Levelling-up and Regeneration Bill

Lord Foster of Bath Excerpts

Committee stage
Monday 20th March 2023 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, Amendment 294, in my name and that of the noble Earl, Lord Devon, would oblige the Secretary of State to make short-term rental properties a distinct use class for planning purposes. The amendment is supported by the Local Government Association, of which I am, exceptionally, not a vice-president, and is based on changes made to secondary legislation in Wales in 2022.

A common theme running through all the amendments is the promotion of the country’s housing stock as a main home, either by raising the council tax on second homes or by using the planning system to control short-term lets. The planning system is not just about whether or not a piece of land is to be developed; it is about the use to which it is then put. For example, you need planning permission to convert a block of flats into a hotel. These use classes have been used to control changes that may be undesirable, and in a few cases they have been relaxed to promote changes between uses.

The Government have clearly recognised that we have now reached the stage where some form of control is needed if we are to maintain a proper balance between those who need permanent accommodation for rent and those who are making short-term visits. Clause 210, mentioned by the noble Baroness, introduced by the Government on Report and headed “Registration of short-term rental properties”, is a very useful step which I welcome. I also welcome the statements made about it in another place by Lucy Frazer, the previous Housing Minister. It proposes a new registration scheme for short-term lets, but this will not happen for some time, as consultation on the exact design of the scheme will not start until later this year, with decisions and actions later.

A registration scheme is a good first step but we need to build on this, as proposed in my amendment, and see much stronger controls. We need to do that if the planning system is to determine local priorities. We also need to make faster progress; only then will we see a better balance of housing options which will help families and young people who simply cannot find a place to live in some rural areas but also in London. Were she still able to attend, I am sure my noble friend Lady Gardner of Parkes would be speaking strongly in favour of this amendment.

A balance is important. Short-term lets can provide a useful boost to the local economy by promoting tourism where commercial accommodation is in short supply or very expensive, and they can be a useful source of income for those who do not need their homes all the time—for example, if they are away on holiday. However, we need a balance between second and first homes. My amendment provides a means of meeting that balance.

The Government’s legislation needs to go further by introducing a new use class for short-term rental properties, which, in turn, should be a precondition for the registration of such properties. We may not need to regulate short-term lets across the board, but making them a separate use class, as proposed in the amendment, allows full planning control in places such as seaside towns and the area just mentioned by the noble Baroness, Lady Hayman, where the growth in short-term letting has become a particular issue, or here in London, where there is pressure on the rental market.

There was a 1,000% increase in homes listed for short-term lets nationally between 2015 and 2021. That is 148,000 homes that could otherwise house local families that are available on Airbnb-style lets. In Cornwall, short-term listings grew 661% in the five years to September 2021. The county has roughly 15,000 families on social housing waiting lists and the same number of properties being marketed as housing lets. The noble Earl, Lord Devon, may mention his county, where short-term lets appear to be worsening an existing housing crisis, with nearly 4,000 homes taken out of the private rented sector and 11,000 added to short-term listings since 2016.

Currently, local authorities outside London have no legal means of preventing this loss of private rented housing to short-term lets. Several cases have come to light of people in rented housing in rural areas being evicted so that the property can be let on a short-term basis. In this context, it is worth mentioning the position in London as it shows a way forward. The Greater London Council (General Powers) Act 1973 —I declare an interest as I was on the GLC at the time—discouraged short-term lets by saying that the use of residential premises for temporary sleeping accommodation for fewer than 90 consecutive nights in London was a change of use, for which planning permission was required, so London residents face a possible fine of up to £20,000 for each offence of failing to secure planning permission. That position was basically confirmed in the Deregulation Act 2015. I see some advantage in simply extending this London provision to the rest of the country.

Finally, there are issues here that go beyond my noble friend’s department. Holiday lets get mortgage interest relief; residential tenancies do not. Holiday lets have no minimum energy and safety standards, and they qualify for business rates and small business rate relief. We need a cross-government approach to get a coherent and better-balanced policy on this important matter. Of course, I hope my noble friend will feel able to accept my amendment. If she cannot go that far—and I see from her body language that that may not be possible—will she commit to consulting soon on building on Clause 210, with a view to getting that better balance between the use of scarce housing stock in areas under pressure and to helping families for whom private renting is the only option?

[Lord Foster of Bath (LD)]

My Lords, I will address the four amendments in my name and that of my noble friend Lord Shipley and comment on some of the others. We have already heard numerous examples describing why we need to address the issues around empty homes, second homes and properties available for short-term rent. As noble Lords are aware, some parts of the United Kingdom have already introduced measures to tackle some of them; for example, certification of tourist accommodation in Northern Ireland and licensing schemes for short-term lets in Scotland and Wales. Sadly, at the moment, England is being left behind.

I am pleased that at long last the Government are tackling one issue—the way in which some second home owners have gamed the system so that they pay neither council tax nor business rates—but many other problems remain. I live in east Suffolk, close to the popular seaside town of Southwold. With the recent growth in second home ownership and the rapid rise in properties available for short-term rent, of the 1,400 properties, now only 500 have full-time residents, while 500 are second homes and 400 are short-term lets; in other words, nearly two-thirds are not permanently lived in, and this has had a significant impact.

--- Later in debate ---

[The Earl of Lytton (CB)]

My Lords, I will get the guilt off my shoulders through your Lordships’ provision of the confessional: I declare an interest as co-owner of a second home in the West Country and of two short-term let properties in the same area. All, like the house I live in, which is in another part of the country, are legacies of estates that have been broken up and whittled down. Both areas have important family historical and indeed, in some cases, national historical associations.

Having declared that, I ought also to declare to the noble Lord, Lord Foster of Bath, who mentioned the Built Environment Committee, that I was, until the latter part of January, a member of that committee, and very privileged to have been so under the chairmanship of the noble Lord, Lord Moylan, who I am pleased to see in his place, and before him, the noble Baroness, Lady Neville-Rolfe. So I am familiar with the matters that were brought before us. However, I shall leave a lot of that to one side because there has been a bit of disaggregation in the groupings here. We have group 10 coming up, in which aspects of this will recur, and I find that quite difficult to deal with: I shall try to avoid getting up then and saying the same thing all over again and boring your Lordships.

While I have involvement with both normal assured shorthold tenancy properties and short-term buy to let, I certainly do not have anything to do with keeping property deliberately empty: that would be complete anathema to me, and I say so as somebody with professional training: I am a chartered surveyor and I know that all that happens with empty properties is that they deteriorate. They are much better occupied and lived in or used in some way.

I agree with the general premise that residential properties should not be deliberately kept empty for no good reason. I know that in some areas—the City of Westminster is one—there was a thought that foreign investors were buying up high-end residential accommodation and keeping it empty under the premise that perhaps it was less valuable if it had been previously occupied. It takes all sorts, but that is a particular situation. I support the noble Baroness, Lady Hayman of Ullock, in her Amendment 166 because there is a great deal of speculation about how many empty properties there are and where they are. They are not always in the places where people want or need housing and have to live and work. So, first and foremost, there is a distribution problem, along with a numbers problem. We need to sort that out, and there needs to be better data on that.

I would go further and suggest that the reasons why a property might be empty need to be understood before we set about making dramatic changes, either to the amount that is levied or to planning, although I take the point made by the noble Lord, Lord Foster, that something probably needs to be done in some of the areas that the noble Lord, Lord Shipley, referred to—the hotspots. They are not actually everywhere; they are not in every town and city; they are in defined places. Even those who particularly object to the idea of second homes and holiday homes altogether on principle recognise—and the data seems to show—that these are in quite specific areas. They are not necessarily in holiday locations at the seaside; they can be in the middle of cities and in parts of Greater London. We need to identify that.

We should not underestimate the inventiveness of those faced with a surcharge, any more than we should fail to consider the equity of a surcharge where there is a genuine reason the property is empty. The noble Baroness, Lady Hayman, referred to that and I use the example of the Ds: death, disrepair, dispute, debt, decarbonisation and, of course, redevelopment. Sorry, “redevelopment” is not a D, but noble Lords will get my drift.

Another aspect is that if there are to be additional charges, is that for the purpose of rectifying some particular, identifiable ill or mischief that is occurring, or is it just another tax? If it is just another tax and it is going into some jolly old pot, I am not particularly keen on that. There needs to be some degree of hypothecation. If there is a demonstrable case—for instance, that empty properties affect affordability in a locality or are adversely affecting incomers who might be economically active—the tax yield generated should perhaps be devoted to that or allied purposes and not put in some general pot. Presumably the case needs to be made.

I agree that ultimately, subject to some sort of national framework and means of analysis, the decision should be for the local community to put in place—and not necessarily be dictated from on high. The authorities, having made the case, must accept that the principle stood behind that is binding on them; otherwise, we risk a rather unedifying and opaque state of affairs, where the power is invoked for one reason but implemented for some entirely different objective altogether, and I would not be keen on that. We do not need a knee-jerk reaction to all that. There needs to be a consistent methodology for assessing the nature of empty second properties or short-term letting, and the detrimental effect these are having.

The noble Lord, Lord Foster, gave a graphic account of the issue, which I know from—

[Lord Foster of Bath (LD)]

Before the noble Earl moves on to another point I raised, could I ask, through him, for the Minister to perhaps confirm that even in the current legislation as proposed, it will be possible for councils to add a premium on the council tax for empty properties? It would be for the council to determine how that money is used; for example, my own local council has already a debate on this issue and proposed that the vast majority of additional money raised will go towards the building of more affordable homes in the area—to address the problem that is now being created because of the empty properties and short-term lets.