Housing Bill

HL Deb 14 September 2004 vol 664 cc1055-94

5.1 p.m.

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

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(Lord Rooker.)

On Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Pitkeathley) in the Chair.]

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

Baroness Hanham moved Amendment No. 183:

Page 94, line 40, at end insert "within a permitted period of 14 days of the property being placed on the market"

The noble Baroness said: I shall speak to Amendments Nos. 183 and 194 together. Although they come from two different clauses, both relate to the building in of some leeway into the process of preparing a home information pack.

The provision of such leeway is crucial to the continued effectiveness of the housing market. I know that the Minister disagrees with that and although we had a Second Reading debate during our proceedings yesterday, we must continue with our amendments and our views on how the HIP should apply.

Even in this day and age of advanced computer systems, of desk-top publishing, of easily negotiable electronically held property databases and of surveyors equipped with laser-guided tape measures, if I wanted to put my house on the market this afternoon in order to execute a very quick sale under the regime imposed by Part 5 of the Bill, I would be unable to do so until my estate agent had produced a home information pack. It is possible that I could not afford that delay. There must be some flexibility in the system.

I am aware that some estate agents in areas where the home information packs were piloted were able to produce the information in the same amount of time as it took to draw up and agree property particulars. Although impressive, that still led to a delay of about a week in putting property on the market. Had the photograph of my house gone up in my estate agent's window on the day I had instructed the sale, that would have given prospective buyers an extra week to consider putting in an offer, knowing that the home information pack was being produced.

Although I do not know whether there are any statistics available, by and large I am sure it is a fact that sellers often want to sell in a hurry, while house buyers are happy to take a little more time. Fourteen days is by no means a figure that needs to be set in stone. Indeed, given the improvements in information technology, particularly with the advances of the National Property Gazetteer, it could be argued that as home information packs may well be ready in a couple of days a fortnight's leeway may be unnecessary. But I do not believe that we should make it a sine qua non that home information packs must be available on day one. I beg to move.

Baroness Maddock

I shall speak to Amendments Nos. 183A and 185C. They too relate to day-one marketing. Amendment No. 183A is similar to that tabled by the noble Baroness, Lady Hanham. It is a probing amendment following discussions that took place in another place. Following the Government's amendment to Clauses 138 and 139 at the Commons Report stage, some people believe that confusion has arisen on the timing requirements for the possession or production of the home information pack. To avoid any misunderstanding in the market, I am seeking clarification with Amendment No. 183A.

One interpretation of Clauses 138 and l39 as presently drafted is that the responsible person—the seller or his agent, if there is one—has to provide an HIP or part of a pack only if requested by the buyer. The responsible person has 14 days in which to do that—or more if terms and conditions are debated under Clause 139(5).

That appears to conflict with requirements in other clauses, which seem to require the possession of an HIP from the outset. I am therefore seeking clarification on whether the above interpretation of Clauses 138 and 139 is correct. Is it a relaxation of the Government's requirement for day-one marketing? If it is, it is welcome, but those outside the Chamber are confused. I would welcome clarification from the Government.

Amendment No. 185C is designed to help the Government on this issue. The Government's proposal to introduce home information packs will bring to an end the right of consumers to put their properties up for sale when they desire. In future, they will have to wait until the home information pack has been prepared. No one really knows how long that will take, as we have discussed several times already.

The Government seem willing to accept the very optimistic forecast that it could be as little as three days, while others who believe that they have a greater degree of realism and appreciation believe that it could be considerably longer. Indeed, the noble Baroness, Lady Hanham, spoke of one week. It means the ending of "day-one marketing" and many of those who work in the housing market feel that it is not desirable and that it could have an inflationary effect on the market.

The purpose of my amendment, therefore, is to keep the Government's options open. It provides the Secretary of State with the power to determine at a later date the appropriate period of time in which the home information pack must be made available to prospective purchasers after marketing commences.

We do not have to make the decision now. The Government have already said that home information packs will not be introduced immediately and that we are working roughly to 2007. That therefore gives us the opportunity to consult with the industry and, crucially, to monitor progress in the areas that are most likely to cause delay in the production of HIPs.

I know that the Government argue that if home information packs are not available to buyers when marketing takes place, their effectiveness will be undermined. I do not believe that that is true—and many who work in the field do not believe that it is true. Most prospective buyers arrange to view a range of properties in a given area before they narrow down their list of potential purchases. Often they will instruct an estate agent to arrange several initial interviews based on their criteria such as price, location and size. I hope that those more experienced will back me up on that. Indeed, I have done the same thing myself. At this stage, buyers will not want to be burdened with lengthy technical reports for each and every property that they view, for access to which, as I understand it, they would have to pay a charge.

Because the current home information pack proposals will delay the ability of consumers to market property, it is widely accepted that there will be some reduction in the number of properties coming on to the market. Independent studies have measured that and they give figures of between 13 and 30 per cent. If the figure is 13 per cent, that is still fairly detrimental. Even at the lower end of the forecasts, it is likely to have an inflationary effect.

The Government have questioned just how important day-one marketing really is to consumers and whether they will be put off placing their houses on the market if they have to complete a home information pack. There are conflicting views on this topic and I should be very interested to hear from the Minister whether his department has any plans to undertake some independent research into the matter before pressing ahead with day-one marketing. The amendment is designed to help them to do that, and I hope that the Government will look favourably on it. It is an important issue and it is very controversial.

The Earl of Caithness

The noble Baroness, Lady Maddock, is absolutely right: this is a crucial area and it is one that will cause a huge amount of contention unless we get it right. It will be the area where most disputes occur because vendors invariably want their houses marketed from day one. They will give instructions for whatever reason, but they want to put their houses on the market now. Of course some people are coming forward at present and saying, "I want to market the house next spring. Start preparing particulars now", but that does not happen all the time, and a big section of the market will be put under considerable constraint by the Bill as it stands.

We talked about this matter a little last night. It was quite late and, on reading col. 998 of the Official Report, I noticed that I mentioned a somewhat similar situation in response to the noble Lord, Lord Borrie, on the question of buying Whiteacre. If one reads what I said in the Official Report and takes it by itself, it could be misleading. What I wanted to say was that the noble Lord, Lord Borrie, would be at a disadvantage if he had to sell his house in order to make an offer on Whiteacre. In the Official Report, it reads that the noble Lord could not submit an offer to the noble Lord, Lord Phillips. Of course, the noble Lord could submit an offer, but if he had to sell his own house first in order to obtain the finances, he would be at a considerable disadvantage in wanting to buy the house compared with someone else who already had his house on the market with a home information pack.

These are critical amendments. I look forward to hearing what the Minister has to say, particularly with regard to some of the points raised by the noble Baroness, Lady Maddock.

Lord Rooker

This is a very important part of the Bill and the system. I fully accept that, but I certainly cannot accept some of the things that I have just heard, such as that the industry does not know what is going on and will be confused, and so on. From extensively published consultation documents, the industry knows exactly what we have been thinking about in some considerable detail for the past 18 months. So there are no surprises in this measure.

This is the first of a number of amendments about the duties in Clauses 137 to 141 to have a home information pack before commencing any marketing activity. I fully admit that this is an area which probably causes the most concern. I would argue that that concern is not justified and I shall try to give my reasons. However, we recognise the concern, which is why we have been doing something about it.

Ministers and officials at the Office of the Deputy Prime Minister have discussed the concerns extensively with key stakeholders, including the National Association of Estate Agents. We know that the key concerns are uncertainty over how the home information packs will impact on the market—that is a factor—and particularly how long it will take to compile the packs.

We know from experience that some agents who are providing home information packs on a voluntary basis—it is only a modest number at the moment; I realise that—can manage to compile packs in about five working days. We take the view that, given the advances in information technology, it should be possible to compile them in a shorter timeframe by 2007. And, once the Bill is enacted, that will act as a significant push to information providers to change their processes to ensure that the information is available very quickly. So, with compulsion on the way, it will cease to be a voluntary activity.

Some stakeholders are saying to us, "That's all very well in theory, but what if the practice turns out to be different?" What if an item in the pack—for example, the home condition report—takes a good deal longer and that acts as a logjam on bringing homes to the market? Those are issues that have been raised and it is a fair point. The big concern seems to be that if that kind of problem does arise, the Bill may be too inflexible as it stands to deal with the situation. It is that point on which I want to give the Committee some assurance.

First, following the Office of Government Commerce Gateway review of the home information pack programme, we are setting up a new, extensive programme support structure to oversee the route through to the implementation of the home information pack. All the key stakeholders have welcomed the move and they are actively involved. Therefore, it is not being done behind closed doors. Part of the job of the new programme arrangements is to bottom out and address the risks and develop effective contingencies. That work will identify and address any of the pinch points that could delay production of the home information packs.

Secondly, as I mentioned last night, there will be a dry run of home information packs before they come into force. We want to identify the components of the packs by the middle of 2005 and have them available from the middle of 2006. That will give a minimum of six months for estate agents and others to test the new arrangements before they come into statutory force. That gives a rough idea of the timetable and we have left ourselves plenty of time.

Thirdly, if we find that the speedy production of home information packs is at serious risk, provisions in the Bill would enable us to address the situation. Clause 144(9) allows the Secretary of State to address this kind of problem in regulations. He could vary the time at which a document is required to be included in the pack; he could make some kind of transitional arrangements; and he could make different arrangements for different areas, descriptions of property and other circumstances.

In short, there is an armoury in the Bill to deal with problems relating to the speedy availability of documents and other problems if they arise after all the other preparatory work, along with that of the stakeholders, has been done and defects come to light. So there is no question of the Government introducing home information packs in a way that will cause unnecessary delay in getting homes on to the market. That is not our purpose.

Some of our research has indicated that 40 per cent of consumers are dissatisfied with the current system. More recent surveys conducted by the Consumers' Association and the Yorkshire Bank both indicated a dissatisfaction rate of almost 90 per cent. Therefore, some action must be taken to improve the situation.

One principal cause of that dissatisfaction is the lack of up-front information available to sellers and buyers. That lack of transparency at the start of the process is a primary cause of uncertainty, failed transactions and wasted costs. We genuinely believe that our reasonable proposals will remedy that, but the amendments would risk perpetuating the problems associated with the current system where sellers market their homes without the benefit of important information to guide their marketing decisions and buyers take important decisions on the basis of little or no information.

It is no good to say that this beggars belief; we know that it happens—it is happening now as we speak. We are talking about some 8,000 properties a day or 40,000 properties a week. People will be looking at places for a few minutes. They may have looked at lots of others as well but, on the basis of little or no information, they will make offers and then become very upset afterwards.

The time spent compiling the pack need not be long and we think that it is time well spent. As I have said before, all this information, save for the home condition report, already has to be provided at some stage in the process. The difference is that we are saying, "Do it upfront".

Some of the tick box forms that people fill in for fixtures and fittings and about the property itself—two or three of the forms one gets from solicitors—could be done beforehand. Sometimes there is undue delay, even as regards the solicitor getting the seller to complete the form, to tick the boxes. They say, "You are selling the house. I need the form. Tick the boxes". So, undue delay can be caused even by the seller not filling in the basic forms because they cannot decide to leave the curtains or the spice rack or something stupid like that. All of that is on the form and they simply have to tick a box.

So, there are delays. We are asking that that be done before the home is marketed. There is no problem about that. If someone decides that they want to sell the property, they obtain the forms and get them filled in. If we seek to cut corners, as the amendments would propose—the idea is to market under the present system, stick it up for sale today, find a buyer the next day, and sell the house—that is fine, but that apparent speed can be illusory. That is what we know from the present system. You think you have sold and you have not. Then there are protracted negotiations while the legal aspects are sorted out and local searches are commissioned. There can be arguments about the property and the things that are found out and arguments about the price. Each of those things can reveal problems which add to delay. Indeed, sometimes, not always but many times, they can lead to the collapse of the sale, and the whole process can be complicated by chains.

Having the relevant information at the start of the process creates a number of benefits. The seller and agent can use the home information pack to assist in setting the asking price. This is different—

Lord Phillips of Sudbury

I am sorry to interrupt the Minister in full flow. He repeatedly makes the point that all this upfront information is nothing but benign. However, to take one example, does he not accept that all the information that will now be required on the title of the property, which currently is not required of the vendor's solicitors until after exchange, will lead to a huge amount of wasted time and effort between solicitors in cases where, having agreed in principle to sell and buy, the property transaction then collapses because of a chain problem, a finance problem or a number of other issues; for example, change of circumstances? Does he not at least concede that in many cases those requirements will add considerably to cost?

Lord Rooker

I find that quite interesting from a lawyer; that is, the possibility of things collapsing after the offer has been made because of problems caused by finding out about technical hitches and details. It is true, I accept, that some documents might come in at the very end and that could cause a problem. However, I suspect—I shall take advice on this—that that would be in a minor amount of cases compared with the vast number that fail either because of the condition of the property or other matters relating to the condition which are found in the home condition report and which would make that miniuscule in comparison.

Lord Phillips of Sudbury

I am grateful for what the Minister said. The truth is—this is where the problem of not having a good evidential base for all this is exposed—that survey work has been done and my own survey work among the solicitors of Suffolk and North Essex indicates that the majority of transaction failures are nothing to do with the condition of the property but are to do with valuation and obtaining finance. Valuations are not part of the home information pack. That will come later. So, far from this solving the frustrations and heartache of transactions that collapse, the statistics that we have—my noble friend Lady Hamwee quoted some last night—indicate that around 15 per cent of transactions collapse because of survey issues as compared with all the other issues.

Lord Rooker

We can bandy statistics. I have some better statistics than I had yesterday—this is not the group of amendments in which to use them—which will, I hope, rebut some of the points raised. The fact is that you cannot tell the connection, except in individual cases. If there is an argument on valuation, was it caused by someone finding out more about the property than they would have known without having the home condition report? They may say, "Hang on a minute. I'm not paying that much for the property. It's not worth that much because something's been discovered". It is true that that might be ticked off as an argument about valuation. Why did that arise in the first place? Because someone found out something and, if they had found out about it beforehand they would not have made the offer on the basis of false information. So, it can look like an argument about valuation but it may be that the valuation was done in ignorance of the home condition report and not knowing about the property in the first place.

I was half way through a really good sentence about the time spent compiling the pack. Speed can be illusory and can be followed, as I have said, by protracted negotiations while the legal aspects are sorted out. Each of these issues can reveal problems that add to the delay and the collapse of the sale altogether.

Having this relevant information at the start of the process creates a number of benefits. I was going on to say that it is perhaps novel for the estate agent to set the price of a property based on knowing something about it. That may be novel for some estate agents. Knowing information on the property they can give better advice on marketing strategy and selling price. The pack will help to identify for the seller and the seller's professional advisers problems, for example, with the title. If there are problems with the title, the time to find out about them is before you market the property, not when you are supposed to complete.

Other benefits include transparency. If a buyer makes an offer knowing the true condition, they are less likely to complain later on about valuations and other matters. We think that the cost savings should be evident. As I have said—and I will give further details on this—our modest, conservative estimate is that some £350 million is wasted each year. That is a complete waste; there are no assets gained from that. Streamlined conveyancing will be possible due to the bulk of legal and other preparatory work being carried out in the days before marketing and not the weeks afterwards with the pressures involved.

We consulted on these matters some 18 months ago, including on the issues of the documents that would be needed for the title. So, there are no surprises about what is needed in the pack by professionals.

The benefits in terms of shortening the period from offer acceptance to exchange of contracts and making the process more transparent should more than outweigh any slight delay—it can be only a slight delay—to marketing while the pack is put together. To allow marketing, even for a limited period, without a pack perpetuates the failings of the current system. Buyers and sellers would be negotiating in the dark. This lack of upfront information, as we mentioned earlier, is the root cause of consumers' dissatisfaction.

Amendments Nos. 183, 183A, 185C and 194 may have been tabled on the assumption that sellers will be unhappy waiting until a pack is compiled before marketing commences, but what sellers really want is a quick sale, not quick marketing. There is a difference between a quick sale and quick marketing. It is a quick sale that they want; the outcome, not the process. We want to speed up the process so that the outcome becomes more certain for everyone concerned.

Amendment No. 183 would delay for 14 days the duty to have a pack. As I have explained, that would perpetuate the current problems and I cannot believe that it is a serious attempt to improve the Bill. As I have said, the same arguments apply to Amendment No. 183A. Amendment No. 185C would allow the Secretary of State to make regulations prescribing a permitted period, beginning when the marketing starts, within which a pack must be provided.

I understand the concerns, and no one wishes to see unnecessary delays. However, as I have said, the Bill contains a range of mechanisms to enable us to deal with potential problems. With the homework and spadework that is being done with the industry in full co-operation between now and the bringing into force of the legislation, such problems will not, it is to be hoped, arise.

It is important not to underestimate the difficulties for enforcement authorities—someone will have to enforce this, as will be clear—of allowing marketing for a period without a pack. That would be a difficulty. If that period were allowed, it would be impossible to police the system and I think it would remove the benefits of upfront information to buyers and sellers and leave a high chance of aborted transactions. As I said last night, it would be selling a false prospectus to the public on the basis that they thought we had done something about it.

The Earl of Caithness

As the Minister was in the middle of his most interesting sentence, I did not continue the discussion at that point. However, I should like to take him up on three or four matters. The Minister keeps referring to the current problems the industry faces. We should not forget that over 70 per cent of transactions do not cause problems; they work perfectly well. They can be speeded up, but the market is not in crisis. The market is working. Areas need attention, but to give the general impression that the market is a complete failure and in dire need of improvement is a totally wrong picture of what is happening.

The Minister referred again to the £350 million in abortive costs of transaction failures. Let us remember that that figure of £350 million was based on a survey involving 30 properties and was extrapolated from that. We must also bear in mind that those who did the research gave a caveat on the figures and said, "These figures need further work". The Government have not done that further work.

I was very interested that the Minister then started to disagree with the research that he had carried out by Key Research on the question of failed purchases. It is true that 30 per cent of failed purchases are a result of an adverse valuation survey, but now the Minister wants to look behind that. He has been beating the drum that that 30 per cent—in fact he is calling it 43 per cent because he is adding in the 13 per cent of unfavourable surveys—is the cause of this Bill. If the Minister wanted a more accurate breakdown of why purchases failed, then the Government should have arranged it at a much earlier date rather than proceeding with a Bill, so that we could at least be talking of a sensible research programme that did not have a whole lot of caveats with it.

Finally, the 13 per cent of failed purchases due to an unfavourable survey in fact works out at a net figure of less than 4 per cent of all failed transactions. That does not reflect a market in crisis.

Baroness Maddock

I thank the Minister for his clarification on Amendment No. 185C. It would appear that something similar to what I was requesting is actually in the Bill, but not being a lawyer. I find it quite difficult to interpret. I will look at the matter again and discuss it with others.

On Amendment No. 183A, again in trying to get to grips with how the legislation is written, I would have appreciated a little more clarification about how the 14 days works in the other two amendments to which I referred. In his reply, the Minister talked about how difficult this was to police, and said that that is why it had to be day one. However, some of it will be day 14, and somehow it will have to be policed. I will look carefully at what the Minister said and perhaps we will return to the issue.

Baroness Hanham

I too thank the Minister for his reply. I am bound to say that I think we will probably end up taking a different view on this throughout the Bill's passage.

The Minister made it very clear—it is becoming increasingly obvious—that this is an immensely bureaucratic system. When we get round to a system that is being policed, which is what the Minister now says it is, then we are really in considerable difficulty as regards the free marketing of a property. The fact that there is to be no flexibility about when the housing packs must be available is, if I may say so, rather foolish.

I do not think that the clauses to which the Minister referred, and the regulations which will perhaps come in to give some flexibility, are going to do the job at all. It seems perfectly reasonable to say that those who want to put their houses on the market can do so. They will then have a bit of time in which to finish off the bureaucratic information that must be made available. All this information, except for the home condition report, already has to be made available for the sale and purchase of any property.

I think the Minister may also be underestimating how long home condition reports will take to get done and, as I suggested yesterday, whether buyers will rely on those reports. We have not yet had any discussion about what integrity buyers will see in the reports and whether buyers will believe they can rely on what the reports say. It is likely that there will be double expenditure, with the buyer choosing to have yet another survey done, perhaps by a more qualified person than the home condition surveyor.

So, we do not agree with the Minister's view on this. I am sure that we shall return to the matter. For today, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 183A not moved.]

Baroness Hamwee moved Amendment No. 183B:

Page 94, line 40, at end insert "unless the property is marketed as being sold without a home information pack"

The noble Baroness said: In moving Amendment No. 183B I shall speak also to Amendment No. 185A.

During these exchanges, I have mused on the fact that, had the Minister been a partner in my solicitors practice, which in itself is quite an interesting thought, he would probably have been one of those who used to say of domestic conveyancers—never, of course, one of our own partners—"They spend all their time asking questions like, 'Does the property have a roof?' And, if they are on the other side, 'The purchaser should rely on inspections'". I say that because I accept a little of what he says about the cumbersome nature of the process.

I suggested that the two amendments should be grouped with the last group that we debated last night on "voluntarism"—I cannot think of another word for it. Despite my request, that did not happen. I am moving the first one today because the Minister may have something to add to the issue. However, I shall not rehearse now the arguments for a voluntary home information pack.

However, I should like to pick up one point that the Minister has mentioned several times. It is relevant to this debate, and I for one have not yet got my head around it. The Minister talked about a dry run before the pack becomes compulsory. I have not yet understood how the dry run is to happen unless we have a voluntary scheme before the commencement orders bite. When the noble Lord replies, I should be grateful if he would explain just how he will ensure that there is a dry run without the problem that he has used to counter the arguments against a voluntary scheme.

These two amendments provide that a seller can choose to sell without a home information pack. It may well be that a seller would want to opt out for some of the reasons we have heard, and perhaps for others. I do not think that the buyer would be placed at a disadvantage as he will know that a pack is not available. If a buyer thinks a pack is so important that it affects his choice of property, he will not pursue his interest in that property.

The sellers may not want to provide a pack because of cost considerations—a matter which we have certainly more than touched on. The Government assume, if I understand this correctly, that the cost of compiling a pack will be absorbed by the selling agent until a sale goes through. That seems likely to put huge pressure on the agent to ensure that a sale does go through.

A number of noble Lords have expressed doubts about some estate agents, although not about all of them. But the profession as a whole has some way to go to up its reputation. There are some agents who would have a view to their own interests at least as much as to the interests of their clients and it sometimes seems to me that not every agent quite understands who his client is. I hope that the Minister can answer the specific point about a dry run and can add to it. I would hate to think that these are the killer amendments and I had not moved them. I beg to move.

The Earl of Caithness

I support the noble Baroness. She made a point that I wanted to raise at some stage. I shall follow what she said, which was that there would be pressure by estate agents to get a sale. I regret to have to say that that happens at the moment because a lot of estate agents work on incredibly low salaries but with high commission rates. That is a very bad practice in a professional business that sells somebody's prime asset. Where estate agents are on a low salary and high commission, there is huge pressure on them to get a sale as quickly as possible, regardless of the client's interest.

With a home condition report and a home information pack, there will be even greater pressure on them to get a sale. The directors will be saying, "This costs money and time for which we are not getting a proper reimbursement. Get rid of that property as quickly as possible. Get the vendor to accept a lower price. Let's get it off our books. Get it done and we can submit a fee account because that property has been hanging around". That might not be in the client's interest. On occasions, my partner and I have said to clients, "Do not accept the offer. Wait a bit". That has incurred no extra expense under the rules by which we operate at present but has proved to be for the benefit of the client in the long run.

When we discussed this yesterday, my Amendment No. 184A was grouped with the amendments. It was my fault that I did not realise it at the time and therefore did not speak to it. I notified the noble Lord, Lord Rooker, that I might at some stage raise Amendment No. 184A just to get his response. If one follows the amendment that the noble Baroness has moved, and adds this advertisement: This property is offered for sale without a home information pack or home condition report being currently available. Intending purchasers may be exposed to an increased risk of financial loss if adverse legal or structural matters affecting the property become evident after negotiations for the purchase have begun", it is in the consumer's interest. It allows the prospective purchaser to say, "I am not going to bother with those properties that do not have an HIP. I will just concentrate on those that do"; or the vendor can say, "I am still interested in a property that does not have an HIP. It is exactly the same situation that I have been used to operating in in the past. I will carry on with the prospective purchase".

If, in due course, it is found that prospective purchasers are shunning properties that do not have home information packs or home condition reports, then the market will force estate agents to tell their clients that they must produce that information because they are missing out on the main section of buyers.

The noble Baroness is absolutely right to pursue her amendment but I should be grateful if the Minister would comment on Amendment No. 184A.

5.45 p.m.

Lord Phillips of Sudbury

I add to the point just made by the noble Viscount—

Noble Lords

The noble Earl.

Lord Phillips of Sudbury

I do apologise. That is the most appalling error that a man can make in this House. I doubly apologise.

At Second Reading, in relation to concerns about the effects of the packs on low value homes, the Minister said that, we believe that it is best left to the market to provide solutions".—[Official Report, 7/6/04; col. 86.] I wholly concur with that sentiment. The noble Earl is absolutely right in saying that people are quite capable of judging between one offer and another, between one estate agent and another, or between an offer with a pack and one without.

But how does the Minister see the position of a couple who are poor—perhaps old age pensioners—who have to sell a house to relieve their financial problems? Are they going to be denied the prospect of a sale unless they can find an estate agent prepared to bear all the up-front costs? I think that the up-front costs are going to be of the order of £800 to £1,000. That is without solicitor's fees and solicitors are not in the habit of doing abortive work without charging for it, at least, by no means always. So if one adds solicitor's costs, one is well over £1,000.

Who is going to bankroll that? If the answer is that some estate agents will bankroll it themselves, the noble Earl made the point that they are not going to hang around for ever. If the property is still on the market after six months, they will not wipe the debt off or continue to carry it. I can tell the noble Lord that the firms that will benefit from this will be the big battalions. This is highly anti-competitive. The small, newish estate agent is not going to be able to carry the debt of £50,000 to £100,000 of unpaid expenses that will be incurred in these home packs. So, if the Minister rejects these amendments, what is the fate of the poor seller? Who is going to carry the very substantial costs, which may ultimately prove abortive, but which, in any event, could be hanging around for months?

Lord Bassam of Brighton

The two amendments in this group effectively create a voluntary system rather than a compulsory one. We have gone over this issue a fair bit already and I do not want to tire the Committee with more of our thinking behind the system. I simply say that we do not think that a voluntary system is right or fair or that it would, in the end, be at all effective. There are extensive benefits in the system as set out in the legislation. If we take Amendments Nos. 183B and 185A together, they would have the effect of making the system for home information packs voluntary. Effectively, the only duty would be for the seller or his agent to say whether the property was being sold with a pack.

Despite what the noble Earl, Lord Caithness, says, we think that there is sufficient evidence to suggest that buyers and sellers are unhappy with the way in which properties are bought and sold. In many cases, people are losing hundreds of pounds on abortive surveys and searches. To pick up the point made by the noble Lord, Lord Phillips, it is those who are perhaps least able to afford those costs who often end up bearing the brunt of them. I do not think that there is any doubt—and what the noble Lord, Lord Phillips, said underlines the point—that some of these costs can be quite crippling. But we think that, in the end, there will be a benefit for all in having a universal system, rather than a voluntary system.

As the noble Lord, Lord Rooker, made plain yesterday, there is a cost to the wider economy, apart from the substantial time that is wasted through abortive transactions. I do not think that anyone could seriously argue that the market is working well in all circumstances and should be left alone and unfettered; but, effectively, that is what the opposition to this main proposal suggests. Ultimately, it is not enough simply to suggest that technology will solve the problems over time. Yes, of course it will assist in the end in terms of introducing the proposed changes. That is why we have provided for a longer time, so that the benefits of speeding up transactions can be fully brought in.

I do not think that anyone has disputed the benefits of key information being provided up front. All that has been suggested is that essentially there is a disbenefit in delaying going to market, which, basically, is what is on offer here. Estate agents offering home information packs or condition surveys up front report that buyers and sellers welcome them and that many people are positively enthusiastic. Certainly, agents in my area say that to me, which I think is for two reasons. First, it is easier to market a property and, secondly, the sellers and their agents do not have the fear that extra efforts will not be rewarded.

Ultimately, this system will be welcomed, particularly when we have the added benefit of technological change. Last night, 1 heard the argument that we should simply wait for that: but we do not want to wait. Of course we want to accrue those benefits and see the system speeded up, but by having a voluntary system, which effectively would create a two-tier system across the country, all sellers would be missing out, and that would be very unfortunate.

In our view, the market is not working well enough. There are too many disadvantaged people for us to maintain the status quo. We need change and improvements so that consumers can see a real and lasting benefit. That is why the voluntary approach is not the right approach to adopt in this situation. Some people do not like compulsion, but, regrettable though it is, in this situation it is entirely necessary.

A couple of important questions and points were raised. The noble Baroness, Lady Hamwee, talked about the dry run, which she saw as a sort of voluntary system. All the pack components will be in force, including the home condition report and certification scheme. In answer to her specific point: yes, it is the commencement order that will bring in the duty after the dry run is over. It is important to respond to that point.

The noble Lord, Lord Phillips, made a point about paying the costs and the poorer seller. That class of seller already incurs costs under the present process. Those people can least afford the wasted costs with the associated abortive transactions that sometimes occur. I know I made that point earlier, but it is important. It is much more likely that there will be greater certainty in the process when the information is up front from the moment that the property is taken to market, which those people will welcome.

Clearly there is more debate to be had about where the costs will fall. I do not necessarily accept what the noble Lord said about where that cost will be. Nor do I accept his cost estimate, which, from the evidence that we have had so far, seems to be on the high side. I think that sellers really want greater certainty in the process and less frustration, which a universal system of home information packs will provide. That is why the voluntary approach is the wrong approach and why we think that we have got it about right. Some ironing out will be done and there will be a careful process of implementation. That is why we have set the timing as we have, which will be welcomed by the industry as a whole as we move towards that point of implementation.

The Earl of Caithness

Perhaps I may clarify one point with the Minister. Did he say that, under the Government's present proposals, the abortive costs that the market experiences at the moment will not arise in the future?

Lord Bassam of Brighton

I would not want to say that there never will be abortive costs after the scheme has been introduced. I know that the noble Earl takes exception to the pilots in Bristol and does not have a high opinion of them, but so far the evidence suggests that abortive costs will be much less and abortive sales will be fewer in number. There must be a benefit from that. Neither of us would be happy estimating exactly how much less those abortive costs will be or how many fewer abortive sales there will be. All the evidence suggests that there will be greater certainty in the process, which is surely what people selling a home want. Do we not all want to see a better market that performs and works well for everyone?

Lord Phillips of Sudbury

Perhaps I may ask the Minister to expand on the dry run. All Members of the Committee want that to work and for a better system to come out of it. However, it is fair to say that the practitioners in the Chamber have more anxieties about the exceptional cases; that is, the number of cases that will not fit neatly into the proposed package. I ask, first, what is the scale of the dry run? Secondly, what is the length of the dry run?

Thirdly, and most importantly, I am sure that the Minister will agree that there is no point in having a dry run if one cannot learn from it and make such amendments as may be necessary in the light of it. My concern is whether there is anything in the Bill as presently structured—I do not think that there is— that will allow the Government to say, "Okay, we have learnt these lessons for sure. Two of them confirm our view about this Bill. One of them runs directly contrary to what we thought when we debated this and we will amend the legislation before it comes into full effect".

Lord Bassam of Brighton

I think that I said earlier that there will be a commencement order that will bring in the duty after the dry run is over. We have got an implementation period, which, from memory, is around 2007, giving us about two-and-a-half years. That means that there is ample scope and opportunity for discussions with the industry. Those discussions are already taking place, which, as I said, are about ironing out wrinkles. Of course we can do that.

I think that, yesterday, my noble friend Lord Rooker gave an example in the legislation where we will be able to do things by order. I have not got that at the forefront of my mind, but I am saying to the noble Lord, Lord Phillips, and to Members of the Committee: yes, we will do this carefully and constructively and we will work with all the relevant stakeholders who are discussing those sorts of details with us now. As I said yesterday, we want to make this work with good will. Because we have a lengthy run-in period, we can achieve that, which is in everyone's interests.

Lord Phillips of Sudbury

I am sorry to press this, but it is very important. If, for example, in the dry run, it was found that transactions of a certain type generally did not react constructively to the pack, in current legislation I do not think that there is anything that would allow the Government to say, "Fine, we are going to exclude that class of transactions from the compulsion".

The Government would not lose anything in conceding that parts of the Bill, such as the one on the basis of which these amendments are brought forward, could have within it the power of the Minister to make the provisions compulsory or not. At present, there is not that leeway. I am not asking for an answer now. But, because this has emerged as being really important, I am asking for the Government kindly to look at the whole of the dry run, which, in a sense, is the sort of pilot that we were talking about last night, and build into the legislation enough leeway so that if their expectations are not fulfilled by the dry run we are not trapped into having to come back to Parliament to change the legislation.

Lord Bassam of Brighton

The noble Lord makes perfectly reasonable points. To recap: the scale will be national, there will be a six-month minimum period and of course we will learn from it. We have the power to make regulations to exclude different types of property and different components. If the noble Lord is looking for the authority for that he will find it in Clauses 143 and 144. I am reminded that it was not so long ago that we produced the home information pack consultation paper. There are few surprises in this debate because much of the content and thinking behind it is contained in that document.

We have ample time to refine it further. The way in which we have set out the legislation provides us with the flexibility that the noble Lord seeks. This is where trust, good will and working together with the stakeholders can deal with some of the problems that perhaps the noble Lord and the noble Earl, Lord Caithness, see as intractable.

6 p.m.

Baroness Hamwee

I am aware that we have spent about an hour on the first two groups of amendments. In introducing this amendment I deliberately did not repeat all the arguments from yesterday. I hope that I speak for my noble friend Lady Maddock—the noble Baroness can speak for herself—in saying that we do not need to have the Government's arguments repeated. New points are always welcome. We have got the message. We disagree on the matter. That is why I carefully did not repeat the arguments but used the amendment as a basis to ask a question on which my noble friend has built.

I still do not understand how a dry run will do anything much to assist knowledge if the arguments that the Government have been advancing about the need for compulsion apply. It seems contradictory, but I shall not pursue the matter now. We will pursue it later. So much of the Government's proposals are based on their understanding—as our arguments are based on ours—of the experience of different groups of people with different experiences of sales, properties and so on.

It would be extremely helpful if the Government could give us a list of all the survey work they have carried out so that we can consider whether they have hard evidence about what will happen to small estate agents—or what will happen to elderly people, perhaps someone having to move into a residential home, whose experience will be completely different from a young family moving to a bigger house. There are so many different aspects.

I hope that that will enable us to answer some of our questions. It would be extremely helpful to know what survey work has been undertaken. I am not sure that the Minister will be able to comment: perhaps he will do so later today. I leave that point with him and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 184 to 185 not moved.]

Lord Rooker moved Amendment No. 185ZA:

Page 95, line 1, leave out "to" and insert "where the responsible person is"

On Question, amendment agreed to.

[Amendment No. 185A not moved.]

Baroness Hamwee moved Amendment No. 185B:

Page 95, line 7, at end insert "; and ( ) the seller markets the property himself

The noble Baroness said: The amendment proposes that an individual who markets a property himself, not through an estate agent, is not required to have a home information pack. There may be an argument about provisions applying to estate agents selling in the course of business. We have said already that we are interested in protecting consumers, but it is not at all obvious that a seller wishing to undertake the sale himself should be as restricted in his ability to sell as the provisions would ensure.

Most DIY home sellers, unless they have a background in conveyancing, would not have the expertise to assemble a pack. Sellers are consumers as well. The noble Baroness, Lady Hanham, mentioned technological advances. As a consumer or seller I might want to take advantage of what is available over the Internet. Information in the field of domestic property is now refined to make it as straightforward as possible for land registration and so on.

I wonder whether it is appropriate for the Government, who talk about choice, to provide that a DIY seller would not have a choice. I beg to move.

Lord Borrie

It would be a great pity if the Committee accepted the amendment. It would make a large hole in the proposals in Part 5. It has been said both by the noble Baroness, Lady Hanham, and by the noble Baroness, Lady Hamwee, that a seller is a consumer as well as the buyer. When one normally thinks of consumer protection one thinks of the buyer and protection for the buyer vis-a-vis the seller. First-time buyers, an important group of purchasers of houses, they are buyers only.

This part of the Bill gives added protection, not only to first-time but to other buyers, so that above all when they make an offer they do so on the basis of intelligible and comprehensive information and knowledge about the property. That is the basis of having this material available from the moment of marketing as we have repeatedly debated on this part of the Bill.

In a chain there are chains of buyers and sellers One of the sellers may be selling their house without a professional estate agent. We have said many times that a chain is a most important consideration under this part of the Bill. There are many reasons why someone would wish to sell his property without an estate agent. It may be to save the commission; it may be someone with time on their hands to show people around the property and so on. Why should the element of purchaser protection, which I want to emphasise, be lost just because the seller or one of the sellers in a chain is selling privately and not through an estate agent?

Of course the assembly of much of the information may require more professional expertise than even the most bold vendor may have; yet we all know that people do their own conveyancing, selling and acting as an estate agent.

The additional requirement under Part 5—which has to be provided up-front instead of later on—is to have available a home information pack at the time of marketing. That is most important. It would be a pity if it was not required on all occasions. The attempts of the other side to make this a voluntary practice have been discussed. The amendment is another way of trying to reduce the effectiveness of Part 5 by saying, "It should apply only to those in the profession of estate agent". I think buyer and customer consumer protection would be severely limited if the amendment were accepted.

Baroness Hanham

Does the noble Lord, Lord Borrie, agree that the only part of the pack which would not have been required anyway in the normal course of events is the home condition report? As far as I am aware, the purchaser has had the choice of whether to obtain a survey. It is now being suggested that the purchaser should not have that choice—the decision is being foisted upon them by the Government. The Government are saying to them, "You are stupid not to get a survey. You must go ahead and have a survey, which will come with the home condition report in the pack". That is the first issue.

Secondly, the only time that I have come across a chain for purchase was when my daughter was buying a flat quite recently. What caused the trouble in the chain was the valuation of property further up, where people were negotiating to bring prices down and pressure was being brought to bear. That may or may not have been to do with a survey result, but I suspect that it was far more to do with how much money people further up the chain at the highest levels could obtain before pressure was put on to get the prices down.

This is a hugely bureaucratic system to provide a survey of a property on which purchasers may very well not rely anyway. There will be a whole caboodle of measures, including policing, to get people to do something they may not have wanted to do originally.

Lord Borrie

The noble Baroness has raised many wide questions, including whether or not a purchaser will rely on the survey. We have not yet discussed that and it is not my role to try to answer all those questions.

The aim of this part of the Bill, and the compulsory element of it, is to change the culture of the past where a vendor will market a property and put it up for sale without any indication of what it is like. Buyers are expected to produce an offer and, if they are going to compete with other buyers, as they do, to do so as soon as possible without having any idea about a whole range of issues that are fundamentally important if the matter is eventually to go through. This change of culture is wholly desirable.

Turning to the amendment, it would be a great pity if the requirement applied only when a property was put on the market by a professionally qualified estate agent.

Lord Phillips of Sudbury

I have never felt less in sympathy with the noble Lord, Lord Borrie, for whom I hold an ancient and deep regard. He speaks like a bureaucrat to his back teeth. If we are to change the culture—and we are changing the culture—this is a bureaucratic juggernaut to crush a handful of individuals who sell their own properties.

The noble Lord referred to a large number of individuals selling their own properties whereas it is a tiny number. We really should be able to accommodate the odd eccentric individual who does this. I suggest that self-interest will make the number extremely small.

We put up with individuals doing their own conveyancing. If the noble Lord and the Government want to be consistent with this bureaucratic theme, we had better put an amendment in the Bill which prevents people doing their own conveyancing. Believe me, that gums up the works and prevents the smooth-flowing, swift, transactional perfection that the Bill is supposed to bring about. So do that.

We allow people to go into courts and advocate for themselves. They gum up the works; they cause a frightful delay; they are a mess and a muddle. Stop it. We should not allow these individuals to get in the way of the perfect bureaucratic state.

I feel very strongly about this point. I urge the Government not to listen to the siren song of the noble Lord, Lord Borrie. The amendment will affect a tiny number of cases and we should be prepared to accommodate them.

6.15 p.m.

Lord Avebury

Perhaps I may ask a completely different question and slightly lower the temperature of my noble friend's torrent of vitriol against the noble Lord, Lord Borrie, if that is not too strong a word.

Lord Phillips of Sudbury

It is too strong.

Lord Avebury

I simply want to ask what happens in the cases of individuals who, as my noble friend says, choose to market their property through the Internet and the role of the webmaster is simply to place the details of the property on a site and not to do anything else in connection with the sale, such as, as my noble friend mentioned, the conveyancing.

If an individual simply wishes to use a common website because that is where potential buyers, the purchasers, would normally look—and therefore it is a good place to show your wares—and undertakes the rest of the transaction himself, is the webmaster of that site a responsible person within the meaning of the Bill; or does he incur any other liabilities under the Bill simply by reason of the fact that he places the details of that property on his site?

Lord Borrie

I am sure my noble friend the Minister will answer that more adequately than I can. I would have thought that the webmaster was not an estate agent and that the vendor was retaining his own responsibility for marketing the property.

I am delighted to hear the noble Lord, Lord Avebury, give the example—as did the noble Baroness, Lady Hamwee—of more and more people putting their properties for sale on the net in this way. It only goes to show that his noble friend Lord Phillips, who asked me vitriolic questions a moment ago, may be understating the case when he says that only a "tiny number" of people sell their own properties. I suggest that it is probably not a tiny number and that in future, because of the net, it may well increase.

Lord Bassam of Brighton

I think I am entering into some kind of private grief in this debate. I would not describe it as vitriolic, but it has certainly been illuminating.

To go back to where we should be and to consider the amendment and its effect, my noble friend Lord Borrie is right: this is another way of trying to develop a two-tier approach. The amendment seeks to put sellers who are selling direct, without going through an agent, in a different position. Clause 135 provides that the seller becomes responsible for marketing the property when he or she puts the property on the market or makes public the fact that the property is on the market. Clause 137 provides that a seller, while responsible for marketing a property, is not himself subject to the duty to have a home information pack if he employs an estate agent to market the property on his behalf and he believes on reasonable grounds that his agent has a home information pack.

That enables sellers to rely on their agents to meet the home information pack obligations. It avoids unnecessary duplication and expense and minimises the direct impact on sellers.

I should pick up on something that the noble Lord, Lord Phillips, said. He said that we were depriving a minority—"a tiny number" was, I think, the expression he used—of direct sellers of the opportunity of going to market without the encumbrance, as he sees it, of the home information pack. Around 95 per cent of homes are marketed by estate agents, so that leaves 5 per cent. I am not a brilliant mathematician but, if we are saying that something like 8,000 properties go to market a day—that is the figure I am most familiar with; some 40,000 a week—that means that 400 sellers a day go out to the market direct. I would not describe that as a tiny number. It is a tiny percentage, but it is a significant number during the course of a year. I dispute the claim that it is a tiny number.

In the vast majority of cases, of course, the home information pack duty will fall to the estate agent, but if the amendment were to be agreed, people would be tempted to see it as a form of loophole and it could increase significantly the number of direct sellers if they thought that it would give them some form of market advantage. The amendment would create another form of a two-tier system, where private sellers could market without packs, but those who use an estate agency would not have that facility. That would create uncertainty in the market and risk undoing the main benefits in the new system. In a chain of transactions, delays and problems with homes marketed by sellers without packs would cancel out the benefits of packs provided by estate agents for the homes that they were marketing. That would be a highly unsatisfactory outcome.

As we said earlier, all sellers stand to gain from a more efficient and effective system where there is less waste and fewer transaction failures. The number of transaction failures is not insignificant. It is thought that a transaction failure takes place in 30 per cent of cases where a property goes to market. That suggests that there is a lot of scope for wasted expenditure.

We are trying to create a better and more effective market—a market that is well informed and works well. The amendment does not provide sufficient protection for the market and I dispute the suggestion of the noble Lord, Lord Phillips, that the numbers involved are tiny and insignificant. We would not be persecuting direct sellers. We are tying to provide for a better and more effective universal system. It is right that there should be a level playing field. We cannot accept the amendment for those reasons.

The noble Lord, Lord Avebury, asked what would happen to people who market via the Internet and whether the webmaster would be an estate agent. "Estate agent" is defined in Clause 132 of the Bill. I doubt whether many webmasters would fulfil that definition. However, it is possible for Internet estate agents to exist. I agree with the interpretation of my noble friend Lord Borrie of where the liability rests.

The amendment has allowed us to expand a little more on the benefits of the new system. I cannot accept that we would be persecuting those who wanted to sell direct.

Lord Avebury

I looked at the definition of "estate agent" in Clause 132(1) to which the Minister referred. It states: A person acts as estate agent for the seller of a residential property if he does anything, in the course of a business in England and Wales, in pursuance of marketing instructions from the seller". If the owner of a property instructs the webmaster to put it on the website, is that not in pursuance of marketing instructions? I am not quite so certain that the definition has the meaning which the Minister has ascribed to it. I would sooner he took advice on it from those who are familiar with these matters than give me an off-the-cuff answer in Committee.

Lord Bassam of Brighton

I am happy to take further advice. I have had some advice. In that situation, the webmaster is probably operating in the same way as a newspaper or broadsheet. That takes us back to the question of who is the vendor. It is not the webmaster.

Lord Phillips of Sudbury

The Minister mentioned the figure of 5 per cent. I took that to mean 5 per cent of properties marketed. My strong impression is that the majority of people who try to sell their houses themselves are not successful and they eventually end up with estate agents. If the amendment were not accepted, all would-be direct sellers would be driven into the estate agency market. The Government may think that is a good thing; I think that it has an impact on people's choice and freedom.

Baroness Hamwee

The amendment has certainly taken us into unexpected areas. The noble Baroness, Lady Hanham, has quite understandably anticipated some amendments that will come later. In identifying that the only novel item in the home information pack is the house condition survey, she rightly reminded us that the survey will not necessarily be adequate for lenders and that not everyone now chooses to have one. I suspect that it is often people whose finances are on a knife edge in making a purchase who take the calculated risk of not having a survey carried out. The Government are seeking uniformity, but what they are proposing contains a strong element of nannying.

The noble Lord, Lord Borrie—the siren, whom I shall now think of as Lorelei—said that when one talks of consumers, one normally thinks of purchasers. I agree with that in a commercial context, where the seller is selling a number of similar or identical items. It is not the case here. I am not sure whether the noble Lord made the same point, but I shall clarify our position. In proposing the amendment, we are not suggesting that one DIY seller in a chain would exempt others in the chain producing home information packs. We shall certainly come back to the issue. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 185C not moved.]

Clause 137, as amended, agreed to.

Clause 138 [Duty to provide copy of home information pack on request]:

The Earl of Caithness moved Amendment No. 185D:

Page 95, line 8, at end insert— ( ) A seller or responsible person acting on the instructions of the seller may decline to provide a potential buyer with a home information pack until such time as an offer for the purchase of the property has been accepted by the seller.

The noble Earl said: Amendment No. 189A has been grouped with this amendment. I do not think that it bears any relation to Amendment No. 185D so I shall degroup it. I shall come back to it as a separate amendment.

Amendment No. 185D is a simple amendment. When discussing an earlier amendment, the noble Baroness, Lady Maddock, referred to people who come along "shopping for particulars". They look at a vast number of houses before they narrow down their search. If each of them wants a home information pack, a huge amount of extra paperwork and wasted time will be involved in preparing those packs. The packs are not going to be insubstantial documents.

Members of the Committee will know that I pointed out at Second Reading that an Office of Fair Trading report noted that in Denmark, which the Government think offers such a good comparison that it has to be used in their arguments, the home information pack now goes up to 800 pages. There will be a lovely lot of people carrying around 800 pages. But do they have to carry around 800 pages? If somebody comes to me and asks for a home information pack and I know that person is not going to buy the house because he has looked at five other properties and has yet to buy anything, can I say to him, "No, I am not going to give you a home information pack. You can look it up on the web". Does that satisfy the requirement for providing a home information pack? Or do I have to give him the 800 pages of material that he is never going to read and then throw away? How many more trees will have to be cut down to satisfy this demand?

6.30 p.m.

As a result of the present Bill, there will be a huge amount of abortive costs. I probed the Minister, the noble Lord, Lord Bassam, earlier, on whether he thought there would be such costs in the future. He backtracked a little from what I believe he said earlier, and said "We're not quite certain. We can't quantify it". I can tell him that there are a great many abortive costs in any housing market; even in the Scottish system, where they are going to have voluntary packs. If I put an offer in for a house in Scotland and it is accepted, that offer—in the vast majority of cases—becomes binding. Therefore, if, say, 20 people all want a house, there will be 20 surveys, only one of which will be part of an accepted bid. That means abortive costs for 19 other people. It does not matter which market we look at: New South Wales, Denmark, Germany or America. To proclaim that there will be no such costs, or that they will be any different from the alleged £350 million at present, is a misrepresentation of the true situation.

This amendment is designed to save abortive costs, and to allow the seller or the agent acting on behalf of the seller—to say "I've got a home information pack, but you can't have it. You come forward with your offer, and if it's accepted, I'll give you the pack". I beg to move.

Lord Avebury

I think it is a very good idea, as the noble Earl has said, for home information packs to be provided on the web. It is not absolutely clear to me, from the way the Bill is worded, whether that would discharge the duty to make the pack available. If vendors did not wish their HIPs to be generally available to the public at large, they could make the information on the web password-protected, so anyone going to the estate agent and expressing an interest in a property would be given the necessary password, and would then have access to the pack. If the Bill allows information to be provided in that way, I warmly welcome it, because that would cut down unnecessary information and encourage estate agents to be more web-friendly than they are at the moment. I know most of them are already fully alive to the benefits of electronic marketing, but if it were made clear on the Bill, which at the moment it is not, that displaying the pack on the web would discharge the duty to provide the same, it would be extremely welcome.

Lord Bassam of Brighton

Perhaps I could remind your Lordships of what the Bill actually does, before I make my points on why we cannot accept this particular amendment. The Bill places two main duties on those responsible for marketing property. The first duty, in Clause 137, is to have a home information pack in their possession while the property is on the market. The second duty, in Clause 138, is to provide a copy of the pack to a potential buyer who asks for it. As most of your Lordships now probably understand, that is a qualified duty, and subsection (4) of Clause 138 sets out circumstances where no copy has to be provided. Essentially this is where there is no prospect of the property being sold to the person making the request.

The effect of the amendment would be, as the noble Earl accurately described it, to convince sellers, although they have a home information pack in their possession, to refuse to provide a copy of it, even to a genuine potential buyer. The noble Earl expressed it very well—in short, the colour of the person's money should be shown before he gets access to the HIP. We cannot accept that. It is, after all, the primary purpose of the pack to enable buyers to reach a well informed decision on the most significant purchase they will make. As far as we are concerned, this amendment would completely undermine that purpose, and for that reason I cannot accept it. I invite Members of the Committee to reject the amendment.

The Earl of Caithness

Could the noble Lord, Lord Bassam, answer my question, which was supported by the noble Lord, Lord Avebury? If somebody comes into my office and says that they wish to have a home information pack, can I refer them to the one on our website, instead of having to give them paper?

Lord Bassam of Brighton

The answer is "yes", if the potential purchaser is happy to receive a copy in that form. I think that is provided for at subsection (10) of Clause 138.

The Earl of Caithness

I am extremely grateful for that clarification. So, I do not have to give a home information pack to anybody—I can say that our pack is on the Web, and one can look at it there. I need one office copy, full stop.

Lord Bassam of Brighton

I did not say that.

The Earl of Caithness

I listened very carefully to exactly what the noble Lord, Lord Bassam, said. The noble Lord referred me to subsection (10) of Clause 138. I am fulfilling the duty to have a home information pack by having it in my office. If a purchaser comes in and wants to see it, I can now say to him, "Yes, you can see it. It's on the website". Is that correct?

Lord Bassam of Brighton

It would certainly satisfy the requirement if the potential buyer is happy to receive it in that form. If he is not, I suggest that the agent would have to provide it in another form—that is, a hard copy.

The Earl of Caithness

I am grateful for that clarification. I come back to the original point: this is going to lead to a lot of wasted time and bureaucracy. I know of potential purchasers in the market now who will happily spend their Saturdays visiting estate agents—most of whom do work on Saturdays, so theirs is at least a six-day week saying they want home information packs just for the fun of it. They already do just that with sets of particulars. That will add to the unnecessary cost and bureaucracy that this Bill will produce. The more we look at the Bill, the clearer it is that it is a mess, which will not help the housing market.

Lord Borrie

If the person who has asked for the report is not genuinely interested in buying the property, the agent does not have to give him a copy of the pack.

The Earl of Caithness

They will all say they are genuinely interested now. I will be able to say to them, "I remember Lord Borrie saying that I don't have to give it to you, because he said so in debate and it's in the Bill", and they will say "I'm going to take you to court. I am genuinely interested. You prove that I'm not". Therefore, in order to save all that kerfuffle, I will inevitably have to have lots of copies of the home condition report—which, in Denmark, would be 800 pages—ready and available. If the property is particularly attractive, we could attract a huge amount of interest: tens of inquiries in a day. That means producing a report for every potential person asking about the property, which is an added cost, extra bureaucracy, and a waste of time. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 186 and 187 not moved.]

The Deputy Chairman of Committees (Lord Tordoff)

If Amendment No. 188 is agreed to, I shall not be able to call Amendment No. 188A for reasons of pre-emption.

Lord Hanningfield moved Amendment No. 188:

Page 95, line 24, leave out subsections (4) and (5).

The noble Lord said: Here we continue with our recent debate. Subsections (4) and (5) of Clause 138 are among the most curious in Bills currently going through Parliament. Subsection (4) places an onus on the agent to possess such extraordinary powers of wit and intelligence that, frankly, such people should not be estate agents but secret agents working for MI6.

We have already discussed at length the fact that estate agents do not at present have to fulfil any professional qualifications or requirements. Anyone can become an estate agent. However, this subsection calls for an estate agent who can estimate another person's wealth from the moment they step into the shop, who can tell a con man from any other member of the public, and—most bizarrely—can tell whether a potential buyer will not be approved by the seller.

I look forward to the Minister's response to this amendment because, as it stands, this is an example of over-legislation—an argument that could apply to many other points we have discussed today. Subsection (4)(a) seems to assume that an estate agent would have detailed knowledge of a person's means to buy property. I grant that certain customers may well be known to an estate agent as people who have difficulty in raising finance—a point just touched on by my noble friend Lord Caithness. It may be that their income is uncertain or that they have to self-certify their income if they are self-employed. However, it would be a mistake to legislate so that an estate agent is given discretion to pass up a sale simply because he suspects that a prospective buyer cannot afford a property. We all know what lenders are willing to underwrite in debt changes almost on a daily basis. To that end, it will be almost impossible for an estate agent to gauge whether a prospective buyer is solvent.

Subsection (4)(c) is even more anomalous. In Committee in another place the Minister was able to pluck out of thin air a hypothetical example to illustrate when this paragraph could be used. He suggested that if a seller has told his agent that he wants only prospective buyers who are keen gardeners to receive a home information pack, this paragraph would apply. We do not need to legislate for this. Surely once a vendor has met and shown a prospective buyer the property, if he feels that his herbaceous borders might fall into the wrong hands, he has no obligation to accept an offer made by such a non-green-fingered buyer. This is silly legislation and let us please get rid of it. I beg to move.

Baroness Hamwee

We tabled Amendment No. 188A which is also in this group. It also seeks to persuade the Government to explain just how people to whom the seller is not likely to be keen to sell the property are to be identified. I am sure that the Government are satisfied that the provision does not provide the possibility of a get-out by leaving it wholly as a matter for the judgment of the vendor or the agent, but how will that be dealt with on an objective basis? How will it be enforced? The whole provision seems very curious.

Quite apart from that, how is the question of confidentiality in respect of the home condition report and other documents to be dealt with? I have been told by the Law Society that details, for example, of burglar alarm systems are normally provided before exchange. I assume that that is not the sort of thing that would have to be included, but perhaps the Government will take this opportunity to expand on both points.

6.45 p.m.

Lord Phillips of Sudbury

On this occasion I rise to speak in favour of the Government's position. Members on these Benches have said broadly that we are not happy with many aspects of the home information packs. The system is not flexible enough and we do not like the element of universal compulsion. However, this is an attempt on the part of the Government to provide some leeway. While I agree absolutely with the noble Lord who has moved the amendment and my noble friend that the language of subsection (4) is loose and rubbery, I am grateful for small mercies.

I think that there will be occasions when someone seeks to buy a £1 million property, but the estate agent asks: "How are your finances? Are you dependent on a mortgage?". If the response is, "Yes, we will need a 100 per cent mortgage", and the buyer's occupation is that of a capstan lathe turner, the agent might reasonably deduce that the property was a little beyond the buyer's ambition.

Similarly, from time to time you can take a powerful dislike to someone else for reasons you think are good. They may be familial or business reasons. Alternatively you may think that someone is a crook and has done harm to your family. Given that, why on earth should you not be allowed to say, "Whoever else I sell my property to, it will not be John Smith"? As long as the decision is not unlawfully discriminatory, why should one not do that?

I shall be interested to hear the Minister's response, but for my part I accept the provision because it makes a modest inroad into what is otherwise too compulsory, universal and inflexible a scheme.

Baroness Hamwee

I rise to respond briefly to my noble friend. As a careful lawyer, I am sure that he and I would both want to ensure that something which he and I think is right does not cause trouble. The paragraph must be drafted in a way that would achieve the end we both want to see.

Lord Phillips of Sudbury

I agree with that, but on the other hand my noble friend may agree with me that it is unlikely that a person would take someone to law on this paragraph unless it was plainly an "in-your-face" rejection made without any reasonable grounds. However, perhaps I am becoming too optimistic at this point in the debate.

Lord Bassam of Brighton

It is always nice to be surprised when speaking at the Dispatch Box. The speech just made by the noble Lord, Lord Phillips, has been a very pleasant surprise indeed. It almost makes me wish that I had been old enough, back in 1970, to vote for him. I used to live in the area where the noble Lord stood for election. However, that is wishful thinking on my part.

What we are trying to do here is to enable potential buyers to be entitled to have a copy of the pack or part of the pack if they want it and are prepared to pay any reasonable fee for the copying costs, and Clause 138 provides for this. Potential buyers will often want to show a copy to their legal representative, for example, or look at the contents at their leisure. That is fair enough, but we can foresee situations in which the seller or his agent should be able to turn down such requests for copies without breaching the home information pack obligations. As I pointed out earlier, subsection (4) of this clause sets out the three possible circumstances when the duty to supply a pack may not apply.

The first of these circumstances is when the seller or his agent believes, on reasonable grounds, that the person could not afford the property in question. The agent might know the financial circumstances of the person in question, for example. The seller may also want to exclude people who could not demonstrate that they had arranged "in principle" a mortgage offer.

The second circumstance applies if it is believed that the person making the request is not really interested in buying the property or one like it. An example of this might be where a journalist poses as a buyer to gain access to the home information pack relating to a celebrity's home. Another example is that of a serial time-waster who is known to the estate agent.

The third reason allows someone not to provide a copy of the pack if they believe that the potential buyer is not a person to whom the seller would wish to sell the property. There could be all sorts of caveats which a seller might want to attach to the sale of the property. For example, a seller with a prize-winning garden has already been mentioned. He might instruct the agent not to market to anyone who was not a keen gardener and who might neglect the garden.

There are human rights implications here as regards the right to privacy. This subsection simply reflects the current position, where someone can simply refuse to sell his home to a particular person if he wishes to do so, and for no particularly good reason. Having said that, the provision does not affect anyone's rights under the legislation governing discrimination on the grounds of race, sex or disability. In no way can this provision be used to contravene that legislation.

Subsection (5) provides that subsection (4) does not apply if the responsible person knows or suspects that the person making the request is an officer of an enforcement authority. These provisions in our view strike a reasonable balance between the need, on the one hand, for genuine buyers to get copies of important documents and, on the other, for sellers or their agents to refuse this where they believe that there are good grounds to do so.

Amendment No. 188A would remove the right for a seller or their agent to refuse to supply a pack if they believe that the person asking for copies was not someone to whom the seller was prepared to sell the property. While we can understand the sentiment behind the amendment, I believe that the concerns which have been expressed about it are misplaced. The existing legal position is of course being preserved. A seller can choose to whom they wish to sell and to whom they do not. It would be unreasonable to put a seller under a duty to provide copies of the pack to people they know they will never sell to. For those reasons we cannot accept either of the amendments. I am very grateful to the noble Lord, Lord Phillips, for setting out some very good arguments in support of our case.

Lord Hanningfield

I know that the noble Lord, Lord Phillips of Sudbury, gave the Government some little measure of comfort when speaking to these amendments. He also agreed that the wording of the clauses, which concerned us more than anything, can be very much misinterpreted. I agree with the noble Baroness, Lady Hamwee, that there might be some legal challenge to them.

This is the problem with this section of the Bill. When looking for a new house most people want to look at about 50 houses. If I were looking I would want to look at between 50 and 100 houses. One would want information about 100 houses because one would want to visit in a wide area. Most of the people I know looking for a new house look at that number before buying. Because they go to an estate agent and ask for details of 20 houses over a period of two or three weeks does not mean that they are not seriously in the market. But as my noble friend Lord Caithness said, it means an enormous amount of paperwork in the future because one cannot just get the simple detail of a house and look at it and then dismiss it, because one has to have a pack.

Therefore, I believe that these clauses would mitigate against buyers who want to put a lot of effort and thought into the new home. It is about the freedom of the consumer. We have had several discussions about that today. People will finish up with a large number of packs when choosing a new home. I believe that although the clauses are protection fir some people, they are written in a way which can deter and work against the purchase. We shall have all these arguments again at Report, which will take another month at the rate we are progressing at the moment. I shall not pursue this amendment any further today. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 188A not moved.]

Lord Rooker moved Amendment No. 188B:

Page 95, line 36, leave out subsection (6) and insert— (6) That duty does not apply where the responsible person is the seller if, when the request is made, the duty under section 137 does not (by virtue of subsection (2) of that section) apply to him. (6A) But where the duty under this section is excluded by subsection (6), it is the duty of the seller to take reasonable steps to inform the potential buyer that the request should be made to the other person.

On Question, amendment agreed to.

Baroness Hanham moved Amendment No. 189:

Page 96, line 12, at end insert— ( ) All documents and information contained in the home information pack shall be confidential to—

1. (a) the seller,
2. (b) the person acting on his behalf as an estate agent,
3. (c) a person acting on his behalf as a solicitor or conveyancer, and
4. (d) any bona fide buyer or potential buyer."

The noble Baroness said: We had quite a lot of discussion about Internet packs, but we have not discussed how confidential information packs should be and to whom, particularly to those who are on the net. It is very easy to publicise on the net. This amendment is designed particularly to ensure that a degree of privacy is maintained between the various parties in a property transaction.

Clearly, confidentiality is easy to administer when dealing with paper-based documentation, and I shall come back to that. By and large, people respect the word "Confidential" written across the top of a page. But without getting too bogged down in the intricacies and complexities of Internet protocols and security, if a home information pack were to be sent via an e-mail, by and large it would be secure. It will meet the recipient without falling into the public domain.

However, if a home information pack were to be posted on an estate agent's website, it would be publicly accessible and it could be misused. Will these information packs be confidential to those who are given them? It goes back to the question which the noble Lord, Lord Hanningfield, raised a minute ago about the number of packs which people are likely to obtain.

Unusually, in these packs there is a home condition report and, unusually, therefore, there is going to a large amount of information about a particular property if the pack is done properly. Potentially, a great number of people are going to have access to that information and pass it from hand to hand, if that is what they want to do. I suspect that if someone receives a home information pack and then decides not to proceed they will pass it to someone else. There will come a moment when an estate agent will not know who has its information pack.

We need to look at the extent of the role of the information pack and whether there is to be any privacy, particularly on the Internet, to which I have directed the amendment. It is wide enough to encompass the information packs in general. As I say, I believe that there is a potential problem here where there will be a great deal of information available about a property to people who may not have interests which are wholly worthy. I wonder whether we can do something about that. I beg to move.

Lord Bassam of Brighton

In our view this is a valuable amendment because it raises the important issue of confidentiality. We certainly recognise that there are circumstances where a seller would not want information about their property disclosed to people outside the home buying and selling process. I gave one example earlier of the celebrity who might simply see it as a ruse by a journalist to find out more about the home and its contents.

Generally speaking, there is unlikely to be anything in the home information pack which could cause problems if disclosed to parties other than those directly involved in the transaction. That is a generality.

Clause 144 restricts the contents of the pack to information about the property. Information of a personal nature about the seller could not be prescribed for inclusion in the pack. Also, the information contained in the home condition report will relate specifically to the condition of the property and its energy efficiency. It will not contain sensitive or personal information, for example, about security arrangements or even about the way the property is furnished or decorated.

Even so, there could be cases where information in the pack might be obtained and used for purposes that have nothing to do with the sale or purchase of the property and circumstances where the information might be used in a way which offends the seller. Two examples which spring to mind are those where a double glazing salesman obtains home condition reports for the purposes of identifying potential business opportunities and then bombards those properties with sales literature. Even more intrusive would be the example of the public figure I gave earlier.

These are serious issues and we need to ensure that the Bill addresses them and complies with human rights legislation. I believe that the Bill does that. Clause 139 enables any person who has any concern about the use to which any information would be put to impose certain conditions. If they wanted to restrict the category of person to whom the information could be disclosed to those set out in the amendment they could do so.

As I said earlier, Clause 138(4) ensures that sellers and their agents do not have to give copies of the pack, or any document in it, to someone who is not genuinely interested in buying the property or someone to whom the seller would not be prepared to sell the property.

It is worth mentioning in passing that the seller or agent would always have up to 14 days to provide a copy of the pack. In circumstances where there was suspicion it would provide scope for some form of investigation as to whether the buyer is genuine. I am sure that most agents will use that time valuably.

The noble Baroness is right to focus on this serious issue. We believe that we have covered it in the way in which we have framed the legislation. It will be the subject of further discussion as we come closer to the implementation date. No doubt, where there are genuine and real concerns, matters can be further hammered out.

7 p.m.

Lord Avebury

Would it be possible for the person selling the house to provide that a copy of the home information pack should be issued only on loan and that once someone has decided not to proceed with a purchase, it should be returned? It seems to me that that is one way in which a person, who is worried about the dissemination of information about his house to third parties, could protect himself. He would know that anyone walking into an estate agency and obtaining a copy of the pack would have possession of it only for as long as he was seriously interested in the house and that he would have to return it at the end of that process, whether or not he proceeded with the purchase.

Lord Bassam of Brighton

The noble Lord asks a good question. I was going to reflect on it, but I am advised that that may be a condition that could be placed on the release of the pack. That appears to be a reasonable condition. I hope that helps the noble Lord.

Baroness Hanham

I am grateful to the Minister for that. However, he did not address the issue of the Internet. I freely admit that I am not very clever about the Internet, but, listening to my noble friend Lord Caithness earlier, I understand that people can look at an estate agent's website. He asked whether it would be possible for an estate agent simply to say to someone, "The pack is on our website so you can look at it".

One problem about that is the security of that information and whether there is any basis for making that information private. I appreciate that these documents will never be totally private, but I believe that one must try to ensure that they do not get into the hands of the wrong people who will cause trouble for potential sellers.

There may come a time when a seller decides that he will not sell his house but many of the packs will still be roaming around. We then return to the issue of the double-glazing salesman and people ringing doorbells who should not be. We cannot ignore the point. I know that the Minister is briefing the noble Lord, Lord Bassam, as we go along, for which I am grateful, so I shall be quiet and then perhaps the noble Lord can tell me what the Minister is saying.

Lord Avebury

When the noble Earl, Lord Caithness, raised this point about the home information packs being on the Internet, I suggested that to maintain confidentiality, the site could be password-protected or a particular page could be password-protected. When someone applies for a home information pack he would be given the password and the information would be deleted from the site as soon as the sale had been made.

Lord Bassam of Brighton

My noble friend Lord Rooker has helpfully told me that that is standard practice now. I am thinking hard. I have one or two friends who are estate agents and they have a similar system with password-access only. That is probably the key to the point raised by the noble Baroness, that an access provision will be provided. No doubt sellers will want that because they will not want miscellaneous information bouncing around and available to all and sundry. If a seller decides to take his house off the market, he would not want the information left on the estate agent's website. It may be that conditions are applied that ensure that the information is protected. That does not appear to be at all unreasonable.

Baroness Hanham

I am not sure why the Minister does not accept my amendment. In fact, he has done everything but accept it. I offer him the chance to accept the amendment before withdrawing it, with the possibility of returning to the matter again.

Lord Bassam of Brighton

I shall not accept the amendment. I have explained clearly why that is so. In essence, we believe that the concerns of the noble Baroness are quite right, but that the legislation provides the protection that is required.

Baroness Hanham

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Lord Geddes)

I understand that Amendment No. 189A has been degrouped from Amendment No. 185D.

The Earl of Caithness moved Amendment No. 189A:

Page 96, line 12, at end insert— ( ) At completion of the purchase, the buyer of a residential property shall reimburse to the seller or other responsible person who originally paid for the preparation of the pack the cost of the home information pack provided to them. ( ) The total cost exclusive of VAT or other statutory taxes is not to exceed 0.25% of the sale price of the subject property excluding any apportionment for fixtures and fittings.

The noble Earl said: This is a simple amendment. At the moment, Prescott's penalty weighs heavily on every vendor. Every seller will be faced with considerable extra costs. In a good housing market a seller may sell his property quite quickly and the costs may not be too onerous, but in a slack housing market—as when I first set up an estate agency and it took a long time for properties to move—there will come a time when the agent, the home condition surveyor or inspector—he would not be a qualified surveyor and the solicitors will say, "Money please", to the vendor and the vendor, whether or not he has sold his property, will have to pay a large sum of money.

It seems to me that to balance Prescott's penalty, the purchaser should reimburse the vendor, on completion, with the vendor's costs, which are limited by subsection (2). That would make the sellers keen to proceed, as they will want to conclude a sale as quickly as possible and the purchaser will appreciate the commitment into which he has entered. I believe it is a fair and reasonable amendment. I beg to move.

Lord Bassam of Brighton

The noble Earl has been very astute in seeing that the Bill is silent on the issue of how the costs of the pack will be met. That is deliberate on our part. It is clear to us from discussions with the industry that sellers will be able to choose from a wide range of options; for example, some mortgage lenders are likely to provide a free pack as an incentive to sellers to stay with them on to the next purchase. Some voluntary home information pack schemes currently run by estate agents provide a pack without an upfront charge. In some cases the cost is recouped via a commission fee, as one may expect. Alternatively, of course, sellers may choose to pay for packs themselves and seek to reflect the cost in the purchase price.

Our view is that the market will provide consumers with many choices and the imposition of a statutory straitjacket, in our view, would be very unhelpful. That is not what we want. The noble Lord, Lord Phillips—if I may remind the Committee of his earlier argument—said that in certain circumstances it is desirable to have flexibility. We have provided for that. We believe that it would be wrong to impose that as an obligation on the buyer. We do not want to see the cost forced on to buyers. We believe that the market will sort this out. In those circumstances, how the cost of the pack will be met is open.

The Earl of Caithness

The noble Lord is right about fees. The evidence in Denmark is exactly as he has said. In Denmark, since the introduction of the home information packs, the fees charged by agents have risen; they will also rise in this country. The amendment mitigates that fact by putting the onus on the purchaser. The whole of the onus at the moment is on the vendor. The vendor has to commission all the work upfront and it has to be paid for. No solicitor, no estate agent, no home condition inspector will do that for free. That is not the world in which we live.

It would be wrong of me to say that I shall withdraw the amendment and return to it at another stage. I am taking enough on to another stage and it is time to test the opinion of the Committee.

7.9 p.m.

On Question, Whether the said amendment (No. 189A) shall be agreed to?

Their Lordships divided: Contents, 53; Not-Contents, 119.

Division No.3
CONTENTS
Astor, V.	Kingsland, L.
Attlee, E.	Lindsay, E.
Blatch, B.	Luke, L.
Bridgeman, V.	Lyell, L.
Brooke of Sutton Mandeville, L.	McColl of Dulwich, L.
Brougham and Vaux, L.	Mancroft, L.
Byford, B.	Marlesford, L.
Caithness, E.[Teller]	Masham of Ilton, B.
Carlisle of Bucklow.L.	Monson, L.
Carnegy of Lour, B.	Montagu of Beaulieu, L.
Cope of Berkeley, L.	Morris of Bolton, B.
Crathorne, L.	Mowbray and Stourton, L.
Crickhowell, L.	Noakes, B.
Dean of Harptree, L.	Northesk, E.
Dixon-Smith, L. [Teller]	Norton of Louth, L.
Dundee,E.
Elton, L.	O'Cathain, B.
Fookes, B.	Park of Monmouth, B.
Geddes, L.	Renton, L.
Glenarthur, L.	Seccombe, B.
Hanham, B.	Selsdon, L.
Hayhoe, L.	Strathclyde, L.
Higgins, L.	Ullswater,V.
Hodgson of Astley Abbotts, L.	Waddington, L.
Hogg, B.	Walpole, L.
Howell of Guildford, L.	Wilcox, B.
Kimball, L.	Windlesham, L.

NOT-CONTENTS
Acton, L.	Lester of Herne Hill, L.
Allenby of Megiddo, V.	Lipsey, L.
Alli, L.	Livsey of Talgarth, L.
Amos, B. (Lord President of the Council)	Lockwood, B.
	Lofthouse of Pontefract, L.
Andrews, B.	McDonagh, B.
Archer of Sandwell, L.	Macdonald of Tradeston, L.
Avebury, L.	McIntosh of Hudnall, B.
Barker, B.	Mackenzie of Framwellgate, L.
Barnett, L.	McKenzie of Luton, L.
Bassam of Brighton, L.	Mackie of Benshie, L.
Billingham, B.	McNally, L.
Borrie, L.	Maddock, B.
Brennan, L.	Mar and Kellie, E.
Burlison, L.	Massey of Darwen, B.
Clark of Windermere, L.	Maxton, L.
Cohen of Pimlico, B.	Miller of Chilthorne Domer, B.
Corbett of Castle Vale, L.	Morgan of Drefelin, B.
Crawley, B.	Morris of Aberavon, L.
Davies of Oldham, L.[Teller]	Neuberger, B.
Dean of Thornton-le-Fylde, B.	Oakeshott of Seagrove Bay, L.
Desai, L.	Parekh, L.
Dixon, L.	Patel, L.
Drayson, L.	Pendry, L.
Dubs, L.	Phillips of Sudbury, L.
Elder, L.	Pitkeathley, B.
Evans of Temple Guiting, L.	Ramsay of Cartvale, B.
Falkner of Margravine, B.	Rendell of Babergh, B.
Farrington of Ribbleton, B.	Rodgers of Quarry Bank, L.
Faulkner of Worcester, L.	Rogan, L.
Filkin, L.	Rooker, L.
Gale, B.	Roper, L.
Gibson of Market Rasen, B.	St. John of Bletso, L.
Goldsmith, L.	Sawyer, L.
Goodhart, L.	Scotland of Asthal, B.
Gould of Brookwood, L.	Sewel, L.
Gould of Potternewton, B.	Sheldon, L.
Graham of Edmonton, L.	Shutt of Greetland, L.
Grocott, L. [Teller]	Simon, V.
Hamwee, B.	Smith of Clifton, L.
Harris of Richmond, B.	Smith of Leigh, L.
Hart of Chilton, L.	Snape, L.
Haworth, L.	Stone of Blackheath, L.
Hayman, B.	Taylor of Blackburn, L.
Henig, B.	Temple-Morris, L.
Hilton of Eggardon, B.	Thomas of Gresford, L.
Hogg of Cumbernauld, L.	Thornton, B.
Hollis of Heigham, B.	Tomlinson, L.
Holme of Cheltenham, L.	Tordoff, L.
Hooson, L.	Triesman, L.
Howells of St. Davids, B.	Truscott, L.
Hoyle, L.	Tunnicliffe, L.
Hunt of Kings Heath, L.	Wall of New Barnet, B.
Jacobs, L.	Walmsley, B.
Janner of Braunstone, L.	Warner, L.
Jones, L.	Watson of Richmond, L.
Kilclooney, L.	Whitaker, B.
King of West Bromwich, L.	Williams of Crosby, B.
Kirkhill, L.	Williamson of Horton, L.
Layard, L.	Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.

7.20 p.m.

Clause 138, as amended, agreed to.

Clause 139 [Section 138: imposition of conditions]:

[Amendments Nos. 190 to 191A not moved.]

Lord Rooker moved Amendment No. 191B:

Page 96, line 24, leave out "Such"

On Question, amendment agreed to.

[Amendment No. 192 not moved.]

Clause 139, as amended, agreed to.

Clause 140 [Duty to ensure authenticity of documents in other situations]:

Lord Rooker moved Amendments Nos. 192A and 192B:

Page 96, line 42, after "be" insert "— (a)

Page 96, line 43, after first "or" insert—" (b) a copy of

On Question, amendments agreed to.

Baroness Hanham moved Amendment No. 193:

Page 96, line 44, after "duty" insert "to take all reasonable care"

The noble Baroness said: The amendment looks minor, but is intended to tighten up the language used in the clause. "Duty to ensure" is a particularly onerous duty to have, and a fairly unforgiving one. An estate agent can only reasonably be expected to rely on information and documentation given to him by other parties when putting together a pack, if indeed it is the estate agent who puts together the pack. An agent is under an obligation to do all that he can to get all the documentation correct, but he cannot be held responsible for errors that other professionals make.

We therefore propose that the insertion of, to take all reasonable care", would adjust the clause so that its meaning was clear. An agent has to do all that he can, but ultimately errors in documents forming part of a pack have to be the responsibility of the original authors and originators of the information for the document itself. I beg to move.

The Earl of Caithness

My noble friend is absolutely right. My Amendments Nos. 195ZA and 195ZB are rightly grouped with Amendment No. 193. It would be quite unwarranted for an agent or a seller—a private individual, should he be responsible for preparing the pack—to be liable for information that he has not compiled himself.

The home information pack will now be a weighty tome. As I said, in Denmark it is now 800 pages, and only a fraction of that relates to the work of the estate agent. Surely the estate agent is responsible under the Property Misdescriptions Act for the work that is properly that of an estate agent, but where the home information pack includes searches, the home condition report and items from the solicitor, there is no way that he can verify whether those are true. The estate agent should therefore not be the person at risk. I support my noble friend in her amendment.

Lord Phillips of Sudbury

I can only add, in agreement with what has been said, a fact that may not be abundantly clear to everyone who looks at the clause. It will be in the gift of the seller how many agents he or she employs. The innocent agent, if I can call the person that—the agent who did not, for example, prepare the survey report—will have absolutely no say over the agent who did. It seems unfair that they will therefore be lumbered with the bad work of someone whom they had no choice in selecting and of which they were not aware because they did not do the survey.

Lord Rooker

Before I reply in detail, I want to take up a point that the noble Earl just made, because he again repeated something that he has said at least three or four times today. We had lots of correspondence following Second Reading—I accept that it was delayed—in the course of which I gave him information based on information from the chief executive of the Danish equivalent of the National Association of Estate Agents. It was that, in recent years, the home information pack in Denmark had grown to 210 pages. Why the noble Earl keeps multiplying that by four, I do not know.

The figure is not 800 pages, but the noble Earl has given that figure three or four times, notwithstanding the fact that our own consultation paper published 15 months ago gave an example of the home information pack that ran to about 100 pages, 20 of which would be the home condition report. We are not even at the Danish levels, which are a quarter of what the noble Earl has said.

The Earl of Caithness

As I said earlier, the figures that I am using are in direct quotation from the OFT's report on estate agents, in the international comparison section.

Lord Rooker

Okay—I am correcting the OFT then. I gave the noble Earl the figure of 210 pages, in writing. He did not have to use the OFT's information; he could have used that of the chief executive of the Danish estate agents. He has chosen to use a figure that is greater, from this country rather than from the Danes. I assume that the Danes probably know more accurately than the OFT the level of their pack.

We can come back to the issue. As I said, the British equivalent in our consultation paper runs to about 100 sheets—I have not counted exactly—including the 20 pages of the home condition report. They are all there for anyone to see. It was published in March last year, so there should be no surprise about that for anyone outside the House or inside it. I do not have to accept whether Denmark's figure is 800 pages or 200; ours will not be like that. In any case, however great the pack is, everything in it already takes place. All that we are doing is bringing the information upfront. It does not matter whether the figure is 100 pages or 500; the information comes from what takes place now, with the sole addition of the home condition report, which will run to about 20 pages.

I shall return to Amendment No. 193. I thank the noble Baroness for it, because I hope that it enables me to give a satisfactory explanation. In order for the packs to have any value, the information has to be authentic and accurate. However, it is not necessary to import the additional words into the clause. The trading standards officer would not serve a penalty charge notice on someone who had taken care to ensure the authenticity of the content of the pack; it would certainly be most unreasonable to do so. We can put that on record now.

The Bill is long and I do not expect Opposition Members to have read every detail of it; I have not done so myself, which is why I take advice. In fact, there is already a provision in the Bill that makes what I have said clear. Paragraph 6(3) of Schedule 7, which is on page 207, provides that there are grounds of appeal against the service of a penalty charge if, in the circumstances of the case it was inappropriate for a … notice to be given to the recipient". That could usefully be covered in guidance to trading standards officers on enforcing home information pack duties. We will raise the matter with the Local Authorities Coordinators of Regulatory Services.

In respect of Amendment No. 195ZA, it is unnecessary to put those words into the Bill. The trading standards officer would not serve a penalty charge notice on someone who has taken that care.

Amendment No. 195ZB would absolve an estate agent from any responsibility for ensuring the authenticity of the documents in the pack where these have been provided by the seller or a separate company not associated with the estate agent's own business. Acceptance of the amendment would undermine one of the principles of the Bill. Under this, the responsible person—whether that is the seller himself or the estate agent employed by him—is responsible for ensuring that a pack is in place when marketing begins and that that pack meets the requirements of the legislation. If the amendment were accepted, an estate agent who knew for certain that a particular document was not authentic would nevertheless be quite free to hand it over to potential buyers. I do not believe that anyone—the noble Earl or anyone else—would accept that as being right.

We are happy to put on the record that we would regard it as most unlikely that an estate agent who relies on the authenticity of documents supplied from a reliable source will be in breach of any duty to ensure authenticity. I ask the Committee to remember that an estate agent is not taking on legal liability for the documents in the pack. I repeat that the estate agent does not take on legal liability for any of the documents in the pack.

The home inspector is responsible for the home condition report. The local authority is responsible for any local searches. Any redress sought by anyone for problems with documents within the pack is against the person who produced the document. The responsible person needs to be careful that the documents are genuine. I hope that that answers the questions. Some detail is buried deep in the schedules, but that meets the point of the main amendment.

The Earl of Caithness

I thank the Minister for that clarification. It is helpful and it takes us forward.

Baroness Hanham

I, too, thank the Minister for that explanation. It was extremely helpful and it is good to have it on the record. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Rooker moved Amendment No. 193ZA:

Page 97, line 10, leave out "in response to a request" and insert "in pursuance of the duty"

On Question, amendment agreed to.

Clause 140, as amended, agreed to.

Lord Bassam of Brighton

I beg to move that the House do now resume. In moving the Motion, I suggest that the House be again in Committee not before 8.32 p.m.

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

House resumed.