You are here: Parliament home page > Parliamentary business > Publications and Records > Lords Publications > Lords Hansard > Lords Hansard by Date > Daily Hansard
Previous Section Back to Table of Contents Lords Hansard Home Page

We all agree that house purchase is fraught with difficulties. The main problems are and always have been gazumping, the length of time taken on searches, difficulties in getting a mortgage and, finally, surveys. With the removal of the home condition report from the home information pack, not one of those problems will be solved by the pack. A whole raft of groups has expressed concern about the packs. The Royal Institution of Chartered Surveyors was originally in favour, but now regards the pack as poorly conceived and has launched a judicial review. Estate agents, as one might expect, are not in favour, but neither are the Council of Mortgage Lenders, the Law Society or the Better Regulation Commission. Most telling of all, Which?, the Consumers Association, withdrew its support once home condition reports were made voluntary. It regards home information packs as currently constituted as,

Finally, the body representing trading standards organisations is also against the pack, saying it does not believe that the proposed £200 penalty is any kind of incentive to comply. Trading standards officers are now supposed to rush around checking whether a three-bedroom house really has three bedrooms or four.

A lot of apocalyptic statements have been made by all sides in recent weeks. Personally, I have never bought into the idea that the whole market would come to a grinding halt if the packs were brought in, but enough serious concerns were raised that the Government should have listened to professional bodies sooner and taken action. Last week the Minister in another place rather dismissed the comments and kept referring to “vested interests”. It fascinates me that when people agree with the Government they are stakeholders, but the moment they disagree they become vested interests.

It would have been possible for the Government to refute a lot of the arguments being brought forward if they had published the results of the pilot schemes. However, we have had to take all that on trust. It is interesting to note that on the one hand the Minister has said that it is too early to publish the results of the pilots, but on the other hand that the Government have listened to what has come out of the pilots and have made changes. The civil servant who gave evidence to the Merits Committee confirmed that the pilot studies should have started last July but could not get going until October because the regulations were not in place. In fact, most of the schemes started in January and therefore it is too early to evaluate their impact. He went on to say that he did not know whether savings in transaction times had been made or how the public had responded. When asked about the cost, he replied that it could be anything from nothing to several hundred pounds. He was asked about home condition reports, and said he thought it was right that they should be voluntary but admitted that a voluntary scheme would be unlikely to result in a high take-up. I am not shooting Mr McDonald—he is just the messenger—but what he said was that there is no evidence of transaction times being cut, no clear idea of the cost to consumers, and no confidence that voluntary home condition reports would be taken up.

I want to turn to energy performance certificates, which are the subject of a different statutory instrument, but have become inextricably linked because the Government put that certificate into the home information pack. Both practically and in terms of debate it would have been much easier if the Government had not linked the two. We hear a lot of talk about the need to reform house purchase procedures, and then people talk about energy performance certificates which are a response to the climate change agenda and have nothing to do with the way we buy our houses. Members on these Benches have always been in favour of energy efficiency measures and we have argued for them for many years, but we have to be sure that however energy performance certificates are delivered, it is done properly if they are to be an effective way of helping householders properly to assess the energy efficiency of their homes and to determine how best to spend their precious money on energy efficiency measures. My fear is that if this is not done properly the whole domestic greening agenda could be brought into disrepute by measures that are not properly thought out.

The guidance was not published until 29 March and there was a very short time for the industry to prepare for what should have been a 1 June start. Over recent months there has been question after question about the number of assessors until, finally, there has been an admission today that only a few hundred have gone through the complete process.

I have a question for the Minister. Defra used to have an approval of energy assessors until recently as part of its grant-giving scheme. I am told that about 8,000 people were assessed and approved under the Defra scheme. The Government decided that they were not going to allow a “top up” scheme so that assessors who were accredited under the Defra scheme could take a short course and then move on to the EPC framework. However, in April they finally relented and organised a fast-tracking scheme. Why did the Government leave it so late to move people who were already accredited in the principles of energy performance into this new scheme?

The Minister said that there will be a roll-out of energy performance certificates—whether over the forthcoming months or years we do not know—and as new surveyors come on stream the categories of property which will have to have EPCs will be revealed. But it is asking for a huge leap of faith on the part of people training to be assessors to say to them, “If you train, we will give you the work”. You are asking these people to spend more money to be trained when the evidence they have had in recent months is that government promises cannot be relied upon.

There is an inconsistency in the Government’s approach to EPCs. The rented sector, which is around 11 per cent of properties, was not supposed to need these certificates until October next year. As a result of today’s Statement, we now think that certainly some socially rented properties will be brought in, but only after stock transfer. Representatives of the buy-to-let sector have told me that landlords have been told that they will need to renew the certificate only every 10 years. So the EPC regulations will state that a new tenant has to have a certificate, but that that certificate could potentially be up to 10 years out of date.

In another place, when asked about the 10-year period for people buying houses, the Minister said:

Why are the Government saying that it is a fat lot of use to someone buying a home to have a certificate of that age but that it is fine for someone renting a property?

If the Government are serious about domestic energy saving, it is high time that they reduced VAT on the materials to do so. That is the kind of measure that would show a real commitment to energy saving, rather than forcing people through a bureaucratic measure.

Home information packs should be scrapped. There is no evidence that time or money will be saved or that any of the problems associated with house buying will be reduced. Energy performance certificates should go ahead—indeed, they have to under European Union legislation—but separately from home information packs.

The Merits of Statutory Instruments Committee has done a great service in highlighting the problems associated with home information packs and how far short they fall of achieving the Government’s intended aim. The Government should listen to the committee and professional bodies and scrap them. There is no reason why the public should take all the risk for a bungled government scheme.

The Earl of Caithness: My Lords, I have to confess that part of me believes this is a fitting farewell to Mr Prescott. He started this policy and it ends in a farce. Perhaps some Ministers who have been involved with the policy—I exclude the noble Baroness the Minister—are not fit for purpose. The Civil Service is fit for purpose but perhaps its bosses were not.

The noble Baroness asked me to consider completing my training and obtaining my EPC qualification. The reason I am not going to do that is quite simple: it is because I identified early on in my training course that the home condition survey, in which one had three boxes to tick and there were many get-out clauses, was generally a waste of a survey; it was not a proper survey.

5.30 pm

The EPC, on the other hand, is a very detailed survey, involving the number of windows, external walls, doors, boilers and radiators. Those are just the sorts of thing it is easy to get wrong. The boiler is the most important component when you heat your house, and if I get it wrong—if, out of the boxes marked A to E showing the energy value of the house, I tick the box marked B—and someone comes along and says, “That’s exactly what I wanted, a ‘B’ house”, and buys it, then sells it two years later and the next surveyor says, “Actually, it’s an ‘E’ house”, that is exactly when the surveyor gets sued. That is the risk, which is unacceptable when you are a surveyor in a small firm and you are not doing the rest of the work that goes with it. At my age I am not going to join a big firm that would have the insurance cover and the necessary protection. The threat of getting sued is the reason why a lot of estate agents have sold out to banks.

It is a difficult situation for our surveyors. I have done the training. I have half the energy qualification; I just need to update that, but I will not. I am not going to take that unacceptable risk. Perhaps that is why on the Government’s website there is only one qualified EPC surveyor for the whole of London. It is not really surprising that with only one surveyor they have had to pull the regulations. Until that situation has resolved itself—and some court cases are bound to come up—the Government will always have a problem on their hands.

The noble Baroness, Lady Scott of Needham Market, mentioned the £200 fine if one did not comply with the regulations. The Trading Standards Office does not have time to check the number of properties sold around the country and whether they are three, four or five-bedroom. There is a wide variety of ways you can describe a house when it comes to the fourth or fifth bedroom. I have seen some estate agents’ particulars for London in which they class as a bedroom a room that is no more than a walk-in cupboard. That will certainly be taken off the list in future, but they will still get the same price for the house because when they show the applicant around they will say, “This could be used as a bedroom”. I ask the Minister to look at that again, as it will not give clarity. It certainly will not help us surveyors. We will err on the side of not putting the number of bedrooms; that’s it—we are free. I can draw a plan and give the square footage, but I am not going to say how many bedrooms there are in a house any more, if there is any doubt. That is the way the market will react to something that has not been thought through terribly well.

What is the way forward? How can we help the Government? I agree with the noble Baroness, Lady Scott of Needham Market: let us separate the EPC from HIPs. The EPC is a regulation imposed on us by Brussels. It will not be the be-all and end-all of ending climate change. It tells you the value of the house, but it is actually up to the owner or the tenant to make the necessary alterations; put in the new boiler, change the radiators or put in more lagging. Again, the noble Baroness was right when she said we should get rid of the VAT on those improvements. That would get the confidence of the public, who would say, “This is not a diktat from central government”—which it is at the moment—“but something we can buy into. I will feel good from having extra lagging, and I will be able to get it cheaper than I can now because there will be no VAT”.

HIPs are dead. They are not adding anything to the buying or selling process. The market has moved forward, as have the solicitors and the estate agents. A lot of what the Government set out to do 10 years ago has happened and will continue to happen. More and more people are selling through the internet rather than going through agents. It is a constantly changing situation.

The time everything takes is coming down, which everybody wants. There is no benefit to a surveyor or an agent in not having quick transfers of houses, although there might be to solicitors, who can build up a big file and charge the client more money. The sooner one can sell or buy a house for somebody and get the deal done, the quicker one can go on to the next one.

This is a very difficult situation for the Government to get out of. We all want this market to work. I live and work in it pretty well every day of my life and what is happening is making matters more and more difficult and confused. I should like the Minister to take one message away from the House—to keep the EPC and do it separately; it does not have to be tied in with HIPs. Then we can look at the buying and selling process again.

I urge the Government to work with us surveyors. I know for a fact that communication with the National Association of Estate Agents and the Royal Institution of Chartered Surveyors was pathetic. The situation was bound to end in tears; it has done. Now that we have reached this stage, please can the department and the Government listen to what the agents are saying? I know that they do not agree with us, but we live and work in the market and we need that market to work for our own benefit as well as that of the Government.

Lord Elystan-Morgan: My Lords, I reiterate the remarks of the noble Lord, Lord Richard. There is a bizarre element to the situation in that we are seeking to pray against an instrument that no longer exists.

Lord Hanningfield: My Lords, unfortunately, the noble Lord, Lord Richard, is not in his place, but we have had advice from the Clerks that the regulations will not be withdrawn until tomorrow. Therefore, it is quite appropriate to have this debate today because the regulations have not yet been withdrawn.

Lord Elystan-Morgan: My Lords, I did not say that the debate was invalid; I said that it was bizarre. In the light of the noble Lord’s comments, it is more bizarre still.

Don Quixote tilted at windmills; he had a physical target to aim at, but for us the target will disappear tomorrow and there will be nothing for us to tilt against. Given that the Government are about to withdraw the regulations, can we stand back from the immediate question of the home information packs and look at the broader problem? It is of long standing and arises from the fact that, under our statute law, there is inevitably a gap between the moment there is an agreement subject to contract and the moment there is an exchange of contracts.

That gap arises out of statute law. It started with the Statute of Frauds 1677 in the aftermath of the civil war, when claims regarding hundreds and thousands of transactions might or might not have been valid. The 1677 Act ordained that there should be some evidence in writing to confirm a sale and purchase of land. That was the situation in the Law of Property Act 1925 and it was strengthened by the Law of Property (Miscellaneous Provisions) Act 1989. The Law Commission report of that year said that it was not sufficient that there should be some note or memorandum in writing evidencing a sale but that the contract itself should be in writing.

During that period of uncertainty, when the transaction is in a state of limbo, all sorts of abuses are possible, gazumping being the very worst of them. The noble Earl suggested that solicitors might have been working for their own purpose in delaying these matters. Lawyers have had to face that charge of delay for many centuries. The Roman poet Ovid said in the first century that delays in law are odious—every Member of the House will know exactly how it reads in Latin, so there is no need for me to reiterate it. I do not believe that lawyers are responsible for that delay. During that period, a great deal has to be done as far as the purchasing party is concerned. Normally, a third party is involved; that is, a lender. The lender, be it a building society or a private lender, will often be concerned not only with the physical state of the property but with the valuation. In addition, the building society, as well as the private mortgagee, may want to know a great deal as to the state of the purchaser’s finances. All of that is bound to take time.

Probably the worst indictment that can be brought against the Government, who have played fair in this matter and have been sincere and consistent for 10 years, is that they have overestimated the significance and status of the home information pack. They have done so for the reasons that I have mentioned. It is only one of a number of factors that affect this situation. Whether or not one has a perfect system of home information packs—this is far from perfect—one will always face the basic problem, which will exist unless we change our statute law.

Some people will say, “Look at Scotland”. There, by giving formal replies to a number of missives, one arrives at a concluded and binding contract. I shudder from seeking to make any evaluation of the state of the law north of the Tweed. France has a totally different system. While the system that we have is under statute, and I doubt whether we can change it without bringing about greater anguish, these problems will remain and the possible advantages of the home information pack will at best be limited.

The home condition report being a non-mandatory part of the home information pack is a massive weakness. The Merits Committee states at paragraph 18 of its report on the regulations:

I am not sure that that is absolutely correct, but the main thrust and the main potential benefit of the home information pack are lost unless there is a mandatory provision in relation to the home survey. That may simply not be possible at the present time. It could succeed only if there was an adequately manned inspectorate, made up of people who had not only examination qualifications but also experience. That experience will be invaluable with regard to the status of the home information pack in the market.

Therefore, I shall ignominiously abstain if the matter is brought to a Division. The Government have thought well about this matter, have been sincere and have been concerned with a real problem that affects so many people. About 25 per cent of all transactions fall in the three to six months that it takes for the deal to be concluded. The wastage in money is of the order of £300 billion to £400 billion per annum. That is a real social and economic problem.

I do not believe that it would be right for me to vote against the Government and certainly I cannot vote for them in this situation. Therefore, I am left in that purgatorial situation of abstaining.

5.45 pm

Lord Graham of Edmonton: My Lords, the noble Baroness, Lady Hanham, concluded her remarks by inviting the Minister to bury the current proposals, but I am looking forward to a resurrection. Although the Government may not even yet have got it right, I congratulate them on being driven by a number of imperatives.

I begin by saying what I would have said if this had been a standalone debate. I am puzzled, frankly, by the number of individuals and bodies agreeing in general that something should be done but not that which is proposed, or saying that it should be done quickly but not as quickly as is being proposed. I have a funny suspicion that a great many organisations mentioned this afternoon profess that they are in favour, in general, of action along the lines proposed, but are very conscious of the fact that they are trade protection organisations. There are professions to be protected. One early element that has emerged in my reading of the situation, although I am not as competent as some professionals who have spoken here this afternoon, and the general tenor that I sense in this discussion, is that there is a resistance to people entering a field that has been hitherto an exclusive preserve of the profession and that those people are seen as Johnny-come-latelies who are perhaps not as fully qualified as members of the profession. It is with a faint dose of praise that they say to the Government that something must be done, but not by the Government. They are saying, “Leave it to us—we are in the position to make the situation better”.

The House needs to be reminded of one or two facts. The main basis on which we have come here today is that there has been a lack of consultation. Well, we have all been in consultation. If the Government listen carefully but decide not to change their attitude, it is said that the Government have steamrollered and ignored other views. On the other hand, if as they have done today and more than once during this process, the Government come back and say that perhaps they can improve things, people sneer. People laugh and grin at what they believe to be a great humiliation. I do not see what the Minister or her colleagues have done as humiliation; instead, they are determined to try to get it right. I hope that we can build on what the Minister said in the Statement. There seems to be an emergence of a working arrangement between the main protagonists and the Government. One might say, “That’s good news, but it is a bit late”.

When I was in the Commons some 25 years ago, there was a vogue for something called a logbook, which was to put right what has been attempted now. The idea was floated and a lot of flesh was put on the bones of the idea that every house should have a logbook, which was part and parcel of the sale. That was 25 years ago. I referred earlier to the advice that Peter Walker gave in 1984 that mortgage lenders should insist on information of the kind that we are talking about being part of every sale. Early Day Motions have been introduced in the Commons for action to be taken and Select Committees have come out in favour, in general.

I am not competent to argue the minutiae of the detail of the proposals, but I am looking in general at the situation with which we are faced. Frankly, it is an appalling situation. As regards the energy situation on the ground, I am told by Friends of the Earth that 2 million people are at risk from fuel poverty and that 1 million do not even have hot water insulation. That costs only £20. The cost is so little but the reality is that millions of homes in this country could be improved. Some of us have taken necessary steps such as having loft insulation installed. We incurred a cost but it was not tremendous. We may ask why on Earth other people do not take those steps when they have the same need to have a better insulated and more energy efficient house. The sad fact is that they do not. They can either be compelled to do it—of which I am not in favour—or encouraged to do it by sticks and carrots offered by the Government.

Next Section Back to Table of Contents Lords Hansard Home Page