rose to move, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 23 November 2007, be annulled (SI 2007/3301).
The noble Lord said: My Lords, we take up again what was a fruitful source of debate and indeed a happy hunting ground for my predecessor in this job, the noble Baroness, Lady Hanham. We continue to debate a saga of unfortunate actions that have led to unfortunate consequences.
In a sense, the Government are fortunate that the consequences of this series of regulations are now fairly well disguised behind a growing economic slow-down which is being followed by falling prices in the UK housing sector. All of that is exacerbated by the consequences of the sub-prime banking collapse in the United States which has caused a shortage of credit in the UK banking system and aggravated the general loss of confidence in the market. The collapse of Northern Rock, which is as yet unresolved, does nothing to help the situation.
All these factors hinder the possibility of seeing a clear and precise picture of the impact caused by the introduction of home information packs. However, there are things that we know. We know that the Government have never dared to publish the results of the research, which cost £4 million, into the effects of the pilot schemes. This is most unfortunate. It inevitably leads suspicious minds like mine to the conclusion that there is perhaps something the Government wish to hide—or, at the very least, not to reveal. We know that in its fifth report of this Session, the Merits of Statutory Instruments Committee undertook a very helpful and full review across what I will term the housing market industry. Its conclusions, which I will paraphrase, are as follows. The objectives of the home information packs regulations are to provide consumers with better information at the right time to reduce costs and carbon emissions from homes. It goes on to say that these amending regulations provide for a further reduction in the information required in home information packs. Views among stakeholders continued to be divided—both about the benefits of this change and about home information pack policy generally.
I acknowledge that the Association of Home Information Pack Providers continues to be enthusiastic because of the transitional arrangement that the Government have put in place. It goes on to note that there are problems in obtaining even some of the reduced information required. I believe that I have interpreted its note correctly. The fact that there is less information than was originally intended means that the general purpose of the packs is not as strong as it might otherwise have been. However, its enthusiasm is not matched by others elsewhere. While noting a reduction of costs of searches by some local authorities, the Council for Mortgage Lenders also noted that delivering energy performance certificates through home information packs will take more than 13 years to cover the housing stock. Yet energy performance certificates are the main reason for pressing on with home information packs. It goes on to say that the Government should reflect on whether energy performance certificates could be more quickly, and more universally, delivered in a different way.
As someone who is participating in the Committee stage on the Climate Change Bill, which is currently in this House, the matter of speeding up the reduction of carbon dioxide emissions from the domestic sector cannot be deferred for 13 years; the problem is more urgent than that. Those qualified to provide energy performance certificates will need to provide their services to any householder. We have a much greater urgency than is implied by having them tied to home information packs.
A memorandum from Mr Michael Garson to the Statutory Instruments Committee lists 10 objectives which, he says, the home information packs fail to meet. I do not intend to list them all as it would take too long.
Hear, hear!
My Lords, I am glad that I have a measure of agreement. Those objectives range from increasing the costs of home transactions to uncertainty about standards and whether those standards can be consistently applied.
Anecdotal evidence from members of the Royal Institution of Chartered Surveyors, who are in the housing business on a day-to-day basis, is not helped by the state of the housing market. Inquiries that they receive about possible new business are down by 5 per cent in the south of England and nearer to 30 per cent in the north. That is a very heavy reduction, and prices are going down at the same time.
I also received the comment from RICS members—again, this is anecdotal—that home information packs had become a source of revenue for some of them. In other words, the law of unforeseen consequences applies: the client will pay more for the home information pack than it costs to produce.
It seems to be said everywhere that the searches required for home information packs are inadequate for the purposes of clients’ lawyers before any purchase can be completed. The members of the Royal Institution of Chartered Surveyors are clear that, in reality, the home information pack is not a major consideration in the minds of home-buyers.
It is now time to appreciate that the introduction of home information packs has been a distraction in the housing market and that we should bring them to an end. This Prayer could be the first step in that process. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the regulations, laid before the House on 23 November 2007, be annulled (SI 2007/3301). 5th Report from the Merits Committee.—(Lord Dixon-Smith.)
My Lords, I feel as though I am intruding on old friends in this debate. When there was a debate on the No. 2 Regulations last year, my noble friend Lady Scott of Needham Market started by saying, “Here we are again”. I am taking over from her today and, as I look around, I see a number of Members of the House whose words on that occasion I have recently read. On that occasion, on a Motion moved by the noble Baroness, Lady Hanham, from the Conservative Front Bench, the Government, with Liberal Democrat support, got what might be called a “non-fatal mauling”. To say that the Government ignored that would be unfair; I am sure that they paid a great deal of attention to what was said, not least because many of the points made in the debate were very valid. Nevertheless, they ploughed on.
I have never been terribly enthused by home information packs. They were a good idea, but the Act was flawed and the implementation has certainly been flawed—at least, it has been very difficult. It has been fragmented and there has been an impression of stuttering and stumbling along. Having said that, we should pay credit to the noble Baroness, Lady Andrews, who, as a Minister, has put a lot of personal commitment and energy into making HIPs work. Without her efforts, they probably would not have been put into force. Some people may consider that to be a good thing but I think that she should be given the credit for them. However, they are still struggling to get over the finishing line, as we see with the amendment regulations before us.
In many ways, it is too soon to make a judgment on home information packs. In the debate on 18 July, the Minister said:
“They will help to end frustration and reduce costs”.—[Official Report, 18/7/07; col. 273.]
At the moment, the kindest thing that one can say is that that case is as yet unproven, but it may be that that will be the long-term effect. However, Parliament as a whole will have to come back to this issue at some point in the future to see whether HIPs are doing what has been claimed for them. If they are not, their cost will mean that they should be done away with. Nevertheless, at the moment the jury is not out because the evidence and information is not there, but the jury will be needed in future.
The noble Lord, Lord Dixon-Smith, said that the Government had never dared to publish the report from the pilot trials. I do not know whether that is the case or whether it has just taken a long time for the information to emerge through the system. Again, I shall be kind to the Government and suggest that that may be the case, but one has to ask when this information will be published, as clearly it must be. On the previous occasion, they promised to publish it in the late autumn. Whenever autumn may be nowadays with global warming, it certainly does not extend into January of the next year. We need a clear commitment on when the information will be published, because it is vital. It is extraordinary that a system has been introduced across all types of housing before publication of the report on the pilot schemes, which were presumably intended to give us the benefit of that information before the decision to proceed was made.
The report by Europe Economics has been published but it was only narrow in its reference to the housing market and it suggests that there has been no impact as yet. Again, we shall see in a year or two whether that continues to be the case. I know only that the introduction of the two-bedrooms-and-less rule on 14 December resulted in all the advertisements for houses disappearing from the local press in my part of the world for around three or four weeks before Christmas. We got remarkably thin newspapers, which just shows how much the newspapers rely on people advertising houses. It may be that, apart from that, nothing has happened. However, we want to know what use HIPs are, what impact they are having and whether they are value for money. Those are questions to which we shall have to return.
The energy performance certificates have had a wider degree of support around the House and certainly from the Liberal Democrats but, again, some serious research must be done on them once they have been around for a while to see whether they are making a difference. Are they resulting in more energy-efficient houses because people are investing in things to produce that? Such evidence might emerge in a couple of years’ time, but the Government must take responsibility for ensuring that the research takes place, and that is the basis of my second question.
Here, we are discussing quite narrow amendment regulations to regularise what has been happening since 14 December and to extend what is known as the “temporary first-day marketing provision”—a few people in the world will understand what that means—to 1 June. What will happen if there is a need to extend that beyond 1 June? Will we have more amending legislation or will 1 June be an absolute back-stop? That is my third question.
I turn to the temporary provision on leasehold information. Until 1 June, the leasehold documents, apart from the lease, will now be authorised, not required, documents because of the difficulty that people have had in getting this information quickly from landlords and leaseholders. Are the Government satisfied that by 1 June people will start to produce this information or that they will have had enough practice in the new system for it to work, or, again, will the date be extended beyond 1 June?
The debate about HIPs goes far wider than these regulations, but the noble Lord rightly asked questions about how they were introduced and where we are going now. However, in the context of where we are now, our view is that the regulations are sensible. They are not fundamental and they are not unprincipled, and, even if we voted against them today, we would not want to see the system close down overnight—it is too far advanced for that. If HIPs are to become a permanent feature, that is one thing but, if they are not to become permanent, a decision on them will have to be taken in a year or two or perhaps four or five in the light of experience. Therefore, we would not support the noble Lord, Lord Dixon-Smith, if he pushed this Prayer to a Division this evening, although we sympathise with a great deal of what he said.
My Lords, I declare my interest as a consultant to a firm of estate agents. My noble friend Lord Dixon-Smith mentioned some of the problems with the energy performance certificate and although it is welcomed by a lot of people, I would remind the House that it is not a panacea. It is not going to solve the energy problems of housing. It might identify some but it does not provide a solution.
HIPs are a very different issue, and that issue, among others, has led to this Government being the most disliked and distrusted when it comes to property matters, most particularly for the lack of consultation. Even the Communities and Local Government Select Committee in another place, which has just published its annual report for 2007, said:
“CLG’s failure to engage effectively early enough with stakeholders is both one of the principle reasons why HIPs were delayed and a further example of the Department’s inability to build the relationships it needs if it is to succeed in taking partners with it across the whole range of policy”.
It was absolutely crucial that the Government took the property industry with it. It clearly failed and that was a major mistake.
What have been the effects of HIPs so far? With regard to speeding up the process, we have no evidence at all. In fact, we are building up quite a caseload of work imposed by the purchasers’ solicitors, asking for far more details in the searches and not accepting the vendors’ searches. Few buyers read HIPs or even ask for them. In our firm we have not had a single prospective purchaser even asking for a home information pack. I thought I had better widen the range, so I rang a number of estate agents around the country. I have not found one that has said a prospective purchaser has asked for a home information pack. One prospective purchaser asked for an EPC but none for a home information pack.
There has been a reduction in the number of properties coming to the market. Whether this can be blamed entirely on HIPs is debatable and I am not going to make judgment at the moment, but it is sad at a time when we clearly need more housing. There is a reduction in land coming on the market for new build and there is also a reduction in new stock coming on the market. That is going to restrict mobility and changing jobs, and it is going to add to the general economic decline and depression that is beginning to affect us. In the research we have been doing—and I have talked to other agents about this—we have also found that no action is being taken on the EPC. People will look at the EPC but they have got their own ideas for the house. Very little action is being taken as a consequence of having that certificate.
What are the consequences of these regulations? We come back to something that I have been stressing all the way through our discussions on home information packs and that is first-day marketing. I ask the Minister, please, to think again. In many cases, it is taking well over two weeks to get a home information pack. There are still delays and there are going to continue to be delays. Please do not distort the market any more by withdrawing the ability to market on the first day that one gets the instructions. It is a very important part of how the property market works and is used by so many agents, particularly in the south-east where the market tends to be bigger and stronger than elsewhere. To take that away would be really detrimental, and I mean that. It would be utterly detrimental. I ask the noble Baroness to think again and let us continue to market at day one. I know of no evidence of agents deliberately flouting HIPs, so could she just leave that provision? I again raise the point of my noble friend Lord Dixon-Smith about the results for the pre-implementation trials of HIPs. It is quite wrong that the Government have not published these. It was a pity that the Liberal Democrat Party was taken in by the Government’s promises on pre-implementation trials but the results should have been published by now.
Let me quickly move on to the leasehold market. The plans for this are vague and the regulatory impact assessment is based on assumptions about consumer behaviour rather than evidence. One particular concern is that the impact assessment fails to take into consideration the carbon cost of preparing an EPC. Will a new EPC be required with every lease? If so, how does that comply with the rules from Brussels that tell us that an EPC is valid for 10 years? If you have to have an EPC only every 10 years, the letting market is being treated differently to the sales market. That leads to all sorts of further complications. What the Government still have not addressed with regard to letting is the problem of getting information out of managing agents. As far as the regulations are concerned, all one now needs to produce is the lease, but as from 1 June one is going to have to produce all the details and we are going to be back in the hands of managing agents who have no incentive at all to provide that information to vendors. That is going to mean a further delay in bringing property to the market. I hope the Minister will think on that again.
My Lords, listening to the noble Lord, Lord Dixon-Smith, and the noble Earl, Lord Caithness, it seems to me that there has been a continuous and sustained undermining by people with vested professional interests who see HIPs as an unwelcome intrusion in their hitherto unchallenged stranglehold over both buyers and sellers in the domestic housing market. They resent the fact that the consumer is getting a better deal via HIPs. This is a small part of the major drive by the Government both to improve the buying and selling of houses and to stimulate the housing market.
I do not take kindly to people who are given evidence from the department and stand up here and ignore it in their debate. Last December, I wrote to the department and asked for an update on the HIPs saga. I was told by the department that an announcement which addressed the points was going to be made, and I got a copy of it. That information—which is public information and I cannot believe that the noble Lord, Lord Dixon-Smith, who is very good at his homework, is not in possession of it—answers a number of queries. When we have previously debated this subject, one of the main arguments has been the inaccessibility or unavailability of qualified people to carry out the surveys. I was told in December that 5,794 people are now accredited to provide energy performance certificates. When the figure was 2,000 it was derided, but at that time the figure of 2,000 was adequate. As the programme has been rolled out with more and more properties from four-bedroom down to one-bedroom properties, more and more people are required. But the evidence is that they have not only been found and trained but also accredited as worthy of carrying out these inspections. I cannot understand the point that is being made.
Another point made was about cost. We were told that HIPs would cost the consumer £600. The figures I have from the department show that the cost has been between £300 and £350 over a period of six months. That was the figure that we were given nine months ago, and Members opposite should reflect on the cavalier way in which they are treating the information that is available to them.
I am told that HIPs are taking on average seven to 10 days to prepare. Either I can take the shaking of his head by the noble Earl, Lord Caithness, whose professionalism I respect, or I can take the evidence from the department, which must be based on the information that it has. I am told that for the majority of property, drainage and water searches are being delivered within five days. If that is the position, it knocks skew-whiff the evidence that this is somehow a drag on these matters. Energy performance certificates are being prepared on average within two to four days. Let us be reasonable. The noble Earl, Lord Caithness, said that this will not be a panacea. It was never expected to be a panacea; it is a genuine attempt to deal with something that has been more than a niggle, not only for first-time buyers but for others. What was a cosy relationship—one might call it a closed shop—has now been impinged on by this new arrangement.
As far as I am concerned, the consumer—the person who is buying and selling—is king, not the professionals involved. The consumer is very important and needs to be taken into account. I therefore say to the Government that I look to the evidence from the Europe Economics report, to which the noble Lord, Lord Greaves, referred. The report finds no evidence of any impact on transactions or prices, although there is a predicted short-term impact on new listings. You either accept the professional integrity of people who supply the department with evidence of how this is working or you do not. I happen to accept it. I congratulate the Minister, who, as the noble Lord, Lord Greaves, has said, has invested a certain amount of personal endeavour in this matter from the very beginning, and her colleagues on sticking to their guns. The problem that they have sought to solve will not be solved overnight, or even for years, but the absence of their measure would have meant a continual nag and niggle for the buying public. I say all power to the Minister and her colleagues and I wish this well. To annul the regulations would not only do nothing at all; it would simply add to problems that exist.
My Lords, I very much welcome the statement made by my noble friend Lord Graham of Edmonton, with which I entirely agree. I felt that the noble Lord, Lord Dixon-Smith, and the noble Earl, Lord Caithness, were the mouthpiece of the Royal Institution of Chartered Surveyors. They did not like it, so the thing should be cancelled. HIPs are being blamed for the downturn in the housing market, based on anecdotal evidence. We were told that the Government need to agree this with the property industry. This is my interpretation. The property industry needs to engage with the Government. My understanding is that the Government tried very hard to engage with the property industry. Negotiations went on for some time, and in the end the property industry said, “We don’t like it”.
My noble friend talked about the consumer. This is where we should start. I am told that having a HIP has stopped quite a few vendors, or so-called vendors, putting their house on the market and simply testing how much they will get for it. If they actually have to spend money on a HIP, they might think twice before doing that, which is not very good for people who want to buy it. The other thing is that if there are three or four people competing to buy a house or a flat, you could end up with three or four surveys of the same house or flat, which is great for the surveying industry but a complete waste of money. The HIP is a way out of this.
Ditto with the energy performance certificates, Yes, people might not want them, surveyors might not want to know about them, and they might not be perfect, but they will provide information to people who can then take action or not. I suggest that, as the price of gas, electricity and everything goes up, more and more purchasers, when taking the decision whether to buy, will welcome them as providing information so that they can decide whether they will buy a place, whether it needs more insulation and how much it will cost.
The noble Lord, Lord Dixon-Smith, seemed to like the idea of the energy performance certificates, but did not want them to be part of the home improvement pack. I do not know how one could become obligatory without the other.
My Lords, I wish it was a home improvement pack. It is only a home information pack.
My Lords, I am very sorry. I simply reflect on the Motion tonight. Basically, it would throw the baby out with the bathwater. Yes, there have been problems, but they are largely solved, in my opinion. Are we really going to accept a Motion on behalf of one professional organisation? I am a member the Institution of Civil Engineers. It certainly does not go around praying like this against what I think is a very good regulation on the basis that, “We don’t like it, therefore the Government should not push it forward”. I look forward to hearing the Minister’s response.
My Lords, I apologise for the fact that I have been in Grand Committee on the Children and Young Persons Bill and have therefore missed a substantial part of this debate. I believe that I have made the general salient points on earlier occasions. If the regulations are to be judged on the basis of whether the Government have produced a panacea for the massive problem that existed—the gap between the agreement, or the meeting of the minds between two parties on a real property sale, and the exchange of a concluded contract—the answer must clearly be no. They have not done so. Nor will they, and nor will any other Government anywhere in the world, within the system of English law. They have tried hard. Their efforts go back some 10 years, and in so far as the home information pack and the energy performance certificate are concerned, they have tried honourably and properly to bring about some amelioration of the problem between purchaser and vendor. They have also brought about some amelioration of the environmental problems that this generation must face.
My Lords, the last time we debated HIPs, I began by saying how grateful I was for the opportunity to tell the House what progress we have been making. That was greeted by hollow laughter around the Chamber, but I can honestly say this evening that I am grateful for the opportunity that the noble Lord, Lord Dixon-Smith, has created. We have a good story to tell and I want to bring the House up to date and to welcome members of a new cast. It is nice to see the noble Lord, Lord Greaves, on the Front Bench—I am grateful for his kind words—and the noble Lord, Lord Dixon-Smith. I am also grateful for the support of my own Back-Benchers and for the welcome of other noble Lords, including the noble Lord, Lord Elystan-Morgan.
We have, over the past 18 months to two years, had an extended debate on home information packs. It has sometimes not been easy for the Government, but we have listened closely to what has been said. Noble Lords will know the unfolding narrative. We debated HIPs on a number of occasions last year, and noble Lords rightly asked us to keep their introduction and operation under close review. We have done just that. We particularly took into account the number of energy inspectors and how HIPs have been operating in the market. I will address some of those issues a little later.
I shall give a little chronology and say where we are. HIPs started to be rolled out on 1 August 2007, when we rolled them out to properties with four or more bedrooms. That was closely followed by the roll-out to properties with three bedrooms. On 14 December, we rolled them out to the remaining sizes of property, thus completing the process.
Over the past months, as HIPs have been introduced, we have been conscious at each stage of the need to take account of the responses of stakeholders. On the last occasion we debated HIPs, my noble friend asked specifically that the dialogue with stakeholders should be kept open, especially while the scheme is being implemented. We have done just that, and indeed the very sensible transitional measures we are now bringing forward are informed by and reflect what stakeholders have said about how to improve the experience for the consumer and the industry operating in the marketplace.
The measures do two things. They further extend the temporary first day marketing period until 1 June 2008 and remove the requirement to obtain leasehold documents except the lease itself until the same date. During this period, we have commissioned further work to assess how leasehold documents can be most effectively provided. I shall come back to that point in the light of what has been said by the noble Earl, Lord Caithness. We believe that these measures will help consumers as HIPs continue to bed in.
The first measure means that for the next five months, until June, anyone looking to sell their home can do so immediately, provided that they have commissioned a home information pack and they expect it to arrive within 28 days. Why did we extend the transitional arrangement? We did so because of a later than expected commencement of the final stages of HIPs and in light of the need to produce guidance for local authorities dealing with access to and charging for search information. I can tell the House that the access and search guidance will be published this Friday, which will be helpful to everyone involved.
Of course there have been unexpected changes in the market, and I shall say more about that later, but we also received strong representations from stakeholders who have emphasised that an extension would greatly assist our joint objective of a smooth implementation. We have listened to what they had to say. We believe that this extra time benefits buyers, sellers, estate agents and solicitors as HIPs bed in and become part of the familiar landscape of buying and selling.
The second decision, to remove the requirement to provide leasehold information other than the lease until June, was also driven by what the industry told us would help HIPs to be delivered smoothly and effectively. We had previously made changes to allow 28 days for the provision of leasehold documents, and that was based on earlier evidence from the area trials. But let me say that it has never been the case that we have been waiting for a final, cliffhanging result from those area trials. We have tried to use the information coming in to us over the past months to inform what we can as we change the processes, and thus the leasehold documents were given the extended period of 28 days.
However, uncertainty remains in the ability of the system to cope with the requirement for additional leasehold information upfront—the sort of leasehold information set out in Schedule 5 to the original regulations. It became apparent that more information on the leasehold system was necessary if we were going to make it a more useful process. Early feedback from the industry showed us that while the lease could be produced at low cost without too much difficulty, providing additional documents containing information about, for example, major works on the property was more likely to cause delays and hold up production of the packs. However, we have turned this into an opportunity. Having discovered that—and to be frank, we were working on the basis of anecdotal evidence because there were virtually no systematic accounts in the field about this—we have taken the opportunity to establish not just how we can overcome the problem, but what else we can do to provide leasehold information in other ways. To that end, we have commissioned Ted Beardsall, deputy chief executive of the Land Registry, who is a member of our Home Buying and Selling Stakeholder Panel—which I am sure noble Lords will be delighted to know exists—to advise us on what else can be done to improve the provision of leasehold information alongside further consideration of the search process. So this amendment allows time for that work to be undertaken and to inform the way that leasehold information is included in the pack. That is, I think, a very prudent step.
Over the past six months we have been looking at a sensible, pragmatic and responsive process. What has happened is that between 1 August 2007 and 10 January 2008, we have seen 260,740 EPCs and 188,899 HIPs launched. I think that that is a very creditable result. The difference between the two figures is simply that in the beginning, because we were conscious that we had energy inspectors without work, local authorities got them to do EPCs for some council social housing.
The noble Lord, Lord Dixon-Smith, who I know is very committed to the energy and carbon reduction agenda, asked why we cannot go faster. From 1 October 2008, EPCs will be required, in addition to all residential property sales, for private and social rented properties upon a change of tenancy; and commencing 6 April this year, for the sale, lease and construction of commercial property. DEAs who already have their core skills will have the option of acquiring the extra skills needed to carry out non-domestic EPC work if they wish to do so. We are looking at an expansion of the volume of work into these other areas.
I am afraid that I cannot answer the question raised by the noble Earl, Lord Caithness, about leasehold in relation to EPCs, but I am happy to make a commitment to write to him. We will discuss it in the department.
We know that the pragmatic approach has worked, not least because of our own monitoring, which is done in many different ways from regional monitoring to spot checks with estate agents at the local level. Information is coming to us from all directions. The sort of thing we have noted as it comes to the office is as follows; I quote from estate agent Tim Barton at Dreweatt Neate:
“I can quote two cases already where the registered title element has revealed what could have caused major difficulties later on. In one the registered boundaries were significantly different from those told to us by the vendor and in the other the property was covered by restrictions the vendor was not aware of. HIPs are already proving their usefulness and two sales that might have hit the buffers later on have been put on the right track from the start”.
That is exactly the sort of thing that we discussed in the abstract when trying to anticipate problems which can and do frustrate sales, generating much wastage in the system. Conveyancer Lisa Shenton of Irwin Mitchell said:
“The packs are designed to help people looking to purchase a property, and this latest announcement by the government brings more certainty for the market”.
That underlines how we are being asked for clarity and certainty all the time.
Obviously I have to address the comments of the Merits Committee. The noble Lord pointed out that there are still divergent views on HIPs, and the Merits Committee has rightly pointed to them. But I have to say that there is now far more understanding of and confidence in HIPs and the process around them than there was the last time we debated this issue. It is a measure of the fact that they are becoming a familiar part of the landscape and are bedding in.
Let me take this opportunity to address the issue raised by the area trials, because again it is something that the Merits Committee referred to. It is not true that the area trials have not been used to inform the development of HIPs, and I have to take issue with the noble Lord because it is not a question of not having dared to come forward with the evidence. We have always said that we will use the evidence wherever possible. But it was a measure of the protracted nature of the system that the average time needed for a home sale is over six months, and sometimes much longer. It was not until the end of last year that we had gathered a sufficient set of transactions to study in order to make proper judgments about it. Those are now with the independent researchers who are compiling the evidence. Believe me, we will bring it forward as soon as possible.
The noble Earl, Lord Caithness, is quite right: one of the issues we face is that we have discovered that many buyers are not seeing HIPs, and that this may come out at the area trials as well. There is no justification for it and I do not think it should be up to the buyer to have to prod and push and search for their HIP; it is for the estate agent to do so. He should be saying, “Here is the HIP. This is what we may be able to make use of because it contains important and valuable information”. I say that particularly because the regulations provide buyers with a legal right to rely on the information provided in the pack. We are therefore discussing with the National Association of Estate Agents what more can be done to increase awareness of the energy certificate. We have also responded to that discovery by committing to a systematic communications strategy, which is aimed at all the people who should be making sure that HIPs are at the front of their mind, because of the valuable information that they bring forward. We want to start that campaign quickly; its essential message will be, “If you’re buying a home, make sure that you see the information pack”.
I cannot resist saying that my noble friend has already done a magnificent job in looking at the evidence that has been brought forward that deals with some of the unproven and dire predictions. Many of those, which we heard not least in this House before HIPs were introduced, have simply evaporated. I hope that this smooth rollout, given the volume of HIPs and EPCs, will help to put many minds at rest.
Before we rolled out, many said that there would be delays in putting packs together and that the process would come to a standstill. However, we have found exactly what my noble friend quoted in her figures. On average, HIPs are taking seven to 10 days to prepare; the majority of property, drainage and water searches are being delivered promptly within five days, while EPCs are being prepared on average within two to four days. The cost of a pack is not around £1,000, as was hazarded previously; the average cost is £300 to £350.
I should spend a little more time on the impact on the market, given what was found in the research that we commissioned. I know that the noble Lord, Lord Dixon-Smith, has rightly focused on our now being in a different situation with the housing market than we were six months ago, let alone a year ago. Early on, in spring 2007, we commissioned authoritative and independent modelling from Europe Economics to show the likely impact of HIPs on the market. That research concluded that there was no evidence that there would be any impact on transactions or prices, although there was—as my noble friend said—a predicted short-term impact on new listings, as sellers changed the timings of their listings. The report concluded that this predicted impact on listings would be short-lived and that the impact would be marginal compared to the wider factors. We therefore rolled out to around 18 per cent of the market on 1 August, as I said, going up to 60 per cent of the market on 10 September.
By that time, however, as noble Lords know full well, market conditions had changed for a variety of reasons: the credit crunch, Northern Rock and so on. We decided that we then had to seek expert advice about the likely impact of rollout, and therefore asked Europe Economics to look again at its research in the light of changing conditions—in the knowledge that we had already started the process, and that there was evidence from real-time market conditions. We asked them to collaborate on that with Dr Peter Williams, of the National Housing and Planning Advice Unit—a former deputy-general of the Council of Mortgage Lenders, and a man with extremely practical and wide experience of the market—to consider whether changing housing market conditions meant we should delay the rollout. Its advice was that HIPs had had no impact on prices or transactions, and that changed market conditions would make no difference to that. It also said that there were strong arguments for rolling out as planned, and that further delay could cause greater uncertainty, which would be extremely unwelcome. This was clearly consistent with the advice that we were getting from others. Indeed, all of the sensible commentators who know the housing market well were clear that interest rates, house prices, stock market uncertainty and concerns about sub-prime lending are the significant factors determining behaviour in the housing market. The impact of HIPs is very minor compared with those. All of that was in our minds when we decided to roll out on 14 December.
I am coming to consider the benefits but, before I do so, I will answer the important question asked by the noble Lord, Lord Greaves: “What happens now?” We have these transitional arrangements in place; the noble Earl, Lord Caithness, also raised a question there. We are guided by the realities, and we have tried to be extremely responsive. We certainly have better relationships with stakeholders than at the beginning. We are keeping them alongside us and all the evidence points to a smooth rollout.
We must continue to monitor the market and to look closely at how the processes are working; we will make decisions on the back of the evidence. When I talk of clarity and certainty that is what we will aim for. We cannot, therefore, be categorical in predicting the future, but I do not expect any more transitional arrangements and we will be guided by what we find.
I turn, finally, to the benefits. HIPs have already cast a spotlight on areas of the home-buying and selling process that were in need of change. We have also seen knock-on benefits, including over 80 local authorities reducing their search costs by an average of £30. From the feedback that we are getting, we have certainly seen consumers beginning to benefit from getting early information. I quoted just one example, but that is exactly why we want to make sure that buyers see the HIPs.
With the EPC being produced quickly, it means that consumers have access to important energy efficiency information, and the Energy Saving Trust has calculated that up to £300 per year on energy bills can be saved. The next step is to ensure that consumers are aware of the assistance available to them for increasing the energy efficiency of their home. This is, of course, not a panacea, but it will take us toward a much more realistic understanding of what fuel costs and its impact.
I will conclude by reflecting a little on the comments made by the noble Earl, Lord Caithness, about speed. Estate agent Sam Chivers, of Barons Property Services, said:
“The HIP has provided me with a great sales tool and without a shadow of doubt enabled purchasers to move much quicker to the point of exchange; now all they require is a mortgage offer and answers to any enquiries that their solicitor should raise, then they are ready! Gone are the days of eight, twelve or sixteen week transactions, welcome to the new era of four week exchange, it’s real and it’s here”.
We want that to be the experience of every estate agent, and everybody who buys and sells a home in future. I am grateful for the patience of your Lordships, since I have taken a long time to go through the details. I hope that noble Lords will feel fully informed about what we know; that is where we are with this policy now.
I am grateful to the Minister for her long and detailed response. I am also grateful to everybody else who took part in this debate; as I expected, it has indeed proved useful.
There is a fundamental problem here, which is that as a nation we have become increasingly punch-drunk on regulation and new systems, but it is instinctive for everybody to try to make it work. I have a deep feeling that so much of society works in spite of government and regulation, not because of them. Every time that we come along, saying that we can do by regulation something that will improve things, I personally doubt whether the actual improvement is real. So, we have a basic and fundamental difference in approach here, which will lead us never to completely agree. That is the reality.
I was fascinated that the noble Baroness, when she responded to my complaint about the lack of published information on the studies done on the preliminary trials, said that the Government were still studying that information. That says to me that they put the whole edifice in place before they had arrived at a conclusion about whether the trials had been as effective as they expected them to be. That may be a misinterpretation of the Minister’s words—if it is, I apologise—but they are more or less the words that she used. So we have a difficulty.
I was fascinated by the remarks of the noble Lord, Lord Greaves. To use a little alliteration and a slight misinterpretation of his words, he said that the Act is flawed and the pack is flawed—but, despite that, he finished up agreeing that the whole lot should go ahead. That seems a trifle inconsistent.
My Lords, I said that it is going ahead, and stopping it now would do more damage than allowing it to go ahead.
My Lords, I am grateful for that clarification. However, I beg to differ as to whether stopping it now would necessarily do any harm.
I should say to the noble Lord, Lord Graham, that I did not mention any questions about the ability to provide qualified people, nor did I mention the question of costs. The provision of a home information pack is described to me by some people in the business as an earnings centre for the profession. Whether that is good or bad is neither here nor there, but it is certainly an unintended consequence, which is what I said it was.
I tried to produce a reasonably balanced picture of what is going on. However, it is very difficult to find a great deal of good, published information, but it is very easy to find adverse comment. This has been a useful debate. I am not quite sure what is happening in June because the noble Baroness said it would depend on the way in which the situation developed. If I understood her correctly, she left open the question of further regulation to delay the full implementation of HIPs. That means that we will almost certainly be back here on some other occasion, if not debating the issue in this form then in some other form. It has been a useful hour. I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.