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However, we have lost an opportunity, because the noble Baroness rejected my amendment that would license estate agents. One of the advantages of licensing estate agents would be to cover the important matter of the safety and security of the consumer. It is entirely the Government’s fault that that problem, which has been highlighted over domestic energy surveyors, will be raised more and more often. It is a delight to see the government Deputy Chief Whip on the Front Bench. In, I think, 1978, he introduced what became the Estate Agents Act 1979. At that time, he, too, would have wished very much for estate agents to be licensed and for proper security checks to have been made.

Energy performance certificates are very important but they are a fairly blunt instrument to achieve what the Government want to do. As my noble friend Lady Hanham said, they gold-plate the EU regulations; that is not unusual with government departments. I recall it happening very often when we were in government—and that is not to our credit.

There are many loopholes in this proposal. Not every house that is put on the market needs an energy performance certificate. The house may be marketed by a home-finder who is not an estate agent or the vendor and they may say, “I am getting a pack prepared”; in that case, an EPC does not need to be prepared at that stage.

If the Government really want an energy survey of our homes, they need to include the houses that never

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come on the market. Quite a number of houses will never come on the market and never have an EPC. The Government’s policy will therefore not achieve their objectives.

I am delighted that the Government will now allow us estate agents to do first-day marketing, but that raises exactly the problem that the noble Baroness, Lady Scott of Needham Market, mentioned. The vendor will be able to say, “I have commissioned a pack”, and, in a housing market such as it is now, the house will doubtless have been sold before the pack is ever produced—not that it will ever be of much benefit to the purchaser. In a bad housing market, the situation will be different. I expect that we could be in a bad—or a very different—housing market in the not-too-distant future. We will then get a different argument, which will involve all the additional costs that the Government are forcing on vendors by requiring them to have produced all this rather worthless information up front.

I support my noble friend Lady Hanham. I ask the Minister once again to reconsider all of this; please take it away and please take it back to your Secretary of State, Mrs Balls, and say to her, “This is not a policy that will work. You are a new Secretary of State; let’s have a fresh look at this”. The Minister will know that there was a big meeting yesterday at the RICS, at which it and the NAEA looked at the whole of housing policy. We should build on that and come forward with something that everybody in the industry agrees on and the public can live with and benefit from.

Lord Elystan-Morgan: My Lords, the difficulties that are inherent in the sale and purchase of real property are considerable and historic, and will remain with us whatever view the House takes on this Motion. In our debate on 22 May, many, including myself, belaboured the point that for more than 300 years there has been an inevitable time gap between the moment at which an agreement—a meeting of minds in an oral agreement—is made with regard to the sale and purchase of land and the moment at which that agreement becomes binding in law by the evidence in writing of the agreement. For the past 18 years, that has had to be in writing. That will remain the situation, and that is the essential problem.

In that time gap, good and evil will operate. The good that will operate will be that the purchaser is able to negotiate fully a mortgage—that is needed in the vast majority of home purchase transactions—and he will be able to make full investigations into the physical state of the property and any environmental problems. That cannot happen overnight and it is the main reason why there is that time gap of three to six months between the oral agreement and the exchange of contracts. The room for manoeuvre by the Government—by any Government, however committed—is therefore limited.

4.15 pm

I sought to belabour that point on the last occasion and I make no apology for doing so again, because it seems to be central. However, the Government, on

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this occasion, are in a stronger position than they were on 22 May. At that time, I suggested, perhaps less than prudently, that the failure to make the home condition survey part of a compulsory scheme was a fundamental flaw. I have changed my mind. Even if it was made compulsory, a valuation would still be necessary. On what would that depend? It would depend on the property’s physical condition. Therefore, a home survey that did not contain a valuation—and it has never been suggested that it would contain one—would inevitably be duplicated and, in practice, would not achieve anything on its own. For that reason, I have changed my mind.

There is a case for the home information pack even if its effect is limited. One beneficial effect is the creation of a culture of acceleration in relation to that period of three to six months. There is some anecdotal evidence that constant pressure—and the Government have been consistent on this for 10 years—has brought about some change, because of that climate of psychology. Indeed, there is overt evidence that over 50 local authorities, being acutely conscious of the delay in issuing search results and of the cost of searches, have reduced both the time and the cost by at least 20 per cent. What about the £20 million spent on this over the years? If that money has been responsible for that result alone, as I believe it has, it will have been money well invested.

The limitations are considerable. I am sure that anybody looking soberly and fairly at the situation will accept that. It is right and proper that the energy certificate should be an integral part of the home information pack. Obviously, I am not privy to the Government’s thinking, but I do not know why they have gone so far in this direction, beyond the Brussels requirements—maybe out of some obeisance towards Brussels, but I doubt it. I suspect that it has much more to do with the consideration that over a quarter of our energy emissions come from domestic premises and that, for a comparatively low rate of expenditure and with comparatively little interference with the rights and day-to-day manoeuvres of ordinary people, this proposal can achieve a great deal. If that can be brought about, that again will be a first-class investment.

I appreciate that, since 22 May, there has been a vast improvement in the number of accredited inspectors. I am glad that that is so and that there is a gradual phasing-in of this system to avoid a potential big bang of bringing it in all at the same time.

However, there remains considerable cynicism on the part of those sitting on the Conservative Benches and, to some extent, on the Liberal Democrat Benches. Far be it from me to pretend to sit in judgment on them in this matter, but I hope that they will accept that here we are dealing with a massive social problem, which has caused much frustration and much unnecessary loss to many people. The losses in financial terms alone must amount to well over £500 million per annum. About 25 per cent of all sales fall through, many on account of gazumping, and there is little that we can do to change that. Even if we adopted a Scottish system of a series of missives, I doubt very much, due to the totally

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different culture relating to conveyancing in England and Wales, whether it would bring about any meaningful change.

Therefore, we are left with a considerable social problem, as I am sure the Conservative Party and the Liberal Democrats accept. What is their solution? Are they prepared to ask the public to consider any alternative here? I say that not in any spiteful way or with a hectoring attitude, but I beg them to consider whether it is necessary to divide the House on this matter. If they do, whether they succeed or not, they will create confusion and uncertainty for the general public. I do not pretend for a moment that the situation is not already tainted by confusion and uncertainty, but they will add to that and I do not think that they will do the British public any service whatever.

Lord Graham of Edmonton: My Lords, I do not think that the House should be under any illusion but that we are facing an attempt by a new boy on the block to enter into the buying and selling of houses, which has been the almost exclusive preserve of a number of vested interests. When we talk of the people who have influence in this matter, we should not forget that estate agents, surveyors and others, whose cosy club has existed for a long time, feel threatened. They are right; they are being threatened.

The Government are accused of doing something, when for years nothing was done directly to tackle a problem that has affected most people—including noble Lords, and I am certainly not an exception—involved in buying or selling a house. Therefore, from my point of view, the Government are to be congratulated on doing something.

The criticism levelled at the Government is that their grand plan of three or four years ago has been watered down. However, they have listened, rejected, changed and consulted, and they have finally come to the conclusion that the only additional procedure in buying and selling a house should be the requirement for an energy performance report. The case for such a report, taking into account the issue of waste, has not been denied. The noble Baroness, Lady Hanham, said, without any caveat, that the report would cost £600, but the cost that I have been given is £300 to £400. She may be right, but so might I. I got my information from a source whose briefing, I am sure, will have reached the noble Baroness. Given that the average cost of buying a house these days is over £200,000, the additional cost of the report—shall we say £400?—is a flea bite. No one will willingly subject themselves to being bitten by a flea; however, if that is what it boils down to, and there is a service, it is a good thing.

We talk glibly about global hostility to the matter among surveyors, estate agents and solicitors, but it is not necessarily so: some surveyors, estate agents and solicitors approve. The argument has rested on the unreadiness of the system to operate. I take the point made by the noble Baroness, Lady Hanham, about defining a four-bedroom house. Yes, there are clever people who are prepared to twist things and to commit subterfuge. I do not just mean estate agents

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or surveyors; some ordinary people will resort to it. If, for the extra cost, this piece of paper is produced, the 1,600 people who are ready now will shortly be increased to 2,000, which is an adequate number, I am told, to deal with that which the order seeks to do.

The legislation is very limited compared to how it was. For the life of me I cannot see why the House is not prepared to give the Government the opportunity to put into practice that which noble Lords have always said they want; that is, to bring down the cost of selling and buying a house. Hitherto, these reports have had to be commissioned by the buyer; in future, they will have to be commissioned by the seller, so the cost to the first-time buyer will be substantially reduced. The noble Baroness, Lady Hanham, shakes her head. She may be able to quote evidence to show that the cost will not fall on the seller but on the buyer. We all know that people buying and selling houses are often in a chain. What you win on one you lose on the other, but as a result the costs will be marginal.

The noble Lord, Lord Elystan-Morgan, made a powerful point about the cost of abortive sales that fall in early on. Hundreds of millions of pounds have been lost because of delay, missed opportunities and so on. The Government—I do not use the words “congratulate” or “persistence”—are seized, as I am, of the need not just to do something, but to do something positive and helpful for people who want to reduce the cost of buying and selling their houses.

I take with a pinch of salt the claim that the whole industry involved in buying and selling houses is opposed to the scheme. I know them well enough to believe that, once the scheme is operating—it has to start—a growing number in the industry will come to the view, “Well, if there is some gravy to be lapped up, I may as well get a little bit of it”. The Minister has my support in her attempt to assist ordinary people to buy and sell their houses as equitably as possible.

Lord Redesdale: My Lords, I promise not to make a Second Reading speech because we are looking at a regulation that is coming in. I am a great supporter of HIPs, not because of what they represent but because they include the EPC. We have discussed that with the Minister. It is an incredibly valuable aspect. Noble Lords on all Benches have said that they support EPCs, which is why no fatal amendments to the Bill have been tabled.

Everybody has mentioned how this debate is being reported. In my local property paper, the Avenues, there was a whole section on how this debate in the Lords would lead to the death of HIPs. That is not the case. We should not forget that this is a non-fatal amendment. If it is carried, HIPs will carry on. Previous votes have led to a delay in respect of most properties until properly trained individuals are ready, but they have delayed only one section. I ask the Minister to make a clear statement that all the other aspects will come into force as the regulations state—for the four-bedroom house, for example. I take issue with the noble Lord, Lord Graham of Edmonton: you do not have to be intelligent to work out what is a four-bedroom house; my seven year-old son could argue the case for what is a four-bedroom

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house. That will change at the end of the year, and all houses will fall under the regulation. All rental property, social housing and businesses will be included.

4.30 pm

We should not underestimate the Government’s achievement in EPCs. They will save millions of tonnes of carbon. Because this has become a heated debate, I take issue with missives that we receive from lobbying organisations. The Royal Institution of Chartered Surveyors is a lobbying organisation, as far as I am concerned, when it sends me unsolicited e-mails—which made me rather annoyed—as if I agreed with every line and iota that it came up with. Members of that organisation are calling for an emergency general meeting to question whether the judicial review is in the interest of all their members. I know that the Minister will talk about the state of the judicial review, but the RICS has some internal issues that it will have to address.

If I were an energy assessor and had paid the RICS to take the qualification, but it then launched a judicial review that meant that I was probably out of a job for the next three or four months, I would be very unhappy.

I have one more issue to raise with the Government. Under EPCs, you can change two things that will change the energy rating of your house: the insulation in your loft and your boiler. Of course, changing a boiler is a major expense. However, the Government could use EPCs to indicate how inefficient a boiler is. If they then state that the boiler is inefficient, energy efficiency credits, which are issued by suppliers, could be used to reduce the amount of gas used by domestic suppliers, which is an obligation on the suppliers. That means that EPCs could be used to reduce the cost of replacing an inefficient boiler with an efficient one. That would be a massive step forward. I am sure that many noble Lords throughout the House, hand on heart, realise that they have tried to eke out the life of a boiler for five or six years past its real date of demise. If those boilers were changed in enough houses around the country, vast amounts of carbon could be saved.

I very much hope that the Minister will consult boiler manufacturers and other organisations to make that happen. It could happen without regulation and would be a real benefit of EPCs. Notwithstanding the real concerns advanced by my noble friend, which we have all shared, about how the measure has been implemented by the Government—I am not blaming the noble Baroness on this, but it has been a long and arduous process—I ask the House to consider that in the vote we are seeing whether we think EPCs are important. Climate change is an issue. One way to address it is through EPCs.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My Lords, I am very grateful indeed for this measured and thoughtful debate on such an important topic. I want to take the House through the changes that we have made since we last debated the issue, in response to the points raised and

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to the consultation and conversations that we have had with stakeholders. I shall try to reassure the noble Baroness that we have done everything that we can to make the introduction of HIPs on 1 August as smooth, robust and certain as possible. That is what we intend to do. I hope that at best I can persuade her not to press her Motion to a vote because arguments have been made for that, but I certainly want to give noble Lords as much information as I think is tolerable to reassure them about what the noble Lord, Lord Redesdale, rightly described as an arduous process, but one that is now in a good and strong position.

It is worth saying that the Prime Minister made clear last week that housing is one of the Government’s top three priorities. An essential part of that process is to ensure that people are able to buy and sell their homes in as open, modern, transparent and, we hope, stress-free a way as possible. On that I am indebted to the analysis given by the noble Lord, Lord Elystan-Morgan, both in the previous debate and today that makes clear how long we have been wrestling with this complex legal situation. We particularly want first-time buyers not to be unduly hindered from entering the market, and we believe that HIPs are an important first step in the process. They will help to end frustration and reduce costs. We remain committed to their introduction, alongside energy performance certificates.

As we have said many times, we believe that HIPs will improve the experience of home buying and selling for consumers by providing them with vital information collected at the start of the process, and for the first time provide them with important information about the energy efficiency of their home. First-time buyers will receive their packs free. It is also right to point out that we have already seen improvements. The price of searches has been driven down and processes are being speeded up. While I talk about it being a first step, we have already seen some changes in behaviour in the market.

The last time we debated HIPs was on 22 May and I updated noble Lords then on the agreement that we had made with the Royal Institution of Chartered Surveyors, brought about by its judicial review against the EPC. I shall come back to that point with an answer to the questions put to me. I also set out our decision to revoke and then lay revised regulations for Parliament to consider. I made clear our intention to roll out HIPs initially for properties of four bedrooms or more. That pragmatic approach was also in part a consequence of the judicial review by RICS and the uncertainty that that had caused among domestic energy assessors in training, who were very reluctant to come forward. Today, as we debate the issue again, I want to explain briefly why we remain committed to both HIPs and EPCs, to tell noble Lords about the progress we have made in meeting the targets we set to achieve a successful rollout, to look at our plans for monitoring and evaluation of quality following the introduction of HIPs, and to dispel a few myths that have been accumulating around the process. Lastly, I want to look at the longer term picture.

Noble Lords have once again expressed their opposition to HIPs in principle, described as cynicism

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by other noble Lords. All I say is that the whole motive behind this long journey has been to increase the transparency and predictability of the process by providing information early on and thus reduce the risk of problems that could be avoided surfacing later, at great cost in time and energy. HIPs will be of particular importance to first-time buyers.

The inclusion of energy performance certificates is an absolutely vital tool in our efforts to tackle climate change. Many noble Lords have argued that HIPs and EPCs can be separated, but anyone who believes that climate change is an urgent threat—the noble Baroness, Lady Hanham, indicated that EPCs are extremely important—would surely support the Government in trying to introduce them as speedily and urgently as possible, and that is what the HIPs vehicle allows us to do.

I cannot give the noble Lord, Lord Redesdale, a birthday present today—I congratulate him anyway—but I will look at his suggestion in a very positive fashion. It is both logical and interesting. If he will leave it with me, I would be happy to take it away. My response to the argument that we are trying to gold-plate the arrangement is that it is not gold-plating to want to move urgently—by sending a signal to homeowners that they can be helped to do something to reduce their costs—to reduce our carbon use and lower the costs of energy. An EPC which is 10 years out of date is not going to influence behaviour and will not cut tomorrow’s costs, which is why we are where we are. I remind noble Lords that carbon from our homes accounts for 27 per cent of all emissions.

Noble Lords have been rightly concerned with the process and the need for the introduction to be as smooth and as predictable as possible. On 22 May we announced that we were committed to re-laying the regulations, carrying on work to increase domestic energy assessor numbers, rolling out a pilot to look at EPCs and social housing, consulting stakeholders and running a consultation with RICS. We have done all those things. We could not have listened harder. Indeed, the noble Baroness, Lady Scott, said at one point that we had listened almost too hard.

We relaid the regulations on 11 June. We gave early notice to the industry to enable a full debate on the policy. The regulations were considered again by the Committee on the Merits of Statutory Instruments, which was supportive of the efforts made by the department in response to concerns both inside and outside Parliament in relation to HIPs, and of the opportunity given for further scrutiny. It welcomed the Government’s response to stakeholders in holding a consultation on the age of the EPC.


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