Short and Holiday-let Accommodation (Notification of Local Authorities)

Karen Buck Excerpts

1st reading: House of Commons
Tuesday 21st March 2017 Commons Chamber

[Ms Karen Buck (Westminster North) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require householders to notify local authorities of an intention to register accommodation for short or holiday lets; and for connected purposes.

Good ideas can be undermined when a minority abuse or exploit them, causing harm to others and undermining the wellbeing of the wider community. The “sharing” economy is fizzing with good ideas and opportunities. We are in an era where the potential use of resources—from labour to transport to homes—can be made more of by the speed and flexibility of digital communications, and we should not be putting unnecessary barriers in the way. Yet, that is not the same as saying there should be no rules. Individuals and communities need to be protected, and the rules we agree on must be enforced.

We now have an emerging consensus, including London councils of different political complexions, the Mayor of London and London Assembly members, on the need for further action. So today I am putting forward a proposal that will make it possible to effectively enforce the rules preventing the abuse of short and holiday let accommodation. Although I welcome the freedom for homeowners to let their properties for such purposes without excessive bureaucratic interference, it is difficult and expensive for cash-strapped councils to police the rules. With no requirement to seek permission for a short let, the only way to identify where such lettings are taking place—and, more importantly, where they are in breach of the rules—is by having staff comb the various websites to find them.

As some of us flagged up during the passage of the Deregulation Bill, which set the 90-day annual maximum for short lets, proving a property is let at all can be tough when there is no notification, and proving a property is let for more than three months in any one year is labour-intensive, expensive and cumbersome. Officers of my own local authority, Westminster, have been of great help in preparing this short Bill, and they have told me:

“It is difficult to determine the addresses as there is no prior notification system. My officers spend an inordinate amount of time trying to identify properties from website photographs where addresses are not provided like Airbnb. We also rely heavily on members of the public notifying us of people short-letting properties.

We are up against it but remain vigilant and continue to do all that we can to deal with the commercial lets (i.e. Those let in excess of 90 nights).”

People who are using Airbnb and others of the various platforms for short and holiday lets sometimes say to me, “Why does it matter? Why shouldn’t we, as homeowners, do what we want with our properties?” For many of them, it should not matter at all, as they are the occasional hosts—they are the sharing economy—earning a bit of extra cash from a spare room or when they are away. They are aware of their own legal responsibilities and are considerate of neighbours—let them flourish. The problem is that they are not alone. Alongside the responsible owner-occupiers are irresponsible ones, illegal sub-letters and an increasingly significant commercial operation seeking to take advantage of potentially higher yields.

Across all London boroughs, in the year following the Deregulation Act 2015 there was a city-wide 126% increase in the number of short lettings advertised on Airbnb alone. Westminster had an 80% increase, but some boroughs saw even bigger rises, with Camden’s figure going up by 124%, Southwark’s by 139% and Brent’s by a staggering 762%. There is now evidence to suggest that the short let phenomenon is spreading across the UK, with Edinburgh and Manchester following London—Brighton and Bristol are among the other authorities experiencing this. The latest data on InsideAirbnb.com confirms that, with nearly 50,000 listings across Edinburgh and Manchester alone. In terms of potential breaches of the law, my borough is currently investigating more than 1,100 properties believed to have breached the 90-night limit.

Also in the early part of last year, the number of whole properties—as opposed to rooms—in London listed on Airbnb increased by a quarter, from 17,625 to 21,861. Research by the Residential Landlords Association shows that 41% of all Airbnb listings in London last June were multi-listings, meaning that the property owners had more than one property advertised; this increase, to some 17,590 properties, is also a sign that the website is increasingly becoming commercialised. Meanwhile, 54% of entire home and entire apartment listings in Manchester, and 43% of those in Edinburgh, were identified as multi-listing properties, again indicating that the trend is going well beyond the image of the sharing economy.

Two concerning issues arise from that, the first of which is the loss of residential accommodation. Short lets can bring in up to three times the income of more traditional flat rentals: £1,800 a week, on average, for a two-bedroom flat, as opposed to £620 a week for a traditional assured shorthold tenancy, according to Westminster City Council. Even before the Deregulation Act, evidence suggested that flats were being, in effect, converted into semi-permanent holiday lets, but now the pressure is even more intense. The potential to earn more from short lets is a key selling point on some of the sites. People are told:

“The rents you can achieve during weekend stays or overnight stays can easily match or beat what you could achieve for a monthly rental income from a normal tenancy—plus you can enjoy the flexibility of choosing when to put your property up for rent, and when not to.”

Another company states:

“A short term let normally generates 50-100% more income than a long term let.”

So, alongside the genuine sharing economy lettings by homeowners, that leads to a longer-term loss of residential homes, even those available for traditional assured shorthold lettings. Westminster City Council alone estimates there to be 3,000 whole properties on listings sites, with about 1,000 each in a number of other individual boroughs.

One constituent wrote to me to say:

“This style of letting has nothing to do with people make a bit of extra money on the side from their homes, by renting out the odd room, (which was the original premise of Airbnb) and has now become a licence for people to make big (non-tax-declared money) at the expense of local residents who are subjected to its considerable downsides”.

Where this all began for me was the number of constituents coming to raise concerns about the impact of their communities becoming an unofficial part of the hospitality industry. Their questions were about issues including: the impact of transience; their security; antisocial behaviour arising from noise; waste issues; overcrowding; and a range of other sources of disturbance. Those disturbances place a cost on the local authority, too. Enforcement costs, and the costs of dealing with noise and other breaches of regulations have to be met by cash-strapped local authorities.

One constituent wrote to me to say:

“We are a single house in Bayswater (six flats) and we manage ourselves. All the flats but one (ours) are now non-owner-occupied. A few weeks ago it became obvious that one flat was renting on Airbnb, and I’m fairly sure had broken the 90 day limit. This is technically in breach of the terms of our leases, which have that ‘single private use’ clause in them, but more than that I really hate the idea of our house turning into a hotel, our front door key in strangers’ hands. And I’m fairly sure it breaches the terms of our buildings insurance which is a bit scary.”

That whole area of downsides from short lettings—insurance and other lease requirements regularly being breached as a consequence of short lets— is beginning to come to the public’s attention.

Meanwhile, tax revenues are, if anything, going down—that is certainly what other cities are finding. One article looking at the American experience found:

“First up on the list of grievances big cities have with vacation rental sites is lost tax revenue. The number of missing tax dollars is truly astounding. A study from AllTheRooms.com, a vacation rental and hotel search engine, found that the total 2016 tax revenue from room rentals brokered through Airbnb would amount to almost $440 million if they were taxed at the same rate as traditional hotels.”

That is the American experience. We do not have a local UK experience, but that is where we are going.

Unlike before the 2015 Act, councils now have to prove not merely that a property is being short let, but that it has been short let for more than 90 days in a year, which is a far harder and more resource-intensive task. What can be done to resolve this? Local authorities are looking for the Government and the Department for Communities and Local Government to be more prepared to intervene to exempt neighbourhoods from the current set of regulations—they have the powers to do that. Westminster City Council applied for such an exemption but was turned down, although I know it is considering making a fresh application. The platforms can also do more. I welcome the fact that Airbnb has said it will enforce the 90-day maximum rule, but not all other letting platforms are taking the same approach—in some cases they are making it clear that they believe it is for the host to uphold the law, not for themselves, as letting platforms, to do so.

What I believe is now necessary, and what this short Bill aims to do, is to introduce a light-touch online notification system that is mandatory for homeowners to complete, where they merely confirm the dates their property is to be used for short letting. This is not about seeking permission, but is merely about allowing local authorities to know where short and holiday lets are taking place so that they are able to enforce effectively. By all means encourage people to make good use of their homes and earn extra cash, but let us make sure that this does not intensify the housing crisis, land costs on others—while sharing none of the rewards—and inflict misery on long-term residents who, to their shock, can find themselves waking up in a hotel annexe, but after all the caretakers have gone home.

Question put and agreed to.

Ordered,

That Ms Karen Buck, Mark Field, Tulip Siddiq, Jim Fitzpatrick, Andy Slaughter, Victoria Borwick, Kate Green, Peter Kyle, Rushanara Ali, Kerry McCarthy and Ruth Cadbury present the Bill.

Ms Karen Buck accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 24 March, and to be printed (Bill 159).