§ 5.23 p.m.
§ [The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Nicol) in the Chair.]
§ Clause 1 [Home energy rating survey]:
Lord Ezra moved Amendment No. 1:
Page 1, line 8, after ("mortgage,") insert ("offer to").
§ The noble Lord said: In moving Amendment No. 1 I shall speak also to Amendments Nos. 3 to 5. The object of these amendments is to meet some of the points raised by the noble Baroness, Lady Miller of Hendon, at Second Reading of the Bill on 5th December. The noble Baroness then stated that, while the Government had some sympathy with the aims of the Bill—which were to promote the use of energy ratings for domestic residences to lead to the more efficient use of energy—they had reservations about the method proposed. In particular, the noble Baroness pointed out that an obligation to provide an energy rating survey with every mortgage loan could lead to much unnecessary work and expense, as some borrowers might not be interested in such a survey and 143 in other cases it might be a newly-built residence which would have a relatively high energy rating survey already under the buildings regulations.
§ I consider that this is a valid point. It is for that reason that I have tabled Amendment No. 1. The amendment would oblige mortgage lenders only to offer to make an energy rating survey. Amendment No. 5 states that the obligation to offer an energy rating survey shall not apply to any residential accommodation on which a mortgage lender has reasonable grounds for believing that an energy rating survey has been made within the past three years. That would eliminate all new buildings. Three years is regarded by the professional firms who are engaged in making energy rating surveys as the minimum period that should be allowed to elapse after each survey. Following the period of three years circumstances may well have changed to justify a revised survey.
§ Amendment No. 4 provides that a mortgage lender shall take reasonable steps to explain the benefits of such a survey to intending borrowers so that they are aware of the situation. Amendment No. 3 is simply a drafting amendment which follows upon Amendment No. 1.
§ I believe that with these modifications the Bill will help to promote the much more widespread use of energy rating surveys, to which I understand the Government are committed. One must bear in mind that some half million mortgage loans are made each year. In my view, this is a much more effective way of spreading the use of home energy rating surveys than leaving it to individuals.
During Second Reading the noble Baroness pointed out that one of the conclusions from the trials recently carried out with selected mortgage lenders was that,
once house buyers are given information about what they can do to improve the energy efficiency performance of their homes, the majority of them—over 80 per cent.—welcomed the energy efficiency information provided and indicated that they would be likely to take action in the next two years".—[Official Report, 5/12/96; col. 845].
§ I regard that as very relevant to the proposals in the Bill.
§ Furthermore, it should be remembered that in 1994 the Environment Committee in another place recommended that the Government consider a mandatory scheme for home energy labels (as they were then described). This Bill does not go as far as that. It simply makes it mandatory for mortgage lenders to offer borrowers the opportunity of having an energy rating survey when the loan is being arranged. As was pointed out at Second Reading, that should be much less costly than for an individual home owner independently to arrange for such a survey to be carried out. The largest firm that provides valuation services to mortgage lenders, Countrywide Surveyors—which I mentioned at Second Reading—could provide an energy survey for £15 compared with up to £150 for an independent survey.144
§ I trust that with the modifications now introduced the Government will be able to support not only the intentions of the Bill—I understand that they do—but also its detailed provisions. I beg to move.
§ Lord Graham of Edmonton
We on these Benches echo our sincere appreciation to the noble Lord, Lord Ezra, for giving us a canter round a very familiar course. I recall the sympathy of the Minister on the last occasion with the broad thrust of the Bill. There cannot be very many who object to a measure that is designed to make the running of a home more efficient and cost effective. Unless the Minister is able to tell us of a considerable cost that may fall upon the state, what we are after is sympathy and direction from the Government so that those who have it in their gift to put a bit more flesh on the bones will be encouraged to do so.
There is no doubt that the costs of heating and making heating systems more efficient to ensure that money is not wasted are becoming higher and higher.
The noble Lord, Lord Ezra, drew my attention to the fact that something which tells you what is wrong and how it can be put right may cost the consumer as little as £15. I, of course, accept his figures. So we should not look a gift horse in the mouth.
We are all conscious of the parliamentary timescale and all the other pressures. The Bill needs to leave this place as soon as possible to have any chance of support in another place. I hope that the Minister will recognise the genuine effort that the noble Lord, Lord Ezra, has made since Second Reading to make the Bill more acceptable, not just to the Government but to those outside this place. I think the phrase to be used about heating is that we give this proposal a warm reception.
§ 5.30 p.m.
§ Lord Cochrane of Cults
I welcome the clarification and explanations given by the noble Lord, Lord Ezra, of this admirable Bill, which, looked at in the historic context, deals with a subject which is now as important to housing as drains were 150 years ago. For that reason, the clarifications and amendments which do much to improve the drafting of the Bill deserve every support.
§ Baroness Miller of Hendon
Amendment No. 1 is an important change which takes away the requirement for mortgage lenders to carry out a SAP rating and provide one for every prospective mortgagor. It would have the welcome effect of reducing the burden on mortgage lenders by requiring them only to make an offer of a SAP home energy rating report. I understand, though, that the Council of Mortgage Lenders has indicated that it would still resist such a proposal.
Amendment No. 3, as the noble Lord, Lord Ezra, said, is consequential upon Amendment No. 1. Amendment No. 4 would place an obligation on mortgage lenders actively to promote the offer of a SAP rating and advice. I understand that some mortgage lenders are likely to view this as an unnecessary burden, and even though it is unlikely to be an arduous one an unwilling lender is less likely to explore the options to provide the most effective rating and advice services than it would have done if it had initiated a voluntary scheme.
145 The Government are active in a wide range of programmes to improve energy efficiency. We agree that it is important to promote energy efficiency but we still have reservations about the Bill and hope that the lenders can be encouraged to become much more involved in voluntary schemes.
We were delighted to hear recently of the initiative by NatWest Home Loans to pilot a SAP rating and energy advice service. That is just the kind of approach which the Government think is likely to be more effective than prescription and legislation. We will be keeping in close touch with developments.
Amendment No. 5 would avoid duplicate ratings being issued on, for example, the same new dwelling where the building regulations for England and Wales already require the house builder to provide a SAP rating as part of the compliance procedures. It would also take into account the changes in SAP ratings which derive from energy price changes and home improvements. To that extent it would be a helpful amendment. However, it would not avoid the possibility of different mortgage lenders obtaining ratings on the same property for their prospective mortgagors. That risk is particularly relevant to the existing stock, to which the majority of mortgage valuations relate.
The noble Lord, Lord Ezra, who, I know, has done a great deal of work, might therefore wish to reconsider whether Amendment No. 5 entirely meets the objectives he intends.
§ Lord Ezra
I thank the noble Lords, Lord Graham of Edmonton and Lord Cochrane of Cults, for their kind support for these amendments and for the Bill as it now stands. I was pleased to learn from the noble Baroness that she, too, felt that the amendments were helpful although she thought that Amendment No. 5 might go further. Nonetheless, she reported that the Council of Mortgage Lenders is still opposed even to these moderate and limited proposals. I am sorry to hear that. Building societies and other mortgage lenders have done a great deal to serve the community. They have an opportunity here to serve it even more. Although there have been some voluntary initiatives, as the noble Baroness said, they have been very limited.
The opportunity to give these rating surveys to 100,000, 200,000 or even 300,000 purchasers of properties who would be interested—they will have asked for the surveys to be made—is an opportunity not to be missed. Having shown their great interest in promoting energy rating surveys, having put them forward and worked them out, and the Environment Select Committee of another place having recommended a mandatory scheme, I am sorry that the Government should still be swayed by what I find largely inexplicable reservations on the part of the mortgage lenders. The noble Baroness did not give any reasons for their taking that view. It is merely that they apparently do not want to be bothered. I am sorry to hear that. It does not demonstrate the spirit which they should show to the community. I hope that the Bill can 146 expeditiously complete its remaining stages in this place and that time will be found for it to go through another place.
Lord Ezra moved Amendment No. 2:
Page 1, line 9, leave out ("house") and insert ("residential accommodation").
§ The noble Lord said: With this amendment I shall speak also to Amendment No. 6. This is purely a drafting amendment to change the word "house" to "residential accommodation" in order to widen the provision's scope. I trust that the Committee will agree these drafting amendments. I beg to move.
Lord Ezra moved Amendments Nos. 3 to 6:
Page 1, line 11, leave out ("every") and insert ("the").
Page 1, line 11, at end insert—
("() A mortgage lender shall take reasonable steps to explain the benefits of and to promote the offer to carry out an energy rating survey pursuant to subsection (1) above.").
Page 1, line 13, at end insert—
("() This section shall not apply to any residential accommodation on which a mortgage lender has reasonable grounds for believing that an energy rating survey has been made within the last three years.").
Page 1, line 27, at end insert ("and "residential accommodation" has the same meaning as in the Home Energy Conservation Act 1995.").
§ Clause 1, as amended, agreed to.
§ Remaining clauses agreed to.
§ House resumed: Bill reported with amendments.