Sharing Economy: Short-term Letting

Karen Buck Excerpts

Thursday 16th June 2022 Commons Chamber

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

I congratulate the hon. Member for Cities of London and Westminster (Nickie Aiken). As the Member for the other part of the borough of Westminster, I apologise for covering some of the same ground in respect of locality.

Having set up the all-party parliamentary group on the short lets sector, I am conscious that the issues that the hon. Member describes are having an increasing impact on cities, coastal communities and popular tourist areas across the country. Although it is always deeply unedifying to stand up in Parliament and say “I told you so,” I have to say that we told the Government so. During the passage of the Deregulation Act 2015, we warned that the changes allowing the 90-day limit in London would be likely to lead to an explosion in short lets and a very detrimental impact on communities—and that is exactly what has happened.

I remember saying in debates on the Deregulation Bill and on two subsequent ten-minute rule Bills—the Short and Holiday-Let Accommodation (Notification of Local Authorities) Bill and the Short and Holiday-Let Accommodation (Registration) Bill—that residential communities are being turned into unlicensed and unmanaged branches of the hospitality industry. The hon. Member has made many of the same points; I will not repeat them, but let me very briefly reinforce them.

As the hon. Member says, nobody is proposing any kind of ban. The sharing economy concept is a strong one. It is a smart and popular idea for people to let out a spare room or let out their home for a couple of weeks when they go on holiday or work abroad: it generates money in communities, generates money for the people who let the properties, and is clearly popular with the people who rent them. The digital economy has created enormous opportunities, and that is one of them.

However, the implementation has changed fundamentally since the original concept: it is now a highly commercial enterprise, as the figures show. A report in 2020—I have cited it previously, but I cite it again—found that just one sixth of the revenue of Airbnb, which is a major player in the field, came from the kind of home-sharing let that was its original concept. As the hon. Member says, we can track the huge shift to whole-property rentals, which has been very significant in London and across the whole country. Research by Tom Simcock of Edge Hill University has found a 423% increase in lettings by “multi-hosts”, owners of multiple properties. That gives an indication of how deeply and increasingly commercialised the sector is.

The impact is felt in the loss of residential property; the hon. Member made that point, and I endorse it. The clear indication is that it is financially advantageous to landlords to move out of the lettings market and into the short-let market, where they can make substantially more income and enjoy significant tax advantages in doing so. All over our borough of Westminster, properties where people could once live are being used just for the holiday industry. That has all kinds of impacts on people in housing need, and on communities.

There is also an impact on the management of antisocial behaviour and nuisance, ranging from noise to rubbish. If people were staying in hotels or in registered hospitality, there would be commercial arrangements for waste collection and they would be making a contribution. None of that applies in this instance.

This morning, entirely by coincidence, I received an email from a constituent on Harrow Road—not the heart of the west end, but the very north of my constituency, at the poorer end. I was told that five identified properties were now being let as short lets; people were coming and going with their luggage all through the day and night, and it was causing concerns about security. It is not necessarily that people choose to behave badly, or that they are acting in an especially antisocial way, but when people are on holiday they act differently. They do not have the same constraints as residents on the hours they keep or the way they act, and they certainly do not have the same sense of responsibility for security. It causes a great deal of anxiety.

It has been said, and I will repeat, that local authorities have their hands tied behind their back when it comes to enforcing against short lettings. Finding properties that are legally let under the short let arrangements but have to be acted on when they breach the 90-day rule is asking local authorities—cash-strapped local authorities—to do the almost impossible. They do not know who is letting. They would have to monitor everything to find that out and then be able to prove that the letting exceeded the 90-day limit. It is completely unreasonable to ask them to do that.

Landlords, particularly the commercial landlords that see the advantages of short let arrangements, are driving a coach and horses through the legislation. This is leading to enormous strains in local communities and a great deal of anger among neighbours, who turn to the local authority to help with enforcement but find that the local authority does not have the capacity to do so. Also, not unreasonably, the hospitality industry, which has had a terrible couple of years with covid, feels that there is not a level playing field, given its members’ responsibilities in terms of health and safety and taxation. They are being undercut, not by individuals letting out a spare room, but by major players in the corporate hospitality sector exploiting a loophole.

It is essential that the Government wake up to this problem. It is spreading across the country and the implications are profound. The Government can act very quickly, without excessive regulation, just to make sure that people who let out these properties are licensed to do so and that we know who they are. If we know who they are, we are in a better position to act when they breach the rules. We have been asking for this for seven years. It is a cross-party issue—cross-party in the local authority, Westminster, and cross-party in Parliament. The Minister must wake up and act to protect communities and to protect us against the loss of valuable residential property before it is too late.

[Rachael Maskell (York Central) (Lab/Co-op)]

I congratulate the hon. Member for Cities of London and Westminster (Nickie Aiken) and my hon. Friend the Member for Westminster North (Ms Buck) on their speeches today. I want to take the debate outside Westminster and highlight the impact this issue is having elsewhere in the country.

Members in all parts of the House know that this industry is growing at a rapid pace in tourist destinations. York, the most visited place outside London, is certainly experiencing many of the problems that have been described this afternoon, and on a matching scale, although our city is slightly smaller. We know that in York there are about 2,000 Airbnbs already, predominantly in my constituency, but they are increasingly becoming an issue on the outskirts of the city and in the more rural villages. In the city centre, we often find streets—family streets—where there are five or six Airbnbs, and it is having a serious impact. Everywhere I go across my constituency, I have constituents come up to me to talk about Airbnbs and holiday lets—or, as they are increasingly being called, party houses. They are not in keeping with the character of our city. There is a clash of cultures between families, who just want to get on with everyday living, and the predominantly weekend culture of parties, which in the summer never stops.

We are not seeing this just in existing properties in the city. Increasingly, we are seeing it in new developments in York. Developers are putting predominantly luxury accommodation in the city, but many of the properties are being bought as investment assets. That is an issue we all have with what is happening in parts of the property market. Of course, if they are vacant, suddenly the lights go on and people think, “Why don’t we turn this into a short-term holiday let?” We are seeing an increase in that in the new estates.

I certainly had concerns about this in relation to proposals for the York Central development. It is an incredible development, with 2,500 homes proposed for the site. In my discussions with Homes England, there was a recognition that this could become a party city right in the middle of York, because local people will not be able to afford to live in those luxury homes. They will therefore end up just going straight into the hands of the companies that are running the Airbnbs. Also, the numbers in the new developments go into the Government’s housing numbers, so the Government are ticking off their lists and saying they are achieving their housing targets, but those houses are actually just switching over to become Airbnbs. They are part of what I call the extraction economy—not the shared economy—because people are taking that property and wealth out of our city, and nobody gains. In fact, everybody loses. That is why it is important that the Government get a grip of this now and bring forward the legislation that is needed to regulate this area.

Ultimately, these are homes that we desperately need. We have all spoken about the shortage of housing in our constituencies, the fact that social housing waiting lists are rising sharply and the availability of property to buy is just not there. Every single time a property comes on to the housing market, in come these owners of Airbnb, cash in hand, hoovering up the properties ahead of people who have saved meticulously for their mortgage. And they are offering over the market price for those properties. I heard of one incident in York where they offered £70,000 more than the market price for the property. As a result, local people were not able to move in. I speak to young couples and families—as we know, people are now much older before they can even think about purchasing a home—and they are saying that they save and save and try to enter the market, but every time they are beaten to the post by people who then turn the properties into Airbnbs.

[Ms Buck]

My hon. Friend has probably seen the advertising—for a while there was advertising on the London underground—saying how much more money people could get by taking advantage of short-term lets. This is creating a powerful incentive to do exactly what she is describing.

[Rachael Maskell]

My hon. Friend is absolutely right.

The average rental price in York is extortionate—not compared with London but certainly compared with elsewhere in the north—at £945 a month for private rented accommodation. On Airbnb, that same property could go for £700 for a weekend. As a result we are seeing a frenzy among landlords who are saying, “Actually, I could get a lot more money out of an Airbnb property, so I’m going to issue a section 21 notice, evict my current tenants and then turn the property over to an Airbnb.” As a student city, we have more than 40,000 students in York, but many of the homes in the student areas are also turning themselves over to Airbnb. This means that we have a shortage of student accommodation as well as local people not being able to get into housing. The impact on the housing in the city is escalating.

Some of these places are being marketed not just as holiday lets; they are deliberately being marketed for stage and hen parties. This is becoming an issue that impacts not only on our city centre, because those parties are being taken out into the community. I have one cul-de-sac in the Groves in York where there are three of these Airbnbs in a little courtyard, and they advertise for 30 people to go and spend their weekend there. It is at the end of a family residential street, and people in my community have told me that the noise goes on all night. These are working people; they are working shifts and have jobs to do. Their children are going to school and perhaps sitting exams at this time of year, but they are having sleepless nights. On top of that, they are trying to shelter their children from the profane language. People are half-clad in the streets. Women do not feel safe down some of the back alleys in the Groves, where a lot of children play. It is turning these wonderful little communities in York into nightmares.

People do not feel safe in their own home anymore. In fact, I heard from one family who put their house on the market and moved out of the city, which was the only way they could escape the party houses that were increasingly in their area. They wrote to me about the impact it was having.

With the increase in Airbnbs, we are seeing the disappearance of York’s ability to house its own local community, which is having a severe impact on the local economy. We have heard about the tourism sector, but traditional B&Bs are losing out because they follow all the rules, pay their duty, follow health and safety and all the other things. They are in direct competition and, of course, they are covering their costs, so they are being pushed out. Guest houses are the same.

We are therefore seeing deregulation of the whole visitor economy, which does not benefit the location and has serious implications for local businesses. I challenge those who say this is good for the economy, because what we are seeing is an extraction economy. Many people purchasing houses in York are not from York. They are from London and the south-east predominantly, so they are seeing the opportunity as a holiday destination. They have no connection to those communities, so they are taking out of those communities, not feeding into them.

When I hear the expectation that there is going to be a 30% a year rise in the number of Airbnb properties over the next decade, according to Airbnb’s own research, it fills me with terror, so it is important that we get on top of this issue now. That increase is going to make it far worse, year by year, across our communities, and it will fuel our housing crisis even more, which will give the Minister the biggest headache of all. We are standing up to say we need this to be addressed.

I know the Minister has an interest in social housing, but we are seeing these people go cash in hand, along the same line as right to buy, and say, “If you buy your home and go through that process, we will be back to give you even more money in exchange for your property.” That is why it needs to be regulated, and regulated tightly.

Airbnb is having a profound impact on our community and services in the city. This is not particularly thought about, but our economy is now struggling to recruit the people it needs. Airbnb is escalating and fuelling the housing crisis, which is impacting on care workers and NHS staff being able to find property in the city. It is impacting on the hospitality sector. Of course, the people coming to our city often use those services and want hospitality venues to be open, but the sector cannot recruit staff. The people who would have been in those properties cannot afford to live in the city anymore, so they are being pushed out. Airbnb is having a negative impact not just on the housing environment but on the local economy. The deregulated system is not working.

We have heard about the impact on children and the community. When section 21 notices are issued, children have to leave their school and go elsewhere. That is having a negative impact across the area.

We have heard about people’s weekends of misery. When Friday comes, they do not know who will come off the train with their trolley bags and wander up the street. They do not know whether they are going to have a peaceful weekend or a party to endure and, of course, the other antisocial behaviour that goes with it. Some of the things I have heard are quite horrific. This is not what our city is about and it is not what my local people want our city to be about in the future. That is why we need to address this.

As the hon. Member for Cities of London and Westminster mentioned, there is also a loss of local revenue involved here. York is losing about £2 million in council tax, and many of these escape under the bar in terms of being a “small business” so they are not paying small business rates. Across the country we do not have the 90-day limit either, so we are talking about this loss throughout the year, along with the implications it is having. This has escalated in York during the pandemic. York has been seen as this fantastic place, two hours away from London and an amazing city to live in, with good schools and all the rest of it, but people have then realised, “Ah, but it is also a really good destination for staycation.” That has been incredible for our recovery, and I am not knocking it at all, but people have also seen the chance, over the lockdown period and particularly since, to come to invest in Airbnbs. That is why we are seeing this sudden growth in the city, which has taken it by shock and surprise, and has had that negative impact there.

I know that the Government have been on a path to look at a registration scheme on Airbnbs. I do not knock them for that, but the world has changed rapidly. I just say to them that we need to move on from that now and look at a full licensing scheme. A registration scheme would simply have serious deficiencies. We have heard about the benefits of a licensing scheme in Lisbon, and Scotland is introducing one. I also point the Minister towards what has happened in Nice, which has a stringent licensing scheme, but one that works incredibly well for those residents. A licensing scheme could help local government have sufficiency in resourcing to support this.

Both hon. Members have mentioned having a different class of housing so that a separate revenue could be charged from that, but we could also look at doubling council tax or even at having a multiplier on council tax, at the local authority’s discretion. This could be one way of looking at how we can build that revenue back into the local area. Of course these people will then pay for those services—currently they are not—such as refuge collection and even parking schemes, which have an impact on areas. We could also limit housing, and we have heard from hon. Members how advantageous that would be to a local area as well. Nice has not only a strict fines regime to deal with significant antisocial behaviour, but the right to remove licences and to grant licences. It is looking at how it can place conditions on licensed properties. There would be real advantage, not in the Government holding those powers, but in giving them to local communities, through their local authority. It would make landlords themselves have more responsibility as well for the properties that they let, including through a third party—an agency—and it would bring in greater controls.

Finally, let me look at the speed with which we need to bring this in. The Levelling-up and Regeneration Bill is before Parliament, and it talks about opportunities associated with things such as second property reform. As we have heard, for many people we are talking not just about a second property, but a third, fourth and so on. I have heard that some have more than 100 properties; this is a very highly organised industry. It would seem appropriate that the Government could table an amendment or new clause to that Bill to look at this issue and address the matters before us. If we do not act now, the housing issues that the Minister and his team are trying to resolve, which are complex and growing, are going to just get worse and worse. Therefore, I would really welcome more discussion with the Government about how we are going to move this rapidly into legislation to end this nightmare for our residents. Given the number of Members from across the House and their communities that this has an impact on, may I suggest to the Minister that he holds a roundtable with us so that we can discuss these issues at length? I think that across the House we all share the view of what we need to achieve, and I am sure that we can find the right solutions for government and for our communities.