§ 5.38 p.m.
§ House again in Committee
§ Clause 123 [Service of overcrowding notices]:
§ Lord Rooker moved Amendment No. 171H:
§ Page 88, line 34, leave out "section" and insert "Chapter".
§ On Question, amendment agreed to.
§ Baroness Hanham moved Amendment No. 172:
§
Page 89, line 22, at end insert—
(10) In deciding whether or not to serve an overcrowding notice, the Authority shall have regard to the prescribed standards referred to in section 64(2).
§ The noble Baroness said: Clause 123 allows for the service of an overcrowding notice where a house in multiple occupation is considered to be overcrowded. The clause will apply only to houses in multiple occupation that do not require a licence because the licensed HMOs will be dealt with under licensing procedure. Under Clause 64 the local housing authority cannot be satisfied that a house which requires an HMO licence is reasonably suitable for occupation by a particular number of households or persons unless it meets the prescribed standards laid down by the national authority. This means that there will be national guidance for local authorities with regard to overcrowding for licensed HMOs. There is, however, no provision, as far as we can see, under Clause 123 for there to be any such guidance. This would lead to different standards being applied between licensed HMOs and those that do not require a licence. The purpose of Amendment No. 172 is therefore to require the authority, in deciding whether to serve an overcrowding notice, at least to consider the same guidance as applies to licensed HMOs. This would give them a yardstick by which their actions should be judged. The amendment would require the local authority only to consider the guidelines. It does not require them to follow them, if there is a good reason for them not to do so. The amendment would result in consistency of treatment for all types of HMOs when dealing with overcrowding issues. I beg to move.
§ Baroness HamweeI am again asking a question about definitions and pointers. I readily admit that it may be that I have simply missed the point. Clause 123 is about an "excessive" number of persons being accommodated. The term is also used in Clause 124. Is that "excessive" as in Clause 125, where it is not defined but is dealt with? Or is there a definition somewhere else, which I have failed to pick up? Or is it one of those things that one recognises when one sees it, without a definition?
§ Lord RookerClause 123, as the noble Baronesses have said, is concerned with the service of 946 overcrowding notices in respect of houses in multi-occupation. I understand that there has been some concern that local authorities apply different standards for room sizes and it is felt that there would be more certainty if there were a set of national standards. We have no plans to introduce national standards at the moment. We intend to consult on these provisions, as well as on the overcrowding provisions in Part 10 of the Housing Act 1985, including whether there is a need to retain the current house in multi-occupation specific provisions that are contained in the Bill under which local standards have been set. Clause 187 enables the appropriate national authority to amend or modify the house in multi-occupation specific provisions in this part by order.
The noble Baroness's amendment provides that in deciding whether a house in multi-occupation is overcrowded, the local authority must have regard to minimum standards that are prescribed for licensing purposes. The overcrowding provisions in this part apply only to unlicensed houses in multi-occupation since the licensing regime itself deals with overcrowding and space standards. This amendment would result in further regulation of the HMO sector—which is probably not its aim—since, in determining whether a non-licensed house in multi-occupation is overcrowded, regard would need to be had of the number and quality of shared bathrooms, toilets, kitchens and other facilities. As currently drafted, the only factor of which local housing authorities can take account in determining whether a house in multi-occupation is overcrowded under Section 124 is whether there are enough rooms, vis-à-vis the number of people living in the property.
We think that the effect of this amendment, which greatly enhances the local authority's power to serve overcrowding notices in respect of non-licensed HMOs and therefore limit the permitted number of occupants, would be to introduce a shadow licensing regime for the whole of the house in multi-occupation sector that is not officially licensed.
On the question of whether there is a definition of an excessive numbers of persons in Clause 123(2), as dealt with in Clause 125, the local authority decides what is excessive in its view, taking account of Clause 125. The residential property tribunal will decide on appeal. if there is a dispute about it.
§ Baroness HanhamI thank the Minister for that reply, but I am slightly baffled by it because he said that it would bring more houses in multiple occupation into a licensing system. But the whole of Clause 123 is about the service of overcrowding notices. It is a clause that applies to any house in multiple occupation: not just to licensed HMOs or to unlicensed HMOs, but to any HMO. If it applies to any HMO then, by definition, it will bring it under some sort of statutory control and it is relevant to this part of the Bill and the previous part.
I do not understand the Minister's reply because our amendment suggests that, as overcrowding is stated in the Bill to be a problem and local authorities are able to take action, they should have regard to the prescribed standards rather than having to implement 947 them. It would bring some consistency. Perhaps the Minister might like to come back on why, when there is a clause that encompasses all the HMOs, it should become a problem when one tries to steer it towards a prescribed standard.
§ Lord RookerMy mental answer just then was "No". I did not want to come back because I do not have an answer. Clause 123(1)(b) specifically refers to houses in multi-occupation not required to be licensed. To that extent, the noble Baroness is incorrect. I shall be happy to drop her a note on this matter.
§ Baroness HanhamI would be grateful to the Minister if he would do so because the whole clause is headed "Service of overcrowding notices". If it relates to HMOs that are not licensed, which is what we are talking about, we say that there should be regard to the standards that already exist. I thank the Minister for his reply. We may return to this, depending on his response by letter, if he is able to let me have it before the next stage. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 123, as amended, agreed to.
§ Clauses 124 to 126 agreed to.
§ 5.45 p.m.
§ Clause 127 [Appeals against overcrowding notices]:
§ Baroness Hanham moved Amendment No. 173:
§
Page 91, line 7, at end insert—
(6) A residential property tribunal may allow an appeal to be made to it after the end of the period mentioned in subsection (1) if it is satisfied that there is good reason for the failure to appeal before the end of that period (and for any delay since then in applying for permission to appeal out of time).
§ The noble Baroness said: Strangely, my Amendment No. 173 is not grouped with the other amendments. Amendment No. 173C, which is a government amendment, does exactly what our Amendment No. 173 would do, which is to extend the period before an appeal to the residential property tribunal is out of time. If that is correct, I welcome it. I think we have got into a muddle about the grouping. I beg to move.
§ Lord RookerThere should not be any muddle. I shall not go back through loads of notes now. So far as Amendment No. 173 is concerned, the Government support it and I recommend it to the House.
§ On Question, amendment agreed to.
§ Clause 127, as amended, agreed to.
§ Clause 128 [Revocation and variation of overcrowding notices]:
§ Lord Rooker moved Amendment No. 173A:
§
Page 91, line 19, at end insert—
(2A) An appeal under subsection (2) must be made within—
as the case may be.
§ The noble Lord said: Clause 128 concerns the revocation and variation of overcrowding notices. A person whose request to have a notice revoked is refused or not promptly dealt with has a right of appeal to the residential property tribunal. The amendments tidy up the appeals procedure by requiring appeals to be made within 21 days, unless the tribunal gives permission for late appeals. I beg to move.
§ On Question, amendment agreed to.
§ Lord Rooker moved Amendments Nos. 173B and 173C:
§
Page 91, line 23, at end insert—
( ) A residential property tribunal may allow an appeal to be made to it after the end of the 21-day period mentioned in subsection (2A)(a) or (b) if it is satisfied that there is good reason for the failure to appeal before the end of that period (and for any delay since then in applying for permission to appeal).
§
Page 91, line 24, leave out subsection (5) and insert—
(5) In this section "relevant person" means—
§ On Question, amendments agreed to.
§ Clause 128, as amended, agreed to.
§ [Amendment No. 174 not moved.]
§ Baroness Maddock moved Amendment No. 174ZA:
§ After Clause 128, insert the following new clause—
§ "INFORMATION TO BE PROVIDED TO OCCUPIERS
§ (1) The local authority shall from time to time take reasonable steps to make those occupying residential accommodation aware of their duties and powers under Parts 2, 3 and 4.
§ (2) The local authority shall publish a summary of their duties and powers under Parts 2, 3 and 4 which shall include—
- (a) an explanation of the classes of persons or properties subject to the licensing duties set out in Parts 2 and 3 within the authority's district,
- (b) an explanation of the duties and obligations imposed on those who are licensed, and
- (c) an explanation of the circumstances in which the local authority might exercise its powers under Part 4.
§ (3) The local authority shall make the summary available for inspection at their principle office and shall provide a copy free of charge to any member of the public who asks for one."
§ The noble Baroness said: I apologise for the lateness of this amendment. The Bill gives a number of duties to local authorities to enable them to licence houses in multiple occupation. The purpose of all those duties is to promote the health, safety and general welfare of occupiers and potential occupiers of houses in multiple occupation and other residential accommodation. In enforcing the various schemes, local authorities are required to notify and to hear representations from those who might have to comply with any licence or order imposed in respect of a particular property. Although occupiers are given some limited information—for instance, when the authority takes over the management 949 of a property in pursuance of an interim or final management order—there is no requirement that residents be made aware that there is a duty on the landlord to be licensed or that the landlord may be subject to general or specific conditions if he wishes to retain his licence or avoid a management order or overcrowding notice, which we have just been discussing.
§ Given the limited resources of local authorities, which we have discussed as the Bill has progressed, it is important that the obvious and natural ally in the introduction and policing of the above schemes—the occupants of residential accommodation—are made aware of the obligations imposed on landlords by those schemes. Equally, those most likely to know whether their welfare is being affected are the occupants themselves. At present, nothing in the Bill requires local authorities to educate occupiers about the powers available under the Bill. That is the purpose of the amendment.
§ In the absence of any information being given to occupiers, the likelihood of any real benefit to occupiers is diminished, as is their ability to participate in the process. That is detrimental if we are trying to help local authorities to roll out the programme, which we all agree is a good idea. We should make sure that there is some publication and some way of communicating with residents. I beg to move.
§ Lord RookerThe amendment proposes that local authorities should provide information about their powers and duties to residents of properties affected by the powers. Although we accept and agree with the points made by the noble Baroness and the way in which she has raised them, we do not think that the amendment is necessary.
There are provisions in the Bill as drafted that will alert occupiers to proposals for or the existence of such schemes. There are requirements to consult about the making of licensing schemes and to publicise them when they are made. Moreover, the Bill provides general duties on authorities to secure the effective implementation of licensing schemes. The powers and duties under Parts 2, 3 and 4 will be identical for every local housing authority, so we do not think that it is such a good idea to impose a separate duty on each authority to summarise the legislation.
If it will help, I can assure the noble Baroness that the Government fully intend to promote licensing and that that will include the publication of leaflets advising both landlords and occupiers of the licensing regime. Those will be distributed nationally and should be widely available free of charge from local offices, libraries, housing advice centres, citizens advice bureaux and other agencies. I hope that that will meet the general thrust of the points made by the noble Baroness which, as I said, we take on board.
§ Baroness MaddockI thank the Minister for that reply and will look carefully at the more detailed parts of his answer. In the mean time, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 129 [Index of defined expressions: Part 4]:
§ Lord Rooker moved Amendments Nos. 174A to 174D:
§ Page 91, line 33, at end insert—
| "Dwelling | Section (Empty dwelling management orders: introductory)(4)(a) and (b) |
| Final EDMO | Section (Empty dwelling management orders: introductory)(1)(b)" |
§ Page 92, line 2, at end insert—
| "Interim EDMO | Section (Empty dwelling management orders: introductory)(1)(a)" |
§ Page 92, line 15, at end insert—
| "Relevant proprietor | Section (Empty dwelling management orders: introductory)(4)(c) and (5) |
| Rent or other payments (in Chapter 2) | Section (Empty dwelling management orders: introductory)(4)(e)" |
§ Page 92, line 17, at end insert—
| Third party | Section (Empty dwelling management orders: introductory)(4)(d)." |
§ On Question, amendments agreed to.
§ Clause 129, as amended, agreed to.
§ Baroness Hanham moved Amendment No. 175:
§ After Clause 129, insert the following new clause—
§ "POWER TO REQUIRE EXECUTION OF WORKS TO REMEDY NEGLECT OF MANAGEMENT
§ (1) If in the opinion of the local housing authority the condition of a house is defective in consequence of neglect to comply with the requirements imposed by regulations under section 198, the authority may serve on the person having control of the house, or the person managing the house, a notice specifying the works which, in the opinion of the authority, are required to make good the neglect.
§ (2) The notice shall require the person on whom it is served to execute the works specified in the notice.
§ (3) A person commits an offence if he fails to comply with a notice under this section.
§ (4) In proceedings against a person for an offence under subsection (3), it is a defence that he had a reasonable excuse for not complying with the notice.
§ (5) A person who commits an offence under subsection (3) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
§ (6) The provisions of Part 3 of Schedule 1 shall apply to a notice served under this section as if it were an improvement notice (omitting paragraphs 12, 13, 17 and 18)."
§ The noble Baroness said: The Committee will be aware that the management regulations are a detailed set of regulations dealing with the day-to-day running of all houses in multiple occupation, not just licensed HMOs. The regulations are prescribed by central government. Currently, the regulations deal with issues such as cleaning, maintenance, testing fire alarms, ensuring that banisters, stair carpets and floor coverings are safe, boundary walls are kept in repair, letterboxes work properly, gardens are maintained and that the manager displays details of his name and address. That is just a brief summary; there are other 951 provisions. The Government will be redrafting the management regulations, but the Office of the Deputy Prime Minister has said that they will continue to cover essentially the same ground.
§ Under the Bill, any breach would be a criminal offence. Breaches could be trivial, such as having a broken letterbox or unkempt garden. The current management regulations provide for criminal prosecution in the event of a breach but also allow for the service of a works notice where work is required to remedy a breach. Current government circular advice advises local authorities normally to resort in the first instance to service of a works notice rather than instituting criminal proceedings in the event of a breach. Experience in Leeds has shown that that is what the authority does, save in the most serious cases. Landlords are concerned about the extent to which the criminal law is being relied on in the Bill to deal with breaches.
§ The proposal contained in the new clause would retain the existing alternative of serving a notice in the event of breach. Failure to comply with the notice would be a criminal offence. The notice procedure provides a half way house, so that one does not have to resort immediately to criminal proceedings.
§ The Government have rejected that suggestion because they want local authorities to rely on the HHSRs to carry out a risk assessment under that system in the event of a breach. That approach fails to take into account the detailed nature of the management regulations. The failure to clean up a room in a property or mend the letterbox, although a breach of the management regulations, is unlikely to attract a score at all under the HHSR system. Furthermore, it is really a waste of resources for an environmental health officer to go to the lengthy and detailed procedures envisaged under the guidance to deal with minor matters. Prosecution is a sledgehammer to crack a nut.
§ A simple notice procedure to deal with such small breaches is a useful method in the local authority's enforcement armoury and will also save costs. I beg to move.
§ Baroness MaddockI shall speak to Amendment No. 238A, which is grouped. We think that there has been an omission from Clause 198. My amendment replicates powers currently contained in Section 372 of the Housing Act 1985, which requires the execution of works to remedy poor standards of management. A similar power is not contained in this Bill. That is why we are moving the amendment.
The Government may think that everything in Clause 198 covers that, but as it is something that has been in operation for a number of years and something which officers of the Chartered Institute of Environmental Health think is important to keep, I would like to hear the Minister's view on this amendment.
§ 6 p.m.
§ Lord Bassam of BrightonThese amendments deal with issues that are similar to each other but not exactly the same.
952 The amendment tabled by the noble Baroness, Lady Hanham, would permit a local authority enforcing the management regulations to issue a notice specifying works to remedy physical defects if the property was defective in consequence of neglect to comply with the requirements imposed by the management regulations under Clause 198.
The amendment is well intentioned but it misinterprets the purpose of the management regulations, which set out basic management duties for HMO managers with regard to those HMOs that are of the description so specified.
The focus of the management regulations will he on the management of the property. They are not intended to address the physical fitness of the property. That is where the misunderstanding arises. The physical conditions of properties, including HMOs—whether licensed or not—and all required works can be dealt with by the powers available to local authorities under Part 1 of the Bill.
It is not our intention to create unnecessary bureaucratic duplicate measures which are already provided for in the management regulations powers. Management regulations are only concerned with management duties while the powers provided under Part 1 of the Bill are the correct vehicle for tackling the hazards to which the noble Baroness has drawn attention.
We understand why the amendment has been put forward, but we do not think that it is necessary or that it will work in the way in which the noble Baroness suggests.
I am grateful to the noble Baroness, Lady Maddock, for her amendment. It would amend Clause 198 to include in the regulations powers that enable a local authority to serve notices on owners of HMOs to carry out works or actions that may be necessary to ensure satisfactory standards of management and that they are in place in the HMO.
The noble Baroness was seeking a response to whether we felt that we had left something out from previous legislation. We have not.
If works relating to the physical conditions of properties are required, the powers available to local authorities under Part 1 of the Bill can be used to require them to be carried out. I understand where the demand for "works notices" under the management regulations comes from. Local authorities are used to these tools under the existing management regulations, made under Section 369 of the Housing Act 1985.
The flexibility and powers for local authorities conferred by Part 1 make it unnecessary for management regulations to continue to be the vehicle for ensuring that works are carried out. Again, we do not want to create unnecessary duplication between Part 1 powers and management regulations.
It may help if I give an illustration of what management regulations are aimed at tackling. The management regulations will be able to place a duty on a manager to ensure that means of escape from fire are 953 not blocked. If the local authority discovers that they are, then it will be able to prosecute that person for failure to comply with the management regulations. However, if blockage of the fire escape constitutes a hazard to the health and safety of the residents, the local authority can take action under Part 1 of the Bill to require the landlord to remove the hazard. It is not necessary to confer an additional power on the local authority to serve a different kind of notice on the landlord because the type of work that needs to be carried out relates to something that is covered by the management regulations.
The solution to the problems and difficulties to which both noble Baronesses have drawn attention is dealt with in the practical workings of the management regulations. I hope that that explanation helps.
§ Baroness HanhamI thank the Minister for his reply. I am sure that his explanation is absolutely spot-on. But we need to reconsider what the management regulations are set to do against Part 1 of the Bill.
The requirement to do the improvements which are set out under the management regulations—which are more trivial matters—are covered by the improvement notices in Part 1. I am not sure that I agree with that, although I hesitate to say that the Minister is wrong. I would like the opportunity to check that and, if necessary, return to these matters on Report. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 130 [Meaning of "residential property" and "home information pack"]:
§ The Deputy Chairman of Committees (Viscount Allenby of Megiddo)Before calling Amendment No. 176 I should inform the Committee that Amendment No. 199A has been added to this group.
§ Lord Hanningfield moved Amendment No. 176:
§ Page 92, line 25, leave out "or intended to be occupied"
§ The noble Lord said: All the amendments that we have tabled under Part 5 of the Bill have to be seen in light of the fact that we have serious concerns as to the inclusion of this part. The Minister in the other place was able to show that he, too, had doubts about the feasibility of some aspects of the home information packs and, indeed, the home condition reports and he welcomed sensibly tabled amendments that improved the overall quality of this legislation.
§ There are many aspects of this Bill that we welcome. Part 5, however, the compulsory provision of home information packs, we do not.
§ We appreciate that the Government have had such a scheme in mind for quite some time. Indeed, the improvement of the current system by which property is bought and sold has been one of their long-held election manifesto pledges. Any initiative that attempts to improve the way in which the housing market works on a day to day basis we welcome.
§ However, the issue here seems to be that neither we, nor the property industry at large, had fully appreciated that sellers would be obliged to provide 954 these packs, at substantial costs to themselves, and that the packs would have to be available as soon as the property was put on the market.
§ We therefore disagree wholeheartedly with the compulsory nature of these packs as well as when the legislation requires them to be produced and the onus that this places on the seller and their agents. As well as this, although we appreciate the need for consistency, we disagree that every house to be sold should need one.
§ To that end, I would like to begin by moving Amendments Nos. 176 and 177 and also, with your permission, speaking to Amendments Nos. 210 and 199A, which cover the issues of warranties, to establish what property requires a home information pack. The need for clarification on this point is much needed.
§ If a house is clearly derelict and in need of much renovation, why should the vendor have to produce a lengthy, expensive report on its condition when it is clearly obvious that any buyer will realise that the house he is thinking of purchasing is clearly a renovation project?
§ At the other end of a house's life cycle—the formative years—how can a home information pack be necessary for a property that has not yet been built? The final specifications may need to be clarified to suit the buyer's requirements, such as issues regarding tenure and other essentials. All this sort of information, that the Bill expects to be available, may not have been finalised when the property is put on the market. Indeed, we will be discussing the timing of the production of these packs at a later point in the proceedings.
§ Likewise, if a property is brand new and entirely covered by adequate guarantees and warranties by the builders, why should an information pack be provided over and above what has already been put in place? On the issue of warranties, our amendment makes clear that a warranty provider means the National House-Building Council or another provider duly approved by the appropriate national authority.
§ Will the Minister assure us that there will be enough inspectors in place before the legislation is rolled out across the land? We accept that the National House-Building Council and other approved bodies are well qualified to carry out the inspections envisaged for the production of home information packs. But, so far, there have been a wide range of figures bandied about as to the number of inspectors that will be required. I beg to move.
§ Baroness MaddockThis is a new section. We support efforts to assist consumers with buying and selling houses. But, as will become apparent—in particular, my noble friend Lady Hamwee will make it apparent—we are very concerned about much of the detail and implementation of home information packs.
I support the intention of Amendment No. 199A. It is important because the National House-Building Council provides warranties for new houses. We need to be careful I have said this in reference to other 955 parts of the Bill—that where things are operating satisfactorily, we need to be able to draw them into legislation and not work against them. Obviously, the National House-Building Council expressed quite a lot of concern about that. When new homes are first marketed, it would like them to be exempt from having to have the home condition report. As regards "second-hand" homes, the NHBC refers to a 10-year warranty. I am a little worried about blocks of 10 years, but I am sympathetic to the points that it has made. We do not want completely to do away with the present system.
One reason why people buy new houses is because they get a warranty and know what is happening. It may be that there is certain other information that also needs to be provided. But I hope that the Government will be sympathetic to the position of the National House-Building Council. I am fairly sure that they are, but I should like to hear in some detail what the Minister has to say about that. So I am supportive of the principle behind Amendment No. 199A.
§ Lord BorrieIt was right that the noble Lord, Lord Hanningfield, and the noble Baroness, Lady Maddock, should give their broad views on this controversial part—Part 5—before we get into the detail of a great deal of separate amendments. I would like to express a different view on the two fundamental questions that they have both mentioned. When, if there is a duty to supply a home information pack and a house condition report, should that be required? Should there be a gap in time before it is due, although the house is put on the market?
That would be severely detrimental to Part 5 and the valuable consumer protection embodied in it. If there is a time gap before a home information pack is required, that would be a blow to the intentions of the Bill. Apart from preliminary thoughts that the vendor has about wanting to sell, if he puts it on the market to the general public he or his estate agent should have the pack available. As to whether it should be compulsory or voluntary, we all know that there have been a number of voluntary schemes in operation up and down the country, many of which have been very useful. We have all seen some of the lessons that have been learnt from that.
If a scheme is introduced for England and Wales that is not compulsory, it inevitably means that if there are chains of vendors and purchasers—we all know that that is one of the great problems vendors and purchasers have—the chain will be only as good as each link. If one of those links is broken because there is no home information pack or house condition report, the rest will not go through effectively. In other words, compulsion is required to make the scheme effective.
It is a valuable scheme. We all want reassurances from the industry. No doubt the Minister can convey assurances on matters such as how many inspectors there will be and whether purchasers will be satisfied or want their own surveys or valuations done as well, which would somewhat destroy the purpose. We all want answers to those questions. But if, from the 956 beginning of the discussion on Part 5, we allow some period when the vendor markets the property but does not have to produce the pack and, a fortiori, if we have the scheme only voluntarily and not compulsorily, we would probably be wasting our time.
§ 6.15 p.m.
§ The Earl of CaithnessI am sure that we will come on to the points raised by the noble Lord, Lord Borrie. In fact, I think that we start looking at the points he raised at the next amendment. This is a different amendment. I must declare my interest. I am a consultant to an estate agency in London. I am a surveyor and have practised for probably more years than I care to remember just at the moment.
I should like to raise one point of major concern with the Minister; that is, the lack of response and information that I have received from his department. At Second Reading, I raised a lot of issues; it was only last Friday that I received the final piece of information. On 26 June, I received a letter from the Minister in which he said that he would write in more detail in days to come. I looked forward to receiving that letter. Coincidentally, I wrote to him on 26 June, reminding him that, with Committee stage coming up, I was looking forward to receiving a detailed reply. On 15 July, the Minister wrote a letter that I did not receive. But that did not answer any of my specific points. I got answers to those specific points only on Wednesday, Thursday and Friday of last week.
This is a completely new part of the Bill; that is, Prescott's penalty on property owners. It is new, unchartered territory. No other country in the world does what we are going to do. Therefore, it needs to be scrutinised with very great care. The amendments were ably introduced by my noble friend. But I want to clarify with the Minister how one is supposed to produce, as an agent, a home information pack containing a home condition report when one is selling a property that has not yet been built from a plan. There is a show house. The next house will be identical. Someone comes along wanting to buy it straight off the plan. A home information pack cannot be produced. If a property is three-quarters built, a home information pack cannot be produced, let alone a home condition report. This part of the Bill therefore starts off as a nonsense. I therefore strongly support my noble friend Lord Hanningfield in moving the amendment.
§ Baroness Gardner of ParkesI have not taken part in discussions so far on this Bill. This is the part of the Bill in which I have a particular interest—perhaps I should declare an interest. There is another major problem. As regards houses that have not been built, valid points have been made, although, presumably, one would be able to say that they will be built to a certain specification.
I am more concerned about how one gets anyone along to certify exactly the condition of a building. Many people may find themselves in that difficulty. My home in London is surrounded by redevelopment. In fact, 20 years ago, I had to rebuild my whole house. The building opposite went down three storeys 957 underground and split my house apart. If the seller's pack had existed, perhaps the vendor would have revealed to me that the house was fatally flawed, and it might have helped me.
Since then, all those big buildings that were built then have been demolished and they are rebuilding everything. Pretty well everyone in the area has cracks developing in their houses. Now, no one can get any surveyor round to look at the cracks. Although you would imagine that the groups that were just finishing building would want to be quite sure of the condition of your house, so that they did not get the blame for what the next huge developer is going to do, this is not the case. Certainly, surveyors who were asked to come in July to look at new cracks developing have not been seen yet.
What concerns me—and I speak as a dentist who knows how hard it is to get a dentist at the moment—is how you are going to find enough surveyors or qualified people to comply with all of these home information packs. There is real cause for concern there. The Minister will have to satisfy the Committee that people will be in sufficient quantity, and sufficiently available, at a cost that people can afford if they want to sell their property, whether is it new or old. Certainly, in the area of London I have spoken about, you could not possibly produce a pack if you could not get anyone to walk in the door. It may be that we will all be bidding up more and more, and whoever pays the surveyor most will get one to come to their house. Who knows? But it is just not good enough. This is a very important point.
Another important point is that when the housing market is running hot, as it was in the past when houses were selling so quickly, you would have to be very quick with your pack. But it is quite a different matter if the market is slow, and your house is on the market possibly for a year or two. How many packs are you going to have to produce in that time? I see that there is a later amendment which says the pack must not be more than three months old. That is quite a horrific thought—you would have to pay repeatedly for the same conditional survey to be made. This part of the Bill really causes worries.
§ Baroness Young of Old SconeI want to address Amendments Nos. 210 and 199A, because there seems to be some misunderstanding of the issue of a warranty, and a more fundamental misunderstanding about the very valuable purpose of the home condition report and the home information pack. Since everyone has been making mini-Second Reading speeches about this section, I might as well join in and say that I am a great fan of both of those provisions, and I think they will help considerably in a number of ways.
One of the issues I want to raise in the context of these two amendments has not been raised previously. The warranty that a house has as a new build primarily relates to the structure and condition of the building. The home condition report contains other elements, for example, the environmental efficiency of the building, which are important concerns to the purchaser in terms of what 958 that will do to future fuel bills, as well as, I hope, to many purchasers in terms of the environmental impact that their intended purchase will have. I hope also, being a great fan of the home information pack and the condition report, that we will see other environmental condition issues associated with that. The provisions already contain information about flood risk management, which is of vital importance to buyers of property.
I hope that the Minister, in dealing with these two amendments, will recognise that the warranty is only very partial in what it covers. I take the point made by the noble Baroness, Lady Maddock, that if the system is working then it should not be amended. The warranty will no doubt be a very valuable input into the home condition report for those houses that are new.
§ Lord Phillips of SudburyAs this is the first time that I have contributed to the debate, I had better declare an interest as a solicitor whose firm does lots of conveyancing. I myself used to do a lot. I would like to illustrate what the noble Baroness, Lady Gardner of Parkes, said about the virtue of Amendments Nos. 199A and 210. It seems to me that if those were added they would exclude from the purview of the HIP a considerable number of transactions. I am as keen as anyone to improve our conveyancing system, to make it easier and less expensive. But I do not think there is any point in trying to pretend that the HIP will make things any cheaper.
If one considers the prospect of a pack becoming out of date when the market is flat—as the noble Baroness, Lady Gardner of Parkes, said, it is commonplace for properties to be around for well in excess of the likely period after which one is going to have to renew surveys and searches—then one is really into major expenditure. I do not know whether the statistic has been given hitherto, but to give one specific example of my home patch in Suffolk, Babergh District Council now charges £129 for a basic search. It charges another £74—and this is national—for drainage and environmental searches, and it charges £10 extra for each of 15 optional enquiries. So if one had the whole 15 optional enquiries, plus the basic search, plus the drainage and environmental searches, one is talking of £350. And many local authorities charge a lot more than £129 for basic searches.
It seems to me that there is no point in being anything other than profoundly pragmatic about all this. If these two amendments are, as I say, going to reduce the potential costs of conveyancing—which ultimately, one way or another, find their way back into the system, whether through increased prices or however else—without any major drawback, then I hope the Government will go with it.
§ Lord RookerUnfortunately, I am not in a position to make a Second Reading speech, but to answer the amendments. I am going to have to stick to that, because lots of issues have been flagged up.
I think I shall kick off before I start on my notes with one specific answer to the noble Lord, Lord Hanningfield, who moved these amendments. 959 He made the point that, if a house is derelict, why should there be a home condition report? If it is marketed—and this is the key—for residential occupation, then a home condition report is required. If it is marketed for redevelopment, then no home condition report is required. We will achieve that by regulation. I am happy to give that assurance. Quite a bit will be in secondary legislation.
I was also quite pleased to listen to the last few speeches, because we got away from the London-centric argument. I take the view that London is slightly different from the rest of the country. Particularly, the part of London where the noble Earl, Lord Caithness operates is completely different to the rest of London, so far as I am able to ascertain.
On the issue raised by the noble Baroness, Lady Gardner of Parkes, on skills, I take the point about the shortage of people, and we will come to that in later amendments. First, we would not operate the system if it did not work, because it is not planned to come in overnight anyway. Secondly, we do not envisage a massive shortage of people qualified to do the home condition report. I think the figure is somewhere around—do not hold me to this, because it will turn up later on —7,000 nationally. It is not envisaged that there will be difficulty in getting the people trained and skilled to do the report in this legislation. It is horses for courses. I fully accept the point the noble Baroness made about the individual issues she raised. Nevertheless, there are many issues that have been flagged up that we will come to later. I am not trying to pre-empt those, by the way, it is just that it enables me to kick off this section and give a few answers before questions start being raised.
6.30 p.m.
I turn now to this group of amendments, and the two others related to it to which I shall be happy to respond. It is the Government's intention that the marketing of single dwellings for sale with vacant possession should be subject to the home information pack obligations. The definition of "dwelling-house" in Clause 130(1) is key to securing this. Making the deletion suggested in Amendment No. 176 would run counter to that objective.
The effect of deleting the words,
or intended to be occupied as a separate dwelling",from subsection (1) would be to remove unoccupied homes from the home information pack duties. But there are many reasons why a property might be unoccupied while it is being marketed. Obvious examples include cases where the owner has already moved, or where someone is selling the home of a deceased relative. The benefits of up-front information in the home information pack apply just as much to homes which are vacant during marketing as they do to homes that are occupied.We see no reason for opening up what would be a potential loophole, as well as putting the customer at risk. This is a consumer protection issue.
§
Amendment No. 177 would delete the words,
and includes one that is being or is to be constructed",
from subsection (1), thereby excluding homes which are not yet built or still in construction from the definition of a dwelling house and thus from the home information pack duties.
§ I shall seek to explain why the amendments are undesirable. It is common practice for house builders to market new homes before construction is completed. Indeed, I know that in many cases the marketing takes place before construction has even started. It is commonly the case that houses are marketed "off plan", before a single brick has been laid—assuming, of course, that any bricks are being used to build the houses. That is not always the case these days. Buyers of such homes need up-front information of the sort the home information pack will provide just as much as the buyers of existing homes. This is already recognised by house builders, most of whom provide prospective buyers with a pack of helpful information about their new home. Our intention is that the home information pack will bring this information into line as far as possible with that available to the buyers of existing homes.
§ I accept that commissioning a home condition report on a house that does not yet exist, or is only half built, is unnecessary and not what we propose. The Bill provides in Clause 144(9)(c) power for the Secretary of State to address this in regulations. We will do that because we want a sensible market to operate in which people have access to better information. We are reasonably convinced that, overall, the market will operate better and to the benefit of consumers.
§ Our consultation paper on the contents of the home information pack included a proposal to allow home condition reports to be omitted from the pack for first sales of newly built homes so long as the structural integrity of those homes is covered by a satisfactory warranty. To qualify, warranties would have to provide the necessary cover for any undisclosed defects, and therefore offer an effective substitute for the home condition report for first sales of new homes. We are setting up specialist working groups that will consider this and advise us on the appropriate contents of home information packs for sales of new homes.
§ I turn to Amendment No. 177A. This would delete the words "or may become" in subsection (2) and thus would amend the definition of "home information pack". The effect would be to disapply the definition from properties that are not yet on the market. The amendment may seem relatively innocuous but, when taken together with similar amendments tabled by the noble Earl to other clauses—Amendment No. 178A to Clause 131 and Amendment No. 194A to Clause 141—a different picture emerges.
§ The amendments would open up a loophole that would enable estate agents to engage in supposed pre-marketing activities that would amount to actual marketing in all but name, but without triggering the home information pack duties, which I presume is the fully declared intention of the mover of the amendment. It would, for example, enable someone to evade the duty 961 to have a pack when marketing begins by advertising the property as "becoming available for sale shortly" knowing full well that potential buyers would see this as a marketing gambit. That is what it is and we might as well call a spade a spade. It is a loophole waiting to be exploited and is therefore not something I could recommend to the Committee.
§ Amendment No. 199A seeks to add a new subsection to Clause 144. The new subsections, as set out in Amendment No. 210, would exempt the responsible person from providing a home condition report for the sale of a new home. The amendment would also provide that there is no duty to have a home condition report where the property is resold during the period in which the warranty cover remains in place.
§ Although we do not intend that home condition reports should be required for the sale of new homes—that is, from the builder to the first buyer—for the reasons I gave earlier, we are not convinced that this exemption should apply throughout the 10-year warranty period.
§ Amendment No. 210 would have a similar effect to that of Amendment No. 199A. I have already explained that we intend to exempt sales of new homes, but still believe that the home condition report is required for subsequent sales of new homes—that is, new homes that would then be second-hand. Subsection (8)(c) of Amendment No. 210 would provide that a home condition report is not needed when the ownership of a new home is transferred from a developer to another company prior to marketing and where the company assuming ownership is registered with a designated warranty provider.
§ To be frank, this provision is not necessary because the home information pack duties are triggered only when there is marketing to the public or a section of the public. A pack is therefore not required when a property is transferred from one person to another in these circumstances. It is necessary only when the property is put on the market, or where a "qualifying action" is taken by an estate agent. I can also assure noble Lords that, while we debate these issues in Committee and on Report, officials in the department are continuing to work extremely closely with interested parties to discuss all the issues relating to this part of the Bill, including those relating to new homes.
§ Because we are at the beginning of this group, I think that it is worth putting a little more on the record, although it would not normally be required. I turn to warranty schemes, which have already been raised. In our view, an effective housing warranty scheme will involve inspections at the construction stage with a view to preventing or correcting defects before completion. An effective warranty scheme will also provide a good measure of redress for the home owner if defects come to light after completion. It should provide for the builder to rectify defined sorts of defects, including quite minor ones, for an initial period and should then provide a "no fault" insurance cover for a further period against significant damage 962 arising from defects in the original construction. The designation of any housing warranty scheme by the Secretary of State would be on the basis of a scrutiny of the operational effectiveness of the scheme and the extent of the cover provided.
§ As mentioned, we intend to consult separately about the designation criteria for designated housing warranty schemes. We envisage that the criteria would have regard to a series of issues: the process for vetting builders seeking admission to registers, and for monitoring builders on the registers; the technical standards laid down by the schemes; builders' undertakings in relation to compliance with the scheme standards; warranty scheme operators' arrangements for checking plans and carrying out site inspections; the arrangement under schemes for resolving disputes between owners and builders over what remedial work is needed to bring a home into compliance; the terms of the insurance cover underpinning the builder's obligations; and the terms of the insurance under which the owner can claim if damage due to non-compliance with the scheme standards comes to light following the end of the builder's warranty period. I think that it is worth putting those points on the record further to help our debates.
§ I am reminded that I have spoken to Amendment No. 177A tabled by the noble Earl, Lord Caithness, that has been regrouped and therefore has not yet been moved. He now has advance warning of what my response will be. I apologise for that.
§ The Earl of CaithnessI was going to thank the Minister and remark on how kind it was of him to give me an answer to something I have not yet spoken to. However, I can assure the Minister that I will speak to the amendment in due course. The noble Lord also said that I operate in a different market from anywhere else. Of course I do; that is the housing market. There is no such thing as the single housing market as a general or specific area. The housing market in England and Wales is comprised of thousands of separate housing markets. It is different throughout the country from one area of town to another; it is different from street to street. That is why we need qualified surveyors to know the differences.
The Minister spoke about the regulations to be laid under Clause 144(9)(c). When are we going to see them? I fear that much of the debate will be shoved away under the promise of regulations, but unless we see draft regulations before Report stage we will not be able to carry out the work that we need to do satisfactorily in Committee. For instance, in Clause 144(9)(c), the Minister will be able to provide for different types of property market. Where houses are of a particularly low value he will exempt them from having a home condition report or an HIP. We will create all sorts of false markets. Unless we can discuss that in Committee, the House will be prevented from doing what it should.
The Minister referred to the warranty and said that there would be no HIP when it came to the first sale from the developer to the first owner. He did not like the idea of a 10-year warranty. The noble Baroness, 963 Lady Maddock, was also concerned about it. What happens if an owner puts down a deposit on a house that is yet to be completed and for all sorts of reasons is unable to proceed with the purchase that he is legally contracted to buy? That person will then have to sell that property. Surely in those circumstances it would be wrong to have a home condition report.
Would it not be wise to have the warranty extending perhaps not for 10 years but to have no HIP necessary for the first two years after the house is completed? At that stage I can see a logical argument for bringing in a home information pack. The housing market is full of such circumstances in which we will catch people and subject them to extra unjustified expense.
§ Lord RookerI did not apologise to the noble Earl for the delay in response to his question at Second Reading, so I apologise for forgetting about that. In response to his example of someone who puts down a deposit on a new property covered by a warranty, who does not live in the property but is required to purchase it—I am not sure about the contractual obligations if the property has never been lived in—I am not sure how the sale would figure. I shall take advice. It is the kind of nitty gritty example for which we need to have an answer.
We would like to cover every property sale in the country, but to cover 100 per cent is probably not a practical proposition for the kind of example that the noble Earl has just given. I am not giving an answer, but I can envisage the circumstances of a brand-new dwelling that has been sold off-plan, where someone who has put down a deposit is for some reason required to go the whole hog and buy the property and then market it to sell it—although it cannot be completed and they have never lived in it. We would not want to open up loopholes, but such practical questions have to be dealt with. That is why we aim for 100 per cent, but we will probably never fully achieve it.
Forty thousand people market their property every week. No matter what happened to the 40,000 that marketed last week—if any problems arise—another 40,000 people will market this week. In other words, any government who introduce such a programme need to be certain that everything is in place to run the system, simply because they are people's homes and it goes without saying. Forty thousand homes every week is about 2 million per year. If something does not work, it is not just the 40,000 people who marketed last week who will be affected, but those marketing this week and the next week and the week after that. The rules have to be in place and copper bottomed.
Many questions on many issues must be answered and people must be trained, as I said to the noble Baroness. No one denies that it is a big operation. It is also because the majority of properties—I will not argue about the number—are in a chain. That is why the system has to be compulsory; it cannot be voluntary. A voluntary system will not work, simply because of the majority of properties being in a chain. We shall come to that issue in later amendments.
964 6.45 p.m.
Twenty-eight per cent—one quarter—of transactions fall through after an offer has been made and accepted. Think about that: 40,000 properties are marketed every week; think about the distress, the anxiety and the frustration and the cost to the person who has made the offer and obtained the surveys. I spoke to someone yesterday who had paid as prospective purchaser for two surveys and both dwellings had fallen through: he was extremely angry.
Many people are involved in this matter and we must get it right and answer as many questions as possible and be open and honest: to get it 100 per cent right will be extremely difficult given the type of example raised by the noble Earl.
§ Lord Phillips of SudburyOn 7 June at Second Reading the Minister twice said that he would not detain the House regarding the information and evidence on which key parts of Part 5 are based. He invited that debate—I think he called it—to happen in Committee. I refer to the crucial nature of the 28 per cent statistic—as he put it, 28 per cent of transactions break down between offer and exchange of contract, with all the attendant heartbreak and expense and so on. Everyone here accepts that; those of us in the business have seen it too often.
Have the Government undertaken substantial and widespread research among the body of people who will know this better than anyone—namely, solicitors engaged in conveyancing—as to how that 28 per cent figure is compiled and, more importantly, what causes they ascribe to the breakdown of transactions? They are many and disparate.
§ Lord RookerI do not have the answers off the top of my head, but there are many disparate causes, not least finding out about the property on which one has made an offer. It beggars belief that people make offers on property not knowing much about it. They will spend less time in a house than in the supermarket and make an offer. Then they start to find out about it when the seller has to give the information about what is available, rows with neighbours, fixtures and fittings, which is the fence and all the basic stuff that has to be filled in now. The majority of requirements under the Bill already have to be provided now.
We are trying to get most of the information upfront to enable people to make an informed decision on an offer, knowing more about the property in the hope that the sale will take place rather than falling apart if they make an offer that is accepted. I understand that solicitors have an interest; I cast no aspersions on the noble Lord—far from it—but I understand that the Law Society is not very happy about the scheme. Many other people who know about the heartache are coming on board, the more they find out about it.
I freely admit that the proposal has changed since the Government first brought it forward before the last election when we were criminalising people and doing all kinds of things—it quite rightly got a drubbing and we have made substantial changes. I will see whether a 965 breakdown of information is available, because I am happy to have a debate in Committee to see how the 28 per cent figure breaks down. I have seen so much about it over the past few months, but I am not sure whether there is a breakdown of the figure.
§ Lord Phillips of SudburyI am grateful to the Minister. It is very important that he should do that. When he replies, will he make reference to the Home Office document on this issue, which it describes as a "small study by economic consultants"? It concluded that the proposed HIP could create benefits. I hope that the information upon which we are proceeding does not rest upon this small study. It does not look as though it does.
§ Lord RookerNo, I do not say it rests completely upon that study. This issue was piloted in Bristol on a voluntary basis—indeed, some people around the country are still operating such a system—but, because it is voluntary and because of the chain system, you cannot check the effectiveness of it. That is a part of the problem.
Even I have said in my musings, "This is a big operation—40,000 a week across the country. We have got to get it right. Why can't we pick a region and consider everything in that region?". But, of course, you would get all the arguments about people buying and selling out of the region and on the margins. Most people will be buying and selling within the region, subject to job changes and so on, but I was convinced—as indeed the current Minister has been convinced—that it will not work unless everyone plays ball because the vast majority of properties are in a chain. That is the major difficulty and one which I freely accept.
There will be amendments in due course in relation to estate agents who are not even based in England. They think that that will be a way around the measure, but it is not. However, there is a way around it for us.
We have to face these matters—it is a complicated issue—but we are satisfied that this is a major consumer protection measure. I believe that it is one that will get a good wind the more information that is known about it.
§ Baroness HamweeI agree that it is a consumer protection issue. I am not sure whether I have declared my interest as a solicitor, albeit as one in a practice where everyone else does the conveyancing because it would not be safe if I were let loose on it.
As regards the Minister's comment about people spending so little time looking at a property, with the first flat that I bought—I was influenced entirely by the spiralling prices in the early 1970s—I spent about seven minutes in the property, spotted the offers that the vendor had received and offered him £100 more than he was asking. That was a lot of money at the time.
Noble Lords have received a briefing from the National Association of Estate Agents and I take this point from that briefing. According to the Government's 966 own document, Key research on easier home buying and selling, the most common reasons for failure are related to the property price not meeting the lender's valuation or a change in the buyer's financial status. Thirteen per cent of aborted purchases were caused by a bad survey, which is arguably the only factor that could be dealt with by the introduction of home information packs.
From the same briefing, the Minister referred to the trial in Bristol. The home information packs were free of charge. There were 159 volunteer transactions during the six-months' trial period, of which only 61 exchanged or completed a sale by the end of that six months' trial. However, 4,400 sales were completed in Bristol in a six month period in the same year—in other words, not the same six months. But the figures are helpful.
§ The Earl of CaithnessLet me put what the noble Baroness has just said in context; the 159 transactions in the Bristol survey excluded the new Beazer homes. With those excluded, you get 159—which shows that it is a very small survey on which the Government have based their legislation. The Government, of course, paid for the home information packs. The noble Baroness was right to quote the key research. The valuation—on which there will be nothing in the home information pack—is the major cause of failed purchases.
The Minister referred to 40,000 properties marketed per week, but one of the great sources of information on which the Government rely is what is happening in Denmark. We market 40,000 properties a week in England and Wales; in Denmark, there are fewer than 70,000 property transactions a year. Again the Government have used a totally wrong comparison to bring forward in the Bill. As they did with New South Wales and Denmark, they have done with Bristol. This is based on a very shaky foundation.
The Minister did not answer my point about whether he will publish the draft regulations under Clause 144(9)(c) before the Report stage. It is very important that we should know.
§ Lord RookerI cannot answer that. Obviously we want to publish as much as possible before the Report stage. We want to give the House answers because that will help us to obtain a fair wind for the Bill.
Of the figures that have been given in terms of failure rates, there are currently arguments that the transaction failure rate is now only about 15 per cent. But the Government have carried out an informal survey with major groups of corporate and independent estate agents. That indicates that transaction failures are still, running at about 30 per cent, and of those about 43 per cent were attributable to an adverse survey.
I freely admit—I almost declare an interest—that in 1979 I pulled out of a purchase following a survey which stated that the roof was on the move. I have gone past the property on the train since and the roof was still there. But the report said it was on the move and I said, "No, I am not getting into that", and pulled 967 out. I do not rely on Denmark but it is worth pointing out that, although it is true that it is smaller, it is a very similar market to England and Wales. More than half its homes are owner occupied; the annual transactions-to-population ratio is similar at one to 55; more than 90 per cent of home sales are conducted through estate agents; and Copenhagen, which has a population of 1.75 million, has a vibrant market and is similar to large cities in England. All the main players in the Danish home buying and selling industry agree that the system works well and is an improvement on the old system.
No one is saying that it is the same—it cannot be because of the population difference—but, as I said, the ratio figures indicate that it is not totally unfair to look at it proportionally as a market with conditions similar to our own.
§ Lord HanningfieldWe have many more amendments. Shall we move on to some of them?
§ The Earl of CaithnessI want to pick up on two points. First, to thank the Minister for what he said about the regulations. Secondly, the 43 per cent that he mentioned is 30 per cent of adverse valuation surveys—it had nothing to do with the structure of the buildings—and that is not covered in the home information pack. Only 13 per cent was due to an unfavourable survey. So it is not 43 per cent; it is only 13 per cent.
§ Lord HanningfieldWe have had an exciting debate on the amendment. There are dozens of these amendments so we had better have another day or two for the Committee stage of the Bill. We always knew this was going to be an interesting area.
There seems to be a great deal of support for Amendments Nos. 199A and 210. I repeat the points made by several noble Lords about new houses either not being completed and resold or houses being sold in the first few months of completion. I was interested to hear the Minister's tremendous enthusiasm for it all. I can remember Ministers having the same enthusiasm for the community charge and having several debates on it; they were selling it to us over and over again.
It might be a good idea if this legislation was brought in before Christmas this year. My feeling is that it will be as popular as the community charge. I am surprised that the Minister said he has had many people supporting this provision; I have heard very few people support it. It is a pity that we have to wait two years for it because it might create the same reaction as the community charge.
We will obviously debate the matter later in Committee, as well as on Report and at Third Reading. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 177 not moved.]
968§ 7 p.m.
§ The Earl of Caithness moved Amendment No. 177A:
§ Page 92, line 30, leave out "or may become"
§ The noble Earl said: This is a simple amendment to which the Minister has already said a few words. I hope that he will say a few more.
§
Clause 130(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 a property or the terms on which it is or may become available for sale".
I can understand why the home information pack relates to properties that are for sale, but having it relate to properties that "may become available for sale" has much wider implications. There are implications for those who are just considering selling their property in due course. The clause seems to put an onus on people to have a home information pack ready and available whether or not they are going to put their property on the market. I beg to move.
§ Baroness HamweeI know that the Minister has commented on these words already, but I have a lot of sympathy with the noble Earl. It may be that I did not understand the Minister's arguments, but perhaps he could set out what other stages between a sale being a twinkle in a prospective vendor's eye and putting the house on the market the Government have considered and how they came to this form of words. There are quite a lot of stages between considering putting a property on sale and doing it. This seems to be so open that it is hard to support it on the face of it.
§ Lord RookerTo be honest, I am confused. I am not clear whether the noble Baroness is supporting the noble Earl or not. She seemed to start off that way and then to come round to the commonsense view of opposing him towards the end.
I have nothing new to say beyond what I have already said, except to point out that the amendment is part of a little group that is littered around the Bill that opens up a massive loophole that would enable estate agents to engage in supposed pre-marketing activities. The key question is: is the house on the market? If it is known that one can go to an estate agent, put one's head around the door and say, "Have you got a filing cabinet of people not featured in the window who think they might sell if someone wanted to buy?", dozens of estate agents, and the crooks and spivs of this world, will operate a black market and say, "Oh, you can come to us. By the way, people who put their head around the door, we'll send them up to you and if they like your house and make an offer, you don't need to get a home information pack". That would be pre-marketing that really amounts to marketing. A massive loophole would be opened up if the amendment were accepted, without triggering the duty to provide a home information pack. The amendment goes against the whole thrust of this part of the Bill.
§ Lord Phillips of SudburyWould the Minister employ an estate agent who is going to market his 969 property in such a manner? How on earth can an estate agent get the best coverage, the best price and the maximum number of offers if he keeps it in his filing drawer?
§ Baroness HamweeI agree with the Minister in that I would not want to open up a loophole. I would much rather that legislation was straightforward and enforceable. However, is it right to make duties enforceable, attracting penalties that are set out later in this part of the Bill, in connection with a property which may become available? I have not analysed the Bill to see whether one would ever get to that point, but it seems to be relevant to the arguments that the Minister was using.
§ Baroness Gardner of ParkesThe "may become" provision is extraordinary. What if a group of people are sitting around a dinner table and someone says, "Well, have you thought of selling this house?" If the reply is, "Oh, I might think of it", does that mean that the house "may become available"? Or does one have to approach an estate agent? I am all for closing loopholes, but why can there not be a specific, designated means of defining when one's home is now for sale? The Minister spoke about estate agents saying a property might become available, but that is the technique that they use now. They are always ringing up and saying, "Would you like to sell your house?" Then they will say to someone else, "Would you be interested if so-and-so decided to sell?" That matching of people goes on even now. That is more likely to happen at a time when property is hard to sell. People will not be prepared to pay for a home information pack when no one is buying and when they think that they will have to repeat it. Will there be a ceiling on how much one has to pay constantly to repeat one's home information pack if it sticks?
§ Lord RookerIf the chat around the noble Baroness's dinner table is such that someone says, "I might want to do it? Are you interested?", the property is not being marketed to the public. The trigger is marketing to the public or a section of the public. I suspect that the noble Baroness's dinner table would not count as the public. It is only if a seller indicates to a section of the public or to the wider public that his property may be available for sale that he would need to have a home information pack. For the estate agent, the definition of "qualifying action", which is the trigger, is in Clause 141. That definition is quite tight. There are grey areas. We do not want to legislate for further grey areas. We want to make the legislation as black and white as we possibly can.
§ The Earl of CaithnessThe Minister has moved on to Clause 131 while I am on Clause 130. I am not yet talking about marketing, although I shall talk about it. I am talking about a home information pack for a house that "may become available for sale". That is nothing to do with marketing. We have not come to marketing yet. I might not even employ an agent, so the clause relating to agents is not relevant yet. I am 970 grateful for the support of the noble Baroness, Lady Hamwee, who, with her solicitor's brain which I do not have, also sees the provision as a problem. In order that we can move on, will the Minister have a look at this point, not from the point of view of marketing—we will do that under Clause 131—but from the point of view of a house that may become available for sale. For example, we may know that somebody is going to sell a house because his parents have deceased or whatever. He has not given instructions. From my interpretation, he is caught, because that house may become available for sale. He has not yet reached that stage, but the stage before that.
§ Lord RookerPerhaps I am doing the noble Earl a disservice, but as I said before it was moved, Amendment No. 177A is seductive and looks relatively innocuous. However, we are not stupid. The Marshalled List is public knowledge. As I have said, if the amendment is taken together with two other amendments, regarding Clauses 131 and 141, which is the intention, a different picture emerges. It is not as innocuous as it first appears. Taken together, they open up a massive loophole. That is what I am warning the House about, so we do not go down that road. On its own, the amendment is innocuous, and the noble Lord can make a reasonable, moderate case for it. However, the other amendments grouped with it would be highly damaging.
§ The Earl of CaithnessI am grateful for the Minister's last remarks, because we will come back to this. To take up what the Minister said, the Committee could accept my amendment but refuse the amendments to clauses 131 and 141. My Amendment No. 177A, which he looks at with dread, is so innocuous that the House could accept it at a later stage. Meanwhile, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Hanningfield moved Amendment No. 178:
§
Page 92, line 30, at end insert—
( ) The Secretary of State may by regulations prescribe the operational date of all or part of the introduction of this Part with regard to the capacity effectively to implement.
( ) The Secretary of State may not make any regulations under this section unless a draft of the regulations has been laid before, and approved by a resolution of, each House of Parliament.
§ The noble Lord said: I do not wish to dwell on this amendment for too long, but suffice to say, given the debate we have already had, there is a lot of doubt as to whether the Government can really establish Part 5 of the Bill and have it implemented by the Minister's date of early 2007. We all share concerns about the level of expertise available to produce the packs. The Royal Institution of Chartered Surveyors claims that although 2,000 of its residential property surveyors are currently sufficiently qualified to carry out the inspections needed to compile the packs, the likely need, according to the Government, is for 7,000 inspectors by 2007. The Minister said so himself 971 several times during the debate. Given that surveyors will need to go through a 12-month conversion course, followed by several months of in-role training, we are being very optimistic if we think that in a matter of 24 months we will have a sufficient number of qualified surveyors to do the work.
§ That is why, and I am sure the Committee will agree with me on this point, it is important that the legislation gives the Secretary of State a degree of latitude as to when he can go about the implementation of Part 5. I am particularly keen to see the first subsection of Amendment No. 178. The capacity to implement effectively is the point I want to emphasise. Without the necessary surveyors in place, it is not difficult to envisage the entire housing market grinding to a halt as house sellers wait their turn for a surveyor to carry out the necessary inspections. As the Minister said on an early amendment, between 1.3 million and 1.4 million house transactions take place every year in the United Kingdom. Even taking into account a slight steadying of the market come 2007, it is unlikely that number will have dropped very much. In fact, due to the demands of the Deputy Prime Minister for thousands more new houses, particularly in the south east and my own county of Essex, the housing market will be even more full. It is important, therefore, that the Secretary of State has discretion over the implementation of Part 5.
§ I now talk briefly to the second part of the amendment, which is designed to ensure that the process behind Part 5 is revisited fully by both Houses before it is implemented. I am sure none of us has any particular desire to trawl through this debate again in two years' time, but it is important that the conditions are right for the implementation of that part. I do not need to point out that the world may well have changed a lot by 2007, both in the country nationally and perhaps quite rightly in Westminster too. To that end, it is important that the process is revisited.
§ Lord BorrieThe noble Lord, Lord Hanningfield, has raised an important matter—that of the numbers of inspectors qualified to do the job. He used the word "surveyor", perhaps loosely. I do not think it requires a qualified member of the Royal Institution of Chartered Surveyors to do the job, and, as the noble Lord is well aware, many people have talked about an appropriate NVQ that would be quite adequate. The Government's statement about 2007 is based on the view that time is needed to get an adequate number of inspectors.
The key point is that this is a chicken and egg situation. If Parliament passed an amendment of this sort, the prospect of the actual introduction of home condition reports and the need for inspectors would be put that much further forward in people's estimation. As it is, with the Government's plans reasonably firm on the matter of date, once the Bill goes through there will be some sort of incentive and interest in attaining that qualification, interest which would not be there if the prospect were pushed away several years ahead.
§ 7.15 p.m.
§ Baroness HamweeOn the amendment, though I am not following the line of argument of the noble Lord, Lord Hanningfield, can the Minister amplify the statement made in the compendium letter sent to noble Lords following Second Reading, and indeed the comments made today, about taking time to introduce home information packs "on a compulsory basis"? That is the wording in the letter dated 26 June. We would not introduce HIPs on a compulsory basis until we were confident that the packs could be assembled quickly and efficiently and in a form that people would find easy to use. We will come to the issue of voluntarism later. Will the packs' introduction be achieved by the commencement orders, or is there something more complicated behind it?
§ Lord RookerOff the top of my head, the phrase in the letter covers a situation where the date is set. We know early 2007 is challenging. but we believe it is possible. When we are getting close to that date, the legislation is in place and the training is under way, it will be much easier to encourage the industry to implement the system anyway, in advance of the actual date. It is not as if nothing will happen in property marketing one Friday, and then everything will all happen on the following Monday. The radicals in the industry and those who can see the benefits of consumer protection, and actually of marketing the issue as one of protecting consumers, will be up and running before the statutory date. That was what the terminology in the letter was intended to cover.
We have no intention of introducing the home information pack requirement until we are satisfied all the pieces of the jigsaw—and it is a jigsaw—are in place. We will not, for example, introduce the home condition report until we are satisfied that adequate numbers of appropriately qualified and insured home inspectors are available. We want to ensure there is capacity in the industry to implement Part 5 of the Bill in an efficient and effective way, and therefore we will continue, as we do now, to work closely with representative bodies affected and the industry in general, as we develop the regulations and prepare for implementation of the home information packs.
We have set up new programme management arrangements designed to ensure that the home information pack proposals are implemented smoothly, so the interests of consumers are safeguarded and the disruption to the industry is minimised. We do not want a black hole to appear. By and large, those arrangements have been welcomed by the industry and consumer representatives, and we look forward to working closely to achieve a realistic implementation.
As I have said, the research to date suggests the beginning of 2007 is an achievable target for implementing home information packs. It is challenging but nevertheless achievable. If the blueprint shows that is not the case, we will think again. This is not our poll tax. We learnt our lessons from that tax: unless we are ready and convinced, we will not do it. Therefore, if enough 973 pieces of the jigsaw are put in place we shall pull back. There is no question of us implementing this proposal until everything is in place for a successful introduction.
Of course, we would encourage the widespread use of home information packs well before the period of implementation of a compulsory system—six months beforehand. There has been an enormous amount of government publicity and from the industry. The industry will gear up before the system becomes universal. That should give ample reassurance that a commencement order is sufficient to introduce the operational date of the home information pack duties.
The demand issue was raised by the Select Committee on the draft Bill in the other place. I have repeated the assurances that we gave the Select Committee about not implementing it unless we are satisfied. Our view was that to satisfy demand for home condition reports there is a need for some 7,500 to 8,500 inspectors, assuming a mix of full and part-time working, so it will not necessarily be a full-time job: 40 hours a week. Sufficient numbers, with a satisfactory geographical spread across England and Wales, will be required. It is no good if they are all based in London.
Research has been undertaken by the relevant sector skills council. We have figures; for example, from the Royal Institution of Chartered Surveyors. I take the point made by my noble friend Lord Borrie, that such a qualification may not be necessary. The Royal Institution estimated that 4,500 chartered surveyors were carrying out residential surveys.
On a central basis, it is estimated that there are between 10,200 and 17,000 people currently employed in property services or adjacent sectors who may be expected to convert to work in home inspection. It is not as though we want to re-invent the wheel and that nothing similar is being done. Among other interested professional bodies, the Asset Skills research shows the following levels of interest: the Association of Building Engineers at 1,500, the Chartered Institute of Building, 500, and the Institute of Maintenance and Building Management, 1,250. A range of people in the country are undertaking similar or ancillary work.
It is a matter of the industry gearing up once we have the appropriate training. Not only do they need to be trained; they also need to be insured. It is fundamental for the security of the buyer and the seller and for everyone involved in the chain that they are not just qualified but actually insured for the work that they undertake.
§ Lord Phillips of SudburyIn the spirit of genuine cooperation, does the Minister consider that there is no merit in having a fully-fledged pilot of this elaborate scheme before it goes national? We had a small, partial pilot in Bristol, I think, in 1997. It was a different scheme. All the packs were paid for by the Government. There are so many potential loopholes and problems and so much dissent about whether it will be more or less expensive and whether it will save 974 much heartache, and so on. Might it be wise to take a county like Northamptonshire, run the scheme there full-tilt for a year and then take stock?
§ Lord RookerWhen I was responsible for the day-to-day aspects of this, I raised the issue because of the scale. None of the pilots has been compulsory because there has been no legislative framework. That is an issue. If it is not compulsory because of our changed system, no pilot, however big, will tell one what one needs to know. The noble Lord makes a suggestion. Ministers are listening to what is said in Committee. At present, we intend to roll out nationally on a compulsory basis. We do not have closed minds on this. Yesterday I saw a poster which said, "Minds are like parachutes: if they're not open, they're not working". The noble Lord suggests carrying out the scheme on a county or a regional basis. This is an important issue which affects millions of our fellow citizens on a yearly basis. It is not just the individual sellers, but their families and everyone else who becomes involved. I shall take away the suggestion of the noble Lord.
§ The Earl of CaithnessI thank the Minister for that. It is terribly important that we conduct a better, bigger and wider trial than we have had so far. That is what the Select Committee in another place recommended, but it was turned down by the Government. I am grateful for the tone of the Minister's reply to the noble Lord, Lord Phillips. As we all recall, the home information packs, or the sellers' packs as they were then known, were supposed to be in effect by 2003—so they have dropped back four years to 2007. I believe that if we carried out a much bigger trial, over a longer period of time, we would still find wrinkles that would be best sorted out before the system went national.
§ Lord HanningfieldWe have had another interesting debate on this group of amendments. The Minister said that it was not to be his community charge or poll tax. I remember many people wanting to get the matter right with all aspects planned, as the Minister said, to make everything certain. The more we talk about it the more complicated it becomes. That was certainly the purpose of the initial introduction of the community charge. Then the Secretary of State, Nicholas Ridley, decided to do it much quicker. If it had had the right kind of planning and thinking and the right time spent on it, we may still have the community charge.
We have already had one bad experience this year on all-postal ballots. I feel that this could be much worse than all-postal ballots. We shall carry on and only time will tell. We shall have several more interesting debates on this theme during this part of the Bill. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 130 agreed to.
975§ Lord Bassam of BrightonI beg to move that the House do now resume. In doing so, I propose that further consideration of the Bill in Committee recommence not before 8.30 p.m.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.