Housing (Scotland) Act 2006 (Prescribed Documents) Regulations 2008 (Draft)
The next item of business is a debate on motion S3M-1306, in the name of Bruce Crawford, on behalf of the Parliamentary Bureau, on the approval of a Scottish statutory instrument, which is the draft Housing (Scotland) Act 2006 (Prescribed Documents) Regulations 2008.
With great pleasure, I move,
That the Parliament agrees that the draft Housing (Scotland) Act 2006 (Prescribed Documents) Regulations 2008 be approved.
Time limits for the debate will need to be adhered to strictly.
Yesterday, I welcomed the fact that the Scottish National Party Government had finally come round to the Conservative point of view on the need for substantial cuts in business rates for smaller businesses. I said that we welcomed that tax-cutting conversion. I did, however, point out that the SNP has a long way to go on a lot of other issues. Sure enough, less than 24 hours later, one such issue has come along in the form of these regulations, which impose an SNP property tax on Scotland's housing market.
The SNP members are not the only guilty men and women in that respect, however, as the single seller survey is a policy that was inherited by the present Government from the previous regime. Regrettably, it is a legacy that the SNP has accepted enthusiastically. The party that promised in its manifesto to cut red tape ditched that pledge as soon as the new ministers slid into the back of their ministerial limousines, and no one is more culpable in that respect than the supposedly pro-enterprise Mr Mather.
The single seller survey was the subject of a pilot study that was initiated by the previous Government—whose members have all deserted the chamber, so ashamed are they of the so-called evidence base for the policy. An extensive advertising campaign in the pilot areas was intended to attract 1,200 sellers to test the merits of the scheme. As it turned out, only 74 such surveys were undertaken in the whole of Scotland, and only one of those was in Edinburgh although that was the most vibrant property market—and, in that case, the house did not sell. Moreover, it is worth pointing out that, for the purpose of the pilot projects, the single seller surveys were free. The Government could not even give them away, yet it persisted with its plans to make them compulsory. To its discredit, the SNP has tamely followed suit.
Does the member not accept that those who participated in the pilot projects stood to lose the most if the proposed scheme went ahead, which is why the pilot projects did not work?
The pilot projects did not work because people saw no value in this bogus policy.
On the basis of the Government's figures, the present single seller surveys will cost between £360 and £520. They will enrich the surveying profession—the annual income of which, in survey fees, is projected to double to more than £83 million as a result of the introduction of the single seller surveys—and confer precious few benefits on either buyers or sellers. For example, the single seller survey is designed to solve a problem of multiple surveys that no longer exists and which the marketplace has resolved through the increased use of subject-to-survey offers. The impact of the proposed new surveys will also be felt most keenly by the less-well-off sellers, as the Scottish Consumer Council has pointed out. In committee, the minister made great play of the fact that the surveys will benefit first-time buyers; however, as we all know, first-time buyers quickly become first-time sellers, so it will not be long before they, too, feel the pain.
It is, frankly, naive to expect that buyers will rely on a seller's valuation alone. They will want to commission their own valuation to support higher bids in a competitive marketplace and a bigger mortgage application. The proposed new measure will also result in a delay in properties' being brought to the marketplace and a reduction in the number that are put up for sale on a speculative basis, which it is estimated constitute up to 30 per cent of the properties that are on the market at any one time.
Those are all excellent reasons why the Parliament should vote against the regulations today. However, I add one more. The property market throughout the United Kingdom is at a tipping point from which Scotland is not immune. Prices are, at best, holding steady if not falling, and the situation could be a heck of a sight worse by December, when the regulations will come into force. Confidence is fragile and this is absolutely the wrong time to burden the marketplace with more regulations and compulsory charges of this nature.
The regulations are born out of a policy that was discredited from the start and should never have been enacted by the Parliament. Today is our opportunity to kill it off, and we should grasp that opportunity with alacrity.
I welcome the single seller survey, which is an excellent idea. If I may, I will cut to the chase by mentioning one of its most positive aspects. Many first-time buyers are attracted to view a property based on an asking price of, say, £100,000. When they then obtain a basic valuation for which they need to pay, they might find that the property is worth £150,000 or £160,000—a sum that they could not possibly pay. The only people who win in such a system are the valuers, as it does no good to sellers of property to have an artificially low asking price. The property market in Scotland should not require first-time buyers to face an outlay for a valuation to see whether they can afford a property.
If the valuers are the only people who benefit from the present system, how is it that, according to the Government, the fee income of the valuers will double under the system that the member supports?
I will be interested to see the detail of those figures, but I am sure that Mr McLetchie knows very well that lawyers, solicitors and valuers always win. However, the new system will put in place some safeguards.
Let me mention a second safeguard under the new system. At the moment, many people get only a basic valuation done. Constituents of mine have found out that they must pay a quarter share of a £230,000 bill for roofing repairs. As first-time buyers, they had no idea before they moved into the property that they would be liable for that because they got only a basic valuation. What protection was there for my constituents? None whatsoever. The Housing (Scotland) Act 2006 (Prescribed Documents) Regulations 2008 will put that protection in place.
Let me mention a further protection that will be provided. Not that long ago, I was a first-time buyer of a property to which adaptations had been made before I moved in. At one level, the property that I bought after a basic valuation was quite simply a pig in a poke. I was fortunate that the adaptations had been carried out safely and to good standards, but I had no comeback on them. However, some constituents have not been as lucky. That protection must be available for everyone.
It has been pointed out that the pilot schemes were unsuccessful, but compulsory implementation is sometimes required to achieve a Government objective. This is one of those occasions, and that is why we must pass the legislation today.
Finally, how could Mr McLetchie possibly oppose the energy report that will be required under the regulations? It is essential that we ensure that fuel poverty is tackled and that we increase the energy efficiency of properties. If a property's value comes to be measured by its energy efficiency, that is somewhere that we all want to be.
I urge members to vote for the motion.
I intend to be brief, not least perhaps because the Minister for Communities and Sport may be as discomfited by my support as I am in giving that support to him. However, as this is an important issue, I want to underline the Labour Party's support for the Scottish statutory instrument that the Government has made. Of course, the instrument will simply continue the important work that was done in the previous parliamentary session on housing and sustaining communities. That work goes beyond any Government and was given recognition by the housing improvement task force.
The Tories' opposition to the proposal is not new and the arguments that they have deployed to support their position are not new either. One difficulty with the way in which the market currently works is that it disadvantages first-time buyers by involving them in multiple surveys. Artificially low upset prices can also draw first-time buyers into considering the purchase of properties that they could not possibly afford. The Tories' arguments about the pilot were well rehearsed at the time, but the evidence of the pilot simply shows that a voluntary approach cannot work.
Perhaps the most critical issue that needs to change in our communities is the way in which people approach the purchasing of a house. As more people take on ownership of their properties, it must be a concern for all of us that they may do so with less thought than they might give to buying a coat. The new process will ensure that people are given information about the property that they are buying and the challenges that it will involve. The process will also give people a better understanding of the worth of what they are buying. We must be committed—as the housing improvement task force was—to ensuring that people understand the importance of the responsibilities of home ownership and maintaining a property. If we want to sustain communities and ensure that people do not buy properties that they cannot then maintain, we need to tackle the serious problems that exist.
If there are market issues, surely the supporters of the market on the Conservative benches will tell us that the market will adjust, especially as people will have more information when they make purchases. The minister has committed himself to monitoring the policy as it is rolled out, which is an important reassurance for people. We will support the Government on this matter at decision time.
For a change, Liberal Democrats congratulate the Government on building on the good work of the previous Executive and introducing the home report by December this year. The report will allow buyers of homes to make better-informed decisions on what, for many, will be the biggest purchase of their lives.
First-time buyers will benefit most from the policy. As Bob Doris said, those individuals will no longer have to commission surveys for homes that they are only considering buying, which will save them about £150 a time. The seller survey will give buyers a complete picture of the home that they are about to buy, including details of the condition of the property, an energy efficiency rating and a valuation. The inclusion of a valuation is one of the least commented-on elements of the home report, but I hope that the fact that an independent valuation of houses will be carried out before purchase will help to quash some of the exponential growth in house prices that has occurred in recent years and will rein in prices.
The previous Executive and the current Government must be congratulated on the manner in which they have introduced the home report, which contrasts with the approach that has been taken at Westminster. The Government down south has botched and bungled the introduction of home information packs, costing the taxpayer at least £20 million to date.
Finally, I wish to comment on the linkages between poor health, the environment, sustainability, poverty and housing. With fuel poverty rising in Scotland in recent years and our homes accounting for one third of carbon emissions in Scotland, I hope that the energy efficiency report that is included in the survey will help to curb Scotland's greenhouse gas emissions and make a contribution to tackling climate change.
It may surprise many members that I welcome David McLetchie's request to speak against the regulations, as it gives me yet another opportunity to explain to him and the Conservative party what every other party represented in the chamber debated and voted for when the Housing (Scotland) Bill was considered by the Scottish Parliament more than two years ago.
The regulations are not just about the single survey; rather, they introduce a package of three documents to the house buying and selling process. The Housing (Scotland) Act 2006 requires that the seller, or the agent of the seller, must make a copy of prescribed documents available to prospective buyers on request. The regulations introduce three documents: the single survey and an energy report prepared by a chartered surveyor, and a property questionnaire completed by the seller.
The single survey contains an assessment by a surveyor of the condition of the home, a valuation and an accessibility audit for people with particular needs. In all the discussion that has taken place, Mr McLetchie has failed to mention the fact that for the first time accessibility audits will be available. That means that people who are vulnerable, older people and disabled people will have information about homes that they wish to purchase.
Does the minister not think that, if someone is disabled and in a wheelchair, it will be pretty obvious to them from their own eyesight whether a property is suitable? A £500 survey is not needed to tell people something that they can see with their own eyes.
With due respect, it is rather unfortunate that Mr McLetchie seems to suggest that all disabled people are in wheelchairs. The situation of many people who are disabled and have mobility and other problems will be enhanced greatly by the provision of an accessibility audit with the survey.
The energy report contains an assessment of the energy efficiency and environmental impact of the home, and recommends ways in which to improve its energy efficiency. The report will be prepared by a chartered surveyor as part of the survey inspection. The surveyor will also will be able to provide, without the need for a further inspection, an energy performance certificate that meets the requirements of European Union legislation. The seller will get both the report and the certificate from one inspection of the house for one fee.
Order. There are too many conversations going on.
The property questionnaire will be completed by the seller of the home. The information that it contains about the home will be useful to buyers.
Together, the documents will comprise a home report, which will give prospective buyers reliable, professional information about the condition, energy efficiency and value of a house before they decide whether to make an offer for it. That is the critical point, because, almost unbelievably, that is not what homebuyers are used to at present. Some 90 per cent of buyers in Scotland rely only on a mortgage valuation report, which contains a valuation but little information on the condition of the property.
Mr McLetchie suggests that, with offers subject to survey, the market has resolved the problem that the single survey tries to address. He claims that offers that are made subject to survey make the single survey unnecessary. However, let me explain why that approach fails to cut the policy mustard.
Order. There are still too many conversations taking place in the chamber.
The housing improvement task force report of 2003 said that the primary objective of the single survey was to give sellers and buyers better information than they currently get about the condition and value of the house. It said that better-informed homeowners are more likely to undertake maintenance and repair work, which helps to address the £5 billion of disrepair in Scotland's private sector housing stock.
The phrase "offers subject to survey" is a misnomer. Most people still get only the cheapest form of inspection that is available—a valuation report, which the Royal Institution of Chartered Surveyors does not even class as a survey. Offers subject to valuation, as the approach should be called, fail to meet the primary driver behind the introduction of the single survey. Offers subject to survey are a market reaction to the problem of multiple valuations, which, in hot markets, is a serious problem in Scotland. However, addressing multiple valuations is not the primary driver behind the introduction of the single survey but is a secondary concern.
The home report will enable the market to operate with informed buyers and sellers. Frankly, I am astonished that a Conservative would disagree with that. It is clearly common sense. The Scottish National Party—like, it seems, every other party except the Conservatives—believes that buyers and sellers of houses in Scotland should have detailed information about the condition and value of the house before offers are submitted and not as an afterthought. The single survey will achieve just that.
Order. Once again, there are too many conversations taking place in the chamber. That has been mentioned three times now. Could we please hear out the minister in relative silence?
Mr McLetchie raised a number of issues in his opening speech. He said that the regulations will impose a property tax, and he has also used the phrase "a stealth tax". That is a good soundbite, but it is absolute nonsense. The regulations introduce not a tax on property but a fee for producing a solid, detailed piece of information so that people who are making the biggest purchase of their lives—and taking the biggest financial decision—have full and proper information before they take the decision and not after they have made a blind offer, which is what the Conservative party seems to support.
Mr McLetchie mentioned the pilot scheme. As other members pointed out today and in committee, the pilot failed in the sense that he tries to interpret it. There were not thousands or even hundreds of users of the scheme. However, it succeeded in showing that we could not introduce a voluntary scheme for a home report and single survey. It also showed that we cannot have two separate schemes operating at the same time in the same marketplace. That is why it is necessary to introduce a mandatory scheme.
Mr McLetchie's comment on the cost was also incorrect. His intervention on Bob Doris was on that point. There will be a cost to the single survey, but he was comparing apples with pears. We will not be supplying a valuation for the cost of the single survey. Buyers will get something much better, with much more detail and information. Of course, the cost will be much less than the one that Mr McLetchie gave. He is taking the cost of the single survey and ignoring the fact that nine out of 10 sellers are also buyers, who will save money when they buy their next house. The cost will be the money that someone spends on their single survey, minus what they would have spent on surveys on the properties they try to buy.
Bob Doris mentioned artificially low upset prices. Removing that practice from the system is one of the main drivers behind the scheme. I agree with Johann Lamont on the issue of monitoring the policy. We gave that commitment in committee.
The home report package has been thoroughly considered and discussed with the key stakeholders. In my view, the regulations mark a major step forward in the process of implementing a significant improvement to the house buying and selling processes in Scotland. All the consumer organisations support the proposals. Which? and the Scottish Consumer Council support the consumers. We are on the consumers' side. Clearly, the Conservative party is not.