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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.
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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.
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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.
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