Housing Act 2004 (Commencement No. 8) (England and Wales) Order 2007

My Lords, I am very grateful indeed for this measured and thoughtful debate on such an important topic. I want to take the House through the changes that we have made since we last debated the issue, in response to the points raised and to the consultation and conversations that we have had with stakeholders. I shall try to reassure the noble Baroness that we have done everything that we can to make the introduction of HIPs on 1 August as smooth, robust and certain as possible. That is what we intend to do. I hope that at best I can persuade her not to press her Motion to a vote because arguments have been made for that, but I certainly want to give noble Lords as much information as I think is tolerable to reassure them about what the noble Lord, Lord Redesdale, rightly described as an arduous process, but one that is now in a good and strong position. It is worth saying that the Prime Minister made clear last week that housing is one of the Government’s top three priorities. An essential part of that process is to ensure that people are able to buy and sell their homes in as open, modern, transparent and, we hope, stress-free a way as possible. On that I am indebted to the analysis given by the noble Lord, Lord Elystan-Morgan, both in the previous debate and today that makes clear how long we have been wrestling with this complex legal situation. We particularly want first-time buyers not to be unduly hindered from entering the market, and we believe that HIPs are an important first step in the process. They will help to end frustration and reduce costs. We remain committed to their introduction, alongside energy performance certificates. As we have said many times, we believe that HIPs will improve the experience of home buying and selling for consumers by providing them with vital information collected at the start of the process, and for the first time provide them with important information about the energy efficiency of their home. First-time buyers will receive their packs free. It is also right to point out that we have already seen improvements. The price of searches has been driven down and processes are being speeded up. While I talk about it being a first step, we have already seen some changes in behaviour in the market. The last time we debated HIPs was on 22 May and I updated noble Lords then on the agreement that we had made with the Royal Institution of Chartered Surveyors, brought about by its judicial review against the EPC. I shall come back to that point with an answer to the questions put to me. I also set out our decision to revoke and then lay revised regulations for Parliament to consider. I made clear our intention to roll out HIPs initially for properties of four bedrooms or more. That pragmatic approach was also in part a consequence of the judicial review by RICS and the uncertainty that that had caused among domestic energy assessors in training, who were very reluctant to come forward. Today, as we debate the issue again, I want to explain briefly why we remain committed to both HIPs and EPCs, to tell noble Lords about the progress we have made in meeting the targets we set to achieve a successful rollout, to look at our plans for monitoring and evaluation of quality following the introduction of HIPs, and to dispel a few myths that have been accumulating around the process. Lastly, I want to look at the longer term picture. Noble Lords have once again expressed their opposition to HIPs in principle, described as cynicism by other noble Lords. All I say is that the whole motive behind this long journey has been to increase the transparency and predictability of the process by providing information early on and thus reduce the risk of problems that could be avoided surfacing later, at great cost in time and energy. HIPs will be of particular importance to first-time buyers. The inclusion of energy performance certificates is an absolutely vital tool in our efforts to tackle climate change. Many noble Lords have argued that HIPs and EPCs can be separated, but anyone who believes that climate change is an urgent threat—the noble Baroness, Lady Hanham, indicated that EPCs are extremely important—would surely support the Government in trying to introduce them as speedily and urgently as possible, and that is what is the HIPs vehicle allows us to do. I cannot give the noble Lord, Lord Redesdale, a birthday present today—I congratulate him anyway—but I will look at his suggestion in a very positive fashion. It is both logical and interesting. If he will leave it with me, I would be happy to take it away. My response to the argument that we are trying to gold-plate the arrangement is that it is not gold-plating to want to move urgently—by sending a signal to homeowners that they can be helped to do something to reduce their costs—to reduce our carbon use and lower the costs of energy. An EPC which is 10 years out of date is not going to influence behaviour and will not cut tomorrow’s costs, which is why we are where we are. I remind noble Lords that carbon from our homes accounts for 27 per cent of all emissions. Noble Lords have been rightly concerned with the process and the need for the introduction to be as smooth and as predictable as possible. On 22 May we announced that we were committed to re-laying the regulations, carrying on work to increase domestic energy assessor numbers, rolling out a pilot to look at EPCs and social housing, consulting stakeholders and running a consultation with RICS. We have done all those things. We could not have listened harder. Indeed, the noble Baroness, Lady Scott, said at one point that we had listened almost too hard. We relaid the regulations on 11 June. We gave early notice to the industry to enable a full debate on the policy. The regulations were considered again by the Committee on the Merits of Statutory Instruments, which was supportive of the efforts made by the department in response to concerns both inside and outside Parliament in relation to HIPs, and of the opportunity given for further scrutiny. It welcomed the Government’s response to stakeholders in holding a consultation on the age of the EPC. The noble Baroness, Lady Hanham, said we had insufficient numbers of domestic energy assessors, but we have made progress and, as I predicted, the numbers have taken off. On 11 July, there were 1,603 fully qualified and accredited domestic energy assessors ready for 1 August, which is more than enough to deal with four-bedroom properties from 1 August. We are well on the way to rollout of three-bedroom properties. We have provided certainty to the industry by setting out on 11 June in our implementation statement the criteria we will use to rollout HIPs to all properties, and we are well on the way to the target of 2,000 assessors for the later stages. We said that we would try to ensure additional opportunities for qualified inspectors to find work. We have done that. The social housing pilot announced on 22 May is progressing well. We have approved bids for more than 120,000 EPCs from more than 100 local authorities and registered social landlords. Successful bidders were informed earlier this week. We expect most EPCs to be undertaken over the summer. It is an excellent opportunity to test the process before it is introduced to all landlords in October 2008. I promised my noble friend Lord Graham that we would engage constructively with stakeholders and critics of the scheme, and we have done so; we have had extensive discussions with stakeholders over the past two months, including RICS. There is no uncertainty; they know that what we are putting in place on 1 August is a measured process. I am pleased to be able to tell the House that they have expressed a willingness to work with us on the next stage of reforms in this area. The judicial review has been stayed, of course, on terms which require the Government to undertake consultation on the maximum and minimum age of energy performance certificates. We agreed that we would consult on the maximum age when it is included in a HIP. We are planning to start informal consultations with RICS and other stakeholders ahead of launching a formal consultation over the summer. Pending the outcome of that consultation, we have amended the regulations to say that an EPC must be no more than a year old when a home is first marketed. I know that what noble Lords really want to hear from me is a guarantee that when HIPs are introduced on 1 August they will be acceptable and as positive a benefit as possible. Let me explain what we have done. To ensure that they are implemented with as little disruption to the current system as possible, the new regulations make it possible for people to market their homes without a HIP for a limited and temporary period, which will last until 31 December. However, before an estate agent or other person marketing the property does so, they will have to provide written proof that they have commissioned a HIP—this could take the form of a letter to a pack provider company, for example, or a copy of the application form; a simple process—and to show that they have either paid for it or agreed to pay for it, again with written confirmation. There are enough HIP providers in place to provide this service. There are standalone services or they can be found in solicitors’ offices, estate agents, search companies and e-conveyancing. If some sellers still have difficulty in finding some of the documents—we know that leases, in particular, are quite difficult to get hold of—all they will have to do is show that they have made all reasonable efforts to obtain the missing documents. Once sellers have received their EPC, they will have to produce a HIP. Since all these documents will be needed in any transaction before a sale can be agreed and completed, the HIP, rather than being an obstacle, should be a more focused and quicker way of bringing key information together. That is the process that we have put in place. We are pleased that it will work. Moving to monitoring and evaluation, we are ready to launch on 1 August. How will we know if HIPs and EPCs are achieving the benefits that we expect? I will say a word about costs. The price of an EPC is about £97, according to our initial trials. In practice, many will be cheaper. The price of the HIP in the area trial has worked out at between £300 and £400. Many are being offered more cheaply. We will be keeping a close eye on the market following the introduction of HIPs, to ensure a smooth rollout. As part of our work leading to the launch, we have had a number of discussions with stakeholders, which have helped inform our decisions on monitoring and evaluation. That means obtaining data at first hand from what is going on on the ground. We are receiving feedback from all parts of the HIP system—estate agents, trading standards officers and so on—to ensure that things are running smoothly. The noble Baroness, Lady Scott, asked me about the pilots. Evidence from the area trials is continuing to inform the ongoing work, as it has already throughout the year. We expect this to continue as we receive more information. We will publish a report on the trials in the late autumn, when we have a sufficient and significant body of evidence. Finally, I will deal with the myths around HIPs. Inevitably, new announcements and innovations generate their own mythologies. There are still a few that we have to deal with, the first being the four-bedroomed house. The noble Lord, Lord Redesdale, said that his seven year-old could explain why you would not market a four-bedroomed house as a three-bedroomed house. It is very simple. Why would you want to put yourself at risk of losing £120,000, which is the average price difference? The property editor of the Times does not think you would. She said the other day: "““In a slowing market, with more properties for sale, being economical with the truth to save a few hundred pounds could mean that your ‘three bedrooms plus study’ property is not first on buyers' viewing lists ... in some locations, space is an especially valuable commodity: Hometrack's average prices for a three-bedroom and a four-bedroom house in Wandsworth, South London, are £460,000 and £620,000 respectively””." That is a major difference. There have also been suggestions of loopholes in the current arrangements. I assure noble Lords that there are no such loopholes. We have deliberately put in place a more flexible system from 1 August, which enables a property to be marketed without a HIP, as I explained, provided that all the required documents are in place. There have been concerns about enforcements. Our concern is that we should have a light-touch regime. We have worked this out with the local authority co-ordinators, regulatory services and the Trading Standards Institute. We all think that HIP duties should be operated with a light touch during the first stages of the scheme, while it beds down. I am sure that everyone will observe our situation with common sense. However, trading standards officers will act on complaints and will penalise people. I was asked specifically by several noble Lords about security checks. The DEA checks will mean that anyone acting as an assessor will be a fit and proper person to practice. They will be CRB-checked at a basic level—all offences of 2.5 years or more, spent and unspent, any offence within the last five years and any habitual offending will be recorded. The home inspector checks will be the same, except that the CRB checks will concern all offences, spent and unspent. I should say that the Association of Chief Police Officers has been consulted and is content. These checks are far more rigorous than, for example, for CORGI inspectors. They are more effective, as we heard, than for estate agents or even chartered surveyors. Accreditation schemes will not rely solely on criminal record checks; references will be followed up and so on. Why is there this difference? It is simply practical. Home inspectors will spend far longer in the home. They will not be accompanied, in the way that energy inspectors are when they search for the boiler. We felt it was proportionate to build in that slight difference while maintaining the absolute security of people in their own homes. I hope noble Lords will be satisfied by that. We move on to the wider reform of home buying and selling processes. Why do we need to do that? We believe that HIPs with EPCs will make positive differences to those processes. They are the first step, as I have said. The Housing Minister has already had a number of discussions with key stakeholders to consider ways to build on HIPs to achieve the change. She is chairing a stakeholder panel on buying and selling that is now going to consider broader issues. Stakeholders have already made a number of positive suggestions that will build on and complement what we have done; for example, the introduction of e-conveyancing and the provision of additional up-front information in the process to better inform consumers. The noble Baroness, Lady Scott, asked for clarity. The whole House asked us in May to listen, to make changes and to be secure in what we were doing. We have tried exceptionally hard to do what we were asked. We have adapted our plans to deal with issues and problems that have been raised, and we will continue to monitor their effective implementation. The time has come to move positively to welcome practical implementation. The market is geared up for delivery. We have enough inspectors in place, who are eager for employment. The industry has all the infrastructure for producing HIPs; it is ready and waiting. Consumers continue to press us for reform, and they are expecting this to happen. There is real urgency about tackling carbon emissions. I urge the House to look forward. I know the noble Baroness, Lady Hanham, will see the importance of taking this first step; we have debated the issue across the Dispatch Box so many times over the past two years. I hope she will not press this to a vote, because I seriously believe that it will send a destabilising signal to everyone outside who wants and expects this to happen and is committed to making it happen. I urge the House to think seriously about its decision. For all the reasons I have given, the Government remain committed to the commencement of HIP regulations on 1 August as planned and to the rollout to all properties shortly thereafter. Consumers, as well as all those who are committed to tackling change, are entitled to nothing less.