HL Deb 14 September 2004 vol 664 cc1108-66

8.32 p.m.

House again in Committee.

Clause 141 [Other duties of person acting as estate agent]:

[Amendments Nos. 193A to 194 not moved.]

Lord Rooker moved Amendment No. 194ZA:

Page 97, line 23, leave out "a view to" and insert "the intention of"

On Question, amendment agreed to.

The Earl of Caithness moved Amendment No. 194A:

Page 97, line 26, leave out "or may become available"

The noble Earl said: In moving the amendment, I shall speak also to Amendment No. 194B. This is a small but important amendment which would allow estate agents to mention to potential buyers properties which may become available for sale, but which are not yet on the market. We touched briefly on the matter yesterday, but it needs to be looked at again in a little more detail, because it is still unclear at what point a property is deemed to be on the market and a home information pack necessary. We discussed various scenarios that are not classified as marketing; for example, if one was at a dinner party with friends or if one happened to say that a property might become available. The noble Lord, Lord Phillips, asked what would happen if someone indicated that a property might become available at an auction.

The amendment would make it clear that an agent can mention to potential purchasers that a property may become available in the future. I beg to move.

Lord Rooker

The noble Earl is right to raise the matter again so as to clear up any doubts about it. Clause 141 imposes a duty which affects only estate agents and which applies where some kind of marketing activity takes place that is too limited to trigger the duties imposed by Clauses 137, 138 and 140. That duty is to have a home information pack available when a qualifying action is taken. A "qualifying action" is defined as an action taken with a view to marketing, or, following your Lordships' acceptance of Amendment 194ZA, with the intention of marketing. Such an action communicates the fact that a property is, or is about to become, available for sale, but does not put it on the market or make public the fact that the property is on the market.

It may help if I give a practical example of the sort of situation this clause is intended to deal with. An estate agent is instructed to sell a property. Before marketing starts properly—that is, before the "For Sale" board is put up and adverts are placed in newspapers—the estate agent tells a potential buyer on his list that a property he, the buyer, is likely to be interested in is about to go on the market, and invites him to make an early appointment to view. In this example, the property may not be on the market as defined by Clause 131. That definition provides that a fact is made public when it is communicated with the intention of marketing to the public or to a section of the public. In the example I have mentioned a communication with one individual may not be with a section of the public, but would clearly be an action aimed at marketing that ought to trigger the home information pack duties.

Without the provision, estate agents would be free to engage in pre-marketing activities that would amount to marketing in all but name. By deleting the words "or may become available for sale", Amendment 194A would have the effect of allowing an estate agent to tell a potential buyer that a property was about to come on the market, with a clear view to marketing it but without triggering the associated duty to have a pack.

It is important for me to stress that those duties are only triggered when any communications are part of a direct attempt to market the property in question. An estate agent is not in breach of the duty if, for example, he or she remarks to a spouse or a colleague that a particular property is going on the market. This would not be a "qualifying action" within the meaning of Clause 141, provided the communication was not aimed at marketing the property.

I give another example. An estate agent is seen at a property that is not yet on the market, and is asked whether it is up for sale. If he were to answer truthfully and say, "Not yet, but it will be as soon as the home information pack is ready", that would not be a qualifying action either. There is a difference between knowing information and actually marketing to the public. It is self-evident.

Amendment No. 194B would delete subsection (3)(b) of Clause 141, which provides that a qualifying action for the purpose of this clause is an action that falls short of putting the property on the market. I have already explained that the whole purpose of Clause 141 is to capture an activity that, while amounting to it, does not meet the definition of "marketing" set out elsewhere in the Bill. I hope it is clear to the noble Earl, as a professional in the property field, that it is quite obvious whether one is making a communication with a view to marketing the property for sale, or just having a chat about it in the office or at home. The two things are quite different, and hopefully professionals will be able to tell the difference between the two.

The Earl of Caithness

I am grateful to the Minister for the time and trouble he has gone to in responding to my amendment, and I will read what he says with care. However, I am sure he would agree with me that the tighter one legislates in this area, the more difficulties will be created, and the more the unscrupulous will twist and bend the rules for their own potential profit.

Defining it in the way explained by the Minister creates a huge grey area over when a property is on the market. A potential vendor seeking to put his house on the market in due course invites four different estate agents to look at his property. I do not know whether I will get instructions, but I do know that the property is going to come on to the market. I know also that the noble Lord, Lord Rooker, is on my client list and might be on the list of the noble Lord, Lord Borrie, as well. But given that the noble Lord is a good mate of mine, I shall ring him and tell him about the property. I say that I do not know whether I will be instructed, but I know that the noble Lord is looking for a property and has made an offer on a house that is his second choice. In such an area one is not quite certain whether or not one is marketing a property if, five minutes after I have spoken to the noble Lord, Lord Rooker, the vendor rings me to give me instructions.

As I understand the legislation, I would have got away with telling the noble Lord, Lord Rooker, about that property. Five minutes later, however, I could not have done so. That kind of situation represents a grey area that will result in endless disputes. It is something we must come back to because it is not right. It is not helpful to the profession, to vendors or to purchasers.

We have passed the stage of trying to get around the home information pack. If one accepts that we are to have home information packs, it is then the ability to get out there and tell someone that something is going to happen which is still uncertain. People are very keen to buy at the moment. They might not be so keen to buy in three months' time and that will be a different market. However, this is an area where there is a potential for conflict and potential grounds for court actions. That is not helpful to the smooth running of the market.

The Minister has given a full reply, but I think that he understands my point.

Lord Rooker

The noble Earl has given an interesting and wholly practical example, and I shall be more than happy to take advice. He would be in trouble only if he had rung me after receiving the phone call to take instructions. Once he had taken instructions, that was it: he would then have been responsible for the marketing of the property. Tipping me off beforehand is not marketing because he had not been told by the vendor that he was the estate agent and I would not know anything about the vendor.

However, situations will arise where three or four estate agents could be seen in the street taking photographs of the same house and walking in and out. It would be obvious to the neighbours that something was afoot. I have said that we want to cover this 100 per cent, but the world is such that you do not cover 100 per cent for the very reasons given by the noble Earl. However, he has asked an interesting question that in due course will receive an answer.

The Earl of Caithness

I am again grateful to the noble Lord for his further full response. This is certainly one of the areas that we will come back to on Report. We considered it yesterday and have done so again today, so I know that it is a matter of concern to many noble Lords. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 194B to 195ZB not moved.]

Clause 141, as amended, agreed to.

Clause 142 agreed to.

Baroness Hamwee moved Amendment No. 195A:

After Clause 142, insert the following new clause—


A property may be marketed with an incomplete pack in circumstances where reasonable efforts have been made to obtain the missing information."

The noble Baroness said: This amendment provides that a property can be marketed with a pack that is not complete where reasonable efforts have been made to obtain the missing information that would make it complete. By and large, we have not moved again from these Benches amendments that are identical to those moved by our colleagues in another place. This amendment is a duplication, and we have tabled it because the Minister stated in another place that he fully appreciated the sentiments behind the amendment and that it would be unreasonable not to take them into account. He ended by saying: We will now consider"— the matter— further, in consultation with industry and consumer stakeholders".—[Official Report, Commons Standing Committee E; 10/2/04; col. 573.] We are moving the amendment in order to hear the results of the Government's consideration. I beg to move.

Lord Rooker

Amendment No. 195A would provide that marketing could go ahead with an incomplete pack in cases where reasonable efforts had been made to obtain the information. We share the noble Baroness's concern on the issue. I can assure her that regulations to be made under Clause 144(9)(a) will achieve this effect without further amendment to the Bill.

Baroness Hamwee

I am grateful for that. When we see the draft regulations such amendments will not be necessary. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.45 p.m.

Baroness Hamwee moved Amendment No. 1958:

After Clause 142, insert the following new clause— Residential properties in disadvantaged areas The duties under sections 137 to 140 do not apply in relation to residential property in disadvantaged areas.

The noble Baroness said: This amendment excludes from the duties under Sections 137 to 140 residential property in disadvantaged areas. It is commended to us by the Law Society, which says that the term "disadvantaged areas" is found elsewhere in legislation. It has been defined for the purposes of special stamp duty exemption. Noble Lords who live in certain areas south of the river but close to Westminster will be aware of the special stamp duty exemptions.

The Secretary of State may seek to make regulations in respect of low value properties in areas of low demand where the cost of the pack preparation is a disproportionately high value of the property. At the other end of the scale it is suggested that standard home information packs will be wholly inadequate for large or unusual properties. In this case I am seeking to draw the Minister's attention to the lack of proportionality where the property is of low value. Rather than pointing to the individual property, this is a similar blanket exemption drawing on the analogy of the stamp duty provision. I beg to move.

Lord Rooker

I understand the reasons why the amendment has been moved. I cannot accept it, but I believe that I have a reasonably positive answer. If it is considered necessary, it has always been our intention to make special arrangements for sales of low value properties in low demand areas in regulation and not on the face of the Bill. This could be done under regulations made under Clause 143, which enables the Secretary of State to provide for other exceptions from the home information pack duties.

Alternatively, we believe that the regulation-making power in Clause 144 enables the Secretary of State to tailor the contents of the home information pack. This power could be used to make different provisions for different areas and different descriptions of property. The noble Baroness spoke very briefly, but it is important to put this on the record.

The amendment concerns the effect that home information packs could have on the sale of low-value properties, particularly properties suffering from low demand. People based in the south-east, the London-centric people, have difficulty getting to grips with the idea of low demand and falling prices. I can assure them that in parts of the north-east and north-west that is indeed the situation. It was a matter of some concern in the Homes Bill, which was before Parliament before the last general election. We promised to consult further on that important issue.

Since then, we have commissioned further and more detailed research and consulted on a range of options for addressing any problems that these proposals might cause for sellers in low-value, low-demand areas. The consultation paper and an independent report on the outcome of that consultation have been made available to the Committee.

This is a difficult issue. I know I shall be asked on what date and when it was deposited, but no doubt I shall find out before I sit down. I can assure the Committee that it is not a secret document. We need to strike a balance between, on the one hand, any disproportionate effect of introducing compulsory home information packs for very low-value properties I am talking about properties that are sometimes bought and sold in pubs for less than £5,000 in the north-east—and, on the other hand, the need to avoid stigmatising the properties or the area even more than they are now. We also want to avoid creating anomalies and denying the benefits of the pack to buyers who may be particularly vulnerable in the absence of good information about the home that they are buying.

It was certainly the view of the researchers that the Government should not make special arrangements for sales of low-value properties. That was also the view of the majority of those who responded to the consultation exercise. If the Government were to intervene, the best option was felt to be a cash limit, so that those sales below a prescribed amount would be exempted from some or all of the home information duties.

Interestingly enough, the option that found no favour whatever was one that would have attempted to define areas in which different arrangements for low-value sales would apply. That would rule out, for example, the housing market in all Pathfinder areas, the nine areas of the country that are well defined on maps. People who live in those areas know that not all properties are low-value and low-demand properties, but they are the most difficult places in the country. If anyone thought of doing that it would be ruled out.

In view of the outcome of our research and consultations it would not be appropriate to put an exclusion on the face of the Bill. We want to do the right thing for those who live in areas where the housing market is not functioning properly. We shall consider all views before deciding whether it is appropriate to make special arrangements in regulations for those properties.

We have heard the speech of the noble Baroness—I do not criticise it but she did not address some of these issues. The next sentence in my brief, which I am almost reluctant to read out bearing in mind the constraints that we are under, says that I shall report back to my right honourable friend the views expressed in the debate on this amendment. It is no good if the noble Baroness expresses no views and I am the only one to do so. In other words, we have addressed the issue.

There has been some research and consultation on the matter which has steered us away from what would be a seductive solution for people with whom we do not want to be disproportionate and heavy-handed, but we do not want to make matters worse than they already are by stigmatising a particular area. If we come to some arrangements, there is capacity in the Bill to do that in regulations. The probable way through would be to put a cash limit on it, so that homes marketed at less than a certain value would have a different set of rules.

This is a very difficult issue. We are talking about people's homes. People do not like being told that they live in low-value, low-demand areas, but they know when they do. When there is large-scale abandonment of properties, street by street, it is a very serious situation. The Pathfinder programme is beginning and, as I say, it really only started full operation this year. We have announced the early funds to eight of the nine areas—the final one will probably be settled before the end of the year. They were levering much more money than we are allowing them, but it is not a five-minute programme. It is not even a five-year programme in some cases. We have to deal with that. But people are buying and selling homes in these areas and we have to take account of that fact.

The unusual thing about the market renewal pathfinder programme is that it is the first time that I can recall any housing renewal programme having as a policy objective the aim of raising the value of properties in the area. Nor did that happen with any schemes that I dealt with for my former constituents—whether it was housing renewal areas, housing action areas or urban regeneration areas—although that may have been a spin-off of those schemes. But one of the avowed policy objectives of the housing market renewal programme is to raise values in the area, restoring the equity and giving people the confidence to invest in those areas and to recreate those communities.

Obviously there is a massively complex programme of work to be undertaken. While that is happening, we do not want to cause any stigmatisation by putting a red line around those areas. Therefore we will look at this matter as it is a serious issue. As I said, I welcome any comments on the matter.

The Earl of Caithness

I am grateful. I will take up that offer. Seldom does one get an offer like that from the Minister and when one does one cannot resist it.

I raised the question of low-value homes on Second Reading of the Homes Bill on 28 March 2001, (col. 351 of Hansard). Could the Minister tell us more about what is in his mind with regard to regulations? He is going to create two tiers of market, anyway. If one has a different set of rules for a property below a certain capital value, one has a two-tier market and stigmatisation for that bottom tier. I agree with him that it is a very difficult problem to get right. The Government have set themselves on this course and they have to get themselves out of this hole.

When the Minister talks about a different set of rules, is he talking about not having a home condition report, or not having a home information pack? Will it be entirely voluntary? Will it be a partial home information pack, or a partial home condition report? We have to look at the situation of not just the low-value home but of a bad market. If it will be difficult to sell a house in good condition in that market, it will be even harder to sell a house of low value that is not in good condition. If that house is not in good condition and there is not a home condition report on it, the problem that the Government are creating gets more intensified and magnified.

I ask the Minister to tell us a little more about this matter as it is an area that we ought to be able to debate. It is fine for the Government to say that they are thinking about the matter and that they will produce regulations, but for people in such a house there is probably another problem: they may be living on very low incomes. If they had a better income they could move. There could be horrendous problems—low capital value, low income, a bad market and a whole lot of costs imposed on them by the Government before they try to sell their house. If the house does not sell, how can they afford to move? There is no way that they can do so; if they could, they would be out of that house. Can the Minister tell us more about that situation?

Lord Greaves

Does the Minister want to answer?

Lord Rooker

No, because I have not got an answer. I invited the thoughts of noble Lords. Some of the issues raised by the noble Earl are the very matters that we will have to consider. We are in listening mode having done some research and consultation. First, we have not said that we will proceed. I said that if we choose to proceed we would probably go for the monetary value rather than a geographical designation because of not wanting to black list an area.

Secondly, we would come up with some other form, which could be a variation on the home information packs. One can think of several variations, some of which the noble Earl touched on, to lessen the burden so that it is proportionate to the issue relating to someone who has a low-value property to sell.

9 p.m.

Lord Greaves

I congratulate my noble friend on raising the issue as it is important, although I am not sure that the amendment is the way to deal with it. Nor am I sure how far areas of disadvantage—I am not certain what they are—coincide with the market renewal Pathfinder areas. There must be some areas of disadvantage and very low house values that have not been designated as part of the Pathfinder areas, That is bound to be the case; it may be pockets here and there, or may be larger areas. If something is to be done, it is important that it not be available only to the Pathfinder areas.

As I said yesterday, I look at the matter from the point of view of the east Lancashire Pathfinder area in particular, which I know quite well. I do not live in it, but I live almost within spitting distance of its boundary. As the Minister said, it is a very important project. Such areas will sink or swim by its success, at least for the next 20 years.

I am not too concerned about stigmatising areas that have already been defined as having a problem of low demand and low prices. An example would be someone who lives in an area such as Burnley Wood in Burnley. I do not know whether the Minister has been there, but some of his colleagues certainly have, and they were all astonished to learn that they could buy whole long streets for five-figure sums—every house in the street. People would have grabbed their hands and said, "Thank you very much", because no one else will pay a penny for them. Such areas are extreme examples of a problem, and extreme within an area such as east Lancashire.

It is clear that, in such areas, the cost of producing the housing information packs could be a bar to even selling a house at all, because it would be a relatively high proportion of the total cost. The matter needs to be looked at. However, particularly in Pathfinder areas throughout the country, if there are to be different rules for cheaper houses, it is important that they be made in a way that is seen as part of the overall package of what is being done in those areas.

By that, I do not only mean the overall programme to stimulate the housing market there; in some of them it is being stimulated already, simply by the fact that they have been declared Pathfinder areas. In some of them at least, including parts of east Lancashire, house prices are going up at an astonishing rate, which appears to be at least in part a response to the fact that they will be such an area. We say that we are going to stimulate a market and—markets are funny things—sometimes that in itself results in the market being stimulated. However, there are still lots of housing problems there, such as the empty and run-down houses and the areas that need refurbishment, into which we hope that the investment will go.

There would be no harm in tailoring what is done in Pathfinder areas at least as part of the package. I do not know whether we could have different rules for different parts of the country but that might be a good idea in the Pathfinder areas, which are being targeted specifically.

I want to echo what the noble Earl said—people are buying the properties. Perhaps he did not say that; perhaps the Minister did. It is important that those people have the same protection as people in other places. They may buy properties as owner-occupiers, or may take advantage of a new generation of housing grants being made available in some of the areas to revive them. If people are doing that, there will be a lot of investment in those houses. They should be thought of as being potentially higher-value houses, although they might still then be sold for between £40,000 and £70,000. People in London might still think that incredibly cheap, but those of us who know the areas well and see some such prices being achieved think the way that they are going up extraordinary. In order to help the sellers, we should not be forgetting the buyers.

In other cases, where the houses are now being scheduled for demolition, it is important that people from other areas—perhaps from the south of England who think they are dirt cheap—should not be buying them on the Internet or in any other way and ending up with houses which will then be taken off them to be knocked down. Again, it is important to think that the full information is provided as in other areas.

The Minister's comments in relation to this were interesting. They and the Government's approach seemed to me to consist of a great deal of common sense

Lord Rooker

I am grateful to the noble Lord, Lord Greaves. He is right that the mere announcement of a board, the publication of prospectuses and the plans, the injection of the seed-corn or start-up money and the gearing of other moneys has already had an effect. Even people who have speculated would, in the normal course of events, be annoyed. However, it is recreating what disappeared—a functioning housing market.

If one is London or south-east centric, it is difficult to grasp the scale of what is happening—and not only in the Pathfinder areas. Not all the Pathfinder areas are incredibly low-demand and abandoned—there is one in which that is not the case—and the geographical approach would not be the right way forward, for reasons I have given.

I will make a final point. The whole Bill is a consumer protection measure. If we made special reasons or regulations which exempted some or part of the home information pack system, we would not want to reduce the protection for the buyers and the sellers. That would be against the grain and quite unfair. People might be buying a low-value property, but they would be entitled to have the consumer protection back-up in so far as we can provide it so they are not materially disadvantaged. That is a point we will take on board and I am grateful for what the noble Lord said.

Baroness Hamwee

I, too, am grateful to my noble friend for his thoughtful contribution. At the beginning of my comments, I mentioned London to see whether I might spark a little recognition from some people. I know they live in the areas that are, as the Minister put it, red-lined for the purposes of stamp duty exemption. We have red-lining and designations for that, for selected licensing—when that is enacted—and for the market renewal Pathfinder barriers.

Not long ago, I, as executor, sold a flat which had belonged to my uncle in Salford. It eventually sold for something like £25,000, but it took about three years. I wonder what I would have done if I had had to produce the home condition survey and so forth and then keep on renewing it. It was enough putting in new carpets, a new kitchen and so forth to make it look more attractive. Commonsense issues are involved.

I might have taken the flat off the market and let it sit empty. But I probably would not have because I would have felt desperately uncomfortable about it. It goes against all my instincts about using property. I am sure that the Minister understands.

When the Minister was talking about the Pathfinder areas, my noble friend Lady Maddock asked whether the Government had considered using Pathfinder money to pay the cost of these packs. That is another comment that the Minister can take back to his right honourable friend. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 143 agreed to.

Clause 144 [Contents of home information packs]:

Baroness Hanham moved Amendment No. 196:

Page 98, line 19, at end insert "; and ( ) the core elements of the pack which must be made available before any marketing of a residential property may take place

The noble Baroness said: This amendment would place on the Secretary of State a requirement to make regulations relating to the key parts of the pack that must be made available prior to, or at, any marketing of the property. Again, it is made against the background that we do not think that the packs should necessarily be available on day one. However, it is a situation that might arise.

The amendment should be taken in the context of the other amendments. To touch briefly on the marketing aspects of this matter, it may be the case that the property is marketed in one way or another some time prior to the detailed negotiations commencing. Of course, marketing a property does not mean that the property will necessarily be sold.

It is also vital that a person who wants to market his property is able to do so as speedily as possible. It should be the case—the Minister, who has temporarily left his place, has said that he would expect it to be so—that many of the packs will be available within four or five days. I think that most of us consider that that will be a triumph of hope over what will become experience, but it should be possible to organise a pack within two weeks. That will happen only if information is held by local authorities and made available on-line and if the home condition report can be carried out in the shortest possible time, which will possibly not be the situation to begin with. Therefore, if someone is to be able to market a property without a pack, there needs to be a sharper definition of what constitutes marketing.

There may be a legitimate reason why a piece of information for the pack cannot be readily obtained, and it seems to us wrong to hold up the marketing of a property in such cases. However, it would seem sensible that a set of core information should be included in the pack before any property can be marketed—for example, applications for searches, terms of sale and the seller's property information, all of which will probably be available quite quickly, as it certainly should be under e-technology. But other aspects may not be quite so easily obtainable.

I think that this is an area which is worth discussing and considering in the light of the marketing aspect. For most people, the marketing will be delayed in any case by the necessity to get information into the packs, and that has the potential to hold up a sale substantially if a property cannot be marketed without all the elements of the pack being available. I beg to move.

The Earl of Caithness

I support everything that my noble friend has said but would add one thing, which I mentioned yesterday. I refer to the case of leasehold properties—flats—and the difficulty of obtaining information from managing agents. I re-read what was said yesterday and I think that we still need to address this problem.

The unavailability of such information is often one of the factors that delays the sale of a flat. If one does not obtain it from a managing agent for whatever reason, the property must still be allowed to be marketed. It penalises the occupier or tenant of that flat unreasonably if he has to wait for all the final details. He may obtain some information from the managing agent. The managing agent may be able to tell him what repairs were done last year but he may not be able to say what repairs were done the year before or the year before that. He may not be able to tell him about the sinking fund. There may be information that he cannot give readily about the future expenditure plans, other than normal repairs and maintenance, but he may not be professional enough to have the whole schedule readily at his fingertips or, indeed, he may not have obtained that information from the owners of the property or the tenants' association. Therefore, many areas are involved in what my noble friend says and there must be a time at which one can get on and begin the marketing process without the full information being available.

9.15 p.m.

Lord Borrie

Clause 144 is important and entitles the Minister to make regulations specifying what documents and what information should be in the home information pack, which we have now been discussing in one form or another for some time. It is obviously a vital provision of this part of the Bill.

We all know that regulations can be changed from time to time. If, following certain trends of thought from those who have spoken so far, the Government were too ambitious in their requirements in regulations as to what should be in the home information pack, that could be altered. However, it seems to me that if one introduces this core element, which is the phrase used in the amendment tabled by the noble Baroness, that is a subtlety too far. I notice that Opposition Members through this Committee stage have been talking about the dangers of over bureaucratising the Bill and the provisions and therefore getting into legal and perhaps litigious arguments as to what is meant. We are introducing, it is suggested, the phrase "core elements" when, as I say, the Government have every ability and opportunity under this clause to say what they want and what they do not want and, indeed, to alter that assertion from time to time if they feel that they have required too much or too little in the home information pack.

Either noble Lords are seeking too much subtlety or this is, I fear, yet another way of trying to reduce the number of things that should be given to enable the buyer to make a sensible decision as to whether to make an offer after the property is marketed.

Lord Phillips of Sudbury

This is obviously a hugely important practical matter and any conveyancer will say that it is. Could not the answer to this amendment—indeed, it is similar in intent to Amendment No. 195A moved by my noble friend—be for the Government to commit themselves to early consultation with the Law Society and the Royal Institution of Chartered Surveyors to ascertain from them the timing for the production of different documents in the pack, given that Clause 144(9)(a) already permits the Government to prescribe different times for the production of different documents.

I think that we are all batting on the same side here but I suspect that we want some reassurance that the Government are fully aware of how important this is, have early consultations and give early indications, therefore, as to just how they are going to deal with it.

Lord Bassam of Brighton

This amendment seeks to place an obligation for core elements of the pack to be available when marketing first takes place. Similar powers are already contained in Clause 144(9). As we have explained in the policy notes, which we have made available to the Committee, our aim with pack contents is to try to strike a reasonable balance between comprehensiveness and cost. We propose to include in the pack only those documents that are relevant to the property and its sale and are likely to be of interest to potential buyers and help them to make informed decisions.

The proposed contents set out in our consultation paper provide information which if not disclosed upfront could later threaten or delay the transaction. Our intention, therefore, is that all documents prescribed for inclusion in the pack will be core documents.

We have gone over this a fair bit, but I want to make one point which I hope will offer more reassurance in particular to the noble Lord, Lord Phillips; that is, we are approaching this with goodwill. We are intending to consult very much with the property professionals so that we get this right and we are very sensitive and in listening mode. Although I can sense some of the difficulties from what has been said, particularly by the noble Earl, who is close to this from his own practical experience, I think it right that we try to tease this out in the consultative period that we shall have. That should enable us to be much more sensitive to market problems and pressures and so forth.

I thought that the point about getting information from managing agents was particularly valid. It is worth saying that if information required for the pack simply is not available because of some obstruction, whether intended or not—perhaps because the information simply does not exist; the noble Earl said that it may be hard to obtain certain information—our expectation in those circumstances would be that marketing could commence without it. But if the information exists and despite reasonable efforts it is not available within a reasonable timescale then we propose to provide by regulation that marketing can commence and that the missing information can be added when it practically becomes available.

So we shall be sensitive to that issue. On talking to friends who have difficulties with managing agents and learning of the difficulties that sometimes tenant or leaseholder groups have in teasing some of this information out, I can well appreciate the difficulty that the noble Earl refers to.

The Earl of Caithness

I am very grateful to the noble Lord for giving way. Perhaps I may press him a little further on his words "reasonable timescale". How long is a "reasonable timescale"? I have asked the noble Lord as managing agent to give me the information, and I am still waiting. When can I go ahead and market the property of the noble Lord, Lord Borrie?

Lord Bassam of Brighton

I am not sure that I want to be pressed on that; nor do I think that the noble Earl is right to press for a precise answer. I do not think that one could be that prescriptive in these circumstances. It would depend on the information being requested and what is reasonable in the circumstances. I think the noble Earl knows that.

I return to the point I made at the outset. We will listen to what we take to be sensible, practical professional views on this issue and make sure that we get it as right as we possibly can.

Baroness Hanham

If we had not put down this amendment, we would not have teased out some quite interesting answers from the Minister. I think the Minister admits that it is entirely possible that elements of the pack will not and cannot be made available immediately.

We have been talking about the speed with which people want to put their properties on the market. In fact, if they are going to have to provide the whole of the home information pack at the beginning, potentially there will be delay to that. It could be delayed even further by the fact that they could not get the information. If the Minister is agreeing that some of that information may not be available, but that it is perfectly possible for someone to market his property by saying that the information is going to come—the obvious moment by which the information has got to be available is by the time the purchaser is beginning to look interested in buying the property—the answer seems to me to be that it would be possible to start marketing the property without some of the information available.

The amendment was really seeking to find out whether there were particular documents which could and probably would be made available quite quickly—whether you could start with those and then pile in afterwards with the more difficult ones. As my noble friend Lord Caithness has rightly pointed out, there are many difficulties with these services. I can perceive difficulties with getting the home condition reports if the provision comes into effect.

The noble Lord, Lord Borrie, said that regulations can always be changed. I do not know whether the Minister's heart sank at that, but mine certainly did because it seems to me that the evidence which would be required in order for regulations to be changed once they had been made would be quite startling and we would never get there.

However, I think that we have an admission from the Minister that the entire contents of the pack may not be available on day one on many occasions; that there will be leeway for people with a valid reason for not having it; and that they will be able to market their property without the information being there immediately.

If the Minister had accepted our earlier amendments which provided that the information did not have to be available in the first two weeks, we would have been home and dry and I would not have had to table these amendments.

Lord Bassam of Brighton

I take the noble Baroness back to the point that I made. What she seeks in effect is already there—in the provisions of Clause 144(9). I said very early on in my response that similar powers are already contained there. That is the key to the answer. We are, of course, going to be flexible in the way in which this is approached.

Baroness Hanham

Yes, it says that the regulations, may … provide for the time at which any document is to be included". My concern is that there are some documents that may not be able to be included, no matter how many regulations the Minister makes about the time at which they must be available. The problem is when they cannot be available within the time that the Minister says. We may come back to this but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hamwee moved Amendment No. 196A:

Page 98, line 19, at end insert— ( ) Before making regulations for the purposes described in subsection (1), the Secretary of State shall consult with representatives of those bodies likely to have an interest in or be affected by the proposals. ( ) A statutory instrument under this Part is not to be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

The noble Baroness said: I have been wondering when the noble Lord, Lord Borrie, is going to say, "Okay, I give in, the noble Lord can market my property". Maybe that will come before we conclude the Bill or perhaps the noble Earl should choose another—I was going to say "victim", but I do not mean that—potential client.

This amendment might more logically have been dealt with under Clause 213 but its substance comes quite neatly at this point. The amendment provides for consultation with representatives of appropriate bodies before regulations are made and that regulations should be subject to the affirmative resolution procedure.

We have heard a lot about what regulations can cover in order to deal with matters that your Lordships have raised by way of amendments to the Bill. We have been assured that a whole range of items can be dealt with, if necessary, through regulations. But this is such a wide ranging and fundamental change to the way the domestic property market will operate in the future that it must be right to give this House and the Commons the opportunity to debate the regulations before they are introduced. We are treading new ground—or new water, I am not sure which one does.

A noble Lord

It depends who you are.

Baroness Hamwee

I am not a very good sailor; I will tread ground.

I heard what the Minister said about the groups that have been consulted. In part, that is behind my earlier request to see what survey work has been done. Of course, I do not doubt his assurances about the research and consultation that has gone on, but it would be helpful to see it.

The Minister will probably say that the first part of the amendment is not necessary because the Secretary of State will do it anyway. The purpose of the second part of the amendment is to ensure that, if we do end up with a compulsory scheme, we, and the Commons, get the opportunity not just to express views but possibly even to contribute to a scheme that is slightly better at the end of the resolution procedure. I beg to move.

9.30 p.m.

Lord Bassam of Brighton

We have had a bit of discussion on Clause 144. It sets out the provisions relating to the contents of the pack, as we have discussed, and it gives the Secretary of State the power to prescribe, through regulation, the documents that are to be included in the pack, the formats in which they should included and the information to be included in them.

The regulations will also say who may provide the documents and who has a right to rely on them. They may also specify the time at which any document is to be included in—or removed from—the pack and make different provisions for different areas or different property types.

Amendment No. 196A would add a requirement that the Secretary of State must consult representatives of interested and affected bodies before making regulations under Clause 144. That is a very important point. As I have said many times, we need to ensure that we get the content of the pack right. For that reason, we are committed to having detailed consultations. We want to maximise the benefits for consumers and, at the same time, take full account of the needs of the property industry and the professionals who play a key role in the transaction process.

I am going to make a big admission, which is simply this. I would not want to claim at any stage that all the necessary expertise resides in central Government. That is why, from the outset, we have involved all the main professional and trade bodies, as well as consumer representatives, when researching and developing our proposals.

I think that it is accepted that we have consulted widely on the major issues. Stakeholders are involved in the new programme management structure and the various working groups that we have set up to advise on the detailed contents of the pack. At every stage, we have been very accepting and welcoming of their active participation and co-operation. I can assure Members of the Committee that we will continue that process until we get beyond the point of implementation. I cannot say that we will always agree: that would not be right and it would be dishonest of me to say that. We will of course take careful account of and review their views.

We do not have a problem with full and proper consultation. The intention behind the amendment is one that we share. However, the difficulty is that to consult is such a general duty. For that reason, it is a little unhelpful. It would leave the regulations open to challenge by any person or body that may have an interest, however remote, were they not consulted.

The noble Baroness will have heard me say before, on this and other legislation, that there is a problem with specifying on the face of legislation those bodies that should be consulted. Inevitably, over time, new bodies are set up and existing ones merge or cease to operate. Interestingly, in the property field that happened not so long ago with the Institute of Valuers and Auctioneers, which was originally represented on our home buying and selling steering group. As I understand it, it has now merged with the Royal Institution of Chartered Surveyors.

Lord Phillips of Sudbury

I am grateful to the Minister for giving way. Will it help if I remind him that the legislation under the Anti-terrorism, Crime and Security Act 2001 had an almost identical consultation provision in it?

Lord Bassam of Brighton

It is quite likely that it did. But legislation and needs vary, do they not? Amendment No. 196A would also change the Secretary of State's regulation-making powers from a negative resolution procedure to an affirmative resolution procedure. I know that that is a popular change to make in legislation. Obviously, we have consulted with the Delegated Powers Committee. My understanding is that, currently, it is content with what has been set in train in the legislation. Of course, if it was to express a different view, we would have to take that into account when bringing changes forward later.

We feel that these issues are best dealt with through regulations rather than in the Bill. It is important to have flexibility to amend any regulations that are put in place in response to changes in the housing market. For example, changes in the market may make some items of the pack redundant or new sources of information may come to light. As presently drafted, the negative resolution procedure is right, should it prove to be necessary to make some changes.

For those reasons we resist the amendment, although, as I think I have probably expressed in my response, we certainly understand the thinking behind it. It is certainly our intention to consult extensively, in detail and as sensitively as possible. We know that so far, in bringing the legislation forward, we have benefited greatly from the wisdom of the various interest groups, property professionals and institutions that advise us.

The Earl of Caithness

The Minister speaks wonderful honeyed words. He has read out some beautiful bureaucracy. He has an excellent speechwriter—I will give him that—"We are listening; we are sympathetic; we are in listening mode." The Government might be in listening mode, but what have they done since we discussed the seller's pack? The only thing they have done is to change from criminal to civil penalties. They have done nothing. They have been in listening mode on the whole of Part 5, and what have we got? Nothing but a straight block.

My goodness, Geoffrey Boycott looks like one of the most engaging batsmen in the world compared to how the Government are defending this provision. They know that they have a duty to get it through, forget about what everyone is saying, soothe them down and give them some nice words. We could do with a bit more from the Government than just listening mode. If they are listening, the fact that so much solid good evidence and hard argument has been put forward from so many people in Committee and yet we have got nothing out of the Government is extraordinary.

Will the Minister confirm that by no means all those taking part in the discussions are in favour of what is going to happen? For instance, the National Association of Estate Agents, which has been heavily consulted, was very in favour of the seller's pack. That was because the chief executive at the time thought it was a good idea. When the members started to say, "Hang on, chief executive, this is not such a good idea after all", he eventually had to resign because he was totally out of touch with his membership.

He has gone on to help the Government in other ways, but the fact remains that the National Association of Estate Agents is not united in support of Part 5. Its members are against it. They might have to work with the Government, but we all have to work with the Government. Will the Minister confirm that many of the people with whom the Government are negotiating: the Council of Mortgage Lenders, the National Association of Estate Agents—many organisations—are trying to knock some sense into the Government because they are concerned about Part 5? Besides consulting and listening will they please take on board some of the advice being given to them?

Lord Bassam of Brighton

I said earlier that we did not always expect to agree with representations made by everyone. The noble Earl is aware of the balance of who is in favour and who is against. He has read the quotes and seen the articles in newspapers, but that does not deflect us at all from believing, understanding and approaching this set of propositions with confidence.

We accept that there will be difficulties in implementation. My noble friend Lord Rooker has made it clear that we will listen sensibly. We have given ourselves a lengthy lead-in period for implementation. We have made it plain that there will be a voluntary period running up to the implementation date, the setting of regulations, and so on.

Of course there will be differences, but that does not mean that we will not focus on practical issues that come up. We have made it clear from the outset that we will listen to those making a practical case on particular difficulties. The noble Earl is being too pessimistic. I am an optimist in these matters: I think that we can get the legislation right and that consumers of estate agents and buying and selling services generally will welcome it over time because they will see that it has improved the process, made the market much easier to understand and enabled them to be much more confident in buying the home that they want.

Baroness Hamwee

The Minister commented on the first part of the amendment and suggested that one reason for not accepting it was the difficulty of knowing who had merged with whom at any given time. The amendment does not suggest continuous consultation but consultation for the purposes of the proposed regulations. I do not take that point.

As to the issue of regulations by affirmative resolution, the noble Lord, Lord Dahrendorf, who chairs the committee to which the Minister referred, has said to me on many occasions that he does not necessarily expect the House to follow the advice of that committee. It gives advice to the House, not a prescription. We happen not to agree with its approach to this matter.

These are very important regulations. They are almost of the status of the primary legislation in their importance. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 197:

Page 98, line 25, leave out subsection (4) and insert— (4) A responsible person shall not commit an offence if he excludes a relevant document from the home information pack, provided the document does not detract from the value of the property.

The noble Baroness said: Having listened to the previous comments of the noble Lord, Lord Bassam, I am tempted to say that if the Government are so confident about these packs it might be a good idea to introduce them voluntarily rather than imposing them. They could then watch people jumping through hoops to get their packs because they will think that they are an overwhelmingly good idea.

That is not what my amendment is about. It is just a comment, which needs to be kept running through the debate, that a voluntary basis would be better than what the Government are trying to do.

As it stands, subsection (4) of Clause 144 is very broad. It states that "relevant information" means anything to do with a property or the sale of a property. We need to test where that ends. For example, a large number of residents living in the counties of Essex, Hertfordshire and Cambridgeshire are currently in the process of fighting the proposed expansion of Stansted airport as they feel that any such development may have an adverse effect on the value and amenity of their property.

We will not know whether that is right unless or until the threatened expansion takes place. However, in the case of the residents to whom I have alluded, if they were going to sell their property and a search—if they did not know about it through publicity—threw up the possibility of an airport, would they need to have a copy of the Government's transport White Paper included in their home information pack so that prospective buyers could make an informed choice about whether they wanted to live near the biggest airport in the world?

The question is only slightly facetious because there will be many other examples where there is a specific problem in a specific area, such as wind farms. There are all kinds of things that may need to be included. It is a question of where the pack ends and whether we go from 200 pages to 800 pages. I beg to move.

Viscount Ullswater

I support my noble friend's amendment. The home information packs will be prescriptive and made by regulation. Subsection (5) contains the kind of information which the Secretary of State may consider to be relevant information. The Explanatory Notes almost mirror the smaller items in that subsection.

I should like to inquire about the Minister's views on the importance of including environmental reports in home information packs. I am advised that well over 50 per cent of all conveyancing transactions utilise an environmental report and that lenders are increasingly requesting them. They provide an assessment of the environmental risk, which has an effect on the value of the property. Many environmental factors are important also on health grounds. Perhaps an environmental report should be included in the home information packs.

The report should provide in particular a statement on whether a property's site could potentially be classed as contaminated land. That is crucial, because, under the Environmental Protection Act 1990, the homeowner is liable for remediation costs when the original polluter cannot be traced. I am sure the Minister will understand that remediation costs can run into hundreds of thousands of pounds. I am thinking of old brownfield sites in city centres—for example, old gas works, old tannery business sites and old canal basins—filled with waste on which houses have subsequently been built.

The report should perhaps contain a clear summary of the environmental information that is easily understood by consumers with no previous experience of those issues, along with a clear explanation of where they should go for further help and of where liability lies if they have a dispute. Important considerations such as subsidence, radon gas and flooding should perhaps be covered as well.

If that kind of information is not included, it could result in two searches being carried out—the first for the home information pack and the second by the buyer's solicitor, which would be a completely different level of search. I believe that the Government expect the home information packs to obviate the need for the buyer to conduct his own search, but without that kind of information, the packs will not achieve what the Government set out to do.

The amendment states that a person would not commit an offence if such relevant documents were omitted. Will the Minister give his view on the kind of environmental information that I have discussed?

9.45 p.m.

Lord Avebury

Perhaps I may add a few words to what the noble Viscount said about subsidence. In the part of London where I live, Camberwell, our insurance company suddenly imposed a very large increase in the premiums because it said its experience in the postcode in which we were living was of large claims having been made under buildings insurance policies for subsidence. That came completely out of the blue and I am happy to say that we were able to switch to another insurance company which had a different policy. That is a good example of the kind of information of which an unwary purchaser might not necessarily be aware if it was not included in the home information pack. Therefore, whatever information is available about the insurance experience of properties in a particular area should be included in the pack.

Some noble Lords mentioned flooding. As your Lordships will be aware, there have been some remarkable instances of serious flooding in low-lying areas where houses have been built on what is described as the flood plain. I hope that future expansion of housing in this country will take careful note of that phenomenon and ensure that new building is kept well away from such areas. Some large housing estates are already vulnerable to overflowing rivers. A purchaser would be entitled to know something about that.

I understand that the Prime Minister has today warned about the serious effects of global warming. That may have an effect on properties in certain areas; for example, on the coast of East Anglia, where, as your Lordships will be aware, there is a gradual tilting of the country, so that properties are more likely to be overwhelmed by high tides in the future than they have been in the past.

Those are all factors that people are entitled to know about, but with the scarce information about what will be contained in the home information packs there is no mention of any of those natural phenomena. It would be useful if the noble Lord could be a bit more specific about the nature of the information that will be required.

Lord Borrie

My noble friend the Minister will feel that the last two speakers, the noble Viscount and the noble Lord, Lord Avebury, have been knocking at an open door. In addition to energy efficiency, which is specifically mentioned in this clause, it is desirable that other matters relating to the environment, flooding, subsidence, and so on, are all included in a home information pack.

Baroness Hamwee

My example is at the frivolous end of the spectrum. "Relevant information" in subsection (4), which the noble Baroness seeks to delete, is, information about any matter connected with the property … that would be of interest to potential buyers. It might be of interest to a potential buyer that the unusual colour that the faÇade of the house has been painted is number whatever of a particular paint range. I said it was frivolous. If we had more detail, we would understand where the balance lies.

Lord Phillips of Sudbury

I do not think my noble friend's point is at all frivolous. I get a little anxious about just what a burden could be imposed on the whole process if the Secretary of State is in risk-averse mode. The Committee needs some help as to what is meant by those loose words, information … that would be of interest to potential buyers". I do not know if the Minister has anything in his brief about what those words mean. This amendment would strike out subsection (4) altogether, so we would all like to understand its meaning.

The Earl of Caithness

I have listened with care to what the noble Lord, Lord Borrie, said, and a lot of it was backed up by other noble Lords who spoke. If the information he refers to is included in the home information pack, first, it gets more difficult for the estate agent to assemble the pack; and secondly, the pack gets bigger. The noble Lord, Lord Rooker, took me to task for saying that the Danish pack was 800 pages long, and told me the figure was actually 210. I said that the quote came from the Office of Fair Trading.

I have some more information, taken from a speech given from Palle Ulstrup, the chief executive officer of the Danish Association of Chartered Estate Agents at a Property Forum dinner in 2002. That is the same person from whom the noble Lord received his information. In that speech, Mr. Ulstrup said: A Danish real estate expert told the study that the paperwork for an owner-occupied dwelling had increased from an already substantial 100 pages to a frequent 800-page set of documents. This increase in workload may have contributed to the rise in agency fees that has occurred in recent years, despite the already large increases in agency income caused by rising house prices since the mid-1990s". That is going to happen here. I know the Minister has the pack at 100 pages, but it grows bigger every time we expand it and look for more information.

Some of that information is entirely valid. Subsidence does not follow postcodes. I had just such a problem with a house: when I bought it, there was no evidence at all of subsidence. The surveyor did not find anything; indeed, he could not have done so unless he had peeled the wallpaper and paint off one particular section of the house in the course of a full structural survey. I give way.

Lord Avebury

I am most grateful to the noble Earl. Of course, subsidence does not follow postcodes, but insurance companies think that it does.

The Earl of Caithness

Indeed, it does not follow postcodes. However, the problem with my house was not following shrinkage of the land, but had been caused as a result of a bomb from the Second World War. We discovered that only last year when the wall was renewed. An extension was built on to the house in the early 1990s and the weight of that extension had caused the house to crack. Proper foundations had not been laid because whoever built it had not realised that he was building over a bomb hole. It was all rather fun, given that it had to be dug out by hand. Machines could not do it, and the nice man who did the work was intrigued to find that the subsidence had been caused by a bomb hole.

What we are discussing is very important because it will influence the size of the pack and the duty of estate agents to put it together within a sensible time.

Lord Bassam of Brighton

Again we have had a useful discussion about the contents of the home information pack. By now I am sure that all noble Lords will have read Clause 144 carefully. It gives the Secretary of State a power to prescribe the documents to be included in the pack. Before prescribing a document for inclusion, the Secretary of State must be satisfied that it contains information that is relevant.

Subsection (4) defines "relevant information" as information about any matter connected with the property, or the sale of the property, that would be of interest to potential buyers. The amendment seeks to delete this subsection, the effect of which would be to enable the Secretary of State to require the pack to include information that is completely unconnected with these matters and is of no interest whatsoever to a potential buyer. Where that would leave us, I am not sure, but it would be a chaotic state of affairs and one that we could not accept.

The amendment would substitute a new subsection (4). First, I would like to assure noble Lords that no one will ever be committing an "offence" by failing to comply with these duties as suggested by this amendment. As the noble Earl, Lord Caithness, has acknowledged, we have moved from criminal penalties to civil sanctions because we have accepted arguments on that issue.

The proposed new subsection (4) would provide that the responsible person could omit a prescribed document from the pack as long as it, does not detract from the value of the property". That would require a subjective judgment by sellers, estate agents, potential buyers and enforcement officers on whether the omission of a particular document would affect the value of the property being sold. We would argue that that would cause great practical difficulties and the seller would already have had to commission all the relevant information in order to be sure that the documents did not reveal any flaws which might affect the value of the property.

The discussion has centred on what might be relevant and which documents ought to be included. I thought the noble Viscount, Lord Ullswater, was right to question whether environmental reports would be included, and whether they would include information about contaminated land. Contaminated land is a category in the standard local authority search and we would expect it to be included in the pack. In fact, Clause 144(6) states: The regulations may require or authorise the home information pack to include— (a) replies the seller proposes to give to prescribed pre-contract enquiries". We would expect those matters to be included. As I recall, they are already included in CON.29. Indeed, if the noble Lord looks at our consultation document, to which I referred earlier, on the contents of the home information pack he will see that the various appendices to refer CON.29 and the issues covered in it. Page 18 of the document makes reference to Environment Agency searches and states at paragraph 5.29 that: Environmental issues are of significant interest to consumers and home buyers are no exception. The Environment Agency are working to implement Environment Agency property search reports as a standard part of the conveyancing process, alongside local authority, drainage and water searches". We would expect all those things to be relevant information and for those to be provided as part of the home information pack.

I hope that has answered the various points raised about what might and might not be included. Obviously, it is very hard to be entirely prescriptive. But these things are very relevant, whether it is brown fields, contaminated land and whether water and drainage issues are of importance. All those things need to be covered. We have consulted very extensively on what should be included in the pack on other environmental information. Generally, we have had a favourable response to what we intend to do. It is worth reiterating the point that we shall want to discuss the issue further with those who wish to ensure that we get it right and that the information revealed is of value to a potential purchaser. Having heard that, I hope that the noble Baroness will be able to withdraw her amendment.

Baroness Hanham

One of the reasons why we are having to work so hard through these clauses is because there is remarkably little information about what is likely to be included in the information packs. The core, which has been referred to before, is quite obvious. Indeed, the explanatory notes set it out in some detail.

There are the wider issues. My example may have been a little extreme. There are areas in which demands could be made. The measures are to be contained in regulations which we do not have. We do not know what is to be included in the home pack. My noble friend Lord Caithness referred to 800 pages. We do not know whether there will be 800 pages or 500 pages. We do not know what is going to take the document to 100 pages.

One of the reasons why I raised this question was to see how wide the area of required information would be. I have not had an answer to my amendment. It may be that the noble Lord thought I was being frivolous. It is not a question of frivolity, but of basic information that we ought to be able to dig out from the Government as to what is required in the packs.

I shall withdraw the amendment today. I shall read carefully what has been said. There is no question but that we shall be returning to the contents of the packs in due course. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hamwee moved Amendment No. 197A:

Page 98, line 32, at end insert "but not the contract itself"

The noble Baroness said: This amendment is grouped with our Amendment No. 200A and Amendments Nos. 198 and 201 tabled by the noble Baroness, Lady Hanham. There are almost one sentence introductions to our two amendments. The first is to ensure that it is not necessary to supply the contract itself as part of the pack—only the terms on which the property is to be sold. I would think that that is fairly clear. But the Law Society says that it may be a potential trap for buyers to be presented with a potentially binding contract, which they may sign because they believe that is what is needed, but without having professional advice.

The second of our two amendments is to provide an alternative to the normal replies to inquiries which seem to be suggested by the Bill. I understand that the current forms being used are not all conventional replies to inquiries. This amendment is intended to be all encompassing. I beg to move.

Lord Phillips of Sudbury

I have a question to ask which I hope will help the Committee. Clause 144(5)(a), which is the part of the clause affected by the amendment, requires the information to be given about, the interest which is for sale and the terms on which it is proposed to sell it". My question is twofold. First, what if all the terms on which it is proposed to sell are not included in the pack, whether through inadvertence or not? What remedy does the buyer have and what potential penalty, if any, is visited on the seller in default?

My second question refers to a commonplace problem. After one has marketed a property, one's circumstances may change or the market circumstances may change so that one needs, in turn, to change the terms on which one proposes to sell. Does the seller, who has issued the pack on one basis, have to inform all those to whom packs have been sent that he is changing the terms? What happens if he does not know where the packs have gone? He may well not know, as they may have been passed on.

This is a critical part of the mechanism, which is why the Law Society has latched on to it. I would be most grateful if the Minister can help the Committee with responses to those two questions.

Lord Rooker

I shall do my best to answer the noble Lord, Lord Phillips, and I am grateful for his advance warning of the questions. At present, I cannot put my hands on the answer. Dealing with the amendments referred to by the noble Baroness, Lady Hamwee, Amendment No. 197A would prevent the regulations from requiring the pack to include a contract. We recognise the concerns that lie behind the amendment.

In our consultation paper on the contents of the home information pack, in which there is a copy of a home information pack—all 100 pages of it—we drew attention to potential drawbacks of the pack containing a prescribed form of draft contract and to concerns about including even a specimen draft contract. We proposed that the pack should contain a summary of the terms on which a property is being offered for sale. Twenty-four of the 57 responses on the issue supported our proposal; and 29 disagreed with including a draft contract in the pack. We are now considering that further in the light of the responses received and the further consultation that we are undertaking, as we speak, with the professional and consumer bodies. The 57 responses were virtually split 50:50.

We do not propose to include in the pack a contract or even a document that is capable of becoming a contract when a buyer is found. I can be quite clear about that reassurance. As I mentioned earlier, any information prescribed for inclusion in a document in the pack must be "relevant information". Clause 144(4) defines "relevant information". It is information about any matter connected with the property or the sale of the property that, in the Secretary of State's opinion, would be of interest to potential buyers.

Clause 144(5)(c) provides that information which the Secretary of State may consider to be "relevant information" includes "anything relating to or affecting" the property that is contained in a statutory register or certain other records.

Clause 144(6)(a) provides that the pack may include the seller's replies to "prescribed pre-contract enquiries". Amendment No. 200A would extend that to cover specifically a seller's property information form. We proposed in the consultation paper that the pack should indeed include something along the lines of the Law Society's property information form, a standard form used by most conveyancers. Thirty-five of the 47 respondents on this issue support its inclusion. Again, we shall now consider this further with the key stakeholders. I can advise the Committee that Amendment No. 200A is not necessary to enable the pack to include a property information form. The form provides information on matters affecting the property which are likely to be important to potential buyers. That information is, therefore, very much "relevant information" within the meaning of Clause 144(4).

We are also satisfied that for the purpose of Clause 144(6), replies to pre-contract inquiries encompass replies to such inquiries made in the property information form. As we explained in the consultation paper, we do not intend that the home information pack should change the principle of caveat emptor—that is not our intention. I did not do Latin—that means "let the buyer beware".

We are not seeking to put sellers under a legal obligation to answer the questions in a property information form. No such obligation exists at present, though buyers have a right to rely on such information that is given. We expect that, as now, most sellers will take the view that it is in their interests to provide requested information where they are able to do so. As I said, the form is basically tick boxes. In some cases— for example, where a property has been inherited—the owner may have only limited information and might not be able to complete the form. The form is well designed to make it quite clear if one does not have the information.

The noble Lord, Lord Phillips, raised the issue of changing the terms on which the seller proposes to sell. The terms in the pack would be those proposed at the time the property is marketed. If the seller decides to change those terms, there is no requirement in the Bill to change the pack, although clearly it is in the seller's interest to ensure that any such changes are brought to the attention of a potential buyer.

That gives me an opportunity to answer an earlier question, which we were not then able to answer. That was the issue of the updating of the pack. The noble Lord, Lord Phillips, raised this issue yesterday, and the noble Baroness, Lady Hamwee, raised it today. I want to make the position clear. It is not our intention to require the seller to update the pack. That is a misunderstanding. The information in the pack must not be more than three months old at the point that marketing commences. That does not mean it has to be updated every three months. I have heard that said, but we have never said that.

Lord Phillips of Sudbury

I am grateful to the Minister for giving way. Does that mean that if circumstances change—for example, the seller becomes aware of a contamination or subsidence problem after he or she has marketed—that when after they have become aware of the change somebody asks them for a home information pack, they can supply the original pack without that key information updated?

Lord Rooker

Because of the other forms giving information that they will have signed, if they answer questions, they are legally responsible for the questions they have answered. In that respect it is still up to the other searches to identify other matters. It will depend on how old the pack is. They may be asked quite a legitimate question by the buyer's solicitor whether anything had changed since the pack was produced. The person is expected to give a positive answer, "No, there have been no material changes". The person is then legally liable for that information, because that would be like filling in the property information document, which one is not legally required to do, but if it is filled in the buyer is entitled to rely on it. That would be a reasonable answer. If one has not sold the property that has been marketed for three or four months, has anything changed in any of the answers given to the questions? That would raise such an issue. That would cover that. If I am wrong I will come back to the noble Lord. But I wanted to make that point because I had heard before about the need to update the pack. That is not the case. But it must not be more than three months old at the point at which it is marketed.

Lord Avebury

Perhaps I may return to the circumstances mentioned by my noble friend—that subsidence occurred at some point after the home information pack was first compiled. Let us say that the property has been on the market for six months and somebody walks into the estate agent's office and asks whether anything has changed in the answers given. The reply could well be no, because no question of subsidence would have arisen at the time that the pack was compiled. He could truthfully say no, and would not be liable for any comeback if it was subsequently discovered by the potential purchasers that the subsidence had occurred and that they had not been informed of it.

10.15 p.m.

Lord Rooker

We are getting to the nitty-gritty of an individual case; of course, the legislation needs to cover all the individual cases that we can think of, and those that we cannot. I shall have to take advice on that. I am answering as a reasonable person in the sense that I am saying, contrary to what people have alleged, that no one has to update and have another survey or home condition report done every three months. We never said that. Others have claimed that that is the case, but it is not. I am making that clear.

Nevertheless, people are entitled to rely on the information that they have been given. After a time, it would be quite legitimate for the solicitors rather than the estate agent to check with each other whether there has been any change in any of the answers that their clients gave, or whether any new information has come to light that would materially affect any of the answers given. It would be legitimate to ask that and demand a clear yes or no.

Lord Phillips of Sudbury

I can help the Minister further. It would be negligence on the part of the solicitor who did not make that the very first question that he asked. I am sure that everyone will be immensely relieved to hear what the Minister has just reiterated—that, in marketing a property, one is not on an endless escalator of updating, new searches and new surveys. That takes a lot of heat out of the matter.

Lord Rooker

Perhaps I should have said it about 10 hours ago. No one asked. The noble Lord did yesterday, but we did not answer; I plead guilty.

Lord Phillips of Sudbury

Earlier today—it was a long time ago—I thought that my noble friend Lady Hamwee made a veiled invitation to the Minister, if he had nothing else to do, to join her firm as part of the property team. I would be interested, too, and could overtop any offer that she may be able to make. The Minister demonstrates the dexterity, resilience and optimism that are the marks of a good property man.

Lord Rooker

I have always been a nosy parker, which is why I thought that I was a moderately good constituency MP. I was nosy on behalf of my constituents. As for going into the legal profession, there will of course come a day when I do not continue to take the Blair shilling, and one may have to look for something else. I certainly had not thought about the legal profession.

Amendment No. 198 seeks to replace "relating to or affecting" with "relevant to". Having listened to what Members of the Committee have said, we are still not convinced that a change is necessary. We find it difficult to envisage any relevant information in the registers and records that does not relate to or affect the property. Even if there were any, that would not prevent the Secretary of State prescribing such information in the pack. Clause 144(5) does not affect the Secretary of State's powers under Clause 144(4) to prescribe for inclusion in the pack any information about a matter connected with the property or its sale that is of interest to buyers.

We are in the process of setting up a working group with the key stakeholders to advise on the nature of the searches to be included in the home information pack. All the key players are represented, including representatives of local authorities, search organisations, conveyancers and lenders. Whichever searches are chosen, I am confident that they will meet the "relating to or affecting" test.

The noble Lord, Lord Phillips, asked what the consequence was of all the contractual terms not being in the pack. There is an issue on that relating to the Law Society's opposition to including contracts, but I regret to say that I cannot put my hands on the relevant note at present.

Clause 144(5)(a) states that the regulations may be made on the property for sale and the terms on which it is to be sold. In our opinion, it would be better if all or none of the terms were included rather than for the contractual terms to be withheld. It may be that those terms are material or of particular importance to the buyer and that they would have affected his decision to buy. Withholding some of them may affect the meaning of some that remain.

Clause 150 confers the right of private action in respect of failing to comply with a request to produce a pack. Ultimately, that must be a matter for the buyer and the seller to resolve. We do not think—this may be the noble Lord's concern—that the pack would affect the validity of the sale. Either the property has passed from person A to person B or it has not, but that matter relates to the legal contract and the exchange. The contents of the pack would not affect that part of the sale. I am not sure whether that answers the noble Lord's specific question. If it does not, I apologise and I shall try to come back to it.

Lord Phillips of Sudbury

I am most grateful to the Minister for even endeavouring to answer the question. I think that it would be helpful to the Committee if he returned to it because Clause 150 does not provide compensation; it provides only for the recovery of fees paid by a frustrated buyer following, for example, the failure of a would-be seller to provide the necessary survey. It would not cover a case where a seller simply did not put into the pack other terms required by the subsidiary legislation. As I said, I think that it would be helpful to hammer this matter out later.

Lord Rooker

We would not expect the omission of a component of the pack to affect the validity of the sale. That is our view. We do not think that if a component of the pack were omitted, the technicality of the sale—the exchange of the ownership from one person to another—would be affected.

Lord Phillips of Sudbury

But it might of course affect the price which the purchaser would have been willing to pay had he or she had it.

Lord Rooker

I fully accept that, and that would be a matter for later action because the sale would have taken place. I presume that such things happen now; for example, where the sale has taken place but the new owner is aggrieved about something that was missed out in the normal course of events and he may seek to claim damages due to negligence from someone who had advised him—perhaps the estate agent or the solicitor who had been acting for him. Perhaps damages would be sought from the previous owner, who did not answer all the requests for information. There have been cases in the courts involving people who did not correctly fill in the voluntary check list. They filled it in but not accurately, and the buyer was entitled to rely on it.

Lord Phillips of Sudbury

I thank the Minister for that. The only reason that I persevere with wondering whether it is not worth a little more investigation is that Clause 150 deals with a civil remedy—this has nothing to do with criminal law—but does not refer at all to normal common law compensation rights. But perhaps that is not necessary. Again, it may be worth the Government returning to this matter because I suspect that this is the kind of thing that will happen many, many times, and it may be as well if we cleared the decks for the consumers.

Baroness Hanham

This exciting exchange prevented me realising that I had Amendment No. 198 in this group. The Minister has kindly replied to it even though I have not moved it. It is a small amendment and I do not need to move it. However, I also have Amendment No. 201 in this group, and it may be easier if I deal with it in its place if the Minister is happy to reply to it then. So exciting has this exchange been that the amendment now has nothing to do with this issue and it would be more appropriate to deal with it later, but it is down to the Minister to decide. I see that he nods his head in agreement.

Baroness Hamwee

I take issue with my noble friend. I think that the Minister would be wasted on property work. I can see him so disarming other parties to a negotiation over a major commercial transaction that he would just walk all over them. That displays my view of conveyancers.

The Earl of Caithness

And he does not need any qualifications to do that!

Baroness Hamwee

I am grateful for the detailed assurances that the Minister gave on the two amendments we started some time ago. We seem to have wandered slightly. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 198 not moved.]

Baroness Maddock moved Amendment No. 198A:

Page 98, line 41, after "property)" insert ", though the provision of any such information by the seller shall be voluntary and entirely at his discretion, and the Secretary of State cannot require the seller to provide such information in the home information pack through regulation"

The noble Baroness said: I apologise to some Members of the Committee. We said that we would not move the Amendment, but now we are moving it. It deals with the word "voluntary", which we have discussed quite a lot today. It also refers to the home condition report not being a full structural survey, which we have also discussed. That was the reason why we were not going to move it, in the interests of getting a move on with the business. However, as the Minister had a rather good speech in reply, we were begged to move it.

The amendment is fairly simple. Its purpose is to make the home condition report voluntary. We believe that if the whole thing cannot be voluntary, the inclusion of the home condition report in the pack should be voluntary. It is one of the most expensive elements in the pack and therefore likely to add considerably to the cost of moving home. In many cases we believe that buyers and lenders will not feel able to rely on the report. That is an issue we have discussed several times under this part of the Bill.

We understand that it is not a full structural survey and that it does not contain a valuation. Therefore, we know that mortgage lenders may want a different sort of survey, as will many people buying a house. During the recent exchanges on the lifetime of a pack, particularly on the home condition report, I was struck by the fact that if you could not sell a house for three years, you would probably need to paint the woodwork, for example. So, there are many difficulties with this.

Perhaps I may press the Minister on another point ill the same section. Clause 144(5) refers to the energy efficiency of the property. It is listed under, the information which the Secretary of State may consider to be relevant information … about", and there follows a long list which includes the energy efficiency of the property. Can the Minister confirm that when the EU regulation kicks in requiring people to have an energy efficiency report on their home, it will be required at the point of sale under the European regulation? Again, that backs up some of the points that we have been discussing about the need for information to be ready on day one of marketing. I look forward to the speech which the Minister wanted to give in reply to our amendment. I beg to move.

Lord Rooker

I am grateful to the noble Baroness for moving the amendment. There are a few points I want to make to clear up some misunderstandings and hares that have been set running. This amendment seemed the most appropriate place in which to do that. I fixed all my notes according to that, but then I was passed a note saying that the amendment would not be moved. I could have included all the material I have elsewhere, but this seemed the most appropriate place. I wanted to reiterate the point we made earlier as I take the last point about the energy report.

I am not good on the EU issue. I know that there is a requirement. It is in the consultation document at pages 128 to about—for existing houses—132. The energy report on the new home was set out as part of the consultation. So there is no surprise about that because a model pack was published in March last year. The home condition report runs to about 20 pages. They are obviously blank forms, but it gives the kind of information that would be required.

Clause 144 deals with the contents of the home information pack. It gives the Secretary of State power to prescribe the documents to be included in the pack, the time at which they should be included and the information that may be included in, or excluded from, those documents.

The information prescribed is subject to the condition that, in the opinion of the Secretary of State, it is information that is relevant to the property being sold. Amendment No. 198A would add a restriction to the effect that sellers may provide the information voluntarily but cannot be required to do so under regulations made under this part.

In our discussion on Amendments Nos. 183B and 185A in Clause 137 we explained why a voluntary home information pack system would not work. The same arguments apply here. I thought that the noble Baroness accepted that, hence she was not going to move the amendment. We need the home condition report to be a standard part of the pack. Its inclusion is fundamental to achieving the objectives of the reforms, for reasons I shall explain.

Our objective is a home-buying process where people are confident that their transactions will succeed by a reasonably certain timescale and at a reasonably predictable cost. To achieve that we need to make sure that the main factors that cause transactions to slow down or fail are known at the outset, not half way through.

Our research showed that 28 per cent of all transactions fail after an offer has been made. That is a huge number. Problems revealed by either a lender's valuation inspection or an independent survey account for 43 per cent of failed transactions. Condition-related problems also cause delays in transactions which ultimately succeed. Twelve per cent of all sellers reported such problems between the lender's valuation, inspection and exchange of contracts.

These problems are compounded because of chains. About 60 per cent of transactions involve chains. The industry estimates that an average chain has four transactions, so the knock-on effects of condition problems can be felt by over a half of all of transactions.

I have used the figure of 43 per cent again, which has been challenged. Yesterday it was almost alleged— I do not put words into noble Lords' mouths—that in effect by using the 43 per cent I was exaggerating the number of sales that had fallen through because of bad surveys. The 43 per cent failure rate is derived from the findings of the 1998 research study, reported in Key research on easier home buying and selling. The research report indicates that in 13 per cent of cases the transaction failed following an unfavourable property survey commissioned by the buyer himself.

The research report also said that a further 30 per cent of buyers withdrew as a consequence of their lender's valuation survey report. Opponents of the reforms have tried to claim that this 30 per cent had nothing to do with property condition.

The research report breaks down the 30 per cent and says that 10 per cent was attributable to the lender's valuation being too low and 20 per cent because of "other matters" revealed in the lender's valuation survey report. So it seems preposterous to claim that the 10 per cent that failed due to the lender's valuation being too low had nothing to do with the condition of the property. How do they know that the down valuation did not reflect the property conditions? As far as the remaining 20 per cent is concerned, what else could those "other matters" be if not condition problems of some shape or form?

I know that the lady I am going to mention was criticised, but, in her evidence to the Commons Select Committee on the Bill, Maria Coleman said that one of the main reasons for starting her voluntary scheme was the discovery that 71 per cent of her transaction failures were due to an adverse survey. We estimate that the home condition report will add about £350 to the £4,000 plus bill that sellers already typically face. This is a small price to pay for a survey that will be of great value to buyer and seller alike.

I have already referred to the 28 per cent of deals that fall after a valuation. We have put a figure on that of £350 million of wasted money, which is £1 million a day wasted in this country. That has been challenged as well, so I want to explain how we got the figure. The tracking surveys in the 1998 research study, Key research on easier home buying and selling, recorded details of the costs incurred by people whose purchase or sale had fallen through. It found that the average cost of a failed transaction was £906: £680 for buyers and £206 for sellers. However, the number of people who provided these details was small, as was said yesterday. It was fewer than 30 cases and the research report advised that the figures should be used with caution, which is what I am seeking to prove that we have done. At £906 per failure, that adds up to around £530 million a year. So our estimate of £350 million takes account of the uncertainty over the small sample size and assumes a cost of only £600 per transaction failure for the total cost to buyer and seller. Despite attempts to talk down the rate of failure—some people claim that it is a lot less, at 15 per cent—our recent discussions with some of the largest estate agency firms in the country, to which I referred yesterday and which is not a scientific survey, show that the failure rate is still about 30 per cent. I give way to the noble Baroness.

Baroness Maddock

Earlier on, the Minister used the figure of a 28 per cent failure rate for transactions. He then said that 43 per cent of those were due to the survey going wrong. That is only 12 per cent of the total.

Lord Rooker

So what?

Baroness Maddock

The Minister is accusing noble Lords of talking the figures down yesterday and I think that that is something like the figure that came out yesterday.

Lord Rooker

We have an enormous number of failures. I have broken that figure down and it does vary. That was the claim that we made and our own research showed that only 13 per cent of transaction failures were for that reason. I was not hiding the figure. In fact, I used the figure yesterday of 13 per cent at the same time as I used the figure of 43 per cent. But, taken in the round, we have a major problem of waste of money and distress caused to people in this country.

I want to put seven brief examples on the record because the department receives a steady stream of correspondence from people who have been let down by the current system. These cases show that our estimate of the cost to individuals of failed transactions is vastly underestimated. We have used £350 million, which averages about £600 for buyer and seller together. I want to give some recent examples that have come into the department. They are very brief and there are only seven of them.

The first one relates to a lady in Somerset. Her offer on a property was accepted but the property was then withdrawn from the market by the seller after four months, as planning permission papers for garage access could not be produced. She wasted £730 on valuation and search fees. This is in addition to a previous attempted purchase where the property was withdrawn after three months, due to problems with the property. On that occasion, £680 was wasted on valuation and search fees.

A Brighton pensioner had her offer of the asking price accepted. She then engaged solicitors and had the survey done but days before the contracts were to be drawn up the vendors withdrew, leaving her with a bill of almost £1,000 and nothing to show for it.

A young London couple with a young daughter spent months looking for a property. They then spent months going through the buying process, spending almost £2,000 on fees. They signed contracts to the point of pre-exchange. The sellers pulled out at the last minute. All of those sums are well above the £600 figure that I used.

A vendor in Cardiff accepted a couple's offer on a property. They became nervous when a "To Let" sign was put outside the property, but the vendor assured them that the sale was still on. At the last moment, the property was withdrawn. The couple had spent all their savings—more than £1,000—on surveys, searches and fees, and have absolutely nothing to show for it. Again, that is well over the £600 figure.

In Gateshead, a vendor assured Mr F four times that the property would be his, after agreeing to terms on the house. He paid for the search fees. The vendor then informed him that the property had been sold to another couple. He is afraid that that could happen to him again and again, costing him thousands of pounds before he has even paid his first mortgage instalment.

In the south-west, in Exeter, a lady wrote on behalf of her daughter—a first-time buyer and a nurse—whose offer on a £90,000 flat was accepted. The seller pulled out at the last moment after the writer's daughter had paid for a survey, searches and other items that cost more than £1,000. The final solicitor's bill is yet to come on top of that.

My final example is that of a couple of young architects in London trying to buy a property for some time. Eventually, they had an offer accepted a few months ago. A week before completion the seller pulled out as he wanted more money. They have paid out several thousand pounds on abortive fees with no recourse, plus distress and upset.

Those examples are just a sample of the letters that come into the department. As I have said, 18 months ago I addressed the National Association of Estate Agents. I did not use the prepared speech, I just asked for the last 20 letters that I had signed to Members of the Commons in answer to queries from their constituents. I chose a dozen examples to read out instead of the speech in order to try to explain that there was a problem. I was accused of all kinds of things, but I just said, "Well, this is the people speaking; not me or the Government".

One of the letters did not go down very well because it was from an estate agent who had spent 25 years as a police officer. He had some quite disparaging things to say about buying and selling houses, which were far worse than anything that he had come across when he was a police officer. That did not go down at all well. I really had to ensure that I did not disclose his location in the country.

I am not claiming that the examples I have given are scientific. But, I am saying that our figure of £350 million for the waste is a very conservative figure based on the 30 cases that we had. With a £600 average cost for buyers and sellers—I am quoting only potential buyers here—the costs involved in every one of those examples are well above that figure.

The noble Earl wants to rise and respond. He will be able to explain his own views: he has brought to this debate his personal experience. But on the website of the estate agency where he is a consultant, the average properties for sale are between £500,000 and £2 million. Frankly, that is not the generality of house buying and selling in this country.

The noble Earl is expert in a very atypical part of the country. He is expert in other matters and I have found his contribution extremely valuable. But that is a matter of public record. On the website of said estate agency, the highest value property is £4.6 million; the cheapest is about £300,000 for a studio flat. That is not typical of buying and selling properties for the 40,000 dwellings that are put on the market each week in this country. Although the noble Earl can bring his technical expertise to our debates—for which I am very grateful—frankly, in terms of his expertise of buying and selling on a daily basis, that is not relevant to the generality of millions of people in this country who are buying and selling houses every day. As he clearly wants to get up, I shall give way to him.

The Earl of Caithness

I am very grateful to the Minister for giving way. Yesterday, I said that I agree that the market in which I work is a specialised sector. But that is part of the housing market. There is no one housing market: every area is specialised. From the bottom end of the housing market with the lowest capital value houses, which will be excluded from the home information pack and the home condition report, right up to the top value houses, they are all part of the housing market. However, the transactions are exactly the same. We have the same problems with people pulling out and potential buyers wasting time that every other market has. All that is different is the price bracket.

10.45 p.m.

Let us look at what the Minister has just read out to us when it comes to failures because of valuation. Nothing in the Bill is going to affect that—there is no change. The home information pack does not contain a valuation. Perhaps it should, but there is nothing that will change the present situation. The vendor's agent will put a price on the property. If the purchaser comes along and the sale falls through because he or his mortgage company has a different valuation, that will be no different. The situation remains the same. The same letters will still come into the department.

The pre-purchase survey will change little. There is going to be a home condition survey. That is not a full structural survey. The Minister has said that all that is required of that survey is that it must be made within three months of the property being marketed. Let us imagine that we are in a poor property market and someone's house has been on the market for nine months. A potential purchaser comes along and asks whether anything has changed since the home condition report. The vendor will then say, "Yes, you look for yourself. That was the home condition report at the date that it was marketed. It was valid at the date of its market. Yes, things have happened, but caveat emptor"—I have the same problem with Latin as the Minister—"it is up to you".

So the buyer has to carry out his own survey at his own cost. There is no change to the current situation; we are back to the same position. The department will still receive letters about pre-purchase surveys. Let us say that the seller pulls out; sellers pull out for all sorts of reasons. In the key research to which the Minister referred sellers pull out because of changes in financial circumstances; because they did not continue the purchase of the house; because they decided to stay where they were—there are all sorts of reasons for pulling out. Nothing in the Bill or the home information pack will alter that in the slightest.

Let us say that the property is sold to another person. That is going to happen. It does not matter whether there is a home information pack. If someone else comes along with a higher offer, the vendor will sell. The agent is duty bound to obtain the best price. The department will still receive letters.

The Minister referred again to sellers pulling out. The one area where there could be a potential change is to have the searches upfront, which might speed up the process. But there is no requirement to keep the searches up to date, so if the property has been on the market for nine months, all that the vendor's agent has to say is, "Yes, the searches were done in accordance with law. It is up to you to check whether it's changed. I am not going to spend any more money. Prescott has made me spend all this money upfront. I'm not going to do a darn thing more. Why should I? It's up to you as the purchaser".

What in reality is going to happen is that there will be a change for properties that can be sold quickly in a good market. In a bad market we will be back to exactly the same position as now. One noticeable thing that will change is that the purchaser will be presented with a home condition report. Most purchasers do not have any survey or condition report undertaken now. They will be handed 20 pages—which are pretty general; we will come to that in a moment. They will ask whether anything has changed. As the agent I will say, "Yes, it is up to you to check what's changed, because it's caveat emptor". They will then in all probability get in a surveyor to carry out another report, which they are not doing at the moment. That pack will lead to more expense.

I understand exactly where the Minister is coming from. But the Bill does not change a single iota of what he said, except possibly for houses that are sold quickly in a bull market.

Lord Rooker

By giving way to the noble Earl, I have lost track of where I was; I was nearly at the end.

I want to answer the point raised about the energy efficiency report so that there is no misunderstanding, but let me make a point about the additional cost of the home condition report. I said that, against the total money that the seller must pay, £350 out of the £4,000 bill that they already typically face, is a small price to pay for a survey that will be of value—the value being that, hopefully, it will cut down the loss of the £350 million, which I tried to explain was a fairly modest figure.

The additional cost, of course, is offset by savings in those transactions where the buyer would have commissioned his own survey. In many cases—not all—it could eliminate the need for separate mortgage valuation inspections, which cost borrowers almost £200 on average, and remove much of the wasteful duplication of surveys that occur under the current system where more than one buyer has surveys on the same house. That is the reality. People queuing up to buy have their own surveys carried out on the same property. It is an enormous waste of money.

As to the energy efficiency requirement, our consultation document was published in March 2003. In regard to the issue about the energy efficiency information being required at the point of sale, the answer is yes, but Article 7 of the directive makes clear that the intention is that the information should help the prospective buyer with his choice of a home. Our own information pack proposals pre-date the European Union directive and it has always been our intention that this energy efficiency information should be available at the point it is of most use—which of course is at the start of the transaction in the home information pack.

Yes, sellers will still sell to someone else with a higher offer, but, unlike now, the buyer will not be saddled with the cost of the surveys and searches. In the examples I have given, the people would not have wasted their money in the first place.

I am sorry that I have taken a little longer than I expected but there were some general points that I wanted to put before we reached the end of the home condition part of the Bill.

Baroness Maddock

I thank the Minister for that reply. We have tried to save time and I hope that it is there on the record.

The noble Earl, Lord Caithness, has made many of the points that I wanted to raise. I thank the Minister for clarifying the energy efficiency report. It is the one part of the home condition report that we would support being compulsory. It is very important. Another part of the EU regulation is that it should be indicated to people how they can improve the energy efficiency of their home, which is a useful suggestion. I am very much in favour of it and have supported it for a long time.

We could bandy figures about the Chamber—and I do not detract from the real distress that people suffer in buying and selling homes—but the Minister is right to say that this is not a scientific issue. It is not. He is referring to a self-selecting group of people who write with their problems. Although it gives us quite a good picture of the kinds of things that go wrong, we have to be careful about drawing big conclusions from such examples. I referred to the percentages earlier.

The Minister has given very detailed replies but, at this hour of the night, I am going to have to read very carefully some of his remarks. It has been a helpful debate. Noble Lords on this side of the Chamber would like the pack to be voluntary, but not the energy efficiency part of the home condition report.

We know that many people are not going to rely on the home condition report and that they will carry out surveys. People are always arguing about surveys. I have had a terrible experience with a survey myself. I bought a flat that was recommended to me. I have discovered since I moved in that he failed to realise that I was paying for all the electricity on the communal staircase; he also failed to inform me that the radiators were outside my property. There are great difficulties involved and everybody can tell a story about how surveys have gone wrong. I am not convinced that the home condition report is going to be so much better than many of the surveys, but as it is late, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 199 and 199A not moved.]

[Amendment No. 200 had been withdrawn from the Marshalled List.]

The Earl of Caithness moved Amendment No. 200ZA:

Page 99, line 6, leave out paragraph (a).

The noble Earl said: The amendment would delete Clause 144(6)(a), which states: The regulations may require or authorise the home information pack to include replies the seller proposes to give to prescribed pre-contract enquiries". I do not see the point of including such a requirement in the Bill, because the Minister has said that the property for sale can be changed without having to change the home information pack. If, after a number of pre-contract enquiries have been made, the property is changed or an alteration in the negotiation is made, all those enquiries become invalid. Until the contracts are exchanged, nobody can be totally certain of what is being sold in a property.

I shall take three brief examples. The first is the three-bedroom semi-detached house which has been used as an example in some of the Government's figures. The pre-contract enquiries may concern the kitchen units and that will come up in the home condition report. The vendor might say that he is selling the property with the units included. The property takes a little time to sell and the vendor renews the kitchen units. He does not have to have a new home condition report or change the home information pack. He has therefore ticked all the boxes that regulations require him to tick, but he has changed his mind about the kitchen because he has put in new units and he wants to take the dishwasher, the deep freeze and the new cooker with him because he has just spent a lot of money on them. However, that is reflected in the price of the property. It is only when one has the price of the property and knows what is included in the sale that one can answer those kinds of questions.

Let us look at a house with land. Let us move out of the city and into the country. Somebody is selling a house and a garden, but owns the field next door. He excludes the field next door from the sale. The pre-contract enquiries may ask who is responsible for the boundary fences and that box is filled in. During the negotiation for the sale of the house and the garden, the vendor is made such a good offer by a potential purchaser of the field that he decides to sell it. Once again, all the boxes that he has ticked have to be changed. It is not until the price and what is included in it are agreed that answers to those questions can be had.

What about the house next door? Exactly the same situation arises. What if I am just redeveloping a property? I have a home condition report when I buy it, and it is fit to live in—but what if I decide to remodel the house, and I am adding bits to it, uncertain exactly what I am going to sell until the final terms are agreed? The main thrust of the argument for deleting subsection (6)(a) is that, until the final terms are agreed, one does not know what is included in the sale and what is not. Why do we need regulations to contain, replies the seller proposes to give to prescribed pre-contract enquiries", when one does not know what the sale is going to include? I beg to move.

11 p.m.

Lord Rooker

This amendment would, as the noble Earl said, delete subsection (6)(a) of Clause 144, which provides that regulations may require the pack to contain, replies the seller proposes to give to prescribed pre-contract enquiries". It is standard practice under the current system for the buyer's conveyancer to seek information from the seller on a range of matters relating to the property, including boundaries, disputes, notices, planning consent and other matters about which the seller would normally have information, and which it is important that the buyer knows about. The Law Society has produced a standard property information form that is used for just that purpose, and I suspect that more than one noble Lord could probably quote chapter and verse from each of its questions.

As the information is needed by the buyer and is provided under the current system, it is clearly "relevant information" for the purpose of subsection (2) of Clause 144. The Government have consulted on the contents of the home information pack, and most of those who have commented on this particular point thought the pack should include a property information form along the lines of the Law Society's form, which was included in our consultation document. The contents of the pack will be set out in regulations, but we have not yet taken any final decisions. The Government are establishing specialist working groups to consider these matters, and there are some issues around the property information form. For example, in some cases, sellers may have limited knowledge of the property and be unable to provide answers. Sellers are not legally obliged to answer questions now, and we do not intend to change that.

The noble Earl raised issues relating to fixtures and fittings. What he did not do, when he talked about the kitchen appliances, was say whether they were built in or not. If a kitchen is built in, I think it would be a reasonable assumption on my part, as a reasonable person, that when I open the doors I will find the oven and the fridge. If they are freestanding, that is another issue, and indeed the question of whether the furniture is built in or not is covered in some of the forms. If the equipment changes during the course of the sale, that is a matter that can easily be decided. I do not see any great issue there.

The original list is just a starting point for negotiations; no one ever refers to it as a straitjacket. I am not aware of it causing major problems, except where people tell porkies when they answer the form, and people then abort statements that were untrue as regards boundaries, disputes with neighbours or other issues. As I said, the specimen form is in Appendix K of the consultation paper on the contents of the pack. We expect that most of the information will not change. We are consulting on the matter, because it is important that we get this right with the industry. It is 18 months ago, near enough, since we published the consultation document. No one is saying that that is exactly the form it will take, but that document will largely form the basis for the home information pack.

The Earl of Caithness

All those who have bought and sold their own houses will be aware of the form. However, the simple point I am trying to make is that where there has been change to the property being marketed—as the Minister has said, that does not necessitate a new home information pack—the answers given to the inquiries laid down in regulations would be wrong. However, obviously that does not matter. If neither the vendor nor the agent are to be penalised because the answers are wrong, then I do not see the point of giving them in the first place and the need for this amendment is removed. It means that you can put what you like in the information pack and change the circumstances at will. The home information pack will mean nothing to the potential purchaser: this is caveat emptor and he will have to do his own thing anyway.

This has proved that much of what the Government seek is not binding and will make life more complicated for the potential purchaser. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 200A not moved.]

Baroness Hamwee moved Amendment No. 200B:

Page 99, line 14, leave out from "which" to end of line 16 and insert "acknowledge liability for any error contained in the prescribed document due to his negligence in favour of"

The noble Baroness said: In moving this amendment I shall speak also to Amendment No. 206A which is grouped with it, along with Amendment No. 202, tabled in the name of the noble Baroness, Lady Hanham.

The first of these amendments would remove from subsection (8) the words, enable provisions of the contract under which the document is to be prepared to be enforced", and insert instead, acknowledge liability for any error contained in the prescribed document due to his negligence in favour of". This is another amendment suggested by the Law Society and seeks to establish exactly what is intended here.

Subsections (7) and (8) appear to empower the Secretary of State to make regulations that would entitle the buyer, the lender or other persons to enforce the provisions of the contract under which a prescribed document is to be prepared. I should be grateful if the Minister could assist us on exactly what is intended.

Amendment No. 206A would allow sellers, buyers and lenders to bring proceedings where they have relied on information contained in the home condition report which proves not to be correct. The Minister spoke earlier today on the issue of liability, but if a home condition report is included in the pack, it ought to be correct for anyone who needs to rely on it. The seller could secure compensation if the report is defective, but if the lender and the buyer cannot secure compensation—or, to put it another way, if the person preparing the report knows that he will not be exposed to action from the lender or buyer—then they may well be reluctant to rely on that report. If there is no redress, one's reliance is reduced accordingly.

The amendment deals with the issue of liability, which is probably a more important matter than is indicated by this minor amendment. I beg to move.

Baroness Hanham

Amendment No. 202 is grouped with this amendment. We have not really touched at all on the surveys which are required before a mortgage can be obtained. Practically every person who buys a house has to have a mortgage survey. The Minister has said on a number of occasions that 77 per cent of people do not undertake a survey of their premises. But that is nonsense in terms of those who have mortgages because they have a survey of a sort. It is usually not a survey that stands up sufficiently as a full condition survey

However, if there is to be a survey for a home condition report, is it the intention that it should be acceptable to the mortgage lenders so that they will not have to do another survey in order to justify a mortgage? I do not need to go into the situation any further. That is the nub of the amendment.

Lord Bassam of Brighton

I shall deal with Amendment No. 202 first because I believe that I can satisfy the noble Baroness, Lady Hanham, on that. This amendment would require the Secretary of State to ensure that the home condition report is acceptable to lenders. We accept that it is crucial that the report is acceptable to them, but I am reluctant to single them out in the way the amendment suggests. It could be dangerous to do so as it could give them a right of veto over the format and content of the home condition report.

That said—and I want this understood—we have been developing the home condition report in very close consultation with mortgage lenders and the Council of Mortgage Lenders to ensure that their information requirements are met by the home condition report. I hope that satisfies the noble Baroness because it is intended to. Obviously, we cannot give people a right of veto over the process of consultation, but it is intended to cover the points that need to be covered. I hope that is a helpful response.

Amendment No. 200B would specify that the terms of documents provided in the pack may include terms that allow claims for negligence to be brought by those who rely on them. Of course we share the sentiment behind the amendment. We all want the packs to be useful to those involved in a transaction. However, I do not think that the amendment is necessary.

The Secretary of State will prescribe the components of the home information pack in regulations under Clause 144, as we have explained. Subsection (7)(b) of that clause enables him to prescribe the terms on which they are prepared. This will provide the means for achieving what I believe the mover of the amendment wants. Clearly, the Secretary of State will want to ensure that sellers, buyers and lenders can rely on these documents.

We intend that the home inspector's liability to sellers, buyers and lenders will be secured by contract. Home inspectors can therefore be bound by the Contracts (Rights of Third Parties) Act 1999. This should ensure that the buyer and lender, as well as the seller who commissions the home condition report, will be able to rely on it and bring proceedings against the inspector should that prove necessary. It is the current intention that regulations made under Clause 145 will specify that home condition reports must contain a statement confirming the rights of buyers, sellers and mortgage lenders to rely on its contents. I believe that is a response to the points raised.

Amendment No. 206A was also in this group. I shall refer to it even though I am not sure that it has been moved. This amendment would require the Secretary of State to be satisfied that appropriate arrangements were in place for buyers, sellers and lenders to be able to bring proceedings against the person who prepared a home condition report upon which they relied before he could approve a certification scheme.

We endorse the sentiment behind the amendment, but we do not believe that it is necessary. We believe that the arrangements we have set out will provide sufficient safeguards to cover all the interests of those who rely on home condition reports. I have tried to give assurances here and I hope that they match the points made in the amendments.

The Earl of Caithness

I listened carefully to what the noble Lord, Lord Bassam, said in reply to this group of amendments. Would he not agree that although the home condition report might satisfy the criteria of the mortgage lenders when first made and there is no valuation in the home information pack, the mortgage lenders have to undertake some kind of valuation in order to make the grant of a mortgage?

Secondly, the older the home condition report—it does not need to be updated—the less any lender will rely on it and the more likely it is that the lender will have to instigate a survey of his own to update the pack because a seller does not have to and the seller will not. Perhaps at day one it may satisfy the criteria, but in the five months, six months, nine months, two years it could take to sell a property, no lender will rely on such a report and there is no valuation attached to it. It has huge built-in weaknesses.

11.15 p.m.

Lord Bassam of Brighton

The noble Earl makes a good point. Most transactions will not take the period of time that he has described, although some will. Even the noble Earl will accept that for an overall percentage of transactions to take longer than six months to go through the purchasing process is perhaps exceptional; certainly a year is very exceptional indeed.

I know the noble Earl is a specialist, but the lenders may want to satisfy themselves; they may want to have another look at some points, particularly if the transaction period is extended. We are talking to them about the detail of the home condition report. We shall no doubt have to continue our discussions with them on that because we want that report to be of value to them, so that it obviates the need for independent and separate reports to satisfy the lenders. We recognise the issue and we recognise some of the implications raised in this discussion. But it is our intention to do all that we can to ensure that that report satisfies them so that they can lend money against the property.

Baroness Hamwee

I freely acknowledge that at this time of night I am flagging. I shall not attribute that to others, but I shall have to read what the Minister has said. I am not sure that I have followed everything, which I am sure is my fault and not his.

On Amendment No. 200B, we are assured that the regulations will be all right, but when talking about issues of enforcement I am not sure that that is wholly satisfactory. I spoke to Amendment No. 206A, but I want to see in black and white what has been said as, earlier, I had understood something slightly different from the noble Lord, Lord Rooker. I thank the Minister for his reply.

Baroness Hanham

I am very interested in the Minister's reply that work has been carried out with the mortgage lenders. The hope is that the home condition report will satisfy them. It would be essential for the home condition report to carry at least a statement saying that it is accepted by the mortgage lenders. As with other matters, one can see that beginning to fade out of existence, as the home condition report removes the novelty. It seems to me important that the buyer will be exempted from having to pay the costs of a valuation in those circumstances; indeed, the seller will have paid for the valuation report for the buyer. That is a completely new concept. I shall not take the matter any further tonight. It has sparked off a whole new area of interest, but I shall not bother the Committee with it tonight.

Baroness Hamwee

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 201:

Page 99, line 27, at end insert "; and (d) allow the Secretary of State to enable local authorities to set and maintain fees for those searches and functions under the Local Land Charges Act 1975 (c. 76), The Local Land Charges Rules 1977 and the Common Registration Act 1965 (c. 64).

The noble Baroness said: The amendment gives the Government a chance to redeem themselves in the eyes of local government by giving local councils more power to raise money locally.

There are currently two types of search. The first type is the official search carried out by local authority officers. There are also now reports carried out by private agencies which are becoming increasingly popular. I dare say that private agencies will still be entitled to do the searches for the vendor. However, these private agencies still have to rely on the information from the local land charges register. Those are given to them by council officers.

The cost of the searches at the moment is set by law at £11. That does not cover the costs. The estimated actual cost in time and effort of local council officers is more likely to be £50 per search. Where a local council is able to charge a sensible amount for the services it provides, these local agencies have estimated that a sum in the region of £60 million from revenue would be raised by local councils across the land. That is a positive development that I hope the Minister will accept. I beg to move.

Baroness Hamwee

I support this amendment. I am very glad that the noble Baroness was fast enough to table it. I realise that we should have tabled it and was happy to see that it was tabled. Personal searches are made because the purchaser wants to get on with it and is prepared to bear the professional cost of a personal search—in other words, the cost of somebody pitching up at the local authority's offices and looking at the material rather than sitting in an office and waiting for it.

That in itself is an expense, so it would not be a great disaster for the consumer—the noble Lord, Lord Rooker, has rightly talked of the Bill as a consumer Bill—if the cost to the local authority of personal searches was covered, because officers have to go and get the files and so on. It is unlikely to add very greatly to the cost for the consumer, but would be fair to the local authority.

Lord Rooker

I have good news—it is a good news day or a good news amendment—although it is only partial good news. I do not want to oversell it.

Amendment No. 201 seeks to give the Secretary of State the power to enable local authorities to set their own fees for services provided under the Local Land Charges Act 1975 and the Commons Registration Act 1965, including for searches of the relevant registers. That is similar to an amendment discussed in Committee in the other place. The Minister with responsibility for housing said then that these fees are not restricted to housing matters. The wording of this amendment might have the unfortunate consequence of allowing only fees relating to residential properties to be devolved to local authorities.

Local land charge fees in England and Wales are currently set by the Lord Chancellor with the concurrence of the Treasury. For England, deregulation of the setting of these fees is part of the Government's strategy for implementing the local government White Paper. The Government have supported David Borrow's Local Land Charges (Fees) Bill. However, it is unlikely that that Bill will complete its parliamentary stages in this Session. I can now confirm that the Government are intending to bring forward an amendment to the Constitutional Reform Bill which would devolve to local authorities in England the power to set fees for local land charge services, with the exception of personal search fees.

In relation to local land charges services in Wales, including personal search fees, the Government have agreed to the National Assembly's proposal to transfer fee-setting powers to the Assembly. A transfer of functions order to achieve that is to be laid before Parliament by the Secretary of State for Wales shortly.

Personal search fees are excepted from the proposals for England because they present some difficult issues. A full review is to be undertaken before any decision is made. It would be premature to set a date for that review until we know the scope of the study that the Office of Fair Trading is planning to conduct into the property search market. The National Assembly for Wales has confirmed that it will not use its powers to set personal search fees in Wales until it has undertaken a review of those fees. It is expected that the National Assembly will join in a review of personal search fees across England and Wales.

Setting fees for searches of the common land register is a matter for my right honourable friend the Secretary of State for Environment, Food and Rural Affairs. Defra is currently considering a package of reforms to the registers, and plans to introduce primary legislation as soon as possible. Information in the local land charges register and information about common land would fall within the ambit of Clause 144(5)(c) as relevant information for the home information pack. However, charging powers in relation to the provision of such information is very much a matter for other legislation, as I have explained.

Progress is on the way. I hope that, in the light of those comments, the noble Baroness will be more than satisfied that that was a very positive response to a fully worked-up amendment that, sadly, I cannot accept.

Lord Avebury

Is it not possible that, one day, all the information will be digitised, and that the consumers will be able to make the searches for themselves without paying professional fees?

Lord Rooker

Probably, one day.

Baroness Hanham

The answer to my amendment seems to be, "Yes, but not now". I accept that, although it is a great pity that it cannot be put into the legislation. I thank the Minister for his reply and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 144 agreed to.

Clause 145 [Home condition reports]:

[Amendment No. 202 not moved.]

Baroness Hanham moved Amendment No. 203:

Page 99, line 35, leave out "may" and insert "shall"

The noble Baroness said: Amendments Nos. 203 to 205 are grouped together. They suggest that, when regulations are put in place, the home condition reports must be produced by someone adequately qualified to carry out the task. Those who carry out the reports must be able to inspire the trust of the purchaser. If we are to have the home information packs foisted on us, for goodness' sake let us at least make sure that they are worth the paper on which they are written.

I refer back to the amendment regarding the suitability of the reports to mortgage lenders. In order for the reports to have any credibility at all in the marketplace, they must be prepared in such a way and by such a qualified person that they are fit for the task. Having language such as, regulations may require a home condition report to be made by an individual who is a member of an approved certification scheme", in the clause is not at all helpful. It suggests that anyone may be in the position to produce such a report and that, if necessary, the house seller can scratch one together.

I recall the Minister saying earlier that there would be a training programme for the inspectors, and I recall reading elsewhere that an NVQ would be required for home inspectors. An NVQ is nowhere near the qualification of a chartered surveyor, the person who currently does the surveys. One of the most important aspects of the reports will be that they are of sufficient quality to enable everyone to rely on them, otherwise exactly what I suggested before will happen—they will not be worth the paper on which they are written, people will not rely on them, and buyers will simply get their own searches and surveys done at the normal expense to them, and thereby will not really save anything at all.

Therefore, it is extremely important that we know what the training scheme for the home inspectors will entail. We should know the level of the qualification that they will be required to have if they carry out this work, the extent of the training and what is involved. I beg to move.

11.30 p.m.

Lord Bassam of Brighton

Clause 145(4) enables the Secretary of State to make provision for the approval of one or more certification schemes. Subsection (5) lists a number of points on which the Secretary of State would need to be satisfied before approving a scheme. They include home inspectors being fit and proper persons to carry out home condition reports, having adequate indemnity insurance and a complaint resolution procedure being in place.

Amendment No. 203 would replace the word "may" with "shall" in subsection (3) of Clause 145. We think that it is appropriate to use the word "may" rather than "shall" in this instance as there is no requirement for the regulations empowered by Clause 144 to be made. However, the use of the word "may" does not imply that the regulations will not be made, nor that home condition reports will be carried out other than by members of an approved certification scheme. The rest of the provisions in the Bill cannot work unless the contents of the pack are prescribed in regulations. I can assure the noble Baroness that the Secretary of State has every intention, after full consultation with interested parties, of making regulations under Clause 144 which will deal with the provisions in Clause 145.

As I said, Clause 145(4) allows the Secretary of State to approve one or more certification schemes. The effect of Amendment No. 204 would be to restrict that power so that only one scheme could be approved at any one time, effectively giving the scheme a monopoly over the certification of home inspectors. I do not know whether that was the noble Baroness's intention but that is what its effect would be. We do not consider that that step would be in the best interests of home inspectors or ultimately, perhaps more importantly, consumers. In the event that the certification scheme was failing, it would be difficult for a second scheme to be introduced quickly enough to offer a viable alternative. Therefore, if the amendment were at some stage to be successful, effectively it would create a monopoly situation which would not work to the benefit of the consumer or supplier of the service.

While there would be the advantage of certainty in having a single scheme—we have no current reasons to believe that approval is likely to be sought for more than one—I think it is important for the Secretary of State to have some flexibility here to approve another scheme or schemes if that were to become necessary or desirable. Crucially, whether it is one scheme, two or three, all will have to meet the same exacting standards. Listening to what the noble Baroness said, that is probably a shared objective because we all want to ensure that the home condition report is a document of value.

Amendment No. 205 would require the Secretary of State to approve any qualification and training schemes set up to train home inspectors. We do not think that that is either necessary or practicable, for the reasons that I shall now set out. As part of the process of approving a certification scheme, the Secretary of State will need to be satisfied about its arrangements for ensuring that applicants for membership are properly competent.

In September 2003, the Qualifications and Curriculum Authority approved national occupational standards for home inspectors. The standards clearly set out the skills and knowledge that should be acquired by home inspectors. Candidates should be trained and assessed to ensure that they meet prescribed standards.

Rather than have a single, one-size-fits-all training course, we propose to allow competition and choice. We envisage that the certification scheme will appoint an awarding body or bodies that will establish qualifications in home inspection. That process is already well under way. On 1 September this year, the Qualifications and Curriculum Authority approved a qualification in home inspection, submitted by the Awarding Body for the Built Environment, in the expectation of Royal Assent and subsequent approval of the ABBE as an awarding body.

In turn, the awarding body could appoint assessment centres that can assess and give credit for candidates' prior knowledge and experience and identify any gaps where additional training is required. We expect that these training needs will be filled, for example, through courses provided by universities or colleges or major employers of surveyors. All candidates would then need to sit a final test set and marked by the awarding body before being awarded the home inspection qualification required to be admitted to membership of a certification scheme.

That seems to us to be an effective and entirely appropriate regime for ensuring that home inspectors are appropriately qualified and trained. Obviously, we have worked hard with the potential awarding bodies, the university sector, the professional organisations and so forth to ensure that what we have set up and designed works effectively so that there can be trust and confidence in home inspectors and their product; that is, the report. I hope that that helps the noble Baroness.

The Earl of Caithness

Perhaps I may ask the Minister a question on this qualification. It follows the answer that the noble Lord, Lord Rooker, kindly gave me last week. I have been looking for it for the last couple of minutes and cannot find it. I asked about the costs that had been paid to a company called SAVA, which is now no longer anything to do with the ODPM but those that were involved in that section of SAVA have now set up a company called Property Industry Research Limited (PIR) and have a big contract with the ODPM.

From memory the Minister's letter said that the total of the contracts first to SAVA and now to PIR are something in excess of £2 million. Later in the paragraph he mentions another figure of £2 million. That figure, coincidentally, is the same as the total of the two figures that he gave me earlier for SAVA and PIR. Can he confirm that the total amount of the contract is just over £2 million or is it £4.2 million or thereabouts?

Lord Bassam of Brighton

My noble friend Lord Rooker has provided me with a copy of this. The total value of the contract is £2,114,913.

The Earl of Caithness

Is that the total that the ODPM has so far spent on these two companies in the contract, and that will be the end of it?

Lord Bassam of Brighton

All I can say to the noble Earl is that that is the total value of the contract.

Baroness Hanham

It is too late to go into the details of this but what we will need to be satisfied about—I am not satisfied yet—is that the training of these inspectors will be such that they will be in a position to do a survey which is adequate; in fact, not adequate, more than adequate. If the home condition survey is not comparable to the survey which is carried out on premises at the moment, buyers will not rely upon it. It is terribly important that we get clear the standard of this home condition report. Does the Minister agree with that?

Lord Bassam of Brighton

I want to agree with the noble Baroness in this sense. It is one of those situations where we are not quite comparing like with like. I understand what the noble Baroness says, but home inspectors will not need to be qualified to what one might describe as the full RICS standard, largely because they are not undertaking the full range of tasks that are included in the chartered surveyor's qualification. I think the noble Baroness needs to accept that point. However, that said, we want them to be of a very high standard indeed.

We have worked very hard with the relevant bodies so that we can have confidence in this and so that the market itself and those institutions and bodies which are part of the market are satisfied. That work has been ongoing. As I said earlier, we have had very extensive discussions with stakeholders to ensure that we achieve the very high standard that will be required so that confidence can be assured.

No doubt the noble Baroness will want to tease more of that out at a later stage, but that is our intention. We recognise the essential importance of the issue.

Baroness Hanham

I thank the Minister for his reply. For today, we beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 204 and 205 not moved.]

Baroness Maddock moved Amendment No. 205A:

Page 100, line 3, at end insert— ( ) for ensuring that members of the scheme are completely independent and have no links financial or otherwise with the responsible person;

The noble Baroness said: Amendment No. 205A amends Clause 145 by dealing with regulations that may be made concerning members of approved certification schemes. The purpose of the amendment is to make it absolutely clear that home inspectors must be independent. The hour is late but this is an important amendment. It is absolutely essential for buyers to know that home inspectors are completely independent if they are going to have the confidence to rely on home condition reports commissioned by sellers. Given the decisions we have had about these reports already this evening, that is very important.

Members of a scheme who are linked to estate agents, mortgage lenders, building fabric warranty providers and financial product providers may not sufficiently protect the consumer in our view. I think that this is a difficult issue. We believe that independence is an important consumer protection for both sellers and buyers to ensure that pressures are not brought to bear on members of a scheme which could influence the contents of the report.

I hope that the Government agree with us on this. They may not think that the amendment should be here, and they may have made provision for it elsewhere in the Bill where we have not found it. However, I think that the issue is important. I beg to move.

The Earl of Caithness

My Amendment No. 208A and Amendment No. 209, in the name of my noble friend Lady Hanham and myself, are grouped. The noble Baroness, Lady Maddock, is absolutely right. This is a fundamental and crucial amendment to how this part of the Bill is going to work. It is a consumer protection amendment. I am sorry that the noble Lord, Lord Borrie, is not in his place because I think that on this occasion he would probably be with us.

Given the advocacy and passion with which the Government have promoted the Bill, one might well have thought that many other countries in the world are ready to follow this lead and the unprecedented step that the Government are taking for England and Wales. But the silence is deafening. Nobody is following what the Government are advocating in Part 5 of the Bill.

The reason for that is simple. The surveyor must be totally independent from all other parties. In the US, it is illegal for there to be any link between home inspectors and the selling agent. Financial institutions are not allowed to own an estate agency chain as their view is that a consumer needs independent financial advice on a mortgage, not from someone selling a property. If transgressions are found, a practitioner can lose his state licence. That is very different from what is happening in the UK, where it is not a question of a conflict of interest but more of a vested interest.

I have concerns about the home condition inspector being responsible to the seller, the buyer and the lender. Those concerns have been somewhat eased by the Minister's comments that the home condition report does not need to be updated. All the surveyor—but let us not call him a surveyor as he does not have the qualifications of a surveyor: he will have the qualifications of an inspector, which are not the same and of a lesser standard—all the inspector will have to say is, "At the time that I did the report it was right, but that was nine months ago. It is now up to the vendor or the purchaser to get an up-to-date survey. You prove that what I said nine months ago was wrong". That is not a good position for an inspector to be in. It gives him a get out clause. But we still have the position where the inspector is responsible and can be sued by three different parties.

11.45 p.m.

Another group that has a vested interest is my institution, the Royal Institution of Chartered Surveyors. All those who have the proper surveying qualifications automatically have the qualifications to be a home inspector. It is not surprising that many firms see this as a good way to increase the turnover of their business without adding to costs.

I move on to an agency that has been giving the Government a lot of advice and which the Government seem to think to be rather good news—Countrywide Assured. But it has a vested interest, in that it is seeking to become a one-stop-shop. If one looks at its annual statement in 2000, it states that it had recently taken an investment amounting to 47 per cent of equity shares in Teramedia, a company that has been granted a licence to access and provide Land Registry and local authority searches electronically. Countrywide also has surveyors. So within one building, within one firm, actions are being taken against the interests of the consumer because if one goes to that firm, it will say that it can recommend a surveyor, who happens to be sitting at a desk there, and that, of course, he will be independent. No, he cannot be independent, he is working for that firm and that is utterly unacceptable.

On a smaller scale, let us turn to the case of Maria Coleman. When she did the pilot scheme in Bristol, she was in control of a company promoting the sale of voluntary seller's pack schemes to estate agents. I asked the Minister yesterday whether she declared that interest to the Government. At the moment, as far as I can see from her website, she is selling 16 properties. That is not the basis on which the Government of this country should be making legislation. That is quite wrong. I must press the Government for an answer. Did Maria Coleman advise the ODPM or the Government of her dual interest, her conflict of interest?

This is where the trouble is going to begin. This is where there will be a huge amount of consumer resistance. At the moment, packs are voluntary, but when all the packs become compulsory and consumers start to wake up to the fact that, rather than getting independent advice, they are getting advice from people who are selling properties as well as being surveyors, or who are working within the same firm, or who are controlled by a financial institution, like the lenders, then consumers will lose even more confidence in the housing market and the way it works.

The noble Lord, Lord Rooker, read out seven examples from letters. Those letters are nothing in comparison to the letters he will get in a few years' time. In a few years' time, the letters are going to say exactly the same thing, but they will have this sentence: "You misled us; you told us that this was going to be a better system". No, it is not a better system but one way we can improve what is proposed by the Government is to have the inspector totally separate and verifiably independent from any of the other institutions: from the purchaser, the vendor and the lender.

Lord Bassam of Brighton

Amendment No. 205A would require that home inspectors are "independent". The amendment does not really give any more depth than that, but it is an important statement in itself. The home condition report should of course be completely objective. We recognise and understand the concern that this objectivity could be compromised if there were to be any potential or actual conflict of interest. I know that there is a particular concern about risks where, for example, the home inspector and the seller's estate agent are employed by the same company.

However, the Government believe that the checks and balances that we intend to put into place will ensure that those fears, while completely understandable, are misplaced. We intend to tackle those risks through the regulations made in accordance with Clauses 144 and 145 and the terms under which the home inspectors will belong to the certification scheme. All the main stakeholders, including the Council of Mortgage Lenders and the Consumers' Association are involved in that work. Certification schemes will not be approved unless all the interested parties can rely on those reports.

I will outline some of the checks and balances. First, we intend that the guidance will be made available. It will set out clearly what the home inspector must do when preparing a home condition report. If the inspector fails to act correctly, that will be readily apparent. Secondly, we intend that inspectors will be required to make a "related parties" statement on the front page of the home condition report if the firm is related to that of the estate agent selling the property. That will make any link fully transparent.

Thirdly, we expect that approval will be granted to a certification scheme only if it clearly establishes the duties and responsibilities of home inspectors and publishes clear guidance about the conduct expected of inspectors, particularly in cases of perceived and actual conflicts of interest. Furthermore, approval will be granted only to certification schemes that monitor and audit the work of home inspectors.

The evidence from our research—and the practical experience of those operating voluntary home information packs in the real world—is that most buyers are prepared to trust a report that is provided by the seller now. Our objective is to ensure that when home condition reports are being provided under the terms of an approved certification scheme, they will be completely above suspicion. In that respect, our aim is to ensure that home condition reports will be regarded in much the same way as an RAC or AA report on a second-hand car is regarded now.

Any home inspector producing a report in a manner that is partial to one party risks being sued by the other and a claim against indemnity insurance will impact on renewal terms. That would also be likely to trigger a complaint to the certification scheme, which could lead to sanctions and even expulsion from membership of the scheme and the loss of livelihood. In summary, that robust package of safeguards will ensure the objectivity of home condition reports.

Amendment No. 208 seeks to delay the implementation of the certification scheme until the Secretary of State is satisfied. I apologise, I should have turned to Amendment No. 208A. The points in respect of Amendment No. 208A are similar to those for Amendment No. 205A. Again, we understood the concerns, but the checks and balances that we have put in place will cover the points that are of concern to the noble Earl.

Amendment No. 209 seeks to delete Clause 145(7). As we have explained many times, Clause 144 contains the general powers for the Secretary of State to prescribe by regulations the documents required to be included in a home information pack and information to be included in, or excluded from, those documents. Regulations regarding the inclusion of a home condition report in the pack would be made under the powers in Clause 144.

Clause 145 is supplementary to Clause 144. It makes provision for what may be required in any Clause 144 regulations made in relation to home condition reports. It also sets out points on which any regulations shall require the Secretary of State to be satisfied before approving a certification scheme for the production of home condition reports.

Clause 145(7) confirms that nothing in Clause 145 limits the Secretary of State's powers under Clause 144 to make provision about home condition reports in regulations. That is the case because Clause 145(3) provides only that the Secretary of State may require in regulations that a home condition report must be prepared by an individual who is a member of an approved certification scheme. It does not require him to do so. Only if the Secretary of State makes a requirement must he make provision for the approval of certification schemes and for the schemes to contain appropriate provision for the arrangements regarding qualifications, indemnity insurance and other aspects set out in Clause 145(5).

I appreciate that that is a technical point, but given the knowledge available on the Opposition Benches and the fact that we have dispatched consultation papers on the pack's contents specifically proposing the inclusion of a home condition report supported by one or more of the certification schemes, I hope that it will be understood. Clause 145 is not intended to provide an exhaustive list of what might be provided in regulations regarding home condition reports. It may prove necessary for regulations to cover considerations not mentioned in that clause: possible examples are monitoring and auditing arrangements and provision for insurance of last resort; that is, cover to protect the homebuyer should the home inspector's run-off cover have lapsed, for example, following his death.

Accordingly, for the avoidance of doubt, Clause 145(7) provides that nothing in Clause 145 limits the Secretary of State's power under Clause 144 to make provision about home condition reports and regulations. I hope that that has covered the issues of concern relating to the amendments.

To answer the specific point raised by the noble Earl, Lord Caithness, concerning Maria Coleman, the Government have always been aware of her commercial interests in estate agency and home information packs. She was operating packs before the Government prepared these proposals, so it has been well known to us for some time. We have acted entirely properly and taken good advice in bringing forward our proposals. I hope that the noble Earl will accept that we have acted in good faith, as I am sure he does.

The Earl of Caithness

I listened with care to what the Minister said in reply. I shall read carefully his response when it is printed in the Official Report. There is a fundamental difference between mine and the Government's position and indeed that of the noble Baroness, Lady Maddock. From the consumer's point of view, if home information packs and home condition reports are to be foisted on the public, the inspector must be totally independent from any other party. That is crucial for consumer confidence and for the reputation of the scheme that the Government propose.

The Minister and I could argue all night about that, but we are coming from fundamentally different positions. I believe that it is absolutely right that the inspector is totally independent. The Government do not care: they think that they can control it by regulations and that they can bring in enough checks and balances to ensure that the public are not put at a disadvantage. I do not believe it for a moment: it just will not work.

Baroness Maddock

As I said in moving the amendment—and the noble Earl, Lord Caithness, expressed the same firm opinion—this is an important matter. I shall have to read carefully in Hansard what the Minister said. He gave a long reply; it is late and we are all tired. Between now and Report stage will the Minister spell out a little more clearly the checks and balances about which he has been talking? That seems to be where the difference is between us. We are saying that we want to be independent: the Minister is saying yes, we have put things in place but we will ensure their independence. That is the point on which we need to be reassured.

Lord Bassam of Brighton

I appreciate what the noble Baroness is saying. I cannot be specific, but we will see what we can do to give some further comfort on that point. I recognise the centrality and importance of the issue. We want to get it right and ensure that home inspectors and home inspection reports are worth the paper on which they are written—that is everyone's objective and it is in everyone's interests that that is the case.

Baroness Maddock

At the present stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.


Baroness Hanham moved Amendment No. 206:

Page 100, line 5, at end insert "which may be achieved by the government underwriting scheme"

The noble Baroness said: Clause 145(5)(b) states that the Government will make regulations in regard to an indemnity insurance that must be available to home inspectors. We understand that many people representing the surveying community, the mortgage lenders and, indeed, the consumers themselves are concerned that there is a dearth of firms wanting to underwrite the work of the inspectors.

This is obviously of enormous concern. If that is still the situation, it will be inevitable that the Government will have to underwrite a scheme of insurance to enable the whole project to get off the ground. That is the purpose of the amendment, briefly and quickly at this time of night, and I am sure the Minister has a respectable answer. I beg to move.

Lord Rooker

He certainly does. Satisfactory insurance is absolutely essential to ensure that consumers and lenders can rely on the home condition report. The insurance needs of home inspectors have been the subject of extensive research and discussion with stakeholders. This includes research carried out on behalf of the Office of the Deputy Prime Minister by several consultants into suitable means of providing a robust insurance regime, which will include insurance of last resort to be provided by the certification scheme. We are confident that it will be made available.

Assisted by the Association of British Insurers and the industry working group advising us on insurance matters, discussions are continuing with commercial insurers to identify options based on a commercial approach. The possible basis for an insurance regime will be published when this further work is complete. We do not intend to introduce compulsory home condition reports until we are absolutely certain that satisfactory insurance arrangements are available. We are confident that adequate insurance will be available without the need for a government guarantee.

Baroness Hanham

I thank the Minister for that reply. I hope his confidence is justified. It could not have been justified a little while ago because concerns have been expressed to us ever since the Bill was published. We will keep a watching brief on this. It may very well be worth coming back to it on Report to see how matters are progressing. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 206A not moved.]

Baroness Hanham

had given notice of her intention to move Amendment No. 207:

Page 100, line 10, at end insert "; and (f) a home condition report must be no more than three months old at the point at which a property is marketed

The noble Baroness said: We have discussed at considerable length the time links of home condition reports. The Minister replied earlier—he did not satisfy us—and I do not believe there is any benefit in moving the amendment now because we will come back to the whole process later.

The Minister said the report could be three months old when it was first put into the pack. The amendment would not allow it a life expectancy of more than three months. I am not going to move the amendment tonight because we will have to come back to it.

The Chairman of Committees

The noble Baroness must not speak to amendments which are not moved.

[Amendment No. 207 not moved.]

Baroness Hanham moved Amendment No. 208:

Page 100, line 10, at end insert— ( ) The Secretary of State will delay the implementation of the appropriate certification scheme outlined in subsection (5) until he is satisfied that there are enough members of such a scheme to meet demand.

The noble Baroness said: I shall speak to this amendment because I am going to move it. I like to explain as I go along what is happening. I got it all wrong. I do the wrong thing and the Minister does the wrong thing.

The amendment reflects a genuine concern of the Royal Institution of Chartered Surveyors that in order for the task of providing home information packs to be carried out effectively at least 7,000 inspectors need to be trained and ready by the time that the home information packs are rolled out across the country. Having said that, although I am happy to accept the institution's estimate, we must be able to allow ourselves a little latitude in this regard.

It comes back to the quality of training and the regulation and maintenance of consistently high standards that will instil trust in consumers, mortgage lenders and probably the estate agents themselves. If the institution's estimate is short and the initial number of 7,000 qualified surveyors is overwhelmed in the first two weeks, it will be little short of catastrophic for both the housing market and the Act. The Secretary of State must have leeway and, again, discretion in the implementation of home condition reports. I beg to move.

Lord Rooker

The amendment would delay the implementation of the certification scheme until the Secretary of State is satisfied that there are enough home condition inspectors to meet demand.

I am delighted to reassure the Committee, as would be every Minister, because we all come and go, that there is absolutely no question of implementing mandatory home condition reports until we are absolutely satisfied that there are sufficient qualified and insured home inspectors available to do the necessary work. Before taking any decision on that, the Secretary of State will of course seek the views of stakeholders.

As I have said repeatedly, we are working closely with those stakeholders, including property professionals, and we are confident that the required numbers of home inspectors can be in place by January 2007. We concur with industry estimates that in the region of 7,500 people will be needed. Some of them will work full time and others part time on preparing home condition reports.

I am pleased to say that there is considerable interest from existing surveyors and related professions and trades. For example, 5,500 chartered surveyors have expressed interest to the Royal Institution of Chartered Surveyors in becoming home inspectors and that does not take account of a further 1,200 surveyors employed by corporate surveying firms. Added to those 6,700 or so chartered surveyors are many members of other bodies, including architects and other building professionals.

We know that a lot of concern has been expressed about the availability of suitable recruits, but I hope that, having heard those kinds of figures in September 2004, Members of the Committee will see that our expectation of having in place by January 2007 the necessary 7,000 full and part-time inspectors is justifiable. There is still work to be done, but, contrary to some of the comments that have been made today, there is a willingness among professionals to make the scheme work and it looks as though there will be enough people to make sure that that happens.

Baroness Hanham

The Minister has said throughout our discussion that 40,000 houses come up for sale each week. Each of those 7,000 qualified people, with half of them on holiday and a quarter of them sick, will be doing at least four home condition reports a day. I hope the Minister is correct. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker

I beg to move that the House do now resume.

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

House resumed.

House adjourned at eight minutes after midnight.