Housing Bill

HL Deb 13 September 2004 vol 664 cc989-1018

House again in Committee.

Clause 131 [Meaning of "on the market" and related expressions]:

Lord Bassam of Brighton moved Amendment No. 178ZA:

Page 93, line 1, at end insert— (A1) In this Part references to "the market" are to the residential property market in England and Wales.

The noble Lord said: This is the first of a number of government amendments. This one is intended to remove a potential ambiguity about the meaning of the expression "on the market" in Clause 131. The amendment makes it clear that for the purposes of Part 5 "the market" is the residential property market located in England and Wales.

Amendment No. 181B follows on from Amendment No. 178ZA and removes a redundant reference to England and Wales in Clause 136.

Amendment No. 210F includes "The Market" in the index of defined expressions in Clause 155, specifying the meaning in accordance with Clause 131 as amended. It is thus consequential on the first amendment.

Amendment No. 181ZA clarifies that for the purpose of Clause 132, a business in England and Wales", includes any business conducted from premises that are not used exclusively or mainly for business purposes—for example, a residential property.

The small drafting changes in Amendments Nos. 178B and 194ZA are intended to clarify the point that only actions that are taken with "the intention of" marketing will trigger the HIP duties. This phrase describes the policy aim more clearly than the expression "a view to marketing", which it replaces.

An estate agent is not in breach of the duty if, for example, he or she tells a spouse or colleague that a particular property is going on the market, but this would not be a qualifying action within the meaning of the part, provided that the communication was not aimed at marketing the property.

Another example is where an estate agent is seen at a property that is not yet on the market and is asked whether it is up for sale. If the estate agent were to answer truthfully, "Not yet, but it will be as soon as the home information pack is ready", that would not be a qualifying action either.

Amendment No. 181ZB is intended to simplify the explanation for the purposes of Clauses 134 and 135, which detail responsibilities of the estate agent and the seller respectively, by defining the property as a residential property that is "on the market".

Amendment No. 185ZA is a small drafting change to achieve consistency of expression with Clause 138(6). Both will now read, where the responsible person is the seller".

Amendment No. 188B removes and replaces Clause 138(6) and thereby removes the unnecessary requirement that a seller must believe that the other person responsible for marketing his property—for example, the estate agent—has a home information pack in the situation when a request is made for a copy of the pack. This requirement is unnecessary because, by definition, one of the responsible people must have the HIP, and where the seller does not have one, the other person must have one.

Amendment No. 191B deals with the situation where the seller imposes a condition on Clause 139(2), requiring the buyer to pay a charge to receive a copy of the HIP or part of it. The amendment ensures that all conditions under the clause, including these, are effective only if notified to the potential buyer before the end of the 14-day period after a request for the pack is made.

Amendments Nos. 192A and 192B remove a slight verbal ambiguity by ensuring that "purporting to be" in Clause 140(1) refers both to the pack and to any document included within it. Amendment No. 193ZA removes a potential loophole that might make Clause 140(4) seem to catch cases where there is no duty to comply with a request made under Clause 138(1). The duty to comply with, a request to a responsible person for a copy of the home information pack", does not apply in various situations detailed in Clause 138. That includes, for example, when the responsible person reasonably believes the person requesting the pack does not "have sufficient means" to make the purchase or, is not genuinely interested in buying a property".

Finally, Amendment No. 210ZC clarifies the period during which a penalty charge notice may be given in the case of a continuing breach of any duty, under Clauses 137 to 141 or Clause 147(4). In the case of a continuing breach, A penalty charge notice may not be given after the end of the period of six months beginning on the last day of the breach. I hope that that explanation is clear. I beg to move.

Baroness Hamwee

Perhaps I may ask a question about Amendment No. 193ZA. I understand that there should be relief from the duty to provide a pack if one does not think that a person can pay for the purchase or is a serious prospective purchaser, but that does not seem to be what it is about. The duty under Clause 140 is about ensuring the authenticity of the document. That confuses me. It suggests that "spoof" documents could be supplied. I am sure that that is not what is meant.

Lord Bassam of Brighton

I am sure that that is not what is meant but, in due deference to the noble Baroness, I will ensure that we check that point. It seems fair that we should.

Lord Phillips of Sudbury

I find all these amendments inoffensive, except for Amendments Nos. 178B and 194ZA. They are the same but concern different clauses. This is rather a micro-point, but it is worth making. Amendment No. 178B affects Clause 131(1). It would change the words, "a view to" to "the intention of". That would be senseless. The clause states: A residential property is put on the market when the fact that it is or may become available for sale is, with a view to marketing the property, first made public in England and Wales". Instead of the words, with a view to marketing the property", the clause would read, with the intention of marketing the property". So far as I can see, if a property is put on the market, it is with a view to selling the property. Surely, that should be the amendment. It is wholly unreasonable to expect the Minister to give a running answer to that rather knotty point. But it is one that I hope his learned advisers will think about. I would commend to the Committee that my wording is a heck of a lot better than theirs.

Lord Bassam of Brighton

The noble Lord, Lord Phillips, is being entirely reasonable in giving me a get-out clause before responding. As a lay person, if I want someone to market my property, I would want him to have intent rather than a view maybe to marketing it. It is possibly a question of emphasis, but I hear what the noble Lord says. Of course, we will take learned advice.

Lord Phillips of Sudbury

If you put the thing on the market, which is what they start by saying, it is with a view to selling it. You do not put it on the market with a view to marketing. It is not a big point.

Lord Bassam of Brighton

You put it on the market with the intent of selling it. Well, I think most people do.

Lord Phillips of Sudbury

Selling it.

Lord Bassam of Brighton

The noble Lord makes a point, and we will reflect on it. We can do no more than that.

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 178A:

Page 93, line 2, leave out "or may become"

The noble Earl said: We now come to the serious business of marketing. This is one of the most important areas of the Bill. The Government are taking away the right of somebody to market their property as soon as they want to do so. They are shackling that person's freedom, that they currently have, and making it impossible for them to do something that is done successfully, and without any great difficulty, at the moment. This erosion of freedom is unnecessary, and will cause great resentment if the Government pursue it. It is quite common in estate agency for people to make very quick decisions about the need to sell a property. This can be for a variety of reasons. The most common reason cited, perhaps, is that they find a property that they want, or that they have been looking and looking and have now seen something that really interests them. In order for them to proceed with that purchase they have to sell their own property. However, the Government are not going to let them do that until they have a home information pack available to them. That could take some days or weeks to prepare.

Let us take the simple case of a freehold property. That should not be too difficult. You now have a home condition report, you have to get all the searches and all the requisite information, and that could take up to 10 days. But what happens if you own a flat, and you have managing agents who are less than diligent in providing you with information about service charges, costs of repairs, future programmes or sinking funds for future costs? I have battled endlessly with management agents in selling flats over the past. They can cause quite a major delay to the sale of a property.

Quite often the managing agents are nowhere near where the flat is. I have sold flats in London where the managing agents have been up in Manchester, and getting information out of them has been horrendously difficult.

The owner of that flat is now going to be faced with the situation that he cannot sell his property because he is not allowed to market it. That is quite wrong. If we are going to have home information packs, and we want to speed up the process of buying and selling properties, surely the property should be allowed to be marketed at day one?

The other extreme is the ability to sell quickly. I have sold a property within 24 hours of being given instructions. I had the right purchaser, at the right price, for the right property, and it all worked. It does not happen very often, but it did happen. Why should, in that instance, an owner have to go to all the expense, time and trouble of preparing a home information pack? He might well have lost the sale. The sale was critical because the purchaser had to choose between two properties, and he was either going to sign an unconditional contract with my vendor, or somebody else's vendor, within 24 hours. So the sale went through.

However, what the Government are now doing will distort the market by preventing marketing at day one. That is crucial to how the current market works. If the Government persist in the view that one cannot market at day one, there will be a seismic shift in how the property market works and how quickly it can flow.

In due course, some 20 years down the road, I do not believe that it will be such a problem, but it will be a major problem in the early days of providing a pack. For that reason, we need to provide flexibility to allow a vendor to market a property immediately he or she wishes to do so. I beg to move.

8.45 p.m.

Baroness Hanham

Amendments Nos. 179 and 180 tabled in my name are probably rather tendentiously grouped with this amendment. However, they refer to "marketing", which must have brought them together.

The purpose of these amendments is to help the Secretary of State, and I hope that the Minister will view them in that light. I understand that, in law, information is deemed to be public once it has been published in the London Gazette. I am not entirely convinced that many prospective house buyers scan the pages of that fine journal, and to that end I congratulate the draftsman of subsection (3) of this clause for including the expression, public or to a section of the public", thus getting over that particular hurdle.

I turn to the issue of what constitutes a "section of the public". If I were to say in passing at a council meeting that I was thinking of selling my house, would I then be required to produce a home information pack that day? On a more serious note, if a property developer were to place an advertisement in a London evening paper—not the London Gazette—prospecting for buyers of luxurious riverside apartments just down the river from here in a development that is yet to be built, would that be deemed to be marketing to the public?

We touched on some of these matters earlier, but as my noble friend Lord Caithness has pointed out, marketing is now a major issue in this part of the Bill. We feel that the most expedient way to deal with it would be to delete this clause and simply leave the definition of marketing to the public to the Secretary of State.

Lord Borrie

We all know of the experience of the noble Earl, Lord Caithness, and it is valuable to the Committee to have the benefit of his thoughts. However, I regard some of his language as a bit extreme and emotional. The use of the phrase, "shackling" the freedom of the vendor to market his property and the citing of certain examples suggest a touch of special pleading.

Let us take the instance of someone who has set his heart for many years on buying a certain property in the neighbourhood. It comes on sale and therefore he is keen to buy. In order to finance the purchase, he has to sell his existing property. That person will want to put his existing property on the market as soon as possible. I fully understand that. But why should he be able to put that property on the market without enabling the buyer to have the benefit of the provisions we are discussing in this part of the Bill—namely, a home information pack and a house condition report—just so that he can put his house on the market quickly, in order to move ahead of other people who may be interested in the property which he has been keen to buy for many years?

Should we suggest that the Bill be radically altered and reduced in its impact in order to deal with a special instance of that kind? The rush to market which it is suggested that the vendor should be able to do would be made at the expense of those who want to know what kind of property they may be bidding for if they interest themselves in his existing property.

Lord Phillips of Sudbury

I strongly support Amendment No. 178A in the name of the noble Earl, Lord Caithness. I am unable to support Amendment No. 179 in the joint names of the three Opposition Peers. I would like some elucidation from the Minister on Amendment No. 180. I do not support Amendment No. 179 because, rather than giving the Secretary of State power to make more regulations on a central issue—namely, what marketing is—I would rather leave that word to be construed by lawyers in the courts under common law principles. Any statutory definition of marketing will be a mess.

I particularly support the amendment to delete the words "or may become available" in Clause 131(1). The provision seems to extend in a most unsatisfactory and unclear way the potential ambit of Clause 131—which is an important clause—to say that residential property is put on the market when it "may become available" for sale. That seems a contradiction in terms. I do not see the rationale or justification for those three weaselly words.

I turn to Amendment No. 180. Those who want subsection (3) to be deleted could be fouling their own nest. It is helpful to say that a fact is made public when it is advertised to a section of the public, but it would help the Committee if the Minister were to tell us what the Government understand the words "section of the public" to mean. Is it any group, anywhere, at any time, as one might logically think, or does it have some particular meaning? Given its importance, it would be interesting to know if he can give us any help.

The Earl of Courtown

Can my noble friend Lord Caithness tell the Committee how long a delay the legislation would instil into the selling of property—or can the Minister?

Lord Bassam of Brighton

As long as it takes me to get on my feet. That last point is for the noble Earl, Lord Caithness, to deal with. I shall deal with the amendments in turn. I start with Amendment No. 178A. I am sure that all Members of the Committee involved in the debate understand that Clause 131 defines the circumstances in which a property is regarded as having been placed on the market and the period during which it is regarded as remaining on the market.

As the noble Earl, Lord Caithness, ably explained—as one would expect—the first amendment is about what he sees as obstacles to sale. The noble Earl made the case from the perspective of estate agency businesses of the provision being seen as an erosion of the freedom to take to market. While I appreciate the sincerity and commitment of that view, we take a different approach. It comes down to that: we have a different view of how we see the market working in the future.

The Government are rightly making the case that we want to have a well-informed market. Some of our common and personal experiences suggest that it is highly desirable that people have more information. That is the purpose of the home information pack and why we take the view that it is important for that information to be available as early as possible in the process. We therefore believe this amendment is inappropriate and that it would open a loophole by enabling a marketing process to begin before that information had been properly assembled.

A seller in those circumstances could simply advertise the fact that his home was about to become available for sale and thus start the marketing ball rolling in all but name, but without having to have a pack ready. That would obviously trigger inquiries, offers and negotiations without either side being in possession of the information needed to make meaningful decisions. I listened with care to what the noble Earl said, because his comments expressed clearly that a potential buyer might have to make decisions and take a view about complex matters in the process of considering and making a reasonable assessment of the offer.

Our case is that they will be better placed to do that with the information contained in the home information pack. While I can see that taking something to market at an early stage may have some potential advantages, there will also be delays at a later stage in the process if that information is not available and the potential purchaser is unable to make reasonable judgments.

As we see it, the absence of the pack at the outset will continue to perpetuate the problems that all house purchasers and potential home purchasers experience at the present time, with a high rate of transaction failure and the unnecessary worry, stress and waste of time that come with it. That is the reasoning behind our objection to the amendment. We do not think it will help in the process of improving the way in which the market operates. I was very taken by the points made by my noble friend Lord Borrie in opposing the view expressed by the noble Earl.

I was interested in what the noble Lord, Lord Phillips, said about Amendment No. 179. We think that the amendment is unnecessary because Clause 131 already provides for the definition. It states: A residential property is put on the market when the fact that it is or may become available for sale is, with a view to marketing the property, first made public … by or on behalf of the seller". Of course, a property will remain on the market until it is taken off or sold.

As the noble Lord, Lord Phillips, said, Amendment No. 180 would delete Clause 131(3). That subsection defines when a fact is made public. Its removal could make it unclear when a property is put on the market and the associated duty to have a home information pack commences. We believe it is important that sellers and their agents should be clear about when the home information pack obligations kick in and when they conclude. The proposed amendment would not help that. For those reasons, the amendment cannot he supported.

The noble Lord invited me to say a few words about expressions—in particular the expression "section of the public"—which are used in the clause but are not defined in the Bill. Our understanding is that the phrase has been used in other Acts of Parliament where some flexibility is desirable. The noble Lord is usually attracted to things like that. The case law indicates that "the public" relates to the public at large; and that "section of the public" indicates a slightly more restricted group. Thus, for example, the placing of an advertisement in a national newspaper could be described as "marketing to the public" as everyone in the country could potentially see it. By contrast, the placing of an advertisement in a local shop window would be marketing only to a "section of the public" as only a small proportion of the public would he likely to see it.

Family members, individuals or small groups of people—one's immediate colleagues at work, for example—would not be considered as a section of the public for these purposes. Marketing to such people will therefore not be affected by the duties described elsewhere in this part of the Bill. Generally speaking, the seller would know such people in a private capacity and the property would therefore not be available for sale on the open market.

I realise that I have probably inadequately responded to all the points that have been made, but that is our case. There is a clear difference of view. Returning to the first of the amendments, the noble Earl made the point that in the future he did not think there would be a problem with the way in which the clause is currently drafted and that it will work. That is a very significant point.

Throughout the debates on this issue, my noble friend Lord Rooker has made it clear that implementation will be steady. We acknowledge that there are difficulties to overcome. We will make sure that the introduction of this part of the legislation. which is very important, travels at a pace but at a pace which understands and respects the fact that the market will change because of the constraints we are placing on it by putting into place important changes through the home information pack.

9 p.m.

Lord Phillips of Sudbury

Before the Minister sits down, I note that he accepted that Clause 131 is the lynchpin of the whole of Part 5 of the Bill. However, if an auctioneer is auctioning Black Acre and at the end of the auction says, "A number of people have asked me whether the owners are going to sell Whiteacre. Well, they're considering that, but they may be bringing it to market in the spring", why on earth should that, which clearly brings it within the "may become available" provision of Clause 131, trigger a requirement on the part of the owner of Black Acre to go to the significant expense of putting together a home information pack when he has not even made up his mind to sell? Can the Minister answer that, because I am blown if I can see how it serves a useful purpose?

Baroness Hamwee

While the Minister is thinking about that, I turn to "public or section of the public". If I were to put a couple of lines in a company's newsletter, which went only to those who worked there, would I be advertising to a section of the public?

Lord Bassam of Brighton

I am less confident in giving an explanation to the noble Lord, Lord Phillips, but in response to the noble Baroness, I can say that that would be deemed as marketing to a section of the public. I do not think that there is any question about that. I want to reflect further on what the noble Lord, Lord Phillips, said, because his example depends very much on the exact form of words used. Of course, there will always be difficulties in those sets of circumstances. In the end, this legislation will work well if we use our common sense and have goodwill. In bringing about an important change for the potential buyer, we have to give careful thought to that, because the advantages are paramount and obvious to all.

Lord Phillips of Sudbury

I think that the Minister sees the point, but it is often useful to the people of a town or a group of property developers to have some inkling that a particular property may be coming on the market. As the legislation stands, just saying that is going to trigger the need for the home information pack.

Baroness Hanham

I refer specifically to Amendment No. 180, which would remove Clause 131(3). Much of our debate has shown why that should be; namely, the suggestion that bringing the matter to the attention of the public is an advertisement in itself and triggers the marketing clauses. It is very unclear what "advertising to the public" and "section of the public" mean. It is not even clear whether putting a picture in an estate agent's window and not advertising in any other way would be covered by the clause. More questions are raised by Clause 131(3) than are answered.

The Earl of Caithness

I shall read with care what the noble Lord, Lord Bassam, said, because he made some points that I would like to pick up at a later stage. The noble Lord, Lord Borrie, accused me of special pleading. If he means that I am making a special plea on behalf of the market in which I work, I shall plead guilty, because the housing market is a mixture of different markets around the country that come together to form the housing market of England and Wales. If I have made special pleading, I have acted no differently from that area of the country which has made special pleading that houses below a certain capital value should not need home information packs. There is no difference—it is just another section of the market with a particular problem, caused by this piece of legislation. I work in the international market in London, which is undoubtedly faster than most other parts of the country and much more international and cosmopolitan.

The noble Lord, Lord Borrie, said I was making a special plea for the vendor, but I am doing the same for the purchaser. If the noble Lord and I are seeking the same property, Whiteacre—mentioned by the noble Lord, Lord Phillips—and the noble Lord, Lord Borrie, really wants the house, but I have my house on the market with a home information pack, he is at a disadvantage because he cannot submit an offer to the noble Lord, Lord Phillips, as he does not have a HIP. The pack works both ways for the vendor and the purchaser, and—I have to repeat the word—it shackles an important sector of the market, though not at all the majority, that will be hamstrung by this legislation.

The noble Lord, Lord Bassam, said that we could advertise that the property is likely to become available. Does that mean I can now put Whiteacre into London Property News, saying, "We haven't actually received instructions, but it's possible that we will do so, and the property is likely to come on the market"? In that case, the noble Lord, Lord Borrie, who is desperate to get Whiteacre, can now see that, "Ah! That is the house I have really been after. I will drop the purchase price of my house because I want a quick sale so that I am in a position to buy Whiteacre".

When we look at the practicalities of what the Government are trying to do, we get into some very difficult areas. It is no good the noble Lord, Lord Bassam, saying "Well, we have all got common sense and we can all handle this". We are dealing with a cut-throat business market where at times people are desperate to get, or to sell, a particular property. The noble Lord went on to talk about making the market work properly. Do not let us forget that over 70 per cent of present transactions go through without any hitch at all. We are not talking about a market that is not working—just about a minority sector of a market that can be improved. As an agent, I would dearly like to see that, and I know the noble Lord, Lord Phillips, wants it improved from the solicitor's point of view. However, we are not talking about the great majority of transactions.

Clause 131 is crucial. The noble Lord, Lord Bassam, did not answer any of my points with regard to flats. I know it will be difficult for him to answer at the moment, but this time I hope that he or the Minister will write to me promptly. At what stage can a property be put on the market with an incomplete pack? At what point can the noble Lord, Lord Phillips, start marketing Whiteacre? He gives me instructions to market the place; it is a flat, and I cannot get the service charges, any of the building costs, the plans for repair or indeed the schedule for the last five years, or details of the sinking fund. I am hamstrung. I will go to my client and say: "I'm sorry, I cannot market your property. You might want to, but you can't, and I can't either. The Government won't let us". At what stage can we actually get on and start marketing the property? Why can it not be at day one, if there is an intention to prepare the pack as soon as possible?

Lord Bassam of Brighton

Because the noble Earl made particular points about flats, I ought to try and respond to some of what he said. I apologise for the discourtesy of not picking up those points earlier. If there are further points that the noble Earl wants covering and I do not cover them, of course we will try to provide him with some more information between stages.

The noble Earl raised the issue of acquiring information on flats and delay in the marketing process. I understand the point. I know that the noble Earl is concerned that managing agents will struggle to provide the information in real time and in the time that assists in the marketing process, particularly at an early stage.

Our view is that the contents of the pack will, in most circumstances—the noble Earl almost made the point for us—enable the market to work well, with 70 per cent of transactions proceeding at an orderly pace. That is not to say that there cannot be improvements, even for those who feel that the system works well as it is. Most of the information will be there and the seller will already have it in his possession. Where information is not readily available and to hand, sellers will be able to market with incomplete packs after a defined period—that will be set out in regulations—provided that they can show that efforts have been made to obtain the missing information.

I believe that over time—perhaps this is behind the point made by the noble Earl—these changes should not cause a problem. In any event, reforms to the Commonhold and Leasehold Reform Act will strengthen leaseholders' rights to obtain information from landlords in a more appropriate and accessible way. One has to look at the changes that we are putting in place as being part of a longer-term programme of improvements to the market and to access to information for those involved in the buying and selling process. Information is there for those who manage the market through estate agencies, sales and so on.

Returning to my earlier point, if we approach this matter with goodwill during the period of time in which we build up to implementation, many of the problems that can now be seen, or imagined, will begin to dissipate. We need to focus on solving them in a practical and hard-headed way. The advantages, certainly for those buying and needing more information to make a reasonable judgment about property, are paramount and very important. That is why I believe that purchasers will see the longer-term benefit of the changes that we are making.

The Earl of Caithness

I am grateful to the noble Lord, Lord Bassam, for that further explanation. He has made an excellent effort to reply to me. He is absolutely right: we need to focus in a hard-headed way. We need to focus on what is going to happen on day one, when we have these packs, which are totally unused by any other country in the world. We are pioneering a new worldwide system in a very complex, large and diverse housing market.

The Minister reminded me of something that I said on an earlier amendment to the noble Lord, Lord Rooker. The noble Lord, Lord Bassam, said, "We will set out in regulations". Could the Government lift the veil gently on these regulations so that we may see them? If we cannot look at the regulations, we shall not be doing a proper job of scrutinising the Bill. Again, I make the plea to the noble Lord, Lord Bassam: can we please see the draft of the regulations before we go into Report stage? Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendment No. 178B:

Page 93, line 3, leave out "a view to" and insert "the intention of"

On Question, amendment agreed to.

[Amendments Nos. 179 and 180 not moved.]

Clause 131, as amended, agreed to.

Clause 132 [Acting as estate agent]:

[Amendment No. 181 not moved.]

Lord Rooker moved Amendment No. 181Z.A:

Page 93, line 16, leave out "of business""

On Question, amendment agreed to.

9.15 p.m.

The Earl of Caithness moved Amendment No. 181ZAA:

Page 93, line 22, leave out subsection (3) and insert— (3) A person may not act as estate agent within the meaning of this Part unless he is qualified under regulations made under section 22 (standards of competence) of the Estate Agents Act 1979 (c. 38).

The noble Earl said: We move now to the qualifications for somebody selling a property. The Committee will not be at all surprised to find me raising this amendment. I have moved something similar before in your Lordships' House and I remember the Estate Agents Act 1979 going through this House.

It seems to me utterly ludicrous that we can have a situation in this country where if the noble Lord, Lord Bassam, wants to sell £100 worth of shares he has to do so through somebody who is highly qualified, has passed all sorts of financial exams and is stringently regulated by the FSA. If the noble Lord, Lord Bassam, wants to sell perhaps the major asset that he owns—his flat or his house—it can be done by anybody without any qualification; that person need have no training whatever. That is a nonsense and it does not happen in other places in the world.

The Government have used Denmark as an example for the housing market. The noble Lord, Lord Rooker, said earlier how similar Denmark was to Britain. But in order to deal with the complexities of the home information pack in Denmark, estate agents have to be licensed. To gain a licence, agents must have a good theoretical and practical knowledge of property matters. From June 2003 all new licensees must have a degree in property transactions and have completed two years' practical training. There is no comparison with England and Wales—we have nothing.

But we are lucky. The Labour government of the 1970s passed the Estate Agents Act 1979 in which Clause 22 contains standards of competence. It states: The Secretary of State may by regulations made by statutory instrument make provision for ensuring that persons engaged in estate agency work satisfy minimum standards of competence". Here is the Fifth Cavalry coming to the help of this Government. The Secretary of State can prescribe professional academic qualifications, designate any body or persons as a body which may itself specify professional qualifications, make provision for the establishment of a body to examine and inquire into the competence of persons engaged, or professing to engage, in estate agency work, and delegate powers to that body.

The net result is that, no individual may engage in estate agency work on his own account unless he has attained the required standard of competence", and that, no body corporate or unincorporated association may engage in estate agency work unless such numbers and descriptions of the officers, members or employees as may be prescribed have attained the required standard of competence; and any person who contravenes this subsection"— subsection (3) of Clause 22— shall be liable on conviction on indictment or on summary conviction to a fine which, on summary conviction, shall not exceed the statutory maximum". The noble Lord, Lord Phillips, will now tell me what that is! But the principle behind that is that as the Government make the process of buying and selling properties that bit more complicated, it is only right that when one is dealing in most cases with the most precious asset a person has, the person handling that transaction should be qualified. It is not right that the mess should be cleared up after that person makes a mistake. We should tackle it before it happens and get the standards right now. I beg to move.

Baroness Hanham

I rise to support the amendment of the noble Earl, Lord Caithness. It is fundamentally important, if the Bill is to proceed in the way it is, that people can trust the estate agents who deal not only with the sale of their house but in many cases on the compiling of the home information pack.

As it stands, currently only one in three estate agency businesses in this country are even members of the ombudsman for estate agents. The ombudsman for estate agents does not offer legal redress for consumers who have to complain about estate agents, but who can do so only if the agents are members of the scheme. The majority of estate agents offer no legal redress or indemnity and can be called to account only through the courts. That inevitably means that the home inspectors will carry the can if something goes horribly wrong.

I have always been enormously surprised that estate agents are not regulated in a way that would give comfort to the public who are buying and selling through them. I therefore support the amendment.

Lord Borrie

One of the advantages of the present subsection (3), which the noble Earl, Lord Caithness, would like to remove, is that it covers those who act as estate agents—that is, act on behalf of a vendor with a view to marketing residential property—regardless of whether they describe themselves as an estate agent. Therefore, as the Explanatory Notes to the clause mention, a solicitor who acts as if he was an estate agent shall be treated as such for the various provisions of the Bill. It therefore follows, and perhaps this is an unintended consequence of the noble Earl's amendment, that a desirable feature of subsection (3) would disappear. But of course that is not the main part of what the noble Earl is seeking.

I feel a sense of déjà vu for the quarter of a century in which the Estate Agents Act 1979 has been in force but for Section 22. Through the 1980s, when I was Director-General of Fair Trading and had certain powers under that Act to ban people from acting as estate agents for various kinds of wrongdoing and misdemeanours, there were many occasions when various interest groups and members of the public suggested the very sort of logic that the noble Earl and the noble Baroness have put forward—that, surely in this important transaction, those who act as agents for the vendors should have some sort of qualification.

The noble Earl may be right. I am not sure that the method of implementing Section 22 that he suggests is the right way of doing it, but I think that, for the purposes of debate, and certainly for the purposes of hearing what my noble friend the Minister may say, I should indicate that the arguments as I remember them for not implementing Section 22 over the years went something like this.

In the first place, it was said that standards of competence differ a great deal according to what the estate agent is doing, what kind of property he is selling, and whether indeed he is doing valuations and surveys and the other things that estate agents often do, especially those qualified by the Royal Institution of Chartered Surveyors. It might be quite difficult to have either a range of qualifications or to think of a common denominator that would be appropriate for all.

I remember banning certain people from acting as estate agents because they had been in gaol for fraud. I remember that many of the complaints about estate agents were not about competence. No one was suggesting that they were not capable of doing the job; they just were not honest. They were doing all sorts of things like failing to pass on offers to the vendor because they got a handout from someone else and that kind of thing. A number of them did that, and no doubt a number of them got off from various charges. However, in my day, and I dare say that it may not have changed all that much, some of them were dishonest—or, at any rate, shall I say that competence is not necessarily the same as integrity?

Finally, in relation to insisting on qualifications for doing any particular task in life, holding any particular post or being in a particular occupation, the question always was and always will be asked: does that not unduly inhibit competition, which is normally beneficial to the public'? The argument is made that there should be rivals for the custom of the public and that, if the requirement for competence is raised to an unduly high level, that may be nicely comfortable and cosy for those who are already in the relevant profession or occupation but it is not necessarily a good thing for members of the public who want a wide range of people who are, I dare say, moderately qualified and certainly people of integrity. But sometimes one wonders whether systems of qualification and registration and so on achieve that.

I am not sure that I can say more, other than I do not think that this is the way of achieving what the noble Earl is seeking. However, I am glad that he put forward the amendment because we shall all have the benefit of hearing the Minister's up-to-date view.

Lord Phillips of Sudbury

Before the noble Lord, Lord Borrie, sits down, can I ask such a useful witness of reality whether, during his time as director-general, those whom he disciplined for various acts of misbehaviour among the estate agent fraternity were disproportionately people who had no RICS qualifications or whether he can recollect little distinction in the numbers between the qualified and unqualified estate agents?

Lord Borrie

My memory is not as good as the noble Lord would like it to be, but I do not think that most of them were members of the established qualified institutions—the RICS and, at that time, the Incorporated Society of Valuers & Auctioneers.

Lord Hylton

When the Minister comes to reply, I think that it would be very helpful if he could confirm, or otherwise, that the relevant part of the Estate Agents Act 1979 is in force. If it is in force, does the current Bill produce a conflict of laws?

Lord Phillips of Sudbury

I find myself a little torn by the amendment of the noble Earl. On the face of it, it looks eminently reasonable and I should be as interested as others to hear what the Minister says in response. The whole world of property has, like everything else, become more and more complicated over the years, and therefore the time may have come to implement this part of the legislation. But one should make no mistake about it: the points made by the noble Lord, Lord Borrie, in terms of bureaucratising and, to some extent, slowing down the competitive ability of the estate agency world may be inhibited.

One point that I want to make strongly is that the first part of the noble Earl's amendment—that is, to abolish the existing subsection (3)—should not stand because, as the noble Lord, Lord Borrie, hinted, many solicitors' firms act as estate agents and do the whole job. They sell the property and convey it, and it would be quite wrong if, in seeking to make an improvement in one area, he were to destroy a perfectly satisfactory practice that goes on in another.

Lord Rooker

I apologise for missing the first part of the debate, but I had a perfectly good and honourable reason.

Lord Phillips of Sudbury

Was it the noble Lord's dinner?

Lord Rooker

No, I had no dinner. I am afraid that I have brought a bucket of cold water for this amendment as well. I can just about remember the Act in question. If I remember right, it was a Private Member's Bill in 1979. I can see my colleague but I cannot remember his name.

Lord Borrie

The noble Lord, Lord Davies of Oldham, was one of the two sponsors.

Lord Rooker

That just shows you. Of course, there was general consent for the Bill because of the fall of the government. It was a Private Member's Bill that got a fair wind through both Houses because of the vote of no confidence. But, since then, no government have seen fit to make the regulations under Section 22.

9.30 p.m.

When the Act was originally debated in the House, the government spokesman said that it would not prescribe any standards unless and until the need for them was apparent. Section 22 has not been brought into force, which is the answer to the noble Lord, Lord Hylton. Presumably, there has been no commencement order; hence no requirement for regulations.

The Office of Fair Trading report looked very carefully at the issue of competence requirements for estate agents. The report concluded that the range and complexity of the legislative requirements placed on estate agents do not justify a regulatory requirement for minimum standards of competence. That is what the report concluded.

The Government agree with the OFT's "intellectually rigorous" analysis, although those words are not in my notes. Placing competence requirements on estate agents would lead to an increase in their costs which in the end would be passed on to consumers in the form of higher rates of commission. We do not believe that that is justifiable as it would impose unnecessary costs on business and inhibit competition without delivering sufficient improvements.

I suppose that in a way I would rest my case on that last sentence. I do not think the case is that strong otherwise. In other words, if there is to be regulation it must have material benefit for people. There is no question about that, otherwise it would be a waste and a fraud to do it. It would give a false impression to people that by regulating, things will be great. In this case we could do all these things but it would not deliver sufficient improvements to make the job worth while. I think that that is the honest view. Common sense would tell you that they should be competent, but the legislative proposals would be so complex that it would not be worth while for the gains that would be made. That is fair and I am quite happy to stand here and make a robust defence on that basis as opposed to my earlier sentences.

On the other hand, there is help on the way. One has to look at this in the round. I realise that we go through the amendments one by one. Nevertheless, the Government have tabled Amendments Nos. 210C to 210E. We believe that that little package of amendments, which is on the second page of the Marshalled List—certainly we shall not reach them tonight—provides for a requirement for estate agents to belong to a redress scheme approved by the Secretary of State. We think that that potentially offers a more effective and efficient mechanism for improving standards in the sector.

Let us suppose that once estate agents have had to sign up to a redress scheme, the independent body that runs the scheme decides on a dispute between an estate agent and buyer or seller, finds for the buyer or seller and then says to the estate agent, "Legally, you have to make redress"—which is not the case at present. There would then be a cost upon them and they might start to clean up their act as regards the competence of the people working in the estate agency who had caused the problem in the first place. It offers a mechanism for improving standards in the sector. It is a backdoor means of raising competence because we are more or less saying, "If you get yourself in trouble, it will cost you a fortune if you have incompetent staff and you fall foul of the person doing the adjudication". It will be a legal requirement to be a member of such a scheme.

Although we are opposed to compulsory training and competence requirements, we accept that there may be a case—there is a case; there is no question of that because everyone should be qualified to do what they do, whatever the job—for developing a recognised qualification and national quality standards for residential estate agents. If done properly, this could provide a career incentive to improve standards. There is no question of that. There are thousands of people involved in this industry. It is very competitive so there is opportunity there for career incentive. We see this primarily as a matter for the industry. However, as the Government, we are prepared to offer help and advice and support to stakeholders involved in the development of the process.

We do not say that we do not agree with the amendment, but in the light of the Government's own package of amendments for estate agents to belong to redress schemes, I hope that the noble Lord will withdraw his amendment.

I wonder whether I can take the opportunity—this place does not have any rules so I can probably do this—to ensure that something I said earlier in answer to the noble Lord, Lord Phillips, is not misunderstood, not so much by people here but those outside. By Report stage, we will offer to spell out in more detail what the "dry run" will entail: in other words, the six months before the compulsory date that the pilot starts. I have clearly said in the six months beforehand. I was not saying that we do not want to offer a pilot.

There is a problem. I have taken further advice on the matter since I am not as up-to-date as the day Minister on this. The industry is dead against any single pilots, compulsory or otherwise. The view of the National Association of Estate Agents, the Council of Mortgage Lenders, the RICS and the Consumers' Association is that we need to have a date for the pilot across England and Wales. Otherwise, the education institutions will not gear up for the home inspector courses. We are not likely to get people on the courses, which we need to do a reasonably sized pilot.

The industry apparently is dead set against pilots, even in just one area, because of these difficulties, so there are some major problems. The matter has obviously been discussed. To my certain knowledge it has been discussed. We are offering a six-month dry run, as I said earlier, before the compulsion commences so that we can run the publicity, offer encouragement and everything else. By Report, we will come back and spell out more about what we mean by that dry run. I am not saying that it is the equivalent of a pilot, but it will not mean that everybody goes home on Friday under the same old discredited system—and it is a discredited system for those that fall foul of it—and come in bright and perky on Monday morning to a brand new system.

It clearly would not work like that anyway. We need something programmed and a managed introduction. Although it becomes compulsory on a date, it must be a managed introduction, hence our use of the term "a dry run". It is a national dry run in that sense. I will gladly give way to the noble Baroness.

Baroness Maddock

Perhaps the Minister could clarify a little more what he means "by Report". The plan was that we would come to Report the first week we are back in October. I can see that we will be in the same position. I will be running around the week before trying to find out what is available and maybe not finding it. I am sorry to be so sceptical but the last week has been hell.

Lord Rooker

I have no knowledge of the dates of Report. I genuinely have not seen any dates.

Baroness Hanham

Day one of Report.

Lord Rooker

I am told that day one of Report is 13 October. That is the first Wednesday that we are back. That information is available to the usual channels. I am just a humble Minister who comes here to conduct the business. Whatever day it is, I will be here.

However, I take the point of the noble Baroness. One can see by the size of it that this is a major Bill at the fag end of a Session. It is quite clear that this Bill was always going to be "running late", as it were, up against the end of the Session. We will use our best endeavours to get more information available in advance of tabling amendments, such as other documentation to assist proper scrutiny of the Bill.

I do not want this Bill not to be properly scrutinised, believe you me. I get as annoyed as anybody else because I feel as though we are being rushed without adequate time, especially on issues of course—I am not saying this is relevant—that the other place did not discuss. There is a lot of new material in this Bill.

The Earl of Caithness

I am very grateful to all noble Lords that have taken part. The noble Lords, Lord Borrie and Lord Phillips, took me up about the drafting of my amendment and wanted me to omit the first part, which is to leave out subsection (3). I had a huge amount of difficulty with the Clerks in tabling this amendment. They were very against my tabling anything like this. They said that it was not within the Long Title of the Bill. However, I managed to find a way, thanks to the Estate Agents Act 1979, but it was the Clerks who advised me to put down, leave out subsection (3)". I did not want to leave out subsection (3); I thought it was rather good. But the Clerks said that that is what I had better do, so who am I to argue with them? Having won the major battle, I was not going to fight over a few words like that. But it does amuse me that it has worked out the way it has.

The noble Lord, Lord Borrie, said that estate agents are not all that honest or have the requisite integrity. As an estate agent and surveyor, I could not agree with him more. That is what worries me about my profession. I think the noble Lord, Lord Rooker, hinted earlier that even estate agents are less popular than politicians. As I have sold a second-hand car, and been a politician and an estate agent, I can only look up now, I hope. I cannot get much lower on the ladder in people's estimation than those two things.

Baroness Hanham

You could become a journalist.

The Earl of Caithness

God forbid! I agree with the noble Lord, Lord Borrie. That is exactly why I put down this amendment. I am seeking to raise standards. The noble Lord, with his great experience—I remember him well in the 1980s—talked about the difficulties that having qualifications poses. I put to him the argument that he was using earlier this afternoon, many hours ago. It is consumer protection. Too many people are being taken by estate agents. We need higher standards. I do not think that the profession is honest or has enough integrity. In a lot of cases, it does, but there are too many bad cases. We want to weed out those bad cases. My view is that we should weed them out beforehand rather than afterwards. Although I agree with the noble Lord, Lord Rooker, his amendments are some sort of backdoor scheme and, in this instance, I prefer to go in through the front door. Let us be bold about it. I hope that the noble Lord will think again and say that we must get a grip of this situation. We now have a wonderful opportunity to take this forward.

I take issue with the Minister on one point. He said that the present system of buying and selling is discredited. It is not discredited. Over 70 per cent of transactions go through all right. That can be improved. It is a section of the market that is not working as well as it could. I heard what the Minister said about the dry run. I want to read with care what he said. It is important. People in the profession with whom I have talked are very keen that there is a further trial area on a much bigger scale than the rather miserable one in Bristol.

In view of the amendment that I tabled, I wrote to a number of estate agents, some of which are quite large firms. I wrote about a dozen letters asking them whether they employed qualified people and what they did. I got one reply from an estate agent who said that his firm did not employ qualified people but did some in-house training. That is not good enough. It condemns my profession. It is for that reason that I shall support the Minister when he comes to his amendments but I hope that he will support me and say that we have got to wield a much bigger stick to this bunch. I might come back to this but, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 132, as amended, agreed to.

Clause 133 [Responsibility for marketing: general]:

Lord Rooker moved Amendment No. 181ZB:

Page 93, line 31, leave out from "is" to "; and" in line 32 and insert "on the market ("the property")"

On Question, amendment agreed to.

Clause 133, as amended, agreed to.

Clause 134 [Responsibility of person acting as estate agent]:

The Earl of Caithness moved Amendment No. 181A:

Page 94, line 5, at end insert "or"

The noble Earl said: This is a very simple amendment. It is to insert the word "or". The purpose of this amendment is that an agent cannot act without instructions. Therefore, the ceasing of any marketing is de facto sufficient that he is no longer instructed so it should be "or" rather than a separate paragraph. I beg to move.

9.45 p.m.

Lord Rooker

I regret to say that I have a much longer speaking note than the noble Earl's introductory speech. It is another one of those little, innocuous amendments, I am afraid. Clause 134 describes the responsibilities of a person acting as an estate agent, when they apply and when they cease to apply. The agent must comply with the duties set out in Clause 137 for as long as he is instructed by the seller to act and is taking steps to market the property on the seller's behalf. He stops being responsible when all the following three conditions are met: his contract with the seller is terminated; he has ceased to take any action to make public the fact that the property is on the market; and any such action taken on his behalf has ceased.

The amendment would insert the word "or" after the first condition. The intention would appear to be to provide that an estate agent is to be regarded as responsible in cases where his contract had been terminated but he continues to carry out marketing activities. We are not persuaded that that would assist consumers, to be honest. In fact, it is the very opposite: the effect would be to make more ordinary sellers become responsible persons under the Bill and subject them to the home information pack duties. If the estate agent is still actively marketing a property, he ought to be the one complying with the home information pack duties.

The amendment would also mean that an estate agent would no longer be subject to the duties under the Bill where the agent's contract had not been terminated but marketing activity had ceased. That could present huge problems to which the noble Earl did not refer.

The Bill as drafted relieves agents of complying with the duty when a property has been taken off the market. To replace that with an arrangement whereby a property could still be on the market but the pack obligations would come and go according to the level of activity of the agent concerned would be impossible for anyone to police. It would be impossible for trading standards officers. As drafted, the Bill sets up a straightforward, sensible and easily understandable arrangement. I therefore hope that the noble Earl will not pursue what appears to be his innocuous, seductive, sensible amendment, because it is not so in reality.

The Earl of Caithness

That was quite fascinating, but not at all what I was expecting. Clearly, I have started something much more ingenious than I thought. I was under the simple impression that if I stopped marketing a property, I was no longer instructed. As long as I am instructed to sell Whiteacre for the noble Lord, Lord Phillips, I will market it. If I do not market it, I will be got rid of. My job is to market property. So it was in fact a simple amendment. However, it is clearly much more complicated than I had anticipated. I will read what the Minister said and am delighted that he spoke for much longer than I did. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 134 agreed to.

Clause 135 agreed to.

Clause 136 [Application of sections 137 to 140]:

Lord Rooker moved Amendment No. 181B:

Page 94, line 29, leave out "in England and Wales"

Clause 136, as amended, agreed to.

Clause 137 [Duty to have a home information pack]:

Baroness Hanham moved Amendment No. 182:

Page 94, line 38, leave out "the duty of a responsible" and insert "a matter of voluntary discretion for a"

The noble Baroness said: This is a large group of amendments, including Amendments Nos. 182, 184 and 185. The remaining amendments are consequential on those first three. They are all linked and would, if implemented, make the information packs voluntary. During the course of the day, we have had some discussion on the desirability of a voluntary or statutory home information pack. It is still our view that this part of the Bill is wrong and that we should try to advance amendments to bring the Government to a commonsense view and stop these home information packs being an absolute requirement.

We understand that some people might find some merit in producing the packs and. without doubt, in some circumstances they would add to the marketability of the property. However, as a general rule, producing home information packs could be seen as one of many options available to a home seller.

While we recognise that they may well have some merit in simplifying the process of presenting a home on the market—indeed, many people may chose to produce the packs in order to increase the desirability or marketability of their property—imposing a duty to produce such a pack is unnecessary, will force people to sell their properties privately and will he most unhelpful to all concerned.

There are many reasons that bring us to this view and some of them will be discussed further on in the course of the Bill. At this stage I put down a marker that we believe that these packs should be voluntary. I beg to move.

Baroness Hamwee

That is a view that we share. The more the noble Lord, Lord Rooker, convinced himself about the need for a compulsory scheme—talking about 40,000 last week, 40,000 this week, 40,000 next week, so we have got to get it right—the more I thought what a jolly good idea it would be to have a voluntary scheme which would enable us to gain the experience to get it right. We could tweak the scheme over a period in the light of that experience.

The arguments for home information packs have been about transparency and speeding up the process. I am unconvinced that this is the way to speed up the process. I hope that the electronic mechanisms that are becoming available—on-line searches, and so on—will do that. It defies my belief that the packs will. We simply do not see eye to eye on that matter.

The best evidence of the potential of the pack comes from the experience that some agents are able to put before us. There are voluntary schemes going on now.

Over the summer I was interested to read an item in the press—given the time, I will not share the full article with your Lordships—about an agent who operates a voluntary scheme. He said that it should not be forced on sellers. He is quoted as saying: If the Government were involved, it would become far more complicated and less flexible". That is a sad reflection on the Government, but one I fear that I share.

The underlying point is that we should get proper experience. We have heard from the Minister of the problems that the industry is reported as seeing in the pilot. For goodness sake, let us not get it wrong.

The Earl of Caithness

This is a very important set of amendments.

Under the proportionality section of The Principles of Good Regulation published by the Better Regulation Task Force, it is stated: Policy solutions must be proportionate to the perceived problem or risk … don't use a sledgehammer to crack a nut". In the report on the Bristol seller's pack trial—which the Government think is the greatest thing since sliced bread but is in fact useless—it was reported in paragraph 7.11: Thirty eight per cent of sellers considered their experience with the seller's pack worse than expected"; and in paragraph 9.4 it says: The buyers' exit survey showed that only 23 per cent felt that the pack helped them to decide whether to put in an offer". The same report stated: One of the aims of the seller's pack was to help the buyer make an informed decision on whether to purchase". Yet only 42 per cent consulted the pack before making an offer. There is no great demand for the pack.

What about the cost? There will be a huge added cost to the whole of the property market for buyers and, particularly, for sellers. It is alleged that the current system costs about £350 million due to aborted transactions, which I seriously question. That £350 million figure is based on the analysis and extrapolation of costs incurred in just 30 transactions—I repeat, 30 transactions—when we market more than 40,000 per week in this country. That is a highly suspect figure.

But we know that the home condition report is an added cost of a minimum of £300 per report: 2 million transactions would cost £600 million. So we would practically double what the Government say the present system costs. That is a nonsense of a way to make legislation. The Government are imposing Prescott's penalty on property owners. There is no doubt that this is a huge added burden, which will cost a great deal of money. It is not "cost equal". For that reason, these amendments, with some of those that we discussed earlier, are absolutely crucial to getting the balance right.

Lord Phillips of Sudbury

I am grateful to the Minister for saying that what he had offered before supper was not now possible. The least persuasive part of his explanation was that the industry did not like the idea. Without being too condemnatory in saying it, one has to say that the estate agency industry has a vested interest in the passage of this measure. There is no question but that very many transactions. which, for all sorts of reasons, currently go through without any survey being undertaken will now have to have a survey.

At Second Reading, the noble Lord, Lord Rooker, said that there was evidence from other countries of the success of packs. But what is so manifestly lacking here is a lack of evidence from this country. When we debated this issue in relation to the Homes Bill in 2001, I went to see the noble Lord, Lord Whitty, to discuss the evidence on which the Bill had been brought forward. He was very frank: the evidence was extremely thin, about which he was quite open.

Given the scale—to which the noble Lord just referred—and reach of these reforms, which could not be more profound, affecting as they will up to 2 million transactions a year and members of the so-called ordinary public, it is a folly for us as a House to go forward with this hugely different, highly complex, Byzantine regime without solid evidence. What proportion of failed transactions will be addressed by the buyer's pack? What will be the extra costs? We have had no remotely convincing statistics of what they are likely to be. What are the savings likely to be? We have had mere speculation as to what the savings are likely to be.

At the time of the Homes Bill, I conducted a detailed survey among the solicitor practitioners of the Suffolk and North Essex Law Society, which had no axe to grind. Its net conclusion was that that Bill was likely to impose significant extra costs on the "conveying" public—if I may put that way. There is no question that those costs will find their way back into the costs of acquisition and disposal.

Of all the aspects of this debate that make me believe that this set of amendments must be right is the sheer lack of basic evidence that what we are doing is workable and likely to achieve its purpose. I urge the Government to think hard about that. Although this may not be a poll tax—that is somewhat hyperbolic—there is no doubt that interfering wholesale, as we are, with an extremely well tried, well honed, organically developed system of conveyancing in this country, really is tampering with things one knows not of. My fear, frankly, is that the best intentions in the world may not relieve the proposals in this Bill from pretty dire consequences downstream. I simply do not see why we need to take that risk. I was very grateful for the Minister's reception of my suggestion of a pilot earlier, and I really do not see why it should not be undertaken. I am deeply unimpressed by the industry not thinking much of it. I concede the difficulty of training the inspectors, but that is a superable problem. I think if you decided to take a county, and Northamptonshire was going to be the pilot, one could set up training for inspectors in that county quickly and efficiently, so that you could get the pilot on the go.

For my part, I wish the intentions of this Bill all the good luck and success in the world. But short of a pilot, or something like it, I do not believe that we are headed down a sensible path. For those reasons, I would support this set of amendments.

10 p.m.

Lord Rooker

As I have said before, if we are not confident that it will work, if we are not geared up and the industry is not geared up and we have not got the staff trained, it will not be brought in. I have made that clear. But we cannot get to that point if we do not pursue the legislative route. It has to be, as I have said before, the compulsory route. It is not worth doing voluntarily, simply because of the number of properties that are in chains in this country. It would simply not work on a voluntary basis. So our starting point for debating this amendment, and others with the same aim, has got to be clear from our point of view: acknowledgment of the deficiencies of the present home buying and selling process.

There is misery caused. When I went to address the AGM of the National Association of Estate Agents about 18 months ago—I think I have said this before—I dumped the speech. I did not use it. About a week beforehand, because I had been writing letters as housing minister every day to Members of Parliament who had got letters and surgery cases from their constituents about the buying and selling process, I said "Give me 20 of the last letters we have had in". And I used them as my speech. It did not go down very well, because they did not like taking it. I simply quoted from these ordinary people's letters the fingerprints of ordinary citizen's experience in buying and selling properties. It was disastrous. True, they were the complainants, but that was the point. There is a really serious problem here, and they did not like it. I said I probably would come back the following year with some more, but by then I was not the housing minister.

There is a real problem of deficiencies in the system. The Government start from that position. The process is slow by international standards. I know I am going to be asked for this, and I have not got the figure for it, but we are just about the slowest in Europe. Whether that is little Europe or big Europe, I do not know. I do not know how slow we are, but we are incredibly slow, there is no question about that. Anyone who has been in the process knows. We think it is very inefficient, and takes place in a disjointed fashion. Professional people—solicitors and others—spend most of their time sitting around waiting for someone else to do something, but nothing happens. That is the reality and people understand that. It is absolutely appalling. It is wasteful and prone to delays.

Lord Phillips of Sudbury

I am terribly sorry, and most grateful to the Minister for giving way, but that was the provocation to cap all provocations: to make a generalised statement that solicitors sit around waiting for something to happen. Just sit inside any solicitor's office for a day, and you will know that their reputation in conveyancing matters depends upon them pulling their finger out and getting on with it. That is because, as the Minister has implied all along, speed is of the essence.

I know that the Minister is being semi-jovial at this time of night, but I hope that he will withdraw the remark.

Lord Rooker

They are not doing nothing, they are obviously doing something for client B while they wait for replies for client A. They are still clocking up on the clockometer for the money. I am not saying that they are twiddling their fingers. They have made inquiries, sent out various forms and contacted local authorities. They have started the searches and have tried to contact the solicitors for the other party. But the system is a problem and an incredible waste of professional people's time.

We think that around 30 per cent of transactions fail after the offer has been accepted, which in itself is a problem. Indeed, Members of the Committee can go and ask people in the street about their experiences. They think they have a deal and then, all of a sudden, it evaporates. Although the figure has been queried, we estimate the cost of failures to be around £350 million. Around £1 million a day is wasted. That is not money down the drain because it goes into someone's pocket, but it is not part of buying houses because nothing has happened. The deal has fallen apart. However, someone has been paid because people have paid out their money.

Nine out of 10 consumers are not satisfied with the present process. When asked, 90 per cent of consumers are not satisfied with the present procedure. We ought to focus on that statistic. The results of our research carried out by independent consultants were presented in a consultation paper, together with options for reform. The responses revealed a clear consensus on the way forward. Home buyers and sellers need more information and they need it up-front, at the start of the process.

It is true that only a minority of people have surveys carried out. The percentage is worryingly small when you think about what they are actually buying. As I have said, because of the chain system, home information packs need to be compulsory so that everyone can benefit from them. We cannot have someone wrecking the whole process, which we do not doubt would happen if they were voluntary. Voluntary arrangements would not work.

The Law Society's transaction protocol provides some evidence. For years the protocol sought to encourage sellers, through their solicitors, to make all the legal documentation available at the start of the transaction process. That has been only partially successful. Despite the best efforts of the Law Society, the voluntary protocol has not been able to deliver the improvements we seek, so we have taken the mandatory route to deliver these universal benefits.

The effect of the main amendment and those tabled with it would be to introduce a voluntary home information pack system and essentially continue what is now a very unsatisfactory process; indeed, it would be almost the status quo. Sellers would be allowed to avoid the duties by ensuring that the marketing material made it clear that the property was being sold without a pack. That would probably be the worst of all worlds. Given the choice, some sellers—perhaps a sizable proportion—would choose to market their property without a home information pack. That might be to avoid costs or in the hope of avoiding disclosure of information. That is key here—the avoidance of the disclosure of information about problems with the property that sellers are aware of, but do not want to disclose. We think that that is very unfair to buyers who would have had to provide a pack for their own sale, given that most people are part of a chain.

More harmful than that, the result of these amendments would be an unsatisfactory two-track process where sales without packs would slow down sales with packs in a chain, cancelling out the benefits to those who had provided the packs. Having people freeloading in the system just would not work and we would be back to where we started.

A small number of forward-looking estate agents—those who really care about the people they are working for—are already marketing properties with home information packs and reaping the benefits, not least in lower transaction failure rates. While I accept that such agents represent only a small proportion, numbers are increasing. However, the increase is taking place far too slowly for us to say that the market will ultimately provide. I am afraid the phrase used by the late Ian Gow when he was Minister for housing—"the magic of the market"—does not apply here because we would have to wait until kingdom come before the system became universal. Only by introducing the requirement for the packs can we deliver the benefits.

We listened to the concerns expressed during the debates on the Homes Bill before the general election. We have come forward with a different system now. It is not based on criminal sanctions at all. But we need to beware of relaxing the duties if we are to succeed. A case can be made for a voluntary basis, but it would not improve the buying and selling of homes. We cannot make such a case at the same time as saying that we are going to improve the system.

There are markets all over the country. House prices vary regionally: there are expensive houses alongside inexpensive ones. While I pay enormous tribute to the sincere concern the noble Earl, Lord Caithness, has raised in his amendments, behind which there is goodwill and experience, the section of the market in which he operates is unusual to say the least—I do not think that it is mirrored anywhere else in the country.

I hope that on reflection the Committee will recognise that a mandatory system is the only one that will work. It would not be worth having this part in the Bill if we were not doing that. That is why we went back to get a manifesto commitment to introduce a compulsory home information pack system. There would be no need for legislation for a voluntary basis; we would not be doing what we are doing.

I know that that is a bucket of cold water, but the voluntary system will not work and we are not going down that route; if we were we would not need the Bill. It would be a false prospectus to say to people that we can improve the system on a voluntary basis. We cannot make such a case: it will not work because the bulk of properties are involved in a chain. People will say that we said that there would be a different system and that we would improve it; that they trusted us and we did not tell them the truth.

The noble Baroness, Lady Carnegy, quoted us the latest report from the Commissioner for Standards in Public Life about the fact that the general public think that Ministers and MPs are telling fibs. I think that the report said "lying". We are not lying on this matter. We would be telling fibs if we said that we could do this on a voluntary basis and improve the home buying and selling process. We genuinely do not believe that we could make that stick. It would not be telling the public the truth. It is not a happy story. It is incredibly complicated.

I accept that and I have given enough forewarnings: every week another 40,000 dwellings are being marketed. We step on that and get it wrong at our peril as Government. We understand that, which is why the provision will not be introduced unless we have it geared up, we have had a good dry run, people are adequately trained and all the bits are ironed out that are not straight at the present time. The only way to do it is through a compulsory system.

The Earl of Caithness

I must take up the Minister on some of his points. He blames the chain system for the delays. I contend that he is totally wrong to do so: other countries have chain systems and are quicker than us. The chain system can hold something up but it is not the only cause. The Bill is not going to help the chain system. We are slow by international standards but we are becoming much quicker. We are also cheap by international standards. We are speeding up hugely because of e-conveyancing; the solicitors have become much quicker; the agents have improved over the past six years.

If the Minister carried out a survey now compared to the evidence of the 1990s he would find that transactions are going through more quickly. I was surprised when he said that nine out of 10 people were not satisfied with the present system. If I carried out a survey now I could get 10 out of 10 for him, because it is a matter only of the question one asks. I could get one out of 10 if I asked another question. That is not a terribly good statistic.

The Minister said that forward-looking estate agents are selling with packs now. The Minister in another place, Keith Hill, called Maria Coleman, who was part of the Bristol project, "saintly" in Committee. At that stage Maria Coleman, besides being an agent, was very involved with a company that produced the packs. No wonder she was for the packs. It was a conflict of interest which I hope she declared to the Government before she took it on. I would be grateful if the Minister could confirm that.

I have used packs in the past and it helps when solicitors provide information to agents. It can work on a voluntary basis. I disagree fundamentally with the Minister on that.

10.15 p.m.

Baroness Hanham

I thank all noble Lords who have contributed to this very important part of the Bill.

One of the assumptions made by the Government in regard to home information packs is that buyers will accept the home condition report. I am not sure that that will happen. I do not know of any buyer who will say to the seller, "Okay, the report that you have given about the condition of your property is correct". We may very well find that the situation is not much different from that which exists now; people will simply go and get a second survey of their own which they feel they can trust.

We have not yet touched on the cost of these packs. The current estimate is £1,000 for each pack for each seller. We shall come later to how often the packs will have to be produced. Thanks to the activities of the Bank of England, the property market is slowing; we are not in the same heated market that we have been in for a number of years. It will be interesting to see whether that slowing will benefit from home information packs. I doubt that it will. I think the whole mechanism is beginning to calm down; there is more for buyers to seek, to look at and to go around. E-conveyancing and e-transactions are already beginning to speed up the whole process.

The Government are seeking to impose an extremely bureaucratic system. It is not a system that we like. We think that there are benefits in putting this on a voluntary basis if people wish to put all the information together, have it available and risk having a home condition report that buyers will accept, but it should not be on a wholesale compulsory basis.

With that, I beg leave to withdraw the amendment for the time being.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton

I beg to move that the House do now resume.

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

House resumed.

House adjourned at eighteen minutes past ten o'clock.