HL Deb 03 November 2004 vol 666 cc337-68

(1) No section 21 notice may be given in relation to a shorthold tenancy of the whole or part of an unlicensed house so long as it remains such a house.

(2) In this section—

On Question, amendments agreed to.

Clause 115 [Management scheme and accounts]:

Lord Bassam of Brighton moved Amendment No. 20:

Page 83, line 1, at beginning insert "provision".

On Question, amendment agreed to.

Clause 124 [Compensation]:

Lord Bassam of Brighton moved Amendment No. 21:

Page 89, line 17, after "party" insert "in consequence of a final management order"

On Question, amendment agreed to.

Clause 129 [Making of interim EDMOs]:

Lord Bassam of Brighton moved Amendments Nos. 22 and 23:

Page 94, line 37, leave out sub-paragraph (i).

Page 94, line 39, at end insert "and ( ) paragraph (d) does not apply;

On Question, amendments agreed to.

Clause 130 [Authorisation to make interim EDMOs]:

Lord Bassam of Brighton moved Amendment No. 24:

Page 95, line 11, leave out paragraph (b) and insert— (b) that there is no reasonable prospect that the dwelling will become occupied in the near future,

On Question, amendment agreed to.

Baroness Hanham had given notice of her intention to move Amendment No. 25:

Page 95, line 21, at end insert ", and (c) why the dwelling has been unoccupied

The noble Baroness said: My Lords, I rise to say only that I am not going to move the amendment. I now appreciate that within that great chunk grouped with Amendment No. 3 was government Amendment No. 24 which, although it does not entirely address the questions that we raised, it does so well enough. We do not need to pursue the whole point about empty properties, the stage at which intervention comes and when the property tribunal can have a role any further.

[Amendment No. 25 not moved.]

Clause 132 [Making of final EDMOs]:

Lord Bassam of Brighton moved Amendment No. 26:

Page 97, line 14, leave out paragraph (c) and insert— (c) in paragraph 7(6)—

  1. (i) paragraph (c) is to be read as referring instead to Part 4 of Schedule 7, and
  2. (ii) paragraph (d) is to be read as referring instead to paragraph 27(2) of Schedule 7;

(ca) paragraph 7(6) in addition is to be read as requiring the notice under paragraph 7(5) also to contain—

  1. (i) the decision of the authority as to whether to pay compensation to any third party,
  2. (ii) the amount of any such compensation to be paid, and
  3. (iii) information about the right of appeal against the decision under paragraph 34 of Schedule 7;"

On Question, amendment agreed to.

Clause 144 [Meaning of "residential property" and "home information pack"]:

[Amendment No. 27 not moved.]

Clause 147 [Responsibility for marketing: general]:

[Amendment No. 28 not moved.]

Clause 151 [Duty to have a home information pack]:

Lord Hunt of Wirral moved Amendment No. 29:

Page 106, line 15, at end insert—

"( ) That duty does not apply if, and for so long as, the seller determines that the property is to be sold without a home information pack, and in the event the estate agent for the seller is the responsible person, the seller has so informed him."

The noble Lord said: My Lords, with this amendment, I shall speak also to the consequential Amendments Nos. 33 to 35, 44 and 45. This series of amendments springs from a combination of substantial practical reservations about the Bill and profound and deeply held considerations of principle. To put it more simply, many of us in this House believe that mandatory home information packs are wrong in practice and in principle.

The practical objections have been rehearsed previously. The simple fact is that many people are not convinced that a statutory regime of this kind is workable. Furthermore, even if it is workable in the most crudely functional sense, there are still good reasons for believing that it will inhibit, or perhaps even badly undermine, the workings of the housing market. That would ill serve the interests of the buyer and seller.

Secondly, there are important, unresolved issues of principle at stake. I do not wish to appear in any way partisan, but this debate seems symptomatic of a clear ideological gap between the Front Bench opposite and the rest of the Chamber. I shall call it a gap rather than a chasm or a gulf, at least until I hear the Minister's response to this group of amendments. Whether or not homes should be sold with home information packs is not self-evidently an issue of substantial constitutional or ideological significance. I fear, however, that this part of the Housing Bill is all too typical of a tendency to prefer regulation to deregulation—to fix that which is not broken and to intervene where it would be better to leave well alone.

I shall deal first with the practical points. Mandatory home information packs would certainly introduce a new level of rigidity into the housing market. As there is no such thing as a free lunch, there certainly will be no such thing as a free home information pack. The cost is estimated at anything up to £800 per dwelling, and the latest figures that I have seen estimate that around 2 million dwellings are put on the housing market every year. Of those, only around 1.5 million are sold. In other words, as many as a quarter of the dwellings put on to the market are not bought or sold by anyone.

In the present situation, one could say that no harm has been done, or that hardly any unrefundable costs have been incurred. With mandatory home information packs, that position will change significantly. Regardless of whether a property is sold, someone will have to cover the cost of the home information packs. The cost of the packs will also be highly regressive. A terraced house in a less fashionable part of the United Kingdom may cost only a fraction as much as a home in London, but the cost of a home information pack will inevitably be very similar for the two properties.

I hestitate, particularly given the presence of the noble Lord, Lord Rooker, on the Front Bench, to use the following term, but what he is proposing could become a form of poll tax for the housing market: regressive, retrograde and resented. The UK housing market is competitive, flexible and efficient, and very innovative as well. As Ministers have previously conceded, the market has been generating some highly effective private initiatives with regard to the information provided to would-be buyers. That is a very good thing. So why this idea of compulsion? Where is the market failure? No concrete evidence for it has been adduced at any stage. It genuinely pains me to say so, but the answer. I fear, lies in the deeper, atavistic instincts of this Labour Government.

That brings us to the deeper issues of principle and philosophy. I have never been one to genuflect before the free market. However, as Winston Churchill might have put it, for all its shortcomings, the market seems generally preferable to all the other models that have been tried from time to time. When it works, the market mechanism works very well indeed. As Ministers have occupied us day after day here and in another place with their attempts to control our lives, so they bring before us today yet another measure that seeks to extend the tendrils of government into a hitherto unexplored aspect of our lives. Where we in this House prefer freedom, all too often a Minister will put forward policies of control. Where we seek to promote diversity—the "thousand points of light", if you will—often, they offer only drab, state-inspired uniformity. As next year's general election approaches, no doubt the Prime Minister will try again to convince us that those old instincts have been consigned to the dustbin of history. Maybe, in his case, they have. But perhaps he should spend more time scrutinising the details of the legislation that his Ministers are promoting.

Earlier this month, we lost one of the most admired Members of this House, Earl Russell. How I wish he were here with us today. Earl Russell believed in freedom and regarded the state and all its apparatus with the most profound suspicion. He was a true liberal, with a small "1" as well as a large one. In one of the very last speeches that he made in this House, on a different element of this Bill, Earl Russell perfectly adumbrated the argument that we are having here today. He said: There is necessarily a place for compulsion, but it is an unpleasant, expensive and labour-intensive process that will not become easier while the Chancellor is engaged in reducing the number of civil servants. So where something can be done voluntarily and compulsion rendered unnecessary, it is a good thing".—[Official Report, 21/7/04; col. 270.] It is not always the case that my noble friends and I see eye to eye with Earl Russell's party, hut I am delighted that today we do. I am also delighted that we have the support of so many others in this House, notably that of the noble and learned Lord, Lord Donaldson.

The body of our laws in this country—our unwritten constitution—is built upon the principle that we may assume that we have freedom of action unless and until we are told otherwise. Our presumption should always be for freedom, for less state control. This matter of the home information packs may seem to represent to Ministers a skirmish in the foothills rather than a battle for the commanding heights, but it is important and emblematic none the less. Defending our freedoms is not the exclusive preserve of any one party, nor of any of the existing parties in any shape or form. I hope, therefore, that the Government will listen carefully to what is said in this debate, see sense and change tack on this aspect of the Bill. I await the Minister's speech. I beg to move.

Baroness Hamwee

My Lords, I thank the Minister for his further letters to my colleagues and me; they have been extremely helpful. I am very grateful to him and his office for the way in which they have assisted us through the Bill. I thank also the noble Lord, Lord Hunt, for his reference to our late noble friend. I wish that I could do justice to Conrad Russell's memory; I shall try.

I said of a smaller amendment on Report that we were trying not to cause trouble but to save trouble; that is also the case with this group of amendments, to which my name is attached on behalf of my noble friends. We acknowledge that there are interests to be protected—those of the consumer—but we do not regard them as equivalent to the situation where there is a single producer and many small consumers. In this case, there is something that is rather more balanced—a seller and a purchaser.

4.30 p.m.

Our concern is that if it is possible to achieve a workable cost-effective scheme, that is what we would like to see. But the Government are not only a long way from achieving that, they are also a long way from knowing that it is achievable. They argue that this is why they will do the dry run, which is of course a voluntary arrangement.

A compulsory scheme may or may not be implemented. The noble Lord has referred to aspects of a nanny state, as have I previously. Perhaps I may add to that; the Government will have invested an enormous amount in the scheme for home information packs. I am not questioning the Government's good intentions at all, but it is human nature that they will not want to let HIPs go if they do not succeed in their further work on them. They will not want to let all that work go. They will try to find reasons to go ahead; not, unless they are superhuman, look for reasons not to proceed. There have been examples of primary legislation not being proceeded with, but that is very rare.

We acknowledge that the Government have already done a lot of work with—I hate the word, but I suppose it is appropriate—stakeholders, and they intend to do more. But even now, at almost the last knockings of the Bill in the second Chamber, their response to points is, "We will consult". A very proper response is in the most recent letter from the noble Lord, Lord Rooker. But does it give us the confidence that Parliament should at this stage be making legislation that compulsorily requires all sellers to comply with it?

Today, the House is being asked to agree to primary legislation when so much depends on regulations. For example, at the previous stage, I queried the term "of interest" to a purchaser. I thank the Minister for the latest letter which deals with that. It says: Interest, as defined in the Oxford English Dictionary, means concern or curiosity". It would clearly be in the interest of consumers if the Secretary of State could prescribe that packs contain matters of concern to them and not just those that are essential to the transaction. Yes, but in how much detail? How wide a provision is this? I dealt with that particular point at some length at a previous stage. So I simply say, quite!

I asked the Law Society whether it was happy with the term "the property" in Clause 158(5) and whether it excluded anything. Does the term "the property" exclude things, such as boilers and alarm systems, where it would not be reasonable to require guarantees and warranties to be produced before exchange? The answer from the Law Society is that it will have to look at the regulations.

The noble Lord, Lord Hunt, has referred to this point, but I cannot leave it out of my speech. We are concerned about the cost of home information packs, particularly home condition reports. We are concerned about it where the property is of low value—if that is not an absurd term to use in today's housing market—or, at any rate, of comparatively low value. We are concerned about the cost where the purchaser is at the limit of what he or she can afford and may not, as things stand now, choose to have a survey. A lot of people borrow a very large proportion of the price in order to purchase; for example, young people who are desperate to get on the housing ladder and families who need a bigger property because the family is growing. We are concerned about the cost where there is a family breakdown and there is no cash to be thrown around. We are concerned about elderly people who are on an average pension. All those people would struggle with the cost even if it is deferred.

Which? recognises that. I have seen in its briefings that it proposes that the cost should be rolled up in the mortgage. That would meet some of our concerns. But we are talking about struggling to find a solution to something that should not be a problem. The Government say that it will all be okay because if there is no sale, there will be no cost.

Agents may bear the cost in the first instance, but they are not charitable organisations. Why should they be? They will claim ownership of home information packs and the intellectual property rights in those packs. They will not hand them over to a seller who wants to change agents—quite possibly for very good reasons. Indeed, a home information pack created by one agent may not be usable if its logo is on every page. Agents will have an interest in getting a quick sale in order to recoup their own outlays.

There are matters of very considerable public interest in how all this will operate. Will large organisations want to lock people into all their other services? Unless there are regulations controlling it, they may use their own inspectors and their own panels of conveyancers.

Another anti-competitive element is the effect on people who might want to do their own conveyancing. At a previous stage, the Minister said that there are not many of them, so it will not be much of a problem. I do not think that amateurs would find it easy to prepare the summary proposed under Clause 158. It would create something which—I say this as a solicitor—we should not encourage.

I am aware that the Government say that home information packs will save costs because there will be fewer failed transactions. The noble Lord, Lord Hunt, referred to the cost of the substantial proportion of transactions that do not proceed. The Minister will say no doubt that the very existence of home information packs will reduce the number of failed transactions. On the information that the Minister gave us at the previous stage, only 8.5 per cent of all failures follow the buyer's own survey. That is quite a lot, but it is by no means the majority of failures. The much larger proportion of failures follows the lender's valuation survey.

In his most recent letter, the Minister stated that HBOS—probably the largest lender, and the Halifax as most of us know it—will use the home condition report as part of the valuation process. Many noble Lords will have received from the Council of Mortgage Lenders a briefing for this stage. Although I am aware that I am taking some time, it is proper that some of this is read into the record. It states: There are diverse views among lenders regarding the concept and practicality of a home information pack. As such, the Council of Mortgage Lenders does not support or oppose home information packs. It acknowledges that the Government are determined to introduce them and will be constructive if they proceed. One would expect no less.

It continues: It is not possible at this stage for lenders to give a definitive view of the extent to which they will use home condition reports". I do not want to be tripped up by the Minister on this: I readily acknowledge that the Council of Mortgage Lenders goes on to say: With a voluntary scheme, it is difficult to imagine a dual process where there is or is not a home condition report available". But this is not a situation that permits us one perfect answer. If it did, we would not still be debating it. If lenders want to be constructive, that is how we are asking them to contribute. After all, under the government scheme, we are not talking about moving to an automated system that does not require the brain to be engaged.

Which? has been cited in support of home information packs. Indeed, it is. But, in its latest briefing, even Which? states that it is continuing to seek clarity on six issues and that there is still a lot of work to be done, so it is worth making home information packs work. That is precisely our point of view. A voluntary scheme is the best way of going forward; not going headlong into what could be disaster.

Lord Donaldson of Lymington

My Lords, I have added my name in support of the amendments in this group. However, while supporting them I should make it clear that I approach the matter from a slightly different standpoint from that of the noble Lord, Lord Hunt of Wirral. Perhaps some of his remarks might be regarded by the Government Front Bench as inflammatory. I do not wish to be involved in that one way or the other. It is part of the political hurly-burly of life from which retired judges who are Cross Benchers ought to keep clear in all circumstances.

I understand that the provisions of Part 5, dealing with the home information pack, are intended to speed up the process of buying and selling residential property. That, at least, is something which I should have thought everyone would support. In so far as the pack would do so, then I think that it will be welcomed by both sellers and buyers in their own self-interest. However, in some cases the pack might not have that effect, and in certain cases it would not have that effect.

Attention was drawn to the first example at the previous stage by the noble Earl, Lord Caithness. He said—this must be right—that the process of putting a property on the market usually starts with someone having a notion that they might or might not want to sell, and going to see an estate agent to take professional advice on the saleability of the property, the kind of price it might fetch and so forth. If, as is usually the case, the potential vendor is satisfied and accepts the advice, the noble Earl made it clear that the agent would expect to be able to put the property on the market straight away, particularly as he probably has a list of potential buyers known to him. But if he has first to put together a home information pack, there will be a considerable delay. That may well not suit a potential purchaser who might be keen to know whether he can get hold of the property or whether he must look elsewhere, and it certainly would not suit the seller, who in the Government's view would be prevented from jumping the gun.

In other cases the pack might appear to highlight problems where none exists. I went through some of the requirements of the home information pack on the last occasion, and I made it clear that I agreed with some of them. Although I have not checked what I said, I think I said that I agreed that the home information pack should contain information about title. However, in the light of personal experience—I do not want to personalise this, but individual cases throw up potential problems—I realise that I was wrong.

It so happens that a flat is presently on the market—it does not matter where it is—which has been sold subject to contract, the sellers being my children. If they had been asked what title they held, they would have had to answer by saying that they had none. That would seem to be an inhibitory factor to the progress of a transaction which otherwise would be perfectly straightforward since there are no problems about it. The person holding the title is almost certainly myself, as executor of my wife's estate. I will ensure that my children have the title when the time comes to honour the contract, but I do not feel constrained and I do not see why I should have to explain to a purchaser exactly how I am going to achieve that transfer. In fact, it is quite a complicated matter and one personal to myself and my family. If asked, I would give a guarantee that my children will be in a position to pass title in clue course, but why do I have to raise the question? How will it help the purchasers, my children or anyone else? All it will do is raise entirely false fears.

I turn to another case which I have mentioned before, although I had not realised quite how right I was. I refer to the home condition report. Along with many others, the flat I have just mentioned is part of a large block. The structural condition of the flat is of no concern either to the sellers or to a buyer because, as is customary in these cases, the owner of the freehold or a superior lease-holding landlord bears the cost of all repairs. While it is perfectly true that that cost filters down to the individual owners of the flats, it does not do so individually. So nothing would be gained by commissioning a survey of the particular flat. There may be 20 other flats all in the same group to whose upkeep any individual flat owner would have to contribute. It would be ridiculous for the sellers of an individual flat to seek to get a survey of the whole block, and it would be equally stupid for the buyer to try to do so. The plain answer is that the only concern of the purchaser is what he will have to pay, and that he can find out by inquiring into the record of the service charge and whether there are sinking funds to deal with it. That is the information he needs; he does not need a condition survey of any kind.

4.45 p.m.

I am sure that the Minister will respond by saying that all of the above could be addressed in regulations. Perhaps that is the case, but the other problem is that we have not the slightest idea of what the regulations will contain. As I mentioned on the last occasion, when I was lobbied by the Consumers' Association, I in turn probed it on all sorts of matters. However, the answer was always, "We are still negotiating"; but ultimately the response was, "It is all an act of faith". There were at least four Bishops in the Chamber last time, so perhaps that was more appealing. However, none is in his place today. I do not believe—and I doubt whether many noble Lords would believe—in legislating on the basis of hope and faith that the Government will get it right. While I do not cast aspersions—I am sure that the Government will try to get it right—I remain far from convinced that they will do so, or even in the eyes of some that they will do so. To get it right in the eyes of all is too much of a task.

What is the alternative? The alternative is to recommend home information packs tailored to the particular transaction. There is no doubt that they would be valuable. So long as there is no delay in bringing the property to market, it could well pay a seller to put together a home information pack. By the way, I do not believe that it would be the property of the estate agent; it would belong to the seller. But when, where and how to put it together are matters very much better left to the market. There is nothing philosophical about that, it is just a plain fact and a matter of common sense.

I hope very much that noble Lords will support this group of amendments because they will enable sellers and buyers to look at the particular transaction before them—the only one they are concerned about—before deciding what to do. A buyer may refuse to do anything until he has a home information pack, while a seller may decide that it would pay to get out a home information pack before he even has a buyer who has accepted the sale. My own example is a good one in that the buyer has agreed the sale subject to contract without having a home information pack. We do not really need one. All the information will be given by my children's solicitors to the other party's solicitors as and when it is needed. They will be in a position to explain why they are not giving out information on, for example, the condition of the property and on exactly how my children will get title. They will be able to do so and it will be achieved in one way or another.

For all those reasons, I wholeheartedly support this group of amendments.

Baroness Hanham

My Lords, I support the amendment moved by my noble friend Lord Hunt of Wirral. As the Front Bench team, my noble friend Lord Hanningfield and I are happy to sign up to it. My noble friend moved the amendment with a great deal of expertise and laid out—both now and on Report—very clearly the problems that we and those who support the amendment envisage in making the home information packs available on a compulsory basis.

The Minister has proffered only one reason of any resonance for having the home information packs—and that is for cases where people may be searching for more than one property. In such situations, they may have to carry out surveys on more than one property and incur extra expenditure if the sale falls through. But we are here considering expenditure on home information packs, which will have to be provided on the first day of the sale process. The cost will initially be borne by the seller but, by definition, they will become wrapped up in the cost of the purchase.

As we have said on umpteen occasions, it is extremely unlikely that the purchaser will be able to rely on these packs—particularly on the home condition report which, at the moment, is not acceptable even to mortgage lenders. Not many purchasers rely on a mortgage lender's survey—surveys are carried out for different reasons—and, if they do not do so now, they are not going to rely on a home condition report. As a result, they will end up paying for the home condition report and for an additional survey.

We have not managed entirely to tease out information on for how long these home information packs will be valid. We do not know whether they will be sufficiently robust to survive for longer than, say, three months. Properties may come on to the market and sell very quickly. If they are going to sell quickly, they will do so whether or not there is a compulsory information pack. Many matters may occur over a short course of time which may involve a new pack having to be prepared for a property at very short notice.

A great deal of bureaucracy will lie behind these information packs. The bureaucracies will have to be set up with trading standards to ensure that they are established in accordance with government legislation and government standards. We have never understood why the Government wanted to get muddled up in the property market. They have already raised enormously the cost of property by vast increases in stamp duty over the past few years. This, again, will be an additional burden.

The Minister begged in aid the support of a number of organisations within the industry, but at the Report stage most of that was shot down and we were left with HBOS and the Consumers' Association backed-in behind them. But the Consumers' Association has made no attempt to work out the costs of the packs. As my noble friend Lord Hunt said, they could cost anything up to £1,000, but no one seems to know how much they will actually cost or what they will ultimately achieve.

We have opposed the compulsory nature of these packs from the outset. We can see no purpose at all in the Government intervening in this part of the market. If a seller wishes to put together all the information and have it available, that is fine—it is happening at the moment—but why try to intervene further? The Government appear to believe that this will improve the functioning of the housing market. However, the only thing that is having an effect on it at the moment is the increase in interest rates, which is beginning to depress the housing market as we speak. I do not believe that any compulsory home information pack will make the movement of houses for sale any better than it is at the moment.

I am pleased to support my noble friend's amendment. As we have said before, we believe that the Government are profoundly wrong in trying to make these packs compulsory. I support the amendment moved by my noble friend.

The Earl of Caithness

My Lords, like the noble Baroness, Lady Hamwee, I thank the Minister for the correspondence between the Report stage and now. Unlike at earlier stages, ibis correspondence reached me and I am grateful for that. It has certainly helped.

What the Government are proposing is unique in the world: no other country is seeking to do, or does, what the Government are trying to foist on to England and Wales. Scotland is not doing it; Denmark is not doing it; and New South Wales—a state, not a country, which the Government have prayed in aid—has a lesser scheme than the one they are proposing for us. None of the other states in Australia are following what it is doing.

For years the Government have been telling us that the home information pack is a marvellous device which will solve all the ills of the property buying process. If there was any truth in that statement, then all agents would be already using the packs, but very few are, and all consumers would be demanding them, which they are not. Quite clearly the Bristol trial, which was flawed in a number of respects, showed that many consumers did not use the packs when they were given them. The packs were not the success that they were supposed to be.

The consequences of having compulsory home information packs will be twofold. First, they will unquestionably reduce the number of properties on the market. At the moment, there are no costs up front for someone who wishes to put his property on the market. That will not continue, particularly when you have to bring in surveyors to carry out a home condition report. At some stage there will be a very nasty bill for the seller, whether or not the property is sold. A person who does not sell his property, for whatever reason, will be faced with a great deal of abortive costs, much more than those faced by a current buyer who fails having conducted a survey.

Secondly, home information packs will reduce the flexibility for marketing. If one receives instructions to market a property, it is very important that you are able to do so immediately. The conditions that the Government are imposing will prevent that. It will mean a further delay in the housing market.

The Minister will say that research carried out by the Government is one of the reasons for the introduction of home information packs. That information was contained in a document Key Research on Easier Home Buying and Selling. Some of the wording used is questionable in its definition, but it shows that only 13 per cent of properties that did not go through to completion failed because of an unfavourable survey. That is a small percentage.

But it is even smaller than that in reality. If one accepts the national fall-through rate as being 28 per cent of all transactions—but I do not believe that it is; these are the Government's figures and I think it is more like 15 per cent from research carried out by the National Association of Estate Agents—then 13 per cent of the failures due to an unfavourable survey means that only 3.64 per cent, less than 5 per cent, of all failed transactions was due to a bad survey.

5 p.m.

As has been pointed out by my noble friend Lady Hanham, the Minister said that the big agencies were pro the pack. Of course they are pro the pack when the legislation is introduced. The reason is simple: in the pack is the home condition report. We shall discuss that in more detail on Amendment No. 40. It is purely a commercial exercise as far as the agents are concerned.

The cost of a home information pack will be a minimum of £300. That means that every year—not just the first year—there will be a £600 million bonanza for estate agents and surveyors. That is an unacceptable price to pay for a report of little value. It is only as good as the surveyor can make it. I shall come on to that in more detail on Amendment No. 40. The Minister may say that the cost of the failed transactions from the buyers' point of view is £350 million, but remedying that with a £600 million cost seems totally ludicrous.

The noble Baroness, Lady Hamwee, spoke about agents, and I confirm what she said. As an agent myself, I think it would be wrong for me to vote for something that will potentially give my firm this extra money for no benefit to the consumer.

Another concern about the home information packs is that there is no restriction on where the information will go. The noble Lord, Lord Rooker, said: We recognise that there are circumstances in which the seller would not want information contained in the home information pack to be disclosed to anyone outside the immediate home buying and selling process".—[Official Report, 20/10/04; col. 786.] There can be no control at all on what happens to the contents of a home information pack.

What happens with regard to companies doing damp-proofing? What about companies providing electricity or gas to one's house, or even builders? If they set up their own team of people to do home condition reports, they will have a huge commercial market advantage. If a builder sets up a team of people to do home condition reports, his work will increase substantially. It is a wonderful ploy for people to make a lot of money but with no benefit to the consumer.

A voluntary scheme will stand or fall on its merits. If the pack can really do what the Government say it will, there should be little difficulty in agents convincing sellers to sign up for it. The Government, after all, spend large amounts of money telling us of the dangers of obesity and smoking. Perhaps they could extend their campaign to tell us of the dangers of buying a property without a home information pack. If the Consumers' Association or Which? are correct, and the majority of buyers find a pack useful, there will be pressure on sellers to produce one or risk not selling.

The Minister is keen to see the market implement his proposals. He is demonstrably less keen to allow consumers to decide whether they want them or not.

Lord Fowler

My Lords, I support the amendment of my noble friend Lord Hunt, which would make the provision of the home information pack voluntary, and I do so for this reason. What the Government are doing is totally inflexible—placing a duty on sellers to provide a home information pack in all circumstances. The Government are basically imposing a blanket duty. With that duty, as my noble friend so rightly says, comes an extra cost, which could be £800 or £1,000. It is a substantial cost.

On Report, I mentioned that between 1992 and 1998 I was the chairman of the National House-Building Council. The council, as well as other warranty organisations, provides 10-year warranties, guarantees for the buyers of new homes. I did not see why the duty in the Bill should be placed on sellers of houses covered by warranty organisations. They were already providing consumer protection of a much more profound kind than is envisaged here. I was not alone in that, as the noble Baroness also put down an amendment on that point. Indeed, I extolled the virtues of organisations such as NHBC, their high standards of inspection and the importance of their service to the public.

If I may digress for 30 seconds, little did I know that, literally as I was speaking, extolling and urging the importance of service to the public, my local authority was, without any notice, digging a foot-deep trench outside the front of my house in London, cutting off the parking area from the road. At least my car was on the outside, which is more than can be said for my neighbour, whose car was on the inside. So there is some importance in service to the public—I hope that my local authority is listening to this.

At the risk of the same thing happening again, let me say seriously that warranty organisations such as the National House-Building Council provide consumer protection in a number of ways. They provide a 10-year warranty; they provide a warranty based on close, stage-by-stage inspection of the house being built; and they provide a warranty that can be passed on from one owner to another. It is an important part of consumer protection, and it gives strong protection.

The question I ask is the question I asked previously: what, in addition to that protection, will be provided by the Government's proposals? The warranty is more valuable; there is no point in adding cost to the vendor of another pack; and there is no point in the additional bureaucracy which inevitably goes with that.

Frankly, in the absence of the sensible exemption that I and others urged on the Minister on Report, I have no other course but to support the amendment. However, having listened to my noble friend Lord Hunt and to the rest of the debate, I think there is a range of additional reasons why the amendment should be supported. It would be much wiser for the Government to go down the path suggested by my noble friend than the way they are going at the moment.

Lord Selsdon

My Lords, I get the feeling that I am one of a group of naughty children complaining that Nanny has said we should not do this and that we might be smacked. No one on the other side seems prepared to go into bat with the noble Nanny—I mean, the noble Lord, Lord Rooker.

I support the principle of this. The Minister was kind enough to invite us to a meeting in Committee Room 3 or 4; there he was, with the Minister from the other place and a range of officials, willing to try to co-operate. Only three Members of your Lordships' House were there. I felt that that was wrong. Then I thought, "Maybe they are not in the real world". I have already explained my role in the building field.

Since the last stage of the Bill, I asked myself what I would regard as relevant information if I were Secretary of State. I asked people who are good at selling houses. Included in the sort of things that are considered relevant information these days are health and safety. For instance, does anything near the property let off more than one decibel of noise, including aeroplanes that may go over, or rat runs in the morning? These are the sort of things that people want to know. Is there a bus route nearby that is safe for children to get back on? If you want to sell a house, you produce all the favourable information you can and then produce what the estate agent or lawyers require of you. Last time I spoke I emphasised that it was the lawyers who hold everything up. In general, when we do our own conveyancing, we do it within 24 hours. What happens with the legal brigade is that they write to each other; they cannot communicate and then say that they have been in touch—got a fax but not got one back. They delay everything. People who do not understand the legal profession think that something has gone wrong. They get extraordinarily nervous and wonder, "Is it going to go through or not? Can we proceed with buying our house?" That is part of what I would call private sector bureaucracy.

I then wondered what I would do if I were drafting this Bill. I would do very much what the noble Lord, Lord Rooker, has done, but I would not make it legislation. I would go along and talk to Sir Derek Higgs or anyone who writes the combined codes such as Cadbury, and others, and see whether they could introduce a combined code for estate agents, lawyers, surveyors and everyone else involved. Within that combined code should be all the things that should or should not be done.

I am feeling sensitive because as a senior non-executive director of a medium-sized company in the construction industry, I spent the last week doing nothing but trying to interpret the combined code. I came to the conclusion that I rather like the Albanian language which has 32 letters in it. When I first went to Albania I said, "You're in a bit of a hopeless situation". They said, "No, you do not understand. Hopeless does not mean no hope: it means less hope than anything else that you can think of". Useless does not mean no use and worthless does not mean no worth. This part of the Bill is worthless and useless, but it should be turned not into a voluntary organisation but a combined code that the agents would accept.

Depending on the part of the world that one is in, if one wants to sell a house the agent will usually take time to come round and see it and then he will send a questionnaire. That questionnaire will have all sorts of questions in it. He will require that, at his own expense, a little man—who one might think was a burglar—comes round with an electronic machine and does a quick floor plan. But they do not worry about the cubic feet. I have always worked in cubic feet all my life. Everyone else works one dimensionally—flat. Cubic feet are very important when one wants to heat a building.

Then one gets a solicitor and he produces another box-ticking exercise, which he then sends to another solicitor and they all tick the boxes about whether the fittings are included or whether it would be a good idea to get below the threshold for stamp duty by saying that one is buying a washing machine for rather a large amount of money—to get below the figure and save a little. Apart from that, the exercise could just involve box ticking.

However, then it comes to the question of having a full survey, and I would hate to go back and point out the number of occasions when I had to assist people in litigation with a surveyor who says, "It's nothing to do with me old chap. I passed it to my insurers and they will deal with it". Three or four years later when the bill has risen, one is told that one may be able to help one's friend or client get some money but it will cost £30,000 to get back £120,000 because of the dry rot that was not there. The whole area is a bit of a mess because the information provided is not necessarily reliable.

If we follow health and safety regulations further down the line, in many buildings there may be a lead pipe hidden in a wall somewhere which may cause lead poisoning. One of the objectives of the information pack is health and safety. Then there is the question of whether one has re-jigged the house and installed an open-plan kitchen. If it is between the sitting area and the front door, there has to be a fire door under building regulations. Is it a conversion? Have the necessary approvals been obtained and such things? I believe that 90 per cent of the housing stock in the United Kingdom would be condemned if every one of the regulations that exist at the present were followed.

Will the Minister consider for a moment whether there is something between a voluntary information pack and some form of code which the industry would be willing to accept? Then, the responsibility would rest on the shoulders of the person acting for the vendor or the buyer. It is not difficult, because most of the facts are there. Should the Minister want to know what sort of questions to ask and answer, I could provide him with several thousand that have been asked over time.

My final tip to your Lordships is, if you really want to sell your house, as you know, you put some warm bread at the back of the house as they do in supermarkets and put on some fresh coffee—which should be Arrabiata. That smell makes a friendly environment and covers up the smell of the dog and everything else. We should be enjoying this debate and not worrying. The Minister's heart is in the right place; unfortunately his soul has been misguided.

5.15 p.m.

Lord Rooker

My Lords, the noble Lord, Lord Bassam, told me that it is my function to enthuse your Lordships about the home information packs. I will try to do that without the warm bread and coffee recommended by the noble Lord, Lord Selsdon. When the noble Lord extolled some of the issues that people might think important when buying a property, there was one that he did not mention, although that is not a criticism of his speech. I have done a fair bit of looking in estate agents' windows during the passage of this Bill to see what is there. So many times I saw, in large bold capital letters, "No chain". Why is "no chain" so important? It does not say anything about the size of the property, how many rooms it has, its colour, how big the garden is, whether it is south-facing or has a garage. "No chain" is not relevant to the bricks and mortar at all, so why is it relevant?

We all know why it is relevant. It means that we will not get gummed up. Contrary to what the noble and learned Lord, Lord Donaldson, said, we are not only concerned about the property that we are buying. We need also to know how many other people are waiting to buy and sell their homes before our person can get out of his property. The chain issue is important, which is why we have repeatedly said that this measure, if it operates, has to be compulsory and not voluntary. The chain is the essential issue about compulsion.

I wish to make another point in kicking off this debate. I regret to tell your Lordships and warn you in advance that this is not a five-minute defence.

Lord Donaldson of Lymingiton

My Lords, before the Minister leaves the question of the chain, of course it is important. However, it is very simple to ask the question. The seller will want to know whether there is a chain because, if there is, he will want to be able to consider alternatives. That does happen. In my own transaction, my children were asked whether there was a chain and they also inquired whether there was a chain at the other end. In the case of the first purchaser there was a chain, and shortly afterwards it broke and they could not go ahead. In the case of the second and current purchaser, he said, "No; not only is there no chain but there is no mortgage". That is very important information, but one can always ask. There is no need to put it in the information pack.

Lord Rooker

My Lords, that may be so in the odd examples given by the noble and learned Lord. However, the vast majority of properties are sold in a chain. The average chain is five or six properties long. There is no control over the rest of the chain and a fortune can be spent on reports on houses or dwellings that one does not end up buying.

Another issue must be put at the front of the debate, which relates to everyone save the noble Lord, Lord Fowler. I fully accept that he came to this debate from a different direction with regard to the national housebuilders' certification and warranty scheme. Basically, everyone who has spoken has been anti-consumer. I regret that.

Noble Lords

Oh!

Lord Rooker

My Lords, hang on a minute. That is because we are all looking at different consumers. The Government's key consumer is the buyer, not the seller. That has to be the case. I know that many buyers are also sellers, but there are massive numbers of first-time buyers. I was looking at today's press cuttings telling me that the Government are going to be defeated tonight. I have before me an article saying, "House information packs facing defeat. Lords set to reject seller's packs". I have another one from page 12 of the Guardian saying, "Bridget Jones gains in the housing market". It states: Figures released yesterday reveal the proportion of new mortgages taken out by single women—or singletons in Bridget-speak—buying their first home alone has more than doubled over the last 20 years". The big gainers in this measure are first-time buyers. It is anti-consumer simply to concentrate exclusively, as virtually every speech has done, on the sellers to the exclusion of those buying. I regret that. I shall do my best to answer the points individually, but there are some key issues that we need to discuss, as this is Third Reading and it is do or die.

Contrary to the remarks made by the noble Lord, Lord Hunt, the process is broke. We reject the case that the process is not broke and that we do not need to fix it—it is broke. The starting point for this amendment should be a clear acknowledgement of the deficiencies of the present scheme. One would never think that there were any deficiencies of the present scheme, to listen to noble Lords who have spoken today, but there are major deficiencies in the home buying and selling process. In some ways, the noble Lord, Lord Hunt, ought to know better, but I do not want to be too critical of him. Those deficiencies cause misery and wasted costs of hundreds and hundreds of pounds for people, as deals fall through. The emotional anxiety goes beyond the pale for some people. Those are deficiencies that this group of amendments would perpetuate.

The lead with this group of amendments is being taken, I regret to say, by the Opposition—simply by vested interests, who do not want a change and are unwilling to contemplate modernising the process.

Noble Lords

Oh!

Lord Rooker

My Lords, I am not going to sugarcoat this case. I have learnt diplomatic skills in your Lordships' House. Your Lordships may not think that I am using them at the moment, but I am. I am simply not prepared to sugar-coat the case, which must be put in as bold and stark a way as possible.

Lord Hanningfield

My Lords, I resent the Minister's remarks. I am leading on the amendments but I have no vested interests at all. As a Front-Bench speaker, I have always felt that the reports should either not be in the Bill at all or they should be voluntary. I resent the Minister's suggestion that we have vested interests.

Lord Rooker

My Lords, I am not accusing any noble Lords of having vested interests, but of putting the case for vested interests outside—for the estate agents and particularly the legal profession. Oh, here we go!

Lord Phillips of Sudbury

My Lords, we have listened to the endless depredations of the noble Lord, Lord Selsdon, about the professions, and mine in particular. Does not the Minister accept that the estate agency and legal professions will do very nicely out of the proposed amendments in Part 5—very nicely indeed?

Lord Rooker

My Lords, they do very nicely out of the fact that so many deals fall through at present, causing people extra costs, which is what we want to avoid.

We have done a lot to create sustainability in a range of policies, and this provision is an attempt to do that in the home buying and selling process. We want to create a better and fairer housing market, because we believe that the system is actually broken. There have been a lot of changes in the past 30 years—I fully accept that—and changes since I first came to Westminster. More people now own their own homes, and still more want to do so; that is never ending, and it is a free choice. But one thing that has remained constant, decade after decade, no matter which government have been in power, is that the system of buying and selling homes drives people to distraction.

The answer to many of the problems, although I do not say that it is the final answer—no one is saying that—is a better informed market. That happens in many other walks of life, and it is not rocket science. We know that markets work best when buyers and sellers are in possession of relevant information, and the housing market is no exception. That has been the conclusion of every review of the problems of home buying and selling in England and Wales.

There have been quite a few reports, but I want to mention just a couple of them, because they transcend the generations. The Law Commission report on "subject to contract" agreements, for example, was laid before Parliament as long ago as January 1975. Then in 1984 there was the first report of the Conveyancing Committee, better known as the "Farrand report"—I believe that that was Julian Farrand. More recently, the previous Conservative government responded to concerns about inefficiencies in the market. The Lord Chancellor's Department report, Surrey of options for simplifying the house purchase process, published in 1993, concluded that sellers should provide property details at the outset and conveyancers could reduce the uncertainties of chains by encouraging the greater disclosure of information. So it is not as though the proposals have come fresh to this Government. They have been around for decades and have been considered by previous governments of both political persuasions.

Kate Barker is a member of the Bank of England's Monetary Policy Committee. She produced the Barker report, on which the Government will pronounce towards the end of next year. In her report, she said: An efficient housing market depends on buyers and sellers having available to them accurate and comprehensive information about individual properties as early as possible. This is often not the case at present, and as a result many transactions fail or take longer than necessary. Home Information Packs seek to address this market failure and, providing that they are properly researched with the industry and consumers"— which is what the Government are intending to do— should reduce the risk of transaction failure and speed up the buying and selling process. I welcome the greater transparency that they are expected to bring, and would not anticipate that there will be an impact on house prices as a result of their introduction". Unlike the opposition parties, we have taken some courage on this issue. I realise that ours is a high-risk strategy, as we have said in debating other parts of the Bill. The fact that 40,000 dwellings are marketed every week means that if we get our provisions wrong, the Government are in deep trouble. Once we start the process, we are on a conveyor belt, and there will be 40,000 annoyed people each week if it goes wrong. Therefore, it will not he introduced until we are absolutely rock solid and sure that it will work, along with the regulations and our partners and stakeholders in the industry—the buyers, lenders and everybody else. The provisions will not be introduced overnight; it will be at least early 2007 before they are introduced, and they will not be introduced then if there are any doubts that it might not work, because we will have done a complete dry run.

We want to see people taking proper responsibility for their stewardship of the housing stock, including its upkeep and energy efficiency. No link is being made in this debate between the demands for more and better use of the existing stock in creating sustainable communities and for higher energy and other standards, and the role that home information packs will play in achieving those ends. That is remarkably missing from Liberal Democratic contributions today, but it is something that they have amendments on—which I shall come to in a moment. They say, "Get rid of everything, but keep the energy efficiency reports", which is a preposterous and impractical proposition, which I shall elucidate in a moment.

Noble Lords

Oh!

Lord Rooker

My Lords, I shall come back to that point, because it is part of the Liberal Democrat agenda.

All the evidence suggests that buyers and sellers are unhappy with the way in which properties are bought and sold. We know that—many people have complained about the process. Buyers are losing hundreds and hundreds of pounds on abortive surveys. Survey after survey is done on the same property, which no one ends up buying. What an absolute waste for the buyer! Noble Lords have not mentioned that at all in this debate. That is why I say that the whole thrust of the debate has been anti-consumer, if one considers it from the buyer's point of view. Many of those buyers, particularly the first-time buyers—the Bridget Joneses of this world, as it were—are the least able to afford those costs, and often bear the brunt of them.

Those costs can be crippling for hard-working families, as well as single people, and they are a cost for the economy as a whole, because they do not produce any assets. No one gains from those abortive surveys, except for the people who have carried them out and the other professionals involved. That is certainly a cost to the economy as a whole.

Baroness Hanham

My Lords, may I interrupt the Minister while he waxes so lyrical? Would he address the point that I have raised repeatedly, from Committee stage onwards, about the fact that people are not going to be able to rely on the home condition reports and will undertake surveys anyway? if they are going to do that, the Minister's whole argument falls flat on its face.

5.30 pm
Lord Rooker

Yes, my Lords, it would do—and I shall come to that. I shall come to all the issues, because I am determined that no one will be able to say that the Government did not employ the full range of arguments, whatever the result of the vote later tonight. That is what I am paid to do—and I quite enjoy it.

We have to make the point about those central issues. It is a seductive argument that we should leave it to the market and make the proposals voluntary, not compulsory. I accept that that is a seductive argument, which needs responding to. It is true that there are one or two areas of the country where the process operates voluntarily. Estate agents offering home information packs or condition surveys up front report that buyers and sellers welcome them, and many are positively enthusiastic. But penetration has been absolutely minimal in the market. We accept that, and I shall not go over the figures.

There are probably a couple of reasons for that. First, it is simply easier to smarket a property without one; there is no doubt about that—it is easier. Neither the sellers nor the agents acting on their behalf need to do more than provide the barest of details about the property. If that means that certain defects are not revealed initially, they might think that it is worth taking the risk. "It is for the buyer to find out about it", they would argue.

The second reason is that sellers and their agents fear that their extra efforts will not be rewarded and that others marketing without up-front information will gain at their expense. That is the issue of competition in the high street. So, it applies to sellers looking for another property who may well find that as a buyer they have to pay for surveys and searches on one or more other houses where the seller has decided not to provide the pack. That is the position across the market currently. Voluntarism will not break the mould. That is the key problem.

I turn to the issue of the number of sales that fall through. We have argued about the figures and the relevant research, and that argument should be put clearly on the record. As I said, in speaking about vested interests I cast no aspersions on any noble Lord. As I say, however, the thrust of the issue in trying to take out the compulsion element of home condition reports is whether it will support the seller's interests at the expense of the buyer's.

In no other sphere of buying and selling products in this country are the odds so stacked in favour of the seller. They have no responsibility to market the property fairly, and that situation is backed by an industry that is geared to reinforce the unequal position. The industry never takes the part of the buyer; always of the seller. That is how the market currently operates. It would suit many of the vested interests if it stayed that way.

For example, it is clearly in the estate agent's interest to achieve the best price in the shortest possible time. No one can deny that. They gain the maximum income and profit for the least amount of work. So a system that hustles buyers—and it can hustle buyers—into taking quick decisions on the basis of little or no information suits estate agents very well. It is no matter that buyers who act in haste will sometimes repent much later when they receive their reports on the property and that causes them to drop out of a purchase after they paid money for reports.

Worse still, they could go through with the purchase and find that they have bought a pig in a poke when the true story comes to light after the purchase is completed. Others will say, "They should have taken professional advice. It is their fault. Buyer beware". That is not good enough in this day and age.

Sellers are not always the gainers in a rushed sale either, particularly if their property has not been properly exposed to the full market. People talk about a quick phone call on a Monday morning to the effect, "Get the property on the market. You'll get a quick sale because we have a list in the filing cabinet of people who might want this property". The buyer might say, "Hang on, I want to test the market on this". The estate agent will say, "No, we have a buyer here. We have someone very interested in this". So the buyer will also be damaged.

Lord Northbourne

My Lords, as a fellow of the Royal Institution of Chartered Surveyors, perhaps I may say to the Minister that I rather resent his comments about estate agents.

Lord Rooker

My Lords, if I am striking home, then good.

Lord Northbourne

My Lords, it is extraordinarily unfair, if I may say so, Minister. I am saying that you are not giving a correct picture of the way in which chartered estate agents and chartered surveyors behave.

Lord Rooker

My Lords, I am painting a picture of a market that does not work and disadvantages consumers. That is the point. As I have repeatedly said, I am not making personal allegations against any noble Lord, any particular company or anything like that. We know that the market does not work from the number of collapsed sales, the heartache, and the waste of assets, money and income. Left to its own, notwithstanding all the reports and inquiries that I mentioned, the profession has not done enough to deal with the situation.

I was addressing the issue of quick sales. If the estate agents were following their own guidance from the National Association of Estate Agents, they should not be able to make these quick sales over a Monday morning and afternoon. Their own guidance instructs and advises them to carry out certain procedures which could not be done in a day.

So the idea of first-day marketing—to which we may return later—is a nonsense. If the law and the National Association of Estate Agents guidance are followed, there will not be instant marketing. If there is, those so-called professional estate agents are not following the guidance of their own national association. We know that because of what they are required to do and produce from the guidance that has been issued. Later, if necessary, we can discuss that in greater detail in Amendments Nos. 31 and 32. These opposition amendments are underwriting the unfairness and inefficiency that dogs the housing market.

We understand that the seller needs reassurance—that is absolutely true—as part of the package. As I say, however, these amendments seem intent on ignoring the difficulties experienced by the buyer. I ask noble Lords to think about the buyer before they go into the Lobby to vote down the provision. The only message being sent so far to buyers is, "Grin and bear it; it is your own fault". I submit that that is not good enough.

I shall spend a few minutes on the issue of first-time buyers. First-time buyers have the encouragement of not having to produce a home information pack before entering the market. Nothing at all is on offer to those who already have a foot on the ladder but are faced with the lottery that passes for the current buying and selling process. We are asking people to accept a false prospectus, and that simply is not fair.

We are proposing a rounded approach which has a degree of compulsion—as I explained, because of the chains, it will not work without that—that will not be imposed overnight. There is still a huge amount of consultation to be done with buyers and lenders and all the professions that are working very positively on the department's working parties to get this right. We are proposing a rounded process and approach to help first-time buyers into sustainable home ownership and help all those who need to avoid the frustrations and costs that are their current lot. We ignore that at our peril.

The Opposition are backing a vision in which the acquisition and possession of a home is an end in itself and not one in which the home is an asset not only for the current owner but for following generations. It is short-sighted and, of course, it short-changes the buyers. Voluntarism is a virtue. I fully accept the point that the late Lord Conrad Russell made. In the vast majority of issues, people should try to find a way of resolving problems before asking Parliament and the Government to sort them out. People's automatic response to a problem should not be to say, "The Government should do something about it". If people do not do so, it will lead to loads of legislation, regulation and interference.

After due consideration of the issue—on which, as regards the criminal offence arguments in the Homes Bill before the previous general election, the Government were rightly rubbished—we have gone through processes and arrived at the considered conclusion that the voluntary approach will not work, simply because of the way in which the market operates in this country. Because of chains, a voluntary scheme will never work properly in this country. Ultimately, this is consumer protection legislation designed to turn a very stressful experience into a better one. I will not say that it can be a happy experience because I suspect that buying, selling and moving will never be a happy process. However, it could be a lot less stressful than it is now.

I turn to the industry, about which we have heard a few tales. We have had the advice of the Council of Mortgage Lenders, which of course is neutral, professional and fair. It does not exactly make the case one way or the other, but it makes a point: the voluntary system will not work. However one reads the brief that the Council of Mortgage Lenders sent to noble Lords, it still says: The CML finds it difficult to envisage a situation where lenders would adopt dual processes to cope with applications where there is or is not a HCR available". It just would not work. The association makes that point.

In the following paragraph, the association makes a point—which, of course, no one read out—on valuations by home inspectors. In the final sentence, it states: "We hope this"—that is, the qualifications and skills of the home inspectors— will mean that, where they are still necessary, valuations can be provided quickly and cost effectively, using the HCR as a basis". That may not go down too well on the Opposition Front Bench, but that is the view of the Council of Mortgage Lenders. It has been dismissed in the speeches which have been made that the biggest lender—perhaps it is HBOS—is in favour of it, but that does not matter. It is in favour of it only in the sense that it is geared up to operate the system. It has said that it will operate the system. It is not saying that it is going out to promote the Bill because it wants Royal Assent. It wants to know what Parliament's views are.

One cannot dismiss the fact that the biggest lender in the country is willing and able, and can see positive advantages in this if it is what Parliament decides. Our contacts with the main players in the industry show that their thinking is now not about if, but about when. They are looking at this issue. Many of them already have the necessary preparations and planning under way and, as it requires a degree of investment, that will accelerate quickly after the Bill gets Royal Assent and people are confident that it will happen. The home condition report is an important component of the pack. Many sales are delayed by condition-related problems, not just by the transaction. A voluntary home condition report is a bird that will never fly for everybody. There is no question about that.

I know that the noble Earl, Lord Caithness, has repeatedly claimed that reseach shows that the figure for the number of house sales that fall through is 13 per cent of transactions only and he has made the point that the figure is smaller than that. We claim that the figure is 43 per cent, based on our research. The 43 per cent failure rate is derived from the findings of the studies published on the 1998 research. In paragraph 615 of that research, the report indicated that in 13 per cent of cases the transaction failed following an unfavourable property survey commissioned by the buyer. But the research went on to say that a further 30 per cent of buyers withdrew as a consequence of their lender's valuation report. Opponents of reform tried to claim that that 30 per cent has nothing to do with the property's condition. Frankly, that is not on. I am not going to go to the wall about whether it is 43 or 41 per cent, but one thing is for sure, it is not 13 per cent.

Baroness Hamwee

My Lords, I was trying to make it clear that I accept the figure. I have no material to query it with. But if 30 per cent of transactions fall through following a lender's valuation survey and we do not have the confidence that lenders will use home condition reports as the basis for their valuations, where is this getting us?

Lord Rooker

My Lords, we are not talking about surveys of the same kind. I shall come to that in a moment when I talk about the kind of survey that will take place for the home condition report, as opposed to the current lender survey. People will know more about it before they make their offer. That is the point. At the present time, it is afterwards. That is where people are being shortchanged.

The point about the costs and the energy issue is not unimportant because lots of costs are bandied around. There will still be a need for sellers to provide an energy survey if we are to comply with the European Union Energy Performance of Buildings Directive. We know that there is cross-party support for the provision of energy efficiency information to home buyers. The compulsory element of this does not seem to cause any anxiety. When it comes in, it will be an EU compulsory issue that anything bought or sold must have an energy efficiency report. We estimate that that report could cost sellers about £150 if it is done as a free-standing energy report.

Under the proposals that we are debating it would form part of the home condition report costing about £300. The home inspector will make the same input but it will produce a double benefit: the energy survey and the valuable report on condition that all the parties, including the buyer's mortgage lender, can rely on. It will help transactions to go through smoothly, that would otherwise have failed. Why does anybody have the idea that later on we could say that we have a better system and will not have reports to help buying and selling because of the European Union scheme that will cost £150? What would anybody get out of that? In this case, they get two for the price of one. Also, there would not be inspectors. But in this system we will be geared up for people who are qualified and trained to do the job.

The requirement for the energy report is an example of the state intervening for a greater good. We fully accept that. In this case, for the good of the individuals concerned, the husbandry of the nation's energy resources—we all understand the reason for that—and for the good of the planet that we all share. The same arguments apply in the case of the home condition report and, as I see it, one cannot be in favour of one without the other.

5.45 p.m.

The issue of technological change has been raised from time to time and the Opposition has said that we do not need to go down this paper-based route because we can have electronic searches and electronic conveyencing. There is nothing between us on the merits of using new technology. We want to see the maximum use possible. Unfortunately, our discussions with the industry suggest that progress is still very patchy. This is where the home information packs are important because they will provide an incentive. There is no incentive at present to get on with using electronic technology in buying and selling. The incentive is not there because of the dislocation of the market and the fact that it does not work. We think that the home information packs and technological change are complementary and need each other to work. That point has been well made.

On Report, reference was made to the Law Society's TransAction scheme as a good example of how a voluntary scheme can work. Noble Lords have made the point that everybody who has bought or sold has used these tick-box forms. That involves the use of standardised forms and conditions of sale that are now accepted and used by most solicitors. I regret to say that my notes do not say "all solicitors". It is clearly a good thing but TransAction has not eliminated the problems with delays and failures that the home information pack is designed to tackle. We think that our proposals will supplement and build on the TransAction scheme by adding to it the other information needed by buyers. It is curious that the Law Society is pushing for a voluntary scheme when its own experience with TransAction demonstrates its limitations. It is entirely voluntary, but I accept that if one fills the forms in one is legally liable for the answers.

I shall try to respond briefly to all the points made in the debate. I have a good deal of sympathy with the points made by the noble Lord, Lord Fowler, regarding new properties. The Government are in no way criticising the work of the National House-Building Council. It provides a first class scheme of warranties for buyers of new properties. But, as I said in the note that I sent to the noble Lord, there is a problem that, once a new home is sold, its owner could make changes that affect the structural integrity of the property, which could invalidate the warranty in such a situation so that if a second buyer were to purchase the home with the warranty, but without a home condition report, he could find himself in a situation where the property had defects and the warranty had been invalidated. There is a real problem in respect of people buying a property with a warranty because it will not cover the second and third owners of new property. I will not read into the record all of my note about the effect on the second purchaser. The Government have taken the points made by the noble Lord very seriously and they have been considered by Ministers.

The noble and learned Lord, Lord Donaldson, made a point about selling flats. I am very reluctant to comment on individual circumstances but he is right that we all bring our individual circumstances to the debate. The home condition report on a flat will not cover the structure of the block. It will cover the internal parts of the flat, the common parts that lead to it and the roof space above it, if it is accessible. But, having said that, no one in their right mind should buy a flat in a block of flats unless he finds out who is responsible for paying for, let us say, a new flat roof, whether there is a sinking fund and what is its degree, whether major works are planned in the next 12 months and whether every person in the block is due to get a bill for £4,000 or £5,000 as his contribution. One would be out of one's mind if one did not ask about that.

I am not arguing that a home condition report will do that because it does not meet the point made by the noble and learned Lord, Lord Donaldson. But the idea that people will say that it does not matter because they are not individually charged is wrong. Some of my constituents who have bought flats were individually charged to the tune of thousands of pounds. Some of them were ex-council tenants who got a bill from the council for major refurbishments. It is not quite as straightforward as the current sale by the noble and learned Lord, Lord Donaldson. But I am very pleased his sale is straightforward, because I do not wish him any aggravation whatever.

As to the level of the home condition report not being acceptable to lenders, which was the point made in the intervention, I shall have to use jargon but the experts around me will know what it means. The home condition report is based on a mid-level inspection, sometimes known as "level 2". This is very similar to the level of inspection underpinning the current Royal Institution of Chartered Surveyors homebuyer's survey and valuation, which is acceptable to lenders. I explained earlier that I have gone through that process myself in the past 12 months, but in one part of the transaction only so it was not a buying and selling situation.

The home condition report inspection goes into much more detail than the simple valuation inspection—level 1—undertaken by many lenders currently. That is the answer to the noble Baroness, Lady Hamwee. There have been extensive discussions with lenders about the content of the home condition report, to ensure that it contains the information that they will need. It is crucial that the information is for their purposes.

The noble Earl, Lord Caithness, raised a point about damp-proofing companies and the builders who would gain. It is a fair example, but the government amendment on the home condition report register comes later. It is the one that my noble friend and I withdrew from debate on Report, as it was spotted by the noble Baroness, Lady Hanham. We were very unhappy; it was as much my fault as anyone else's, for not asking the right questions. Controls about what happens to the home condition report will be in the Bill, as we want to use the new clause that we will propose later. Our intention with that can be seen—it is to prohibit the use of information for direct marketing. In fact, it will be made a criminal offence. That is in the Marshalled List today in an amendment on the home condition report. It would be a criminal offence to violate the regulations.

The behaviour of home inspectors will be governed by a code of conduct. Failure to follow the code would lead to disciplinary action by the certification scheme. The code of conduct will set out the behaviour that is expected and would control the circumstances in which home inspectors could offer additional services. We envisage that the code would not permit a builder who was also a home inspector to undertake repairs identified in the home condition survey.

On behalf of all the home buyers in the country and in terms of their consumer interests, as opposed to those of sellers—they are sometimes the same people, but there are more buyers because of first-time buyers—I hope that the amendment will be rejected.

Lord Hunt of Wirral

My Lords, the debate has been wide-ranging and interesting, and I am very grateful to all those who have participated. I am particularly grateful to my noble friend Lady Hanham, who asked a question of the Minister—would the purchaser not want his own survey?—that has not really been answered. Despite all that he has said, we still have not had a response to it, nor to the question posed in the very effective speech of the noble Baroness, Lady Hamwee. She pointed out that the Council of Mortgage Lenders had said that lenders may not use the home condition report, so there is the strong likelihood that the system will not work.

I am particularly grateful to the noble and learned Lord, Lord Donaldson, who pointed out that perhaps I should have omitted the party-political bluster. I apologise to him for that, because the issue is so important and I said that I wanted to be as impartial as possible. I shared with the Minister in advance some of the points that I would make, and I hope that he recognises that the issues are huge. I thank my noble friends Lord Fowler, Lord Selsdon and Lord Caithness very much for their contributions.

The key question that the Minister has not really answered is on compulsion. He sought to answer it in his first few lines when he mentioned the chain, but home information packs will not affect the chain one bit. There are a number of reasons why sales do not proceed. All that the home information pack will do is introduce an additional cost in every case, and there are 1.5 million houses for which the sales are not aborted.

It "ain't" broke, so why are we trying to fix it with the principle of compulsion? I hope that the Minister will recognise that he has not countered or addressed that principle. He finally said, "Trust us. If there are any doubts on whether the measure will work, we won't bring it in". That is quite a limp argument. Surely we should be reasonably confident that it will work. It will not work because compulsion has no place in consumer protection legislation, which always seeks to establish equality between parties. It has no place in compelling, between two private individuals, the production of the report, which will add to the cost. We should test the opinion of the House.

5.55 p.m.

On Question, Whether the said amendment (No. 29) shall be agreed to?

Their Lordships divided: Contents, 179; Not-Contents, 132.

Division No. 2
CONTENTS
Addington, L. Bridgeman, V.
Alliance, L. Brittan of Spennithorne, L.
Alton of Liverpool, L. Brooke of Sutton Mandeville, L.
Ampthill, L. Brookeborough, V.
Anelay of St Johns, B. Brougham and Vaux, L.
Attlee, E. Burnham, L.
Baker of Dorking, L. Byford, B.
Beaumont of Whitley, L. Caithness, E.
Blatch, B. Cameron of Dillington, L
Bonham-Carter of Yarnbury, B. Carlile of Berriew, L.
Bradshaw, L. Carlisle of Bucklow, L.
Carnegy of Lour, B. Miller of Chilthorne Domer, B.
Chadlington, L. Miller of Hendon, B.
Chorley, L. Monro of Langholm, L.
Clement-Jones, L. Monson, L.
Colville of Culross, V. Montagu of Beaulieu, L.
Colwyn, L. Montrose, D.
Cope of Berkeley, L.[Teller] Morris of Bolton, B.
Craig of Radley, L. Mowbray and Stourton, L.
Craigavon, V. Moynihan, L.
Crathorne, L. Murton of Lindisfarne, L.
Crickhowell, L. Neuberger, B.
Dean of Harptree, L. Newby, L.
Dholakia, L. Newton of Braintree, L.
Dixon-Smith, L. Noakes, B.
Donaldson of Lymington, L. Northover, B.
D'Souza, B. Norton of Louth, L.
Dundee, E. Oakeshott of Seagrove Bay, L.
Dykes, L. O'Cathain, B.
Eden of Winton, L. Onslow, E.
Elles, B. Palmer, L.
Elliott of Morpeth, L. Park of Monmouth, B.
Elton, L. Peel, E.
Ezra, L. Perry of Southwark, B.
Falkland, V. Peyton of Yeovil, L.
Falkner of Margravine, B. Phillips of Sudbury, L.
Fearn, L. Platt of Writtle, B.
Fookes, B. Plummer of St. Marylebone, L.
Fowler, L. Rawlings, B.
Freeman, L. Razzall, L.
Garden, L. Reay, L.
Gardner of Parkes, B. Redesdale, L.
Garel-Jones, L. Rees, L.
Geddes, L. Rennard, L.
Glentoran, L. Renton, L.
Goodhart, L. Roberts of Conwy, L.
Goschen, V. Roberts of Llandudno, L.
Hamwee, B. Rodgers of Quarry Bank, L.
Hanham, B. Rogan, L.
Hanningfield, L. Roper, L. [Teller]
Hayhoe, L. Rotherwick, L.
Henley, L. St John of Fawsley, L.
Hodgson of Astley Abbotts, L. Saltoun of Abernethy, Ly.
Holme of Cheltenham, L. Sandberg, L.
Hooper, B. Sanderson of Bowden, L.
Hooson, L. Scott of Needham Market, B.
Howard of Rising, L. Seccombe, B.
Howe, E. Selsdon, L.
Hunt of Wirral, L. Sharman, L.
Jacobs, L. Sharp of Guildford, B.
Jenkin of Roding, L. Sharples, B.
Jopling, L. Shaw of Northstead, L.
Kimball, L. Shutt of Greetland, L.
King of Bridgwater, L. Skelmersdale, L.
Knight of Collingtree, B. Smith of Clifton, L.
Laing of Dunphail, L. Steel of Aikwood, L.
Lane of Horsell, L. Steinberg, L.
Lester of Herne Hill, L. Stewartby, L.
Linklater of Butterstone, B. Stoddart of Swindon, L.
Liverpool, E. Strathclyde, L.
Livsey of Talgarth, L. Swinfen, L.
Lucas, L. Taverne, L.
Luke, L. Tenby, V.
Lyell, L. Thomas of Gresford, L.
McColl of Dulwich, L. Thomas of Swynnerton, L.
MacGregor of Pulham Market, L. Thomas of Walliswood, B.
Thomson of Monifieth, L.
Maclennan of Rogart, L. Tope, L.
McNally, L. Trenchard, V.
Maddock, B. Trumpington, B.
Mar, C. Vallance of Tummel, L.
Mar and Kellie, E. Vinson, L.
Marlesford, L. Waddington, L.
May of Oxford, L. Wade of Chorlton, L.
Mayhew of Twysden, L. Wakeham, L.
Methuen, L. Wallace of Saltaire, L.
Michie of Gallanach, B. Walmsley, B.
Watson of Richmond, L. Williamson of Horton, L.
Wilcox, B. Willoughby de Broke, L.
Williams of Crosby, B. Wolfson, L.
NOT-CONTENTS
Acton, L. Irvine of Lairg, L.
Ahmed, L. Jay of Paddington, B.
Alli, L. Jones, L.
Amos, B. (Lord President of the Council) King of West Bromwich, L.
Kirkhill, L.
Archer of Sandwell, L. Lea of Crondall, L.
Ashley of Stoke, L. Leitch, L.
Ashton of Upholland, B. Levy, L.
Bach, L. Lipsey, L.
Bassam of Brighton, L. Lockwood, B.
Bernstein of Craigweil, L. McDonagh, B.
Bhattacharyya, L. McIntosh of Haringey, L.
Blackstone, B. McIntosh of Hudnall, B.
Borrie, L. MacKenzie of Culkein, L.
Bragg, L. Mackenzie of Framwellgate, L.
Brooke of Alverthorpe, L. McKenzie of Luton, L.
Brookman, L. Mallalieu, B.
Burlison, L. Massey of Darwen, B.
Campbell-Savours, L. Maxton, L.
Carter, L. Mitchell, L.
Chandos, V. Morgan of Drefelin, B.
Christopher, L. Morris of Aberavon, L.
Clark of Windermere, L. Murphy, B.
Clarke of Hampstead, L. O'Neill of Bengarve, B.
Clinton-Davis, L. Parekh, L.
Cohen of Pimlico, B. Patel, L.
Crawley, B. Patel of Blackburn, L.
David, B. Paul, L.
Davies of Coity, L. Pendry, L.
Davies of Oldham, L.[Teller] Pitkeathley, B.
Dixon, L. Plant of Highfield, L.
Drayson, L. Prosser, B.
Dubs, L. Puttnam, L.
Elder, L. Radice, L.
Evans of Parkside, L. Rea, L.
Evans of Temple Guiting, L. Rendell of Babergh, B.
Falkender, B. Rooker, L.
Farrington of Ribbleton, B. Rosser, L.
Faulkner of Worcester, L. Rowlands, L.
Filkin, L. Royall of Blaisdon, B.
Finlay of Llandaff, B. Sainsbury of Turville, L.
Fyfe of Fairfield, L. Sawyer, L.
Scotland of Asthal, B.
Gale, B. Sewel, L.
Gavron, L. Simon, V.
Gibson of Marker Rassen, B. Snape, L.
Giddens, L. Stone of Blackheath, L.
Goldsmith, L. Taylor of Blackburn, L.
Gordon of Strathblane, L. Temple-Morris, L.
Goudie, B. Thornton, B.
Gould of Potternewton, B. Tomlinson, L.
Graham of Edmonton, L. Triesman, L
Grantchester, L. Truscott, L.
Greengross, B. Tunnicliffe, L.
Grocott, L. [Teller] Turnberg, L.
Harris of Haringey, L. Turner of Camden, B.
Harrison, L. Wall of New Barnet, B.
Hart of Chilton, L. Warner, L.
Haskel, L. Warwick of Undercliffe, B.
Haworth, L. Weatherill, L.
Hayman, B. Whitaker, B.
Henig, B. Whitty, L.
Hilton of Eggardon, B. Wilkins, B.
Hollis of Heigham, B. Williams of Elvel, L.
Hoyle, L. Winston, L.
Hughes of Woodside, L. Woolmer of Leeds, L.
Hunt of Kings Heath, L. Young of Norwood Green, L.

Resolved in the affirmative, and amendment agreed to accordingly.

6.6 p.m.

[Amendments Nos. 30 to 32 not moved.]

Clause 152 [Duty to provide copy of home information pack on request]:

Lord Hunt of Wirral moved Amendment No. 33:

Page 106, line 28, at end insert— ( ) That duty does not apply if and for so long as the seller determines that the property is to be sold without a home information pack, and in the event the estate agent for the seller is the responsible person, the seller has so informed him.

On Question, amendment agreed to.

Clause 154 [Duty to ensure authenticity of documents in other situations]:

Lord Hunt of Wirral moved Amendment No. 34:

Page 108, line 15, at end insert— ( ) That duty does not apply if, and for so long as, the seller determines that the property is to be sold without a home information pack, and in the event the estate agent for the seller is the responsible person, the seller has so informed him.

On Question, amendment agreed to.

Clause 155 [Other duties of person acting as estate agent]:

Lord Hunt of Wirral moved Amendment No. 35:

Page 108, line 37, at end insert— ( ) That duty does not apply if, and for so long as, the seller determines that the property is to be sold without a home information pack, and in the event the estate agent for the seller is the responsible person, the seller has so informed him.

On Question, amendment agreed to.

[Amendment No. 36 not moved.]

Clause 158 [Contents of home information packs]:

[Amendments Nos. 37 to 39 not moved.]

Clause 159 [Home condition reports]:

[Amendments Nos. 40 to 42 not moved.]

[Amendment No. 43 not moved.]

Clause 161 [Power to require production of home information packs]:

Lord Hunt of Wirral moved Amendments Nos. 44 and 45:

Page 112, line 14, leave out "subsection (5)" and insert "subsections (4A) and (5)"

Page 112, line 16, at end insert—

"(4A) A person is not required to comply with such a requirement if—

  1. (a) he is the seller and has determined that the property is to be sold without a home information pack; or
  2. (b) he is the estate agent for the seller and the seller has informed him that the property is to be sold without a home information pack."

On Question, amendments agreed to.

Clause 170 [Grants]:

[Amendment No. 46 not moved.]

Baroness Darcy de Knayth moved Amendment No. 47:

After Clause 179, insert the following new clause—