HL Deb 19 October 2004 vol 665 cc655-716

3.13 p.m.

The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Rooker.)

On Question, Motion agreed to.

Clause 141 [Meaning of "residential property" and "home information pack"]:

The Earl of Caithness moved Amendment No. 144A: Page 102, line 26, leave out "or intended to be occupied

The noble Earl said: My Lords, as your Lordships will see from the groupings list, this amendment is grouped with Amendments Nos. 144B, 144D and 144E. I was not consulted on that grouping. I think that it is inappropriate, and I have told the Minister's advisers that at this stage I wish to break the grouping and speak only to Amendments Nos. 144A and 144B. I shall deal with Amendments Nos. 144D and 144E separately.

These are probing amendments to find out exactly what the situation will be for someone who is selling a dwelling that is in the process of being constructed. I am thinking here of a developer of a block of flats that is either at the planning stage or half way—or any variable stage—between the beginning of construction and completion.

Many such buildings, particularly in a good market—in a not so good market, they tend to stick around—will either be sold off-plan in advance or as the building is under construction. If a purchase takes place while the property is under construction, the property could well be modified at some stage during the construction. The purpose of the amendments is to elucidate the exact position for the developer. I am not talking here about a refurbishment of a property; I am talking about a new build. I am not clear whether the developer must produce a home information pack either before or during the process of construction. I beg to move.

Baroness Hamwee

My Lords, at the previous stage—I cannot remember whether it was this amendment or a similar one—I supported the noble Earl. It is helpful to have Hansard in order to consider precisely what Ministers say on these sometimes small but difficult points. I cannot support the noble Earl on this issue because I am persuaded by what the Minister said on the last occasion about marketing being important, both as a matter of drafting but more importantly as the substantive point. I believe that the issues raised by the noble Earl are very important but I am not sure that this is the way to proceed.

Lord Bassam of Brighton

My Lords, the answer to whether or not a home under construction will require a home information pack is obviously "yes". In the normal run of events, one would expect a home condition report to form part of that pack, but obviously it will not be required to be in the pack while the property is still under construction.

What happens when the property is finished is rather different. At that point, we would expect a home condition report to be added to the pack unless—this is another important qualification—the home is being sold with the benefit of an approved warranty. As I understand it, such warranties are fairly common in the industry and that term is understood. In that case, of course, no home condition report will be required. We can provide for this situation by way of regulation when the legislation is in place. I hope that that answers the noble Earl's point satisfactorily.

It may be worth adding that, during the process of consultation, we made it clear that home information packs included a proposition to allow home condition reports to be omitted from the packs for the sale of newly built homes so long as they were covered by the satisfactory provision of a warranty. The reference to how the Secretary of State will cover this point in regulations is found in Clause 155(9)(c).

It is also the intention of the Government to set up a specialist working group that will consider the way in which the measure is introduced. That will be part of the process of arranging for other elements of the pack and for advising on the appropriate contents of home information packs for the sale of new homes. I hope that that information aids the noble Earl.

The Earl of Caithness

My Lords, I am grateful to the Minister for his answer. It spells out more clearly in words of one syllable what I hoped he was going to say, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 144B not moved.]

The Chairman of Committees

My Lords, I should remind the House that if Amendment No. 144C is agreed to, I cannot call Amendment No. 144D because of pre-emption.

Baroness Hamwee moved Amendment No. 144C: Page 102, line 30, leave out from "or" to end of line 31 and insert "its terms of sale in accordance with section 155

The noble Baroness said: My Lords, it seemed to me that whatever the technical answer to the concerns raised by your Lordships about the phrase, "become available for sale", if such a phrase causes problems, your Lordships may not be the only ones to be a little confused by it. I thought that the phrase was perhaps distracting. As I have just said, the issue is about marketing not about whether something is, or is to become, available for sale.

The words I have suggested are only a synonym for the words in the Bill. The obligations for which this part of the Bill provides are not in this clause. Therefore, I do not see why it is necessary to have a reference here to future availability. I try to be helpful, not, as I say, to be critical of the drafting for the sake of it but because if there is confusing terminology, when this Bill becomes law others may be rather confused. I beg to move.

The Earl of Caithness

My Lords, I support the noble Baroness in her amendment. My amendment No. 144D tackles the problem in a slightly different way. As I said in Committee, the noble Baroness with her legal training spotted the same problem as I did.

The problem is clear when you look at the Bill. Clause 141(2) states: References in this Part to a home information pack, in relation to a residential property, are to a collection of documents relating to the property or the terms on which it is or may become available for sale". The key words there are "or may become".

The legal advice I have received is that everyone, regardless of whether they are marketing their property, has to have a home information pack because that house, or that flat, may become available for sale. We have here terminology which is highly confusing. If one has had legal advice which is contrary to that of the Government, it is best to try to resolve the matter before it has to be resolved in the courts. With due respect to the noble Baroness, no one wants to pay solicitors any more than is utterly necessary. Here is a very good opportunity to do so.

I do not mind which of the two amendments is accepted by the Government. However, if they do not accept the amendment tabled by the noble Baroness, I shall test the opinion of the House on my amendment. This is a fundamental point. It has nothing to do with the marketing of properties but with the clarification of what property is on the market.

In Committee, the noble Lord, Lord Rooker, went off at a tangent and associated this amendment with a lot of other amendments later in the Bill. He tried to wrap the whole thing up into one and said that this caused a major loophole. Let me say yet again to the noble Lord, Lord Rooker, that this is entirely separate. This is a freestanding amendment that is not related in any way to the subsequent amendments. It is a question of legal definition and making certain at an early stage of the Bill that there is clarity.

Lord Bassam of Brighton

My Lords, this is a curious debate. On the one hand the noble Baroness wants to be helpful in improving the quality of the drafting; on the other I fear that the noble Earl and I shall have to beg to differ on his particular amendment, for the reasons that we set out in Committee.

For the purpose of convenience I shall deal first with the amendment tabled by the noble Earl because I think that might assist. Amendment No. 144D would disapply the definition from properties that are not yet on the market. I am sure that the amendment is probably intended to protect people who mention around the dinner table that they are thinking of selling their house from being under a duty to have a pack. However, the amendment is not necessary to prevent such "conversational marketing" being caught by the duties. It will not be caught by the Bill as it stands.

If passed, the amendment would have other unwelcome effects. The noble Earl does not agree with us, but we are confident that it would open up a loophole which would enable estate agents to engage in supposed pre-marketing activities that would amount to actual marketing in all but name without triggering the home information pack duties. It would, for example, enable someone to evade the duty to have a pack when marketing begins by advertising a property as becoming available for sale shortly knowing full well that potential buyers would see that as a marketing gambit.

Noble Lords expressed concern in Committee that the reference to when a home may become available for sale could lead to people who were merely contemplating selling a house being under a duty to have a pack. As we made clear in correspondence on 11 October on issues arising from Committee, we are satisfied that the Bill imposes no duty to have a pack when someone is just considering putting a home on the market. I am happy to make that clear and put it on the record once again.

Clauses 145(1) and 146(1) identify when the duty to have a home information pack in Clause 148(1) arises and whether the responsibility is the estate agent's or the seller's. The responsibility arises when an action takes place that either puts the property on the market or makes public the fact that it is on the market. There is no responsibility and hence no duty at the "just considering" stage.

Under Clause 152, estate agents must also have a pack when they take a qualifying action. That duty will apply even where a property is not on the market or the estate agent does not qualify as a responsible person. This is defined in Clause 152(3) as: action taken with the intention of marketing the property which—

  1. (a) communicates to any person in England and Wales the fact that the property is or may become available for sale; but
  2. (b) does not put the property on the market or make public the fact that the property is on the market".
However, this still does not mean that there is a duty to have a home information pack when an owner of a residential property is just considering whether to sell. Clause 152 affects only estate agents who intentionally make a direct attempt to market the property.

The amendment that the noble Baroness believes she has helpfully moved would also disapply the definition from properties that are not yet on the market. As I have explained, no amendment is necessary to prevent those who are merely considering putting their home on the market being subject to the home information pack duties.

Like Amendment No. 144D, this amendment would also open up the loophole that would enable estate agents to evade the duty to have a pack when marketing begins by advertising a property as becoming available for sale shortly which would, in our view, amount to marketing by any other name. If it is just a drafting amendment, again we cannot accept it because it would lead to problems with a number of references to home information packs elsewhere in Part 5.

Clause 141(2) is intended to be a general definition which works for all later references. All those later references make a distinction between the term "home information pack" as a general concept, and a home information pack which complies with the regulations on content. So, to define the pack by reference to Clause 155 regulations would cause problems. The references to "home information pack" within Clause 155 would also then become unhelpfully circular. I have tried to draw a distinction as to the unhelpfulness and the problems that both these amendments might cause. I hope that that enables both the noble Baroness and noble Earl to think further about the undesirability of their amendments.

3.30 p.m.

Lord Phillips of Sudbury

My Lords, before the Minister sits down, he talked about the danger of what he called "pre-marketing tantamount to marketing". In my view that is a nonsense of a formulation. If the amendment of the noble Earl, Lord Caithness, is not accepted, what would be the position of an auctioneer selling a property, who at the end of the auction said: "It may well be that the neighbouring farm will be coming on to the market in the autumn"? Is that caught by this section because the words "may become" are not omitted? That is just one of a thousand examples I can think of where the law will be unclear. But the Minister may be able to satisfy us about that.

Lord Bassam of Brighton

My Lords, the formulation used by the noble Lord probably would not be caught in the terms in which he described it. It is obviously something that we will have to think carefully about in framing the regulations and providing the guidance. But I cannot see that it would be in those terms because the reference is an exceedingly general one. Without sight of a map and looking to see where the neighbouring farm might be, it is a speculative offer from the auctioneer to say simply that there may be other farms in the area that are going to be coming on the market at some point in the future. I cannot see that that is pre-marketing.

Lord Phillips of Sudbury

My Lords, I am most grateful. This is precisely the danger of the words "may become". It is precisely a "may become" situation if the auctioneer says, "We may be marketing Black Acre in the autumn". That is precisely the point.

Lord Bassam of Brighton

My Lords, I think the noble Lord is probably creating the mischief of a potential evil that does not necessarily exist. I cannot accept the noble Lord's point.

Lord MacGregor of Pulham Market

My Lords, before the Minister sits down—unfortunately I was not able to participate in the earlier stages—what is the situation where two individuals are talking to each other and one says, "Well, I may be thinking of putting my property on the market within the next year"? Will that be caught under this provision?

Lord Bassam of Brighton

My Lords, we had some discussion of that in Committee. I do not think that that situation would be caught at all.

Baroness Hamwee

My Lords, I was not being as devious as the noble Lord thinks.

Lord Bassam of Brighton

My Lords, I would not like the noble Baroness to think that I thought she was devious.

Baroness Hamwee

Oh dear, my Lords, that is a terrible slur—mind you, it seems he has never noticed. I should perhaps have put a comma after the words "terms of sale". That is the relevant point. My phrase, in accordance with section 155", was intended to refer to the home information pack, which is raised at the beginning of the sentence.

I was not attempting to achieve by the back door, a side door or down the chimney, the things that the Minister suggests. I am straightforwardly trying to stop other people in the future getting confused over the clause which, as he rightly said and spelled out before, is a definition clause, the duties being in subsequent clauses. That is why I have tried to take out anything that might be thought to relate to the duty in the terms we have been discussing.

However, there is a limit at which the Opposition Benches must stop trying to improve the Bill. I have reached that point and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Caithness moved Amendment No. 144D:

Page 102, line 31, leave out "or may become"

The noble Earl said: My Lords, I spoke in part to this amendment when the noble Baroness, Lady Hamwee, moved her previous amendment. I have to say to the noble Lord, Lord Bassam, that I think the noble Baroness's drafting was more elegant than mine, but that this is an extremely important point. I am not trying to destroy the Bill but to be constructive because there is very genuine concern outside the House. I know that the Government Front Bench is not listening to any concerns. It has "big resist" over everything that we have put forward.

It is not up to noble Lords to get the wording of an amendment exactly right. We do our very best. We do not have a troop of lawyers behind us. Certainly, when I was a Minister, the point was the spirit of an amendment. If the Government accepted the spirit of the amendment they could easily redraft the provision in another place and send it back to us. Both the noble Baroness and I are trying to improve the Bill at this point. There is enormous confusion outside the House, which we are trying to lessen considerably. I beg to move.

Baroness Hamwee

My Lords, it is only right to say that—and I am sorry to have to say it—for reasons which I hope I have already explained, we would find it difficult to support the amendment if the noble Earl were to divide the House. The issue is about when a property is marketed. This is a distraction. We do not think that dealing with the matter as proposed by the noble Earl addresses the marketing point in a way that gets the outcome we would like.

I do not know whether the noble Earl has spoken to Amendment No. 144E. We have later amendments which address day one marketing. I thought it was right to say straight up, "Sorry, we will not be able to go with the noble Earl on this".

Lord Borrie

My Lords, before the noble Earl comes to a conclusion on whether he wants to call for a vote on the amendment, perhaps he would pay attention to Clause 142(2). An important point is made there. It states: A residential property is put on the market"— that of course results in a home information pack having to be made available— when the fact that it is or may become available for sale is, with the intention of marketing the property, first made public in England and Wales by or on behalf of the seller". It seems to me that that intention must be clear before any obligation comes into play to have available a home information pack. I think that is also an answer to the point raised by the noble Lord, Lord Phillips of Sudbury; that at the end of the auction sale on one piece of property, the auctioneer says that another piece of property may become available in the spring, the autumn or whatever. But if you do not have at that point a clear intention to market the property, then none of the obligations about home information pack and so on comes into play. I hope I am right on that point and that it may persuade the noble Earl not to pursue this rather academic point about "may become" available for sale.

Lord Phillips of Sudbury

My Lords, the noble Lord. Lord Borrie, might agree with me, in the light of what he has just said, that if the auctioneer in the circumstances I was positing was to say not that, "We may be marketing Black Acre in the autumn", but, "It is our intention on behalf of the vendor to market Black Acre in the autumn", that would be caught by Sections 141 and 142. The issue then is, does one need to have a complete home pack ready there and then because you are notifying the world at large that come the autumn, which might be 11 months hence, you will be marketing?

Lord Borrie

My Lords, indeed why not? But it is rather unwise to say those words intentionally.

Lord Phillips of Sudbury

My Lords, it is unwise in terms of this Bill, but extremely sensible in terms of informing the world at large that in a few months' time that property will be marketed. It seems ludicrous to require the person who is giving that information, perfectly naturally, to have in-hand, nine months ahead of the date, one of these information packs, which will be completely out of date by then.

Lord Donaldson of Lymington

My Lords, perhaps I may draw attention to a distinction which appears to have been made by the Minister. He said that if somebody says, "In the autumn my client may be thinking of selling", that is all right. If he says, "In the autumn my client may be selling" that is not all right. So, "thinking" seems to be the great buzz word that you have to include.

Lord Bassam of Brighton

My Lords, I do not have a great deal more to say, because I responded to the points in our earlier debate, but I take exception to the noble Earl's assertion that the Government are not listening on the matter. We have been careful in how we have consulted; we have given commitments to future consultation on the design of the regulations; we have been working extremely closely with the industry on the Bill and carefully preparing these clauses because we understand the sensitivities that exist.

We have had a helpful and useful debate. I take the point made by my noble friend Lord Borrie in his response to the noble Lord, Lord Phillips. He is absolutely right in his interpretation. I think we have got the provision about right but of course, in the end, it will come down to how we design the regulations and implement the provision to ensure that we get it absolutely right and that there can be no room for doubt about when the marketing commences.

I certainly sympathise with the noble Earl, Lord Caithness, in raising the issue, but I do not think that this amendment is the way to take us forward. In the end, it would significantly damage the Bill. If the noble Earl wants to carry on the sort of dialogue that he clearly relishes on behalf of the industry, it would be extremely unwise to pursue the amendment. The noble Baroness has been very wise in her comments in drawing a distinction between the intention behind her amendment and that behind the noble Earl's.

The Earl of Caithness

My Lords, there has not been much communication with me since Committee. I have heard absolutely nothing from the Government. They did not comment further on any of the points that I raised; there has been a deathly silence. If the noble Lord is now saying that if I am to be slightly troublesome about this amendment he will have difficulty in consulting with the profession, that is a threat to which I shall not succumb.

Lord Bassam of Brighton

My Lords, I am absolutely not saying that. That was not the intention behind my words.

The Earl of Caithness

My Lords, I shall read with great care what the noble Lord said, but that is certainly how it came over to me.

I take a contrary view to that of the noble Lord, Lord Bassam. I think that the point made by the noble Lord, Lord Borrie, was well answered by the noble Lord, Lord Phillips of Sudbury, who put the case extremely well and certainly better than I did. We should not wait for the regulations; we are certainly not going to get them before the Bill completes its passage through this House. There is immense confusion on the issue. If the Government understand what they are trying to do, they can revise the amendment in the Commons, if it is passed, but I think that it is right to test the opinion of the House.

Before I do that, I should just like to say how sorry I am that the noble Baroness, Lady Hamwee, has moved away. In Committee, she said that she had a lot of sympathy with me concerning exactly the same amendment. Now it comes to the crunch, she has moved away. I am sorry about that: I supported her amendment and would have done so in the Lobby; I hope that she may have a second thought and support me. I beg to test the opinion of the House.

3.42 p.m.

On Question, Whether the said amendment (No. 144D) shall be agreed to?

Their Lordships divided: Contents, 97; Not-Contents, 143.

Division No. 1
CONTENTS
Ampthill, L. King of Bridgwater, L.
Astor of Hever, L. Knight of Collingtree, B.
Attlee, E. Laing of Dunphail, L.
Baker of Dorking, L. Lindsay, E.
Biffen, L. Liverpool, E.
Blatch, B. Lyell, L.
Bowness, L. MacGregor of Pulham Market, L
Brougham and Vaux, L.
Buscombe, B. Mackay of Clashfern, L.
Byford, B. Marlesford, L.
Caithness, E. [Teller] Marsh, L.
Carlisle of Bucklow, L. Masham of Ilton, B.
Carnegy of Lour, B. Mayhew of Twysden, L.
Chorley, L. Miller of Hendon, B.
Cobbold, L. Molyneaux of Killead, L.
Cope of Berkeley, L. Monro of Langholm, L.
Courtown, E. Monson, L.
Craig of Radley, L. Montagu of Beaulieu, L.
Crathorne, L. Montrose, D.
Crickhowell, L. Mowbray and Stourton, L.
Cumberlege, B. Noakes, B.
Dean of Harptree, L. O'Cathain, B.
Denham, L. Onslow, E.
Dixon-Smith, L. Palmer, L.
Donaldson of Lymington, L. Park of Monmouth, B
Eden of Winton, L. Peel, E.
Elles, B. Peyton of Yeovil, L.
Elton, L. Plumb, L.
Erroll, E. Rawlings, B.
Ferrers, E. Rees, L.
Fookes, B. Renton, L.
Fowler, L. Roberts of Conwy, L.
Gardner of Parkes, B. [Teller] Rotherwick, L.
Geddes, L. Saltoun of Abernethy, Ly.
Glentoran, L. Seccombe, B.
Hanham, B. Selsdon, L.
Hanningfield, L. Shaw of Northstead, L.
Hayhoe, L. Sheppard of Didgemere, L.
Henley, L. Skelmersdale, L.
Howe, E. Soulsby of Swaffham Prior, L.
Howe of Aberavon, L. Steinberg, L.
Howell of Guildford, L. Stoddart of Swindon, L.
Hunt of Wirral, L. Swinfen, L.
Hurd of Westwell, L. Ullswater, V.
Inglewood, L. Waddington, L.
Jenkin of Roding, L. Wade of Chorlton, L.
Jopling, L. Wakeham, L.
Kilclooney, L. Willoughby de Broke, L.
Kimball, L. Windlesham, L.
NOT-CONTENTS
Acton, L. Berkeley, L.
Ahmed, L. Bernstein of Craigweil, L.
Alton of Liverpool, L. Best, L.
Amos, B. (Lord President of the Council) Bhatia, L.
Billingham, B.
Andrews, B. Borrie, L.
Archer of Sandwell, L. Bragg, L.
Ashley of Stoke, L. Brett, L.
Ashton of Upholland, B. Brooke of Alverthorpe, L.
Bach, L. Burlison, L.
Barnett, L. Carter, L.
Bassam of Brighton, L. Christopher, L.
Clark of Windermere, L. Macdonald of Tradeston, L.
Clarke of Hampstead, L. McIntosh of Haringey, L.
Clinton-Davis, L. McIntosh of Hudnall, B.
Cohen of Pimlico, B. MacKenzie of Culkein, L.
Corbett of Castle Vale, L. Mackenzie of Framwellgate, L.
Crawley, B. McKenzie of Luton, L.
David, B. Mason of Barnsley, L.
Davies of Coity, L. Massey of Darwen, B.
Davies of Oldham, L.[Teller] Mitchell, L.
Derby, Bp. Morgan of Drefelin, B.
Dixon, L. Morris of Aberavon, L.
Drayson, L. Morris of Manchester, L.
Elder, L. Northfield, L.
Evans of Parkside, L. Parekh, L.
Evans of Temple Guiting, L. Patel, L.
Falconer of Thoroton, L. (Lord Chancellor) patel of Blackburn, L.
Pendry, L.
Farrington of Ribbleton, B. Peston, L.
Faulkner of Worcester, L. Pitkeathley, B.
Filkin, L. Plant of Highfield, L.
Finlay of Llandaff, B. Ponsonby of Shulbrede, L.
Fyfe of Fairfield, L. Prosser, B.
Gale, B. Prys-Davies, L.
Gibson of Market Rasen, B. Radice, L.
Giddens, L. Ramsay of Cartvale, B.
Golding, B. Randall of St. Budeaux, L.
Goldsmith, L. Rendell of Babergh, B.
Gordon of Strathblane, L. Richard, L.
Goudie, B. Rooker, L.
Gould of Brookwood, L. Rosser, L.
Gould of Potternewton, B. Rowlands, L.
Graham of Edmonton, L. Royall of Blaisdon, B.
Grocott, L.[Teller] Sawyer, L.
Harris of Haringey, L. Scotland of Asthal, B.
Harrison, L. Sewel, L.
Hart of Chilton, L. Sheldon, L.
Haskel, L. Simon, V.
Haworth, L. Smith of Leigh, L.
Hayman, B. Snape, L.
Henig, B. Stone of Blackheath, L.
Hilton of Eggardon, B. Strabolgi, L.
Hogg of Cumbernauld, L. Strange, B.
Hollis of Heigham, B. Symons of Vernham Dean, B.
Howarth of Breckland, B. Taylor of Blackburn, L.
Howells of St. Davids, B. Tomlinson, L.
Howie of Troon, L. Triesman, L.
Hoyle, L. Truscott, L.
Hughes of Woodside, L. Tunnicliffe, L.
Hunt of Kings Heath, L. Turnberg, L.
Irvine of Lairg, L. Turner of Camden, B.
Jay of Paddington, B. Wall of New Barnet, B.
Joffe, L. Walpole, L.
Jones, L. Warner, L.
Jordan, L. Warnock, B.
King of West Bromwich, L. Weatherill, L.
Kirkhill, L. Whitaker, B.
Lea of Crondall, L. Whitty, L.
Levy, L. Williams of Elvel, L.
Lipsey, L. Williamson of Horton, L.
Lockwood, B. Woolmer of Leeds, L.
Lofthouse of Ponterfract, L.

Resolved in the negative, and amendment disagreed to accordingly.

3.53 p.m.

[Amendment No. 144E not moved.]

Lord Hanningfield moved Amendment No. 145:

Leave out Clause 141.

The noble Lord said: My Lords, I wish to speak to Amendment No. 145 and the amendments associated with it. They would remove Clauses 141 to 156 and Clauses 162 to 169. It will not have escaped the Government's notice that the amendments would kill off home information packs. I shall refer briefly to Amendments Nos. 145 to 156, and my noble friend Lady Hanham will, in addition to addressing the main thrust of the amendments, give the details relating to Amendments Nos. 157 to 179.

I welcome and commend the Government's reported late decision to drop home information packs from the Bill. We look forward to receiving the Minister's confirmation of that today. It seems that the Government have finally seen the light and realised that packs will neither speed up property transactions nor stop gazumping. They have finally realised that the packs, at a cost of almost £1,000 apiece, would have been Labour's community charge—or, to put it another way, its property poll tax.

Although I applaud that noble decision, I must make one small criticism of the Government. Surely, rather than announcing the withdrawal of the packs in the most widely read Sunday newspaper in the country—I hope that both Ministers saw the report—

Lord Rooker

My Lords, before we start the debate, I can confirm to the noble Lord that we are not doing so. If that was reported in one of the Murdoch lie-sheets, does it not simply show how inaccurate the press is?

Lord Hanningfield

My Lords, I accept what the Minister says, but normal protocol is to make such announcements to Parliament rather than in the Sunday newspapers.

If the Minister will not remove the packs today, I shall explain why we are opposed to the idea of the packs and why we have tabled the amendments. The plan for mandatory home information packs, as contained in Clauses 148 and 149, is an unnecessary and badly thought-out measure, merely acting as a burden and, we feel, an additional stealth tax on house buying. It will do nothing to speed up the house-buying process or to stop gazumping, the two main arguments that the Government have consistently used to defend the packs.

The National Association of Estate Agents has stated that 90 per cent of its membership is against the home information pack. The Law Society, the Council of Mortgage Lenders and the Royal Institution of Chartered Surveyors have expressed doubts and concerns. Indeed, with the notable exception of the Consumers' Association, which also has reservations, we can barely find one organisation or business that is in favour of the packs. Something must be wrong when those who might benefit financially from such measures oppose them.

The home information pack concept has been around since 2000. Originally it was supposed to stop gazumping; now the Government claim that it will bring transparency to property sales. We feel that it will achieve neither aim. The Government feel that, if transactions are quicker and more user-friendly, it will reduce gazumping and bring benefit to the consumer. The packs will do nothing to speed up property transactions, as it is more than likely that purchasers will still wish to commission their own surveys. Friends and other individuals to whom I have talked have said that they would still want their own information and to have their own survey done. Hence, the proposals will duplicate the number of surveys undertaken, adding to the cost of selling one's home.

There is also now evidence that the mortgage valuation carried out for the lender significantly increases the time between offer and exchange of contracts, unless it has been left until the eleventh hour to instruct a surveyor. Surveyors work on a four-day turnaround. One delay blamed on surveyors is that they require further reports or estimates for significant repairs. That is a justified complaint, but it will not be addressed by the home information pack, as the home condition report would not provide costings for remedial works. The Government's argument that home information packs would prevent gazumping shows a complete lack of understanding of the market, because there is nothing in the scheme to stop a vendor accepting a higher offer at any time after the sale is set up. As always, it depends on goodwill and trust between buyer and seller.

The main issues relating to the requirement of a home condition report have not been properly considered. The pilots have been fudged and ill thought out. Comparisons with Denmark or Australia are not relevant to the process, as the volumes are so dissimilar. Numbers in Denmark and parts of Australia are very small. As we have said, 1.4 million homes change hands in this country every year.

4 p.m.

Since the idea was proposed in 1998, there have been several trials: in Bristol in 2000 and in Cardiff, Coventry and Sheffield in 2003. The pilot scheme was not a success in any of those places, in spite of the fact that the public were not charged a fee for the pack. How much worse would it have been if a charge of up to £1,000 had been made?

Earlier this summer, the Law Society made the case that the packs could help criminals to target vulnerable addresses. That is a valid argument, but, as the Government had no satisfactory answer to it, their only option was to dismiss the report as scaremongering. It remains the case, however, that the packs would force sellers to disclose information such as details of house security systems ahead of a sale. Anyone will be able to receive the pack, whether or not they are serious buyers. What is stopping anyone from obtaining a copy of the pack? We had several debates about the matter in Committee. Where are the necessary safeguards to prevent abuses?

We are also concerned that the packs would put an end to first-day marketing, as detailed under Clauses 142 to 146, which relate to responsibility for marketing. It may be that a property is marketed one way or another some time prior to the detailed negotiations leading to the purchase of the property. Marketing a property does not necessarily mean that it will be sold. There is room for confusion in that area. Furthermore, it is vital that a person who wants to market a property can do so speedily. As people will not be able to market a property without a pack, there must be a sharper definition of what constitutes marketing.

I do not intend to repeat the many arguments in favour of retaining day one marketing, but I will raise again our concerns about the inflationary aspects of limiting day one marketing. The requirement is for a complete home information pack to be in place before marketing is started. We have just debated the amendments tabled by my noble friend Lord Caithness about the start of the marketing process. That requirement will, without question, delay a home owner's ability to market and, therefore, sell their property. Research into the matter has shown that such delays will inevitably reduce the number of properties entering the market. The predicted figures range from 13 to 30 per cent. Even if we take the lower figure, we can see that a 13 per cent reduction in the number of properties on the market would have an inflationary effect on house prices. Yet, the Minister's new policy is to have more houses on the market and available to live in, rather than fewer. Such inflation in what is arguably an already over-inflated market could have a devastating knock-on effect on the whole UK economy.

It was argued by Ministers in the briefing circulated last week that a reduction in the number of houses for sale would not affect the market, because sellers would not be deterred and those who were merely testing the market with no intention of selling would not be around. That is based on pure conjecture by the Countrywide Assured group. In any case, I am not sure that it is the role of government to second-guess the intentions of tens of thousands of consumers. It is not the best way to make policy.

There can be no escaping the cost involved in producing one of the packs. That cost will fall fairly and squarely on someone who simply wants to sell their home. Current estimates put the cost of the pack at between £700 and £1,000. It is a property tax—no ifs or buts. It is another tax to be imposed by the Government on property. As if that were not bad enough, the figure could increase. Following guidance and secondary legislation, the Government could impose additional requirements for the content of each pack, as set out in Clause 155. I wish to remove the relevant clauses from the Bill. I beg to move.

Baroness Hanham

My Lords, my noble friend Lord Hanningfield spoke to Amendments Nos. 145 and 146; I shall address the specifics of Amendments Nos. 157 to 179, before also turning to the general concerns about housing packs. Amendments Nos. 157 and 158 would remove Clauses 153 and 154, which relate to exceptions to the duties of a person acting as an estate agent. Amendments Nos. 161 and 164 address the kernel of our concerns and would delete the clauses on the content of home information packs and home condition reports. The remaining amendments—Amendments Nos. 171 to 179—are more technical and relate to the removal of supplementary provisions so that, consequently, the whole part of the Bill relating to the home packs would be taken out.

I endorse the comments that my noble friend Lord Hanningfield has just made. In Committee, we had a long and involved discussion on the home packs, and we have made it clear all along that we have considerable concerns about the proposals. Our concerns arise not only from the cost of the packs but from their impact in low-demand areas; the creation of an army of inspectors to administer and write the packs; the question of insurance, should something go wrong, which we still have not cleared up; and the important issue of trust between the vendor and the purchaser.

My noble friend referred to the fact that there was more than a little evidence that purchasers will not rely on the packs. They simply will not accept the information in them and will have to set about doing their own survey, at additional cost. The packs will do nothing to speed up property transactions or stop gazumping, as my noble friend Lord Hanningfield said. Gazumping may be a thing of the past, given the way that the price of housing is settling, as a result of the rise in interest rates. That need not delay us for too long; we may need to consider the other extreme of the housing market, in which case housing packs will probably be even less effective.

The Government propose to make home information packs compulsory in 2007. Yet, despite what the Minister said in Committee, we do not believe that there can be sufficient qualified home inspectors able to carry out the number of reports that will be required. That was also admitted by the Government. There must also be concerns about whether qualified home inspectors are as suitable as qualified surveyors to deal with the matter.

As we have said, 7,500 to 10,000 full-time home inspectors will be needed to produce the home condition reports for every property going on the market. At the moment, there are only about 3,000 full-time chartered surveyors, and the shortfall will be made up by recruiting home inspectors and giving them a badge after a one-year NVQ course. The Consumers' Association says that home inspectors will have to have professional indemnity insurance but that, below £5,000, they will carry the cost of claims themselves. As our compensation culture becomes more ingrained, it will be impossible for home inspectors to afford to warranty the condition of a property. Likewise, the cost of hidden defects insurance will become prohibitive.

The Council of Mortgage Lenders has stated that the packs will not be acceptable to mortgage lenders, who are likely to insist regardless on a second survey, so that vendors will be forced to pay twice. Surveys will also be quickly out of date, giving a limited shelf life to the packs. If a property is slow in selling, there is a possibility that the vendor will have to produce more than one pack.

The packs will, in effect, end the process of "testing the water", whereby a property is put up for sale for a short, limited period in order to ascertain the state of the market. Similarly, the packs will end the practice of -first-day marketing", a matter of considerable concern to which we will have to return. We believe that day one marketing is important to many consumers who, for various reasons, desire that their property is placed on the market without delay; that is, without the delay of having to have a home information pack before they can do so.

While I acknowledge that the Minister has given an assurance that provisions are in place to avoid marketing being delayed beyond a short initial period, I can see no justification for abolishing the principle that property owners are entitled to commence marketing when they choose and before a home information pack is in place. If the packs can be produced as quickly as the Government believe possible, I fail to see what objection the Government have to maintaining day one marketing. The idea that large numbers of house sales will be concluded within a few days of marketing commencing, without buyers having the benefit of access to the packs, is not rooted in reality.

Anyone with practical or personal experience of buying and selling property will acknowledge that it takes several days for estate agents to generate initial interest in individual properties. It often arises only once house details have been produced, circulated to those on a mailing list and/or published in local weekly newspapers. Once prospective buyers have seen a property that they would like to view, they will contact an estate agent to arrange a viewing, often during the next weekend.

The Government have failed to take into consideration the steps already being taken to speed up the selling process. That includes the better use of technology, including the introduction of e-conveyancing, the action by mortgage lenders to provide title deeds more quickly and the action by estate agents to encourage purchasers to clear their lines of credit before making an offer.

All in all, we do not believe that there is any benefit to buyers or sellers in the housing market, either in a market where there is a quick demand for sale or, perhaps more especially, in a market where there is a slow and rather more laborious timescale for selling property, which we look as if we are about to enter. It is our fundamental belief that these packs are a mistake. I support my noble friend Lord Hanningfield.

Lord Hunt of Wirral

My Lords, I have watched, listened and read with great interest the debates on this subject. Looking around the Chamber, I see many of your Lordships who have sat through quite a number of those debates. So it must be with a sense of déjà vu that we approach another debate, but it is of enormous importance.

I was stimulated to speak to support my noble friends by—dare I say—a stray comment made by the noble Lord, Lord Bassam, when he spoke on 14 September. In response to some very real concerns voiced by the noble Lord, Lord Phillips of Sudbury, and a number of your Lordships, the noble Lord, Lord Bassam, said that it is, about ironing out wrinkles".—[Official Report, 14/9/04; col. 1070.] He was referring to a comment made by a number of noble Lords about the proposed system being immensely bureaucratic and introducing a whole series of measures that would waste an enormous amount of time and money. I just think that the noble Lord, Lord Bassam, had it completely wrong.

We are very grateful to the Government for stimulating an important debate about the whole question of caveat emptor; being able to purchase a property with some notice of local authority charges or general structural defects. It has been a very valuable debate, but I completely agree with my noble friend Lord Hanningfield. What has gone wrong is the element of compulsion. It infects the whole measure now to such a degree that I agree with my noble friend Lady Hanham that it would be best just to cut it out of the Bill altogether.

I recognise that I have a later amendment for discussion, which seeks to introduce a voluntary principle. But, for the reasons that I want to set out, it would be better to cut it out of the Bill altogether. Of course, as your Lordships know, I should declare my interest as senior partner of a firm of solicitors—Beachcroft Wansbroughs—which has a strong property department. I have drawn on not only the views of my partners and our fee earners but also a number of other people in the legal profession.

4.15 p.m.

Perhaps I may just retirer pour mieux sauter and come back from the debate about the minutiae of home information packs and turn to the general principle of voluntarism versus compulsion. It is no exaggeration to say that this goes to the very heart of the relationship between the state and the citizen. Where is the boundary that should be drawn between the two in a modern free society? It must now be clear to Ministers that many people inside and outside this House regard the imposition of the packs as just that—I repeat, an imposition.

I believe, as do many others, that the measure now constitutes a rather clumsy and unnecessary intervention into a market that in the vast majority of cases works perfectly well. We are told by Ministers that their proposals now address a significant market failure, yet no evidence is adduced to demonstrate that there is substance in that claim. We still await that evidence.

If there is a significant shortfall of information for buyers, as Ministers claim, buyers would cry out for more. Yet the voice of the buyer has in the past been a series of complaints about gazumping, which, of course, has nothing at all to do with home information packs. It has more to do with the state of the market at a particular time.

If there is a great demand for measures like home information packs, surely those who are providing them on a voluntary basis would have a cutting edge in the market place. People who provide that sort of information would find it much easier to sell their homes, and they would probably get a better price. It is rather like selling a car. If one sells a car with its complete history, and a prospect of verifying the history, one is more likely to get a better price, and more likely to sell than someone who just says, "Caveat emptor: it is up to you to check whether there is a roof on the property" or whatever. Surely that is patently obvious.

However, as I have said already, Ministers have done a service in raising this debate. There is a feeling that more could be done. If the packs were established on just a voluntary basis without the need for legislation with some procedures that are clearly understood by everyone, surely potential purchasers would come to regard buying a house without a pack in the same way that they might regard buying a fridge or a washing machine without any instruction manual. It would be a feature of a good purchase that one had all that information.

My point is that the market is perfectly able to cope with this. Already we have concrete evidence of that happening. I have spent a little time with the Law Society and members of its conveyancing committee going through all these details. It has explained to me what I believe to be an increasingly widely used transaction scheme. I understand from the Law Society that more than 80 per cent now use the protocol in whole or in part. It is very flexible, very consumer friendly and might be a very useful blueprint for home information packs. I suppose that I have to draw a little on my experience.

I was once energy efficiency Minister. We as Ministers decided that the best possible way ahead would be for us to rate a dwelling on its energy efficiency. The purchaser would be aware of whether the home had a one-star, two-star, three-star, four-star or even five-star rating for energy efficiency, and the savings would be significant.

We sponsored a development in Milton Keynes where all the houses were energy efficient through the use of passive solar photo-voltaic energy in the roof, and I thought that some of the examples were marvellous. But we also set up a pilot scheme. I say this to the Government: I know that they have already tried to run pilot schemes, but there is nothing as good as a really well organised pilot scheme to demonstrate to Ministers that they are actually going down the wrong path. We ran a pilot scheme in East Anglia and the East Midlands, and my recollection is that it was a complete and utter disaster. Purchasers did not seem to be attracted by the star energy rating. Indeed, the property market is very complicated and complex, so it is no use trying to simplify it in the way the Government have done. I should apologise to my colleagues, some of whom served with me in a previous government, for having divulged this grievous error on my part, but that pilot demonstrated the way ahead and so we dropped it, which is what I hope that Ministers will do with this scheme.

What would be a good idea is the creation of a new gold standard in clear information packs at a non-prohibitive cost—that is, easily afforded and understood. I understand that this, too, is attractive to the Consumers' Association. It is rather like the Sandler investment products that we may see one day in the realm of financial services. They are simple, easy to understand and enable people to know exactly what they are purchasing. That could be an admirable development.

I believe that I could adduce many other arguments against compulsion in this area. We have heard some of them and no doubt we shall hear a few more during the debate. Sellers may not wish to provide the pack because of cost considerations, in particular in areas where property prices are relatively low. A number of previous speakers on home information packs have demonstrated that.

However, the Government seem to assume that the cost of compiling the pack will be absorbed by the selling agent until the sale goes through. I can see a number of serious problems with that, and I want to ask the Government how they can make that assumption. It is likely to put great pressure on the selling agent to effect a sale, which will in turn have an impact on vulnerable sellers. They may well feel pressurised into exchanging contracts, whether or not they wish to do so. Sellers should simply be required to make it clear whether they are using the home information pack on a non-statutory basis. If the packs prove to be popular, they will be widely adopted, but if they are not popular, they will wither on the vine.

A fundamental point of principle is at stake here, as well as a highly practical one. Voluntarism works, and this system ain't broke. The statutory imposition of this new requirement will make the market less flexible and more costly for buyers and sellers alike. It will also create a potentially crippling disincentive to those who wish to dip their toe into the market. I hope that the Government will recognise that this kind of meddlesome social intervention should have no place in a modern democracy.

Lord Borrie

My Lords, I am glad to follow the noble Lord, Lord Hunt of Wirral, because I thought that he made a much more reasonable speech for the Conservative Opposition than the rather extremist remarks from the Front Bench, in particular those of' the noble Lord, Lord Hanningfield. He started inadvisedly by relying on a report in a Sunday newspaper that has no basis, and went on to condemn some 20 clauses outright in what was a completely destructive approach, whereas in Committee I thought that a number of constructive amendments were put forward by Her Majesty's Opposition. Today they seem to have completely departed from that and want to sweep away the whole of the provisions in Part 5.

The Liberal Democrats have not yet spoken on these important matters, although I am sure that they will shortly. I hope that I can appeal to Members on the Liberal Democrat Front Bench—I do not hold out much hope for the noble Lord, Lord Phillips of Sudbury—to be less destructive in their approach than was the noble Lord, Lord Hanningfield.

At this point it is worth pointing out that Part 5 is designed to improve the way in which the housing market works today—and by that I mean the residential housing market. At present, we all assume that a potential purchaser has to make an offer on the basis of a false prospectus—or should I say, on the basis of no prospectus because he has nothing to go on except a few estate agent's basic particulars and a superficial, unknowledgeable view that he and his family may have formed of the property. There is a complete lack of transparency in the process.

Part 5 involves state intervention, which no doubt is ideologically significant to the noble Lord, Lord Hunt of Wirral, and probably to the rest of us. Perhaps I may say to the noble Lord that the state, in the form of governments of which he was a member, as well as Labour governments, has intervened in order to provide requirements for the seller versus the buyer in the field of sales of goods of all kinds, including the refrigerators of which he spoke—and since I mentioned false prospectuses, in relation to company law. Successive governments have intervened time and again to ensure transparency, fairness and a level playing field between the parties to a transaction.

If all vendors wishing to market residential property have to make available to prospective purchasers material along the lines proposed in the Bill, the purchaser will be able to put forward an offer to the vendor on a more rational, knowledgeable and informed basis than typically he can at the present time. That would bring about a wholly desirable change in the culture of the familiar transaction of buying and selling residential properties.

Because house purchases so often form part of a chain—I say this in particular because of what was said by the noble Lord, Lord Hunt of Wirral—the requirement on the vendor to provide a home information pack needs to be compulsory. Otherwise one of the purchasers, one of the links in the chain, is likely to fail or at least to be slowed down when he discovers problems in the property not revealed at the outset. The other transactions in the chain may then collapse as well.

The noble Lord, along with others, very rightly referred to the costs that no doubt the Government have to admit are involved in the introduction of Part 5, but what of the costs so often incurred as a result of failed transactions today? Those costs are borne unexpectedly rather than negligently when a sale falls through because there was no clarity, no home condition report, and there would not have been an abundance of information about the residential property for the interested purchaser. People then have to start all over again.

Let us consider the costs involved when one potential purchaser pays a surveyor to make a report while another potential purchaser pays either the same or a different surveyor, and so forth. That money is wasted in most cases; it is not wasted only in the case of the one purchaser who eventually becomes the owner of the property.

I shall not say any more at this stage because unfortunately we are talking about the sweeping desire of Her Majesty's Opposition to get rid of the whole of Part 5, and therefore I speak only in the most general terms. We would be wrong to do this. I appeal across the heads of noble Lords on the Front Bench opposite to the more reasonable faces I see at the back, to the Cross-Benchers and to almost all—with the exception of the noble Lord, Lord Phillips of Sudbury—reasonable people on the Liberal Democrat Benches.

4.30 p.m.

Lord Fowler

My Lords, I am not sure whether or not the noble Lord, Lord Borrie, regards me as one of the more reasonable faces at the back—probably not—but, contrary to what he said, I have a great deal of sympathy with what my noble friends Lord Hanningfield and Lady Hanham have said and with the case they have put.

A great number of professional bodies and organisations, which we all respect, have come out against the home information packs. They have raised questions about the costs—I wonder whether the public understand that the cost of these packs may be between £700 and £1,000, a fact which is not likely to attract their support—and about the delay.

They have raised also the essential question—it is right that we should deal with it in this way—about whether this is necessary. I wish to raise a specific point which continues the theme of whether it is necessary; it will help to determine my attitude towards the whole issue. Between 1992 and 1998 I was chairman of the National House-Building Council. I know that there is a later amendment in regard to the NHBC and other warranty organisations but, obviously, if these amendments are passed it will be killed off. However, it is worth putting on record what they say.

In view of what my old neighbour in Birmingham, the noble Lord, Lord Rooker, said at the outset, perhaps I should declare an interest in that I once worked for the Times. That was a long, long time ago, perhaps before it was described by the noble Lord as one of "Murdoch's lie sheets". I hope that he will not damn me with association in that regard, although it is not perhaps the most moderate description of the newspapers concerned.

The National House-Building Council is an excellent organisation. At its heart are trained and experienced inspectors who are dedicated to achieving the highest possible standards in new house building. I have heard about the new inspectors who are to be introduced. I have some doubts about whether they can be recruited as easily as the Government think. The NHBC inspectors do their job well; they have the support of the best house-building companies and the support of the best people working in the house-building industry—and by that I do not mean only the managers.

The NHBC is exactly the kind of organisation that the Government should support. Indeed, if it was not there, they would have to invent it. The acid test, obviously, is whether it provides consumer protection. In my view, the consumer protection provided by the NHBC and by other warranty organisations is very great; a 10-year warranty is much longer than you would expect from normal consumer protection measures. It is very unusual to have protection lasting for that length of time. It is a warranty based on close, stage-by-stage inspection of the house being built, and it is a warranty that can be passed on from one owner to the next. That is an enormous advantage when houses are being sold. That kind of warranty gives very strong protection to the house buyer.

Obviously the NHBC inspects a vast number of houses each year. In such cases, what additional protection is provided by a home information pack? Frankly, I can think of very little, if any; the warranty is far more valuable. I can see no point in adding the cost to the vendor of another pack and another set of inspections. There is no point in the additional bureaucracy involved.

This requirement is certainly unnecessary in the case of the new houses that are built each year. Therefore, before determining my attitude, I should like to know from the Government whether or not any exemption is proposed. If no exemption is proposed, the Government will be taking a very inflexible and unreasonable attitude. There are big questions over the principle and the approach that the Government are taking—I agree with all my honourable friends in that regard—and I should like guidance from the Minister about what the Government intend to do in the Bill in the specific area where protection for the consumer is already available.

Lord Rooker

My Lords, I want to be clear so that I can give the noble Lord a precise answer. The nuance of what he said shifted from full protection during 10 years to the new house as it is built and marketed by the builder. There is a difference in the way they are treated in the Bill and I need to be absolutely clear about this.

I can definitely satisfy the noble Lord in one area. For the first sale of a new house, a home information pack is not required. Neither is one required off plan. But a different situation prevails after, say, seven years, when up to three people may have owned the property.

Lord Fowler

My Lords, there is a perfectly sensible compromise amendment in the Marshalled List which provides an exemption for six years, having come down from the original 10 years. I am suggesting that, when the Minister comes to wind up on this issue, it might be appropriate for him to give some hint of what he would say about that. Otherwise, if these amendments are agreed to, he will not be able to say it in any event. It is rather important that we should know.

What is the Minister's attitude towards warranty organisations? I repeat, it seems to me that a warranty from an organisation such as the National House-Building Council which gives protection to the consumer is something exceptional which the Government should encourage at every stage. In the context of houses covered by such a warranty, I cannot see the case for a home improvement pack.

Baroness Gardner of Parkes

My Lords, there has been a great deal of discussion on this issue and I do not intend to speak for long.

The greatest objection to the home information packs is their cost. I do not understand for how long a pack will be valid. At the moment, everyone is saying that the domestic property market will be fairly slow until 2010. It may be that in that time people will have great difficulty selling their homes and the property will be on the market for a very long time. I should like to know how long it will be before there will need to be an update or a new set of papers. It will be costly enough to do it once.

Of course, the lower in value the home, the relatively higher the cost will be to have this done. If you are marketing a very expensive home worth millions, £1,000 is nothing in comparison. But if you are marketing your home at a much lower figure, perhaps £50,000, then £1,000 is very high in relation to that. So the first issue I do not understand is for how long the pack will be operable.

The second issue concerns the responsibility for marketing in general. Clause 144(3) states: Only the seller or a person acting as estate agent for the seller may be responsible for marketing the property". The present practice is that very often you do not place your home with only one estate agent but with several. In that case, which of the estate agents appointed would be responsible? Would one have to be made head estate agent and the other subsidiaries, or does one offer a pack to each of them? If so, would that be another additional cost? How many people will be able to demand a copy of the pack? Does this provision tie one to a particular estate agent? How often will one be able to move if one's house is not selling with that agent?

Will the person requesting the pack have any obligation to help with the cost of producing it? I understand that the cost will fall totally on the vendor. One could be asked to produce unlimited quantities. Can they be photocopies or must the documents be certified each time they are produced for different people, which would add to the cost? Although I agree with my noble friend Lord Fowler about the NHBC, of which I was vice-president for many years, his argument applies only to new property. The more serious concern is with not-new property, which is where the provisions are needed.

What about those who own leasehold properties? They will have to get a lot of their information from the freeholder, who will no doubt be entitled to charge for that information. What limits will there be on such charges? When we dealt with the Commonhold and Leasehold Reform Act 2002, we discovered that, in many cases, after people had acquired all sorts of additional rights, they found that they were paying more rather than less to their freeholders. Even when people had bought their freehold, they had to pay a management charge that was much higher than the ground rent. How will those problems be dealt with?

My daughter married and moved house this year to a house a couple of doors away from where she had lived for 10 years. She found that there were new requirements. There have to be environmental studies. If any piece of commercial property had been built on land nearby, all sorts of additional environmental studies must be done to prove that the land is not contaminated. I suppose that the contamination laws will cover that to a certain extent, but the encouragement is for people to be building on brownfield sites. Therefore, a documented history of every bit of brownfield site will have to be included in the house information pack if the property is built on a brownfield site. In my daughter's case, it was £1,000 just for that survey. She did all the normal searches through the council and the experts under this new environmental law said, "That is not satisfactory, you will have to have much more." Even though she had lived practically next door to the property for years, had suffered no ill effects and was not worried about it, if she wanted to re-sell, she had to complete the environmental searches. The situation is much more complex now.

My noble friend Lord Hunt said that nothing in the Bill deals with gazumping, which is a much more serious matter. Something should be done about it, such as having lock-out agreements, which people can already enter into voluntarily. If someone makes an offer on a property, it is agreed that, if everything proceeds to a sale, a higher offer from someone else will not be entertained. That is the sort of thing that we should be looking for. It has already been mentioned that a number of people have a survey done and then someone else pushes the price of the property up and those people do not then get the property, even though they have borne all the costs of the survey. That is one thing that might be good about this provision, but it should be dealt with in a different way. If someone accepts an offer and the survey is done, one should be entitled to reclaim the cost should the vendor then reject the offer.

Looking again at the Bill, there is an incredible provision that I do not understand at all. Paragraphs (a) (b) and (c) of Clause 149(4) provide a defence against the duty of providing a copy of the home information pack. There is no duty to provide it if one thinks that, the person making the request— is, (a) unlikely to have the sufficient means to buy the property, or, (b) is not genuinely interested or, (c) is not a person to whom one would be likely to sell. Paragraph (c) is more identifiable. One would know whether one wanted to sell to a particular person. It is a personal view, which could be a defence. However, how on earth would one know whether the purchaser of one's house was unlikely to have sufficient means to buy the property? Everyone comes along and says that they are cash buyers, while they desperately run round the corner to get their mortgages. Indeed, I am sure that noble Lords have seen the television programmes about chains—everyone is waiting for the last person to get a mortgage, for the next person to get their mortgage and so on through the chain. It is not realistic to decide whether somebody has sufficient means.

I read in a Sunday paper—the one to which the noble Lord referred—that many years ago a rather scruffy-looking man walked into a Park Lane show room and bought seven Rolls-Royces. He was an Indian maharajah, but one cannot tell much about a person by looking at them. It was a marvellous story. He took them back and sent them out as waste disposal vehicles and insisted that the salesmen who had been so unpleasant to him went with him to see what they would be used for. However, such measures are impractical. I shall not go on because I know that other people have valid points to make, but there are real concerns in this Bill. Expense and time, which are inter-related, are the main concerns.

Lord Phillips of Sudbury

My Lords, I was flattered by the remarks of the noble Lord, Lord Borrie the—Government's one loyal Back-Bencher on this Bill—but even he will not provoke me into unqualified support for this set of amendments. They are a little too incendiary. They would blow up Part 5 altogether. Those of us—not only on this side of the House—who have serious reservations about this part of the Bill are not remotely acting on doctrinaire grounds but on the grounds of sheer practicality. It is fair to say that nearly all those who have spoken on this part at various stages of the Bill have been practitioners in the field—either solicitors or estate agents. There is a genuine, deep lack of conviction within the legal profession and the estate agency profession about the efficacy of the measures put forward, especially in relation to the aspirations that the Government have for them. We will not be deterred—at least I know that my colleagues and I will not—from continuing to oppose those aspects of Part 5 that are over confident.

For two reasons, however, I for one will not vote to eliminate these clauses. First, I believe that there may be substantial merit in the home packs arrangement, which deserves the opportunity to show itself. That is why we have tabled amendments on voluntarism and piloting. It is very important for the House to recollect what the noble Lord, Lord Bassam, said when we debated this on 14 September, which can be found in Hansard at column 1070. He made it absolutely clear that there will be a national "dry run" as we called it. So long as that national pilot is objectively put together, thoroughly carried out, objectively analysed and then acted upon, I say, "Fair dos, let's give it a go". However, very few would accept anything short of that.

We will return to that matter later. I merely wanted to say at this stage that, although potent reasons were advanced for eliminating this set of clauses, we should give a combination of voluntarism and a thoroughgoing pilot the opportunity to show the merits of this proposal.

The Earl of Caithness

My Lords, we are having almost a Second Reading discussion on Prescott's penalty against home owners. The question to which I have never had a sensible answer is why, if this is such a good idea, is not every other country doing it—or why have they not done it? There is not another country in the world that is doing anything remotely like what this Government are proposing. In Scotland, similar housing legislation is being introduced, but it goes nowhere near as far as this Government's, and there the scheme will be voluntary rather than compulsory.

I shall try to analyse the good and bad points of the whole of Part 5. The Government have based some of their arguments for proceeding with Part 5 on what is happening in Denmark and New South Wales. If it was such a good idea in New South Wales to have what is actually a lesser scheme than the Government are proposing, why has not every other state in Australia followed suit? The answer is that people do not like it—no one likes it. The buyers do not like it, the vendors do not like it and the agents and solicitors do not like it. They have found other ways in which to improve the housing market. And to use Denmark as a comparator, when more than 90 per cent of its housing is 20th century—very different from this country—and given that it is much smaller, is a wrong basis on which to work.

The market is working well at the moment. It can be improved, as we all know, and I would support any sensible measure by which to do so. There are undoubtedly some problems with the way in which the current market works, but they are very much in a minority, and Part 5 is not the right way in which to address them. As my noble friend Lord Hunt of Wirral has just said, under these provisions the market will be considerably less flexible than it is now.

Nothing in this Bill will stop gazundering or gazumping. We have heard a lot about gazumping in the debate so far, but nothing about gazundering. By all accounts, in some areas of the country, we are heading towards a gazundering market. In some areas, we are also heading towards a negative equity market. The cycle is coming back, as it was some 10 or more years ago, and the Government will hear howls of protest on negative equity and gazundering, let alone on the extra costs that will be imposed by the Bill. Nothing in the Bill will prevent people from withdrawing from a deal at any stage before exchange of contracts, just as they do now. The situation will be no different.

No proper research was ever done into whether home information packs would work. A short trial was done in Bristol in 2000, which involved fewer than 60 sales and was not designed to measure the effect of the pack on the market. The agent who did the trial was, of course, heavily involved with a company that produced home information packs, so she had a dual interest.

The Bill will stop the immediate marketing of a property, to the detriment of all. On that area, the National Association of Estate Agents has gone back and questioned closely its member firms. Its member firms have gone out to clients, and an overwhelming majority—in some cases, up to 95 per cent, but certainly more than 80 per cent—of all respondents, said that they wanted immediate marketing. This Bill prevents that. The Government are going right against the wishes of people who wish to buy and sell properties.

The pack is disliked by the majority of those in the profession. Indeed, the Select Committee of the Office of the Deputy Prime Minister disliked the packs, too. It said: We are concerned that even advocates of the scheme have identified a range of serious problems which remain to be ironed out … at this stage we cannot recommend that home information packs are made compulsory". But what are the Government doing? They are making them compulsory.

The home condition report is a waste of time and money. The Minister confirmed in Committee that the report needs to be made within only three months of a property coming on the market. He also confirmed that one can make any alteration to the property without altering the home condition report. One can knock down walls or add an extension without declaring it in the home condition report. One can then say to the prospective purchaser that the home condition report was done within three months of the house coming on the market, and that it is up to the purchaser to verify its accuracy. One might not have made any alterations oneself; natural elements might have done that. If I had valued my property in Scotland in the second to last week of August, I could have said that the roof was in perfect condition. We had an early winter gale and lost three slates that have to be replaced before the winter, so the roof was not in 100 per cent sound condition at the beginning of September. That is how quickly a home condition report can go out of date.

The report will put a lot of extra cost on the vendor with no potential benefit to the purchaser—because the purchaser will need to have his own survey done, just as he does now, and as I would certainly recommend he did. As my noble friend Lady Gardner of Parkes said, the cost to the vendor is between £600 and £1,000 per transaction. That figure will be higher in parts of London and could be lower elsewhere—but that is the general cost. We are now entering a cooler period of the housing market, when properties will be on the market for considerably longer than they have been—and the average length now is many months. Those who carry out the work, such as the solicitors who will have to produce all the information up front, the agent who will have a lot of extra work to do and the surveyor who does the home condition report, will all want to be paid whether the property sells or not. As more properties are taken off the market, there will be a huge amount of wasted extra cost.

Part 5 will not speed up the buying and selling process, as other noble Lords have pointed out, but it will significantly reduce the number of properties coming to the market. The Consumers' Association has identified something like a 25 per cent reduction in the number of properties coming on the market because of the extra costs and hassle that a vendor will face. That will seriously distort the market and compound difficulties for a lot of people.

I was surprised by the comments of the noble Lord, Lord Phillips of Sudbury, as I always thought that he was a Liberal—and this is a highly illiberal measure being proposed by the Government. I should have thought that he would be one of the first to support his colleagues in another place. The honourable Member Mr Davey, who leads for the Liberal Democrats in another place, said: We believe that the home information packs represent a totally unnecessary regulation". I thought that the noble Lord, Lord Phillips, had written that for him—and was disappointed to hear that he had not. Mr Davey went on to say: This is a market that the Government should leave well alone".—[Official Report, Commons, 11/5/04; col. 281.] I agree with that. Yes, we all want to improve the buying and selling of houses, but this is really not the way in which to do it.

Lord Selsdon

My Lords, I had not intended to speak. However, I declare an interest as a director of a house building organisation that sells used and new homes. We seem to be having a lot of what are almost Second Reading speeches. The Government have tried extraordinarily hard and consulted very widely on the Bill. In all my time in the House I have never seen so much paper going to and fro, often on what I would describe as useless issues.

5 p.m.

The view of "my gang", if I can describe them thus, is that everyone wants to legislate more and more. If you want to sell a house, you provide as much information as you can. In a good market you have the maximum number of footprints and houses sell as though there is no tomorrow; when times are bad, they do not. When times are bad, you produce more information and you make more effort. You find in general that the people who hold things up are the professional classes—solicitors and lawyers. They cannot talk to each other.

In general, as the cost of these matters goes up, you do not talk to the professionals. You do not appoint them until 24 hours before you wish to complete so that you cannot pay more than 24 hours worth of fees, you do things direct and you break the circuit. As the Internet comes into the matter the younger brigade who are quick with their fingers gather a most amazing collection of information. They know about house prices and they have schedules of 29 houses of the same type. They have aerial photographs that they can download and blow up. An amazing amount of information is available.

I am probably closer to the noble Lord, Lord Borrie, in my views on this matter than are most noble Lords. I believe in fairness. I agree with the Scottish or the French systems of having a promis de vente; namely, that when you have said that you will buy a property, that is the case unless some information is proved wrong.

I do not believe that this is a question for forced legislation. In the old days it would constitute a form of code of practice. I move closer to the views of the noble Lord, Lord Hunt of Wirral, in this regard. If there is so much objection to the measure as a piece of legislation, perhaps some formula can be provided that tells people what information they should in good faith provide, how they source that information and how they check its reliability. In general we have such old housing stock that it is impossible to prove what goes on below the ground. Even in my experience of not selling houses very often, I have had dry rot emerge. That can happen even though you have had the most expensive surveys in the world, you have had heave and hump, you have had solicitors with trainees from some strange part of the world who have been over and disappeared, and everything goes wrong.

As we used to say in my family, Murphy's law operated on the basis that if anything could go wrong it did, but that Macdonald's law made Murphy's law look optimistic. The Government should try to see whether there is some non-legislative way to approach this matter. However, they have done a good job in raising this whole issue. All we are talking about is two people who wish to buy and sell something or deal together having proper information.

Lord Donaldson of Lymington

My Lords, the noble Lord, Lord Borrie, categorised various parts of the House as reasonable or inherently unreasonable but made an exception in one case. However, he said nothing about the Cross Benches. Therefore, I imagine that we are on probation, or that I am.

I make it perfectly clear, lest anyone should have any doubt about it—none of my fellow lawyers will have any doubt about it—that professionally I know nothing whatever about the subject matter of this Bill. I have had a solicitor for a long time, but for reasons that are not to his discredit—they are largely due to my geographical location and his—I have just changed solicitors and asked them to deal with the sale of a flat that I own. I made it quite clear to them they must not assume that I knew anything because on that basis they would be right. However, if they treated me as one of my own clients, they would have a fool for a client.

I am interested in this matter in a remote way as my wife had a policy, with which I agree, that when our family needs changed, we ought to buy a different house unless it was very financially disadvantageous to do so. As a result I believe that the flat I am selling is the eighteenth property that I have owned. Therefore, I can confess to a good deal of experience in this matter. I am interested in this matter on the basis of that experience but I had not intended to contribute to the debate because obviously I cannot make the contribution that the professionals, and others who have gone into the matter in greater depth, can.

However, I changed my mind about contributing to this discussion when I received an e-mail this morning from the Consumers' Association which said that it was afraid that Clause 141 might be deleted. The association wanted to enlist my assistance to ensure that did not happen. I rang the staff at the association and explained that I needed to know a great deal more about the arguments for and against their claim. The staff were very helpful, but I believe that they showed an extraordinary lack of judgment in sending me the e-mail. However, that must be a matter for them.

I entirely accept that there is a great deal to be said for sellers providing much of the information which this part of the Bill requires them to give. The Consumers' Association lists that information as the evidence of title—that is obvious—any planning approvals and building regulations consent—I agree—any warranties and guarantees for new properties—I agree—a draft contract for the sale of the property—that is probably necessary—and leasehold charges. My flat is subject to a service charge and that must be revealed at some stage and there is no reason why it should not be revealed in advance. A few days ago I was slightly taken aback to receive a note from my solicitor to say that he had been in contact with the freeholder with regard to obtaining unspecified information that he needed and that the freehold owner was charging £125 and would I please forward a cheque. I did but I wondered what I was getting for my money. However, that was by t he way.

The home condition report is a wholly different matter. I asked the Consumers' Association what was proposed in that regard. I asked whether the home condition report would in any way measure up to a full structural survey. I was told that it would not. I asked what it would amount to and I was told that it was still the subject of negotiation between all the parties involved. I asked what insurance would be provided by those who provided this unspecified form of condition report. I was told that it was very important that there should be insurance to which those who relied upon it should have access. I said that I agreed with that but asked what happened if problems arose. I was told—this may be news to the Minister—"Oh well, we shall have to have the Government as an insurer of last resort". The Consumers' Association showed itself to be an optimist.

The question arises of whether anyone would accept the home condition report as being sufficient. In that regard I was depressed and enlightened by the Consumers' Association. It told me—I assume that it is right—that the average purchaser does not consider getting a full structural survey but is content that the building society or other lender has accepted that the property is worth lending money on. That is a wholly different proposition. Of course, the greater the difference between the amount that the lender is lending and the actual purchase price of the property, the greater the foolishness in relying on the measure. There is a real case for mounting an education programme, illustrated with the bad cases that I am sure would be produced, in order that the average purchaser realises the importance of having a full structural survey and is able to make an informed judgment about whether he wants one.

I shall not relay all the questions that I asked the Consumers' Association or all the answers that I was given. The lady in the campaign department—I believe that is what it is called—of the Consumers' Association said, "Of course, you have got to have faith. It will be an act of faith". I am not sure about that. It is not the basis on which I have previously voted for legislation, and I do not really think that I shall start now. There is a lot of common sense here, but the matter ought to be approached on the voluntary basis.

Baroness Hamwee

My Lords, I used an earlier opportunity to make a Second Reading speech, so I shall try to confine my remarks to only a few. We recognise that there are consumer interests. I have not heard from the Consumers' Association on the matter for some time. Our approach is one that many noble Lords perhaps implicitly supported with their remarks. We have detailed amendments later on the Marshalled List that reflect our use not of a hatchet, but of a small filleting knife. In particular, we have concerns about the compulsory nature of what the Government propose. We have amendments about voluntarism, the use of a pilot scheme, and the exclusion of the home condition report, about which we share concerns of the type that have just been expressed.

I will not attempt to respond to the whole critique that we have heard in the past hour and 17 minutes, but I want to say in particular how much I agree with the noble Lord, Lord Hunt of Wirral, about the relationship between the state and citizen. Previously on the Bill, I characterised it in a slightly different way, saying that the Government had taken nannying to a great extreme. Whether it is nannying or the inappropriate intervention of the state, I cannot help but observe that the Government have said that they will not alter the caveat emptor provision with which we are all familiar. I have not managed to gather enough expertise in Latin to translate "Caveat emptor the state"—at least, not with sufficient confidence to see it repeated in Hansard—but it is a case of "Beware of the state", which is not really what relationships between buyer and seller should be about.

The consumer interests appear on both sides of the deal. During previous debates, there seems to have been a tendency to approach the matter as though there were a single, small consumer against large producer interests. We have tabled amendments about enforcement, which I will use to make that point a little more later.

We are concerned about costs on the consumer. I say to the noble Lord, Lord Hanningfield, that they are nothing like a tax. However, there is certainly a problem about the cost, which is not one invariably incurred in transactions now. Not every purchaser by any means undertakes a survey. As we have heard, lenders seem not to be the remotest bit inclined to accept the home condition report as the basis of their own valuation, so there is a cost that, however much we think that it might be important for a purchaser to undertake a survey, does not currently occur.

It is a pity that some of those who deal with consumer interests have alleged that the concerns are because of self-interest on the part of professionals. In a way, it is perhaps a pity that so many professionals have taken part in our debates, although some of us have tried very hard to disclaim any professional expertise in the area.

I hope that the Government will tell us—I invite them to do so now—why a voluntary scheme that we wholeheartedly support needs legislation. Perhaps now is the point for them to spell that out. It is better to encourage acceptance than to impose it. For that reason, my noble friends and I agree with my honourable friend the Member for Kingston and Surbiton that we are talking about wholly unnecessary regulation. That is why we support a voluntary scheme, but not the wholesale destruction of the ideas that the Government have brought forward.

5.15 p.m.

Lord Rooker

My Lords, I shall do my best. It has been an extensive debate; I have not counted the speeches, but there have been more than a dozen. I shall try to answer many of the points raised by noble Lords and then make my set-piece defence of Part 5. Essentially, this is very much Second Reading. It gives a new meaning to "the revising Chamber" to take out a whole part of the Bill; it is true that that is revising the Bill, but it gives a new meaning to "revising". I may not cover everyone's points with my notes, but I think that they will then be covered in the set-piece points that I want to make. The issue is not unimportant.

The noble and learned Lord, Lord Donaldson, does not have to answer me—I am not prying—but I would be very interested in the other side of the coin of when he goes in to buy, bearing in mind that he said that he had owned 18 houses. I would be interested in the kind of questions that he, his lawyer and estate agent would ask; he was giving us the view as a seller. I do not ask him to have faith, either. Never believe a Minister who says, "We've got all the answers". I do not claim that; the Government are not perfect; Whitehall does not know best.

I shall make the best case in terms of good legislation to deal with a problem. People have referred to the nanny state. It can be irritating because, if the people who suffer any problem that arises in society get media attention, they say, "The Government should do something about it". The minute that the Government do so via Parliament, there is an argument that we are being oppressive. That is why we have had such massive and complex legislation since the Second World War. I do not accept that it is the Government's job to do something about every problem that comes along, but I want to make a case on this issue. There is a case for the Government, through Parliament, to take some action.

The noble Earl, Lord Caithness, asked about changes happening to the property after the home condition report had been completed. As anyone who has bought and sold knows, one already has to fill in the standard tick-box sellers' forms. Asking sellers whether anything has to their knowledge happened to the property since the home information pack was prepared will become a standard inquiry made of them. Any solicitor, even a trainee, will make sure that their client asks that question, because it is reasonable.

The noble Baroness, Lady Gardner of Parkes, made a point about the number of copies to be produced for potential buyers. Clause 149(8) allows the responsible person to charge a reasonable sum for the cost of supplying copies. She also asked about marketing by several estate agents. All of them would need a copy of the home information pack, but that does not mean multiple home information packs; they could have copies of the same pack. People would not have to produce different packs. She talked about it being the norm for people to use more than one estate agent. It is not my norm. When one signs up to multiple agents, one pays a lot more fees.

I shall respond to the noble Lord, Lord Fowler, and correct one thing that I said, although it was right from my point of view. I probably used the incorrect term, using "home information pack" as synonymous with "home condition report". If a new home is built and a warranty is provided by the builder, it is self-evident that, at the point of sale, a home condition report is not required. That does not mean to say that a home information pack itself, with the title and contract, would not be provided, but one would not need a home condition report for the first sale. I emphasise that the point is the first sale.

There are many proper warranty systems. I pay tribute to the National House-Building Council, of which the noble Lord was chairman. It does a first-class job in giving people comfort in buying new properties in this country, and has an excellent and efficient way of inspecting properties as well. These issues will be covered in regulations, as they were in the consultation paper.

I have extensive speaking notes to Amendments Nos. 151 H, 159A and 163E, but I do not propose to go through them now, because that would not be fair. But they make the general point, which is why I can meet the noble Lord, Lord Fowler, only half way. The legislation covers the purchase of second hand homes—not those bought from the builder.

I used the figure of seven years off the top of my head. I know that we have had a debate on the amendments, but I could have said four or eight years. The seven years did not imply anything about the six-year amendment. The point is that people can carry out work on their homes, but the cover is different from the warranty. Although I could stand corrected, it is also the case that the warranty provision for 10 years for new property is not the same throughout the whole of the 10 years. I understand that it changes at different stages, relating to matters such as central heating. So it is not quite a continuous cover. I am not knocking it, but it is not the same. If the home becomes second hand and may be bought and sold two or three times with people knocking bits and pieces about, then one might understand why we make the case that people ought to be covered if it is second hand.

The noble Lord, Lord Hunt, asked about the Government assumption about the cost of the pack being deferred until completion. The most successful current home information packs—and they are very much voluntary—operate on a deferred payment basis. The indications from the industry are that this facility will be widely available when the statutory scheme is introduced.

I am grateful for the positive remarks made by the noble Lord, Lord Selsdon. He did not say that he would be supportive, but at least his remarks were not as negative as some of the other contributions. I regret the personalising of the matter—I would not say abuse—by the noble Earl, Lord Caithness, regarding my right honourable friend the Deputy Prime Minister.

While I am on that subject, early last week I wrote a 12-page letter to all noble Lords who had participated in the first debate, including to the noble Earl. He shakes his head. I have had that accusation too often—I have given instructions that any future correspondence to the noble Earl will be sent by recorded delivery. Everyone else received the letter, as far as I know. I do not know about the question of email, but the fact is: here is the pack; I signed its covering letter, which was extensive. I do not claim that it answered all of the questions, but it covered all the points raised in Committee, and, I tell the noble Lord, Lord Phillips, it included a four-page annexe about what we will do during the dry run. It is important that if noble Lords ask questions, they are entitled to receive answers.

Someone asked about hidden defects insurance. We do not propose that that would he required. Many of the other points that have been raised will be covered by the speech that I am about to start, which will not take too long, but has to be put on the record. If I do not cover any particular matter, noble colleagues may come back to me.

The current situation is that more people than ever own their homes. I do not know what the current figure is—possibly more than 70 per cent. The most recent information figure was two-thirds and the point is that ownership is the most common form of tenure in the country. Many people who are not owners aspire to own, so we know that the figure will go up rather than down. At some point most of those people will buy or sell a property. But the process of buying and selling is appallingly inefficient. One-third of would-be house purchases fail before completion. I know that there are many reasons for that, but one-third is a huge number. As I said in Committee, some 40,000 properties every week are marketed—2 million a year. That means that anyone who legislates in this field has to be certain that the proposals will work when they come into effect. We are dealing with a huge number, but a large percentage fail before completion.

That does not mean to say that the two-thirds of sales that are successful go through smoothly without any problems. Our research shows that more than half of all transactions have some kind of problem. That explains why surveys show that nine out of 10 people are unhappy with the process and want to see change. For many people the house buying process is time-consuming, unreliable, emotionally draining and expensive. Therefore, we brought forward this proposal to honour a specific manifesto commitment to make provision for the introduction of home information packs—or sellers' packs as they have previously been described.

We have researched the system and we think that making key information on a property available right at the start of the process means that home buying and selling is made easier and, above all, more transparent. Therefore, it would raise the chance of a successful transaction. It will never be perfect—we do not aspire to perfection. But transparency will make it more successful.

We can pray in aid the full support of the Consumers' Association, although I was tempted not to say that, having listened to the speech of the noble and learned Lord, Lord Donaldson. Many progressive people in the industry support the proposal. I will name names before I sit down, which may be a surprise, but I have not been in a position to do that before and I shall do so with the approval of the people concerned. There are no surprises regarding the main components of the pack, because we provided a sample pack in our consultation paper on the contents of the information pack, so that people could see exactly what would be there. Much of it is familiar to anyone who has dealt with the ordinary documents, but the home condition report is the new element. The pack will contain local searches, the home condition report, including an energy efficiency certificate, and other legal documents.

So scare stories about the cost of the pack and the impact on the market have been somewhat exaggerated. Most of the documents have to be provided in any event. That is not new. The costs are simply transferred from the buyer to the seller. Importantly, first time buyers will benefit the most, because they will not have to pay those costs to step on to the first rung of the property ladder.

We have also responded to the concerns of consumers about the conduct of some, not all, estate agents. The Bill now provides for the Secretary of State to require that all agents who market homes with a home information pack must belong to an approved redress scheme. That will ensure that the cowboy element is eliminated from this sector of the market. It will give consumers greater confidence and the certainty of redress when they are let down.

We recognise concerns about the readiness of the industry to deliver the reforms on time. We have set up a programme of management arrangements to supervise implementation and we are involving all of the key stakeholders. We have said many times before that home condition reports will be introduced only when we are satisfied that there are sufficient numbers of inspectors to do the job and that satisfactory insurance arrangements are in place. They will not be introduced before those conditions are met. The same goes for the rest of the pack.

We have consulted on this and we will be examining the results of that consultation with the stakeholders and consumer representatives before we take final decisions. The industry needs certainty that the Government mean business and will deliver on their manifesto pledge. That is needed before those bodies can put the necessary investment into developing the new systems and the training that will be needed. I shall give examples of companies that have already made that investment. It would not be unreasonable to believe that many firms would not take part until such a Bill had received Royal Assent. We want to give an assurance that we will be in that position.

We recognise the advocacy of a voluntary scheme, as the opposition—certainly the Liberal Democrats—would prefer. That would mean that things would stay as they are now. That is not an option and if the amendment is not carried we can have a more detailed debate on that matter later in our proceedings.

I regret that a scare story was started this week about the poll tax. Frankly, it ill-behoves the Conservative Party to run a scare story about the poll tax. Let us face it, we have with us now living proof that the poll tax was not a great success. That story was unfortunate, because it was not true—as, indeed, the opening paragraph of the speech made by the noble Lord, Lord Hanningfield, was not true. I have not seen the newspaper cutting; my remarks stand; the Government have no plans to abandon this Bill; and I was correct in suspecting that the noble Lord quoted one of the Murdoch lie sheets.

Our argument is that the status quo is not acceptable. There are too many complaints and too many people are upset, emotionally drained and financially disadvantaged by the buying and selling process. But of course, that is what the main Opposition are offering.

Progressive interests in the profession, from small to large players, support the measure because they recognise that the consumer must come first—it is very much a consumer protection issue—and they are ready to run as soon as Parliament gives the okay. It is therefore indefensible to say that we want to carry on as we are.

Some of the issues that have been raised today in the media by the Opposition—for example, the idea that everyone must have a pack before they sell a house—are nonsense. They will not speed up house buying or stop gazumping. The real nonsense is in the suggestion that more and better information up front will not lead to better functioning of the market. More and better information is inevitably bound to lead to better functioning of the market. Sellers will be able to put packs together within days rather than weeks and we have plenty of evidence of that now from those who do so on a voluntary basis.

The home information packs are not designed to stop gazumping and we have never made that claim, but speeding up the process will of course make gazumping less likely. We can lay claim to that. Where gazumping happens, buyers will not incur the high, wasted cost that they do now on forking out for surveys on dwellings. Several surveys on one particular dwelling by lots of buyers is an absolute waste of money. We believe that the cost will be neutral as additional costs for sellers will represent an equivalent saving for buyers, but first-time buyers will benefit in particular.

The other claim that at £1,000 per pack it is another attack on home ownership is simply not true. We do not know where the £1,000 came from and no one has given any estimate. This is not a new cost, as I said in a previous debate. Our estimate of £635 includes £300 for the home condition report; £10 for the office copy entries from the land registry; £200 for the searches; and £125 in legal fees for putting the pack together. The main point is that the sellers will not have to pay the costs up front. We know now that the market will enable people to defer the costs, like they defer the estate agents' costs, until the money is in the bank.

It was also said today that the packs are not acceptable to mortgage lenders. That is simply not true and there is no evidence for it. I will later give an example of a key player that knocks that one on the head.

Another allegation made today is that there is real concern about the cost to people on low incomes and that there are insufficient inspectors to undertake the work. I will give some figures on that—I have given them before—to show that there will be more than sufficient inspectors from our current inquiries to undertake the work. With regard to the cost to people on low incomes and in low-value homes—this is a special issue raised by two noble colleagues—we made it clear that we were consulting on the matter and will issue regulations. We do not want to red-line properties, for lots of reasons, but on the other hand we fully accept that for very low-value properties, which exist in areas of major market collapse in parts of the north-west and north-east, that can be a problem. We will overcome that with consultation and regulations to follow.

Another allegation made today—I am really surprised that it was run out—is that as anyone will be able to receive the pack, whether or not they are serious buyers, this is a burglars' charter. As to all the nonsense about the security system in the house being part of the pack, I have made the position clear from this Dispatch Box, so it is on the record in Hansard. First, there will be no details about security systems in the home information pack. I do not know why this red herring is trotted out by those who claim it and the noble Lord, Lord Hanningfield, really should have known better.

The Bill allows sellers to refuse to provide a copy of the pack to people they do not believe to be serious buyers. This brings me to one of the points raised by the noble Baroness, Lady Gardner of Parkes. I am not sure how long it is since she walked into an estate agent with a view to buying a property. The estate agent will ask the prospective buyer, "Have you got the money?", and he will be expected to answer some of his questions. Oh yes, I am speaking as I find. The estate agents will make inquiries because they do not want to be in a position of sending you round to view a property, giving a false impression to their client that they have a serious buyer. They will need to know how the buyer intends to source the finance for the property. That is not therefore new.

On the other point, frankly, it goes without saying that someone trusting—

5.30 p.m.

Baroness Gardner of Parkes

My Lords, I thank the Minister for giving way. The point I made was that probably and often the least scrupulous buyer will say, "Yes, I've got cash". Having said that, there is no way in which the estate agent can ask him to prove it and he then runs off to try to get a mortgage.

Lord Rooker

My Lords, it is up to the estate agent to ask for the proof of that in certain circumstances. They are professionals. If someone goes into the office and says that he is paying cash, perhaps running to several hundred thousand pounds, so as not to mislead their client by sending loads of people round who just have a fetish for going inside houses which are for sale, it will be a reasonable for the estate agents to take steps. That is wholly reasonable.

It was also said that with parliamentary time running out we risk losing the entire Housing Bill if the Government insist on keeping the pack. Although I do not say this about every detail, I repeat that this issue appeared in two manifestos. We got it wrong the first time round by making it a criminal offence, so we have come back with a substantially amended proposal.

There is a poverty of policies from the Official Opposition. There is no doubt about that as there are no positive amendments. In fact, there are no amendments whatever. I am astonished because the only amendment from the Opposition to this Report stage of the Bill is to take out Part 5. There is not a single amendment to try to make the system work better, as there is from the Liberal Democrats, because it is not accepted in principle.

I have to make it clear that if we knock out Part 5, we knock out the redress system, too. For the first time ever, we have a redress system for consumers against estate agents who fall foul of the system. I want to make a partial apology. As for estate agent regulations in the Bill, the authorities in the House of Lords have made it clear that the redress scheme arrangements in Part 5 have to be tied to the home information packs in order to be within the scope of the Bill. We, the Government and the DTI, would have wanted it wider, but as the Bill was introduced it is not possible. The fact is that without the home information pack provisions in the Bill, there could be no redress scheme at all.

The Liberal Democrats recently published a document entitled A Place to Live, which sets out their policy in briefing note No. 29, by aim of reforming the market by moving towards a system of house purchase in England and Wales designed to suppress practices such as gazumping. The word "suppress" is important and clearly recognises that to ban gazumping would go too far—there is an impossibility—and give licence to buyers to drag their heels unreasonably. As I have said, the effect of the home information packs will be to help deliver a policy change sought by the Liberal Democrat policy note.

Action to improve the condition of the nation's housing stock is also an area highlighted by the Liberal Democrats. The Government are spending more than £500 million a year on a variety of programmes to improve the private sector stock, but we all know that because of the scale of the problem, because our stock is so old and because we have an absolutely pathetic record of replacing our stock—it is 0.1 per cent a year while in continental Europe it is 1 per cent a year—the average house in this country must last 1,000 years. You only have to say that to see how stupid it is and how far behind we are in replacing our stock.

Because of the scale of the problem, it can be tackled effectively only if there is an increased commitment from home owners themselves and obviously the home information packs represent a big step forward. The fact that there will be a condition report on the home when they come to sell it will spur the home owners to keep their homes in good repair and certainly do things regarding energy efficiency. That is another feature that has been prominent in Liberal Democrat policy. The home condition report provides a cost-effective way of implementing the EU directive on the energy performance of buildings and providing information on the energy efficiency of the property and ways of improving it.

I fully take on board what the noble Lord, Lord Hunt of Wirral, said about the pilot. He is right. Before you embark on a major area of policy, pilot it. We never had any lessons in Opposition about government, except for about three days at Templeton College, Oxford. There we had a succession of private sector people, ex-permanent secretaries and ex-Labour Ministers who were prepared to be open and honest with us about what to do and how not to make mistakes. If ever a lesson came out of that, it was, "If you're making a major change of policy, pilot it". We have undertaken many pilots in the past seven years on whole areas of policy.

I am not claiming that the pilot in Bristol is the be all and end all, but the way we will operate the dry run performs many of the functions that people draw attention to, including myself. I am sceptical in the department because in piloting London or a region, with the legislative framework needed, people may not put the necessary investment into training. There is a real problem in going for a large pilot on this, which is why the dry run is probably best.

I have been handed a note saying, "People are ready to vote", but I have a very brief note—my fourth—on progress to date on home information packs. I shall complete that and then I shall sit down. It is important because it shows the amount of preparation that has been carried out. It is not being done on a wing and a prayer, and it is not based on faith, as the noble and learned Lord, Lord Donaldson, was asked to do by the Consumers' Association.

The home information pack programme now being run by the Office of the Deputy Prime Minister involves working groups looking at the context of the packs in the light of responses to the consultation exercise. Stakeholder groups, including the Law Society, the Council of Mortgage Lenders, the National Association of Estate Agents, the Royal Institution of Chartered Surveyors and the Consumers' Association, are represented on the working groups or are deeply involved in the programme management arrangements to ensure the smooth and successful introduction of the packs. The working groups expect to report in the spring and we therefore expect to lay statutory instruments before Parliament in the summer of 2005.

One element of the home information pack has been the subject of a large amount of debate—the home condition report. I repeat that this is the only new area of the pack. All other parts of the pack must already be put forward but we are asking for that to happen at the beginning of the marketing process. I know that noble Lords will be pleased to hear that substantial progress has been made on this front. The format of the home condition report is now largely settled after successfully undergoing technical and consumer testing. We have arranged for independent research to be carried out on the availability of home inspectors, and the findings make us confident that there will be a sufficient number of home inspectors to deliver the home condition reports.

Many existing surveyors and members of related professions and trades have expressed an interest in becoming home inspectors. In fact, research has already identified more than sufficient of the required numbers, and we are holding a major trade fair in November for prospective home inspectors and firms interested in employing them. We are also well on the way to putting in place the safeguards that will ensure that the home condition report is objective and that buyers, sellers and lenders can rely on the report with confidence.

In that respect, the insurance market is softening. With the help of the Association of British Insurers and the industry, we are making substantial progress towards securing satisfactory commercial insurance arrangements for home condition reports and home inspectors based on minimum acceptable terms to be prescribed by the certification scheme. I can knock this right on the head: if there is no satisfactory commercial insurance scheme, there will be no system because the Government will not pay for it. I make that absolutely clear, whatever the Consumers' Association may be saying.

In addition, national occupational standards were approved by the Qualifications and Curriculum Authority in September 2003. It approved a qualification in home inspection to deliver the national occupation standards offered by the Awarding Body for the Built Environment—ABBE, which is almost like ABBA. It has also approved applications from the Royal Institution of Chartered Surveyors and Surveyors and Valuers Accreditation to operate assessment centres that will judge whether candidates' competence matches the qualification.

Other applications to run assessment centres from the Association of Building Engineers and the Institute of Maintenance and Building Management are close to receiving approval. All the main professional trade bodies and the Consumers' Association are actively involved in preparing a certification scheme for home inspectors and they intend to apply to the Secretary of State for approval to run the scheme.

Home information pack initiatives are well under way, and a growing number of estate agents, conveyancers and others and getting ahead of the game by introducing their own home information pack schemes with notable success. We expect the number to grow rapidly once the Bill is on the statute book. That will prepare the way for a statutory scheme and will mean that many buyers and sellers will not have to wait until 2007 to experience some, although not all, of the benefits of the home information packs. Many major players in industry are working on plans for launching home information pack initiatives and are looking to announce those after Royal Assent.

If I were to quote a small estate agent somewhere in the Midlands or in some obscure part of the country which was ready to go, together with a tiny building society or lender, noble Lords would laugh me out of court. But I can tell the House that the nation's largest lender, HBOS, and the biggest estate agent, Countrywide, are supporting home information packs. They are gearing up and are ready to go. The biggest home lender and the biggest estate agent practice are ready to go and they support this system. They see commercial advantage in doing so. Countrywide operates under many local names and it would take too long to go through them. But they are names with which we are familiar and it is the biggest estate agent in the country.

In the longer term, we are also planning, with industry, a full dry run of home information packs, which, of necessity, will have to be on a voluntary basis. All voluntary schemes have the drawback that, given the predominance of chains, which answers the question about why the voluntary system cannot be long term, fewer people are able to benefit. But this dry run will enable the industry to test its systems and ensure that the introduction of the statutory scheme goes smoothly. If the dry run reveals problems that would put at risk successful implementation, we have ensured that the Bill contains the necessary flexibility to address those quickly through regulations. In short, a great deal of work is being done not only in government but by all the practitioners outside in co-operation with the Government.

I shall quote one other company and then sit down. This is from the website www.findaproperty.com, which quotes Mr Smith, the head of the Spicerhaart group, which includes the estate agent haart. It is true that he makes a point about cost. However, despite the concerns, he says that he favours home information packs, which have been trialled in some Spicer McColl branches. The website reads: [Mr] Smith says they made sales go through faster and reduced the number of sales that fall through. The company has spent more than £500,000 on technology and made a number of appointments in preparation for the introduction of the Packs". In other words, private sector companies are investing now, but the biggest lender and the biggest firm of estate agents are ready to act in backing this system. I hope that, in the interests of protecting consumers and giving home buyers a fair deal, the amendment to reject this part of the Bill will be defeated.

Lord Hanningfield

My Lords, we have had an interesting debate on the amendments which has shown the great concern and interest of many noble Lords and other people. This is the first time since I have been on the Front Bench and involved in legislation that people on the train have talked to me about a piece of legislation. There has been a lot of interest from the public. As I said earlier, the public particularly do not like the compulsory nature of the scheme. Many people today wished me good luck in trying to remove these clauses from the Bill.

There is nothing doctrinaire about why we want to remove the clauses. We would like a voluntary scheme, but the compulsory nature has to be removed from the Bill to have a voluntary scheme. As the noble Baroness, Lady Hamwee, said, we do not need legislation for a voluntary scheme.

I thank the noble Lords, Lord Hunt of Wirral, Lord Fowler and Lord Selsdon, the noble Baroness, Lady Gardner of Parkes, and the noble Earl, Lord Caithness, all of whom made valuable contributions with which I totally agree. I think that all of us can agree with those contributions. The noble Baroness, Lady Hamwee, agreed with the noble Lord, Lord Hunt of Wirral, that we are infringing the boundary between the Government and the individual. We are making something compulsory which should be voluntary. As I said, 1.4 million homes change hands every year. To make this scheme compulsory will be the most unpopular thing that the Government have ever done. It will be good politically for some of us, but it will be very unpopular indeed.

It is not a joke to say that this is a community charge/poll tax. The Government will regret it. If the scheme had been voluntary, many of us would have gone along with it. We have tabled these amendments because there was no "give" from the Government in Committee, and there will be no more give later if our amendments fail today. The Government seem to feel obliged to put forward this compulsory, unpopular scheme when they could have had a voluntary scheme along the lines suggested by the noble Lord, Lord Hunt of Wirral. The Government are making a great mistake and the only way to remedy it is to remove these clauses.

The noble Baroness, Lady Gardner of Parkes, made a valid point which the Minister addressed briefly. We talk about people wanting low-cost, affordable houses. This sum, whether £600 or £1,000, is a great percentage of a house costing £50,000 or £60,000. And I am referring not only to houses in the north. There are all kinds of low-priced houses around the country that young people want to buy. This will be a charge on them.

The Minister said that this is consumer protection, but it is the consumer who will pay. That is why some companies are jumping on board; they will make lots of profit at the expense of the consumer. That is absolutely disgraceful. Let us remove these clauses which provide for a compulsory scheme and go forward. I should like to test the opinion of the House.

5.50p.m.

On Question, Whether the said amendment (No. 145) shall be agreed to?

Their Lordships divided: Contents, 131; Not-Contents, 154.

Division No. 2
CONTENTS
Allenby of Megiddo, V. Hanham, B.
Ampthill, L. Hanningfield, L.
Anelay of St Johns, B. Harris of Peckham, L.
Astor of Hever, L. Hayhoe, L.
Attlee, E. Henley, L.
Baker of Dorking, L. Hooper, B.
Biffen, L. Howe, E.
Blatch, B. Howe of Aberavon, L.
Bowness, L. Howe of Idlicote, B.
Bramall, L. Hunt of Wirral, L.
Brooke of Sutton Mandeville, L. Inglewood, L.
Brougham and Vaux, L. Jenkin of Roding, L.
Buscombe, B. Jopling, L.
Byford, B. Kalms, L.
Caithness, E. Kimball, L.
Carlisle of Bucklow, L. King of Bridgwater, L.
Carnegy of Lour, B. Knight of Collingtree, B.
Chadlington, L. Laidlaw, L.
Cobbold, L. Laing of Dunphail, L.
Colville of Culross, V. Lamont of Lerwick, L.
Colwyn, L. Lawson of Blaby, L.
Condon, L. Lewis of Newnham, L.
Cope of Berkeley, L. [Teller] Lindsay, E.
Courtown, E. Lyell, L.
Craig of Radley, L. MacGregor of Pulham Market, L
Crathorne, L.
Crickhowell, L. Mackay of Clashfern, L.
Cumberlege, B. MacLaurin of Knebworth, L.
Dean of Harptree, L. Mar, C.
Denham, L. Marlesford, L.
Dixon-Smith, L. Mayhew of Twysden, L.
Donaldson of Lymington, L. Miller of Hendon, B.
Eden of Winton, L. Monro of Langholm, L.
Elles, B. Monson, L.
Elton, L. Montagu of Beaulieu, L.
Feldman, L. Montrose, D.
Fookes, B. Mowbray and Stourton, L.
Forsyth of Drumlean, L. Moynihan, L.
Fowler, L. Murton of Lindisfarne, L.
Fraser of Carmyllie, L. Naseby, L.
Freeman, L. Neill of Bladen, L.
Gardner of Parkes, B. Newton of Braintree, L.
Garel-Jones, L. Noakes, B.
Geddes, L. Norton of Louth, L.
Glentoran, L. O'Cathain, B.
Greenway, L. Onslow, E.
Griffiths of Fforestfach, L. Palmer, L.
Park of Monmouth, B. Sheppard of Didgemere, L.
Patten, L. Simon of Glaisdale, L.
Peel, E. Skelmersdale, L.
Peyton of Yeovil, L. Soulsby of Swaffham Prior, L.
Plumb, L. Steinberg, L.
Reay, L. Stewartby, L.
Rees, L. Stoddart of Swindon, L.
Renton, L. Strange, B.
Renton of Mount Harry, L. Swinfen, L.
Rotherwick, L. Tebbit, L.
Ryder of Wensum, L. Thatcher, B.
St. John of Bletso, L. Tombs, L.
St John of Fawsley, L. Trefgarne, L.
Saltoun of Abernethy, Ly. Ullswater, V.
Sanderson of Bowden, L. Waddington, L.
Seccombe, B. [Teller] Wade of Chorlton, L.
Selborne, E. Wakeham, L.
Selsdon, L. Willoughby de Broke, L.
Shaw of Northstead, L. Windlesham, L.
NOT-CONTENTS
Acton, L. Gale, B.
Ahmed, L. Gibson of Market Rasen, B.
Alton of Liverpool, L. Giddens, L.
Amos, B. (Lord President of the Council) Golding, B.
Goldsmith, L.
Andrews, B. Gordon of Strathblane, L.
Archer of Sandwell, L. Goudie, B.
Ashley of Stoke, L. Gould of Brookwood, L.
Ashton of Upholland, B. Gould of Potternewton, B.
Bach, L. Graham of Edmonton, L.
Barnett, L. Greengross, B.
Bassam of Brighton, L. Grocott, L. [Teller]
Berkeley, L. Harrison, L.
Bernstein of Craigweil, L. Hart of Chilton, L.
Best, L. Haskel, L.
Bhatia, L. Haworth, L.
Billingham, B. Hayman, B.
Blackstone, B. Henig, B.
Borrie, L. Hilton of Eggardon, B.
Bragg, L. Hogg of Cumbernauld, L.
Brennan, L. Hollis of Heigham, B.
Brooke of Alverthorpe, L. Howarth of Breckland, B.
Brooks of Tremorfa, L. Howells of St. Davids, B.
Burlison, L. Hoyle, L.
Carter, L. Hughes of Woodside, L.
Chester, Bp. Hunt of Chesterton, L.
Chorley, L. Hunt of Kings Heath, L.
Christopher, L. Irvine of Lairg, L.
Clark of Windermere, L. Jay of Paddington, B.
Clarke of Hampstead, L. Jones, L.
Clinton-Davis, L. Jordan, L.
Cohen of Pimlico, B. Judd, L.
Corbett of Castle Vale, L. King of West Bromwich, L.
Coventry, Bp. Kirkhill, L.
Crawley, B. Layard, L.
David, B. Lea of Crondall, L.
Davies of Coity, L. Levy, L.
Davies of Oldham, L.[Teller] Lipsey, L.
Derby, Bp. Lockwood, B.
Dixon, L. Lofthouse of Pontefract, L.
Drayson, L. Macdonald of Tradeston, L.
Dubs, L. McIntosh of Haringey, L.
Elder, L. McIntosh of Hudnall, B.
Evans of Parkside, L. MacKenzie of Culkein, L.
Evans of Temple Guiting, L. Mackenzie of Framwellgate, L.
Falconer of Thoroton, L. (Lord Chancellor) McKenzie of Luton, L.
Mason of Barnsley, L.
Farrington of Ribbleton, B. Massey of Darwen, B.
Faulkner of Worcester, L. Maxton, L.
Filkin, L. Merlyn-Rees, L.
Finlay of Llandaff, B. Morgan of Drefelin, B.
Fitt, L. Morgan of Huyton, B.
Freyberg, L. Morris of Aberavon, L.
Fyfe of Fairfield, L. Morris of Manchester, L.
Patel of Blackburn, L. Smith of Gilmorehill, B.
Pendry, L. Smith of Leigh, L.
Peston, L. Snape, L.
Pitkeathley, B. Southwell, Bp.
Plant of Highfield, L. Stone of Blackheath, L.
Prosser, B. Strabolgi, L.
Prys- Davies, L. Taylor of Blackburn, L.
Puttnam, L. Temple-Morris, L.
Radice, L. Thornton, B.
Ramsay of Cartvale, B. Tomlinson, L.
Randall of St. Budeaux, L. Triesman, L.
Rea, L. Truscott, L.
Rendell of Babergh, B. Tunnicliffe, L.
Richard, L. Turner of Camden, B.
Richardson of Calow, B. Wall of New Barnet, B.
Rooker, L. Warner, L.
Rosser, L. Warwick of Undercliffe, B.
Rowlands, L. Watson of Invergowrie, L.
Royall of Blaisdon, B. Whitaker, B.
Sawyer, L. Whitty, L.
Scotland of Asthal, B. Wilkins, B.
Sewel, L. Williams of Elvel, L.
Sheldon, L. Williamson of Horton, L.
Simon, V. Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

6 p.m.

Clause 142 [Meaning of "on the market" and related expressions]:

The Earl of Caithness moved Amendment No. 145A:

Page 103, line 4, leave out "or may become"

The noble Earl said: My Lords, in moving Amendment No. 145A, I shall speak also to Amendments Nos. 145B and 145C.

Amendment No. 145A leaves out the words "or may become". This is a similar debate to the one we had earlier on Amendment No. 134D. Clause 142(2) states: A residential property is put on the market when the fact that it is or may become available for sale is, with the intention of marketing the property, first made public in England and Wales by or on behalf of the seller". We come back to a similar argument that we had earlier about being "on the market". Surely a property is either on the market or not on the market. If so, the words "or may become available" are obsolete and can be deleted.

Amendment No. 145B is about the regulations. The purpose of putting it down was to find out where the Government had got to with their regulations. The noble Lord, Lord Rooker, told us something as he wound up on the previous amendment. But we are, as the noble and learned Lord, Lord Donaldson, told us, making a blind leap of faith on this with the Government. We do not know what the regulations are. They are very difficult to amend and the Government have skilfully drafted the Bill so that we have no opportunity to discuss, amend or alter them. We are asked to take the matter on trust.

The noble Lord, Lord Rooker, waxed lyrical about who was taking part in the ongoing discussions, to which we are not privy. But of course it is only right that those people should be taking part. I can tell the House that a lot of those who are taking part do so because it is their duty to take part, but they do not like one iota of what the Government propose under Part 5 of the Bill. They will have to work with it because the Government can bulldoze through their legislation without considering the points of view of those who disagree with them. At the end of the day they will come together with regulations and we will be told that all the parties have signed up to it. A lot will do so with a very heavy heart, knowing that the Government are doing something detrimental to the housing market in this country.

Amendment No. 145C seeks to leave out subsection (3) of Clause 142. It states: A residential property which has been put on the market is to be regarded as remaining on the market until it is taken off the market or sold". I do not understand the necessity for the subsection. If instructions are given to market a property, it has always been marketed. The moment a vendor withdraws the instructions that property is off the market. I beg to move.

Lord Rooker

My Lords, Amendment No. 145C, as the noble Earl said, would delete Clause 142(3), which provides that when a property is put on the market, it is regarded as remaining on the market until it is sold or taken off. It is very important that it is made clear to sellers and their agents when marketing and the associated duty to have a home information pack begins. Clause 142(3) helps to achieve that.

The clause defines when a fact is made public. Its removal would make it unclear when a property is put on the market and the associated duty to have a home information pack begins. This helps clarity. I cannot see a problem about that. I would ask the noble Earl not to pursue the amendment.

Amendment No. 145B would provide the power for the Secretary of State to define the meaning of "marketing". That is unnecessary as Clause 142 already does that.

Amendment No. 145A is the first in the group. They are all designed to allow first-day marketing of homes by enabling marketing to start before a home information pack is in place. If the amendment were to be accepted, a seller could advertise the fact that his home was about to become available for sale and therefore start the marketing ball rolling in all but name, but without the consequential duty to have a pack in place. So it negates everything that I said in that rather overlong speech I made a while ago.

The Earl of Caithness

My Lords, I am grateful for what the Minister has said. The key amendment in this group is Amendment No. 145A. It is very important that marketing can take place as soon as possible at day one as soon as instructions are received. The majority of the responses to the National Association of Estate Agents proved that. The Government have been made aware of it. They will not listen to it. They do not think it is right; they do not want a vendor to have the flexibility or the right to market his property at day one. That is a major change in the structure of the housing market and is going to inconvenience the consumers that the noble Lord purports to protect.

In view of later amendments on the voluntary nature of the packs, I think that it would be wrong for me to press the issue at this stage. It is undoubtedly something to which we will return at a later date. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 145 B to 146 not moved.]

Clause 143 [Acting as estate agent]:

The Earl of Caithness moved Amendment No. 146A:

Page 103, line 13, leave out "if he does anything" and insert "only if he is so instructed to"

The noble Earl said: My Lords, Amendment No. 146A is a simple amendment. The Bill as currently drafted is not clear whether the subject is the person who has been instructed. The purpose of my amendment is to make certain that the person instructed is the subject of the clause. I beg to move.

Lord Rooker

My Lords, the amendment would remove a very important condition that there must be some kind of action on the part of the estate agent in order for the clause to apply. Somebody cannot act as an estate agent unless he or she actually does something. Furthermore, the amendment would duplicate the condition that already forms part of the clause, that the estate agent must be acting on the instructions of the seller. That is a fairly crucial element.

The Earl of Caithness

My Lords, I did not follow the Minister as clearly as I would have liked. If the estate agent is instructed, by and large, he or she will do something. If he or she does not do anything, he or she is going to get a pretty bad reputation and nobody will instruct him or her. Of course, we have a disadvantage in that the Government declined to accept my amendments to raise the qualification of estate agents and the whole profile of the profession. They have opted for a much lesser model—the back route escape model—which is the ombudsman scheme that picks up estate agents only if they have done something wrong. It does not take a proactive view of the situation and say that estate agents, like other people handling large investments for people, should be fully qualified and therefore more likely to be reliable.

I would just remind the House—for the benefit of those who were not present for the Committee stage—that anybody can set up an estate agency at any time without any previous qualification or experience and handle the sale or the purchase of what in the majority of cases will probably be that person's largest asset. That is something that would never be allowed in the City. I gave the example of selling £100-worth of shares. You must operate through a highly qualified person who is subject to very strict regulation. A £100,000, £50,000 or even £15,000 house may be someone's prime asset, but the person who handles that sale need not have any qualifications or previous training.

I will obviously read what the Minister said. I do not think that he fully answered what I wanted to know through the amendment, but I beg leave to withdraw it at this stage.

Amendment, by leave, withdrawn.

[Amendment No. 147 not moved.]

Clause 144 [Responsibility for marketing: general]:

[Amendment No. 148 not moved.]

Clause 145 [Responsibility of person acting as estate agent]:

The Earl of Caithness moved Amendment No.148A:

Page 104, line 5, at end insert—

"( ) Advertisements in any media for properties on the market without a home information pack must carrying the following caveat in a bold and compelling style— 'This property is offered for sale without a home information pack or home condition report being currently available. Intending purchasers may be exposed to an increased risk of financial loss if adverse legal or structural matters affecting the property become evident after negotiations for the purchase have begun'.

The noble Earl said: My Lords, we move to another set of amendments concerning the voluntary nature of marketing. Amendment No. 148A is intended to take account of where a property does not have a home information pack. I hope that we will be able to deal with that in some detail later, but the purpose of the amendment is that any advertisements in the media for properties on the market without a home information pack should have a caveat attached to them. That would be only fair to potential purchasers and is a consumer protection measure.

Amendment No. 151B again refers to the voluntary nature of the scheme that we propose, as do Amendments Nos. 151D, 153A to 153C and 155B. I reiterate to the Minister how important it is to get on with marketing a property. I know that he does not like the idea, but there is so much demand out there that when someone gives instructions, you want to be able to get on and it would be so much more sensible if the Government would allow initial marketing. If necessary, that can be followed up by the home information pack. I beg to move.

Lord Bassam of Brighton

My Lords, I shall be extremely brief, because we have had the debate about whether we should have a compulsory or voluntary scheme. Essentially, the noble Earl proposes a series of amendments that would qualify the voluntary nature of the scheme that he would prefer to see in place. Amendment No. 148A would offer a form of wealth warning within a voluntary system. Amendment No. 151B would remove the duty to have a home information pack and replace it with a pack provided at the responsible person's discretion. Other amendments are consequential to deal with that approach.

Our view is simple: we do not think that the voluntary route is the most appropriate. We think it right to have in place something that is clear, understood and transparent. That is why we have approached this whole issue in the careful and considered way that we have. In contrast to that, the noble Earl represents a position that essentially says that voluntary packs and the application of technology to the process of conveyancing, searches and so on, is the way forward.

There is a clear and distinct difference of view here. We have recognised and acknowledged that. We have had the important debate in the early group of amendments. We cannot endorse this approach, although, of course, we welcome some other suggestions that have arisen as a product of the noble Earl's amendments. Especially in view of the debate that we have had, I cannot commend the amendments to the House and I hope that your Lordships will view them in line with our earlier debate. I hope that the noble Earl will not press them, or that the House will reject them.

6.15 p.m.

The Earl of Caithness

My Lords, I expected a more negative reply from the noble Lord, Lord Bassam. If he has strayed from his brief to be a bit nicer, I am grateful to him, but there is clearly a big "Resist" in bold letters written at the top of every page of his brief on the amendments. I remember that well myself, but I wish that this Government would show a little more flexibility and understanding of some other people's points of view, which in most cases are better than the Government's. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 148B and 149 not moved.]

Clause 146 [Responsibility of the seller]:

[Amendment No. 150 not moved.]

Clause 147 [Application of sections 148 to 151]:

Baroness Hamwee moved Amendment No. 150A:

Page 104, line 34, leave out from second "the" to "sections" in line 35 and insert "provisions of"

The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 150B, 151A, 151F, 152B, 152C, 155A and 156A. I understand that the noble Lord, Lord Hunt of Wirral, will debate his Amendment No. 151G. I welcome that and thank him for it.

Perhaps it is a little late in the afternoon, but I thank the Minister for the compendium letter, if I may describe it as that, which was extremely helpful. It provided certainly me, and I think my noble friends, with much useful information. I shall refer to it in a moment.

We have argued that if the scheme succeeds, it will be taken up, and that it is better to encourage acceptance rather than to impose it. The Minister's argument is that it will not work unless it is compulsory. If I may, I shall use this group of amendments to ask him to explain to the House in more detail how the dry run will operate, because he places much emphasis on the dry run. In our long debate earlier this afternoon, I asked why it is necessary to have legislation in order to have the dry run, because it seems that the dry run is to be nothing other than a voluntary scheme. I do not think that he answered that point, certainly not directly. If a voluntary scheme will not work, how will the dry run work? How can it work?

It will test various aspects of the home information packs, which is all well and good. We heard that HBOS and Countryside Properties plc support them. We will come later to the question of whether they will accept the home condition reports in lieu of their own valuations, which is the crux of the issue. In the Minister's long letter, on the topic of enforcement, he said—it is important to get this on record so that the answer is intelligible: While there will be no formal role for enforcement authorities during the 'dry-run' we envisage that local weights and measures authorities will use this period to become acquainted with the new process and their impending duties to enforce the statutory scheme. In particular, we will discuss with the local trading standards representative body, LACORS, how trading standards departments might work with estate agents and others during the 'dry-run' to identify and address any enforcement-related issues in advance of the statutory scheme. This will help foster a better understanding of the new process and arrangements for its enforcement". Well, if that is a voluntary dry run, how can that work? I am sorry to ask the Minister to go over the ground again when he has written to us, but I for one—or, judging by the expression on the face of the noble Lord, Lord Hunt, for two—need a more detailed explanation of that.

I acknowledge that a lot of effort has gone into the scheme over several years, but we still believe that it would be better to find a way of piloting or testing, and to report to Parliament and the stakeholders, after which the Government might decide to drop some elements and refine others. Legislation should be proposed at that point, instead of using regulations, to which both Ministers have referred on several occasions. We all know that regulations cannot be amended and therefore often cause a lot of resentment and concern. The Ministers have told the House that the provisions for regulations in the Bill will allow tweaking and adjustment; I do not think that that is the right approach.

Within the past hour or so the Minister has referred to the updating or otherwise of information in the pack. He said, rightly, that even a week-one trainee solicitor probably ought to ask whether anything has happened since the pack was put together. But, in response to the Select Committee, the Government said that if a property had been on the market for some time, the renewal of a home information pack would be a matter for the discretion of the parties. Again, that seems to support the argument for a voluntary scheme.

The Minister also mentioned insurance. In response to the Select Committee he said that the Government were encouraging the development and wider availability of insurance cover for wasted costs. What development has there been on that? Clearly it is a concern. If we are in a compulsory position, the House needs assurance about how close the Government are to achieving such cover. I have already acknowledged the consumer interests, so I do not need to repeat those points. I beg to move.

Lord Hunt of Wirral

My Lords, I agree with the noble Baroness that it would be better to have a wider debate now. That is why I seek to speak to Amendment No. 151G rather than initiate another debate later. I am grateful to the Minister for kindly agreeing to that.

Noble Lords may have noticed that the noble Lord, Lord Bassam, has just made an important, significant concession: he said, by implication, that a voluntary scheme would be appropriate. I am very grateful to him for that. Perhaps it was the advocacy of my noble friend Lady Hanham or the entreaties of the noble Baroness, Lady Hamwee. The noble Lord said that he did not believe that a voluntary scheme would be "the most appropriate". To arrive at that distinction, one must decide first that a voluntary scheme would be appropriate but that it is not the most appropriate, so it is a question of balance. The Government may have been surprised by the strength of the case put forward and by the vote, which was significant, bearing in mind that some noble Lords felt that we should perhaps hear a little more from the Government about the arguments in favour of compulsion. I do not believe that the Government will win this argument, so it is better to try now to find a way through.

I disagreed with the noble Lord, Lord Bassam, when he said that we had had the debate about voluntary and compulsory schemes earlier—not that much earlier. The noble Lord, Lord Rooker, in his forthright way, said that he looked forward to a major debate on the question of whether the scheme should be voluntary or compulsory. Somewhere in between, the wires have got crossed, but the Government should address the question. I have been in my place throughout the debate, and I have not yet heard the Government put that case. They need to; therefore I am particularly pleased that we are to have this debate.

I join the noble Baroness in thanking the Government for their useful compendium letter, but they still have a case to prove. The noble Lord, Lord Rooker, said quite emphatically, with a wide sweep of his hand, that the Government were always on dry runs—I do not know whether that is in comparison to wet runs or something else. He said that, whenever the Government had a new proposal, they always had a dry run first. Dare I whisper in his ear, "conditional fee agreements"? There we had an instance of where, at a stroke, the Government swept aside the whole system of civil legal aid, put in its place conditional fee agreements and ignored the entreaties from all parts of the opposition Benches to have some form of research, dry run or pilot scheme.

Conditional fee agreements have been an utter disaster. The "no win, no fee" regime has been scandalous, with television advertisements of some companies saying, "Where there is blame, there is a claim, and it won't cost you a penny". Sadly, because no one thought the scheme through, not only did companies such as Direct Line and Accident Group go to the wall, but the whole system has been discredited. If only the Government had listened to those of us who said that, before you make such a fundamental step, you have to research and to have a proper scheme. I have yet to hear the Government put forward a persuasive case on what sort of dry run they have in mind. Is it a dry run of a compulsory scheme, in which case it does not sound like a pilot scheme at all, or is it a dry run of a voluntary scheme? We need much more detail. I strongly urge whichever Minister is moved to reply to this debate—they have not yet decided—to give the answers that we have been seeking. We are listening but we believe that the Government have a case to prove.

The amendment that I have tabled has been drafted free of charge by the best lawyers in the land. The eminent minds of the Law Society have put together this amendment, which they believe would make the scheme voluntary yet retain the advantages of home information packs. Previously the Government were congratulated on having stimulated the debate. I add to those congratulations, but the Government are about to lose the argument, so why do they not accept that home information packs have a lot going for them, let the market now demonstrate their value and have a voluntary scheme? If they listen to the House, they will hear that message, and until they have proved their case, we remain unconvinced.

The Earl of Caithness

My Lords, I wish to take a small tangent to support what the noble Lord, Lord Rooker, said about the press. I have just been handed an article from today's Evening Standard. Apparently, I am leading a rebellion with Liberal Peers to defeat a section of the Housing Bill which requires agents to belong to an approved ombudsman scheme. The ombudsman scheme is not my favourite scheme. To use the words of the noble Lord, Lord Bassam of Brighton, it is second best to regulating estate agents. Certainly, I would like to regulate estate agents. The article goes on to say that I am a former director of Knight Frank. I never worked for Knight Frank in my life. That reinforces what complete rubbish the press is these days.

6.30 p.m.

I now have a copy of the letter of 11 October that the noble Lord wrote. I am sorry that I did not get it earlier; I made my remark in good faith, as I had not received the letter. The Minister's officials have kindly given me a copy.

I want to pick up the dry run point, and I am glad to see the noble Lord, Lord Phillips of Sudbury, in his place. It is not a dry run as most people would anticipate it; it is a dry run as a pre-entry to the scheme. All the regulations will have been laid. As I said earlier and the noble Baroness, Lady Hamwee, has just said, we will not be able to amend the regulations. They will be a hammer to crack a chestnut, and they will be hard to understand. Having got all that, all that the Government are going to do is have a six-month introduction scheme before it becomes law at the beginning of 2007.

In the short time in which I have been able to skim through the letter, I have seen nothing to suggest that the regulations could be amended. There will be no assessment, and nothing will be debated. Nothing will alter the Government's mind, which is firmly set, as it has always been, on this course. The only change that they have made is the change from criminal penalties to civil penalties. That is not good enough. We need a voluntary scheme of some sort.

It was difficult for me to speak to my earlier amendments because I wanted to hear what the noble Baroness had to say to what my noble friend Lord Hunt of Wirral said. I have tabled amendments in Committee and on Report in support of a voluntary scheme for home information packs. I have got nowhere, but I hope that we will get somewhere at a later stage.

Lord Rooker

My Lords, the thrust of the amendments is to replace the compulsory scheme with a voluntary scheme. I rest my case on one word that explains why it must be compulsory rather than voluntary: chain. That is the simple fact of the matter. If we do it any other way, one person can wreck everybody's attempt to operate the system. That is the central argument. That is the end of it, really.

It is abject nonsense to say that regulations cannot be amended. Regulations can be amended at any time. Any amending statutory instrument will be subject to the same parliamentary scrutiny. It will be laid in Parliament for 40 days, during which time parties can pray against them. There are two parliamentary committees that examine statutory instruments—the Joint Committee and the Merits of Statutory Instruments Committee. There is plenty of opportunity.

Lord Hunt of Wirral

My Lords, the noble Lord has made the remarkable statement that statutory instruments can be amended. I have been down that road with the Government. I objected to some regulations laid by one of the Minister's predecessors. His predecessor accepted my argument but found that he could not amend the regulations. So, he had to revoke them and then lay new ones. The whole thing was a wasted exercise that cost a great deal of money. We cannot amend regulations.

Lord Rooker

My Lords, I was describing the process. The point is that, during the dry run, which will be done on the basis of the regulations, but voluntarily, we may find issues that mean that we must change something in the regulations. The idea that we cannot change them is nonsense. We come back to Parliament with new regulations. We cannot change the particular statutory instrument—I am not arguing about that—but the noble Lord is making a false point, if I can say that with due respect. We are not talking about primary legislation or about something that we cannot do. We can easily make a new regulation to amend the other regulation. There is a parliamentary process for that, and it is tried and tested.

I take the view—the noble Lord probably does too—that Parliament ought to have the right to amend particular statutory instruments, but we do not. That does not mean that we cannot bring in amending regulations; we can.

Lord Phillips of Sudbury

My Lords, I am sorry to intervene a second time, but it is crucial that we get the business of the dry run or the national pilot sorted out. I am glad to see the Minister nodding. Having said what he has just said, is he committing the Government to consider objectively the outcome of the dry run and then, in the light of that, legislate by statutory instrument as may be necessary, further to that objective assessment?

Lord Rooker

Most certainly, my Lords. I could go further. There are no plans for it, and I do not know the detail, but that is almost axiomatic.

I want to expand on my answer to the noble Lord. As I said, our intention is to publish the proposed final contents of the home information packs next spring. We intend to go through the process of laying the regulations before Parliament around the summer of next year—I cannot be more specific than that. The industry will have full details. To help ensure that there is a smooth and successful implementation of the scheme, the intention is for the Government to facilitate a dry run of the scheme on a voluntary basis from, say, July 2006, to give us six months. We have a sort of target of January 2007, but it is not specific. It is not the date, but it is what we would like to do. If it happened to be April 2007, that would not be a failure.

During the dry run, we will have to consider what happens. Members of both Houses will take a big interest in what happens during the dry run. The Government will be expected to report on what we have found in the dry run and whether we need to change anything. I cannot say so far in advance that it is not conceivably possible that some change will be required; I would be astonished if that were the case. It is a complex issue, and it affects thousands of people every week.

The Government are open about it: we want the scheme to work. I am speaking in October 2004, but it will be the middle of next year before we do the regulations, and it will take a year to plan the dry run and the related issues. We are talking about 18 to 20 months before the dry run starts. My answer to the noble Lord, Lord Phillips of Sudbury, is "Yes". I meant what I said: we will not implement the scheme, in January 2007 or even April 2007, unless we are satisfied that the issues have been ironed out.

The note that I sent to colleagues last week ran to four closely typed pages. I am certain that it went to the Library, although I did not check personally. There are a lot of prerequisites for the dry run anyway. People need to know what system they are operating voluntarily and to know what is in the regulations. Discussions on the management of that are going on as I speak and will continue over the next few months. It is true that we want the operation of the dry run to be as near to the endgame as possible. That way, we can test it out. It would be great if, during the dry run, we could find an area of the country—a county or something like that—in which all the practitioners signed up on a voluntary basis.

I accept that there is a distinction between the dry run and the pilot. The dry run will be voluntary. Given the nature of the regulations, it has to be. Nevertheless, it should not be beyond the wit of all the professionals to get to work on it. We could suggest a voluntary dry run over all the country and we might get three quarters or a half, which is a lot of people every week. It would be great if we could find an area to run the scheme 100 per cent and test it, not to destruction. We might find that things are not working, but we are not fixed on a deadline for bringing the scheme in, so that it is all or nothing, and we will have the opportunity to come back with amending regulations, having discussed things with the industry.

As I said, 2 million homes are marketed every year; that is, 40,000 every week. One-and-a-half million homes are sold and the rest fall by the wayside. For any government bringing in this scheme, failing at the first hurdle would mean that each week—the second, third and fourth weeks, and so on—they would be dealing with 40,000 upset people. Any government who did that would be asking for real trouble.

I shall not give the noble Lord, Lord Hanningfield, the opportunity to come over here to do my job as he would expect me to do it. I am very grateful for his help on this. But this is a big project. I say to the noble Lord, Lord Phillips, that this is not something on the back of an envelope. I hope that some of the issues concerning the dry run will be taken on board.

I turn now to enforcement. By the way, the "weights and measures authorities" is a quaint phrase. It is a throwback. It is almost like the "watch committee" for the police. But we are referring to trading standards representatives. Obviously, as it says in the note on the final paragraph, we the Government will be discussing with the representatives of local government and the trading standards authorities how best they can be involved in the dry run on a voluntary basis. It is very important that they are able to test the kind of things that can go on. That will assist them in building relations with property professionals and preparing them for the duties when the statutory scheme is introduced. So there are plenty of opportunities.

I suspect that this will not be the first time that trading standards authorities have had the opportunity to have a look at a scheme in a little operational detail before it becomes statutory. So I do not envisage a major problem in that direction. Of course, they will not be enforcing it in the sense of penalties. Obviously, at that time it will not have legal force behind it.

Lord Phillips of Sudbury

My Lords, I am grateful to the Minister for giving way. He is being most helpful to the House and telling us very important things. It is a bit out of place because the whole issue of the pilot or the dry run is not part of the group, but somehow we have been sucked into it. It is almost inescapable.

The Minister has said words to the effect that it would be nice to have one part of the country—perhaps a county—where everyone is involved. That would then mean that we were having the equivalent of a compulsory pilot in that part of the country. Of course, it is a compulsory scheme that the Government have in the Bill. To ensure that that process works, why could the Government not have one county that compulsorily will have to be a pilot or dry run of the scheme as a whole? Under anything short of that or short of unanimous volunteering within that county, the chain problem to which the Minister referred will never be tested. Why therefore could we not have that?

Lord Rooker

My Lords, that has been discussed in the department by Ministers. I discussed it when I was the responsible Minister in the early days when the Bill was introduced. In a way, the Government are not running the scheme. The industry is running the scheme. A lot of investment is required. I gave a figure for one particular firm. Our difficulty with having a compulsory pilot is that the necessary training to bring in the accreditation for the inspectors needs to be fairly substantial. People will not invest on that national scale just for a pilot. There has to be a certainty that there will be a national scheme. Hence, we cannot pilot it.

However, with the progress that we are making—I have said that we have a lot of time, but 18 months is not that long—it may be that a part of the country will come up where, for example, some quite small, independent estate agents say, "Well, we will do this when we have to, but only when we have to"—that is, in 2007. It will be their right to do that because the law does not require them to do so beforehand.

But if we could find an area of the country where everyone is prepared to say, "Yeah, we will put our money where our mouth is to try to make the system work", we would obviously be over the moon about that; that is, if we could have the inspectors and so on operating. I cannot say that we can do that because that is not within the gift of the Government to do. Otherwise we would have done it. We would have gone for a regional pilot and tried something substantial. For example, if we could make it work in London, we could make it work everywhere else. From the discussions that we have had with the industry, it just is not possible. That is the long and the short answer for the noble Lord.

6.45 p.m.

The Earl of Caithness

My Lords, would the Minister be prepared to consider an amendment that permitted a period between the end of the dry run and the implementation of the Bill so that in that period the Government could produce an assessment which then could be debated in Parliament? As I have read his letter, which I reaffirm I have read very briefly, it looks as though this is a seamless transaction. There will be the regulations. The dry run will be there from July 2006. There will then be the introduction of the Bill. There will be no point at which the Government say, "This is the result of the dry run. These are the amendments that we are going to make. This is how we are going to alter the regulations and then, once we have altered the regulations, the Bill will come into force".

Lord Rooker

My Lords, the answer to the noble Earl's direct question is "no". Once Parliament has assented to the Bill, there will be a degree of certainty and confidence in the industry that this will happen; whether it is in 18 months, two years or two-and-a-half years, people will make the necessary investment in training. We are fairly certain of that. We have assurances to that effect.

During the six-month, dry-run period—if I can call it that—it may be that we will have to make amendments. But it could be, as I have said, that there will not be a period at the end of the dry run when everyone goes back to what they were doing today, as it were. Once the dry run starts, people will be operating on a voluntary basis. The expectation is that people will see the benefits of it.

I cannot say that we will be coming back to Parliament, but we will be looking at it. There will be parliamentary Questions. It is open to the Opposition and others to have debates on the issue during the dry run in autumn 2006, which I am sure will be the case in the other place and in this place. The Government will report back to Parliament on the operation of the dry run. Certainly, if we have to bring amending regulations back, we will have to explain why.

We will have research on this matter. We have had research already, but we will be checking, piloting and managing the dry run with our stakeholders. It is not something that we will just say to people, "Oh, just test it out and let us know what you think about it" in a laissez-faire way. It will be much more highly managed and structured than that.

Baroness Hamwee

My Lords, we have an opportunity to hear further detail of the Government's thinking on that later. Amendment No. 177B is not a million miles away from what noble Lords have been referring to. I am particularly grateful to the noble Lord, Lord Hunt of Wirral, for his amendment—or to whomever he wants to give credit for it. It is far better than mine, but I was very boring, did lots of consequentials and so on.

The Minister acknowledges that the dry run will be voluntary. I want to make it clear that we support a dry run, which I hope is implicit in everything we have said. But the fundamental question about how the dry run can be a real test of something that we are told can work only if it is compulsory has still not been answered.

The issue of changing regulations was dealt with very thoroughly in the intervention of the noble Lord, Lord Hunt. But it could only be that a government—perhaps any government—who might misunderstand that when a comment is made that regulations cannot be changed, the reference was intended to be to the democratic process of changing them rather than to the government changing them and then bringing another unamendable package to Parliament.

I am sure that we will come back to this issue. For today, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 150B and 151 not moved.]

Clause 148 [Duty to have a home information pack]:

[Amendments Nos. 151A to 151D not moved.]

The Deputy Speaker (Lord Geddes)

My Lords, before calling Amendment No. 151 E, I must advise the House that if it is agreed to I will not be able to call Amendment Nos. 151F or 151G due to pre-emption.

[Amendments Nos. 151E to 151G not moved.]

Baroness Maddock moved Amendment No. 151H:

Page 105, line 12, at end insert—

"(3) The duty to provide information relating to the physical condition of the property shall not apply in the case of a new home sold—

  1. (a) by the builder to a first buyer with the benefit of a ten-year warranty issued by a warranty provider, or
  2. (b) within the first six years of a ten-year warranty period issued by a warranty provider.

(4) In subsection (3) "warranty provider" means the National House-Building Council or any warranty company designated by the Secretary of State."

The noble Baroness said: My Lords, this amendment concerns home condition reports on new homes. We have already discussed this issue today, as well as in Committee both in the Commons and in this House. In the mean time, I have also had discussions with the National House-Building Council, which is mainly responsible for issuing warranties on new homes. The council is extremely concerned about this provision. I know that the noble Lord, Lord Fowler, has also had discussions with representatives from the council, having been closely associated with it at one point in his career.

The National House-Building Council would very much like to see its 10-year warranty as the period. I am not so convinced about that. However, its representatives have convinced me that perhaps a period of six years would be a better period. The reason that period has been suggested is because, as I understand it, during the first six years after the completion of a property, the home owner continues to enjoy additional consumer protection through the statutes of limitation, which contractually oblige the builder to repair any structural problems. That is why I have opted for the six-year period.

The other area giving me concern is that of providing energy efficiency reports. Again I have had discussions about this, and as a result noble Lords will note that I have withdrawn Amendment No. 159 because it would have done away with energy reports altogether, which I did not want.

Energy efficiency reports present a more difficult problem because legislation is coming through from Europe—which I support, having promoted the introduction of legislation in this area myself both when I was in another place and in this House. The big discussion at the moment is climate change. We are changing building regulations and how to address the problem almost on an annual basis. It would therefore be quite wrong to rely on what is provided as regards energy efficiency in a new house today in six years' time.

The arguments have been made. We are also worried about the extra costs, in particular on new homes, which are the subject of this discussion. There is also the question of duplication and unnecessary delay.

While I do not expect the Minister to accept my amendment, I hope that he will acknowledge the concerns of all those dealing with new buildings. Perhaps he will look at some way of reconciling our difficulties in this area. I hope that today the Minister will at least recognise rather more than he did in Committee that something needs to give in this area. That may well not be what I have suggested in my amendment or in amendments tabled by other noble Lords, but this is an important matter which needs to be dealt with. I beg to move.

Lord Fowler

My Lords, perhaps I may intervene for a moment or two. As I declared earlier, I am a former chairman of the National House-Building Council. I strongly support the amendment and the spirit in which it has been proposed by the noble Baroness. She suggests a compromise that provides a sensible middle way.

I shall not repeat all the arguments I put forward at the earlier stage because I, and I imagine the National House-Building Council, will want to study what the Minister said in his reply earlier today, for which I thank him. It was a detailed response and one will want to give it proper consideration.

In brief terms, we are talking of consumer protection here, protection that warranty providers such as the NHBC provide. Of course, as a noble Lord mentioned at the earlier stage, it is perfectly true that it does not apply to all houses built throughout the country, but it does apply to that very important constituency: newly built houses. The warranty provides protection for the consumer in a number of ways, in particular by inspectors who trace every stage of the home being built. The consumer knows that the building has been checked and that there is a guarantee of standard. If defects are found, they will be put right by organisations like the National House-Building Council, which offers a further guarantee. Above all, the guarantee lasts for 10 years, which is an exceptionally long time for a guarantee of this kind. Indeed, I know of very few that last as long as that. It is extremely unusual both in consumer protection and in terms of insurance.

Given that there is already exceptional consumer protection, my basic point is that I do not see why we should attempt to duplicate such protection in respect of this class of housing; that is, newly built houses. I see no point in doing that. Protection and cover are already in place. Why should this important group, the new homes that are built each year, need home condition reports? That is the basic point that I put to the Minister and it is in that respect that I support the noble Baroness in her amendment.

The Earl of Caithness

My Lords, I am glad to follow a former Secretary of State of mine, who has more knowledge of this area than I. Linked with this amendment are two of my amendments, Amendments Nos. 159A and 163E, which aim to achieve very much the same thing.

I would add only that I support what the noble Baroness and my noble friend Lord Fowler have said. We had a good debate in Committee, but it is clear that since then this issue has emerged as a point of real concern, given that it will certainly lead to a duplication of costs. That is an unnecessary burden on both purchasers and vendors. I support the amendment.

Baroness Hanham

My Lords, our names are not attached to the amendment, but we support both the tenor and the tone of it as put forward. During his reply to the previous debate, the Minister referred to "second-hand homes", which is a slightly unusual term when applied to a home. However, he was covering the process whereby houses pass from one person to another. Perhaps there is an argument that things may happen in the interim, but I think that warranties provided by the National House-Building Council and similar warranties ought to be sufficient.

We should bear in mind that over the coming years it is the expectation of the Minister's department that a substantial number of new houses will be built. That will put great pressure on home condition reports. For the Minister to accept the amendment, either at this stage or after discussions on whether the warranty period should be six years or 10 years, would be most sensible.

Lord Phillips of Sudbury

My Lords, I too support the amendment and the conciliatory way in which my noble friend put forward her argument. There will be a fearful waste of money unless this amendment or something like it is introduced.

I would be grateful if the Minister would consider one point. He mentioned earlier that additions or structural changes could be made to a property after it was built. That is a relevant factor, but might not the answer to that be to accept this amendment subject to a requirement for a home condition report in respect of any structural changes made to the property since it was built? That would close the gap.

7 p.m.

Lord Bassam of Brighton

My Lords, it has been a useful debate. Where it states "Resist" in my speaking notes, it is qualified by, "But be nice to them", or something along those lines.

As noble Lords will know, there have been many discussions with the National House-Building Council about the application of home information packs to sales of new homes where a good designated warranty is in place. We are aware that the NHBC has some reservations about them. These amendments are clearly designed to meet and match those reservations.

It is fair to say that the ODPM consultation paper on the contents of the pack proposed that if a physically complete new home being offered for sale is registered under a warranty scheme, the seller— usually the developer—would be exempt from providing a home condition report. I shall explain the reason for that in a moment. Copies of that consultation paper and the report on it have been placed in the Library.

The replies from 17 respondents who commented on whether a home condition report should be provided to potential buyers on the practical completion of a property showed that there was a mixed view. Some thought that, to create a level playing field, a home condition report should be included in the pack; others believed that if a property is covered by a designated warranty there is no need for a home condition report. The House Builders Federation and NHBC additionally suggested that sellers of second-hand homes—an expression with which I know some people feel uncomfortable—where the period of the warranty cover has not expired should have the choice of carrying out a home condition report or simply updating their warranty.

We want to consider these views further. I undertake that we shall do so and that we shall consult very carefully with stakeholders.

As far as we are concerned, the home condition report is a very important part of the pack for the sale of second-hand homes. There is a danger that any attempt to substitute it with alternative provision could deprive consumers of the level of comfort and information they need in order to make what we all accept is an important decision.

The home condition report is a statement regarding the condition of the property. It is aimed at giving buyers good information about the condition of the property they wish to purchase. Potential defects in the condition of brand new homes will have less serious consequences if an adequate warranty agreement is in place, simply because the warranty will require the builder to put right anything defined as a defect which comes to light in the first two years and offer reduced cover in the subsequent eight years.

It is important to appreciate the distinction between the purposes of the two documents. A home condition report is aimed at giving buyers information about the physical condition of the property, its characteristics and its features—information to which every buyer is entitled—whereas a warranty is aimed at giving financial cover to the present owner of the property. So the two documents serve different and distinct purposes. Even if a seller shows a potential buyer the property's warranty, that will not necessarily reveal to the buyer the information that he or she wishes to have about the physical condition and characteristics of the building.

We understand the intent of the amendments, which have been well described by noble Lords who have contributed to the debate. We are content, at least in the current circumstances, to explore further some of these issues. My briefing note states that, "Our minds are not closed on this matter". Officials will continue to work with the National House-Building Council and other interested parties to discuss issues relating to new homes.

For instance, it is our intention—I wish the noble Lord, Lord Hunt, was in his place—to look at the question of the energy efficiency certificate that would normally be included in the home condition report—an issue raised by the noble Baroness, Lady Maddock. I acknowledge that newly built homes are required by building regulations to meet good standards of energy efficiency. Even so, cost-effective improvements might still be possible.

I can give an assurance that discussions will continue. We resist these amendments, but we will ensure that interested parties are able to have further discussions on these matters. Having said that, I hope that the noble Baroness will feel happy to withdraw the amendment.

Baroness Maddock

My Lords, I thank the Minister for that reply. I am slightly worried that Third Reading is due to take place the week after next. If the Government are minded to do anything about this, perhaps they will give us forewarning. I shall discuss this issue with those who have expressed an interest today and with others outside the House. It may be that we shall wish to return to this matter on Third Reading. If the Government are thinking of doing so, I would be grateful if they would let us know.

I again thank the Minister for his helpful reply. I hope that he will keep looking at the issue. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Davies of Oldham

My Lords, I beg to move that further consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.