SECTION 138: IMPOSITION OF CONDITIONS.

HC Deb 11 May 2004 vol 421 cc215-31

1. `(1) A potential buyer who has made a request to which section 138(1) applies may be required to comply with either or both of the following conditions before any copy is provided.
2. (2) The potential buyer may be required to pay a charge authorised by section 138(7).
3. (3) The potential buyer may be required to accept any terms specified in writing which—
   1. (a) are proposed by the seller or in pursuance of his instructions: and
   2. (b) relate to the use or disclosure of the copy (or any information contained in or derived from it).
4. (4) Such a condition is only effective if it is notified to the potential buyer before the end of the period of 14 days beginning with the day on which the request is made.
5. (5) Where the potential buyer has been so notified of either or both of the conditions authorised by this section, the permitted period for the purposes of section 138 is the period of 14 days beginning with—
   1. (a) where one condition is involved, the day on which the potential buyer complies with it by—
      1. (i) making the payment demanded, or
      2. (ii) accepting the terms proposed (or such other terms as may be agreed between the seller and the potential buyer in substitution for those proposed),
      as the case may be; or
   2. (b) where both conditions are involved, the day (or the later of the days) on which the potential buyer complies with them by taking the action mentioned in paragraph (a)(i) and (ii).'.—[Keith Hill.]

Brought up, and read the First time.

Keith Hill

I beg to move, That the clause be read a Second time.

Madam Deputy Speaker

With this it will be convenient to discuss the following: New clause 27—Incomplete home information packs— 'A property may be marketed with an incomplete Home Information Pack in circumstances where reasonable efforts have been made to obtain the missing information.'.

New clause 32—Regulation of estate agents—

1. '(1) The Secretary of State shall by regulations set up a mandatory licensing scheme for persons engaged in estate agency work in relation to Home Information Packs to ensure that such persons satisfy minimum standards of competence.
2. (2) The regulations shall specify a degree of practical experience which is to be taken as evidence of competence and, without prejudice to the generality of subsection (1) above, the regulations shall also—
   1. (a) prescribe professional or academic qualifications which shall also be taken to be evidence of competence;
   2. (b) designate any body of persons as a body which may itself specify professional qualifications the holding of which is to be taken as evidence of competence;
   3. (c) make provision for and in connection with the establishment of a body having power to examine and inquire into the competence of persons engaged or professing to engage in estate agency work; and
   4. (d) delegate to a body established under paragraph (c) above the powers of the Secretary of State with respect to the matters referred to in paragraph (a) above.'.

Government amendments Nos. 81 and 82.

Amendment No. 88, in clause 137, page 94, line 21, leave out from beginning to 'have' and insert— `As a matter of voluntary discretion, a person may'. [R] Relevant registered interest declared.

Amendment No. 110, in page 94, line 23, after '143', insert— `unless the property is marketed as being sold without a home information pack'.'

Amendment No. 89, in page 94, line 23, at end insert— `(1A) The seller, when marketing the property, is obliged to specify whether or not a home information pack is to be provided'.

Amendment No. 90, in page 94, line 24, leave out subsection (2).

Amendment No. 109, in page 94, line 30, at end insert— `()the seller markets the property himself'.

Amendment No. 111, in page 94, line 30, at end insert— `(c) the seller hay indicated that the property is to be sold without a home information pack'.

Amendment No. 91, in clause 138, page 94, line 33, after 'which,' insert', where available,'.

Government amendments Nos. 83 and 84.

Amendment No. 112, in page 95, line 10, leave out paragraph (c).

Government amendment No. 85.

Amendment No. 113, in clause 144, page 99, line 3, at end insert— '(aa) for ensuring that members of the scheme are independent'

Amendment No. 114, in page 99, line 4, leave out `suitable' and insert adequate and appropriate'.

Amendment No. 115, in page 99, line 10, at end insert— `()for sellers, buyers and lenders to be entitled to bring proceedings in respect of a home condition report upon which they have relied in any transaction'.

Amendment No. 92, in page 99, line 16, at end insert— '(8) A responsible person will be exempt from the requirement to provide a Home Condition Report in the following circumstances—

1. (a) the sale of a new home provided that it is registered with a warranty provider designated by the Secretary of State,
2. (b) the resale of a new home where the warranty cover remains in force,
3. (c) the transfer of ownership by a developer of a new home to another company prior to marketing the property to the public where the company assuming ownership is registered with a warranty provider designated by the Secretary of State.'.

Amendment No. 93, in page 99, line 18 leave out clauses 145 to 149.

Government amendments Nos. 86 and 44 to 46.

Amendment No. 133, in clause 209, page 155, line 25, at end insert 'or (d) any regulations under Part 5.'.

Amendment No.131, in clause 226, page 163, line 17, leave out '153'.

Amendment No.132, in page 163, line 38, leave out '(other than section 153)'.

Keith Hill

I rise with a degree of embarrassment, Madam Deputy Speaker, because I have lost my place, and I feel that the House requires an explanation—[Interruption.] The Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Pontefract and Castleford (Yvette Cooper), has rescued me, and I am now in a position to commend Government new clause 13 to the House.

The Government amendments are designed to ensure that the home information pack proposals are as effective as possible, without interfering more than is necessary with the rights of sellers, although I fear that some hon. Members think that the Bill already interferes excessively. However, I assure the House that part 5 of the Bill is absolutely necessary if we are to improve the home buying and selling process in England and Wales, which is currently shambolic.

Clause 150 currently provides that the Secretary of State will identify the situations in which the use of information in the pack is restricted. New clause 13 replaces that with a provision allowing sellers themselves to identify conditions on the use and onward disclosure of information supplied in the pack. In practice, however, sellers and agents who have gone to the trouble and expense of compiling a pack are likely to want to use it to maximum effect by making it available to potential buyers without imposing conditions, unless, for example, they are a celebrity who wants to prevent the media from getting hold of it.

Under new clause 13, sellers and their agents would still need an HIP and to provide a copy to trading standards officers on demand. Sellers and agents can already refuse to supply a copy of the HIP to any person to whom the seller is not prepared to sell or who does not appear to be a genuine buyer. New clause 13 will not add restrictions to access by potential buyers; it just allows conditions to be attached by the seller to the use and onward disclosure of information in the pack. We see no reason to qualify or restrict the conditions that may be imposed, and there seems little point in doing so, bearing in mind that the seller could simply refuse to supply a copy of the HIP on the grounds that they would not sell the property to the person in question.

Mr. Edward Davey

Will the Minister explain how the new clause will enable the seller or the seller's agent to identify a person who asks for a HIP?

Keith Hill

Again, the hon. Gentleman must forgive me, because I did not catch the entirety of his question. Will he repeat it?

Mr. Davey

By all means. How will the new clause enable a seller or a seller's agent to be certain of the identity of the person to whom the HIP is being given? Part of the concern is that people—possibly journalists—who want a scoop on, for example, Posh and Becks, might go round estate agents asking for particulars. How will the new clause deal with that aspect of the problem?

Keith Hill

If the hon. Gentleman will forgive me, we hope to come on to that exact point in later exchanges.

Government amendment No. 86 removes clause 150. Government amendment No. 81 is a drafting amendment that ensures that clause 136 is consistent with the idea that the duties set out in clauses 137 to 139 continually apply while a person is the responsible person, and Government amendment No. 82 permits exceptions to that continual duty. For example, clause 138 only creates a legal duty in relation to a particular request, and the amendment ensures that clause 136 is consistent with that approach. Amendment No. 83 is needed to ensure that clause 138(2) is consistent with clause 149(5). As currently drafted, clause 138(2) requires a responsible person to supply copies of the documents that are in the HIP on the date that the request is made.

Clause 149 gives a right to bring legal action for costs against the responsible person if the information that is supplied in the pack is not what is in the home information pack on the date the pack is supplied. It is important that the two duties match up and vital that buyers get the most up-to-date version of the pack.

3.45 pm

Clause 138 sets out some circumstances in which the responsible person may turn down a request for copies without breaching any duty. Amendment No. 84 makes it clear that the responsible person has 14 days to establish whether, on reasonable grounds, they are entitled to turn down a request.

Amendment No. 85 is a drafting amendment that is consequential on new clause 13. Clause 138(8) provides that the period allowed to provide a copy of the pack is 14 days from the date on which the request is made. The amendment makes it clear that that is subject to any extension of that period arising where conditions have been imposed under new clause 13. Clause 138(8A) provides that the duty to provide a copy of the pack ceases when the property is taken off the market or sold before the end of the 14 days. Amendment No. 85 makes it clear that a person will not breach any duty if, for example, he fails to provide a copy of the pack when he has already agreed to sell his house to another person.

Mr. Syms

This important part of the Bill remains controversial among Conservative Members and others, so I suspect that it will lead to a vote. If we catch your eye, Madam Deputy Speaker, we shall want to move amendment No. 88, which would make the provision of a home information pack voluntary, because, having listened to all the arguments in Committee, we are still unconvinced about the scheme's benefits. If it was such a good idea, the industry would adopt it anyway, but imposing it will add substantially to the costs faced by home buyers and may well slow the process down, not speed it up. We were told in Committee that the cost of a home information pack would be about £600, but the bodies to which I have spoken suggest that that would be a minimum amount and that the real cost would quickly move closer to £800 or £900—perhaps even £1,000. That would be a comparatively small cost for the owner of a £1 million property in Chelsea, but a substantial burden on the owner of a home worth £30,000 or £40,000 in the midlands or the north. The scheme will create real problems, especially in areas of low demand.

Mr. David Kidney (Stafford) (Lab)

But does the hon. Gentleman agree that most of those costs are already incurred in today's market, the only difference being that the buyer pays them, not the seller?

Mr. Syms

I agree that many of the costs are already imposed, but they usually fall due only when the house is sold, whereas the costs involved in this pack will be incurred when the house goes on the market. Although there is of course no guarantee that it will eventually sell, somebody with a house worth, say, £40,000 in an area of low demand will have to meet the cost at some point—possibly up front, as suppliers of the packs may demand in areas where they have less confidence that the home will be sold. The danger is that those who can ill afford it will have to pay those who have provided the information without the guarantee that they will eventually sell their home. That may be a very material feature when people decide whether they want to put their house on the market—or, indeed, to test the market by putting their house with an estate agent, as many people do in the current conditions. Now, people will be able to test the market only by incurring costs of £600, £700 or £800.

Bob Spink (Castle Point) (Con)

Does my hon. Friend agree that his analysis, which I believe to be correct, leads to the conclusion that fewer people will put their houses on the market, which means that supply will be restricted, thus driving up house price inflation?

Mr. Syms

There is a risk of that happening. Indeed, the Minister will need to reassure the House on a number of issues in regard to this project, including the shelf life of a home information pack. Most of the professional bodies to whom I have spoken believe that, following the process of producing the pack and the home condition report, its shelf life would probably be six months—certainly for the home condition report. If a house did not sell, there might therefore be further costs involved in updating aspects of the pack.

We also heard extensively in Committee about the problem of the severe shortage of surveyors, with perhaps 9,000 to 10,000 being needed. Between now and 2006–07, when the scheme will be introduced, substantial efforts will have to be made by all the relevant professional bodies and by the building industry to produce the number of people necessary to undertake the surveys involved. We all get frustrated by the fact that transactions in the housing market sometimes do not proceed as rapidly as they should. I suspect that the answer is more to do with technology than with change, and I pay tribute to the hon. Member for Stafford (Mr. Kidney), who raised these issues in Committee. We had some good debates about how nonpaper-based information could be used to speed up the housing market. My colleagues and I are not convinced that a home information pack is the answer.

As I understand it, if someone goes into an estate agent, they will initially get the details of the property. If, having looked at them, they considered themselves a potential buyer, they would ask the estate agent if they could view the home information pack. Under new clause 13, which the Minister introduced, it would need to be supplied within 14 days, and would possibly be subject to a charge of to some kind of legal agreement or conditions, so that a degree of confidentiality could be obtained regarding the information.

I presume that, as the person would still be only a potential buyer at that point, the costs incurred under the new clause would be the costs of printing off and sending the information, and that the full cost of producing a home information pack would be charged only when someone had actually undertaken to buy a property and signed a contract. I presume that the full cost would be met only at that point. So, when new clause 13 states that the

potential buyer may be required to pay a charge authorised by section 138(7)", I presume that that refers only to an administrative charge for supplying the information to potential buyers.

Perhaps the Minister can tell the House what has been put down in the Bill as a reasonable charge. At the moment, estate agents provide a nice picture of the property and its details free. No doubt, if a prospective buyer were a little more serious and wanted to view the property, they would ask for the home information pack, and the issue of a charge would arise. Some estate agents might decide to accept that cost as part of their overheads because they wanted to sell the property. Indeed, some owners might decide to carry the cost of printing off and sending out the details because they were desperate to sell. However, under new clause 13, it looks as though an estate agent could levy a charge for the provision of this information.

My concern is that estate agents could charge rather more substantial sums than is envisaged by the Government. No figure has been discussed in relation to the provision of this information to potential buyers, as opposed to the actual buyer. Will the Minister give the House an indication of what such a charge might be? Estate agents have to run their offices, pay their staff, and hold and print the information, and I can envisage some of them providing the information on a paper-based system and having to charge a potential buyer £30 to £40 for it. How will that impact on the way in which the market works?

I would therefore like to hear more about new clause 13. In Committee, we did not really talk about the charge. We talked about the main buyer and the main overall costs. The Minister listed specific aspects of the home information pack and stated what he believed that the charge would be. As I said earlier, he also disputed that it would be more than £600. However, if estate agents or those selling homes are allowed to charge a fee purely for printing a document, putting it in a glossy brochure and sending it through the post—perhaps registered delivery if they do not want the information to be publicly available—the charge under new clause 13(2) could be substantial. How would that impact on the way in which the market works?

I am sorry to say that the Minister's most persuasive and articulate arguments in Committee did not persuade my hon. Friends or me that the new clause was the best way forward. At the appropriate point, we may seek your permission, Madam Deputy Speaker, to put amendment No. 88 to the vote so that hon. Members can express how they feel. We believe in voluntary not compulsory procedures. If the market works and the pack is as big an asset as the Government believe, I am sure that the industry will pick it up as a voluntary option, which does not have to be imposed by central Government diktat.

Mr. Betts

I want to speak about new clause 32, which would introduce a scheme to license estate agents. The home information pack is a major regulation issue and I must admit that when I first heard about it and we considered it in the Select Committee on the Office of the Deputy Prime Minister, I was mildly sceptical about whether it would improve the process of selling and buying homes. Such is the power of the Minister's persuasive talents that I came round to the view that it is generally a good scheme and should be supported. I am sure that he will think about my persuasive talents when he decides to support new clause 32.

The Government are committed to a major item of regulation that will clearly formulate the way in which houses are bought and sold in this country. As part of that process, solicitors will perform their traditional conveyancing role. Of course, they have to be qualified and they are regulated in a specific way. The compulsory home conditions survey that we are introducing is also subject to regulation and the inspectors who carry out the surveys must be qualified for the job. There is an issue about training, which the hon. Member for Poole (Mr. Syms) mentioned, and the Government must tackle that to get the scheme right.

As public representatives, we have some duty to safeguard people from their worse follies. Two thirds of people buy a property without a proper home conditions survey. That is a bit silly and it is right for us to protect them from the mess into which they can get. That is one of the reasons for my support of the proposal for the home information pack.

However, although a series of professionals engaged in the process will be subject to licensing, regulation and the need for qualifications, the group of individuals who put the pack together, formulate and produce it will be completely unregulated. Any individual can walk in off the street, rent a property on a short-term lease, then stick a notice outside stating, "We are Rip-off and Folly, local estate agents. Come and sell your house through us." They would be entitled, with no controls, to formulate and produce a home information pack, which is subject to legislation and regulation. That is a glaring anomaly. The set of individuals who have to bring together the whole regulated process and will probably be paid more than anyone else for their endeavours—some people may not always perceive them as endeavours—will remain unregulated.

The BBC's "Brassed Off Britain" andWhich?, the Consumers Association publication, have undertaken work to examine the current position. A survey was conducted into buying and selling homes in this country. It showed that 1.8 million homes are bought and sold every year and that fewer than half the people polled were satisfied with the service that they received from estate agents. That is probably not surprising. Over two thirds thought that estate agents frequently gave misleading information about their properties and 82 per cent. thought that all estate agents should be trained. It does not seem unreasonable to insist that those who do that job should be trained.

People were very concerned that those who would do the home conditions survey should be trained. I think those who would produce the sellers pack should be trained as well, and that they should have a professional qualification. Two thirds thought that the Government should license estate agents. That view, I think, would be fairly well reflected among Members of the House if they were asked to give their opinion based on their own experience.

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I do not want to imply that every estate agent does a bad job, but we should go and talk to the better estate agents—the ones who have a reputation to think about—as they also would welcome a licensing arrangement, because it would lift the standard of their industry and bring a new respect to it. Such an arrangement would also mean that the rip-off merchants and the cowboys could not do a bad job and give the whole of estate agency a bad name. Many of the good estate agents would welcome my proposals.

There is, of course, an ombudsman for estate agents. The problem there, however, is that only a third of estate agents belong to the scheme. While someone who is selling a home can decide to go to an estate agent who is a member of that scheme—I certainly recommend it—people who want to buy a particular home that they are interested in cannot choose to go to a member of the scheme because the agent for the property will already have been appointed by the seller. That is another flaw.

In the meantime, the Minister could easily decide that all estate agents must become a member of the ombudsman scheme. That would be a step in the right direction, but it would not be perfect because, essentially, an ombudsman scheme is about sorting out problems after they have occurred. However, a proper system of regulating and licensing estates agents, and ensuring that they are trained, would try to deliver a better service from the beginning and prevent problems from occurring in the first place.

Mr. Simon Thomas (Ceredigion) (PC)

I want to make one point that I hope the hon. Gentleman accepts. It is not true that all estate agents are not trained or are not professionals in some way, shape or form. Many estate agents, particularly in rural areas, are chartered surveyors as well. Therefore, they have that other aspect to their work.

I agree with the hon. Gentleman in this regard: if we are to have compulsory home information packs, the buyer and the seller need some assurance on the contents of those packs. Most people will still trust the estate agent to put the pack together, but if it contains a fault they will have no comeback on those estate agents, unless they belong to the scheme to which he has referred. He is on the right track there.

Mr. Betts

I thank the hon. Gentleman for that point, with which I agree in general. Indeed, I had a phone call from the Royal Institution of Chartered Surveyors the other day, saying that it generally supports the licence scheme as well. It needs to give that professionalism and certainty to the service being delivered.

I put it to the Minister that there is a difference now that we are to have the home information pack. The public will believe that, because the Government are insisting on the pack, it somehow has Government approval behind it. If the people who are formulating the pack and pulling it together are not necessarily trained—some may be, some may not be—not necessarily qualified; subject to no proper controls and no proper regulation; and not necessarily part of an ombudsman scheme, the Government could be the ones who get blamed in the end for the deficiencies of the service.

Mr. Alan Hurst (Braintree) (Lab)

My hon. Friend may realise that estate agencies often contain within their partnership chartered surveyors, who may well be the same people who draw up the home survey report. There is an inherent conflict of interest from which the purchaser—now called the buyer—may well suffer.

Mr. Betts

That is another fair point that needs to be sorted out. It shows again why we ought to have clear regulations laid down so that the public understand what is expected and required of the individuals who engage in this process on their behalf.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con)

I declare an interest as a fellow of the Royal Institution of Chartered Surveyors. Becoming a chartered surveyor involves a minimum of four years' training. In proposing a training scheme, will the hon. Gentleman give the House some idea of what training he thinks would be necessary and who would grant the qualification at the end of the process?

Mr. Betts

No, not off the top of my head. I have deliberately left the new clause open so that Ministers can take it away and consider those issues with the people in the industry. I see a body being set up, perhaps by the industry, but under regulation. That is something for the Minister to come back on. I do not want to say at this stage that two or three years' training would be appropriate, but clearly some training, a qualification and a form of licensing are what I am arguing for.

Finally, I understand that the Minister may be in a dilemma. I am sure that he is aware that when the public are polled and consulted on these issues, often, the only group of individuals who are seen to come lower down in their estimation than politicians are estate agents. He might be in danger of ensuring, at a stroke, greater public respect and support for the job of estate agency by lifting that group of individuals above his colleagues in the public esteem. In considering that issue, I am sure that the Minister will also have regard to the fact that if he introduced a scheme for licensing and training estate agents throughout the country, he would probably become the most popular individual politician in the country. I leave him with that thought.

Mr. Edward Davey

The hon. Member for Sheffield, Attercliffe (Mr. Betts) is raising his status with his helpful speech and new clause. At this relatively late stage of the Bill, were the Government radically to reform part 5 and make a home information pack voluntary, but adopt the approach of the hon. Member for Sheffield, Attercliffe, they could get a consensus in this House. It is agreed, not necessarily by every Member of the House but quite widely, that the estate agency profession needs regulation and training. The hon. Gentleman did not mention, but he might have done, that the National Association of Estate Agents is in favour of the profession being regulated, which might strike some people as odd, but the good estate agents are concerned to drive out the cowboys. What is interesting is that those same estate agents, who are looking to improve the quality of their profession, think that the compulsory home information pack would be a disaster, both for their profession and for the housing market.

Unlike the hon. Gentleman, therefore, I was not convinced by the soothing words of the Minister in Committee. I want to spend some time explaining why the Liberal Democrats oppose the Government's proposal to introduce compulsory regulation of the buying and selling of homes.

I shall start by replying to the Minister's introduction of new clause 13. It is doubtlessly a step forward in terms of ensuring that the seller can ensure that a potential buyer does not disclose information. As I sought to indicate, however, it has not gone far enough. There are still concerns that people who roll up claiming to be potential buyers could have nefarious motives. Clause 138(4)(c) states that the duty of producing a home information pack does not apply if the "responsible person", the estate agent, believes on reasonable grounds that the person making the request… is not a person to whom the seller is likely to be prepared to sell the property. The Minister might say that that provision guards against the concern that an agent might have that the home information pack will be given to someone from the criminal fraternity, for example. I return to the point that I made in an intervention, however: how will the "responsible person" be able to identify these people? We are being given a process through regulation whereby the criminal fraternity, journalists and others—they are not synonymous—will be able to access the property details of individuals, about which I am very concerned.

Hurst

I declare an interest as a member of the country's most regulated profession, as I am a solicitor in the firm of Law, Hurst and Taylor. I do not know whether the hon. Gentleman makes too strong a point. At present, anybody can walk into an estate agent's office and receive sale particulars and sometimes a glossy brochure. Were film stars or other people of note to offer their properties for sale, all the information that the journalist, and probably the criminal, could want is already available without any check whatever from high street agents.

Mr. Davey

I agree with the Law Society, which is worried that the home information packs may contain much more information than estate agents' particulars—details of burglar alarms, for example. Those certainly do not appear in the information provided by estate agents.

The main issue is whether the packs should be compulsory or voluntary. Our amendments Nos. 110 and 111 would have an effect similar to that of amendment No. 88, tabled by the hon. Member for South Holland and The Deepings (Mr. Hayes), which we shall support if it is pressed to a vote. They seek to make the provision of packs voluntary. We think that if the content of the packs is set out in law so that everyone knows what will be in them, they may well prove helpful to those buying and selling property, so we should let the market decide. By all means let sellers offer the packs as an added competitive advantage to attract potential buyers, but let us not impose them on the market. That might load extra costs on to people who might then be dissuaded from putting their properties on the market, either because they are short of a few readies or because they are merely speculatively testing the market, having seen a property that they liked at the weekend. Making the packs compulsory could freeze the market.

I wonder whether Professor Barker was asked to look at the new clause. She has produced an important piece of work about housing supply and restrictions on its improvement. Many people, not just in the House but outside, think that this new regulation will make the situation much worse. I bet Professor Barker would have been very alarmed if it had been brought to her attention.

Sir Sydney Chapman

I entirely agree with what the hon. Gentleman is saying. Given that the provision represents a radical departure from the present arrangements governing the buying and selling of homes, would it not be wise for the Government to introduce it as a voluntary measure? If it proves to be as much of a success as its proponents claim, it can always be made compulsory later.

Mr. Davey

As the hon. Gentleman may know, the Law Society has its own transaction scheme, which the Minister praised in Committee. It was designed to streamline and speed up the collecting of information for the buyer, and to help avoid gazumping and gazundering. Some 75 per cent. of buyers have signed up to it, on a voluntary basis. It excludes the search, because people declined to pay for it upfront. The experiment has proved popular, but the Government are ignoring the experience of the scheme by seeking to force detailed information on people.

Amendment No. 109 seeks to ensure that a seller who is marketing his own property need not produce a home information pack. We feel that in the age of the internet, people should be encouraged to use the technology to market their own properties if they so choose, and should be exempt from regulation of this kind. I do not see why the Government are against that sort of DIY home selling, which would be a great competitive spur to this particular market.

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New clause 27 seeks to enable someone to market their home when they have an incomplete pack in circumstances in which reasonable efforts have been made to obtain the missing information. That is necessary because the seller will be reliant on other bodies and organisations to access information for the home information pack. For example, they might need to obtain service charge information from a landlord or managing agent. What will happen if that landlord or agent delays, imposes unreasonable charges or fails to furnish invoices or receipts for payments made for previous service charges, which people often like to see when they purchase a property? If a seller has made reasonable attempts to put together a home information pack but has been thwarted by people whom they cannot control, it seems unreasonable to prevent them from going ahead and marketing their property. I hope that the Minister can give a full answer to the proposition in new clause 27.

Amendment No. 113 takes up a point already made. We want to make sure that the home inspectors who produce the report are independent. There is a real concern that estate agents, mortgage lenders, building fabric warranty providers and financial product providers will all come together in a vertical integration of the market in which the conflicts of interest will be many and damaging to the consumer interest. The Government are arguing that the measure favours the consumer, but if those sorts of company come together, with home inspectors being part of estate agent firms or financial institutions, consumers will seriously lose out. There are some real vested interests who support this new measure, and if the Government were really standing up for consumers they would understand that, and stop that new cartel in its tracks before it formed.

Amendment No. 114 seeks to amend clause 144 to ensure that the people who provide the packs have adequate indemnity insurance. The Government have been crossing their fingers and hoping that the people who provide the packs will be able to get professional indemnity insurance, although they have been told by the market that that will be very expensive and might exclude many people. That could make the shortage in the supply of people able to carry out inspections even worse. I hope that the Minister will give due consideration to amendment No. 114.

Mr. Clifton-Brown

Amendment No. 114 is the most crucial of the lot, because if the home condition inspectors do not have professional indemnity insurance, no reliance at all will be able to be placed on their inspection reports. When one considers the money involved in buying or selling a house, one realises that the possibility of those inspectors' missing some vital defect in a property could involve many thousands of pounds. If that process is not properly insured, the whole system will fall into disrepute.

I do not see how an insurance company will be able to provide that cover unless the inspectors are properly trained and qualified, a point made by the hon. Member for Sheffield, Attercliffe (Mr. Betts). That aspect needs careful thought before the Government introduce home condition reports.

Mr. Davey

I am grateful for that point, which the hon. Gentleman made very well. It brings me to amendment No. 115, which is along similar lines. It seeks to allow sellers, buyers and lenders to bring proceedings where they have relied on information contained in the home condition report that then proves incorrect. It is important that that aspect be clarified. If the Government are doing consumers a service—an argument that I do not really accept—they need to make sure that the reports work. That means not just that inspectors should have professional indemnity insurance behind them, but that if the reports prove incorrect, the consumer knows that they can go to law, without any problems, and seek redress. I hope that amendment No. 115 will be accepted.

Amendment No. 115 and many of the others that I have tabled seek to make a dreadful proposal slightly better, so I hope that even at this late stage, the Government will take a different tack. I hope that they will support amendment No. 88, support the amendments that my party has tabled, support the new clause of the hon. Member for Sheffield, Attercliffe, but drop the absurd, outrageous, costly and damaging proposal to make home information packs compulsory.

Mr. Kidney

Fundamentally, the Government seek to make the seller responsible for having all the information needed for the transaction at the beginning, rather than the buyer collecting it in dribs and drabs during the transaction itself, as happens now. We are talking about 1.8 million transactions a year, nearly two thirds of which are in chains, with an average of five transactions per chain. So in a voluntary system, just one non-participant in a chain prevents everybody from benefiting from the Government's scheme. Because of our reliance on such chains under the current system, there is a 33 per cent. transaction failure rate, which is extremely wasteful.

We have heard many times about Maria Coleman, the Bristol estate agent who has a voluntary scheme called "Open Book", through which everything is prepared by the seller at the beginning of the transaction. Her hugely successful voluntary scheme has reduced the failed transaction rate from 33 per cent. to just 3 per cent. It has been running for some seven years, so perhaps Conservative Members can explain to me why there has not been a landslide take-up of such schemes. In fact, Maria Coleman has so many problems with others not following the scheme that she supports compulsion.

Andrew Selous (South-West Bedfordshire) (Con)

As I recall, it was pointed out in Committee that Maria Coleman's scheme provides her with significant additional fee income. Does the hon. Gentleman not think that vested professional interests are involved, in order to boost their earnings?

Mr. Kidney

The extra money is of course for the inspectors. However, the Government's scheme makes provision for inspectors, so that is not a consideration. What is a consideration is that under the current system, several buyers incur the same costs for one property, yet only one will buy it—again, that is wasteful—whereas one seller would incur the costs for everyone. I am sure that the market will develop systems to enable the seller to put off repayment of the costs until the transaction has concluded, as happens with the voluntary scheme.

As the hon. Member for Poole (Mr. Syms) rightly said, there are two problems: shelf life and the sale not proceeding. Here, the Government have clearly decided to grit their teeth and see things through. I am glad that the hon. Gentleman mentioned my discussion in Committee of electronic home information packs, which will cut costs and time yet further. I certainly support the registration of estate agents to make sure that they perform their part of the scheme competently.

At the moment, only one in five buyers purchases a house—at huge expense; indeed, it is the greatest investment of their lives—with a surveyor's report that is equivalent to, or better than, a home buyer's report and valuation. Four out of five do not obtain a report of that standard. Most buyers purchasing with a mortgage rely instead on the lender's survey and report. There are three levels of survey: a basic valuation of a property; a home buyer's report and valuation; and a full structural report. Some 80 to 90 per cent. of buyers with a mortgage rely on a basic valuation. They are paying, so they choose the cheapest.

Someone else obtains the report, but it is the buyers who rely on it. It is worth pointing out that when things go wrong with the report, buyers sue the valuers. That will help to reassure hon. Members that under the Government's scheme, there will be a remedy. In fact, a few lenders refuse to disclose the report in order to avoid litigation risk to themselves and their valuers. Thus some people pay for the basic valuation report, do not get to see it, but carry on and buy their homes. Basic valuation reports clearly involve shorter time inspections and are for a different purpose; they are not what buyers require when making such a huge investment. Most lenders' valuers carry out physical inspections in making those reports, but in recent years there have been a few examples of fast-tracking, which some call desk-top evaluations or drive-by evaluations. Such practices are much more common in the United States of America.

There are legitimate concerns about the number of inspectors and their training, the presence of their indemnity insurance, and the cost of the infrastructure and implementation plan, but those are all practicalities. They must be got right, but they do not amount to objections to the principles, which concern transparency, certainty, consumer protection and consumer satisfaction.

A Consumers Association survey of more than 1,000 adults at the end of last year found that 82 per cent. thought that home information packs would be "very useful" and 13 per cent. "fairly useful"—95 per cent. in total. The Office of the Deputy Prime Minister report on "Piloting the Home Condition Report", published in February this year, found that the majority of those taking part—sellers, buyers, estate agents, conveyancers and inspectors—liked the idea of a home condition report and found it easy to understand. The report said: Most sellers and buyers considered the report to be accurate and independent. It really is a good scheme, which has had all the right preparations and a long lead-in time, as the Minister has announced. The scheme will be a success.

Sir Sydney Chapman

I shall be brief, as much of what I wanted to say has already been covered by my hon. Friend the Member for Poole (Mr. Syms) and, indeed, by the hon. Member for Kingston and Surbiton (Mr. Davey).

The crucial question is whether the proposal for home improvement packs will streamline the buying and selling of a home, or be just an additional bureaucratic cost. As my hon. Friend explained, the cost is likely to be in the order of £600 and perhaps more. I am willing to take an even bet with anyone that if it were £600 in the first year, it would increase by 50 per cent. within five years. That is an aside, but if we are to introduce a radically new proposal, we must think about costs.

I want to raise two issues. First, some people in the market need to sell their home quickly because an emergency has occurred. Will the new scheme help to deal with that problem? Secondly, as my hon. Friend the Member for Poole mentioned, these are problems with houses of very low value. We tend to think, quite rightly, that the cost of buying is going up and up. I know that in the three most northern regions in England, the average cost of a house has now hit the six-figure barrier—more than £100,000. The average cost of a home in London, though, is more than £250,000. There is no problem there. The problem arises generally in parts of the north where housing is very cheap because, for one reason or another, it is virtually unsellable. Various Government amendments and new clauses will change the Bill, but I hope that the scheme that results will bear in mind that particular problem.

All in all, it is a radically new proposal and genuine arguments exist on both sides of the issue. It would be a foolish person who denied that some of the arguments for introducing HIPs were compelling, but, equally, there are opposing arguments. I am bound to say, as an honorary member of the Royal Institution of Chartered Surveyors—I am not a fellow and I have no financial interest—that we should err on the cautious side and introduce the scheme on a voluntary basis first. If it proved successful, it could then be extended.

Keith Hill

I regret having to rise to speak when I know that other hon. Members want to enter the debate, but it is wholly appropriate that I respond to points raised in the debate so far.

I shall start by responding to two specific questions. The hon. Member for Kingston and Surbiton (Mr. Davey) intervened on my speech to ask how new clause 13 would enable the seller or agent to be certain of the identity of a person to whom a pack was given. The precise answer is that it would not. The position will remain as at present. If the seller is concerned, conditions can be attached, but our conviction is that most sellers will not be concerned. A propos the same new clause, the hon. Member for Poole (Mr. Syms) asked what the charge for a copy of the pack covers, and the answer is, the cost of the copy and the documents requested.

4.30 pm

My hon. Friend the Member for Stafford (Mr. Kidney)—also known as my guru—spoke eloquently on this subject. I suspect that we shall hear from him again, and those of us who are early-morning listeners to Radio 4 heard him before 7 o'clock this morning.

I want to deal with those amendments that would introduce a voluntary home information pack system, rather than the compulsory system that is proposed. I must resist them. As I have said repeatedly, a voluntary HIP system would essentially continue the shambolic mess that we have at present. It would allow sellers to avoid the duties by ensuring that the marketing material made it clear that the property was being sold without a pack. Going down that road would lead us to the worst of all worlds.

HIPs need to be compulsory to ensure that everyone benefits from them. We are in no doubt about that: voluntary arrangements simply would not work. It is inevitable that, given the choice, some sellers—perhaps a measurable proportion—would choose to market their homes without an HIP. They might do that in an attempt to avoid costs, or in the hope that they might avoid having to disclose information, for example about a problem with the condition of the property that an HIP would identify. That would be unfair to buyers who had provided a pack for their own sale.

More harmfully, the amendments would result in an unsatisfactory two-track process, in which sales without packs would slow down connected sales with packs. In a chain, that would cancel out the very benefits that the Bill seeks to achieve. We would end up with a system that fostered waste, uncertainty and delay—the very opposite of the Government's intentions. There is no scope for relaxing the mandatory nature of the duties if we want to improve the efficiency of the housing market and protect the interests of all home buyers and sellers.

I turn to new clause 32, moved—also very eloquently—by my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts). He got in very early with the joke about politicians versus estate agents that will have been in the front of hon. Members' minds when considering this matter.

Mr. Clifton-Brown

Will the Minister give way?

Keith Hill

No. I will not give way to the hon. Gentleman because, in due course and as rapidly as possible, I want to deal with a point that he raised in the debate.

The licensing of estate agents is, quite rightly, of considerable interest. This debate is very timely, following the recent report from the Office of Fair Trading, to which my hon. Friend the Member for Sheffield, Attercliffe alluded, and the even more recent publications byWhich? and the Royal Institution of Chartered Surveyors.

The issues debated today in relation to new clause 32 will be of even greater significance when HIPs are introduced, as many hon. Members observed. Estate agents will have a pivotal role in delivering HIPs to their seller clients and to the home-buying public. HIPs will cover a range of documents and information that are currently outside the marketing role that agents perform. That means that estate agents will need to be more professional and have a better knowledge and understanding of all aspects of the process of buying and selling homes. It is essential to the smooth and successful introduction of HIPs that estate agents rise to this challenge, as the RICS and the National Association of Estate Agents recognise.

I therefore sympathise with the intentions behind new clause 32, but hope that my hon. Friend the Member for Sheffield, Attercliffe will appreciate that I am unable to accept it.

The OFT has published a market study report on estate agents that includes recommendations about the future regulation of the industry. My right hon. Friend the Secretary of State for Trade and Industry is considering the report's recommendations and aims to publish a response within 90 days. Ministers and officials at the Department of Trade and Industry are meeting estate agents' representative groups, consumer groups and other interested parties to help inform the Government response. I assure my hon. Friend the Member for Sheffield, Attercliffe that my Department is very much involved with this process. I hope that he will be prepared to await the Government's response to the OFT report. In the light of that, I invite him to withdraw his new clause.

Amendment No. 114 was referred to by the hon. Members for Ceredigion (Mr. Thomas) and for Kingston and Surbiton, and by my hon. Friend the Member for Sheffield, Attercliffe. The hon. Member for Cotswold (Mr. Clifton-Brown) said that it was the most crucial amendment of the lot.

It would specify that a home inspector's indemnity insurance is "adequate and appropriate". The certification scheme will determine a suitable level of cover. The criteria against which the Secretary of State will approve the certification scheme, or schemes, will ensure that that issue will be properly addressed, taking into account the prevailing conditions at the time.

Clause 14(5) provides that the Secretary of State cannot approve a certification scheme unless the members of the scheme have in force suitable indemnity insurance. The amendment in question would substitute "adequate and appropriate" for "suitable". It goes without saying that the Secretary of State would not approve a scheme if the insurance provisions were not "adequate and appropriate". It is not necessary to spell that out in the Bill.

Amendment No. 115, tabled by the hon. Member for Kingston and Surbiton, would specify in the Bill that sellers, buyers and lenders can bring proceedings in respect of a home condition report on which they had relied. That is unnecessary, as those rights will be provided for. Clause 143(8) clearly signposts that intention. In relation to prescribed documents, that clause enables the Secretary of State to impose a requirement that three specified categories of person be able to enforce the terms of the contract under which the document is prepared. That is intended to ensure that buyers and lenders, as well as sellers, can rely on the contents of the pack, including the home condition report.

It being three and three quarter hours after the commencement of proceedings on the programme motion, MADAM DEPUTY SPEAKERput forthwith the Question already proposed from the Chair, pursuant to Order [this day].

Question agreed to.

Clause read a Second time, and added to the Bill.

MADAM DEPUTY SPEAKERthen proceeded to put forthwith the Questions necessary for the disposal of the business to be concluded at that hour.