Interview with Philip Salaman of Quidos

Mr Philip Salaman managing director of Quidos has kindly obliged to answers a few of our questions.

Q 1 NHER produced some great research in relation to non-compliance of Commercial EPCs recently. Do you have any other similar research you are undertaking at present and when could we expect to see the results?

We have conducted recent research into commercial buildings EPC compliance in the South West England area. We have very accurate statistics on the number of commercial properties on the market, and we cross referenced that data against the Landmark database. 73% did not have EPC’s.

However, one far worse result emerged, in that there are numerous properties being marketed with fraudulent EPC’s i.e. those that have not been lodged with Landmark. Most of these are assessors who are waiting until the property nears exchange of contracts, but an element were fraudulent, and a small number had even used incorrect assessor details on them.

Q2. There are nine accreditation schemes with who domestic energy assessors can be accredited with; is this a good thing for the industry or would we better with one or two?

Possibly, depends on what you define “better” as. If you want lower lodgement rates, then you will need more accreditation schemes, promoting competition between them. If you want higher quality standards of EPCs, then improved governance and auditing is required, but this will only impact in higher lodgement fees; whether you have two or ten schemes is only relevant if the auditors of these schemes can reduce their fees significantly for less schemes.

Q3. The domestic energy assessment industry is highly competitive at present and I imagine this will apply to the accreditation schemes as well. Is it likely we will see some consolidation in the market place amongst accreditation schemes?

Potentially, but there would have to be significant benefit for this to happen, which I cannot see. All accreditation schemes have invested heavily in IT and operational procedures, so to consolidate would only lose this investment for one of them.

Q4. From our experience and contact with domestic energy assessors (DEAs), many are struggling finding adequate levels of instructions at a ‘sensible’ fee levels, do you see this changing in the near future?

No. Ultimately market forces dictate price levels based on simple economic factors. Demand will only increase if there is an upsurge of properties on the market (unlikely in current national property market). Supply of the workforce is diminishing, but not enough to make a significant impact. The Government are unlikely to change their policies on EPC requirements in the near future.

Q5. We continue to receive request from trainee Home Inspectors asking us about potential work opportunities to carry out Home Condition Reports (HCRs) on our behalf. The Home Inspector training course is still being sold even though almost no HCRs are being undertaken, how do you feel towards this and do you still offer this training course?

I think that a condition report of a property is a fantastic conception; however it needs to be made more popular by being promoted as a tool to benefit both buyers and sellers. This needs to be done without becoming government regulation, and if the estate agents were encouraged to see the benefits of it, we would move towards a product that was in demand rather than being enforced. However, because it would most likely be used as a house price reduction tool, it is unlikely to be adopted by estate agents.

At Quidos we do not offer Home Inspector training; however those that do are presumably providing courses to students who want to do the course. If the marketing of that course is not highlighting the lack of future work – then that is a different matter. We still provide DEA training, because there is a demand for it. We are very clear in our promotion of the course to students that it is an already oversupplied market, however often candidates are local council and estate agent employees.

Q6. Within domestic energy assessment training courses a section is dedicated to ‘conflict of interests’ i.e. assessors not ‘selling’ insulation services or similar if undertaking the EPC. Many accreditation schemes offer accreditation, run training courses and manage commercial ‘panel’ operations gaining EPC work; is this not a conflict of interest?

Potentially, but unlikely. An accreditation scheme has to maintain high levels of quality in the product it administers (i.e EPC’s). Therefore if the quality of the candidates and the work input into creating an EPC is high, the resultant output will also likely be of a high quality. If an Accreditation Scheme provides poor training, then they are only going to pay for that reduction in quality down the line. Similarly why would an accreditation scheme not be concerned about the quality of any EPC it produced directly, it would seem obvious that the quality would need to be actually higher than any competition? However, Quidos is of the opinion that accreditation schemes should not be allowed to provide EPC’s direct, as this is providing a service in direct competition with their very own members, and as such would ask that the CLG amend the governance rules.

Perhaps there is another conflict of interest that should be highlighted. There are numerous corporate entities that pay for lodgements in high volumes, that provide their own QA checking. Quidos would ask the question of how this is audited, and what guarantees are there to ensure this is as rigorous as it is for independent DEA’s.

Q7 We have seen EPC fee levels fall and many DEAs are carrying out EPCs at what we consider as unsustainable and non profitable, what has caused this situation? Many DEAs blame ‘panels’ for this do you hold this view?

No. Economics dictates price levels. Panels have a role to play in the market place, simply because there are large corporate clients (e.g. large estate agency chains) that could not manage their own ‘panel’ of independent DEA’s, and they contract another company to provide this service. A panel will source the most efficient resources to service its business, so if one DEA will do the same level of work for a lower rate – then the price will decrease. We have seen an oversupply of the workforce (DEA’s), and a decrease in the demand for EPC’s due to the country’s economic situation. Market forces will always prevail.

Q8 Our research from a FOI Act application regarding DEA numbers there was about 12,000 accredited DEAs on the 29th June 2009. What number of DEAs do you feel are actually ‘required’?

Required to service the market? If there are 3,000,000 property transactions per year (including all sales and rental), and a DEA works for 200 days a year, producing (on average) 4 properties per day. Then 3,750 DEA’s are required. However, a huge number of DEA’s will want to work part-time (including those who use this work as one element of a service they provide e.g. surveyor) then this number is likely to be nearer 7,000. Also, the figure of 12,000 accredited DEA’s quoted – does this take into account double counting? Many DEA’s are accredited with multiple schemes, and many DEA’s hold multiple memberships with the same accreditation scheme.

Q9 What advice would you have to someone who was considering training as a domestic energy assessor (DEA) at present?

We advise all potential students with the same information. This is an already over-supplied market, and being an independent DEA also means that you will become a business, having to manage accounts, marketing, finance, sales, etc. In addition we highlight that this should be viewed as a lifestyle business, in that it could be used to supplement income rather than be a main income stream. If a candidate is determined to train, we would far rather they train with Quidos, and be sure they have an excellent education rather than a sub-standard one from any less reputable training provider.

Q10 Do you support the current HIP legislation and if it was ‘scrapped’ what impact do you envisage it will have on your members?

Of course we support the current HIP legislation, and believe HIPs play a pivotal role in reducing the property purchase stress, time, and cost. If they were scrapped, we see the only impact as to those DEA’s who supply HIPs to estate agents and solicitors reducing their business. With regard to the volume of EPC’s we see little impact, as the EPC will still be required at point of marketing.

Q11 The conservatives talk about extending the validity of an EPC to 10 years as has happened within the rental market, what are your views on this?

An EPC is already valid for 10 years, so nothing is changing. The issue is that one will not be required in a HIP any more, and a HIP has a shelf life of three years. So this is will have a negligible effect on the market.

Q12 Thank you for your time and finally what stands your accreditation scheme apart from the others?

Quidos prides itself on high standards of quality, innovative approach to software provision and incredibly good customer service. We are constantly looking to improve the tools we provide to our assessors, and offer one of the cheapest lodgement fees in the industry.

Further information can be found out about Quidos on their website.

There are further interviews planned for the coming weeks and months and we look forward to your thoughts and views.

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