rose to ask Her Majesty’s Government what is now their policy on home information packs.
The noble Baroness said: My Lords, my original intention was to have the home information pack regulations brought to the House to pray against them. Owing to the difficulties in finding a suitable date for a debate before the Recess, it was postponed until today. However, noble Lords will remember that shortly before the House rose for the Summer Recess—on 18 July, to be exact—the new Secretary of State for Communities and Local Government suddenly announced that the mandatory provision of the main component of home information packs, the home condition report, was to be abandoned in favour of the report being produced on a voluntary basis, if the seller wished. Since that seemed to raise the question of the viability of the regulations themselves, rather than praying against the remaining aspects I decided to turn the prayer into a Question, which I ask today.
I will not weary your Lordships with a rehearsal of all the concerns raised in this House and the other place by me and my colleagues about the validity of the rationale for HIPs. The rationale was that, by arming buyers from the outset with information on properties in which they were interested, the packs would prevent sales from falling through and save millions of pounds from being wasted. Concerns were raised about the packs’ shelf life. There were also concerns about the mandatory requirement for a home condition report to be included in a mandatory pack, which had to be available before a seller was even able to put their house on the market. There were great doubts, still not resolved, as to whether a home condition report would satisfy the requirements of the mortgage companies in terms of a survey adequate for their purposes, and as to whether the home condition report surveys would be of sufficient detail to satisfy the requirements of a buyer. There was a concern that the whole thing would be a complete waste of time in view of the imminent arrival of e-conveyancing.
I will briefly draw attention to the aspects that have brought this pack of cards tumbling down, both of which were foreseen and debated ad nauseam but comprehensively rejected by the Government as an unnecessary intrusion into their unfettered belief in the viability of the packs: the number of home inspectors who were in training and would have been ready for implementation day, and the preparedness of the home-sellers industry to undertake this wholesale change. Time after time, the Government were questioned—and I am delighted to see the noble Lord, Lord Rooker, in his place, because we debated this together on numerous occasions—on the number of inspectors in training. The answers were always reassuring: there would be more than sufficient to undertake the work when D-day came. That fig leaf was finally blown aside in the Secretary of State’s admission in July that there were not going to be anything like enough inspectors trained or in training to entertain a compulsory introduction of home condition reports for all sales. In fact, we understand that of the 7,000 required, fewer than 250 had been trained, at a cost for each one of about £7,000. That made implementation impossible.
Another aspect was that the Government had agreed, under pressure during the passage of the legislation, to undertake a pilot—or, as it was termed, a dry run—of the packs prior to their implementation. That has barely begun. We understand that six area trials are due to be undertaken shortly, supported by £4 million of government funding and under the aegis of the Association of Home Information Pack Providers. The test will include the trialling of packs funded in different ways: fully funded, paid for by the Government; the home condition report element funded by the purchaser and the remainder by the Government; and the Government picking up the bill if the sale falls through and the consumer pays the full cost. It does not take the genius of Einstein to see that the only test will be of the fully funded packs.
How are these trials to be monitored and reported? Prior to these dry runs, the Government sought to obtain a benchmark of the current selling processes for comparative purposes by seeking information from estate agents, solicitors, buyers and sellers by means of a baseline study that was to take place between 15 May and 9 June 2006. Was that baseline study completed? How many responses were received from the three-week survey? What use was the study going to be put to? In her statement on 18 July, the Secretary of State also referred to the fact that over 14,000 home information packs with searches had been successfully tested, but that only 250 of these had been produced with “some sort of survey”. Those 250 were to be analysed over the summer. What is the result of that analysis?
While there has been a complete volte-face on the home conditions report, the requirement for an enemy—I apologise; maybe it is indeed an enemy, but I meant “energy”—an energy performance certificate has suddenly become the Holy Grail of the home packs. These certificates are to be mandatory and will contain information and gradings on the efficiency of heating and hot water systems and the insulation of properties. However, they will also require technically trained inspectors. How many of these are in training, and will they require different qualifications and competencies from those of the home inspectors that are currently in such short supply? How does the Minister believe—if she does at all—that it will be possible for energy performance certificates to be introduced by June 2007 if specially trained inspectors are required for them but are not even available for home condition reports?
Does the Minister agree that the only reason why the energy efficiency audit has become so important is to implement the EU directive on energy savings in homes, and that that is already being done perfectly satisfactorily in Northern Ireland, where it is a stand-alone requirement on sale of property? Does she further agree that the European directive talks about a certificate having to be made available on the sale or letting of a property? If so, why are the Government insisting that that is a condition of first marketing a property? The reservations about and opposition to home information packs have been demonstrated to be well judged. Our view, which is supported by many professionals in the industry, is that the Government should do everyone a favour and jettison this whole policy.
I am sure that the Minister will agree that moving home is one of the most stressful things that anyone can do. These provisions, even if introduced in their mauled form, threaten to make that worse, not better. Rather than protecting the public, they are set to undermine the stability and health of the housing market. Having reached the decision to delay, the Government would be well advised to abandon this whole project. It is plain as a pikestaff that these regulations cannot be allowed to stand. They have been blown apart as a result of the Secretary of State’s actions. Will the Minister say when and if they are to be revised and, if they are, can she clearly deal with the question of what the Government’s policies are now?
My Lords, I came to this subject via the indirect route of a member of my family undertaking the training to implement these packs in time to be told that the scheme was not happening. I regarded that as annoying to them—that is an understatement—and as fundamentally unfair to anybody who had undertaken the training. The Government brought in the scheme and then the Government took it away. The cost involved is considerable—more than £8,000—and the course controls your life for a year. I have figures that show that it takes 15 to 20 hours per week of home learning over a year. Vast amounts of effort are required to do that.
Suddenly, something that you had been working towards that you thought would bring you career advancement was taken away at the drop of hat—at least, that is what it felt like. Then, when the noble Baroness responded to a topical Question—it was the last topical Question we had, so perhaps her reply will be more entrenched today—those people found out that the energy component will remain. The figures that I have on that course is that it costs £3,000—as opposed to £8,000—the maximum total home learning is about 40 hours and it can be done in about three months. I was given those figures by one of the major suppliers. So 15-plus times more work and effort over a year—when your applications for jobs and everything else in your life are being controlled by that intensive training—was taken away.
I did not get involved in whether the packs were a good idea in the first place. Initially, they seemed attractive to me, and they still do as a concept. As the implementation was this badly done, I suggest that the Government have a duty at least to compensate those people who have done that work. The junior level of training required for the secondary qualification for which you are apparently covered does not compensate for the amount of effort you have put in. A greater number of people can enter the market to get the training quickly and will thus be competing with you. There is no compensation for the amount of time that you have put in.
No matter what their reasons or how logical they were, the Government must stand up and say, “We got it wrong; we will give you a form of compensation”. Initially, I thought that some repayment of the costs would be enough, but the longer this goes on, the more it will rankle. Every time the Government insist on some training to fulfil a government post, I would be looking over my shoulder for a wee bit, especially in this field. Surely there is a duty—indeed, a moral responsibility—on the Government to give some form of compensation. I look forward to the Minister’s reply, but the fact that you have a junior qualification from your much more expensive training does not cut the mustard. I look forward to the Government taking some action to give compensation.
My Lords, when I saw my noble friend’s Unstarred Question on the Order Paper, I reflected that this year I have undertaken three transactions: I surrendered a tenancy in Pimlico, I bought a small terraced house in Vauxhall and I sold an old farmhouse in Essex. I therefore examined those transactions to see whether, if these HIP proposals had been in force, there was any prospect that they could have done anything to—I quote from the original news release from the ODPM in 2003—
“ensure the home buying and selling process becomes more certain, transparent and consumer friendly, whilst reducing stress and the number of failed transactions”.
I entirely agree with what my noble friend said about the stress of moving house; my wife and I are getting on a bit in years and that makes it worse. I have studied the case. I attended a briefing on Monday and have read the 80 pages of the regulations—80 pages, what on earth are people supposed to make of that? I have come to the conclusion that I cannot begin to see how, if the HIP process had been in force for any of the three transactions that I undertook, it could have done anything other than increase the costs and multiply the bureaucracy.
When I sold my house, my solicitors had no difficulty in getting hold of all the information that they needed, including information about title, so that they could draw up a contract and the conveyance. That included sufficient information to register the land for the first time, as it had not been registered before. When the first purchaser whose offer I had accepted failed to make any progress and I had to put the house on the market again, I asked my solicitor how much that failed transaction would increase his costs. She said that, as she had all the documents and all that she had to do was make other copies and send them off, it would probably cost about another £20. Is that what this massive bureaucracy is supposed to save? I cannot believe that the HIP process—particularly without the house condition survey, which has now been abandoned, as my noble friend said—could conceivably have helped me in any way at all. Apart from one matter—the energy performance certificates, to which I shall return in a moment—I have identified nothing in this process that would have made any of the three transactions anything other than more expensive. I cannot believe that that is what the Government would be happy with.
The ultimate purchasers quite properly insisted on a fully qualified surveyor to survey my 150 year-old house. It is inconceivable that he could have been satisfied by the sort of house condition survey that the Government originally envisaged. The longest delay in the purchase of my house in Vauxhall was getting information out of the freeholder’s agents, and there is nothing in the HIP process that could conceivably have speeded that up. That was the only delay we had.
Where does that leave us? The energy performance certificate is the only part that is worth having, and I could be persuaded that that would be worth while. I believe that the Government ought to withdraw the rest, start again with their energy performance certificates, and see where they get to.
My Lords, it is customary to declare interests in debates. My first interest is that many years ago I served as chairman of a housing committee and was the leader of a London borough, and I got a bit closer to the problems of tenancy and tenure. But, unlike the noble Lord, Lord Jenkins, who I envy—and I appreciate the experiences that he shared with the House—in perhaps 50 years I might have moved five times. Each time was stressful and filled with anxieties, which resolved themselves.
I first came across the possibility of aiding this generality when the idea of a logbook was mooted. That was more than 20 years ago when I was in the other place. So the Government should not be accused of being too quick in trying to produce a solution to a problem. The noble Lord, Lord Jenkins, and the noble Baroness have sought to make it clear that there are no problems to be solved. Now, as far as I am concerned, there are many problems to be solved.
On Monday night, at the meeting which the noble Lord, Lord Jenkins, attended, I asked where was the—
My Lords, I am sorry. My name is Jenkin without an “s” and has been so for the past 80 years.
My Lords, I apologise. I realise that it must be a touchy subject and I will keep off it. On Monday, on the question of where the opposition was coming from, the noble Lord said that people were opposing the Bill on principle. I asked what the principle was. He said that the principle was interference in the free market. I said, “Well, I am supporting it on principle—the principle of interfering in the free market”. If by the operation of the free market there are, across the whole field, supporters for this kind of action, I believe that the Government should be commended for at least making the endeavour.
I hear what the noble Lord, Lord Addington, says: that an aspect of his speech deserves answers and possibly some constructive response from the Minister when she replies. But no scheme with so many vested interests—one of them being the consumer—will ever begin with unanimity. It will evolve. If the Government felt that with the passage of time there would be difficulty in producing a workable and viable scheme for the home reports, they did the right thing in withdrawing them. I am assuming that the Minister will tell us something helpful about the steps taken to try to come around to the original suggestion.
I have quotes from the Law Society, from estate agents and from the Consumers Association. It says that of the people it surveyed 80 per cent said that they were in favour of the scheme—possibly not the detail, but in favour of the idea that this HIP nexus would be produced.
Time, as we all know, is the essence of many situations. The process that takes place in this country is far and away longer than it is in other countries. The Government should take courage and persist in their plans, taking careful note of the improvements which might be made, but certainly not abandon them. I wish the Government well in their process.
My Lords, I declare my interest as a surveyor and as one of those who were conned by the Government into getting trained, only to have the rug pulled from underneath me. I cannot possibly comment on the speech of the noble Lord, Lord Addington, because I might be a beneficiary of it. How we miss the noble Lord, Lord Phillips of Sudbury, on an evening like this.
As we wade through the mire of the shambles of this legislation, chest waders are still needed, so I have a lot of questions for the Government. Will the Minister confirm that from now on and after June, agents will still be able to offer first-day marketing? In order to allow this, may I suggest that the energy performance certificate, the EPC, which is the only new item in the pack, can be made voluntary at marketing but mandatory before the exchange of contracts? The Government have to bring this provision in; it is European legislation and it was tacked on to the Bill to make their commitment to this satisfactory. That would be one way of making the scheme work.
Another way to have first-day marketing is to provide a certificate to the trading standards inspectorate, if necessary, that a pack has been commissioned from the pack provider. After all, it is mostly legal documents. So, as an agent, if we get instructions we can ring up and ask the pack provider or the solicitor to provide the document. If they have a certificate and it is on the way, we can start marketing.
The EPC will require about 1 million extra car journeys a year because it will be necessary before marketing begins. That could be deferred by my suggestion of making the EPC mandatory. It could then be included in the valuation by the purchaser later on in the process. The EPC is valid for 10 years. It is also needed at the change of every tenancy. Which takes precedence? What happens with holiday lets? Are the Government giving us any clear instructions on that? We do not have long to go.
The dry run is another 180 degree U-turn by the Government and £4 million of taxpayers’ money will be spent on it. But some of the home information packs will be subsidised. That is not a dry run; that is not testing the market. It gives a completely false impression. This dry run is already discredited because it will be supervised by the Association of Home Information Pack Providers, which has a vested interest in the process. It is exactly the same mistake that the Government made with the Bristol trial before this legislation started. Maria Coleman had a vested interest in a home information pack business and was trying to pose as an estate agent at the same time.
Where is the industry now? The RICS has lost credibility on this. The National Association of Estate Agents started off badly but suddenly got it right and has gained in credibility. A new organisation has surprisingly sprung up. It is called SPLINTA—Sellers’ Pack Law Is Not The Alternative—ably run by Nick Salmon. It comprises 1,800 firms of surveyors, solicitors and estate agents across the whole breadth of the housing market, covering more than 3,500 offices throughout the country, and it is still growing. Those organisations—the RICS, the NAEA and SPLINTA—want improvements in the housing market. Stop, take a deep breath and come back and talk to us because we want to move just as much as the Minister, but this time let us go in harmony rather than in disharmony.
My Lords, last June the Home Information Pack Regulations were reviewed by the Merits Committee, of which I am a member. What has been said already arises out of the implementation of Section 5 of the Housing Act 2004. I do not think that a case was made then, nor has one been made since, for the abandonment of self-regulation and the creation of a new class of certified inspectors.
Such a bureaucratic intervention will not improve the working of the housing market. There are no reported distortions of substance to the housing market which call for government intervention and control. The Explanatory Memorandum and the regulatory impact assessment, which accompany the regulations, do not claim that there are. The proposed public sector regime does not follow from the consultation process and the responses to them. The driver in my view has been political philosophy, a perceived need to intervene and control, and not an accurate assessment of the best interests of buyers and sellers in a market which in general works well.
I will focus now on the energy performance certificates. These are the remaining mandatory plank on which the Government rely after correctly ditching home condition reports as mandatory. I cite the Explanatory Memorandum which came with the Home Information Pack Regulations. It states:
“The Regulations refer to energy performance certificates as the certificate required by Council Directive 2002/91/EEC (Energy Performance of Buildings Directive) whose form and content complies with any enactment which implements that Directive made in accordance with article 7. Article 7 is expected to be implemented by January 2009. These Regulations do not implement the Directive, and given that they do not do so, there is no requirement to provide a Transposition Note”.
So we are left wondering what is the future of the energy performance certificate. At first reading of the directive, it does not look especially onerous or unduly technical. Its major impact will be not on family houses of different types but on larger buildings, but we have yet to see how it will be transposed and how expert the required experts will need to be. In the mean time, as the Joint Committee asks in its 34th report of July, given the 2009 implementation date, why is there not an “express temporary exception” from the obligation to include energy performance certificates or predicted ones in home information packs? Given that uncertainty, no one in their right mind would rely for regular employment on becoming a home inspector. The fees earned may turn out to be nugatory.
It is also high time for a second full round of consultation. It is approaching eight years since the unfortunately titled document The key to easier home buying and selling was issued. Much has happened since then. Much is happening now. It would be wrong for the Government to cling to proposals which do not even follow from the advice that they received. The public deserve better.
My Lords, I have declared my interests in the past. I begin this little monologue—dialogue, I suppose—by saying that time in reconnaissance is never wasted. However, the Government have spent an enormous amount of time in reconnaissance—very costly, very thorough. The noble Lord, Lord Rooker, provided me with a tremendous number of officials who briefed me thoroughly on everything and I am now a much wiser man.
We are all looking for a more active, positive and beneficial housing market. That starts at the bottom end with social housing and ends, at the top end, with taxing those who spend an enormous amount of money on houses in London. The problem is that the bureaucracy and costs incurred unnecessarily in this country are higher than in others. In other countries they have a simple thing: an estate agent tries to charge as much as 10 per cent. In Germany, it is the buyer who pays the agent’s fee.
Here, our agents in general take 2.5 per cent, but the added costs can be quite considerable. A £200,000 house will have costs from transfer of sale of roughly 5 per cent—£10,000; a £250,000 house will have costs of £17,500—7 per cent; a £500,000 house will have costs of £37,500—7.8 per cent. The cost is the rising amount of stamp duty; other costs that follow are delays, which are stressful.
If you seek to complete the purchase of a house, as the noble Lord, Lord Jenkin of Roding—to give him his full title, without the “s”—said, and you are dealing with leasehold, you then have the problem of having to do extra searches. For example, you may need to get the memorandum and articles of association of the company that owns that property to find out whether there is a sinking fund. Those costs go on and on. Surveys for mortgages are fairly simple: if the house is in a good area, you have a drive-by survey whereby someone just goes by and says, “Well, that house is worth enough”.
We tend to forget that it is not just about the buying and selling of the house but the importance of the house to the individual. Rather unfortunately, at least 15 per cent of people who occupy social housing should not now be there, because they can afford to buy or rent more expensive properties. When we consider all the joint schemes that are now advanced—shared schemes and others—one wonders whether those involved would have to pay the costs of the home information pack if they were transferred through.
I will not try to be negative, because a real benefit could come out of all this by sitting down and thinking significantly about the importance of property to the individual. All political parties have accepted that we seek to be a property-owning democracy. We can argue about how that should be distributed. We all believe in regeneration and social housing, whatever you call it; that may be the move towards shared ownership and freeing up the letting market so that more people have the right to let.
The crunch point is that, in general, 80 per cent of people's assets lie in their home or property and that 80 per cent of their debt is in their property, to which you can add hire purchases and debts related to the home. Therefore, the home is far more important than just being the home. It is someone's asset, and Governments who play around by increasing the cost to the homeowner of maintaining or trading his asset, or make it more difficult for him so to do, do so at their peril.
My Lords, the convention is that short debates of this sort are phrased in the form of a question. If I may say so to the noble Baroness, this is a very good Question. The “I told you so”s may be irresistible to some Members of your Lordships' House, but what really matters is: where now and how do we get there? On how we get there, there are both legal and practical aspects. The noble Lord, Lord Rooker, once paid me the compliment of saying that I was not a real lawyer—I think that he meant that I was not a barrister and did not wear a striped suit—but I think that it is the lawyer in me that has been unable to understand in technical terms how the Government are dealing with this. Are we to get new regulations? Will the Secretary of State use his power to suspend part of the Act, or what? I asked someone to phone the Department for Communities and Local Government to inquire about that. Understandably, the first contact did not know, but was going to phone back, but has not. If the department does not know, I do not know how the public can.
Perhaps a more important point is what the Government will do now to boost confidence in home information packs. I must say that those who have been in sympathy for a long time with what the Government have been trying to do—if not all the detail and mechanisms—are finding that position hard to sustain. It has been a long time. The noble Lord, Lord Graham, said so. When I saw the publications in the Printed Paper Office with the DETR logo on them, I felt quite nostalgic.
According to the Observer in July, the personal financial industry is believed to have spent £225 million on HIPs to date. The article stated:
“While you may not be too bothered about lenders, lawyers and estate agents losing money, I’m sure you are under no illusion about the fact that it will be the consumer who ends up paying”.
My noble friend Lord Addington spoke vividly about the trainees who have paid. I hope that the Minister can be clear about how they will be treated in future. She has been asked about the trials, the dry runs, which are being undertaken and planned. I am sure that the House will be especially interested to hear what are the criteria for judging their success. In June, I read a comment from HBOS that said that lenders had been insufficiently involved in the dry run, that key elements would be tested too late and not tested at volume. That has been touched on.
Home information packs are not the biggest issue in housing. To me, the issue is the supply. If a local authority got into such a pickle, the district auditor and the Audit Commission would come down on it like a ton of bricks. I wonder whether the National Audit Office will take a look at this.
In conclusion, all those in property—there are several in the Chamber tonight—know the dangers of misrepresentation. With that thought, I urge the Government to be entirely clear about their intentions from now on. They represented in a technical fashion to potential trainees that these schemes were going ahead to a timetable, and those trainees need to be compensated. The Government cannot afford another stumble; they need to be clear in order to recover confidence.
My Lords, I declare my interest as a partner in Beachcroft LLP and the other entries on the Register. I warmly congratulate my noble friend on securing the debate and on her lucid and penetrating speech. To summarise what has been said in the debate, the Government have a disastrous policy that is now in a terrible mess. I therefore want to give the Minister as long as possible to explain. We do not have to finish until eight minutes to nine, so she will have a long time to do so, and we are avid to listen.
It is never endearing to say, “I told you so”—I agree with the noble Baroness, Lady Hamwee, that there is little profit in saying that—but many of us on this side of the House, as we have heard, warned Ministers from the outset that their policy on home information packs was ill-thought-out, intrusive, and expensive nonsense. Much more important is the fact that many of us warned that the policy was likely to unravel, and I echo what my noble friend said about the whole pack of cards coming tumbling down. The fundamental point is surely that moving home is already one of the most stressful, debilitating and, above all, costly undertakings. It was generally felt that HIPs could serve only to add to the general nuisance and woe. My noble friends Lady Hanham and Lord Jenkin of Roding are right to talk about that stress. We must bear that in mind. My noble friend Lord Selsdon, too, is quite right that 80 per cent of the assets—80 per cent of the debt—is in a person’s home. We must therefore handle this policy very carefully.
In their original form, HIPs would have cost as much as a survey. Indeed, in many ways they were going to replicate a buyer’s survey but would in no way obviate the need for one. Numerous headlines in July said that the Government had seen sense and had backtracked on all this nonsense, but the truth is not quite so simple or so gratifying. The statement given on 30 July informs us that the only aspect of the Government’s policy that has changed will now be an authorised rather than a mandatory aspect ofthe HIP during the dry run. I recall exchanges with the noble Lord, Lord Rooker, about the dry run and the trials. The ominous note in the statement is an implied threat that mandatory HCRs will remain on the table if the industry fails to make a success of its rollout.
HCRs are supposedly so attractive that they will take flight majestically entirely voluntarily, but just in case they do not, the market must now operate under the shadow of the Government’s power to impose them as and when Ministers dictate. So the leopard’s spots have not changed that much after all, although I hope that the Minister will clarify all this for us. We have already heard from my noble friend Lord Eccles that the Joint Committee found some defective drafting; no doubt the Minister will explain all that and speak in her defence. We have also heard that the EPCs are a very good aspect, and I agree with my noble friend Lord Jenkin that there is a good case for them; my noble friend Lord Eccles said the same.
There are so many questions; the noble Earl, my good friend Lord Caithness, posed a whole set of them. I would like the Minister to respond to the point about compensation made by the noble Lord, Lord Addington, who, with the noble Earl, has instanced the number of people who took the training and have spent a great deal of money, only for the Government to move the goalposts. We need as quickly as possible an explanation of exactly where the Government are at the moment. That, of course, is my noble friend’s question.
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 rollout 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.
My Lords, if the regulations are being revised, what is the status of the regulations issued in July? Are they being withdrawn or are they being allowed? They have had a great hole blown in them. What is their status?
My Lords, my understanding is that, having been laid and passed in the other House, they stand. They will be reintroduced to be amended. If I am wrong about that I shall write to the noble Baroness.
I have probably not answered to the full satisfaction of noble Lords some of the personal issues that have been raised. However, I shall read Hansard very carefully tomorrow and reply in more detail as and when I can. Again, I am grateful to the noble Baroness for the opportunity to have this debate. I will keep the House informed as we go through this process.
My Lords, I beg to move that the House do now adjourn during pleasure for one minute.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.51 to 8.52 pm.]