Mr Roger Gale (North Thanet, Conservative)

I remind the Committee that with this we are taking the following amendments: No. 37, in page 7, line 3, after first `the', insert `effective'.

No. 12, in page 7, line 4, after `sellers', insert `, lenders'.

No. 13, in page 7, line 13, at end insert—

`(8) Sellers, buyers and lenders shall be entitled to bring proceedings in respect of a home condition report upon which they have relied in any transaction.'.

Mr Nigel Waterson (Eastbourne, Conservative)

I am even happier that the birth is nothing to do with me either, but we wish all participants well, of course.

The rest of my speech to amendment No. 11 will be brief, for reasons that I shall explain, and then my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) will deploy some of the heavy artillery that I originally intended to bring to bear. I apologise in advance to you, Mr. Gale, and to the Minister and the rest of the Committee, as I shall have to go to the Chamber, where there will shortly be some other business on which I am required.

I had more or less finished speaking to amendment No. 11, and had referred to points made by organisations such as the Council of Mortgage Lenders. I hope that the Minister is in a better frame of mind this afternoon because, to judge from some of the phone calls that my office has had since this morning, he managed to upset just about everybody involved in the property and conveyancing business. I suspect that his punishment, fittingly, will be many extra briefings for us to take him through in the rest of our debates.

Our point was simple. Those who draw up the home condition reports, whatever one's views about their qualifications, should have full indemnity cover if they get it wrong. Such provision should be in the Bill, but we are open to persuasion on whether a specific amount should be mentioned, although it should certainly be covered in regulations.

Amendments Nos. 12 and 13 focus on what lawyers call the privity point. The Minister referred to the Contract (Rights of Third Parties) Act 1999, which may indeed have the answer to my points. We want to ensure absolutely that sellers, buyers and lenders will all have rights to bring proceedings when they have relied on a home condition report that turns out to be in some way defective, and when some actionable negligence has caused that. People should be able to rely on the report, knowing that they will have redress if there is a problem.

According to the Law Society, as the law stands it is not clear who, other than the seller, could be certain of being able to secure compensation if the report were defective. A lender and a buyer could be reluctant to rely on a report if they had no redress in the event of it being defective. The Law Society says that it is essential to make it clear to whom the producer of a report on a property could be liable.

The issue is fairly straightforward. The Minister may feel that he has a complete answer to it, and I look forward not to hearing it, but to reading it.

Mr Gareth Thomas (Clwyd West, Labour)

The hon. Member for Eastbourne (Mr. Waterson) has for once, with the greatest respect to him, done us a service by probing the important issue of privity of contract, in which I take an interest. I want to take a few minutes to explore the subject, in the expectation that my hon. Friend the Minister will elucidate matters a little.

As a lawyer, I have had experience of dealing with what we describe as surveyor's negligence cases, and this is an issue that often arises in practice. Who can sue? Following the case of Smith and Bush, the position prior to the coming into force of the Contracts (Rights of Third Parties) Act 1999 was that, while there was no privity of contract between a buyer and the party who had prepared a valuation report for the lender or the building society, very often the buyer was able to sue in negligence—not in contract—where it could be established that he had relied upon the valuation report to his detriment. That has been an established principle, certainly when the transaction concerns what could be described as a low-value or modestly priced property.

However, it seems that we need to look at the Contracts (Rights of Third Parties) Act 1999, and I am sure that the Minister will refer to it in his reply. It has extended rights to third parties to be able to sue upon a contract in their own right. Section 1(1)(a) of the Act says that a third party may enforce a term of the contract—I believe that we are talking about the home condition report—if it

expressly provides that he may.

Section 1(3) goes on to say that the

third party has to be expressly identified

if not in name, he has to be identified as belonging to a particular class. Is it the intention that buyers and lenders should rely upon the home condition report? If it is, there is a strong argument for putting that in the Bill—given that one of the primary objectives of the Bill must be to reduce the cost of house buying. Surely one of the objectives is to avoid the necessity for the buyer to obtain his own valuation report by enabling him to rely upon the home condition report procured by the seller. I should be grateful to hear what the Minister has to say on those issues.

When this matter was raised on Second Reading, my hon. Friend the Minister said that it was the Government's intention that both the buyer and the seller would be able to reply upon the HCR. No specific reference was made to the lender being able to rely upon the report. The lenders have a case, because if they are to do desktop valuations, they have to have before them a fairly robust report upon which they can rely, in law as well as in practice, in order to obviate the necessity for them to go out and get their own valuation report and charge the buyer for it.

However, there is of course no privity of contract between the lender and the seller. Do the Government believe that the law of negligence would apply and that, provided that detrimental reliance could be established, there would be a cause of action for the lender as well as the buyer? I should be grateful if the Minister would address these issues because they concern a number of people, including the Law Society and those in the commercial lending community. Although hon. Members might think that I am making a trade unionist point, I have never conveyed a house during the whole of my professional life. If the Bill is to be enacted, we will need greater clarity. I would like to see something like amendment No. 13 included in the Bill or, if not, further assurances from my hon. Friend the Minister.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

In accordance with clause 8(4), the Secretary of State is able to make provision for the approval of one or more suitable certification schemes. Clause 8(5) lists a number of points about which the Secretary of State should satisfy himself before approving a scheme, including whether inspectors have adequate indemnity insurance and whether a complaint resolution procedure is in place.

Amendment No. 11 would specify that members of the scheme should have a minimum of £500,000 indemnity insurance cover. However, it does not state whether that should apply on an aggregate or per claim basis, so it could be rather confusing to put it in the Bill. We do not support including a minimum level in the Bill as it would make it difficult to amend it in line with changes in house prices and inflation. It is far better that the certification scheme should determine a suitable level of cover, as it will vary over time.

It would be inappropriate to include in the Bill a minimum level of indemnity insurance required without also addressing other insurance-related matters—for example, the maximum level of insured excess required and the maintenance of proper run-off cover by members after they cease trading. All those relevant issues will be dealt with in the arrangements that will be put in place as part of the certification scheme. The amendment is therefore unnecessary and unhelpful.

On amendments Nos. 12 and 37, we recognise that lenders as well as buyers and sellers should have access to a complaint resolution procedure. Again, we intend that this matter should be addressed through the certification scheme. In approving a scheme, the Secretary of State will be well placed to ensure that proposals for handling complaints will be effective. That deals with the concern expressed in amendment No. 37.

We are sympathetic to the intention behind the amendments. We are considering how the clause might be amended to make it absolutely clear that lenders' interests are covered, and we shall give further thought to the matter. Clause 8(5)(c) may not necessarily be the best place to do it, but I assure the Committee that we shall return to the subject at a later stage.

In developing arrangements for the resolution of complaints, certification schemes will need to consider whether lenders' interests can be served by the same complaints handling arrangements as those for buyers and sellers, or whether separate schemes would be more appropriate; as my hon. Friend and others will appreciate, lenders will have different concerns from buyers and sellers. The Council of Mortgage Lenders is playing a key role with other stakeholders, including the Consumers Association, in developing the home condition report and certification scheme; it is therefore well placed to ensure that its member's needs are met.

We intend that home condition report inspectors' liability to sellers, buyers and lenders will be secured by contract. I have said that on a number of occasions; it is our clear policy intention. As I said earlier, we are sympathetic to the amendment's purpose, which would make it clear in the Bill that lenders could rely on the document. We shall return to that question later.

As for third parties and privity of contract, the Contracts (Rights of Third Parties) Act 1999 will ensure that the buyer and the lender, as well as the seller who commissioned the home condition report, will be able to rely on it, and will be able to bring proceedings against the inspector should it prove necessary. I have repeatedly made clear our intention that buyers, sellers and lenders should be able to rely on the report and that they should have redress. I repeat that assurance. I fear that some parties simply do not wish to hear our assurances because, for whatever reason, they have taken against the idea of a home condition report. However, that does not change the facts, which are that we intend to ensure that all interested parties—buyers, sellers and lenders—will all be able to rely on the report and bring proceedings against the inspector should it prove necessary.

I hope that I have demonstrated that the certification arrangements, which are subject to the Secretary of State's approval, will deliver what hon. Members are seeking, without the need for the amendments. A valid point has been made with regard to Members' interests, which we will review in the context of the clause as a whole, rather than just in the context of the complaints procedure. I hope that, on that basis, the hon. Member for East Worthing and Shoreham will agree to withdraw the amendment on behalf of the hon. Member for Eastbourne, who moved it.

Mr Roger Gale (North Thanet, Conservative)

Order. On a technicality, that is not possible. The relevant Standing Order states that only the Member who moved the amendment can withdraw it. On that basis, when we come to the appropriate time, the amendment will have to be formally negatived. A Division will not be required, but the amendment must be negatived.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

I am grateful for that advice, Mr. Gale. Perhaps you will explain, on another occasion, how we actually do that. I am sure that it will become clear.

Will we have a clause stand part debate, Mr. Gale? There are a few extra points that I wanted to make which may be more appropriate to such a debate.

Mr Roger Gale (North Thanet, Conservative)

Certainly.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

Thank you, Mr. Gale. In the light of what the Minister has said, I am inclined to go along with that suggestion. The Minister said that some hon. Members did not wish to hear assurances because they were against home condition reports. We certainly want to hear assurances. We have been trying to add certain things to the Bill because it is so lacking in detail, and because it will not be enacted for such a long time, if it ever gets to that stage. The home condition reports are flawed, and do not deal with the central problem of gazumping, with which they were supposedly designed to deal. However, we are pragmatic, and realise that if the Government are, as they have demonstrated, determined to go ahead with the home condition reports, we must ensure that the legislation that is to be forced upon us is as watertight as possible for all the parties concerned. That also accounts for our desire for insurance guarantees.

All this debate is unnecessary. I am aware that the Minister's Department has had discussions with various firms of surveyors that are well-versed in dealing with the problem of indemnities against flawed survey reports, and have been doing so on a purely voluntary and very successful basis. Allied Surveyors has made submissions to his Department. It is one of the largest firms of surveyors in the country, and is based in Chipping Sodbury, near Bristol, a place that has been mentioned many times in our discussions.

Two years ago, Allied Surveyors launched its own scheme—the Allied Surveyors guarantee survey. Under the scheme it has issued approximately 21,660 policies, which have resulted in 256 claims, the vast majority of which will have resulted in some form of payment. A relatively small number, on an ordinary, insurance-based guarantee, have received compensation because the firm has admitted some liability. In many cases, to avoid arguing over £300 or £400, they are prepared to be big and pay up. That is an exaggerated figure.

By way of comparison, when relying merely on professional indemnity insurance for surveyor negligence, over the same period of time, that firm has had just 16 notifications for claims for professional negligence, and it expects that only three or four of those claims will be successful. Those claims apply to all the work that the firm has undertaken, whereas the guarantees are issued on only approximately 20 per cent. of the work. That is an example of a perfectly practical and pragmatic scheme that has worked rather well, separately and far ahead of the legislation that the Government want to bring in. It has worked especially well for customers, who have not had to go to lengthy and costly legislation to take or threaten to take to court surveyors for faulty surveys. Customers on that voluntary and sensible scheme have had a far more satisfactory deal, and have had payouts with having to resort to legal action. Firms have been perfectly happy with the scheme.

The scheme could be extended throughout the country. It could easily operate through the growth of chains of people involved in property transaction—a subject that we discussed this morning. I am sure that any insurance company could take the scheme up and provide the framework for it. If the Government had taken a little more trouble to consider what works in practice and needs to be expanded by better practice, they could have saved us all the trouble of this yet further piece of legislation.

There are warnings ahead. The experience in the United States is not a happy one. Apparently, the US has tried a version of home condition reports known as pre-listing reports. Their success has been scant indeed. In many cases, they have led to greater conflicts of interest and less protection for consumers. That can be seen in recent legislation enacted in several states, especially Massachusetts, whereby it will soon be illegal for a real estate agent to make recommendations to a home buyer on a choice of home inspector. It seems odd that the evidence that the scheme works seems to have been drawn almost exclusively from Denmark. The rather closer example of the US has been fraught with problems, yet I do not believe that it has been mentioned by the Government.

Notwithstanding all that, as it is patently obvious that the Government will not accept a scheme, given their manic compulsion for legislation, it is right that we should stipulate protection for sellers, buyers and lenders. The Minister identified the obvious gap in the wording to protect lenders, so I am greatly encouraged that the Government might move towards the thrust of our amendments. On that basis, I will stop speaking, but I am not able to commit myself to anything ahead of your instructions, Mr. Gale.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

Hitherto, a surveyor acting for a purchaser or a seller has had a specific obligation to that party. He may have a conflict of interest in how he describes something, as he could do so to suit the interests of either the buyer or the seller. On occasion, it will not be possible to look after both interests at the same time. Indeed, the surveyor would be expected to look after the lender as well, so he would be looking after three different parties with three possibly competing interests. In view of the amendment, the Minister needs to give some guidance as to how a surveyor would act under those circumstances.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

Three points have been made. The first is the Allied Surveyors issue raised by the hon. Member for East Worthing and Shoreham. Voluntary schemes such as that are fine. We have no problem with them, and have said that we welcome schemes such as that operated in the case of seller's packs. Some estate agents are successfully using them, which is fine. However, only one person has to decline to take part for the chain problem to arise and the benefits to be lost—which is why it is essential for home condition reports to be made mandatory. The framework for guaranteeing the validity of survey reports must be a consistent scheme throughout the country and not simply depend upon whether there is a good voluntary scheme operating in respect of one group or another of surveyors.

The stakeholders involved in setting up the certification scheme are examining, with insurers, how hidden defects insurance can be provided on home condition reports. The concerns raised by the hon. Gentleman are very much part of the considerations and discussions taking place at the moment because, while such insurance could not be compulsory, it could be a very effective additional—and quite cheap—bolt-on, if people sought additional protection. It is a very important point and one that we are addressing.

The hon. Member for East Worthing and Shoreham talked about the US experience. We have not simply acted on the basis of the experience in Denmark. We have taken evidence from a large number of countries and we did not look at evidence from the United States. The absence of a certification scheme in the US is one of the weaknesses of the arrangements that exist in that country. There are variations from state to state—that is part of their constitutional framework—but there is no national arrangement for providing the underpinning that is provided by a certification scheme. That is why we do not believe that the American experience, in this respect, is helpful.

The hon. Member for Cotswold (Mr. Clifton-Brown) has raised the issue of conflicts of interest. That is a fair and reasonable concern. He raised it in a different context this morning and I addressed it then. It is absolutely with a view to ensuring that we can depend on the quality of the inspector's reports that we are seeking a robust certification framework under which inspectors who prepare reports will produce evidence in a format that allows the least possible scope for interpretation that might favour one party. Objectivity is the key aim, and that is the format that has already been discussed. I think that the hon. Gentleman has seen a copy of the proposed format. If he has not, I will make sure that he does. The objective is to ensure that, so far as possible, information is delivered in a way that is the least prone to interpretation as favouring one party. It is not always possible to remove all elements of subjectivity because judgment is involved in certain respects. So far as possible, however, we intend to ensure that an objective report is delivered.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

May I warn the Minister of one problem that may occur, which he can think about when he has discussions with the new body? The temptation will be for the surveyor's description to be minimalist. He will say simply that the house has a crack. There will be no temptation to make a judgment as to how serious that crack is because, if he is trying to look after the interests of the vendor, the purchaser and the financial institution at the same time then, as the Minister has just acknowledged, wherever possible he will avoid making subjective judgments, although his report will be factually correct. That is yet another reason why the purchaser may need to have a more extensive structural survey to serve his own interests.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

That is an interesting point and when the hon. Gentleman studies the proposed format for the home condition report he will see that it is proposed that, in addition to the descriptions, inspectors should give a rating on a scale of one to four in respect of all the indicators. If I may summarise, rating 1 will indicate that the item is in acceptable state of repair; rating 2 will mean that minor maintenance may be required; where rating 3 is given, significant repair or maintenance is required; and rating 4 will indicate that urgent repair is required. I hope that the hon. Gentleman will accept that, given that obligation, it will not be possible for an inspector simply to gloss over a crack. The inspector would have to indicate whether it was something purely cosmetic, which might rate 2, or something more serious, rating 3 or 4. There really will be an attempt to grade the severity of the problem.

I do not minimise the difficulties. The new format will be complex; it will require a lot of preparation and training and it will need to be properly enforced. However, I ask the hon. Gentleman to accept that it is our intention to ensure, as far as possible, that the measures are objective and will give a fair indication of the condition of the property without the scope for evasion that sometimes mars the benefit to customers of survey reports at present.

Mr Don Foster (Bath, Liberal Democrat)

Earlier in our deliberations, the Minister said that the work of the certification body would be largely a paper exercise. How often does he envisage that representatives of the certification body will check the accuracy or otherwise of the documentation?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

That is a fine point of detail on how the certification scheme will operate. It would be wrong for me to anticipate what will be decided. An expert body involving all the stakeholders is discussing the matter, and it will make recommendations. We shall consider them carefully before making a decision. It would be wrong of me to anticipate its conclusions.

Mr Don Foster (Bath, Liberal Democrat)

Given that in our earlier deliberations the Minister was clear about the cost of the certification body and the average cost that would be added to surveys, the Government must have some idea of the percentage of reports that would be backed up by a visit from the certification body. One would expect the cost of such checks to be a major element in the body's expenses, and it must have been taken into account in the figure that the Minister cited earlier.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

The hon. Gentleman probably misunderstands the basis on which the certification proceeding will be set up. It is not designed to be a double checking mechanism that will check inspectors' work on properties. However, as I said this morning, there will be an obligation for every report to be registered. That will be open to checks, so there will be an option to verify whether one inspector seems to be adopting an approach that appears to be out of line with that of other inspectors. That circumstance might well justify further intervention by the certification body. What the precise criteria should be and how those checks should be carried out are details for the certification body to consider. I ask the hon. Gentleman to accept that we are keen that it should be a rigorous and thorough arrangement, but it must be informed by the views of the specialists and experts who are working with us to develop the system.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

Normally, someone commissions a surveyor to undertake a survey. Under the Bill, the seller will commission a survey, but the buyer will pay for it and the surveyor will be liable to the seller, the buyer and the lender. Under those circumstances, if the buyer or the lending institution wishes to raise further inquiries with the surveyor, will the surveyor be liable to answer them? If so, who will pay for the extra work involved?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

Perhaps I can clarify the procedure. If I heard the hon. Gentleman correctly, he implied that, although the seller would commission the survey, the buyer would pay for it; but that is not our intention. The seller will commission the survey when preparing the seller's pack and he will have financial liability for it. Depending on the arrangement reached with the estate agent who puts together the seller's pack, it may be paid for at the time or on completion of the sale, but it will be commissioned and paid for by the seller. The seller will have the option to seek further information, but that option could be available to other parties. In certain circumstances, and provided that they are satisfied that the particulars are available and that the surveyor is on an approved panel, lenders may choose to go to the same surveyor for further information in the course of a valuation. I see no reason why such an arrangement could not be made to work. There would obviously need to be safeguards, but it would be sensible.

Equally, on seeing a home condition report, a buyer may seek a further more detailed survey from the same surveyor on the basis that that will probably be more economical than starting out with an entirely different structural survey from a separate surveyor. Again, that is one of the options. Our aim is to ensure that the home condition report provides information of real use to all three parties—seller, buyer and lender—on which they can rely. Also, it should provide a cost-effective way to secure additional information, if that is necessary.

Mr Geoffrey Clifton-Brown (Cotswold, Conservative)

I want the matter to be absolutely clear. If buyers or lending institutions request information over and above that required by the home condition report, will they be liable to pay for it?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

If they seek extra information from the inspector, that is a matter entirely for them. It is separate and ancillary to the home condition report, and the seller has no liability. Whether the surveyor chooses to charge for it will depend on his relationship with the lender. If the inquiry is a minor matter from a lender who puts a lot of business a surveyor's way, the surveyor may choose not to charge for it. The judgment will be the surveyor's, but the liability will be entirely on the person commissioning the extra information.

I hope that we have now covered all the issues that we need to. I urge the Committee to reject the amendment.

Amendment negatived.

Mr Don Foster (Bath, Liberal Democrat)

On a point of order, Mr. Gale. I did not want to interrupt the flow of debate but, like the hon. Member for Eastbourne, I may need to attend the debate on the Floor of the House shortly. I apologise if I have to leave early.

Mr Roger Gale (North Thanet, Conservative)

I am grateful to the hon. Gentleman. All members of the Committee understand the difficulties of attending to duties in Committee and on the Floor of the House at the same time.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

I beg to move amendment No. 56, in page 7, line 12, leave out `affects' and insert `limits'.

I shall be brief, lest the threat of the hon. Member for Bath is realised and the Opposition Benches are denuded of Liberal Democrats to participate.

Amendment No. 56 is designed simply to clarify the Bill. Clause 8 states:

Nothing in this section affects the power under section 7 to make provision about home condition reports in the regulations.

That is not an elegant way to express the purpose, and the substitution of ``limits'' for ``effects'' makes the intention clear and allows no ambiguity. I hope that everyone will agree that that is a sensible and appropriate amendment. In line with my earlier comments, I commend it as an improvement to the Bill with no change in substance or policy.

Amendment agreed to.

Question proposed, That the clause, as amended, stand part of the Bill.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

It has become clear as we have talked to the amendments to clause 8 that there are still many questions to be answered, many schemes to be finalised and many details to be given. It is obvious that we are unhappy about the use of the home condition reports. We believe that the HCRs will be too brief, too general and will prove inadequate for many purposes. The measure is far-reaching, given that it could affect more than 1 million private residential sales and that the survey take-up is less than 20 per cent. of the 1.5 million sales at the moment. As things stand, buyers of property will be given a misleading picture as to the thoroughness of the home condition report, as opposed to a fuller survey of the sort that the seller is now perfectly at liberty to commission.

We feel that there is some lulling of the purchaser into a false sense of security. We also want to stress—

Sitting suspended for a Division in the House.

On resuming—

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

I was about to point out a further problem with home condition reports, which is the lack of what I might call shelf life, and the Government have said nothing to suggest that the reports should be time-limited. They are effectively condoning a system under which a house sale could be based on a home condition report carried out six months, a year or even 18 months ago, since when fundamental changes might have been made to the building's soundness—not least, in today's climate, through flooding.

That weakness raises the question of cost. During the frenetic activity that went into the producing the Bill, the Department of the Environment, Transport and the Regions told the various interested parties that it anticipates that the costs involved will rise considerably, even to European levels, where commission rates are typically between 6 per cent. and 8 per cent. That would have a serious impact on the house sales economy.

It is important that people should know that a home condition report will not provide a property valuation. It will not be a structural or building survey, and the buyer may still want a rather more detailed structural survey to be made; if it is deemed to be necessary, which would certainly be the case with older property. That would be in addition to the cost of the home condition report.

The home inspector's inspection will be visual only. We are led to believe that no part of the property will be opened up or damaged to allow a more detailed inspection. In particular, the home inspector will not raise floorboards or floor coverings, will not lift wall finishes or other contents or remove vegetation—I presume that that means mould growing on the walls. However, we are assured that the home inspector will come manned with a 3m ladder, so that will be all right. The reports will contain many flaws, particularly about the outside of the building. Only significant defects to boundary fences and walls, retaining walls, paths and driveways that are part of the property will be reported on, and the home condition report will not deal with the condition of external features or amenities such as tennis courts and ponds.

We are dealing with something that is betwixt and between; the home condition report will not be a cursory tick box valuation, but nor will it be a full survey. It will be a halfway house, but it will increase the cost of the transaction considerably. It will not lead to a full investigation of the property, as some have been led to believe. It will be woefully inadequate. I fear that the home condition report, which is at the heart of the Bill, shows the weakness in the changes that the Government are keen to thrust upon us. We want to reiterate our concern that the Bill is fraught with problems.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

The Opposition's weakness is their tendency to criticise from a particular angle, regardless of whether their criticisms are consistent. [Interruption.] To answer the hon. Member for Cotswold, it is right for the Opposition to oppose, but that need not mean criticism irrespective of consistency. One expects a degree of integrity from Oppositions, and that they will pursue a consistent line. Unfortunately, the hon. Member for East, or rather for Shoreham—

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

At least we are consistent about our constituencies.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

I confessed in a previous sitting to my terrible problem with double-barrelled constituencies. The words East Worthing and Shoreham have at last reached my lips, and I apologise to the hon. Gentleman for getting his constituency wrong.

The hon. Member for East Worthing and Shoreham began by saying that the home condition reports would be too limited and inadequate, and that leitmotif returned at the end of his remarks. He also said that they would lull buyers into a false sense of security. Early in his speech he came up with the simple fact, which we endorse, that a great majority of buyers now obtain no survey or home condition report at all. They enter into what is almost certainly the biggest financial transaction of their life with no information. Far from agreeing on the advisability of encouraging people to obtain some information, the hon. Gentleman took the opposite view and said that the idea was wrong. He then resorted to attacking the proposal on the ground that it would increase cost. However, following his logic and obtaining a more thorough and rigorous survey would cost even more.

What do the Opposition want? Do they want people to be well informed when they take a decision, or ignorant? Do they want them to have a reliable and informative report on which to base a judgment about the need for a further survey? If several important matters in a report received a rating of 4, clearly, any potential buyer would be well advised to obtain further information, but at least the preliminary information would be available.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

At the moment every person—few as they are—who obtains a survey of a building is guaranteed to receive one that is up to date, because it is commissioned when a sale is likely. The assurance of the impartiality of the report is that it has been commissioned by the would-be purchaser. Is not that the big difference?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

No, it is not. I notice that the hon. Gentleman immediately tried to sidle away under a different argument, namely the shelf-life of the survey. The key point is that the buyer must be able to rely on the home condition report. We discussed that issue in detail earlier this afternoon, and because it is so important we are setting up a framework that will provide buyers with reports on which they can rely, in contrast to the present state of affairs, in which the vast majority have nothing. It is rich to be accused by the Opposition of foisting unsatisfactory and insufficiently informative reports on the public, when they admit that most people now obtain little or no information.

As to the shelf-life, we have always made it clear that there will be an obligation to produce a first seller's pack and that in general it would be possible to rely on it for a period but that after a time some items might need renewing. In particular, local authority searches would probably require a check after perhaps three months, but, as I have mentioned several times, with the introduction of new electronic communications systems and with NLIS coming on line, it should be possible to carry out a check for a tiny sum of money, to ascertain the validity of the original search. That would be a way of keeping up to date at minimal cost and would be compatible with what we are proposing.

If a property is on the market for a long time, there maybe a need for a further check—particularly in circumstances such as flooding, as was mentioned by the hon. Member for East Worthing and Shoreham. However, the basic information will generally be valid for a significant time and will provide buyers with information that they currently do not have.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

Surely the point is that it is only a basic search. Given new problems, such as flooding, sensible buyers will have further questions that go above and beyond the scope of the basic search. Further to my earlier point, from which I did not wish to drift, is it not true that if a buyer chooses a property that has been on the market for 12 or 18 months, he will have to pay a premium in commissioning an additional survey because the old one's shelf life has expired? Why should he be prejudiced simply because the seller's property has been on the market for a long time, while someone who bought it after a short time would not have to commission a further report? Why is the Minister so biased against the buyer of such a property?

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

That is a preposterous argument. It is not a question of bias against individuals. We have clearly said that the home condition report will be available to them. We have indicated where it maybe necessary to update it and, in the case of searches, that is likely to be a cost-effective operation. Flooding that affects a property is a serious matter, and someone considering buying a property that has been subject to flooding would be well advised to have further checks made, whatever period had elapsed since the original survey.

If nature sends a flood, it is not the Government being biased against someone who chooses to buy some time after the survey, it is life; it is an act of God. I can tell the hon. Member for East Worthing and Shoreham that that is indicative of the Opposition's approach, which is to seek carping criticisms rather than to recognise that the Bill attempts to remedy a fundamental weakness in our current framework. At present, many people spend money on probably the biggest financial transaction of their lives without any reliable information on the value or condition of the property or the potential cost of any repairs.

Mr Tim Loughton (East Worthing & Shoreham, Conservative)

It is not the Government but the system that is biased against those people that buy properties that have been on the market for a long time. Whatever the Minister may say, they would be well advised to commission their own surveys if there is a threat of flooding or circumstances change. The difference is that the cost of their survey would be on top of the cost of the vendor's home condition report, which would be reflected in the price. The difference is that we have had one impartial survey at the point of sale, which would satisfy all those concerns, and we are now to have two surveys—one HCR and a survey.

Mr Nick Raynsford (Minister of State, Department of the Environment, Transport and the Regions; Greenwich & Woolwich, Labour)

That is indicative of an Opposition who are focusing on the detail rather than seeing the big picture. I have had cause to chide the Liberal Democrats for not being conscious of the realities of business, and I have to say that the hon. Gentleman has fallen into the same trap. If a property has been on the market for a year or more, it is likely that the vendor will reduce the price in order to secure a sale. To suggest that the person who buys six months, a year or 18 months after the property was put on the market is landed with an additional cost without any potential off-setting saving shows that he is out of touch with reality. The hon. Gentleman will recognise that when properties are on the market for a long time the vendors tend to reduce the price in order to make a sale. The Opposition should ``Get real''. They should think about how the market operates and recognise that this is an important additional provision that will ensure that people are better informed and better able to make rational judgments on something that is hugely important to them. That is the result of the Government's determination to attack the problem instead of trying to justify the maintenance of the status quo, which, sadly, is the Opposition's position. They spent 18 years presiding over a housing market that went through extreme fluctuations of boom and bust, and did nothing about it. Now, they can only carp at and criticise our attempts to put matters right. It is a sad reflection on the Opposition that they are not able to take a more constructive position, and the judgment of history will find them wanting.

Question put and agreed to.

Clause 8, as amended, ordered to stand part of the Bill.