Housing Crisis: Rural and Coastal Communities

Lord Foster of Bath Excerpts

Monday 24th July 2023 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, I too congratulate the right reverend Prelate on securing this debate, which has highlighted our housing crisis, not least in affordable homes. Frankly, it is getting worse. Housing benefits now cover only the cheapest 18% of private rentals, housebuilding starts fell by 12% at the start of the year, and half of all our councils built no council houses last year. As the noble Lord, Lord Cameron, said, they need more help and more freedoms. Yet, while hardly mentioned in today’s housing statement, the crisis is particularly bad in rural and coastal areas, where house prices and rents are higher than in urban areas, while incomes are lower. It is increasingly hard for people of working age to live and work in rural and coastal areas, with the inevitable impact on their local economies.

As we have heard, there are three principal causes: too few genuinely affordable homes being built; second homes taking over full-time residential homes; and—the most rapidly increasing problem—short-term lets, or STLs, taking over the long-term privately rented sector.

I live in Suffolk, close to the popular seaside town of Southwold. Of its 1,400 properties, only 500 have full-time residents, 500 are second homes, and 400 are STLs. Therefore two-thirds are not permanently lived in. House prices and long-term rents have risen steeply, leading to staff shortages. Many bars, restaurants and hotels now have staff vacancies, and it is feared, as the right reverend Prelate said in respect of our rural and coastal communities more generally, that Southwold will soon be hollowed out.

In Committee on the levelling-up Bill, the Government promised action on STLs. Consultation has taken place on measures to enable councils to limit them, which I welcome. However, they do nothing to help the problems caused by many of the 257,000 second homes not used as STLs—“second homes for council tax purposes”, as they are known. Neighbourhood plans and new powers for councils to increase council tax on second homes will help but are insufficient.

Can the Minister explain why the Government, having belatedly agreed to address the STL problem, are failing to do the same for the second home problem? What is being done to resolve the failed attempt to close the tax loophole whereby second home owners avoided paying either council tax or business rates? Since Michael Gove introduced the so-called tough new measures, an extra 12,000 second homes have been added to the business rates list, leading the Telegraph recently to report:

“Holiday let council tax crackdown backfires—costing local authorities millions”.


Can the Minister also say what further steps will be taken to address this problem?

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[Baroness Swinburne (Con)]

I will come to my levelling up contribution shortly, and if it has not satisfied the noble Baroness at that point, I will happily come back in writing to her.

With regard to those communities in Devon, particularly when it comes to social housing supply, please know that we have listened and are taking everything into consideration as we look to level up prosperity and opportunity, as well as bolster community cohesion. We recognise that rural areas have more limited affordable stock than other places. As well as the affordable homes programme, my right honourable friend the Secretary of State for Environment, Food and Rural Affairs has announced £2.5 million of funding to provide a network of rural housing enablers across England, which will help to identify development opportunities and secure the support of local communities. Homes in rural protection areas are also exempt from both the right to acquire and the right to shared ownership schemes.

We are therefore introducing measures to strike the right balance between boosting local tourist economies and the availability of affordable homes for local people, giving councils the power to apply a council tax premium of up to 100% on second homes through the Levelling-up and Regeneration Bill, and introducing higher rates of stamp duty for second properties and new measures to close the tax loopholes on holiday lets—alluded to by a noble Lord—that came into force in April.

With respect to the regulating of holiday lets, we propose to introduce a planning use class for short-term lets and a registration scheme for all such properties. The consultations on these have just closed and we will give an update in due course. Through the Renters (Reform) Bill we will change the way that the short-term lets market interacts with the private rented sector. By abolishing no-fault Section 21 evictions, as well as removing the existing ground (3), landlords will be unable to evict a long-term tenant to convert their home to a holiday let and maximise profit during the peak summer season. We do not think that it is right that landlords can do this and we will end the practice.

Turning to the planning reforms, alongside having enough homes to go around, we want to see them well designed and in keeping with their surroundings—a particular priority for rural and coastal communities. We are proposing planning reforms to create a quicker, modernised planning system that will be to all these communities’ benefit. These are all set out in the Levelling-up and Regeneration Bill and in a consultation on changes to the National Planning Policy Framework that ran earlier this year. In this, we specifically explored opportunities to unlock small-scale sites as well as strengthening the significant untapped potential of community-led development to meet housing need in rural and coastal areas. We are carefully considering the consultation responses—there were nearly 26,000—and hope that our response will provide some real potential for positive outcomes for our countryside and seasides.

Turning to the infrastructure levy, we launched—

[Lord Foster of Bath (LD)]

I apologise for interrupting, but before the Minister moves on, can she explain why the Government are thinking of introducing powers to enable local councils to control STLs but are not thinking of introducing similar powers to help councillors to control the number of second homes that do not become STLs?

[Baroness Swinburne (Con)]

I thank the noble Lord. I will note back to the comments about the registration scheme for short-term lets, which will capture many of those that are being used for—

--- Later in debate ---

[Lord Foster of Bath (LD)]

I apologise, as I know that time is very short, but short-term lets is one issue. I have already welcomed what the Government have done. However, there are a quarter of a million second homes and growing that do not get converted into short-term lets and are not covered by the current proposals. What will be done about the growing number of second homes that will not become short-term lets?

[Baroness Swinburne (Con)]

I will need to get my noble friend the Minister to respond to the noble Lord in writing on that specific issue.