B. Home Information Pack (Amendment)
Regulations 2008 (SI 2008/572)
Summary: These Regulations introduce a requirement
for a Home Information Pack (HIP) for a new home to include information
about sustainability; and they extend until 31 December 2008 the
provision that allows for insurance to be used to cover gaps in
searches data in defined circumstances.
The Government have now published the final report
of the trials of HIPs in pilot areas. The findings in that report
raise questions about the extent to which the secondary legislation
on HIPs has delivered the objectives the Government set for it.
Against this background, it is important that any additional information
that is included in HIPs, notably about sustainability, is presented
in a readily understandable and useful way.
The Home Information Pack (Amendment) Regulations
2008 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.
19. The Department for Communities and Local
Government (DCLG) have laid the Home Information Pack (Amendment)
Regulations 2008 under sections 163 and 250(2) of the Housing
Act 2004. An Explanatory Memorandum (EM) and Impact Assessment
(IA) have been provided.
PREVIOUS REGULATIONS
20. This is the fifth occasion since 2006 that
the Committee has drawn Regulations relating to Home Information
Packs (HIPs) to the special attention of the House.[5]
Most recently, we reported on the Home Information Pack (Amendment)
Regulations 2007 (SI 2007/3301) in our Fifth Report of the current
Session. SI 2007/3301 made two changes to the Home Information
Pack (No. 2) Regulations 2007 (SI 2007/1667: "the principal
Regulations"): it extended to June 2008 the temporary first-day
marketing provision;[6]
and it provided that, until June 2008, while it continued to be
a mandatory requirement that the lease should be included in the
HIP, it would no longer be obligatory that all other leasehold
documents required by the Regulations should be in the HIP.
21. In our comments on SI 2007/3301, we noted
that those Regulations provided for a further reduction in the
information required in HIPs; and also that views among stakeholders
continued to be divided about the benefits of this change to the
requirements, and about HIP policy generally.
22. SI 2007/3301 came into force on 14 December
2007, which was the date on which the Government applied the HIP
requirements to all homes placed on the market. In our Fifth Report,
we said that we had hoped that the Government would have drawn
on the lessons of the trials of HIPs in pilot areas (carried out
in 2006-07), and presented an analysis of these to Parliament,
before proceeding with the full national roll-out of the policy.
However, we received a letter of 4 December from Baroness Andrews,
Parliamentary Under-Secretary of State, DCLG, which made it clear
that national roll-out was to be effected before conclusions could
be drawn from the trials.
LATEST REGULATIONS
23. The Home Information Pack (Amendment) Regulations
2008 (SI 2008/572: "the 2008 amending Regulations")
make further changes to the principal Regulations:
they introduce a requirement for a HIP for a new
home to include information about sustainability. This may take
the form of a "sustainability certificate" issued under
the Code for Sustainable Homes ("the Code") which has
been developed for DCLG;
they extend until 31 December 2008 the provision
that allows for insurance to be used to cover gaps in searches
data in defined circumstances.
24. Under the principal Regulations,[7]
HIPs are required for all homes when placed on the market, and
HIPs are required to include an Energy Performance Certificate
(EPC), an assessment which provides key information about the
energy efficiency of the home. The 2008 amending Regulations add
sustainability information to the HIP requirements for new homes.
The requirement for sustainability information will be met by
a certificate stating whether or not a home has been assessed
against the Code; this can take the form of either a "Code
certificate" or a "nil rated certificate".
25. The preparation of EPCs falls to Domestic
Energy Assessors to complete. Where a Code certificate is requested,
this will be produced separately, by Code assessors. The EM states
that certificates must be issued by an approved Code assessor.[8]
The EM offers the following explanation of the interaction between
EPCs and Code certificates:
"EPCs cover energy performance whereas the Code
covers nine areas of sustainability. The energy rating of a home
that has achieved 4 stars will have an energy performance equivalent
to EPC band A. A home which achieves 5 or 6 Code stars exceeds
the maximum EPC rating. The EPC chart rating is reproduced on
the final stage Code certificate. Both the EPC and Code energy
components use the same calculation methodology and the Code assessor
will use the EPC calculation (produced by an EPC assessor) for
the Code energy assessment."
26. The EM also explains that, in consultation
on the Code during summer 2007, views were sought on linking the
Code to HIPs; that there was strong support for ensuring that
buyers of new homes were given more information about the sustainability
of new homes; and that the majority of respondents agreed that
the HIP should be the mechanism to give buyers such information.
It comments that "the inclusion of sustainability information
in the HIP should encourage buyers to demand, and developers to
build, more sustainable homes."
27. We note the support expressed for sustainability
information to be included in HIPs. We also note, however, that
evidence from the report of the HIPs trials (see below) suggests
that the material set out in EPCs exerts limited influence over
home-buyers. This underlines the importance of ensuring that any
further information, i.e. on sustainability, is both useful and
presented in a way that is readily understood by users of HIPs.
REPORT OF TRIALS OF HIPS IN PILOT AREAS
28. On 6 March 2008, the Minister for Housing
and Planning made a Written Statement about the 2008 amending
Regulations,[9] which said,
among other things, that "with EPCs and the new rating against
the code for sustainable homes all home buyers will benefit from
information about the costs of running their home and their environmental
impact."
29. The Minister also announced the publication
of the final report of the trials of HIPs in pilot areas ("the
trials report"),[10]
and commented that "this shows that most participants were
satisfied with their HIP, and that buyers were beginning to act
on energy ratings." We have also been interested in this
report, as we indicated in our comments on the Home Information
Pack (Amendment) Regulations 2007 earlier this year.
30. 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.
31. Chapter 1 of the trials report, entitled
"Does the HIP improve the home buying and selling process?",
is relevant to the first of these objectives. In particular, section
1.8 deals with overall satisfaction with the buying and selling
process. We were struck by the following findings, based on questions
put to sellers and buyers in the trial areas:[11]
"Sellers were more optimistic about the effect
of the HIP on the efficiency of the selling process. When they
first marketed their property with a HIP, more than half (56%)
expected that the HIP would make the selling process more efficient
and less than one-third (30%) disagreed. After having gone through
the entire selling process, however, impressions of the capacity
of the HIP to make the process more efficient was muted, with
fewer than a third of sellers agreeing that it had done so (29%
of those who sold their property agreed it had made the process
more efficient, and 17% of those whose property was still on the
market agreed)."
32. The trials report also found that 58% of
buyers who had seen their HIP did not think that it had speeded
up the buying process (while 20% agreed that it did), and that
41% of buyers did not agree that the HIP had made the selling
process more efficient (while 37% did agree).
33. In short, among consumers with direct experience
of the selling and buying of homes in the trial areas, fewer than
3 in 10 of sellers who completed the sale of their property thought
that the HIP had made the process more efficient, and fewer than
4 in 10 of buyers held this view. For the majority of both sellers
and buyers in the trial areas, it appears that HIPs did not deliver
the efficiency which is implicit in the first objective ascribed
to the policy by Government.
34. Chapter 3 of the report, entitled "How
can the impact of Energy Performance Certificates be maximised?",
is relevant to the second of the specified objectives. It includes
the finding that over half of buyers who saw their HIP agreed
that the HIP helped them know what they need to do to make their
property more energy efficient. However, the report also states
that sellers were unlikely to act on the information provided
in the EPC prior to or during marketing; that very few buyers
felt that an EPC would impact on their decision to buy (though
they might use it to negotiate on price); and that only 32% of
buyers said that they planned to undertake at least one of the
recommendations made in the EPC. At least in the trials, this
suggests that EPCs are falling short of their potential for improving
energy efficiency.
CONCLUSIONS
35. It is helpful that the Government have now
published the final report of the trials of HIPs in pilot areas,
albeit some three months after deciding to extend the requirements
for HIPs to all homes. As noted above, the findings in that report
raise questions about the extent to which the secondary legislation
on HIPs which has passed through Parliament has delivered the
objectives which were identified for it. Against this background,
it is important that any additional information that is included
in HIPs, notably about sustainability, is presented in a readily
understandable way.
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