Levelling-up and Regeneration Bill

Earl of Lytton Excerpts

Committee stage
Wednesday 22nd March 2023 Lords Chamber

[Lord Best (CB)]

My Lords, I support Amendments 441, 443, 444 and 446 on the theme of short-term lettings, tabled by the noble Lord, Lord Moylan, the esteemed chair of your Lordships’ Built Environment Committee, on which I am honoured to serve. I also support the amendments from the noble Lord, Lord Foster of Bath, on data sharing and safety.

I share the worries relayed very forcefully in submissions to our Built Environment Committee over the loss of long-term rented homes because of landlords switching to short-term lettings—propelled not least, it seems, by a tax and regulatory regime that favours the latter. As the noble Lord, Lord Moylan, has said, our debate last Monday covered a lot of the issues that have been debated in our committee and are now the subject of these probing amendments. Noble Lords gave much support on Monday to earlier amendments that advocated a registration or licensing scheme—the two could look very similar. The Built Environment Committee favoured local discretion in introducing a national scheme locally, since some places have virtually no short-term lettings. It would be very bureaucratic to have a scheme applied there. The Government are also committed, as well as to a registration scheme, to taking a regulatory arrangement forward, and I hope that we can hear news from the Minister of a timetable in this regard.

In addition, there was support on Monday for the proposition from the noble Lord, Lord Young of Cookham, and the noble Earl, Lord Devon, endorsed by the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Foster of Bath, for new use classes, which would enable planning powers to be used to control numbers of short-term lets in each local authority. The Government are consulting on that proposition, which personally I would favour; it deserves attention, alongside some tweaks to remove perceived incentives in the tax and regulatory frameworks, which currently appear to encourage landlords to end longer-term lets and switch to Airbnb-style short-term rentals.

I add to the debate one extra ingredient: the international dimension. In this digital age, the Airbnb phenomenon for accommodation, like Uber for transport and Amazon for retail, is ubiquitous and has caused concern in sectors in most other advanced economies. Many different regulations have been applied in other countries, particularly in tourist hotspots. A report from the Property Research Trust last year, Regulating Short-Term Rentals: Platform-based Property Rentals in European Cities, describes numerous efforts to face this challenge. Amsterdam has a strict permit system, with fines of about £20,000 for failure to comply. Barcelona has banned all short-term rentals, even in private homes. In Ireland, those areas of the country designated as rent-pressure zones have tough restrictions. In parts of the United States, such as San Francisco and Boston, only properties with the host living there during the stay are allowed to be operated as short-term lets. This international perspective demonstrates that we are not alone in facing this problem. We have a greater problem of scarcity of rented housing than most of our neighbours, which suggests that an effort to get to grips with the downside of short-term lets may be overdue here.

I have one final point. Amendment 444 reflects the Built Environment Committee’s firmly held view that new arrangements should not deter any home owners from letting spare rooms on a short-term basis. The current tax-free position, allowing up to £7,500 per annum, encourages the use of underutilised assets and brings extra income that can help with rising mortgage costs. The amendment emphasises the value of continuing that favourable tax regime for owner-occupiers in underoccupied homes.

I hope that the Government will be bold in following the lead of many other countries. We need to address the pain and disruption being caused in particular locations by the growth of short-term lets that replace badly needed longer-term rented homes. I support the amendments.

[The Earl of Lytton (CB)]

My Lords, I too support these amendments, particularly the lead amendment in this group, moved by the noble Lord, Lord Foster of Bath, about the gathering of better data. I will try not to repeat what I said last time, other than that I have some skin in the game here in the sense that I jointly own properties that are let on assured shorthold tenancies, as well as short-term holiday let properties.

This is a multifaceted issue. Second homes may, at other times, be part-time holiday lets. Holiday lets may be for leisure trips one minute and for business purposes another, and they may alter from season to season. They may be for a couple of days at one point, or a couple of weeks or three months at another point. It is very difficult to make a one-size-fits-all assumption when you are dealing with short-term lets, holiday lets or even assured shorthold tenancies.

The platforms are also equally variable: it could be booking.com—a very common one—Airbnb, an owner’s own website, word of mouth, a card in the window of the local convenience store, or a repeat booking. They are all means of people getting in contact. I know this for a fact, because the only one that does not affect the properties that I am involved with is Airbnb as we do not use that platform, but I know lots of people who do. In respect of what the noble Lord, Lord Best, said, the thing about a platform such as Airbnb is its slickness and convenience for users—both lessors and prospective occupiers. That has really made it a benchmark worldwide phenomenon and has driven its operation and popularity as much as any wish to shift from one to the other.

I contacted a local estate agent down in the West Country—not one I use but I knew somebody in the place—and asked them what was happening with short-term lets as against assured shorthold tenancies, for example. They deal with a lot of such tenancies; they are one of the main agents in that area. I was told that, while there is considerable demand for assured shorthold tenancies—often 20 or 30 applicants for each—there were very few cases of an AST being terminated for the purpose of moving the property to a short-term letting. There was nearly always some other reason for ending the AST: it was a pot of money that the owner wanted to put into some other investment, such as extending another house or helping a child with a house purchase in another part of the country.

I do not know, therefore, how frequent this supposed transfer is. Organisations such as Shelter say that they have lots of people coming along saying that they have been kicked out because the owner wanted to do an Airbnb-type letting, but I do not know whether that is an essentially urban phenomenon—it may be—or more general. I just do not think that we have the data. That goes back to the point that the noble Lord, Lord Foster, made: we need better data.

I would worry about attempts to jump to conclusions about what we do here. I follow the noble Lord, Lord Moylan, the chairman of the wonderful committee of which I am a former member, but I worry about attempts to jump to conclusions, particularly because we have not had the results of the Government’s own thinking on this, and particularly when applying these user types to a range of properties that equally has a very considerable breadth—from a shepherd’s hut at one end through to a static caravan and to a permanent dwelling. Some may be suitable only for seasonal use: I think of the very large caravan parks that—“decorate” is the wrong word—“appear” in places such as the Pembrokeshire Coast National Park. I cannot say that I regard them as beautiful or a benefit to the environment, but they clearly fulfil a seasonal requirement.

There are some settlements—some seaside places and holiday hotspots—that are built on tourism. That is what they are there for, almost, and the fact that they empty themselves for parts of the year is not a particularly modern phenomenon. I remember when as children we used to go on holiday to a part of Cornwall on an annual basis, and just about every other house was advertising bed and breakfast. Those bed and breakfasts may have morphed into Airbnb, or a short-term let on some other platform. Noble Lords have mentioned that there are clearly problems associated with an imbalance of property uses, but as the noble Lord, Lord Moylan, confirmed—I raised this point on Monday —these are not consistent, geographically or by type. They tend to be associated with hotspots of one sort or another. We need to understand the dynamic.

The noble Baroness, Lady Hayman of Ullock, picked up on the point I made that we need to flesh out a great deal more what is happening here. If we do not know the purposes and drivers behind what is happening in any given instance then we are not going to get near to creating viable policies for the purpose. Let us make no mistake: this phenomenon is undoubtedly causing problems in certain areas. We had evidence of that in the Built Environment Select Committee when I was privileged to serve on it. What is required here is a degree of localised assessment, but based on consistent, nationally accepted data-gathering principles and analysis, so that we get a proper basis for dealing with this, and can look at and compare like with like and not be comparing apples with pears.

I entirely endorse Amendments 445B and 447, tabled by the noble Lord, Lord Foster, because I know for a fact how very important safety is within a property, particularly where there is short-term turnover of occupancy and people are not particularly familiar with the property. It is absolutely important that they are safe, and that things such as batteries in smoke detectors are checked annually and that combustion appliances have proper tests and are serviced. They should be safe and safety checked at regular intervals.

The noble Lord, Lord Foster, referred to the business of trying to get at the data on this through council tax records. He is absolutely right that this is a pretty deficient way of dealing with it. I am going to tell a tale out of school here. My wife has written on numerous occasions to the billing authority in relation to a property that has been used for holiday letting for many years, saying, “Look, this is being used pretty much year-round as a holiday unit. Should it continue to be in council tax?” To which answer there came none, and why would there? Why would any clever finance officer of a local authority decide that he was going to forgo council tax—which he collects and keeps in his kitty, thank you very much—and be the collecting agency for business rates for central government, to be redistributed according to whatever the normal formula is? The noble Lord, Lord Foster, mentioned one area where the thing is skewed; that is a second area where there is a perverse incentive not to get things in the right slot.

It gets worse. Under the “check, challenge, appeal” process that business rates operators have to deal with when dealing with the Valuation Office Agency, someone has to formally claim the property for the purposes of being its agent before they can even get the process in train to change the assessment. That is not a sensible way of doing it either. We are completely at sea on this and really need to sort it out.