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Lord Rooker: By giving way to the noble Earl, I have lost track of where I was; I was nearly at the end.
I want to answer the point raised about the energy efficiency report so that there is no misunderstanding, but let me make a point about the additional cost of the home condition report. I said that, against the total money that the seller must pay, £350 out of the £4,000 bill that they already typically face, is a small price to pay for a survey that will be of value—the value being that, hopefully, it will cut down the loss of the £350 million, which I tried to explain was a fairly modest figure.
The additional cost, of course, is offset by savings in those transactions where the buyer would have commissioned his own survey. In many cases—not all—it could eliminate the need for separate mortgage valuation inspections, which cost borrowers almost £200 on average, and remove much of the wasteful duplication of surveys that occur under the current system where more than one buyer has surveys on the same house. That is the reality. People queuing up to buy have their own surveys carried out on the same property. It is an enormous waste of money.
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As to the energy efficiency requirement, our consultation document was published in March 2003. In regard to the issue about the energy efficiency information being required at the point of sale, the answer is yes, but Article 7 of the directive makes clear that the intention is that the information should help the prospective buyer with his choice of a home. Our own information pack proposals pre-date the European Union directive and it has always been our intention that this energy efficiency information should be available at the point it is of most use—which of course is at the start of the transaction in the home information pack.
Yes, sellers will still sell to someone else with a higher offer, but, unlike now, the buyer will not be saddled with the cost of the surveys and searches. In the examples I have given, the people would not have wasted their money in the first place.
I am sorry that I have taken a little longer than I expected but there were some general points that I wanted to put before we reached the end of the home condition part of the Bill.
Baroness Maddock: I thank the Minister for that reply. We have tried to save time and I hope that it is there on the record.
The noble Earl, Lord Caithness, has made many of the points that I wanted to raise. I thank the Minister for clarifying the energy efficiency report. It is the one part of the home condition report that we would support being compulsory. It is very important. Another part of the EU regulation is that it should be indicated to people how they can improve the energy efficiency of their home, which is a useful suggestion. I am very much in favour of it and have supported it for a long time.
We could bandy figures about the Chamber—and I do not detract from the real distress that people suffer in buying and selling homes—but the Minister is right to say that this is not a scientific issue. It is not. He is referring to a self-selecting group of people who write with their problems. Although it gives us quite a good picture of the kinds of things that go wrong, we have to be careful about drawing big conclusions from such examples. I referred to the percentages earlier.
The Minister has given very detailed replies but, at this hour of the night, I am going to have to read very carefully some of his remarks. It has been a helpful debate. Noble Lords on this side of the Chamber would like the pack to be voluntary, but not the energy efficiency part of the home condition report.
We know that many people are not going to rely on the home condition report and that they will carry out surveys. People are always arguing about surveys. I have had a terrible experience with a survey myself. I bought a flat that was recommended to me. I have discovered since I moved in that he failed to realise that I was paying for all the electricity on the communal staircase; he also failed to inform me that the radiators were outside my property. There are great difficulties involved and everybody can tell a story about how surveys have gone wrong. I am not convinced that the
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home condition report is going to be so much better than many of the surveys, but as it is late, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 199 and 199A not moved.]
[Amendment No. 200 had been withdrawn from the Marshalled List.]
The Earl of Caithness moved Amendment No. 200ZA:
The noble Earl said: The amendment would delete Clause 144(6)(a), which states:
"The regulations may require or authorise the home information pack to include replies the seller proposes to give to prescribed pre-contract enquiries".
I do not see the point of including such a requirement in the Bill, because the Minister has said that the property for sale can be changed without having to change the home information pack. If, after a number of pre-contract enquiries have been made, the property is changed or an alteration in the negotiation is made, all those enquiries become invalid. Until the contracts are exchanged, nobody can be totally certain of what is being sold in a property.
I shall take three brief examples. The first is the three-bedroom semi-detached house which has been used as an example in some of the Government's figures. The pre-contract enquiries may concern the kitchen units and that will come up in the home condition report. The vendor might say that he is selling the property with the units included. The property takes a little time to sell and the vendor renews the kitchen units. He does not have to have a new home condition report or change the home information pack. He has therefore ticked all the boxes that regulations require him to tick, but he has changed his mind about the kitchen because he has put in new units and he wants to take the dishwasher, the deep freeze and the new cooker with him because he has just spent a lot of money on them. However, that is reflected in the price of the property. It is only when one has the price of the property and knows what is included in the sale that one can answer those kinds of questions.
Let us look at a house with land. Let us move out of the city and into the country. Somebody is selling a house and a garden, but owns the field next door. He excludes the field next door from the sale. The pre-contract enquiries may ask who is responsible for the boundary fences and that box is filled in. During the negotiation for the sale of the house and the garden, the vendor is made such a good offer by a potential purchaser of the field that he decides to sell it. Once again, all the boxes that he has ticked have to be changed. It is not until the price and what is included in it are agreed that answers to those questions can be had.
What about the house next door? Exactly the same situation arises. What if I am just redeveloping a property? I have a home condition report when I buy it, and it is fit to live in—but what if I decide to remodel
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the house, and I am adding bits to it, uncertain exactly what I am going to sell until the final terms are agreed? The main thrust of the argument for deleting subsection (6)(a) is that, until the final terms are agreed, one does not know what is included in the sale and what is not. Why do we need regulations to contain,
when one does not know what the sale is going to include? I beg to move.
Lord Rooker: This amendment would, as the noble Earl said, delete subsection (6)(a) of Clause 144, which provides that regulations may require the pack to contain,
It is standard practice under the current system for the buyer's conveyancer to seek information from the seller on a range of matters relating to the property, including boundaries, disputes, notices, planning consent and other matters about which the seller would normally have information, and which it is important that the buyer knows about. The Law Society has produced a standard property information form that is used for just that purpose, and I suspect that more than one noble Lord could probably quote chapter and verse from each of its questions.
As the information is needed by the buyer and is provided under the current system, it is clearly "relevant information" for the purpose of subsection (2) of Clause 144. The Government have consulted on the contents of the home information pack, and most of those who have commented on this particular point thought the pack should include a property information form along the lines of the Law Society's form, which was included in our consultation document. The contents of the pack will be set out in regulations, but we have not yet taken any final decisions. The Government are establishing specialist working groups to consider these matters, and there are some issues around the property information form. For example, in some cases, sellers may have limited knowledge of the property and be unable to provide answers. Sellers are not legally obliged to answer questions now, and we do not intend to change that.
The noble Earl raised issues relating to fixtures and fittings. What he did not do, when he talked about the kitchen appliances, was say whether they were built in or not. If a kitchen is built in, I think it would be a reasonable assumption on my part, as a reasonable person, that when I open the doors I will find the oven and the fridge. If they are freestanding, that is another issue, and indeed the question of whether the furniture is built in or not is covered in some of the forms. If the equipment changes during the course of the sale, that is a matter that can easily be decided. I do not see any great issue there.
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The original list is just a starting point for negotiations; no one ever refers to it as a straitjacket. I am not aware of it causing major problems, except where people tell porkies when they answer the form, and people then abort statements that were untrue as regards boundaries, disputes with neighbours or other issues. As I said, the specimen form is in Appendix K of the consultation paper on the contents of the pack. We expect that most of the information will not change. We are consulting on the matter, because it is important that we get this right with the industry. It is 18 months ago, near enough, since we published the consultation document. No one is saying that that is exactly the form it will take, but that document will largely form the basis for the home information pack.
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