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Housing (Scotland) Act 2006 (Consequential Provisions) Order 2008

Volume 703: debated on Tuesday 8 July 2008

rose to move, That the Grand Committee do report to the House that it has considered the Housing (Scotland) Act 2006 (Consequential Provisions) Order 2008.

The noble Lord said: The order was laid before the House on 9 June. It is made under Section 104 of the Scotland Act, which allows for necessary or expedient changes to UK legislation in consequence of an Act of the Scottish Parliament.

This order is made in consequence of the Housing (Scotland) Act 2006. The purpose of that Act is to address concerns about the condition and quality of private sector housing in Scotland. It implements the recommendations of the Housing Improvement Task Force established by the Scottish Executive in 2001 to look at factors that impeded improvements to housing stock. The task force noted the £5 billion worth of disrepair in Scotland’s privately owned housing and made over 150 recommendations after two years of research. These included the need to improve the information available to home buyers on the condition of properties. The 2006 Act gives Scottish Ministers the power to require sellers to provide specified information to prospective buyers.

The Housing (Scotland) Act 2006 (Prescribed Documents) Regulations 2008 were passed by the Scottish Parliament on 7 February 2008 and will come into force on 1 October 2008. These regulations make provisions within devolved competence to specify the documents that a seller or a selling agent must possess and provide in response to a request from potential buyers. Together these documents are called the home report. Currently most purchasers in Scotland rely on a scheme 1 mortgage valuation report that contains relatively little information about the condition of the property.

The purpose of the home report is to improve the information available to purchasers and improve the quality of housing stock. For houses put on the market after 1 December 2008, the home report will provide information about the condition, energy efficiency and value of the property at the start of the buying and selling process. For the first time, all sellers will have this information before proceeding with marketing and all prospective buyers will have it before deciding whether and how much to offer.

At the core of the home report is a survey and valuation prepared by a qualified surveyor who is registered with or authorised to practise by the Royal Institution of Chartered Surveyors. Any other providers approved in the future will have to reach equivalent standards. The survey will be commissioned by the seller and made available to all potential purchasers. It is clearly important that buyers should be able to rely on the survey provided in the home report. That means making provision to ensure that a surveyor has a liability towards a buyer in the same way as at present a surveyor has a liability towards a seller.

This Section 104 order is expedient as the Scotland Act lists consumer protection as a matter reserved to this Parliament, so it is beyond the competence of the Scottish Parliament to make provisions of this nature. Therefore Article 3 of this order establishes the liability of a surveyor towards a buyer. If the buyer’s claim is successful, the courts will determine the amount of damages in the usual way.

The Scottish Executive conducted a lengthy consultation on the home report and the majority of respondents have welcomed its introduction. The Scottish Consumer Council has said that the changes which the home report will make,

“are in the interest of buyers and sellers and what consumers want”.

The consumer organisation Which? has said that,

“the Home Report will have an immediate benefit to first-time buyers who often have to spend hundreds in order to find out whether they can, or indeed should, buy a home”.

The home report has also been welcomed by the Energy Saving Trust and Friends of the Earth Scotland.

The Scottish Executive have received constructive feedback on the terms of the home report from the Royal Institution of Chartered Surveyors. We also understand that the Law Society of Scotland has plans to become a provider of a Law Society of Scotland-branded home report.

The order also amends the House of Commons Disqualification Act 1975 to reflect the fact that the 2006 Act changes the name of the rent assessment committees to “private rented housing committees”. Members of the former body were already excluded from sitting in the House of Commons and the order will make modifications to reflect the change of name and ensure that members of the renamed body will also be disqualified.

The order demonstrates the Government’s commitment to working with the Scottish Executive to make the devolution settlement work. I hope that the Committee will agree that the order is a sensible use of the powers in the Scotland Act and that the practical result is something to be welcomed. Accordingly, I commend it to the Committee. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Housing (Scotland) Act 2006 (Consequential Provisions) Order 2008. 22nd report from the Joint Committee on Statutory Instruments.—(Lord Davies of Oldham.)

I declare my interest as an owner of housing property in Scotland. The Minister will be aware that here in Westminster my party has opposed large parts of similar legislation. However, such legislation now exists in Scotland and was passed by the Scottish Parliament, so it is important that this measure has come before both Houses of this Parliament. If there is to be any right to damages occasioned by it, it is necessary that they can be pursued wherever the various parties find themselves within the UK, without any border demarcation. Consumer protection is a UK issue, and that is very proper.

This is bound to be a tricky area; one tries to think how a claim like this will be triggered. It will probably be mainly as a result of discovering some defect in the property, such as dry rot or something like that. It might equally be when the purchaser is quickly remarketing the property and finds that he is liable to make a big loss on the resale. It could be argued that that is part of the market mechanism, but he is very likely to try to raise a claim.

Surveyors will mainly have to act as if they were acting on behalf of the buyer, and they may get limited co-operation from the vendor. The inspection will tend to be fairly rigorous, and the costs will all have to be met by the vendor. The only other aspect that is slightly worrying, with the market in its present state, is that this may cause a weakening of the housing market in Scotland. I do not know if the Government have any views on the effect that this small measure may have.

I welcome this order. I inquire, however, partly for historical reasons, whether the arrangements which are made more effective in Scotland as a result of the order were subject to discussion with the Government before the implementation of the Housing (Scotland) Act. As the Minister said, this is a good example of co-operation with the Scottish Executive, but I take it that Her Majesty’s Government do not simply try to rationalise something of this nature after the event, particularly, as the noble Duke said, when there was some controversy about the substance of it in the context of the English debate.

There is a great deal of sense in consumer protection matters being decided on a United Kingdom basis; indeed, there may even be sense in consumer protection law becoming more standard across the entire European Union. It would not worry me unduly if that were the trend, because consumers have a right to have a simple system of protection that is as widespread as possible where they are likely to be making purchases or sales. Of course, many people now purchase second homes in countries overseas, where standards of protection are not necessarily the same, but that goes wide of the order.

It is a matter of some interest to know whether the substance of the home report to which the Minister helpfully referred was sprung as a surprise on the Government or whether there was a consultative period prior to implementation of the Act. I can see no possible disadvantage in the provisions of the order, which beefs up considerably the effectiveness of the provisions for reports and acts as a strong disincentive to give shoddy or inadequate valuations and reports. I welcome the order in those terms.

I am grateful for the welcome of the noble Lord, Lord Maclennan, for the order, and the rather more muted enthusiasm of the noble Duke, the Duke of Montrose. I recognise that his party had some reservations about the English version of the measure, but, as he rightly acknowledged, this is an issue of consumer protection, which is why it is on a UK-wide basis.

I accept exactly what the noble Lord, Lord Maclennan, said: not only is it to be welcomed that consumer protection measures should be UK-wide, but we ought to expect such measures to form part of European initiatives as time goes on, against the background where people purchase across frontiers and need defences for any wrongs that may be done to them as they do so. The noble Lord is right to say that second homes are involved. What enthusiasm I am meant to express from the Dispatch Box for second home purchases in other countries I am not so sure, but I recognise that those who do purchase need to be fully aware of what they are doing and need all the protection that we can provide. In so far as we see extensions of that in due course, so be it.

The purpose of the order is to introduce into Scotland an opportunity for greater awareness of the position on the part of the purchaser, because of the additional information in the home report. The noble Duke, the Duke of Montrose, asked what impact it may have on the housing market. He particularised it at first by asking whether it will lead to claims such as, “I have bought the house, but now it does not look to be as valuable as when I bought it”. He is right to say that that looks to be more of an issue of the housing market than of the surveyor’s report and the home report to which scrutiny is given. It is much more likely, rather than being on the global value of the house, that the claim will be that the surveyor had failed to identify a serious defect with the house which was causing the loss of value. It would not be the price and the loss of value that was the issue but the defect that had not been identified by the professional, in which case there might be a question of a claim. We have said that any such claim of a failure in that respect must be able to be pursued across the length and breadth of the United Kingdom. I am sure that he recognises the value of that. The order covers it.

On the more general point about the effect on the market, the order will come into play this December, a month in which the housing market traditionally is dampened down and a relatively small number of transactions are concluded.

The noble Duke also talked about anxieties that have been expressed about the home report dampening the market. First, the home report is a particular service to the consumer that is meant to give the purchaser of a house, where purchasers are involved, greater security in what is probably their most substantial transaction ever. Protection is necessary. Secondly, I doubt whether this legislative change for benign consumer protection will be particularly marked, given that, as we all recognise, the housing market is changing in fairly significant ways and may do so for the foreseeable future. It is therefore highly unlikely that the order will have much to do with market conditions. I think the noble Duke will appreciate that rather bigger forces are at play with regard to house prices, so he should not expect too great an impact in those terms.

Again on the more general issues that have been raised, I emphasise that the reason for the order relates to an important dimension of the housing market in Scotland in that it seeks to improve the condition of Scottish housing, which we all recognise falls below the standard that we would wish to see. This measure is therefore brought before the Committee because of its consumer protection dimension, which is a UK-reserved issue for the very reasons to which the noble Lord, Lord Maclennan, referred.

I hope that noble Lords who made points about the order will feel reassured, and I commend it to the Committee.

On Question, Motion agreed to.