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

Karen Buck Excerpts

1st reading: House of Commons
Wednesday 13th December 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.

As with so many other aspects of the digital and sharing economy, the nightly booked accommodation sector brings advantages for some but adds costs to others. Without sacrificing all that is good about it, it is clearly time the Government acted to help those who are the losers in this new environment and, in particular, made it realistically possible to stop the illegal element within it. It is time, too, to recognise that this industry is by no means confined, as was the original intention, to homeowners renting a room for some extra cash, or letting out their property when going on holiday, but is becoming increasingly commercialised, as is evidenced by the rise in the number of multiple listings by single owners on sites such as Airbnb and the proliferation of subsidiary agencies offering management services.

One year ago, I introduced a Bill along similar lines to this one seeking to respond to the growing concern among my residents about the short, holiday, or what we now call the nightly let sector. Many residents feel the impact most in respect of their own homes: issues around noise, rubbish, security fears, antisocial behaviour, breaches of leasehold in blocks of flats and the undermining of insurance. It is also increasingly clear, however, that, as ever more properties turn over to shorter lets, there is a wider impact, including the loss of much-needed residential accommodation.

Since last year, the pressure has only grown. Last week, research published by the Residential Landlords Association found 53,000 Airbnb listings this year in London alone—up 60%—and a 54% increase in whole property listings. That is equivalent to 12,213 homes that are not available for residential use. In my borough of Westminster, the number of Airbnb lettings rose from 1,603 in 2015 to 3,621 in 2017—an increase of 126%. As of March, an estimated 3,621 whole properties were advertised in the borough and 27,175 entire properties in London. Figures provided by Westminster City Council suggest that in London alone, over two years, there has been a 187% increase in the total number of rentals; the total comes to 173,714. As we know, Airbnb is the biggest player, but there are a number of others.

It is certainly not only London that is affected, as the RLA’s ten-city research showed. It found that the largest percentage increase occurred in Birmingham, where demand has increased by 687% over the two years; that Liverpool had the highest proportion of professional listings, at 72% of all rentals offered by multi-listing hosts; that in Cardiff there had been a 536% increase since 2015; and that in Edinburgh the figure was up by 182%, with 18,105 rentals this year. Several other cities are increasingly being affected.

Of course, many property owners—probably the large majority—lawfully let their properties to enjoy some extra income via Airbnb and other sites, and most owners and tenants act responsibly. To be absolutely clear: no one—not me, Westminster City Council or the Mayor of London—is seeking to ban short lets. It is clear, however, that there is unlawful letting too, and of course last year that prompted Airbnb to announce that it was introducing its own restrictions so that property owners on their sites could not let accommodation for more than 90 days a year.

That was a welcome development, but predictably it has not solved all the problems. There were loopholes from the start, the most significant of which is that, even with a major platform committed to upholding the law, if other platforms do not follow suit, or if owners prove adept at switching between them, or classify whole properties as single rooms or move between definitions of addresses, the core issues remain.

All these issues were brought to the fore in London earlier this year when Assembly Member Tom Copley brought concerned parties from London together to analyse the trends in this sector and the problems it is causing for local authorities and others. I very much look forward to his report on the topic, which I believe is imminent, and I am grateful to him for sharing his evidence and conclusions with me. They have informed my speech today. This is emphatically a cross-party issue, as his work confirms and as is demonstrated by the work done by Westminster City Council, which I have drawn heavily on today. We are working across parties to make sure that the Government address the negative impact on communities

What is the problem? There are three main problems. The first is the sheer scale of this growing sector and its concentration in certain neighbourhoods—although it is spreading—of London. There are apartment blocks in my constituency and others that are fast becoming informal hotels, but without any of the management and support functions provided by hotels and, of course, without paying business rates or corporate taxes. More localised lettings, even though they do not have the same concentration of problems, can still cause real stresses for neighbours and costs and demands on the public purse. Only this weekend, I was in Dibdin House, a former Church Commissioners block in Maida Vale, where a woman was telling me that the flat upstairs had been let continuously on short-let sites for the past two years, meaning that people never knew who was coming and going and that there were parties and all kinds of issues having a negative effect on the local community.

The second problem is the loss of whole properties to the residential sector at a time of acute housing demand. Although single rooms account for a high proportion of nightly lets, overall, 70% of my borough’s holiday lets are whole properties. We know that short lets of nightly booked accommodation command far higher rents than assured shorthold tenancies. The RLA analysis demonstrates the growing professionalism of the sharing economy, with a 75% increase in the number of multi-listings. It believes that landlords are shifting into the sector because of the impact of Government changes to taxation, but also because lettings on a nightly basis command far higher income for landlords.

Information provided to me by Westminster City Council based on Valuation Office Agency data indicates that a one-bedroom flat will rent for £495 a week locally on an assured shorthold tenancy, but for £1,561 a week if let on a nightly basis; that a two-bedroom flat can rent for £620 a week, but for £1,838 a week on a nightly basis; and that a three-bedroom property can rent for £950 a week on an assured shorthold tenancy, but £2,656 can be generated a week by a nightly let. The RLA says that its research

“identifies a significant issue for the future of the Private Rented Sector…in that landlords are starting to offer their properties as short/holiday lets”

rather than as residential lets. It has also found that

“over 1 in 3 are doing so because of tax increases on landlords”.

The RLA will have to make the case for how the tax differential impacts on landlords, but the fact is that, between higher rents and tax changes, we are losing properties, particularly in central London, but increasingly elsewhere, too, as the short-let sector grows.

The third problem is the costs of and difficulties with enforcement. As of September 2017, almost 1,500 properties in Westminster alone were suspected of unauthorised nightly lettings over and above the legal 90-day maximum. Last year, an Institute for Public Policy Research report found that almost one in four short-let properties were being let for more than the 90-day legal limit. Scarce public resources have to be devoted to dealing with problems arising from a minority of nightly lets and to identifying and seeking to prevent owners from breaching the legal limit. Westminster City Council currently spends more than £250,000 a year on planning enforcement activity, which is purportedly more than the tax bills of certain companies involved in creating the issues. As it says—and I agree—the polluter does not pay.

We urgently need to look at this growing issue of enforcement. This is now an issue in cities all over the world and we are in danger of falling behind; other cities are leading on enforcement. When public resources are so scarce, we simply cannot expect local authorities to have to spend their resources in enforcing the law. We need a simple legal change and the Government to get behind local authorities. We need the Mayor of London to be able to take a role in enforcing the Deregulation Act 2015 and we need some action now from the Government before this becomes a crisis.

Question put and agreed to.

Ordered,

That Karen Buck, Robert Neill, Kevin Brennan, Tom Brake, Tommy Sheppard, Karin Smyth, Andy Slaughter, Matthew Pennycook, Clive Efford, Tony Lloyd and Emma Dent Coad present the Bill.

Karen Buck accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 23 February 2018, and to be printed (Bill 142).