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Lord Rooker: My Lords, I shall come back to that point, because it is part of the Liberal Democrat agenda.
All the evidence suggests that buyers and sellers are unhappy with the way in which properties are bought and sold. We know that—many people have complained about the process. Buyers are losing hundreds and hundreds of pounds on abortive surveys. Survey after survey is done on the same property, which no one ends up buying. What an absolute waste for the buyer! Noble Lords have not mentioned that at all in this debate. That is why I say that the whole thrust of the debate has been anti-consumer, if one considers it from the buyer's point of view. Many of those buyers, particularly the first-time buyers—the Bridget Joneses of this world, as it were—are the least able to afford those costs, and often bear the brunt of them.
Those costs can be crippling for hard-working families, as well as single people, and they are a cost for the economy as a whole, because they do not produce any assets. No one gains from those abortive surveys, except for the people who have carried them out and the other professionals involved. That is certainly a cost to the economy as a whole.
Baroness Hanham: My Lords, may I interrupt the Minister while he waxes so lyrical? Would he address the point that I have raised repeatedly, from Committee stage onwards, about the fact that people are not going to be able to rely on the home condition reports and will undertake surveys anyway? If they are going to do that, the Minister's whole argument falls flat on its face.
Lord Rooker: Yes, my Lords, it would do—and I shall come to that. I shall come to all the issues, because I am determined that no one will be able to say that the Government did not employ the full range of arguments, whatever the result of the vote later tonight. That is what I am paid to do—and I quite enjoy it.
We have to make the point about those central issues. It is a seductive argument that we should leave it to the market and make the proposals voluntary, not compulsory. I accept that that is a seductive argument, which needs responding to. It is true that there are one or two areas of the country where the process operates voluntarily. Estate agents offering home information packs or condition surveys up front report that buyers and sellers welcome them, and many are positively enthusiastic. But penetration has been absolutely minimal in the market. We accept that, and I shall not go over the figures.
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There are probably a couple of reasons for that. First, it is simply easier to market a property without one; there is no doubt about that—it is easier. Neither the sellers nor the agents acting on their behalf need to do more than provide the barest of details about the property. If that means that certain defects are not revealed initially, they might think that it is worth taking the risk. "It is for the buyer to find out about it", they would argue.
The second reason is that sellers and their agents fear that their extra efforts will not be rewarded and that others marketing without up-front information will gain at their expense. That is the issue of competition in the high street. So, it applies to sellers looking for another property who may well find that as a buyer they have to pay for surveys and searches on one or more other houses where the seller has decided not to provide the pack. That is the position across the market currently. Voluntarism will not break the mould. That is the key problem.
I turn to the issue of the number of sales that fall through. We have argued about the figures and the relevant research, and that argument should be put clearly on the record. As I said, in speaking about vested interests I cast no aspersions on any noble Lord. As I say, however, the thrust of the issue in trying to take out the compulsion element of home condition reports is whether it will support the seller's interests at the expense of the buyer's.
In no other sphere of buying and selling products in this country are the odds so stacked in favour of the seller. They have no responsibility to market the property fairly, and that situation is backed by an industry that is geared to reinforce the unequal position. The industry never takes the part of the buyer; always of the seller. That is how the market currently operates. It would suit many of the vested interests if it stayed that way.
For example, it is clearly in the estate agent's interest to achieve the best price in the shortest possible time. No one can deny that. They gain the maximum income and profit for the least amount of work. So a system that hustles buyers—and it can hustle buyers—into taking quick decisions on the basis of little or no information suits estate agents very well. It is no matter that buyers who act in haste will sometimes repent much later when they receive their reports on the property and that causes them to drop out of a purchase after they paid money for reports.
Worse still, they could go through with the purchase and find that they have bought a pig in a poke when the true story comes to light after the purchase is completed. Others will say, "They should have taken professional advice. It is their fault. Buyer beware". That is not good enough in this day and age.
Sellers are not always the gainers in a rushed sale either, particularly if their property has not been properly exposed to the full market. People talk about a quick phone call on a Monday morning to the effect, "Get the
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property on the market. You'll get a quick sale because we have a list in the filing cabinet of people who might want this property". The buyer might say, "Hang on, I want to test the market on this". The estate agent will say, "No, we have a buyer here. We have someone very interested in this". So the buyer will also be damaged.
Lord Northbourne: My Lords, as a fellow of the Royal Institution of Chartered Surveyors, perhaps I may say to the Minister that I rather resent his comments about estate agents.
Lord Rooker: My Lords, if I am striking home, then good.
Lord Northbourne: My Lords, it is extraordinarily unfair, if I may say so, Minister. I am saying that you are not giving a correct picture of the way in which chartered estate agents and chartered surveyors behave.
Lord Rooker: My Lords, I am painting a picture of a market that does not work and disadvantages consumers. That is the point. As I have repeatedly said, I am not making personal allegations against any noble Lord, any particular company or anything like that. We know that the market does not work from the number of collapsed sales, the heartache, and the waste of assets, money and income. Left to its own, notwithstanding all the reports and inquiries that I mentioned, the profession has not done enough to deal with the situation.
I was addressing the issue of quick sales. If the estate agents were following their own guidance from the National Association of Estate Agents, they should not be able to make these quick sales over a Monday morning and afternoon. Their own guidance instructs and advises them to carry out certain procedures which could not be done in a day.
So the idea of first-day marketing—to which we may return later—is a nonsense. If the law and the National Association of Estate Agents guidance are followed, there will not be instant marketing. If there is, those so-called professional estate agents are not following the guidance of their own national association. We know that because of what they are required to do and produce from the guidance that has been issued. Later, if necessary, we can discuss that in greater detail in Amendments Nos. 31 and 32. These opposition amendments are underwriting the unfairness and inefficiency that dogs the housing market.
We understand that the seller needs reassurance—that is absolutely true—as part of the package. As I say, however, these amendments seem intent on ignoring the difficulties experienced by the buyer. I ask noble Lords to think about the buyer before they go into the Lobby to vote down the provision. The only message being sent so far to buyers is, "Grin and bear it; it is your own fault". I submit that that is not good enough.
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I shall spend a few minutes on the issue of first-time buyers. First-time buyers have the encouragement of not having to produce a home information pack before entering the market. Nothing at all is on offer to those who already have a foot on the ladder but are faced with the lottery that passes for the current buying and selling process. We are asking people to accept a false prospectus, and that simply is not fair.
We are proposing a rounded approach which has a degree of compulsion—as I explained, because of the chains, it will not work without that—that will not be imposed overnight. There is still a huge amount of consultation to be done with buyers and lenders and all the professions that are working very positively on the department's working parties to get this right. We are proposing a rounded process and approach to help first-time buyers into sustainable home ownership and help all those who need to avoid the frustrations and costs that are their current lot. We ignore that at our peril.
The Opposition are backing a vision in which the acquisition and possession of a home is an end in itself and not one in which the home is an asset not only for the current owner but for following generations. It is short-sighted and, of course, it short-changes the buyers. Voluntarism is a virtue. I fully accept the point that the late Lord Conrad Russell made. In the vast majority of issues, people should try to find a way of resolving problems before asking Parliament and the Government to sort them out. People's automatic response to a problem should not be to say, "The Government should do something about it". If people do not do so, it will lead to loads of legislation, regulation and interference.
After due consideration of the issue—on which, as regards the criminal offence arguments in the Homes Bill before the previous general election, the Government were rightly rubbished—we have gone through processes and arrived at the considered conclusion that the voluntary approach will not work, simply because of the way in which the market operates in this country. Because of chains, a voluntary scheme will never work properly in this country. Ultimately, this is consumer protection legislation designed to turn a very stressful experience into a better one. I will not say that it can be a happy experience because I suspect that buying, selling and moving will never be a happy process. However, it could be a lot less stressful than it is now.
I turn to the industry, about which we have heard a few tales. We have had the advice of the Council of Mortgage Lenders, which of course is neutral, professional and fair. It does not exactly make the case one way or the other, but it makes a point: the voluntary system will not work. However one reads the brief that the Council of Mortgage Lenders sent to noble Lords, it still says:
"The CML finds it difficult to envisage a situation where lenders would adopt dual processes to cope with applications where there is or is not a HCR available".
It just would not work. The association makes that point.
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In the following paragraph, the association makes a point—which, of course, no one read out—on valuations by home inspectors. In the final sentence, it states: "We hope this"—that is, the qualifications and skills of the home inspectors—
"will mean that, where they are still necessary, valuations can be provided quickly and cost effectively, using the HCR as a basis".
That may not go down too well on the Opposition Front Bench, but that is the view of the Council of Mortgage Lenders. It has been dismissed in the speeches which have been made that the biggest lender—perhaps it is HBOS—is in favour of it, but that does not matter. It is in favour of it only in the sense that it is geared up to operate the system. It has said that it will operate the system. It is not saying that it is going out to promote the Bill because it wants Royal Assent. It wants to know what Parliament's views are.
One cannot dismiss the fact that the biggest lender in the country is willing and able, and can see positive advantages in this if it is what Parliament decides. Our contacts with the main players in the industry show that their thinking is now not about if, but about when. They are looking at this issue. Many of them already have the necessary preparations and planning under way and, as it requires a degree of investment, that will accelerate quickly after the Bill gets Royal Assent and people are confident that it will happen. The home condition report is an important component of the pack. Many sales are delayed by condition-related problems, not just by the transaction. A voluntary home condition report is a bird that will never fly for everybody. There is no question about that.
I know that the noble Earl, Lord Caithness, has repeatedly claimed that reseach shows that the figure for the number of house sales that fall through is 13 per cent of transactions only and he has made the point that the figure is smaller than that. We claim that the figure is 43 per cent, based on our research. The 43 per cent failure rate is derived from the findings of the studies published on the 1998 research. In paragraph 615 of that research, the report indicated that in 13 per cent of cases the transaction failed following an unfavourable property survey commissioned by the buyer. But the research went on to say that a further 30 per cent of buyers withdrew as a consequence of their lender's valuation report. Opponents of reform tried to claim that that 30 per cent has nothing to do with the property's condition. Frankly, that is not on. I am not going to go to the wall about whether it is 43 or 41 per cent, but one thing is for sure, it is not 13 per cent.
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