Furnished Holiday Lettings: Taxation

Debate between Anne Marie Morris and Peter Aldous

Wednesday 1st May 2024 Westminster Hall

[Peter Aldous]

I agree with my hon. Friend wholeheartedly, and I intend to develop some of those points.

[Anne Marie Morris (Newton Abbot) (Con)]

Will my hon. Friend give way?

[Peter Aldous]

I will give way one more time at this stage, after which I will have to make some progress.

[Anne Marie Morris]

On the basis of the contributions that have been made, does it not seem obvious that what we need is a proper impact assessment of the reform? We need to look at the impact on the economy, the impact on housing and the impact on the tourism sector. I am sure my hon. Friend will also come to the expected impacts on gross value added and on jobs.

[Peter Aldous]

I agree wholeheartedly. I had planned to raise a lot of the points that have been made; let me now get on to back them up with the evidence.

Since the Budget, I have been contacted by many constituents highlighting their concerns. I am grateful to them for their feedback, as well as to PASC, the Short Term Accommodation Association and the National Farmers Union for all their briefings and advice.

In some ways, I have a sense of déjà vu, in that the proposal mirrors in many ways those put forward in the 2012 Budget to tax Cornish pasties and static caravans. In his Budget speech, my right hon. Friend the Chancellor stated that he had concerns that the current tax regime for FHLs is distorting the market and that there are not enough properties available for long-term rental by local people. Therefore, to make the tax system work better for local communities, he plans to abolish the FHL regime. In the accompanying Red Book, the proposals are described as having the advantages of tax simplification, creating a level playing field and supporting people to live in their own areas. I have concerns that the proposals will not fulfil those objectives, and I hope I can illustrate why.

The Office for Budget Responsibility has calculated that the measure, along with the abolition of the multiple dwellings relief, will raise £0.6 billion of additional receipts by 2028-29. That figure pales into insignificance compared with the potential loss of value added and local jobs, which I shall outline shortly.

--- Later in debate ---

[Peter Aldous]

I thank the hon. Gentleman for that further observation; he is right.

As I was saying, my second point is that it should be emphasised that furnished holiday lets are a long-standing economic lifeline for many coastal and rural areas. The regime supports micro and small businesses that are the cornerstone of many visitor economies. Abolishing it would hurt those businesses—including farmers who have diversified into tourism, as well as other businesses such as pubs, which rely on the lets for trade—and PASC estimates that even a modest 20% reduction in furnished holiday lets could result in the loss of £1.9 billion GVA and 46,000 jobs. The former figure is considerably higher than the Office for Budget Responsibility’s assessment of the additional tax that will be generated.

Thirdly, furnished holiday lets are not the cause of the housing crisis, as I think colleagues have mentioned. PASC estimates that a total of 197,000 properties in the UK fall within the FHL regime. Due to planning restrictions, 39% of those holiday let properties can only be used for holiday purposes. That means that 76,000 furnished holiday lets could not be used as residential dwellings, and only 121,000 furnished holiday lets have planning permission to be used as residential dwellings. The context is important: those 121,000 dwellings without planning restrictions have been established not in the past three or four years but over many decades; however, they represent 0.4% of the 30.1 million total UK housing stock and just 40% of the annual house building target of 300,000 new homes. Although there might be anecdotal evidence to suggest that private rental landlords are moving into the short-term let sector, PASC can find no quantitative data to support that conclusion. Indeed, less than 2% of traditional short-term let businesses had previously rented their properties out as a long-term let.

[Anne Marie Morris]

Is it not also clear, following the Renters (Reform) Bill, that there has been a haemorrhaging of landlords who do not wish to be in the private rented sector? As a consequence, they used to go to holiday lets, so holiday let individuals are hardly going to be going back to the private rented sector, which they wanted to leave and are leaving in droves.

[Peter Aldous]

My hon. Friend makes a good point that reinforces my arguments about the unintended consequences of this proposal.

My fourth point is that there is no statistical evidence to suggest that furnished holiday lets have a disproportionate impact on house prices. As part of the consultation on the proposed introduction of the new planning use class for short-term lets in England, the Great British Holiday campaign commissioned an economic impact study by Frontier Economics on the size, growth and economic importance of traditional holiday lets in rural and coastal communities—unfortunately just in England, but I am sure that is equally relevant to Scotland and Wales. Frontier Economics found that there was no relationship between popular holiday let areas and the growth rate of real house prices between 2015 and 2022.

My final home truth is that there would be unintended consequences of a change to this taxation regime.

Seagulls (Coastal Towns)

Debate between Anne Marie Morris and Peter Aldous

Wednesday 26th October 2011 Westminster Hall

[Peter Aldous (Waveney) (Con)]

It is a privilege to serve under your chairmanship, Sir Alan. I am pleased to have secured the debate, which gives me the opportunity to raise an issue that in recent years has affected the lives of many residents in my Waveney constituency, in particular in Lowestoft, as well as around the country, in coastal towns and further inland. In Waveney, there has been a problem in Beccles, some 10 miles from the coast, while problems have also arisen in such places as Bath and Birmingham.

Seagulls are part of the fabric of seaside Britain. Historically, other than following the plough, they have kept themselves to the coast. However, in recent years they have moved inland, nesting, feeding and breeding in buildings and on roofs, and in doing so causing considerable nuisance, stress and anxiety to nearby residents. In Lowestoft, much of the current problem centres around Waveney drive and the adjoining streets, and residents have been disrupted in a variety of ways.

Gulls are powerful birds, with a wing span of almost 5 feet, and they have messy habits. They have been known to tear apart refuse sacks and scatter the contents of litter bins in their search for food, making a mess and distributing litter, which has the potential to attract other, more conventional vermin.

[Anne Marie Morris (Newton Abbot) (Con)]

Is my hon. Friend also aware that gull faeces cause a risk to the quality of bathing water in towns such as Teignmouth in my constituency? The Environment Agency is having to look at ways of preventing the birds from nesting on roofs and by the pier.

[Peter Aldous]

I welcome my hon. Friend’s drawing that fact to my attention, as it illustrates the number of environmental issues that arise. Seagulls are indiscriminate defecators, with the ability to expel significant quantities of runny faeces on the wing. The consequences are most unpleasant for residents in their gardens and for anyone else out and about in the open. Householders cannot hang out their washing, and windows, cars and garden furniture are continually fouled and have to be cleaned. One household I know has stopped holding their annual family barbecue. Relaxing in the garden is no longer possible, while soiled clothes, sheets and towels have to be thrown away. There is an additional burden on local authorities’ cleaning duties. Noise nuisance is also a factor. Gulls have a distinctive, prolonged, piercing and very loud laughing call. For many people, a good night’s sleep is a thing of the past.