Short-term Lets: Regulation

Andrew George Excerpts

Thursday 12th September 2024 Westminster Hall

[Rachel Blake]

I agree about the issue of the different types of places and different types of tourism and holiday accommodation. The experience in the centre of London is driven by technology. Previously, the ability to let out a room or even a whole home was much less, but in areas that have longer-standing tourist let economies—such as my hon. Friend’s area and those of other colleagues—we have found that there are different challenges. I believe that those can be discussed through the progression of the regulation of the sector. I thank him for raising that important topic.

[Andrew George (St Ives) (LD)]

Does the hon. Lady agree that this is about the politics of justice, not the politics of envy? It is not just an issue of the taxation of furnished lets. There has been an industrial movement of properties—second homes—going from being registered for council tax to being registered for business rates, and people then apply for small business rate relief and pay nothing at all. Against that, we do not get the investment in affordable homes for local people. In Cornwall alone, £500 million of taxpayers’ money has gone into the pockets of holiday let providers, while those specifically created, for planning reasons, with planning restrictions are outside that—

[Carolyn Harris (in the Chair)]

Order. I call Rachel Blake.

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[Andrew George (St Ives) (LD)]

I congratulate the hon. Member for Cities of London and Westminster (Rachel Blake). I think I got the name of her constituency right; I come from Cornwall, so I do not know exactly how the boundaries cut in this part of the world. In my part of the world, as the hon. Member for Truro and Falmouth (Jayne Kirkham) explained, hundreds of families are still being evicted to make way for yet more holiday lets, because that is the way the tax system and what I will call the economic advantage system work in a place like ours. I will come to the tax system, which the hon. Member for Penrith and Solway (Markus Campbell-Savours) referred to.

We need to address issues of social justice. As I said earlier, this not the politics of envy; it is the politics of justice. I know that we have all been heavily lobbied by those who are concerned about changes in the rules for furnished holiday lets, but we are not being lobbied by the people who are being made homeless as a result of the evictions that are taking place to create even more of those holiday lets.

The late, great Paul Flynn used to say that it is the role of a Member of Parliament to seek out the silent voices, and I believe that is what we should be doing. We should be looking at the issues of social justice and not only listening to the loudest voices in the room. We also need to distinguish between properties that are given specific planning permission that provides for holiday lettings with restricted occupancy and those that would otherwise be used, or have been used, for permanent occupancy. That point has been addressed in the debate already, but I wanted to emphasise it.

I am very much in support of carrying on in the direction of a registration scheme. I also support the hon. Member for Truro and Falmouth on widening the requirements for a C5 change of use class order so that specific planning permission is required for any non-permanent occupancy of a property, not just holiday lets. That is really important, because otherwise we will have all sorts of flipping going on in the system.

The problem we have is that since the Conservative Government introduced the opportunity for second home owners to flip them in order to apply for business rates, and then apply for small business rates relief and pay nothing at all, billions of pounds have gone into the pockets of very wealthy property investors when we should be spending that money for local people. It is simply unfair that the poor are penalised through council tax for allegedly underusing their council house, but the rich are being rewarded for underusing their property investment vehicle. I would be surprised if a Government who say that those with the broadest shoulders should bear the greatest burden do not address that issue or the issue of social justice. In Cornwall, £500 million of taxpayers’ money has gone into the pockets of holiday home owners since 2012, and that is simply unacceptable. I hope that we can address those issues by having not only a stronger planning policy but justice in the tax system.

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[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rushanara Ali)]

It is a pleasure to serve under your chairmanship, Mrs Harris. I start off by congratulating my hon. Friend the Member for Cities of London and Westminster (Rachel Blake) on securing today’s important debate and highlighting the concerns of her constituency. I have an interest to declare: she is one of my oldest friends. I am proud to see her in her place, making her first speech in Westminster Hall.

I am grateful to Members from across the House for their contributions. They have raised extremely important issues and concerns about the impact of short-term lets on their constituencies. They have highlighted the serious challenges that such lets pose in a diverse range of constituencies, in cities such as London and in rural and coastal communities. They have also highlighted the need for action, but in a way that is appropriate for the different kinds of areas and challenges they face.

Contributions have also highlighted a wider point about housing and housing affordability, a major issue for our country. I hope this debate provides an opportunity for us as a new Government to take on board the many ideas, thoughts and insights that colleagues have shared. If we want to get this agenda right, it is important for us to have an ongoing dialogue.

The key concerns highlighted are around safety, waste management, antisocial behaviour, cost of housing and communities being displaced. That should not take away from the fact that we all recognise the important contribution that short-term lets can make to local economies, but they have to be done in a way that is appropriate and does not cause harm in local communities. The pressures cannot be properly understood without taking into account the impacts of such issues.

I recognise the frustrations that many communities feel, where there is an excessive concentration of the properties under focus and particularly in places where there is an acute lack of affordable housing for local people. I also recognise that short-term lets can cause other concerns for local people, including the hollowing out of communities and antisocial behaviour.

[Andrew George]

The Minister mentioned the contribution that self-catering short-term lets make to local economies. Hotels, purpose-built short-term chalets and so on also make an important contribution to local economies and often operate at a disadvantage relative to the many individual short-term lets that are operating below the VAT threshold and that in other respects are avoiding making their contribution to the local community or, indeed, national taxation.

[Rushanara Ali]

I thank the hon. Gentleman for his point. This is why this debate is so important: we must make sure that we address the issues and challenges being raised. The new Government are taking stock and considering a full suite of options for the regulation of short-term lets before we make policy decisions, but I have heard clearly from hon. Members about the issues and challenges they face in their constituencies. We need to ensure that the response is proportionate and appropriate, reflects the different kinds of issues affecting different constituencies, and avoids unintended consequences. The actions we take must properly address those issues.

In England, the average house price is more than eight times annual earnings, and affordability issues are even more acute in the constituency of my hon. Friend the Member for Cities of London and Westminster. The average monthly private rent in London increased by 9.7% last year, and is more than one and a half times higher than the average monthly rent in England. Although it is true that London remains one of the country’s least affordable areas, we are in the middle of a housing crisis right across the country. Years of low house building across all tenures, combined with rising interest rates, have resulted in too few genuinely affordable homes. The issue has been exacerbated in London, coastal towns in places such as Cornwall and areas such as the Lake district by the proliferation of short-term lets and second homes, as hon. Members have highlighted. That is why we want to go further by giving local authorities tools to tackle short-term lets where they are an issue.

The lack of robust data about short-term lets, which my hon. Friend the Member for Cities of London and Westminster mentioned, means that local areas often struggle to define the true extent of the problem and are unable to effectively manage the impacts. Although this data is not perfect, in 2022 a call for evidence suggested that there are about 257,000 short-term lets in England, about 43,400 of which are in London. I know my hon. Friend is keen to have better data about short-term lets in her constituency, and I am happy to hear that she and a number of other hon. Members support the short-term lets regulation scheme. We are committed to introducing the register, which will be an essential tool in enabling local authorities and central Government to access relevant data on short-term lets.

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[Rushanara Ali]

I thank my hon. Friend for her contribution.

Where a short-term let does not meet the relevant lettings criteria, it will usually be considered a second home and will be liable for council tax, including the council tax premium where councils have introduced it. However, we recognise that this may not go far enough towards ensuring that all short-term lets are properly contributing to the local tax system, as the premium will not impact those short-term lets that are eligible for business rates. We will continue to keep the tax treatment of short-term lets under review and will consider what more is needed to achieve our aims.

Short-term lets are just a part of the housing challenge in our country, which is why we are determined to address the issue of affordability and to do what is necessary to get Britain building again.

[Andrew George]

I thank the Minister for giving way one more time. On the point that the hon. Member for Truro and Falmouth (Jayne Kirkham) made earlier about small business rate relief, could the Minister please make sure that some very strong representations are made by her Department to the Treasury with regard to this issue, because the system is being abused at present? When it was first introduced, it was intended to protect village shops and similar businesses; it was not intended to feather-bed property investors.

[Rushanara Ali]

Again, those are really important points that will need to be factored in as we develop these policies. The hon. Member will appreciate that I cannot make commitments today, but we are at the beginning of this Government. We are very keen to make sure we get the policies right. I thank him for the intervention.