity, let me say that the first two bullet points on the
next page—page 6—contain the
phrase: “they
may imperfectly achieve their policy
objective”. That
summarises some of the points that Committee members should have in
mind before they decide how to vote, assuming that Labour Members will
consider the issue on its merits rather than saying, “Whatever
the Minister wants, we want as well.” We could do better than
that on behalf of sellers and potential
purchasers. 5.8
pm
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