Short-term Lets: Regulation

Markus Campbell-Savours Excerpts

Thursday 12th September 2024 Westminster Hall

[Markus Campbell-Savours (Penrith and Solway) (Lab)]

My constituency includes parts of the Lake District national park and I have been a councillor for the town of Keswick for a number of years, so this has been a big issue for me. It was interesting to hear my hon. Friend the Member for York Central (Rachael Maskell) talk about the number of holiday lets in her constituency, which I think she said was 2,000. The CA12 postcode, which comprises Keswick and the surrounding villages, has 1,000 holiday lets. The impact on a micro level is part of the issue. There will be people in some councils around the country who will listen to this debate and think, “What are they talking about?”, but others will know exactly what we are talking about and recognise the problems that it is causing for our people.

I have followed this debate for a few years, and I appreciate the toolkit approach, but my worry is that that is throwing everything at it. We have to remember that some of our tourism economies are now quite reliant on this accommodation. We have even seen some traditional holiday accommodation, such as bed and breakfasts and guest houses, move away because people prefer self-catering options. For me, the question is how we remove the bubble, which is causing so much harm, without destroying our tourism economy. We need to look at the range of options and evaluate them by asking what we would really gain from them and what damage they would cause.

I want to start with tax, which is a funny one. Some people have the idea—I have never bought into it—that if we throw taxes at people, eventually there will be a new equilibrium and all of a sudden we will hit a sweet spot where we have the right number of holiday lets and everyone is happy. Even if we were to achieve that in the Cities of London and Westminster or in Cornwall, it might not work in my area. I do not believe the tax system is designed in a way that will allow us to manage this problem. I appreciate the arguments about fairness and what is just, and whether it is right that, every time a property turns from a residential property to a holiday let property, the tax burden of the parish precept has to be put on the neighbours, because of the way that calculation is done. I get that parts of the tax system are unfair, but I still do not think it is the answer to our problem.

There is also the registration system. I am grateful to my hon. Friend the Member for Cities of London and Westminster (Rachel Blake) for bringing this issue to Westminster Hall. I used to be a Labour activist in her constituency and I remember it being talked about on the doorstep, but Westminster has a key thing that some other areas do not: the 90-day rule. It also has many people living in leasehold properties who are forbidden by their leases from offering short-term lets. The real issue in Westminster is the cat-and-mouse game whereby the leasehold block management companies chase people to try to prove that photographs on Airbnb are of the inside of their flat. Neighbours make complaints, but often enforcement is not possible. I can see the power of a registration scheme for enforcement by those companies and by councils. We have seen this problem on the Churchill Gardens estate, with chocolates on the pillows —the works.

I can see why a registration system would work in London, but there is a big flaw in it. In my area, it would only allow us to do one thing: count how many short-term lets there are. I do not need to count them to know the damage they are causing. What we really need is caps. Some people say, “Well, use the planning option,” but that would see permission given in perpetuity under permitted development rights. It would be a disaster for my community if the 1,000 holiday lets were made permanent in that way.

My hon. Friend the Member for York Central suggested a licensing scheme, and I think that is the way forward. That would allow us to build in caps. Importantly, whereas the planning system is under-resourced, does not have the funds and is front-loaded because people only pay for planning applications at the beginning, under a licensing scheme, owners would have to pay on an annual basis.

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[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to serve with you in the Chair, Mrs Harris. I add my congratulations to the hon. Member for Cities of London and Westminster (Rachel Blake). It is good to see her following in the footsteps of her predecessor, who secured a number of debates and made many contributions on the impact this issue has on that constituency and others. May I also commend the work that London councils have done on behalf of local authorities in the capital to highlight the impact of this issue and bring forward constructive policy suggestions?

There is a high degree of commitment to cross-party working on this issue. As we have heard, it has an impact on constituencies across the country, not just here in the capital, and it was much debated in the last Parliament, particularly during the era of the covid pandemic. We saw many of our constituents who wished to go on holiday or needed to travel for work unable to use hotels, and they therefore made the best possible use of providers such as Airbnb to secure accommodation that met the covid regulations in place at the time.

Many of us worked on the assumption that post-covid there would be a return to the market as we had seen it before, which clearly has not been the case. At the same time, longer-term changes, driven partly by Government but also by wider issues in the market, have seen reducing profit margins for those in the buy-to-let market and people facing higher costs for the standards of the buildings that they maintain. They have also seen the introduction of significantly increased checks on tenants as a result of the need to crack down on unlawful lettings and market changes more generally, as the big players such as Airbnb and Booking.com have sought to create a greater supply of this type of accommodation for commercial reasons.

Clearly, the regulations introduced in 2015—particularly in the capital, with the 90-day limit and the requirement that somebody had to be paying residential council tax on accommodation for it to be let, as well as ensuring that the hon. Member for Kensington and Bayswater (Joe Powell) would not be able to let out his parliamentary office should he wish to do so—are examples of measures taken by Government with a view to ensuring that this market played a positive role in local communities. However, as has been highlighted by many Members, significant issues clearly remain despite those measures and that high degree of cross-party consensus.

As with many things, I put it to the Minister that there will be an opportunity in the Government’s review of the planning system to consider points about the use classes that would apply to property, in particular to introduce requirements around planning consent being sought for those properties that could create a nuisance because of their proximity to other types of residential development, and to ensure that powers that may be enforced are available to local authorities through the planning system.

[Markus Campbell-Savours]

Is the hon. Gentleman aware that planning authorities can barely wash their own faces, let alone take over the enforcement of thousands of holiday lets? Does he not think that that could be a huge challenge, which could perhaps be better funded through taking money directly from the holiday let operators?

[David Simmonds]

I started my political career as the chairman of a planning committee in London, and I am very aware of the challenges faced by planning authorities—not just in the capital, but elsewhere.

The design of the system around enforcement is clearly intended to ensure that it is financially self-sustaining; we have seen some examples of that with local authorities, including those that have entered into contracts with the private sector specifically to ensure higher levels of enforcement funded by fines and charges levied against those abusing the system. Not all local authorities have reached the stage where they are prepared to undertake that work, but clearly both the available market in providers and the powers and freedoms that local authorities have enable them to do that if they feel that it is an appropriate and proportionate solution to the level of challenges and concerns that they face in their local community.

We know that the current situation reflects a long-standing determination on the part of Governments of all parties to ensure that there is an increase in the accommodation available. Measures such as Rent a Room tax relief, which was introduced many years ago, were intended to ensure that there was a greater supply of flexible accommodation, so we need to ensure that we strike the right balance in this market.

I finish with some observations about the context of the housing market in which this debate is taking place. The UK has the most intensively used housing stock of any major developed country in the world. We have very few derelict or empty properties, so given the level of demand in comparison with other major economies, it is clearly important that we ensure as far as possible that accommodation is available to those who need it.

An element of that will be short-term lets, which play an important role in the economy, but with many people looking to secure longer-term and permanent housing that clearly needs to be a high priority. In taking forward their planning reforms, I urge the Government to consider the fact that there are already an additional 1.4 million new homes in England with planning consent already granted by our local authorities. Priority should be given to ensuring that those consents are fulfilled and those homes are built, rather than prioritising, for example, the deregulation of the green belt.

I also want to bring something else to the attention of those present. In some respects the previous Government’s record deserves criticism, but on measures for net additional dwellings and new homes per calendar year—both major measures on housebuilding—development under the previous Government hit record levels; in fact, in recent years it hit the long-term record for as long as the statistics have been gathered. Indeed, during the last Parliament, a net additional 1 million new homes were built in England alone, in fulfilment of the manifesto commitment.

Many hon. Members have highlighted lots of issues that need to be dealt with effectively. I would encourage the Government to consider how, through their review of the planning system, those issues can effectively be brought forward. They should also consider how existing measures that have been highlighted, such as enforcement powers and the means of recouping costs, which are already available and used widely by some local authorities, could be put into action more swiftly.

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[Rushanara Ali]

I thank the hon. Gentleman for his point. This is why this debate is so important: we must make sure that we address the issues and challenges being raised. The new Government are taking stock and considering a full suite of options for the regulation of short-term lets before we make policy decisions, but I have heard clearly from hon. Members about the issues and challenges they face in their constituencies. We need to ensure that the response is proportionate and appropriate, reflects the different kinds of issues affecting different constituencies, and avoids unintended consequences. The actions we take must properly address those issues.

In England, the average house price is more than eight times annual earnings, and affordability issues are even more acute in the constituency of my hon. Friend the Member for Cities of London and Westminster. The average monthly private rent in London increased by 9.7% last year, and is more than one and a half times higher than the average monthly rent in England. Although it is true that London remains one of the country’s least affordable areas, we are in the middle of a housing crisis right across the country. Years of low house building across all tenures, combined with rising interest rates, have resulted in too few genuinely affordable homes. The issue has been exacerbated in London, coastal towns in places such as Cornwall and areas such as the Lake district by the proliferation of short-term lets and second homes, as hon. Members have highlighted. That is why we want to go further by giving local authorities tools to tackle short-term lets where they are an issue.

The lack of robust data about short-term lets, which my hon. Friend the Member for Cities of London and Westminster mentioned, means that local areas often struggle to define the true extent of the problem and are unable to effectively manage the impacts. Although this data is not perfect, in 2022 a call for evidence suggested that there are about 257,000 short-term lets in England, about 43,400 of which are in London. I know my hon. Friend is keen to have better data about short-term lets in her constituency, and I am happy to hear that she and a number of other hon. Members support the short-term lets regulation scheme. We are committed to introducing the register, which will be an essential tool in enabling local authorities and central Government to access relevant data on short-term lets.

[Markus Campbell-Savours]

Does my hon. Friend recognise the issues with the registration scheme, which the previous Government described in their consultation as “light touch”? It will not meet the needs of areas such as mine, where we do not have the additional legal powers available in places such as London.

[Rushanara Ali]

I am grateful to my hon. Friend for his intervention. It is important that we look at what can be done as part of that exercise. He will appreciate the point I made about the new Government needing to take stock of what is working, where the good examples are and what we can draw on. The register is part of that, and I look forward to ensuring that colleagues’ insights and contributions are taken into account.