Deregulation Bill

Lord Tope Excerpts

Wednesday 4th March 2015 Lords Chamber

[Lord Tope (LD)]

My Lords, I have also added my name to the other three from both sides of the House. I have no personal interest to declare, other than that I am a resident of outer London, where this is not yet a problem. I stress “not yet” because the issue is growing so fast and exponentially that it is only a matter of time before it becomes so: not just in central London, where it is of major significance now, but elsewhere in London and in other parts of the country, although they are not affected by this legislation.

I spoke about this at Second Reading in July, at greater length in Grand Committee and on Report. The reason was that I learned more and more about the issues that residents of central London experienced daily from indiscriminate and largely unregulated short-term letting. To that extent, all of us are agreed—and agree with the Government—that we have no objections whatever to London residents wishing to sublet their London residence for a short period while they are on holiday or otherwise away. Where it becomes more difficult is when this grows and in many places, particularly in central London, becomes an industry.

I have been helpfully advised by Westminster City Council throughout this process. For understandable reasons, Westminster has experienced this issue hugely. It told me back in the autumn that for some time it has employed between four and six planners solely to deal with the enforcement of this issue of short lets. It has considerable experience both of the problem and of trying to enforce the law as it stands.

To digress for a moment, on Report I quoted what I had been told by the leader of Westminster City Council, who had told me:

“There has been no engagement with this local authority either at a political or an officer level”.—[Official Report, 11/02/15; col. 1306.]

In reply to the debate, in col. 1316, the noble Lord, Lord Ahmad, denied that and said that there had been full engagement with London authorities, specifically with Westminster. A few days later, on 13 February, the leader of Westminster City Council wrote to Lord Ahmad, saying that this was categorically “not true” and there had been no consultation with Westminster at that time. She wrote:

“I should also note that Westminster had no advanced knowledge of the detail of the policy note”,

which had then just been published,

“and would have been left to read about it online or in the newspapers”.

When the noble Lord, Lord Ahmad, replies, does he wish to put the record straight? Like me, I am quite certain that the Minister was speaking in good faith. I repeated what I had been told. I have no doubt that he repeated what he had been told, but he and I now have in writing from the leader of Westminster City Council that he had been misinformed. He may wish to correct that.

Westminster has been helpful in all this. It speaks from experience and it is true to say that it would much prefer us to go for a 30-day limit rather than a 60-day one. Any limit is arbitrary, of course, and we have gone for a compromise. However, the most important issue for Westminster City Council, and any other local authority that has to enforce this, is that it must have some system of registration. To quote again what I have been told by Westminster, without that,

“we simply would not be able to identify where a property was let illegally on a short-term basis”.

Unless there is a registration system and the regulations require it, albeit a quick, simple, online system, which Westminster says they can set up probably in a matter of hours, then all the regulations—whether they comply with our amendments or the government amendments—will, frankly, be unenforceable and meaningless. I hope that the Minister, when he replies, says at least that the Government will require it in regulations.

[Lord Rooker (Lab)]

I do not want to interrupt the noble Lord, because I agree with everything he has said. When he discussed this with Westminster, I am curious to know whether they discussed the insurance implications—not so much the contents, but one assumes that the owner in a block of flats pays insurance through the service charge. Quite clearly, the lease must be being breached in the sense of the numbers. The insurance companies must have some view about this, because it leaves everybody else liable and may leave the owner of the particular dwelling subject to sanctions by the insurance company. That may be a route to helping to solve the problem.

[Lord Tope]

The noble Lord asks if I discussed this with Westminster: specifically no, not with Westminster City Council. However, in the course of the many months that this has been going on, my noble friends and I have heard from numerous individuals and organisations involved in this. It is indeed one of the issues that others have raised and the noble Lord is right to draw attention to it. Others have been health and safety, fire regulations and all sorts of issues, which will be helped, to some extent, by whatever regulations are introduced.

I began by saying I wanted to be brief. I think that I am temperamentally incapable of being brief on this issue, but I will try. On registration, which is absolutely critical, I will quote from the letter that the leader of Westminster City Council wrote to the noble Lord, Lord Ahmad, on exactly that point. She concluded by saying:

“Having dismissed the suggestion of a simple, light-touch notification process for those seeking to let out their property on a short-term basis”,

which is what the Minister did at the previous stage, she asks,

“how will a local authority be able to identify and therefore enforce against a property being let for the 91st day within a calendar year?”.

I re-emphasise the point because it is critical. Unless we have some sort of notification and registration process, it is simply unenforceable, whatever else we say and do.

The other issue I want to speak to briefly is how we determine that the property concerned is indeed the residential property belonging to the person letting it. It has been suggested that this is done by the requirement, in the Government’s amendment, to pay council tax. We all know that lots of people pay council tax, but it is not necessarily their residence, let alone their principle residence. It is a bit unusual for a Liberal Democrat to quote Westminster City Council so frequently, but it does have the greatest experience on this. It says:

“This provision would therefore change nothing. The real change would be if the Government stipulated that only principal permanent residences were eligible for short-term letting”.

That is the purpose of the amendment in our package.

We are now at the last possible stage of this Bill in this House, apart from ping-pong, and we need to understand why we are at this stage. I raised this issue—as did others—at Second Reading in July, we had a considerable debate on it in Grand Committee on 30 October and we returned to it in February, one day after the Government finally published their policy guidelines and then only under considerable pressure from the noble Lord, Lord Ahmad, who realised that he would have to reply to the debate. We are now trying to put into the Bill details of regulations that should have been properly and fully consulted over that nine-month period. We should have tried at least to reconcile the differences between the different interests—and they are substantially reconcilable if the Government had ever tried. The one local authority most directly involved and with the most experience states in writing twice that up until a week ago, it had had no such consultation.

We are now at the stage where the Government have understood, as I pointed out on Report on 11 February, that it is too late for the regulations to be tabled to receive their 40-days waiting period to be considered in this Parliament. On Report, that was impossible; it is clearly even more impossible now. For this Government not to give a blank cheque to whomever forms the next Government and whoever is the next Minister, we are now putting in the Bill details that ought to have been in regulations, drafts of which should have been produced months ago, discussed and consulted on so that whatever we are to legislate for was clear—hopefully agreed, but at least we could agree where the differences are. We are at the last possible stage putting in the Bill just what the Government until now said that they would not do, but ought properly to be in regulations that have been consulted on and largely agreed.

[Baroness Shields (Con)]

My Lords, I put on record my support for the measures being introduced by the Government to reform short-term letting across London. I do that in my capacity as the Prime Minister’s adviser on the digital economy, but also as the chairman of Tech City. Over the recess, noble Lords will have received a report entitled Tech Nation, which detailed the enormous social and economic benefits being generated by the digital economy—across the country, not just in London. The accommodation sector is a prime example of the sharing economy. It is led by a number of high-growth businesses in the UK which are global leaders in their field. They are hiring a lot of people to support those businesses. It also gives individuals the opportunity to leverage an unused asset and to generate income for themselves and their families.

In my role as chairman of Tech City, I have seen the enormous opportunity that that presents to the UK economy. I see five key benefits as a result of that reform. The first is a more optimal use of space by allowing short-term letting for short periods when homeowners are out of town, to utilise existing housing stock in a much more efficient manner. Secondly, it would be a boost to family incomes. The supplementary income derived from short-term letting can help individuals and families to top up their immediate incomes.

Thirdly, the reform will deliver more taxation to the Exchequer. Any earnings accrued via short-term lettings will have to be declared, thereby boosting Treasury receipts. Fourthly, the reform will provide more options for tourists. Many tourists around the world are now opting to rent a home versus staying in a hotel, especially for groups or families who may need a large living space or a garden, which a hotel or bed and breakfast simply cannot provide. Finally, this reform will help to boost local businesses and employment. New hospitality providers are creating large numbers of jobs. In addition, short-term lets often take place outside central areas, so businesses which may not have historically benefited from tourist footfall may now benefit from tourists staying in their area.

Aside from those overarching benefits, the reform will also provide clarity to Londoners who are now facilitating short-term lets and ensure that they take place in a more secure and regulated manner.

I understand and respect the concerns raised by Peers across the House related to unintended consequences of the reform. However, I am satisfied that the Government have now put in place measures which will protect London’s long-term housing stock and residential amenity. Specifically, the reform will be limited to those who are liable to pay council tax. A limit of 90 days in any calendar year for which residents can let out their residence will also ensure that homes are let out only for short-term occasions. Local authorities will also have power to apply to the Secretary of State for specific areas to be exempted from the provisions. In my view, the additional safeguards called for by the amendments are unnecessary and run counter to what we should be seeking to deliver: a proportionate, straightforward and progressive set of rules.

I should like to tackle the issues in turn. First, it is proposed in Amendment 7 that the total number of days in a calendar year for which a resident can let their property should not exceed 60. In my view, that is far too restrictive and fails to acknowledge the working and living patterns of many Londoners today. Other cities have reformed their laws to allow many more days to letters. Paris, France, allows 120 days, Hamburg 180 days, and San Jose, in the heart of Silicon Valley, also 180 days.

Secondly, it is proposed in Amendments 6 and 8 that the reform should be restricted to principal London residences only. I believe that it should apply to all residences. Often, secondary homes are left empty. In my view, from time to time, those homes should be available to let and utilised more efficiently.

Finally, on exemption powers, although I acknowledge the potential need for the Secretary of State to exempt certain areas from the new provisions, that should be the case only in extreme circumstances and where there is sufficient evidence that residential amenity is negatively impacted. The granting of exclusion powers to councils to restrict short-term letting to specific areas would, in my view, result in a regulatory patchwork across London that would provide neither clarity nor consistency for homeowners.

--- Later in debate ---

[Lord True (Con)]

My Lords, I apologise to the House for not having been able to take part in previous discussions on this matter, but I speak as leader of a London local authority and I consider that it is my responsibility to draw the House’s attention to the way this measure is perceived by a leader of a London authority. I am also by training a historian of Byzantium. I think that very few Byzantine emperors would have devised such a system for their capital city.

On the previous amendment, the Minister on the Front Bench argued very strongly against increasing bureaucracy and extra red tape. He also argued that London needed to be deregulated. However, I anticipate that, just a few minutes later, the Minister now on the Front Bench—my noble friend Lord De Mauley—will tell us the opposite of that and, as the noble Lord, Lord Harris, suggested, will tell us that we need more complication and further regulation. I simply do not see the logic of that and I do not know of another leader of a London authority who shares the Minister’s view.

We heard the representations made by London authorities on a previous amendment. It is important to realise that this is not some bone-headed resistance from a bureaucratic body. People who are talking to government, or who wish to talk to government and advise them, have authority and the responsibility of satisfying the people of London on a day-to-day basis that their streets can be kept clean and be competently administered. I believe that they are clean and competently administered in most cases. We have a non-criminal system that was recently established with general consent and which I do not believe needs to be tampered with. If the Government really believe in deregulation and devolution, there is no rationale whatever in changing the London system.

My authority is a keen promoter of recycling. We pass all the Pickles tests. We do weekly collections and even collect from side alleys. We do not have bin snoopers but we do have the opportunity to impose a light-handed touch of regulation. In five years as leader I have not had a single call, letter or email complaining about this system. There is no evidence base that I am aware of to justify imposing a more complex system on London.

I suspect that at this stage the Government are not prepared to change their mind. That is a pity in the light of the arguments in the record that I have read and those that I have heard. Of course, it would be perfectly possible to proceed with two parallel systems. In fact, it would be interesting to see whether the Government’s more bureaucratic system outside London was more effective than the less bureaucratic system inside London. That could be a sensible way to test public policy. Even at this late stage, I urge my noble friend to consider whether the Government could not leave London well alone. That would not stop anything that is planned for the rest of the country in terms of decriminalisation. That is the considered view of experienced people in London based on their experience of doing the difficult job of trying to administer London and at the same time reduce staffing in local authorities and not take on extra bureaucrats to implement ever more complex systems. I hope that my noble friend will reflect on that when he comes to reply.

[Lord Tope]

My Lords, I am the fourth current or former London borough council leader to speak in complete agreement with my colleagues—indeed, my former colleagues. The essential point has been made: what is wrong with the London legislation passed in 2007, which applies across London and was supported by all the London boroughs—it has to be supported by the London boroughs—that we now need Clause 57, at the end of five pages in the principal legislation, specifically deleting the provisions for London, and a four-page schedule, Schedule 12, implementing them?

There must be a pretty serious problem in London that needs fixing. It is supposed to be such a serious problem, but neither a current London borough council leader nor three former leaders from different parties and different parts of London are aware of any problem at all. The London legislation largely meets the Government’s intentions either specifically in decriminalisation or certainly in intent and purpose. The differences between the schemes are relatively minor, certainly not such as to require nine pages of principal legislation to deal with.

We ask, I think in my case for the third time during the passage of the Bill, what is so wrong with the London legislation that it requires this Bill to change it. What are the problems? What are the issues? There is no record of people being incorrectly or inappropriately prosecuted. Indeed, there is hardly any track record of people being prosecuted at all, so that is not really the object of it. The object is to encourage people to recycle and to comply, not to penalise them. It has a very well tested appeals system, albeit not tested in waste collection, which has not been a problem. It is the same appeals system as is used for parking appeals, which is certainly well tested in London.

We have a good system that has been in legislation for just about eight years. We have a good appeals system and a waste collection system that works. What exactly are the Minister and his colleagues trying to fix with this legislation?