Twenty-fourth Report
Instruments reported
The Committee has considered the following instruments
and has determined that the special attention of the House should
be drawn to them on the grounds specified.
Home Information Pack (No 2) Regulations 2007
(SI 2007/1667)
Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment) Regulations 2007
(SI 2007/1669)
Summary: In revoking the previous set of Regulations
and in now making the Home Information Pack (No. 2) Regulations
2007, the Department for Communities and Local Government have
responded to concerns expressed both in and outside Parliament.
However, since the Regulations carry forward the 2006 decision
that Home Condition Reports will not be a mandatory element of
HIPs, we continue to have doubts about the extent to which they
will serve the objective of improving the home-buying process.
The Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment) Regulations 2007
provide that, for a transitional period, Energy Performance Certificates
can be up to 12 months old when a property is put up for sale.
We welcome the fact that the Department will consult further on
long-term arrangements.
The HIP duties will now apply from 1 August 2007,
and only to properties with four or more bedrooms. The Department
envisage that further implementation will be through two more
phases, applying the duties in a second phase to three-bedroom
properties, and finally to all properties. The phased implementation
is not achieved by these instruments but by a series of commencement
orders under the Housing Act 2004: the commencement orders are
not subject to parliamentary proceedings. We urge the Government
to report on progress and to afford Parliament the opportunity
again to debate the policy before it is further extended.
Baroness Andrews, Parliamentary Under Secretary
of State, Department for Communities and Local Government, wrote
to the Committee on 15 June to provide more information about
the Regulations; her letter is printed at the Appendix. We also
received submissions from the Royal Institution of Chartered Surveyors,
the Association of Home Information Pack Providers and from Friends
of the Earth, each of which is also printed at the Appendix.
The Home Information Pack (No 2) Regulations 2007
are drawn to the special attention of the House on the ground
that they may imperfectly achieve their policy objectives.
The Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment)Regulations 2007
are drawn to the special attention of the House on the ground
that they give rise to issues of public policy likely to be of
interest to the House.
1. The Department for Communities and Local Government
(DCLG) have laid the Home Information Pack (No 2) Regulations
2007 (SI 2007/1667: "the HIP (No 2) Regulations 2007")[1]
and, in parallel, the Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment) Regulations 2007
(SI 2007/1669: "the EPB (Amendment) Regulations 2007").[2]
An Explanatory Memorandum (EM) and Regulatory Impact Assessment
(RIA) have been provided for both sets of Regulations; a Transposition
Note has been provided for the EPB (Amendment) Regulations 2007.
PREVIOUS REGULATIONS
2. The House will recall that, in March of this
year, DCLG laid the Home Information Pack Regulations 2007 (SI
2007/992) and the Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) Regulations 2007 (SI 2007/991).
The policy intention to have been implemented by those Regulations
was that, from 1 June 2007, a Home Information Pack (HIP) would
have to be produced by the seller of a residential property whenever
that property was placed on the market to be sold; and that such
a HIP would have to include an Energy Performance Certificate
(EPC), providing information about the energy efficiency of the
property.
GOVERNMENT ANNOUNCEMENT - 22 MAY 2007
3. On 22 May, the Secretary of State for Communities
and Local Government announced that the Government would withdraw
the Home Information Pack Regulations 2007. The date for the introduction
of HIPs would be put back to 1 August 2007; and from that date
HIPs, with EPCs, would be required for the sale of four-bedroom
houses (and larger properties). The Government would also carry
out further consultation on implementing HIPs and EPCs, starting
this summer (HC Deb 22 May 2007 col 1107 et seq).
COMMITTEE REPORTS ON PREVIOUS REGULATIONS
4. We brought the Home Information Pack Regulations
2007, and the Energy Performance of Buildings (Certificates and
Inspections) (England and Wales) Regulations 2007, to the special
attention of the House in our 18th Report (HL Paper 92, published
on 1 May). We had received written evidence on the Government's
proposals from a number of stakeholder organisations and had taken
oral evidence from officials in DCLG. We published this evidence
in our Report, in which we commented that the Government had not
been able to convince the principal stakeholders in the housing
market that the proposals were sensible or worthwhile, or likely
to be effective for their declared purposes; and they needed to
do more if the market was to respond positively to this intervention.
5. Baroness Andrews, Parliamentary Under Secretary
of State, DCLG, responded to our Report in a letter of 3 May published
in our 20th Report (HL Paper 102, published on 10 May).
DEBATE ON PREVIOUS REGULATIONS - 22 MAY 2007
6. The Secretary of State's statement of 22 May
was repeated in this House by Baroness Andrews, immediately before
a debate on a motion by Baroness Hanham, which called on the Government
to revoke the Home Information Pack Regulations 2007, to take
account of the Committee's Report, and to delay any further Regulations
until full consideration had been given to the pilot schemes which
were under way, and to representations made by stakeholders and
consumers. The debate went ahead, because at that point the Regulations
were still before the House. Baroness Hanham withdrew her motion
and the Regulations were revoked by the Home Information Pack
(Revocation) Regulations 2007 (SI 2007/1525), laid on 24 May 2007.
Baroness Andrews expressed the hope that the changes announced
in the statement would gain the support of stakeholders while
creating an opportunity for more consultation; the Government
would continue to do all that it could to bring more and greater
clarity (HL Deb, 22 May 2007, col. 604 et seq).
LATEST REGULATIONS
7. The HIP (No 2) Regulations 2007 contain a
range of provisions similar to those in the predecessor Regulations
and, in particular, prescribe the documents to be included in
HIPs and the circumstances in which they are included. The EM
points out that, although the Regulations come into force on 2
July 2007, an order is needed under section 270 of the Housing
Act 2004 ("the 2004 Act") to bring into force the duties
in the 2004 Act to obtain and produce on request a HIP. It adds
that the first of a series of such orders was made on 8 June,
with a date of 1 August 2007 to come into force.
8. The House will wish to know that the order
mentioned is the Housing Act 2004 (Commencement No. 8) (England
and Wales) Order 2007 (SI 2007/1668), which is not subject to
Parliamentary proceedings (and thus falls outside the scope of
our scrutiny and the control of the House). It is this commencement
order which sets the date of 1 August 2007 for the introduction
of HIPs, and which specifies that, at that date, the HIP duties
will apply only in relation to residential properties with four
bedrooms or more.
9. The EPB (Amendment) Regulations 2007 make
amendments to the Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment) Regulations 2007
(SI 2007/991), which have not been revoked. The EM explains that
the main purpose of the amendments is to align requirements in
SI 2007/991 to changes made by the HIP (No. 2) Regulations 2007
and to the postponement of the introduction of the HIP duties.
10. The EM to the EPB (Amendment) Regulations
2007 offers an overview of the latest state of policy: HIPs and
Energy Performance Certificates (EPCs) are to be implemented on
a phased basis, starting with properties of four or more bedrooms,
from 1 August 2007.[3]
To enable a smooth transition, until 31 December 2007 sellers
will be allowed to market their properties as soon as they have
commissioned a pack. For a transitional period EPCs can be up
to 12 months old when a property is put up for sale: the Government
will consult further on long-term arrangements. The implementation
of EPCs on newly constructed dwellings will effectively be phased
where the requirement to have a HIP applies.
CONCERNS EXPRESSED ABOUT POLICY
11. The EM to the HIP (No. 2) Regulations 2007
deals at some length (in paragraphs 7.12 and 7.13) with concerns
expressed about the policy as set out in the predecessor Regulations,
and states that the latest Regulations respond to such concerns.
It includes the following:
"The Secretary of State made a statement to
the House of Commons on 22 May announcing the deferral of introduction
of HIPs as a result of a judicial review brought by the Royal
Institution of Chartered Surveyors (RICS) and a shortage of assessors
available to prepare EPCs. She also announced that the regulations
then before Parliament - the Home Information Pack Regulations
2007 (S.I. 2007/992) - were to be revoked to give Parliament
proper opportunity to consider revised regulations in the light
of the necessary changes."
12. The same EM also acknowledges (in paragraphs
7.14 and 7.15) that on two occasions the Committee has brought
predecessor Regulations to the special attention of the House.
It states that the Department have considered each of the issues
raised in the Committee's 18th Report[4]
and ensured that the revised Impact Assessment takes account of
these concerns.
COMMITTEE'S VIEWS
13. We recognise that, in revoking the predecessor
Regulations and in now bringing forward the HIP (No. 2) Regulations
2007, the Department have responded to concerns expressed both
in and outside Parliament. In repeating the Secretary of State's
statement of 22 May in this House, Baroness Andrews stressed that,
when the new Regulations were laid, there would be ample opportunity
for full Parliamentary scrutiny (HL Deb, 22 May 2007, column 598).
The laying of the Regulations more than six weeks before the summer
recess helps the conduct of such scrutiny.
14. As to the specific concerns which we raised
in drawing the predecessor Regulations to the special attention
of the House, we identified three issues in the conclusions to
our 18th Report:
I) EPCS
15. On EPCs, we said that the Government accepted
that linking EPCs to HIPs as proposed would mean that many EPCs
have to be updated more often than the frequency of 10 years specified
in the European Directive which was being implemented. We added
that the Government had not presented a rationale for this approach
which refuted the criticisms voiced; and so we questioned whether
the Energy Performance of Buildings (Certificates and Inspections)
(England and Wales) Regulations 2007 appropriately implemented
the Directive.
16. At paragraph 7.13 of the EM to the HIP (No.
2) Regulations 2007, the Department address this issue of "gold-plating
the Directive". They acknowledge the considerable concern
in relation to their earlier intention to require EPCs to be no
more than three months old when a property is first put on the
market, as opposed to the maximum of ten years allowed by the
Directive. They stress that the Government still consider that
this is the right approach, "but in response to the RICS
judicial review, the Department has agreed to consult further
on this issue. Ministers will decide whether to make further amendments
to the regulations in the light of the results of that consultation.
In the meantime, the maximum age of an EPC when a property is
first marketed will be increased to 12 months to ensure that no
one is required to produce a second EPC for a property before
the consultation has been completed and decisions have been taken
in the light of the responses made."
17. We welcome this demonstration of the Department's
readiness to respond to concerns. We trust that the consultation
which they will now carry out will allow the issue to be thoroughly
explored with the participation of all interested parties. Pending
the outcome of that consultation and the Department's final decision
on how often an EPC needs to be renewed, we do not at this stage
wish to comment on whether the EPB (Amendment) Regulations 2007,
and the principal Regulations which they amend, serve to implement
European legislation appropriately.
II) HOME CONDITION REPORTS
18. We took a close interest in the decision
implemented through the Home Information Pack Regulations 2007
that Home Condition Reports (HCRs) should not be a mandatory element
of HIPs. We commented that HCRs had been intended as a means of
tackling a prime cause of transaction failures in the home-buying
process, but a policy change in 2006 had meant that the inclusion
of HCRs in HIPs would be voluntary; and we had been told by the
Department that voluntary change had been seen to be not powerful
enough to bring about real improvements in the housing market.
19. The HIP (No. 2) Regulations 2007 carry forward
the decision that HCRs will not be a mandatory element of HIPs.
At paragraph 7.7 of the EM, the Department say that "HIPs
will also make possible the market-led roll out of home condition
reports, which have considerable potential benefits for consumers."
We would comment that making something possible does not mean
that it will happen; and that the evidence presented to the Committee,
not least by the Department, suggests that HIPs without HCRs may
do relatively little to achieve the stated policy objective of
providing consumers with better information at the right time,
in order to improve the speed and certainty of transactions and
to reduce wasted costs.
20. In this context, we also note that, in setting
out the policy's immediate benefits to the home-buying process
(at paragraph 7.4 of the EM), the Department state that "first-time
buyers struggling to get on to the property ladder will receive
[for free] much of the information they currently have to pay
for...". The first phase of implementing the HIP duties
will of course now apply to four-bedroom properties (and larger),
and these are unlikely to be the target purchase for most first-time
buyers.
III) MARKET RESPONSE
21. In our 18th Report, we also concluded that
the Government had not been able to convince the principal stakeholders
in the housing market that their proposals were sensible or worthwhile,
or were likely to be effective for their declared purposes; and
that they needed to do more if the market were to respond positively
to this intervention.
22. It may be that there is growing evidence
from the pilot areas that consumers themselves are responding
positively to HIPs; if so, the Department need to present a proper
analysis of such evidence. We welcome the commitment given in
the EM that, in parallel with the consultation process on EPCs,
the Department will continue its informal and formal consultations
with stakeholders, and we hope that this process will generate
greater consensus on how best to take the policy forward. Until
there is better evidence of such a consensus, however, we must
continue to be sceptical about the prospects for a positive market
response to the HIP policy.
23. We would add that the Department have made
it clear that they envisage that implementation of HIPs will proceed
through three phases: homes with four bedrooms (from 1 August
2007); homes with three bedrooms; and all other homes. The criteria
for rolling out the later phases will be the availability of home
inspectors and domestic energy assessors; and each phase will
be activated by a commencement order.
24. We trust that the ongoing process of consultation
with stakeholders will also influence decisions on when further
phases will be initiated. In particular, however, we urge the
Government to report to Parliament on experience gained in each
phase and to allow further opportunities for debate before the
HIP duties are extended to other properties.
1 SI 2007/1667 is laid under sections 161, 163, 164,
165 and 250(2) of, and paragraphs 2 and 11(b) of Schedule 8 to,
the Housing Act 2004 . Back
2
SI 2007/1669 is laid under section 2(2) of the European Communities
Act 1972 and sections 1(1), 8(6), 35 and 47 of, and paragraphs
1, 2, 4, 7, 8 and 10 of Schedule 1 to, the Building Act 1984. Back
3
Except for any such properties which were built to the standards
contained in part L of the Building Regulations 2000 as it applied
with effect from 6 April 2006. The excepted category will also
be subject to phasing, commencing from a later date than 1 August
2007. Back
4
The 18th Report drew attention to the Home Information Pack Regulations
2007, and the Energy Performance of Buildings (Certificates and
Inspections) (England and Wales) Regulations 2007. Back
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