Deregulation Bill

Debate between Baroness Shields and Lord Tope

Wednesday 4th March 2015 Lords Chamber

[Lord Tope]

The noble Lord asks if I discussed this with Westminster: specifically no, not with Westminster City Council. However, in the course of the many months that this has been going on, my noble friends and I have heard from numerous individuals and organisations involved in this. It is indeed one of the issues that others have raised and the noble Lord is right to draw attention to it. Others have been health and safety, fire regulations and all sorts of issues, which will be helped, to some extent, by whatever regulations are introduced.

I began by saying I wanted to be brief. I think that I am temperamentally incapable of being brief on this issue, but I will try. On registration, which is absolutely critical, I will quote from the letter that the leader of Westminster City Council wrote to the noble Lord, Lord Ahmad, on exactly that point. She concluded by saying:

“Having dismissed the suggestion of a simple, light-touch notification process for those seeking to let out their property on a short-term basis”,

which is what the Minister did at the previous stage, she asks,

“how will a local authority be able to identify and therefore enforce against a property being let for the 91st day within a calendar year?”.

I re-emphasise the point because it is critical. Unless we have some sort of notification and registration process, it is simply unenforceable, whatever else we say and do.

The other issue I want to speak to briefly is how we determine that the property concerned is indeed the residential property belonging to the person letting it. It has been suggested that this is done by the requirement, in the Government’s amendment, to pay council tax. We all know that lots of people pay council tax, but it is not necessarily their residence, let alone their principle residence. It is a bit unusual for a Liberal Democrat to quote Westminster City Council so frequently, but it does have the greatest experience on this. It says:

“This provision would therefore change nothing. The real change would be if the Government stipulated that only principal permanent residences were eligible for short-term letting”.

That is the purpose of the amendment in our package.

We are now at the last possible stage of this Bill in this House, apart from ping-pong, and we need to understand why we are at this stage. I raised this issue—as did others—at Second Reading in July, we had a considerable debate on it in Grand Committee on 30 October and we returned to it in February, one day after the Government finally published their policy guidelines and then only under considerable pressure from the noble Lord, Lord Ahmad, who realised that he would have to reply to the debate. We are now trying to put into the Bill details of regulations that should have been properly and fully consulted over that nine-month period. We should have tried at least to reconcile the differences between the different interests—and they are substantially reconcilable if the Government had ever tried. The one local authority most directly involved and with the most experience states in writing twice that up until a week ago, it had had no such consultation.

We are now at the stage where the Government have understood, as I pointed out on Report on 11 February, that it is too late for the regulations to be tabled to receive their 40-days waiting period to be considered in this Parliament. On Report, that was impossible; it is clearly even more impossible now. For this Government not to give a blank cheque to whomever forms the next Government and whoever is the next Minister, we are now putting in the Bill details that ought to have been in regulations, drafts of which should have been produced months ago, discussed and consulted on so that whatever we are to legislate for was clear—hopefully agreed, but at least we could agree where the differences are. We are at the last possible stage putting in the Bill just what the Government until now said that they would not do, but ought properly to be in regulations that have been consulted on and largely agreed.

[Baroness Shields (Con)]

My Lords, I put on record my support for the measures being introduced by the Government to reform short-term letting across London. I do that in my capacity as the Prime Minister’s adviser on the digital economy, but also as the chairman of Tech City. Over the recess, noble Lords will have received a report entitled Tech Nation, which detailed the enormous social and economic benefits being generated by the digital economy—across the country, not just in London. The accommodation sector is a prime example of the sharing economy. It is led by a number of high-growth businesses in the UK which are global leaders in their field. They are hiring a lot of people to support those businesses. It also gives individuals the opportunity to leverage an unused asset and to generate income for themselves and their families.

In my role as chairman of Tech City, I have seen the enormous opportunity that that presents to the UK economy. I see five key benefits as a result of that reform. The first is a more optimal use of space by allowing short-term letting for short periods when homeowners are out of town, to utilise existing housing stock in a much more efficient manner. Secondly, it would be a boost to family incomes. The supplementary income derived from short-term letting can help individuals and families to top up their immediate incomes.

Thirdly, the reform will deliver more taxation to the Exchequer. Any earnings accrued via short-term lettings will have to be declared, thereby boosting Treasury receipts. Fourthly, the reform will provide more options for tourists. Many tourists around the world are now opting to rent a home versus staying in a hotel, especially for groups or families who may need a large living space or a garden, which a hotel or bed and breakfast simply cannot provide. Finally, this reform will help to boost local businesses and employment. New hospitality providers are creating large numbers of jobs. In addition, short-term lets often take place outside central areas, so businesses which may not have historically benefited from tourist footfall may now benefit from tourists staying in their area.

Aside from those overarching benefits, the reform will also provide clarity to Londoners who are now facilitating short-term lets and ensure that they take place in a more secure and regulated manner.

I understand and respect the concerns raised by Peers across the House related to unintended consequences of the reform. However, I am satisfied that the Government have now put in place measures which will protect London’s long-term housing stock and residential amenity. Specifically, the reform will be limited to those who are liable to pay council tax. A limit of 90 days in any calendar year for which residents can let out their residence will also ensure that homes are let out only for short-term occasions. Local authorities will also have power to apply to the Secretary of State for specific areas to be exempted from the provisions. In my view, the additional safeguards called for by the amendments are unnecessary and run counter to what we should be seeking to deliver: a proportionate, straightforward and progressive set of rules.

I should like to tackle the issues in turn. First, it is proposed in Amendment 7 that the total number of days in a calendar year for which a resident can let their property should not exceed 60. In my view, that is far too restrictive and fails to acknowledge the working and living patterns of many Londoners today. Other cities have reformed their laws to allow many more days to letters. Paris, France, allows 120 days, Hamburg 180 days, and San Jose, in the heart of Silicon Valley, also 180 days.

Secondly, it is proposed in Amendments 6 and 8 that the reform should be restricted to principal London residences only. I believe that it should apply to all residences. Often, secondary homes are left empty. In my view, from time to time, those homes should be available to let and utilised more efficiently.

Finally, on exemption powers, although I acknowledge the potential need for the Secretary of State to exempt certain areas from the new provisions, that should be the case only in extreme circumstances and where there is sufficient evidence that residential amenity is negatively impacted. The granting of exclusion powers to councils to restrict short-term letting to specific areas would, in my view, result in a regulatory patchwork across London that would provide neither clarity nor consistency for homeowners.