Fifth Report
Instruments drawn to the special attention
of the House
The Committee have considered the following instruments
and have determined that the special attention of the House should
be drawn to them on the grounds specified.
Home Information Pack (Amendment) Regulations
2007 (SI 2007/3301)
Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment No 2) Regulations
2007 (SI 2007/3302)
Summary: These amending Regulations are intended
to lessen the burden which the requirement for a HIP places on
those marketing a residential property. Comments which we have
received show that practitioners in the housing market are split
in their response to the HIP initiative in general, and the effect
of these Regulations in particular. We consider that it will be
important for the Government to keep the implementation of this
policy under review and to provide full information about the
practical effects of its introduction.
The Home Information Pack (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.
The Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment No 2) 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 (Amendment) Regulations
2007;[1] and the Energy
Performance of Buildings (Certificates and Inspections) (England
and Wales) (Amendment No 2) Regulations 2007.[2]
An Explanatory Memorandum (EM) and Impact Assessment (IA) have
been provided for both sets of Regulations. A Transposition Note
has been provided for SI 2007/3302.
PREVIOUS REGULATIONS
2. This is the fourth occasion in eighteen months
that the Committee have drawn Regulations relating to Home Information
Packs (HIPs) to the special attention of the House:
- in our 39th Report of 2005-06 (HL Paper 214),
we reported on the Home Information Pack Regulations 2006 (SI
2006/1503), which provided that HIPs should include Home Condition
Reports (HCRs) as a mandatory element. At that point, in June
2006, the Government intended to apply HIPs to the sales of all
residential properties from June 2007;
- in our 18th Report of 2006-07 (HL Paper 92),
we reported on the Home Information Pack Regulations 2007 (SI
2007/992) which reflected the Government's decision that HCRs
should not after all be a mandatory component of HIPs. In laying
those Regulations in March 2007, the Government re-affirmed the
date of June 2007 for the introduction of HIPs for the sale of
all residential properties. We considered that, without HCRs as
a mandatory element of HIPs, HIPs might imperfectly achieve their
policy objective;
- in our 24th Report of 2006-07 (HL Paper 129),
we reported on the Home Information Pack (No. 2) Regulations 2007
(SI 2007/1667). These revoked the Home Information Pack Regulations
2007. In May 2007, the Government had announced that HIPs would
be introduced in three phases. That phased implementation has
meant that HIPs applied to four-bedroom properties (or larger)
from 1 August, and to three-bedroom properties from 10 September;
and that they will apply to all properties from 14 December 2007.
LATEST REGULATIONS
3. The Home Information Pack (Amendment) Regulations
2007 (SI 2007/3301: "the amending Regulations") make
two changes to the Home Information Pack (No. 2) Regulations 2007
(SI 2007/1667: "the principal Regulations").
4. First, the amending Regulations extend the
temporary first-day marketing provision, whereby marketing of
a property may begin without a HIP where all the documents required
for inclusion in the HIP have been commissioned and are expected
to arrive within 28 days. In the EM, DCLG state that "in
order to provide a sufficient bedding-in period for the industry
and consumers involved in transactions with those properties,
the decision was made to extend the temporary period until 1 June
2008".
5. Second, the Regulations introduce a temporary
provision on leasehold. The principal Regulations require a number
of leasehold documents to be included in the HIP. The amending
Regulations provide that, until 1 June 2008, while it will be
mandatory that the lease is included in the HIP, it will no longer
be obligatory that all other leasehold documents required by the
Regulations should be in the HIP. The documents in question are
specified in paragraph 1 of Schedule 5 to the principal Regulations,
and include property management rules, summaries of service charges,
and requests for payments towards matters such as ground rent
and building damage insurance.
6. The principal Regulations require that HIPs
must include an Energy Performance Certificate (EPC). For a transitional
period EPCs can be up to 12 months old when a property is put
up for sale: the Government have been consulting on long-term
arrangements. The Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) (Amendment No 2) Regulations
2007 (SI 2007/3302) make no change to this position, but they
do put back the date at which EPCs must be provided for newly
constructed dwellings from 1 January 2008 to 6 April 2008 (as
well as changing other implementation dates).
VIEWS OF INTERESTED PARTIES
7. In our 18th Report of 2006-07, dealing with
the Home Information Pack Regulations 2007 (SI 2007/992), we published
written evidence that we had received from representatives of
a number of the interested parties with whom the Government had
worked closely in developing HIP policy. We concluded that the
Government had not been able to convince the principal stakeholders
in the housing market of the merits of their proposals; and that
more needed to be done if the market was to respond positively
to the HIP initiative.
8. DCLG have maintained a Stakeholder Advisory
Panel, and we invited the non-Government members of that Panel
again to submit written evidence on these amending Regulations.
The evidence we have received is printed at Appendix 1. It is
clear that views are still divided:
- the Association of Home Information Pack Providers
"commends ... the benefits of the amendment regulations in
assisting the objective of a smooth implementation of HIPs";
- the Council of Property Search Organisations
have said that the "extension of the First Day Marketing
period is essential to allow additional time for those providing
information in HIPs, to do so efficiently and without delay";
- WWF have said that they have "consistently
called for a timeframe to allow for the earliest possible introduction
of EPCs across all UK homes and buildings and therefore welcomed
the recent announcement that one and two bedroom homes will be
eligible for an EPC from 14 December onwards";
- the Council for Mortgage Lenders have commented
that they "have already predicted a decline in the number
of transactions next year because of market conditions, and rolling
out HIPs when property sales are falling means that we will never
know their true impact";
- the Law Society have commented that "at
the present time HIPs add a tier of cost to the house buying process
with no benefits to the consumer ... [with] the limited level
of documentation available in the HIP, it is unlikely that this
objective [to provide consumers with better information] will
be achieved ... [extending the temporary first day marketing provision]
is a sensible move insofar as it will allow estate agents to respond
to sellers' requirements to market property at the earliest possible
moment";
- the National Association of Estate Agents have
welcomed the fact that the Government have extended "first
day marketing" and, on a temporary basis, required only a
lease to be included in the HIP, but commented that "the
recognition of these problems, which are unlikely to find a quick
solution, does of course mean that the resultant HIP is even less
fit for purpose and does not meet the original reasons for introduction";
- the Royal Institution of Charted Surveyors have
said that "the requirements to produce leasehold information
have now been reduced to the bare minimum as the government has
at last acknowledged fundamental problems in the time and cost
taken to produce this information. We are extremely concerned
that, in the Regulatory Impact Assessment accompanying these Regulations,
there is no assurance as to the government's intention or ability
to resolve these problems within the six months provided by the
Regulations".
We have also received a memorandum from Mr. Michael
Garson.
MINISTERIAL CORRESPONDENCE
9. On 22 November 2007, Baroness Andrews, Parliamentary
Under-Secretary of State, DCLG, wrote to us to set out the Government's
plans to roll out HIPs to the rest of the housing market from
14 December. The letter is reproduced at Appendix 1. As well as
explaining the two changes to the principal Regulations made by
the amending Regulations (see above), Baroness Andrews referred
to an economic analysis of the impact of HIPs on the market, which
can be accessed on the Department's website;[3]
and she mentioned the Department's continued dialogue with industry.
10. After the amending Regulations were laid,
we sought additional information from the Department on issues
identified in our 24th Report of Session 2006-07, namely:
- the Department's intentions in the light of consultation
on the linking of EPCs to HIPs;
- the extent to which monitoring of the housing
market since August 2007 had shown that HCRs had been voluntarily
included in HIPs;
- whether continuing consultation with industry
had shown that stakeholders who had previously expressed reservations
about HIPs had changed their views in the light of developments
since August;
- whether the trials in pilot areas which the Department
had previously mentioned had been concluded, and if so what lessons
had been learnt from them.
11. Baroness Andrews has written a second letter
to us (also printed at Appendix 1) in which she refers to these
issues:
- consultation on the validity of the EPC is to
be published shortly;
- monitoring of the housing market since August
suggests that there has been a slow uptake of HCRs;
- there is still a variety of views among stakeholders
in relation to HIPs; and
- while the trials have now concluded, full conclusions
will only be available once transaction completions occur, and
the Department are unlikely to receive a final report until at
least the end of the year.
CONCLUSION
12. The objectives of the Government's HIPs policy,
as stated in the EM to the principal Regulations, are to provide
consumers with better information at the right time in order to
improve the speed and certainty of transactions and reduce wasted
costs, and to reduce the carbon emissions that come from homes,
which currently account for 27% of UK emissions. Within this policy
framework, the amending Regulations serve to facilitate extending
HIPs to all properties, by reducing the burden of some of the
requirements.
13. In our 18th and 24th Reports of Session 2006-07,
we concluded that the HIPs Regulations might imperfectly achieve
their policy objectives. We did so because of the Government's
decision that HCRs should not be a mandatory element of HIPs,
and because of widespread criticism of the Government's proposals
voiced by key players in the housing market.
14. These amending Regulations provide for a
further reduction in the information required in HIPs, notably
by no longer requiring that certain leasehold documents are obligatory
elements. We note that views among stakeholders continue to be
divided, both about the benefits of this change to the requirements,
and about HIP policy generally.
15. We had hoped that the Government would have
drawn on the lessons of the trials of HIPs in pilot areas (described
in paragraph 7.23 of the EM to the principal Regulations), and
presented an analysis of these to Parliament, before proceeding
with the full national roll-out of the policy. Baroness Andrews'
letter of 4 December makes it clear that national roll-out will
have been effected before conclusions can be drawn from the trials.
16. We believe that the House will be interested
to note that the Government have seen the need to bring forward
the amending Regulations in order to lessen the burden which the
requirement for an HIP places on those marketing a residential
property. The comments which we have received from interested
parties show that practitioners in the housing market are split
in their response to the HIP initiative in general, and the effects
of these Regulations in particular. Given this state of opinion,
we think that it will be important for the Government to keep
the implementation of this policy under review and to provide
full information about the practical effects of its introduction.
1 Under sections 163 and 250(2) of the Housing Act
2004. Back
2
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
Home Information Packs Housing Market Analysis (November 2007):
see:
http://www.communities.gov.uk/documents/housing/pdf/556789
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