---

Housing: Home Information Packs

My Lords, the noble Baroness, Lady Hanham, has done the House a service by converting her Question into a debate. I share noble Lords’ frustration that it is a short debate, and I shall try to answer as many questions as possible. I will certainly write to noble Lords if I cannot answer all of them in the time available. It has been a very thoughtful debate, and I know that I face many veterans of this policy on the opposition Benches. I shall concentrate on where we go now in order to answer the noble Baroness’s question, but I must say a little about where we have come from. I thank my noble friend Lord Graham for his support. I had another supporter, but he became sick. It is a pleasure to share the Bench with my noble friend Lord Rooker. I start by making it clear that we are fully committed to making home information packs work in the interests of consumers and the industry as a whole. We have agreed on two things tonight: there is nothing more stressful than buying a home; and the home is our greatest, most valuable and most emotive asset. We are right to respect people’s passionate feelings about that, so the need to make the process of buying and selling homes more predictable, less stressful and less wasteful is as urgent and as inescapable as ever. I was delighted to hear the noble Earl, Lord Caithness, say that we should think about the future, because to accept the status quo is an indefensible position. We still have the slowest system in Europe, slower than it was in 1998, and it is horrendously complicated. I very much respect the positive experience that the noble Lord, Lord Jenkin, had with his estate agent, but not all such experiences are so positive. I will return to the point . I do not think that either party opposite would want to put themselves on the opposite side to the majority of consumers who find themselves largely dissatisfied with a process that is so unpredictable and wasteful of emotional energy. The noble Lord, Lord Selsdon, made a very good case for home information packs. It was a very thoughtful and helpful speech in many respects. Noble Lords have asked about the point of having a home information pack without including the home condition report. On the evidence that we have collected, and the evidence from places such as Denmark and New South Wales, we still rightly believe that a single legal document up-front that brings together vital information—sometimes elusive information such as leaseholds that may be scattered in solicitors’ officers or banks or buried in filing cabinets from where it has to be dug out—can make the system simpler and more transparent, particularly for the first-time buyer. I do not want to introduce a personal note into the debate but I am currently in the process of collecting such documentation. I think that this system can remove obstacles in terms of speed and complexity in what is a very uncertain process. There are costs in the system but they will be transferred from the buyer to the seller, and most sellers are also buyers. What a boon it is for first-time buyers to be able to look at a house and to know that they will be given the information they need up-front by the seller. If they do not buy one house they can find another one and they will not have to pay for a second set of papers. On balance, noble Lords have welcomed the energy performance certificate, which is the other mandatory aspect of the HIP. I am glad about that. However, I say to noble Lords who questioned why the EPC was brought forward now—as though it were intended to mask the mandatory nature of the packs—that we have to tackle climate change in this country. Our homes emit huge amounts of carbon. We have no time to waste. We are bringing the EPC forward now because it will contribute to achieving a target of a 20 per cent reduction in carbon emissions by 2010. It will do so by informing people how to save on energy costs, how to improve insulation and how to reduce their bills. This is a win-win situation. We did not have to wait until 2009 and we chose not to because the situation is urgent. It is something that we could do something about. The regulations that we will introduce, to which I shall refer later, will be amended to make stand-alone energy performance certificates a mandatory component of home information packs. Finally, I confirm that home information packs will come into effect, as we have already announced, in June 2007. That is one element of the answer to the Question raised by the noble Baroness. I turn now to the burden of the debate—which is why we made the change and the implications for the industry and people in training. The change announced in July does not in any way imply a loss of faith in the value of home condition reports—far from it. Why should it be easier to get an MoT on a car than it is to get a comprehensive account of the state of one’s prospective home, especially since only 30 per cent of people get a mid-range survey? Our position regarding June was nothing to do with the value that we place on the home condition report but was to do with our obligation to the consumer to have the best possible product that would bring the most effective benefits. Three elements in combination affected our decision. They have been touched on but I should like to enlarge on them a little. The first element was the timing, which was dictated by the fact that when we did the dry run collecting evidence, no matter how expansive the reconnaissance, the real-world impact of home condition reports proved to be very difficult. There were 15,000 voluntary packs in operation, only 250 of which had a home condition element. None of them had a home condition report and we could not test or trial them because the home inspectors were not in place. It became clear that we had to test them in a real world environment. At the same time, we thought that a mandatory test—and we were well advised on this—would be deeply unpopular and flawed not least because people who moved from one area to another would end up by paying twice. In June, we therefore took the decision that we had to have proper, independently evaluated trials which would be conducted by home inspectors. The second element, which was made clear to us, was that despite its best efforts, the lending industry did not have its automated valuation systems in place to the extent that the information generated by the HCR could be used to make mortgage evaluations a simpler desktop process—which is where the lending industry wants to go in many respects. Thirdly, I come to the point about home inspectors. We were confident about the numbers and in the summer we gave the figure of 7,500. But as the training went through, it became clear from the pace of qualification that we could not predict with certainty that we would have that number of qualified home inspectors in place by next June. People were coming into the scheme either from the surveying profession or, as was the case of the brother of the noble Lord, Lord Addington, from scratch. They were progressing at their own pace and were therefore qualifying at different rates. Taking all those concerns together, to have pushed ahead with all aspects of the home information packs as well as home condition reports in one big bang on a single day next June would have been irresponsible. We could not take that risk on behalf of the consumer. I shall turn briefly to where we are now. We understand the impact on the industry, although I was interested to note that membership of the Association of Home Information Providers has seen a net gain, while the number of early adopters has increased. But the most important element concerns the serious personal consequences this has had for individuals, and we do not minimise that. The Secretary of State was quick to apologise, and that apology was very sincerely meant. We do not believe that it is appropriate to offer compensation for reasons I will explain. The trials and testing involved in the voluntary roll-out will absorb people in training. Some 470 home inspectors have completed their training and 177 have been issued with their diploma. The first of those qualified inspectors will be involved in the trials we are about to start and in the subsequent rollout, and as they roll out more will be needed. They will also certainly be needed in order to meet the demand for energy performance certificates because at the moment they are the only people qualified to issue them. However, by 2009 when the rental market will become involved by being required to prepare energy performance certificates, we will need a lot more inspectors. As we are talking about 1.8 million rental transactions, many more qualified people will be needed to award the certificate. Not only are we confident that we will have enough work for the inspectors in that respect, but we are also putting in place an assessor’s qualification which will become available next February; it will match the national occupational standards for energy assessment. We are now investing in a very serious process of trials and testing. It involves only six areas, but they are very different and discrete, and so we think we can achieve a real result. The first of the recruitment evenings took place last night. Some 200 organisations have shown an interest in these preparations, and 75 are already involved in the dry run. Moreover, the private sector will be very firmly encouraged to take part. Government office staff and time have been committed to support the trials and regional publicity campaigns will be run. The trials will examine the take-up and use of both the HIP and the home condition report. Certificated home inspectors will be involved, as well as estate agents and so forth. We need to understand the impact and how useful the pack is not just on the process but also on the quality of the experience in order to maximise its benefits. Will we need to change some of the emphases? Will it need to be fine-tuned in some ways? How can we accelerate the benefits and maximise the impact of energy performance certificates? Money will be used for communication and advertising, and we will be offering incentives in the form of a limited number of free packs as well as packs in which the mandatory element will be provided to the seller free of charge, leaving them free to pay for the HCR, and packs provided on a no-sale, no-fee basis. This is a trial and it will be empirical. What is most important—and here I respond to the noble Earl, Lord Caithness—is that the trials will be evaluated by independent researchers who will monitor them in order to provide an objective understanding of what is happening. The results will feed back into the process and will be published in order to inform our decisions. So in essence our policy is to make a success of the rollout by evaluating the trials as comprehensively as possible. We will keep Members of this House as well informed as we can, along with lenders and all those who go along with us. In response to questions put by the noble Baroness, Lady Hamwee, we will look to see whether people genuinely feel better informed and more confident as a result of the pack. We expect these trials to confirm the benefits which have been found in Denmark, for example, where recent research found overwhelming support for the positive benefits. I can make that research available to noble Lords. We will also look at how long transactions take to complete without packs and whether they prevent transaction failures. While it is clear that they will not prevent such failures where people behave badly or circumstances change, we will be looking at how consumers can obtain greater protections through the packs. A very rigorous set of questions will be asked and the criteria will be qualitative rather than just quantitative because it is the qualitative element that will be extremely important. As for first-day marketing, we cannot prescribe in relation to that, as these are trials, but we hope to look at various factors including the impact of allowing marketing to commence once a home information pack has been commissioned. I will write further to noble Lords on that point. Finally, we have also made real progress in the certification process. The first certification scheme is now going through the approval process. It will be run by the Surveyors and Valuers Accreditation, which will manage the registration. It will ensure that each inspector has PI insurance. As regards registration, a preferred bidder has been found in Landmark Solutions and that will provide us with the database. The DTI has also announced the criteria that the Secretary of State will use to assess the suitability of applicants to run the redress scheme that will be available to anyone who has a complaint. This will offer protection against unscrupulous agents. The regulations will be amended and we will come forward with them early next year. The home condition report will be an authorised document—that is one change that will be made in the regulations—and the energy performance certificate will be a mandatory document. We will publish detailed information on the website. I am very sorry that the noble Baroness did not have a reply and I will look into it .