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The proposal would not help the buyer, but it would help the seller. It is a simple matter of supply and demand. With more money across the board and a fixed amount of property, property prices increase. The stamp duty proposal would do little, if anything, to help first-time buyers. It would give more equity to existing owners. The announcement is far more likely to distort the housing market further and does nothing
to rectify the real problem with stamp duty: the slab system. At present, no stamp duty is paid on a house up to £125,000. On a house costing £125,001, stamp duty is due. Under the proposal, the buyer would pay nothing up to £250,000, but at £251,000 they would suddenly have to pay £7,500. Stamp duty should be applied incrementally. It should be low at the point at which first-time buyers cross the threshold, and it should increase up the scale to multi-million pound homes, so that it hits the people who can afford it.
Real aid to first-time buyers would not include a gimmick on stamp duty; it would include measures to tackle the issue of affordable housing. The Conservative announcement smacks of token measures on affordable housing. Perhaps I am being unfairat least the Conservatives now recognise that there is a crisis in affordable housingbut the announcement was rushed out last week in expectation of a general election. The announcement was more a case of what was left out rather than what was put inthere was no mention of affordable homes, community land trusts or long-term affordabilityand it did not include anything that would solve Britains housing crisis.
And today I can tell you how.
I have read the speech three times, and I am still trying to work out how the Conservatives would solve the housing crisis and, in particular, the affordable housing crisis. They will not do so through that gimmick on stamp duty. The Prime Minister has discussed his vision; the hon. Member for Welwyn Hatfield has asked us to imagine what it is like to be a first-time buyer; next, the Leader of the Opposition will tell us that he has a dream. That is cosy consensus politics at its vacuous worst.
The problem cannot be solved by raising the stamp duty threshold. It requires bold action, and the solutions are not hard to find. Community land trusts have been used in America and across Scandinavia, and pilots have already worked in this country. They can provide genuinely affordable homes for a wide range of people. Rather than handing over, as the Government seem to suggest, large tracts of public land from, for example, the NHS and the Ministry of Defence to private developers to allow them to make the maximum profit from selling houses, the Government should hand over large chunks of land to community land trusts. The value in the land would be held by the community, and individuals would buy and sell the bricks and mortar. The price would therefore be affordable from day one, which is rarely the case under existing affordable housing schemes, and property would remain affordable after it was sold.
Shared equity is another tried-and-tested model that works. When the Liberal Democrats ran South Shropshire district council, for example, the council used equity mortgages to provide low-cost affordable housing for key workers and first-time buyers. The scheme worked brilliantly, but, unfortunately, the Conservatives abandoned it after they took over.
The HIPs scheme contained some good provisions. As has been rehearsed on many occasions, the schemes
introduction was botched, and the question is whether we can salvage what was good. Having initially opposed energy performance certificates, which we have discussed, even the Conservatives now recognise that they are a good feature.
The policy on the local authority search has many attractive features. How many times do people find an attractive house at a good price, only to drop out when they discover from the search that, for example, a bypass, sewage farm or industrial estate will be built next to it? In such cases, many people pay for searches, and the only people who gain are the solicitors and other companies who carry out the searches over and again. The inclusion of one search in the HIP is a great asset to the consumer, rather than people who make money out of conducting such searches. We should consider the interests of the consumer.
In the second week of August, I was hiking on Dartmoor when a national journalist rang me to comment on the fact that personal searches, which were increasingly common before HIPs were introduced, are now rejected by mortgage lenders when conducted as part of a HIP survey. People therefore had to arrange two surveys, whereas the HIPs scheme was supposed to involve only one. Is that just initial teething trouble that the Government have already solved, or is it an insurmountable problem that renders HIPs pointless? We need the evidence and research from the Government in order to take an evidence-based decision.
I first heard of home condition surveys back in 1997, when the new Labour Government floated the idea. My only declarable interest in housing is that I have purchased two houses in the past 20 years, and I know what a boon it would be to have one good survey that includes all the details on the condition of the house. How many times do people have a survey done but, for whatever reason, the purchase does not go ahead? In such a case, 10 different people might pay for a survey on one house. Why not include one survey in the HIP? The Government bottled out on that one and abandoned it very early in the process.
The Government amendment states that certificates can improve the house-buying process and promises that the Government will work with the industrythe same industry that launched legal proceedings against them not many months agoto reform further the home-buying process. On 17 August, Royal Institution of Chartered Surveyors spokesman Jeremy Leaf stated:
The government has no idea how this
will affect the housing market...We find it hard to believe that the government is pressing ahead with this policy at such short notice without first conducting a proper market impact study.
The Government pressed ahead anyway, so now let us have the market impact study that RICS was calling for. Let the details of the pilot studies, which are still confidential, be released and let us have a proper evaluation of HIPs working in practice over this summer and into this autumn. Nine weeks is not long enough, especially during the summer holidays, when housing sales are always slight, and at a time when interest rates are at their highest since 2001 and the crisis at Northern Rock has knocked confidence in the housing market.
Along with the pilot results from the early studies, let us have a decent longitudinal study of how HIPs work in practice. On those grounds, we could support the Government in the vote tonight, but only if such a serious and open review of HIPs were undertaken in practice. If they are a disaster, according to a serious, evidence-based review, we should scrap them. If they are good, and we can rescue their good features from the botched introduction and strengthen them, let us do that. However, let us ground the decision in evidence-based policy, not knee-jerk, headline-seeking motions.
Mr. Nick Hurd (Ruislip-Northwood) (Con): Does the hon. Gentleman share my concern that the botched introduction of HIPs by the Governmentand it has been a shamblesrisks polluting the water of public attitudes towards the energy performance certificate? Would it not be simpler to go straight to that policy instrument and try to build consensus around it?
Paul Holmes: Even that is not a simple solution. We cannot simply scrap HIPs and go to EPCs; a whole series of procedural regulations and legislation would be needed to make the relevant adjustments. By the time we had done that, we could have had a proper review of the system and allowed it to bed in.
As I said, if the Government can promise that there will be a serious and open review of the first three or four months of operation, and if they can release the pilot studies, we will support their proposal. As it stands, the Conservative motion is simplistic nonsense in respect of HIPs. On stamp duty, it both misses the point and would have an adverse effect on pricesto the cost, not the aid, of first-time buyers. On those grounds, we cannot support it.
I agree with a great deal of what the hon. Member for Chesterfield (Paul Holmes) said, and I agree with him wholeheartedly about the need for sensible, clear and rational appraisal, rather than the over-the-top comments that we have heard from many people about the introduction of home information packs.
I want to go back to first principles and why HIPs were necessary. In the course of the debate about the implementation, which has been less than satisfactory, we are at risk of losing sight of the benefits of the project. Under the previous house-buying and selling process, buyers had to make an offer, in what in most cases would be the largest single transaction in their lives, with only rudimentary information about the product that they proposed to buy.
Self-evidently, that is a bizarre way of proceeding and no one would accept it as a rational way of buying any other commodity. The practice evolved over centuries, but that does not make it any better. As a result of the lack of adequate information, buyers had to undertake searches and commission surveys to obtain more information about the property that they intended to buy before the contract became unconditional. Inevitably, that made the process long
and cumbersome and increased the scope for failures or problems in the transactioneither because the potential buyer found in the survey and search information unwelcome items of news that suggested the need to renegotiate the purchase price, or because the vendor had chosen to sell to someone else in the meantime. The practice of gazumping has been a scourge in the housing market at times. All these inefficiencies existed, and under the old system approximately £1 million a day was lost by members of the public in abortive costs as a result of inefficiencies in the market. It is shocking that members of the public lost £1 million a day because of unnecessary and abortive costs. The whole purpose of introducing reform to the system was to try to eliminate those inefficiencies and create efficiency savings that would not just save consumers money, but speed up some of the slower, more tortuous elements of the process of buying and selling houses, while adding transparency and taking some of the heartbreak and stress out of it. It can be a very stressful process for many people.
In 1997, that was the background to the study, to which the hon. Member for Chesterfield referred, that was made very early in the lifetime in the present Government. It was commissioned to look at the whole process and recommend ways forward. It was inclusive, it involved all the relevant professional bodies, and it was published in December 1998a year later than the hon. Gentleman said, but he was pretty near. It concluded that there was a strong case for making essential information about the property available upfront, including necessary survey and valuation information. That concept was then trialled in Bristol in 1999-2000, so this policy was not rushed in without thought or trials. The pilot in Bristol demonstrated a high level of satisfaction with HIPs among the people who had experienced them.
James Duddridge: Does the right hon. Gentleman recognise that those packs were provided for free, rather than costing up to £1,000? If something were provided to me for free, I imagine I would be greatly satisfied; that would not necessarily be the case if there were a much higher cost.
Mr. Raynsford: Of course the packs were provided free as part of the pilot, but the purpose of the pilot was to look at the process, to see whether or not it achieved benefits. I have to say to the hon. Gentleman that one of the problems in all of this is that people have bandied estimates of the cost of HIPs, particularly the house condition report, with very little understanding of what the process would involve if the scheme were introduced on a mandatory basis and there were considerable competition in the market to secure custom.
I do not think that the introduction of the current system was satisfactoryI have made that clear in speeches in the past, and I shall do so later. However, even now, a number of providers are offering either to provide the home information pack for free, or deferring the charge until the sale is completed, which removes completely the fear of cost that was used, I am afraid to say, by the Opposition among others to scaremonger. There are other elements, to which I shall return later, that provide scope for reducing costs to the
public, and the public interest has been lost in much of the hysterical comment made about the scheme.
Dr. Starkey: Is my right hon. Friend aware of cases in my constituency in which estate agents have been very innovative? One month, they told customers that if they sold a house with them during that month, they would not have to pay for a HIP, as a teaser to encourage them. The very next month, those estate agents enticed customers with the promise of a free HIP. Does that not say more about the entrepreneurial nature of estate agents, than it does about their having a settled view about HIPs one way or the other?
Mr. Raynsford: My hon. Friend makes a very good point, and she reminds me that one of the commentators on the pilot in Bristol to which I referred was the then chairman of the National Association of Estate Agents, Mr. Hugh Dunsmore-Hardy, who was extremely supportive of the scheme. Not all of his members were supportivesome of them opposed the schemebut he was the chairman of the association and he was very supportive, as were most professionals. The Royal Institution of Chartered Surveyors was extremely supportive at the time. When the Bill to introduce HIPs was laid before Parliament, the institution said:
RICS has consistently supported the concept of Home Information Packs.
Mr. Liddell-Grainger: I remember debating the matter with the right hon. Gentleman at the time in this Chamber. One of the problems was that it became more and more complicated, and less and less understandable, so more and more people became suspicious. The right hon. Gentleman is right about opinion at that time, but subsequently all those bodies, including mortgage lenders, solicitors and everyone else, said, No, we think it is a bad idea.
Mr. Raynsford: I am afraid that the hon. Gentlemans memory is a little unclear. Matters did not get more complicated, they were simply delayedthat was the problem. Some bodies were unsympathetic from the outset. For example, the mortgage lenders were ambivalent from the start, but they have a vested interest. Their members charge every mortgage applicant a significant fee for commissioning a survey. That part of the system increases costs for the public. Under the proposed new system, there was scope for automated valuations, which would have dramatically reduced the cost to the public but undermined the interests of lenders.
Mr. Raynsford: The hon. Gentleman makes a good point. The money was being paid essentially to the professionalsthe surveyors, lawyers and mortgage lenderswho have a considerable financial interest in the matter.
In the early days of the scheme, professionals in general, albeit not all of them, were supportive. As delays occurred, the group that opposed the scheme gained confidence and became more raucous, and the climate of opinion changed. That was unfortunate and I believe that it happened because of delay. The Bill that was due to effect the HIP proposal after the Bristol pilot was introduced in December 2000 failed to complete its passage before the 2001 general election and therefore fell. It was not reintroduced until 2004, and that long delay allowed momentum to be lost. The seeds of the problem were sown.
The Government made the regrettable decision in the summer of 2006 to drop the home condition reports on grounds that I do not believe to be sound. That added further uncertainty and created a position whereby we are now considering a scheme that does not have all the benefits that the original prospectus offered. However, I believe that it can evolve into a workable scheme that will benefit the public.
It is important at this stage to take stock, consider the current position rationally and try to prepare a proper, cool analysis and sensible recommendations for making progress rather than scaremongering or hysterically crying for extreme solutions. Scrapping HIPs, which the Opposition pledged to do, is not the right way forward. It would do nothing to tackle the problems that I have describedthe inefficiencies and delays in the existing system. It would simply give comfort to those who do well out of those inefficiencies, but it would not help the public. Indeed, it would be a betrayal. It would also threaten the livelihoods of the many people who have trained to carry out inspections and energy performance certificate work, on whose behalf the Opposition shed some crocodile tears. Perhaps they would like to listen to one such person, who wrote to me a few months ago. He said:
I write to you as a recently qualified and certified Home Inspector. I did what Parliament asked me to and qualified and certified before 1st June 2007. I will not forgive the opposition parties for opposing this, nor will the 1,000s of people who have paid £1,000s to be trained.
The Opposition should remember that their irresponsible scaremongering, criticisms and attacks contributed to the problem that those people who trained have experienced in losing the prospect of jobs that they should have had.
Mr. Liddell-Grainger: The right hon. Gentlemans memory is as hazy as mine. I seem to remember his saying that there would be £70,000, that everybody would be looked after, that training grants would be available and that the Government would support the scheme. None of that happened. The right hon. Gentleman misrepresents what happened with the public at large.
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