Homes Bill

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The Chairman: Order. On a technicality, that is not possible. The relevant Standing Order states that only the Member who moved the amendment can withdraw it. On that basis, when we come to the appropriate time, the amendment will have to be formally negatived. A Division will not be required, but the amendment must be negatived.

Mr. Tim Loughton (East Worthing and Shoreham): I am grateful for that advice, Mr. Gale. Perhaps you will explain, on another occasion, how we actually do that. I am sure that it will become clear.

Will we have a clause stand part debate, Mr. Gale? There are a few extra points that I wanted to make which may be more appropriate to such a debate.

The Chairman: Certainly.

Mr. Loughton: Thank you, Mr. Gale. In the light of what the Minister has said, I am inclined to go along with that suggestion. The Minister said that some hon. Members did not wish to hear assurances because they were against home condition reports. We certainly want to hear assurances. We have been trying to add certain things to the Bill because it is so lacking in detail, and because it will not be enacted for such a long time, if it ever gets to that stage. The home condition reports are flawed, and do not deal with the central problem of gazumping, with which they were supposedly designed to deal. However, we are pragmatic, and realise that if the Government are, as they have demonstrated, determined to go ahead with the home condition reports, we must ensure that the legislation that is to be forced upon us is as watertight as possible for all the parties concerned. That also accounts for our desire for insurance guarantees.

All this debate is unnecessary. I am aware that the Minister's Department has had discussions with various firms of surveyors that are well-versed in dealing with the problem of indemnities against flawed survey reports, and have been doing so on a purely voluntary and very successful basis. Allied Surveyors has made submissions to his Department. It is one of the largest firms of surveyors in the country, and is based in Chipping Sodbury, near Bristol, a place that has been mentioned many times in our discussions.

Two years ago, Allied Surveyors launched its own scheme—the Allied Surveyors guarantee survey. Under the scheme it has issued approximately 21,660 policies, which have resulted in 256 claims, the vast majority of which will have resulted in some form of payment. A relatively small number, on an ordinary, insurance-based guarantee, have received compensation because the firm has admitted some liability. In many cases, to avoid arguing over £300 or £400, they are prepared to be big and pay up. That is an exaggerated figure.

By way of comparison, when relying merely on professional indemnity insurance for surveyor negligence, over the same period of time, that firm has had just 16 notifications for claims for professional negligence, and it expects that only three or four of those claims will be successful. Those claims apply to all the work that the firm has undertaken, whereas the guarantees are issued on only approximately 20 per cent. of the work. That is an example of a perfectly practical and pragmatic scheme that has worked rather well, separately and far ahead of the legislation that the Government want to bring in. It has worked especially well for customers, who have not had to go to lengthy and costly legislation to take or threaten to take to court surveyors for faulty surveys. Customers on that voluntary and sensible scheme have had a far more satisfactory deal, and have had payouts with having to resort to legal action. Firms have been perfectly happy with the scheme.

The scheme could be extended throughout the country. It could easily operate through the growth of chains of people involved in property transaction—a subject that we discussed this morning. I am sure that any insurance company could take the scheme up and provide the framework for it. If the Government had taken a little more trouble to consider what works in practice and needs to be expanded by better practice, they could have saved us all the trouble of this yet further piece of legislation.

There are warnings ahead. The experience in the United States is not a happy one. Apparently, the US has tried a version of home condition reports known as pre-listing reports. Their success has been scant indeed. In many cases, they have led to greater conflicts of interest and less protection for consumers. That can be seen in recent legislation enacted in several states, especially Massachusetts, whereby it will soon be illegal for a real estate agent to make recommendations to a home buyer on a choice of home inspector. It seems odd that the evidence that the scheme works seems to have been drawn almost exclusively from Denmark. The rather closer example of the US has been fraught with problems, yet I do not believe that it has been mentioned by the Government.

Notwithstanding all that, as it is patently obvious that the Government will not accept a scheme, given their manic compulsion for legislation, it is right that we should stipulate protection for sellers, buyers and lenders. The Minister identified the obvious gap in the wording to protect lenders, so I am greatly encouraged that the Government might move towards the thrust of our amendments. On that basis, I will stop speaking, but I am not able to commit myself to anything ahead of your instructions, Mr. Gale.

Mr. Geoffrey Clifton-Brown (Cotswold): Hitherto, a surveyor acting for a purchaser or a seller has had a specific obligation to that party. He may have a conflict of interest in how he describes something, as he could do so to suit the interests of either the buyer or the seller. On occasion, it will not be possible to look after both interests at the same time. Indeed, the surveyor would be expected to look after the lender as well, so he would be looking after three different parties with three possibly competing interests. In view of the amendment, the Minister needs to give some guidance as to how a surveyor would act under those circumstances.

Mr. Raynsford: Three points have been made. The first is the Allied Surveyors issue raised by the hon. Member for East Worthing and Shoreham. Voluntary schemes such as that are fine. We have no problem with them, and have said that we welcome schemes such as that operated in the case of seller's packs. Some estate agents are successfully using them, which is fine. However, only one person has to decline to take part for the chain problem to arise and the benefits to be lost—which is why it is essential for home condition reports to be made mandatory. The framework for guaranteeing the validity of survey reports must be a consistent scheme throughout the country and not simply depend upon whether there is a good voluntary scheme operating in respect of one group or another of surveyors.

The stakeholders involved in setting up the certification scheme are examining, with insurers, how hidden defects insurance can be provided on home condition reports. The concerns raised by the hon. Gentleman are very much part of the considerations and discussions taking place at the moment because, while such insurance could not be compulsory, it could be a very effective additional—and quite cheap—bolt-on, if people sought additional protection. It is a very important point and one that we are addressing.

The hon. Member for East Worthing and Shoreham talked about the US experience. We have not simply acted on the basis of the experience in Denmark. We have taken evidence from a large number of countries and we did not look at evidence from the United States. The absence of a certification scheme in the US is one of the weaknesses of the arrangements that exist in that country. There are variations from state to state—that is part of their constitutional framework—but there is no national arrangement for providing the underpinning that is provided by a certification scheme. That is why we do not believe that the American experience, in this respect, is helpful.

The hon. Member for Cotswold (Mr. Clifton-Brown) has raised the issue of conflicts of interest. That is a fair and reasonable concern. He raised it in a different context this morning and I addressed it then. It is absolutely with a view to ensuring that we can depend on the quality of the inspector's reports that we are seeking a robust certification framework under which inspectors who prepare reports will produce evidence in a format that allows the least possible scope for interpretation that might favour one party. Objectivity is the key aim, and that is the format that has already been discussed. I think that the hon. Gentleman has seen a copy of the proposed format. If he has not, I will make sure that he does. The objective is to ensure that, so far as possible, information is delivered in a way that is the least prone to interpretation as favouring one party. It is not always possible to remove all elements of subjectivity because judgment is involved in certain respects. So far as possible, however, we intend to ensure that an objective report is delivered.

Mr. Clifton-Brown: May I warn the Minister of one problem that may occur, which he can think about when he has discussions with the new body? The temptation will be for the surveyor's description to be minimalist. He will say simply that the house has a crack. There will be no temptation to make a judgment as to how serious that crack is because, if he is trying to look after the interests of the vendor, the purchaser and the financial institution at the same time then, as the Minister has just acknowledged, wherever possible he will avoid making subjective judgments, although his report will be factually correct. That is yet another reason why the purchaser may need to have a more extensive structural survey to serve his own interests.

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Prepared 23 January 2001