Deregulation Bill

Baroness Donaghy Excerpts

Thursday 30th October 2014 Grand Committee

If the Government are determined to do away with the provision in the 1973 Act, we need to know what is coming in its place. We need to be reassured that it really will be fit for purpose and will safeguard the interests of the organisations, commercial businesses and, particularly, the individuals in communities to which I have referred. In conclusion, I hope that the Minister will also reassure us that this section of the 1973 Act will not be repealed—if that is the right word—before we have the new regulations debated, discussed, agreed and in place, at least so that the protection remains in place throughout.

[Baroness Donaghy (Lab)]

My Lords, I thank the noble Lord, Lord Tope. I spoke on this issue at Second Reading and little did I know that I would be entering this twilight world of virtual hotels and absence of health and safety. It is a very new world and perhaps not one that I would welcome. I make no apology for speaking about a London issue. I am a Londoner by adoption. I have done my fair share of one-room bedsits and one-bedroom flats, so I think I have some knowledge of the standard of private sector renting. The big issue why it is special for London is the high proportion of flat-dwellers. We must emphasise that because it means that there is a whole new relationship with fellow homeowners, which does not necessarily exist in a street of houses.

I support what the noble Lord, Lord Tope, said. This is not a cosy, house-swapping issue. This is big business. We are talking about Airbnb valued at £10 billion and IHG valued at £8 billion and also about a crisis in housing supply in London. Can the Minister say how the Government reconcile that shortage and the fact that this is going to make accommodation even more short? How does that reconcile with the model tenancy agreement that the coalition Government are preparing? How can we be sure that there is going to be enough accommodation left for those who want to rent on a longer basis?

Noble Lords have already spoken about undermining the tourist industry. I will not go on about that, but I support everything that has been said about it. All the organisations that have approached other noble Lords have also approached me. I believe that the health and safety issue is important, because the Chief Fire Officers Association wrote in March to Airbnb saying the fire safety information given to people using its properties was wrong.

Finally, let me deal briefly, because others have covered the issues that I wanted to, with the libertarian issue. It is quite right that the homeowner ought to have the right to deploy their property in whatever way they choose. That has to be balanced by the right of the property owner not to have a major change in ambience of the place that they purchase. That is particularly true in blocks of flats. There is an expectation when someone buys a property within a block of flats that the ambience will not change, that it will be secure and settled and that it will not turn into the A&E department of the local private hospital, into a hotel, or into more unfortunate areas such as brothels and housing benefit fraudsters at the other extreme. The right of homeowners has to be balanced by the need for people to have some security in the property that they buy in London. If the noble Lord, Lord Tope, were to pursue this on Report, I would support the clause being deleted entirely, but as a reasonable compromise, I will support my noble friend Lord McKenzie.

[Lord Mawson (CB)]

My Lords, I am not an expert in this area, but following a discussion with an entrepreneur who is active in this field and behaving responsibly and who has developed a successful business in response to a real market, I thought it important that an alternative case be put. Over the years, I have often heard a strong case from the public sector as to why it would be unhelpful for a particular change to happen. I have heard attempts to hold the sea back before, but it has often proved impossible in the end. Change happens. As a social entrepreneur and innovator I have certainly been told by the public sector on numerous occasion that, “the sky will fall in” if such and such a change should happen. Having usually stayed the course, I noticed that, in reality, it never did and a new, often positive reality emerged.

The noble Lord, Lord Fowler, gave some excellent illustrations of this phenomenon, and attempts in the past to hold back business development, in his Second Reading speech. I shall articulate an alternative scenario to that painted by colleagues. I have heard considerable opposition to this change and concern over the unintended consequences that may arise as a result. However, I have yet to hear enough focus on the benefits of this reform, which in many people’s eyes is a sensible and forward-thinking piece of policymaking. It is these benefits that I shall focus on.

First, this reform will deliver a more optimal use of space and existing assets. With such well-documented pressure on our housing capacity, surely it makes sense to make better use of the residential property that we already have and to allow our properties not to lie empty for short periods when owners are away. I declare an interest as someone who lets out rooms in my London home. Secondly, a system which no longer makes people feel fearful of criminal sanction simply for renting out their residence when they are away will mean that families, many of whom are in need of additional income, will be free to tap into an additional revenue stream. Much of this revenue will be taxed and will ultimately boost revenue for the Exchequer to spend as it chooses.

Thirdly, it is evident that increasing the variety and stock of locations for tourists to stay will not only boost tourism in the capital, but will give a boost to local businesses that will benefit from this new mode of travel. This extra tourist footfall has the potential to reach parts of our economy that tourist dollars have previously never reached. Furthermore, when tourists decide to stay in people’s homes rather than in hotels, they tend to spend their money in local businesses, local restaurants and local museums. Finally, it should be pointed out that the costs for a family wanting to stay in a hotel in London are incredibly high and many people are simply priced out of a trip to our capital city. Short-term holiday lets provide travellers, especially families, with more choice and often more suitable properties in which to reside while on holiday.

We must be clear that the internet has fundamentally changed the way in which people live, work and travel. Either we decide to embrace this shift in our policy-making and our regulation or we will be left behind, as other cities embrace what is increasingly a preferred way to travel. The emergence of platforms such as Onefinestay, which has been mentioned and which enables people to rent out their residence safely and securely on a short-term basis when they are not at home, is something that we should embrace and not hinder.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)]

My Lords, first, I thank all noble Lords for their contributions to the debate. Many noble Lords have spoken from their personal experience in London and as representatives of various London councils.

Perhaps at the outset I may say that I am not an adopted Londoner; I am a born and bred Londoner and someone who has represented a London council and sat on the London Councils body itself, so I am aware of some of the key concerns that have been raised about the provisions. However, I cannot claim to have made a coherent contribution to the 1973 Act. I hope that my contributions today will be somewhat more coherent, but that is for others to judge.

The amendments, which would allow local authorities to make their own exemptions for particular properties and areas, would, in the Government’s view, risk removing the certainty and consistency that are behind our proposals for all London residents. Indeed, they would create a patchwork of different regulatory approaches across the capital, potentially resulting in unjustifiable differences between local authority areas. Residents may find that their near neighbours have either greater or lesser freedoms to let their property short term, which in many cases would be difficult for them to understand.

Let me be absolutely clear: we intend to retain the important safeguards of Section 25, which protect London’s housing supply for Londoners who live and work permanently in the capital city. However, through Clause 34, we want to provide certainty for all residents in all London local authority areas that they are able to let their homes on a short-term, temporary basis, such as when they are on holiday, without having to deal with the unnecessary bureaucracy of applying for planning permission.

These amendments also seek to exempt from deregulation properties that are not the main residence of the landlord. I reiterate that, through Clause 34, the Government only want to allow residents to be able to temporarily let their homes. This measure will do nothing to make it easier for those seeking to short-term let property on a permanent or commercial basis. Rather than specifying how the deregulation will work on the face of the Bill, the clause seeks the power to make regulations which will provide the legal framework. These will follow the affirmative procedure and will be subject to debate and the approval of Parliament on important issues, including in precisely what circumstances short-term letting will not require planning permission.

I turn to the detail of Clause 34. The clause updates an outdated 40 year-old law restricting Londoners from being able to temporarily let out their homes or spare rooms. Section 25 of the Greater London Council (General Powers) Act 1973 prohibits the use of a,

“building, or any part of a building”,

for “temporary sleeping accommodation” for fewer than 90 consecutive nights without planning permission for temporary change of use. In London, residents failing to secure planning permission face a fine of up to £20,000 for each offence. The regulations that the Government are bringing forward will clarify for London residents what is permissible.

[Baroness Donaghy]

What is the record of the number of fines imposed?

[Lord Ahmad of Wimbledon]

The noble Baroness makes a very valid contribution. Both the noble Lords, Lord McKenzie and Lord Tope, have mentioned that, and I shall come to it in a moment.

We are seeking to provide clarity for Londoners across all boroughs. The noble Lord, Lord Mawson, mentioned London as a capital city and its economy. Last summer nearly 5 million overseas visitors came to the capital. Some of those visitors, as well as UK residents, want to experience London as a local by staying with Londoners who live in London permanently or indeed in their homes while the resident is away on holiday. We know that there are currently thousands of London properties and rooms advertised on websites, but each is potentially in breach of Section 25 as it stands. That is the important point here, and I shall come to that in a moment. There is uncertainty for householders as to whether their local authority will take action against them for unauthorised short-term letting. Today’s technology enables internet sites, which we have heard about in the debate, to offer services to manage and quality-control short-term lettings. Planning legislation for the capital needs to catch up with the 21st century way of living. Noble Lords talked about their personal experience. Every year, thousands of visitors enjoy their holidays in Londoners’ homes, and such short-term letting is prevalent in areas such as Wimbledon during the tennis fortnight.

Through regulations, we want to provide certainty and consistency for all residents in all London local authority areas about when it will be permitted for householders to temporarily short-term let their property without the need for planning permission. The Government’s amendment to Section 25 crucially retains the main provision for protecting London’s housing for those who live and work permanently in London, while seeking to bring the current legislation up to date. Importantly, we want to make it clear that we do not seek to allow the short-term letting of London’s housing stock on a permanent or commercial basis. The Government do not seek to repeal Section 25 of the 1973 Act or amend its primary purpose of protecting London’s housing supply for Londoners who live and work permanently in the capital. Moreover, the Government fully recognise that London’s homes should not be lost to investors to let out exclusively for short-term lets, and our reforms will not enable this. It is the Government’s intention simply to allow Londoners to let their homes on a short-term, temporary basis, such as when they are on holiday, without having to deal with the unnecessary bureaucracy of applying for planning permission.

Clause 34 enables the Secretary of State for Communities and Local Government to bring forward regulations to prescribe the circumstances in which the use of a home as temporary sleeping accommodation is not deemed a material change of use, requiring planning permission. The clause also allows for regulations to exclude individual residential premises, and premises in particular areas, from any relaxation of Section 25.

I come to some of the questions that were raised. The noble Baroness, Lady Donaghy, the noble Lord, Lord McKenzie, and my noble friend Lord Tope asked about prosecutions. London boroughs have taken enforcement action against short-term letting. For example, in Westminster action has been taken against statutory nuisances and anti-social behaviour. This clause is designed to redress the sporadic enforcement of Section 25. It certainly creates greater certainty for residents who want to let their properties short term. The Government’s intention is to allow more people to enjoy and visit London. We are proposing allowing temporary, short-term letting for only householders and not commercial or permanent short-term letting.