Homes Bill

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Mr. Foster: As a matter of interest, were the Minister at some future date to be transferred back to the position currently occupied by the right hon. Member for Skipton and Ripon, would he hold his current view, or those that he held when he was in opposition?

Mr. Raynsford: I am a great believer in progress. Labour Members believe in progress and it is fair to say that Liberal Democrat Members do, too. Unfortunately, the hon. Gentleman is on the side of the House that is associated with a party that does not believe in progress and has a more conservative approach towards the world. The belief in progress and the perfectibility of man, and woman, is such that I have learned from my experience in the past three and three quarter years in government. I would not now repeat the arguments that I made in good faith when I was in opposition and had not the expert advice that I now have available from people with razor-sharp minds who know exactly why legislation has to be drafted in certain ways. I hope that answers the hon. Gentleman's question.

5.30 pm

The use of the word ``may'' should not be taken to imply that regulations will not be made. The rest of the provisions of the Bill cannot work unless the contents of the seller's pack are prescribed in regulations. If regulations were not made, the scheme would not be introduced. We are committed to introducing the seller's pack. We want it to work, and we will make regulations. We are satisfied that the current wording achieves our objectives. I am told that the substitution of the word ``shall'' for ``may'' could expose the Secretary of State to legal challenge for failure to produce regulations by a particular time when there might be good reason to ensure fuller consultation, which might mean that the regulations emerged slightly later. That is one illustration of the potential problem that could arise should the word ``shall'' be substituted for ``may''. I have questioned my advisers carefully on that point, because I have argued the case from the other point of view in the past, and I am satisfied that there are good and precedented reasons for keeping the phraseology that is in the Bill.

Mr. Clifton-Brown: It is an important point, because professionals will be looking at the Hansard report of the debate. When does the Under-Secretary expect to be able to produce those draft regulations? Clearly, it is in everyone's interests that there should be proper consultation with all the relevant bodies. At the same time, it is in everyone's interests that those regulations are known about in good time before the Act is brought into force.

Mr. Raynsford: The hon. Gentleman is correct in saying that there is a balance to be achieved between scope for proper consultation—to allow all interested parties a full opportunity to express their views and enable the Government to learn from the experience of the wide range of bodies who have much to contribute to the debate—and the need to provide plenty of advance notice for those preparing for the implementation of the scheme. I cannot give the hon. Gentleman a precise date at the moment for that reason, but I can assure him, however, that we are determined to complete both those processes. We have two years in which to do so, which gives us more than enough time to ensure full and extensive consultation, and to provide the regulations in good time for the House to consider and debate them. All those who will need to use them will have access to them, and will be able to prepare well in advance of the implementation of the scheme.

Amendment No. 5 would appear to be intended to provide that local authority searches cannot be specified in any regulations that prescribe the contents of the seller's pack. Local searches are important to home buyers and mortgage lenders. If problems are revealed by the search, they can lead to further investigations and delays, possible renegotiation over the price, or even transactions collapsing altogether. The whole point of the seller's pack is to introduce transparency into the system by exposing potential problems and information that might threaten the transaction right at the beginning of the process. The local authority search is an important component. It is a check against other components of the pack, including the home condition report, and the property information form. The search, therefore, needs to be available up front, and I believe that the effect of the amendment would be catastrophic to the good working of the scheme. I hope that the Committee will reject it.

I understand that anxieties have been expressed on these issues. The hon. Member for Eastbourne referred to various concerns. I shall not go into the detailed point. He quoted at length my hon. Friend the Member for Upminster. My hon. Friend was not alone in failing to secure a place on the Committee. Many Labour Members expressed a wish to serve on the Committee. It has proved a popular Cttee, and several hon. Members were disappointed not to be able to serve. I can assure the Committee that I have heard the views of my hon. Friend for Upminster and have considered them carefully. I do not agree with all of them.

My hon. Friend was quoted by the hon. Member for Eastbourne as saying that international comparisons were potentially misleading. I accept that some misleading comparisons can be made, but by whatever criteria one judges, we have one of the slowest systems in the world. Virtually everyone to whom I have spoken accepts that we must be able to speed up the process considerably and that applies equally to local authority searches. I will, therefore, pick up the point that the hon. Member for Eastbourne made, quoting Mr. Rendell. I hope that he is no relation to the Liberal Democrat hon. Member for Newbury (Mr. Rendel). Mr. Rendell wrote to say that the Bristol pilot was bogus because there was a fast-track procedure for the searches, and it would not be possible to obtain information by 2003 using the national land information service and the electronic system. I have to say that Mr. Rendell's first point is unfair and his second is quite simply wrong. Let me tell the Committee why.

The pilot was designed to replicate the circumstances that will apply as and when the new arrangements come into force. We expect NLIS to be available in the not-too-distant future, which is why we sought to ensure that local authority searches could be processed more quickly than under the existing manual arrangements. That is the reason why there was a strong emphasis on creating a quick procedure for accessing the information necessary for the local authority searches. It is in everyone's interest that we do that, to speed the process up, because the current arrangements are not satisfactory.

As for the claim that the endless and similar arrangements will not be available by 2003, I inform the Committee that a statement was issued today, prepared jointly by the local authority improvement and development agency, and by Teramedia Ltd., which is working with the agency on this. The statement makes the point that

    there is already a modernisation programme under way, pioneered by the local government Improvement and Development Agency (IDeA) and the first local authority data providers are being selected. Roll out plans for modernisation indicate that a critical mass of data providers would be able to provide updates to questions direct from the source registers by 2003.

    We are also looking at the feasibility of various private sector initiatives to keep this information constantly up to date, for example in the area of planning applications received in the interim. Indeed, the first NLIS Channel Licence is being signed tomorrow by Teramedia Ltd.

    None of this would be possible using manual methods but I have confidence that NLIS will provide this capability through a choice of outlets, by the time sellers packs are mandated by 2003.

Mr. Clifton-Brown: I am a member of the Public Accounts Committee, and time after time we have come across big government IT programmes that were delivered very late. One can think of NIRS2 and IT in the Ministry of Defence. Far too many big government IT programmes are delivered late, so it is highly possibly that the NLIS programme will be late. Under those circumstances, it will still be necessary to rely on manual searches. It is my experience that local authorities are very variable in the length of time that they take to provide local authority searches. Would it be a defence in such circumstances to provide a seller's pack, saying the date of application for a local authority search and the date on which it was expected to be provided.

Mr. Raynsford: Our intention is that there will be no need for it, because the system can be obtained electronically within a short time. I am pleased to say that Teramedia Ltd., a private sector company with considerable experience in the field, and the local authority improvement and development agency are both confident that that can be achieved.

However, to take the hon. Gentleman's point, in the event of gross inefficiency on the part of a local authority and a total failure to provide the information by the time that the agent felt it was reasonable to put a seller's pack on the market, it would certainly be possible for the agent to put the pack on the market with the note, as we have described, stating that the information will be provided as soon as it becomes available. I would hope, however, that the agent would notify, not just the local authority, but our Department, because such a failure would be wholly unsatisfactory. As I have said, we are seeking to improve and speed up processing and most local authorities are entirely sympathetic to the need for such processes to be carried out far more efficiently than they are now. We will continue to apply pressure to help ensure that that is achieved.

Amendment No. 19 would provide that a valuation of the property may be included in the contents of the seller's pack. We have deliberately chosen not to include a valuation in the pack for two main reasons: first, inclusion would unbalance and inhibit the usual bargaining process; and, secondly, a valuation is subjective and could become out of date very quickly in a fast-moving market. In our view, the home condition report would generally be reliable for six months or so without a valuation attached, but its reliability would be seriously compromised if it included a valuation that became out of date in a matter of weeks.

The home condition report will greatly assist buyers in making a sound judgement on whether the price of the property accurately reflects its condition. We also want lenders to be able to use the home condition report to assist their valuation purposes, although we do not intend, in any way, to inhibit the ability of lenders to carry out a separate valuation inspection if they feel that is necessary. We are quite confident that the condition report will greatly assist the current trend, in the industry, towards desktop valuations for mortgage purposes and it would be very wrong if buyers armed with a home condition report were asked to pay unnecessarily for a separate valuation inspection.

We recognise that there may be circumstances where lenders will wish to carry out their own valuation inspections, we will provide for that, but in the majority of cases we are quite confident that the availability of the condition report should make inspections the exception rather than the rule. That, of course, will be of huge benefit to the public who are currently paying, on average, approximately £180 for such a valuation. If we can remove it, it is another cost reduction in the system and so benefits the consumer. That is what the Bill is all about—making the system better and more cost effective for the public. We are discussing with the Council for Mortgage Lenders how that can be achieved. The CML is one of the stakeholders represented on the body governing the development of the home condition report and certification scheme and it is well placed to ensure that lenders needs are considered alongside those of other stakeholders.

Amendment No. 6 will provide that the seller's pack may include information on the physical condition of the property, but a survey report or home condition report may not be prescribed in regulations. Again, the amendment is wholly unsatisfactory and would be utterly destructive to the whole process. The inclusion of a mandatory, professional report on the condition of the property is central to the overall objective of our proposals. Research has shown that the cause of 43 per cent. of failed transactions are a result of problems identified by the valuation inspection or conditions survey where one is commissioned. That is why the information should be made available at the very start of the transaction process and should be included in the seller's pack. Furthermore, in the chain, the effective delays and aborted transactions can go well beyond those directly involved. That adds further weight to the argument for identifying condition problems at the start of the process.

The inclusion of a condition report also brings other major advantages, the largest for first-time buyers. They have the least experience in the market, and the least experience in owning property. They are probably those in the greatest need of reliable advice on condition. They are also often those who can least afford a survey. They have a real gain from these proposals. There can be few measures that would give more direct benefits to first-time buyers. When they first buy, often when people are most stretched and in greatest difficulty, they will not have to incur some of the costs they face now. This is a very sound basis for helping first-time buyers. It is one of its greatest advantages.

5.45 pm

Specifying that information on the physical condition of a property should not be in the format of a survey or a home condition report, would considerably weaken the effectiveness of including this information. In order to be of benefit to consumers, the information needs to be prepared to consistent benchmark standards by a competent inspector, that is a member of an approved certification scheme.

Our proposals for a certification scheme will ensure that the condition reports are independent, objective and reliable. Any certification scheme approved by the Secretary of State will ensure that reports are produced to consistent benchmark standards by suitably qualified inspectors with professional indemnity insurance.

One of the major advantages of the home condition report is that it will be a standard form of report, produced to consistent standards. This will enable consumers to compare the condition of different properties. It is far preferable to using the homebuyer survey and valuation, where a wide variation of reporting occurs, due to a lack of benchmark standards. Many of us who have gone through the house buying process, and have commissioned surveys, will know that the caveats and safeguards put in by individual valuers often vary. It will be of huge benefit to have a standard set of procedures that will be understood, so there will be a lot less scope for valuers to use weasel words to conceal potential weaknesses or failures, or to safeguard themselves against action if their report is not a good one.

Amendment No. 7 to clause 7(5)(d) will provide that any information on the physical condition of the property contained in the seller's pack should also include information about the risk of flooding. Clause 7 (5)(d) signposts our intention to include a home condition report in the seller's pack. The precise contents of the home condition report are not yet finalised, but I can assure the Committee that it will contain information relating to flooding. If, for example, there was evidence of flood damage to the property, it is intended that that should be reported. Even if there was no physical evidence of flooding, the report might still point out any potential risks of which the inspector is aware.

In view of recent events, to which the hon. Member for Eastbourne referred, I can understand the calls for information relating to flood risks to be made available in the seller's pack. In this respect, potential buyers can go to the Environment Agency, which provides a search inquiry service on this and other environmental matters. Any such search would fall within the provisions of clause 7(5)(c)(ii), and we will consider this further in consultation with representatives of consumers and the professions.

 
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