Holiday and Second Homes Regulation: Cornwall and Isles of Scilly

Andrew George Excerpts

Wednesday 23rd October 2024 Westminster Hall

[Andrew George (St Ives) (LD)]

I beg to move,

That this House has considered the regulation of holiday and second homes in Cornwall and the Isles of Scilly.

I am delighted to have secured the opportunity to debate this motion. It is worth emphasising that this is about not the politics of envy, but the politics of social and housing justice. Many people are concerned about the proper provision, allocation and use of property, particularly residential properties, in those areas with a significant preponderance of holiday and second homes. The tourism industry in such areas is vital, but it is important to get the balance right in the usage of properties and how, and which, properties are used in the industry. In such areas there is often a big mismatch between earnings levels and house prices, given the large amount of wealth that wishes to invest in those properties, so we need to ensure a proper balance.

It is also important to understand the distinction between second and holiday homes. Often, in discussions and media commentary, the two are confused. They are two sides of a coin, but in regulatory terms they are significantly different. Some properties flip from one form of regulation to the other, from being second homes operating under the council tax regime to the holiday lettings sector, which operates in the business rates system.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for securing this debate. In previous Parliaments, he has proven himself to be an advocate for those who have such issues. Does he not agree that we need to make the most of tourist potential—as we seek to do in the incomparable Ards peninsula, which I represent—but a fundamental need is to have housing stock available for people to live and raise their children in, without being outpriced by the demand for second homes?

[Andrew George]

Indeed I do agree, and I am grateful for that intervention emphasising the points that I and many of those present wish to make. Although we are talking about Cornwall and the Isles of Scilly specifically, the subject clearly has wider impact across the country as a whole.

The context is important in Cornwall and the Isles of Scilly. Over the past decade, more than half a billion— £500 million—of taxpayers’ money has been handed out to holiday home owners in Cornwall alone under a variety of different and variable tax incentives available to the holiday lettings sector, such as the small business rate relief system for furnished holiday lets. Perhaps most scandalously, because those properties were entitled to such relief, they were entitled to covid aid as well—£20,000 to each one of them, for no very good reason.

The latest figures in Cornwall show nearly 14,000 second homes and more than 11,000 properties registered as short-term lets, as far as businesses are concerned. The most recent trawl through the larger of the holiday letting websites showed nearly 22,000 active listings. That figure was recorded on an initial trawl, but it does not represent the full scale of holiday lets available.

[Perran Moon (Camborne and Redruth) (Lab)]

In the hon. Member’s discussions with the public, private and voluntary sectors, is there any higher imperative across the whole of Cornwall than dealing with the issue of holiday and second homes? In my experience, there is no higher priority than grasping the challenges we are facing, which impact not just coastal areas, but towns in the middle of Cornwall, because people move from the coast to inland towns.

[Andrew George]

The hon. Member is absolutely right. On the one hand, we are trying to address the desperate housing needs of local families. We have in excess of 20,000 families on the local housing register, and we know that is merely the tip of the iceberg—the need is a great deal more. On the other, a lot of local families are being evicted from their private rented accommodation to make way for yet more holiday lets. If we do not recognise that, we are failing to grasp the full picture, so he makes a strong point.

I acknowledge that this is an important part of the Cornish economy, but it is worth noting that when one looks for accommodation in places such as Cornwall and the Isles of Scilly, the hotel and guesthouse sector is just as—if not more—important, in the sense that it competes with the holiday letting sector without many of the incentives and benefits that the self-catering sector enjoys. For example, many operate above the VAT threshold, whereas those in the holiday letting sector, if they take it down to a single property, do not. Of course, they face many other regulations as well.

[Marie Goldman (Chelmsford) (LD)]

Does my hon. Friend agree that second and holiday homes have a big impact on the hospitality sector, because businesses find it difficult to find accommodation for their staff, especially in places like Cornwall and the Isles of Scilly where there is limited accommodation, which then makes it difficult for them to run their businesses?

[Andrew George]

That is absolutely the case. As a visitor to the Isles of Scilly, my hon. Friend knows that that is a significant problem, because people cannot commute to the Isles of Scilly to work. It is difficult to commute to work for businesses providing those kinds of jobs in many of the coastal areas around Cornwall, and many people find themselves living in very informal settings, including caravans, because nothing else is available to them.

I will rapidly run through some of the regulations concerned: council tax; small business rate relief; the furnished holiday lettings scheme; holiday business registration, which the last Government proposed, and the planning use class changes. First, on council tax, going back to the pre-history where this all originated, when the Conservatives originally introduced the council tax system—what they called the community charge—they introduced a 50% council tax discount for second homes, because they said second home owners were not using all the services and therefore should not have to pay for them. That was the justification back in the 1990s.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

The hon. Member mentioned some of the solutions. Would it not be a good idea to consider giving a suite of powers to a local authority so they could pick and choose which of those would suit that local authority and those particular circumstances?

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[Andrew George]

I am grateful to the hon. Member for that intervention. Indeed, she anticipates something that I will come on to in a moment.

Going back to that pre-history, we managed to make that change under the previous Labour Government. Indeed, I remember well a debate in this Chamber on 9 February 2000 when I raised these issues almost a quarter of a century ago. Chris Mullin was the Under-Secretary of State responding to that debate. I had raised the issue of the unfairness of the 50% council tax system. I had been campaigning pretty much on my own for some time until that point. I made the point to the Under-Secretary that the responses I had received from Government had been complacent. I hope the Minister, who I am pleased to see in his place today, will consider the precedent set by Chris Mullin when, towards the end of his response, he said:

“The hon. Gentleman said that he had received a rather complacent response from the Government, and, indeed, I have here a rather complacent response, which I will not read out. I merely say that the issue was reviewed about a year ago, and at the time there were no sufficiently cogent reasons for a change. I am, however, willing to follow up the point in my Department. Perhaps we can discuss it later.”—[Official Report, 9 February 2000; Vol. 344, c. 112WH.]

Chris Mullin and I did discuss it later, and the policy was changed.

One of the lessons from that is that we can effect change through these debates if Ministers are receptive to the arguments we put forward. I hope the Minister will consider that. The last Conservative Government responded to pressure. A lot of us were arguing very strongly against the way second holiday homes were being treated, although I was outside Parliament during my nine-year sabbatical. They could not withstand that political pressure; they had to respond to it. Indeed, they announced the intention to increase the premium on second homes by up to 100%, to be imposed by local authorities.

Have the new Government carried out any kind of impact assessment on the change in council tax arrangements for second homes? Have they considered whether it would have a counterproductive impact, if it was not married with a suite of other regulatory changes? People might switch from council tax to business rates and use the small business rate system, for example, and pay nothing at all. They may take other options rather than paying council tax.

[Steff Aquarone (North Norfolk) (LD)]

My hon. Friend is making an excellent speech. To build on the point made by the hon. Member for Truro and Falmouth (Jayne Kirkham), does he agree that we need local councils in Cornwall, the Isles of Scilly and elsewhere to be given greater powers to ensure that second home owners pay properly towards mitigating the overall impact of those homes on local communities? This is not about banded council tax or business rates; it is about the wider implications, for which we need to perhaps consider changes.

[Andrew George]

My hon. Friend makes an important point. It is not just the housing impacts; it is the wider societal and community impacts property investors have on local communities. I hope that when the council tax increase comes in, the Government will be clear on what local authorities can do. Will the council tax increase provide additional income that local authorities can use to address housing need, or will it result in a reduction in the central Government support grant to local authorities? Cornwall is staring down the barrel of a £100 million deficit, so that issue is very significant. A number of us are making the argument that council tax could go up by 200% or 300%, rather than 100%, in some areas because of the impact second homes are having, in order to adjust things as we believe they should be adjusted.

I have already referred to the impact small business rate relief has had. It has clearly been a major incentive for property investors to invest in holiday lets in areas such as Cornwall and the Isles of Scilly. Although the small business rate relief system is due to expire next year, could the Minister be clear about the Government’s plans for the future? There are no doubt pressures from that sector to reintroduce a similar rate relief. Although I do not think that is justified, for very obvious reasons, there are parts of the sector, particularly those holiday lets under an occupancy restriction, that could perhaps be included. We have had a campaign success, in that the last Conservative Government insisted on a 70-day use to justify the rate relief, but that needs to be reviewed.

I hope that the Government will be clear about how the registration scheme will be introduced, and I know that Cornwall council has offered to assist the Government in that. The council has expertise and is keen to introduce the registration system, but it needs to know how the scheme will work, what level of verification and inspection will be required by the council and what income can be raised. It will be an expensive process and Cornwall is offering to be a pilot area, if the Government wish.

Let me turn to the proposed planning use class change, which the Liberal Democrats have long argued should apply to all non-permanent occupancy residences. In other words, second homes and holiday lets should all be within one category, because we believe that the impact is the same on local communities, and therefore the change should apply not only to holiday lets but to second homes.

I hope that the new C5 use class for short-term rentals, which was announced by the previous Government, will be looked at with care, particularly the fact that it appears to fall under permitted development rights. In other words, local authorities specifically have to apply an article 4 direction to avoid a situation where someone converting a property to a holiday let simply announces it to the local authority and does not need to seek permission. I hope that the Minister will look at that issue. In the Liberal Democrats’ view, we also need to look at a sunset clause on those permissions; otherwise, there will be a perverse incentive for all of us to seek planning permission for that use class change in order to get a market advantage or an inflated price within the market. There should be a sunset clause, relating to the end of that usage, ownership or change within the Land Registry.

In conclusion, I will simply say that this is a very important issue in areas such as Cornwall and the Isles of Scilly, and—as we can see from today’s debate—in many other parts of the country. A suite of policies and changes need to be addressed by the Government, and many of us across all parties would be keen to work with them to ensure that the balance is absolutely right, and that local housing need is given the highest priority of all.

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[Alex Norris]

Yes, that is right, not least because once we get to that tipping point, the consequences can be profound and rapid. Of course we need action today, and I will speak about that.

One of the many important things that the hon. Member for St Ives said was that this is not about envy; he made a good point about balance. What his community and colleagues’ communities are asking for is a recognition of balance. They want to have a thriving tourist sector, but they need to be a place where people can live and where the consequences of those who make significant profits are shared fairly. It is about finding that balance and we have not got there yet, which relates to his point.

I want to talk about some of the issues and housing demand itself.

[Andrew George]

I just want to re-emphasise that many people who own second homes in Cornwall make a significant contribution to the local community, and indeed a financial contribution, because they recognise the impact of their privilege. As I say, this is not about envy, and a lot of those who own second and holiday homes are conscious of the impact.

[Alex Norris]

That is an excellently made point. I always wonder which of these debates attract people watching online; I suspect this might be one of them, and I hope that people have heard that message. We are talking about finding that fair balance, but I am sure we all agree that we have not found it yet.

Renters’ Rights Bill

Andrew George Excerpts

Wednesday 9th October 2024 Commons Chamber

[Angela Rayner]

I absolutely agree with my hon. friend, and I pay tribute to him for the work that he did in local government before coming to this place. He will know about the direct impact of this issue, as will many Members of this House. It is not just about having a home; no-fault evictions have an effect on children, and on a person’s life, job, income and everything else that they want to do. That is why it is so important that, whereas the previous Government made no progress in four years, we are now at this stage of the Bill after four months and we intend to continue at speed.

[Andrew George (St Ives) (LD)]

I warmly welcome the Bill. It is right that we should regulate to avoid bad practice in the sector, but does the Secretary of State agree that measures should be available to enable, and indeed incentivise, good practice? Given that the previous Government gave millions of pounds to holiday homeowners in various tax incentives to encourage that sector, surely there must be methods by which the Government can incentivise good practice. Otherwise, the Bill might become counterproductive.

[Angela Rayner]

I thank the hon. Member for his comment. I hope that he recognises from my opening remarks that good landlords have nothing to fear from this Bill, and we will help them. The new database will help landlords to understand and meet their legal duties, and we will provide clear guidance. I will talk more about how that database will work.

Part 1 of the Bill will introduce a new, modern tenancy system that removes fixed-term tenancies, meaning that tenants can stay in their home until they decide to end the tenancy, and they will only need to give two months’ notice. This will end the injustice for tenants who want or need to leave at short notice but cannot, and allow both landlords and tenants the flexibility to respond to changes in their circumstances.

I want to make it clear that our Bill ensures that landlords will still be able to reclaim their properties when they legitimately need to, through clear and robust possession grounds. We have also considered the unique situation of student accommodation and specialist sectors such as stepping-stone accommodation, for which the Bill also includes a possession ground. In most cases, tenants will have four months’ notice, so that there is time to find a new home, and landlords will have to wait a year from the beginning of a tenancy before they can use the “moving in and selling” grounds for eviction. This honours our commitment to level the playing field decisively for renters, which goes further than the last Government’s ambitions. Of course, landlords will still be able to quickly evict tenants who engage in antisocial behaviour and make other people’s lives a misery, to protect the strong communities that we want to see flourishing around the country.

The Bill will also empower tenants to challenge unfair rent increases that are designed to drive them out. It will prevent tenants from being bound by rent review clauses, putting them in a stronger position to challenge unreasonable rent hikes at tribunal.

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.

Housing: Cornwall and the Isles of Scilly

Andrew George Excerpts

Monday 9th September 2024 Commons Chamber

[Andrew George (St Ives) (LD)]

It is a pleasure to have the opportunity to raise the rather grave issue of providing affordable housing in the housing emergency-ridden communities of Cornwall and the Isles of Scilly. I am grateful to those engaged in business earlier this evening who have permitted us a little extra time to explore the issue. Perhaps that was done for good reason, so that the grave and important issues of Cornwall and the Isles of Scilly could be properly and fully debated. I welcome the Minister to his place. Indeed, Liberal Democrat Members warmly welcome him and fully take on board the sincerity, intensity and determination of the Government to address the serious housing problems that exist across the country, and the housing emergencies that exist in many communities as well as Cornwall and the Isles of Scilly.

I should also declare an interest. During my nine-year sabbatical from this House I went back to my profession as the chief executive of a registered provider—a housing charity—working at the front line on predevelopment work and delivering affordable homes for local people. It is a challenging environment, and because of the man-made—or man and woman-made—nature of the regulatory environment in which professionals operate, and the topographical challenges that we face in places such as Cornwall, it is a little like trying to push boulders up a steep slope. I hope the Minister will take into account that if measures can be taken to improve the availability of opportunities for those who are ticking all the right boxes to deliver genuinely in-perpetuity affordable homes, which are desperately needed in our communities, the Government will do that.

This is not my maiden speech, and after having taken a sabbatical—perhaps it was an enforced sabbatical, but it was one I enjoyed—away from the Chamber for so long, I would in normal circumstances praise my predecessor. We did not share much in the way of political agreement, but he worked hard for the constituency and achieved a great deal. Indeed, Mr Derek Thomas strived on a large number of projects, and I hope that I will reflect the efforts he made to ensure that those projects are delivered during my time in this House.

Because it is not my maiden speech, I therefore do not need to remind the House, as I did on 22 May 1997, that my constituency is the most beautiful and most remarkable place in the country, occupied by the most beautiful, remarkable people.

[Jim Shannon (Strangford) (DUP)]

On that point, will the hon. Member give way?

[Andrew George]

Am I giving way on “beautiful” or “remarkable”?

[Jim Shannon]

On both.

[Andrew George]

Okay, on both points.

[Jim Shannon]

First, I commend the hon. Member on securing the debate. It is good to see him back in his place. He brought much to the Chamber when he was here before, and I was fortunate to share some time with him in the Chamber. We have many things in common. The first is that we have beautiful constituencies, and the second is our concern about affordable housing and its accessibility. Does he welcome the Government’s manifesto pledge to increase housing? In my area, the housing lists are massive. Does he agree that when it comes to the Government’s policy, it must first be better streamlined planning? Secondly, they should allocate funding to getting families into homes. Thirdly, does he agree that we need a strategy and a programme motivated and driven by Westminster for all the regions of this great United Kingdom of Great Britain and Northern Ireland, because, as I always say, we can do it better together?

[Andrew George]

The hon. Member anticipates many of the subjects that I will be coming on to, which are about the delivery and streamlining of planning and so on.

Part of my background is not only in the delivery of housing through a community land trust and the charitable housing sector, but also in my volunteering. For many years, I was involved in Penzance street food project and was working at the frontline addressing and speaking to people who were suffering from the most severe housing problems in the country. Indeed, in Cornwall we often have to repeat that although people come and have enjoyable holidays, as I know the Minister did, beneath that veneer are extremely severe housing problems and severe and exceptional levels of homelessness, which perhaps are beyond the vision of those who come and enjoy our beautiful beaches, our beautiful environment and our wall-to-wall sunshine.

I have given the Minister advance notice of some of the subjects I intend to cover, but one is to probe a little harder on the Government’s intention to raise house building targets and to challenge how we can properly ensure that if we are to build more homes, that will address need, rather than developers’ greed. I will come back to that in a moment. Under the surface—I think a lot of people are not fully aware of this—the public purse is making a major contribution to the injustices going on in the housing sector, in that multi millions of pounds in public money are going into the pockets of holiday home owners, especially through various tax loopholes and covid aid grants and so on. That clearly is driving the sector in the opposite direction to the one in which it should be going.

By way of background, Cornwall has high levels of housing need. The latest Homechoice register is 20,332, but that is after the annual administrative process of removing people who have not been active on the register for the previous year. The month before that, the register was 27,000, so the numbers oscillate. From my experience of undertaking housing need surveys across many communities in Cornwall, the numbers often underplay the significant level of unexpressed housing need. We often find that the level of need in most communities is at least double what is recorded on the Homechoice register, because many people think it is a waste of time putting their names on it, because they have little chance of ever getting a home.

Of course, every location has housing problems of one type or another—other places experience similar problems—but in Cornwall we face a rather unique combination. For example, just 12.8% of our housing stock is social housing against a national average of 17.1%, and although 20% or thereabouts of the housing stock is privately rented—that is about the national average—it is an extremely vulnerable sector for people to find themselves in. Particularly in recent years, a large proportion of families in that sector have found themselves on the verge of being evicted to make way for yet more holiday lets.

Housing completions have been good. We have an effective register and a housing association sector that is delivering well, and indeed Cornwall is one of the best local authority areas in delivering numbers, but it achieves that as one of the larger local authorities, so it is bound to be up at that end of the league.

My first substantive point for the Minister is about the Government’s stated intentions on house building targets. I fully endorse and support the Government’s intention to deliver in order to meet housing need, but, as I said to the Deputy Prime Minister when the announcement was made in July, Cornwall shows how simply having house building targets does not work.

Cornwall is one of the fastest growing places in the United Kingdom, having almost trebled its housing stock in the last 60 years—I have been living there through most of those years—and yet at the end of all that the housing problems have got worse. I am not saying that it would be better if we had not built any houses, but simply setting very high housing targets in itself does not address housing needs. The two-dimensional view of housing being somehow a simple relationship between supply and demand in which equilibrium will be found and prices will therefore reflect what local wages can afford has never been the case in Cornwall. That reflects, in effect, a sub-London housing market, with house prices having been significantly inflated by people and property investors buying second and holiday homes.

In the present local plan for Cornwall, covering 2010 to 2030, the house building target is 52,500. The Government propose to increase those projections under their new formula from 2,707 properties per annum to 4,454. I urge the Minister to allow places such as Cornwall to be granted devolved powers to vary the way in which we achieve what needs to be done in our local environment: not simply to give us house building figures but to set targets to reduce housing need. After all, house building targets are a means to an end—the end is to meet the housing need—and if we have built the homes but that has not achieved the purpose, we must ask ourselves: are we going about it in the right way?

The Government’s new standard method has a different starting point from the old method. It is based on a two-step process of a 0.8% annual uplift on existing housing stock, plus a further uplift for the affordability gap. The problem with that approach is that, in places such as Cornwall, it bakes in demand for second and holiday homes, because that has to be included in those overall figures. That was a problem in the previous plan, when we had our local plan projections rejected and the inspector wrote in much higher figures, saying that we had to increase the numbers to 52,500—more than another 5,000 homes—in order to address, as they put it, “the growing demand for second homes in Cornwall.” We have high and growing demand for affordable homes—that should be baked into the figures.

We should have a mechanism by which we can deliver those homes, because the way in which the system works is that we get all the second and investment properties—the developers are very pleased to do those, but they are not so keen to deliver the genuinely affordable homes, which are the ones that we need. There is a simplistic view that there is equilibrium between supply and demand, and there is a presupposition that developers will release properties in the market when the Government’s policy achieves its stated intention of reducing house prices in that locality. We found that they only release them at times of housing inflation, so that is simply not the case.

In my experience at the development end, trying to deliver the affordable homes that local people need, the policy is counterproductive because if the number of homes announced in the local plan increases, the hope value of land adjoining every single community in Cornwall goes through the roof. If a local housing charity goes there and says, “I would like to look at your land and build some affordable homes on it,” the developer will not talk to them. They will wait for the lottery win when they get the full open market development value on that land, which is significantly greater than what a local charity can offer. I urge the Minister to have a conversation with those who are trying to deliver the products on the ground, to set targets to reduce need rather than feed developers’ greed, because that is what housing targets do in places such as Cornwall—elsewhere they might have a different impact. Again, I ask the Minister to come to Cornwall and the Isles of Scilly and see what it is like. I am sure that all the local MPs, who are all champions for their own localities, will be fighting hard to address these issues.

A further point I wish to make is on the rural exceptions policy, as I used that tool when working in the sector on a regular basis, and I have raised it with the Minister already. It works well; since the 1990s when it was introduced, it has been very effective in delivering affordable homes on land that otherwise would not get planning permission. All I would say to the Minister is that we should look at ways in which we can expand and grow development on rural exception sites. In Cornwall we are doing very well; we deliver 50% of what is delivered on rural exception sites across the whole of England. About 20% or 30% of delivery in Cornwall is through rural exception sites. What the local authority has done, and what we as a charity sector campaigned for it to do, is extend the entitlement to deliver rural exception developments from the smaller villages to the edge of towns. It may sound counterintuitive, but one of the best ways of delivering affordable homes is to draw the development boundary very tight around a local community and to use rural exception as a way of ensuring that we keep the development land values low and deliver genuinely affordable homes.

The other thing I urge the Minister to do, perhaps to correct the mistake made by Cornwall some 15 years ago, is not to allow cross-subsidy on rural exception sites. That has created a slippery slope where more and more landowners and private developers find ways around normal planning procedure and use rural exception sites as a Trojan horse to crowbar in far many more unaffordable homes on those sites than would otherwise be the case if we stuck to the principle of the policy itself.

Against that, there is a very significant challenge of construction industry inflation, which is affecting Cornwall as it is many other places. That has caused a lot of developments in places all around Cornwall to be stalled, as the cost-to-value ratios have resulted in the unviability of many projects. I urge the Minister to look—I am sure he is—at Homes England’s affordable housing programme. While it is looking to the next five to 10 years, the current programme up to 2026 needs a further injection to address the current difficulties that many developments face.

I said that I would address housing injustice. I am conscious of time and I know other hon. Members wish to speak, so I will be brief. When I was first elected, in 1997, the Conservatives had just introduced the 50% council tax discount for second homes. I campaigned against that at the time, and was grateful to Chris Mullin and the late Michael Meacher for being receptive to the arguments to remove the 50% council tax discount. However, in 2012, the Conservatives then introduced another loophole, which allowed second home owners to flip their properties from being registered as second homes for council tax to being registered for business rates as a holiday let, if they could demonstrate that the property was available for 140 nights a year. They did not need to let it, but it had to be available for 140 nights a year as a holiday let. Then they could apply for small business rate relief and pay nothing at all.

We have ended up with a situation where all that has to be covered by the Treasury. Initially, in 2012, when I first blew the whistle on it as an MP, that resulted in £6.5 million going each year to holiday homeowners in places such as Cornwall. Within a couple of years, that had doubled. There has been an industrial-level movement of properties from council tax to business rates. When covid happened, they were all entitled to a covid grant as well, on top of that. As a result of that, the furnished holiday lettings and other loopholes, in Cornwall alone over 10 years we ended up with over £500 million of taxpayers’ money—that is our money—going into the pockets of holiday homeowners, at a time when only half that amount was going into housing associations to deliver affordable homes. I urge the Minister to work with his Treasury colleagues to close those loopholes and to find far better ways of using that money. If, as the Prime Minister rightly says, those with the broadest shoulders should bear the greatest burden, this is an area where that burden should be borne by the people who can afford extra properties and property investment in holiday and second homes. That is not, in my view, an appropriate way for us ever to spend public money.

I said to the Minister earlier that I wanted briefly to mention the Isles of Scilly, and I hope that he will come and visit the area. Many people find it surprising that it is currently experiencing depopulation, which is largely driven by the lack of affordable housing. Here I declare an interest, as one who has been working in the sector. Our charity had been working with the council on a project for which we had planning permission, and everything else, to deliver 12 self-build affordable homes for local families. Those homes were desperately needed—I believe that only eight homes have been built on the Isles in the last 10 years—but the construction costs were extremely high. It costs three times as much to build a home there as it does to build one on the mainland. Moreover, the project did not meet the requirements of Homes England in relation to subsidies.

I urge the Minister to have a look at the very special environment that exists on the Isles of Scilly, and to address its housing needs. It is 28 miles from the mainland coast, and it should not be said that members of its community can commute, because they simply cannot do so. I also urge the Minister to consider the community-led homes sector. If we want to change the whole narrative and the way in which communities operate, we should give people the power to start representing themselves and local housing needs through, for instance, community land trusts and co-housing communities. The last Government had a flirtation with that sector and gave it some support, but then withdrew it. However, this work has started, and I think that more can happen to deliver more. If communities have local land trusts or local housing working parties, that is far better than allowing the nimbys to take over and start driving the development process.

Let me also encourage the Minister to consider the issue of discounted sale homes. Before I worked in a community land trust I was a sceptic, but I have to say that I am a convert to that method as one of the additional mechanisms to provide intermediate housing. I believe that it would be a cost-effective way for Homes England to engage with communities that want to deliver in-perpetuity homes for locals, which is clearly very important.

Of course we do not want Rachmans and of course we want to drive bad practice out of the sector, but I hope that, perhaps taking a cue from what is happening in the holiday lettings, the Minister will consider this suggestion. As well as regulating the private rented sector, why should we not reward good landlords? If they are delivering security—affordable rents, a high-level energy performance certificate and the decent homes standard—surely there must be a way, within the tax system, of rewarding those good landlords, as well as regulating and penalising the bad ones.

I hope that the Minister will consider each of the points that I have made to him. I am grateful for the additional time that I have been given to elaborate on those important points, and, of course, he has plenty of time in which to respond. I do not know whether other Members wish to speak as well.

--- Later in debate ---

[Jayne Kirkham]

I thank the hon. Member for his intervention. I will shortly move on to some of the ways in which we can deal with the proliferation of second homes and holiday lets, and address the imbalance.

I want to reinforce the point that the hon. Member for St Ives made about the tax loophole. I think £18 million is now lost in council tax because so many housing providers have taken advantage of the loophole whereby they can claim business grants and the zero rate of exemption, rather than pay council tax, if their houses are let out for 10 weeks of the year. As the hon. Member said, so much money was lost in business grants during covid. I think £170 million in business grants went to properties that were registered as holiday lets.

I want to mention my hon. Friend the Member for Plymouth Sutton and Devonport (Luke Pollard), who cannot speak in this debate. He has worked hard with us in Cornwall on the issue of protecting first homes, rather than second homes, and he has supported us, as I know that the same issue applies up in Devon. We have spoken with the Minister about potentially having a toolkit of measures that could be used to deal with issues relating to second homes and holiday lets. I know that our Government will introduce one of those measures: the licensing of holiday lets, hopefully with fees and safety checks on those lets, which is not done at the moment—some properties are not checked for fire safety, or for safety in any way. That is a massive loophole that needs to be dealt with.

The hon. Member for St Ives talked about planning requirements. The previous Government had a review on introducing a use class for holiday lets—but then did not do very much about it—so that is one possible measure. The default could be second home owners having to apply for a change of use if they flip their homes to holiday lets.

[Andrew George]

On the C5 category, and further to the excellent point that my hon. Friend the Member for North Cornwall (Ben Maguire) made, the last Government tinkered with this, announcing and reannouncing on many occasions a proposal to introduce a use class for holiday lets, but does the hon. Lady not agree that that would be far better if it applied to all non-permanent occupancy, whether second homes or holiday lets? Otherwise, there will continually be flipping from one to the other to avoid regulation.

[Jayne Kirkham]

I thank the hon. Member for that point. I wanted to talk about council tax in particular, because, strangely, one of the few things that the entire council agreed on—we have a Conservative council in Cornwall at the moment—was doubling the council tax on empty second homes. In fact, we wrote to the Secretary of State at the time to ask whether we could triple the council tax on second homes, as they do in Labour Wales—that was a very unusual thing to do. Of course, as has been discussed, this is about looking at closing the loophole so that the owners of the property cannot flip between business rates and council tax. That would mean an £18 million a year gain in council taxes.

I agree with the hon. Member that we should encourage co-operative and community housing in Cornwall. That is very popular, and if it was supported more, there would be a great deal more of it. In fact, our cabinet housing member in Cornwall has said that if every village built 10 homes, that would deal with the housing crisis completely. Discouraging hope value, particularly in certain parts of Cornwall, would be very helpful. I know that forcing developers to deliver their affordables rather than relying on the viability defence is part of the Government’s plans, because so often developers get to a point and say that they cannot afford to build the affordable houses that they promised. Another real problem is that the cost of building has shot up because the contractors in Cornwall have dropped in number and have become a great deal more expensive.

--- Later in debate ---

[Matthew Pennycook]

I thank my hon. Friend for that point. I acknowledge the pressures and the challenges. We need to give local authorities the tools to shape the type of development undertaken—not only through their local plans—and to get a grip on excessive concentrations of second homes and short-term lets. That is the Government’s intention. On the NPPF and housing targets, it is the Government’s considered view that we need to act to increase supply in all parts of the country, and need to take steps to ensure that the housing market responds to the needs of communities. These are complementary, not conflicting, policy intentions.

[Andrew George]

I entirely endorse the sentiment of what the Minister is trying to do, but this is about practicalities. There are enormous opportunities for unscrupulous developers to use the NPPF as a Trojan horse, so that they can crowbar in significant lottery-like wins on land. If someone can convert an agricultural acre into an open market acre of development land, they do not need to work for a living; they just need to keep shoving in planning applications, and they will make a lot of money. Having some intermediate measure by which we can deliver affordable homes on that land is surely the way forward.

[Matthew Pennycook]

I will touch on rural exception sites, and the land market in particular, but I come back to the point that none of that negates the need for ambitious housing targets, via consents and oversupplying consents, to ensure that we build the number of homes that we need, but I take the hon. Gentleman’s point and will address it directly in short order.

I shall start with land values, because the hon. Gentleman has raised a concern, not only in this place but in other forums, about our proposed changes to national planning policy potentially placing upward pressure on land values, thereby frustrating our objectives. We fully appreciate the risk, which is why we are committed to further strengthening the system of developer contributions and to the reform of compulsory purchase compensation rules. Indeed, just today I brought into force regulations that allow action to be taken on hope value, where required in the public interest, but we will go further in the forthcoming planning and infrastructure Bill.

The hon. Gentleman touched on rural exception sites. The Government very much recognise that people living in rural areas often face challenges finding adequate affordable housing. Ensuring robust support for the necessary housing in rural areas is essential to supporting the broader sustainability of rural communities. The national planning policy framework is already clear that planning policy and decisions should support opportunities to bring forward small sites for affordable housing in rural areas. These rural exception sites should help to meet the housing needs of rural communities, enabling local people, and those with family or employment connections, to live locally and help sustain thriving places.

However, I want to go further in supporting rural affordable housing. In the consultation on the proposed reforms to the NPPF, launched on 13 July, we are actively seeking views on what measures we should consider to better support an increase in affordable housing developments in rural areas, and I very much welcome the hon. Gentleman’s engagement with that. I will take away his point on cross-subsidy and give it further consideration.

I very much recognise the unique situation on the Isles of Scilly, particularly the challenges to the viability of construction. My officials are working closely alongside Homes England to support the council in achieving its housing ambitions, and it is important that this close collaboration continues. I also note the wider challenges on the isles and how housing challenges interact with other pressures faced by residents. In recognition of this, my officials are looking to convene a working group with other Departments to highlight the plurality of issues, and to ensure that the Government can best support island residents.

I appreciate the hon. Gentleman’s interest in community-led housing, including the role of community land trusts, and his professional experience in this area. I recognise the role that community ownership of land and affordable homes can play in delivering the Government’s agenda, although I hope that he will recognise that the support we are able to offer must be considered in the round, alongside the full range of departmental programmes. Again, the Government have set out changes to how we plan for the homes we need as part of the NPPF consultation, which includes proposals designed to strengthen support for community-led housing.

Building Homes

Andrew George Excerpts

Tuesday 30th July 2024 Commons Chamber

[Angela Rayner]

I absolutely agree that we desperately need affordable homes. It depends on where my hon. Friend’s local authority is in the process, but we will be setting out the targets, which are likely to be increased for her area, so that the local authority can engage in the process. The golden rules will allow more affordability where there is restrictive release of grey belt. We will ensure that we provide support on affordability and that there is no gaming of the system, so that we get the best we can out of section 106.

[Andrew George (St Ives) (LD)]

I strongly endorse the sentiment and purpose of the Secretary of State’s policy statement. She will be aware that, as others have said, the planning system is fuelled by greed, rather than need. Cornwall is not nimby—it is one of the fastest-growing places in the United Kingdom and has almost trebled its housing stock in the last 60 years—yet local people’s housing problems have got worse, so my question to the Secretary of State is this. House building targets are a means to an end, so would it not be far better in places such as Cornwall if those targets were set to address the need, rather than simply allowing developers to fill their boots?

[Angela Rayner]

That is what the new formula does. We are trying to assess the need in areas, taking particular account of their current stock, but also of affordability; I suspect that Cornwall has a particular challenge with that as well. As part of that process, we hope to strengthen the plans on section 106, and the new homes accelerator task force will help to get sites moving forward where they already have planning permission. By working across Whitehall, we will also deliver the infrastructure that people want, because that is the other big issue that keeps coming back. Where we have speculative sites or the release of green belt, or where there is a large amount of housing in an area, the infrastructure is critical. That is the issue we need to overcome, and we are clear on that as a Government.