Sharing Economy: Short-term Letting

Rachael Maskell Excerpts

Thursday 16th June 2022 Commons Chamber

[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.

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[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Eddie Hughes)]

I begin by thanking my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken) for the opportunity to debate this important issue. It is a matter of considerable interest to many hon. Members across all parties and I am grateful to have heard some of their contributions today. Although short-term and holiday letting to paying guests is not a new phenomenon, it is clear that there has been rapid and significant growth in the market over the last decade or so, driven by the proliferation and popularity of online platforms such as Airbnb—other platforms are available.

Many hon. Members will have seen first hand and heard from their constituents as to the challenges and, on occasion, the benefits that that growth has brought to communities, the tourism industry and the wider housing market. Today’s debate has been an invaluable opportunity to hear about the picture in different areas of England, and indeed Scotland.

We can all agree that the sharing economy makes an important contribution to the wider economy. Some estimates suggest that short-term let hosts and guests contribute more than £3 billion to the UK economy. The sharing economy also benefits consumers, who enjoy a greater choice of accommodation at a range of competitive prices. Obviously, for households who have unoccupied or underused accommodation, it provides an additional source of income. Of course, an increased number of tourists in any area will have a positive knock-on effect for local businesses, particularly tourism and hospitality businesses, which will see more footfall and more spending.

Despite those myriad benefits, there are major drawbacks for certain local areas as hon. Members have highlighted. It is a particular issue in hotspots such as the constituency of my hon. Friend the Member for Cities of London and Westminster; in York, as the hon. Member for York Central (Rachael Maskell) highlighted; in rural areas, such as the south-west and the Lake District; and in Edinburgh, as the hon. Member for Edinburgh East (Tommy Sheppard) highlighted.

It has been argued that the growing number of short-term lets is affecting housing supply. Some people are rightly concerned that landlords may be prioritising short-term letting activity instead of long-term tenancy arrangements. Today, the Government published a White Paper for private renters, “A Fairer Private Rented Sector”, which sets out our plan to fundamentally reform the sector and to level up housing quality in this country. Our hope is that that package of measures will help good landlords in the market.

Another concern about short-term and holiday lets is the reports of noisy neighbours and the antisocial or nuisance behaviour of guests. Indeed, the Greater London Authority has reported that in the five London boroughs with the most Airbnb listings, there have been complaints related to short-term letting activity. Westminster reported 194 complaints of noise, waste and antisocial behaviour over just one year. Local authorities have a range of powers to enable them to tackle such issues, including being able to serve abatement notices if they believe a statutory nuisance is taking place; powers to tackle noise under the Noise Act 1996; and powers under the Anti-social Behaviour, Crime and Policing Act 2014 to act on nuisances such as litter and garden rubbish, as well as noise.

As we have heard from my hon. Friend the Member for Cities of London and Westminster, a further issue in London is that some short-term lets are regularly in breach of the 90-day rule that we have heard about. She has done a valiant job of lobbying Airbnb to take an industry lead and has encouraged it to accept a registration scheme, to provide local authorities with full disclosure of properties in their area, and to enforce that rule.

For those unfamiliar, if London properties that are liable for council tax are let out for more than 90 nights a year, that represents a material change of use for which planning permission is required. That rule was introduced in the Deregulation Act 2015 and gave Londoners similar freedoms to residents in the rest of England, where there are no restrictions. Prior to 2015, Londoners could not let out their homes on a short-term basis. The rule means that Londoners can rent out their property when, for example, they are away on holiday. In practice, however, as we have heard, local authorities say that they are struggling to enforce when there are breaches because of a lack of data on where the lets are located and who runs them.

This brings me on to what steps the Government are taking to improve how the short-term lettings sector operates. There is currently no definitive source of data on short-term lets, and much existing evidence is largely anecdotal. Much of the publicly available data also predates covid-19, so we really need to get an up-to-date picture of how the market is operating today. In the very near future, the Department for Digital, Culture, Media and Sport therefore intends to publish a call for evidence to help us do precisely that. After this debate, when I see the relevant Minister in the Tea Room, I will be nudging him in the right direction. Getting an up-to-date picture of how the market is operating will be vital for developing appropriate ways forward that not only preserve the benefits of short-term letting but address the challenges. When the call for evidence is published, the Government will welcome responses from those who have spoken today so that, when working out what the Government should do next, we can take advantage of the valuable knowledge imparted today.

[Rachael Maskell]

It is my understanding that DCMS will be looking at a registration scheme, not a licensing scheme, and there is a world of difference between them. Given the Minister’s departmental interest in this issue, could there be a roundtable to discuss the impact of this and the difference between licensing and registration? Would he advocate or facilitate such a roundtable with, for instance, the Members here and Members with a particular interest in this issue?

[Eddie Hughes]

I do not know if I can facilitate that, but, trust me, I am definitely going to advocate it. I think the idea of a roundtable with the relevant Ministers from my Department and DCMS would be an excellent idea. That would give colleagues from across the House the opportunity to engage, and it would be delightful if the hon. Member for Edinburgh East could contribute to it as well. I fully appreciate the jurisdictional element, but it would still be good to have his input.

Another prominent call is for changes to the planning system. I recognise that the creation of a new class for short-term lets appears an attractive way to limit them. However, this would also create challenges about how a new use class would be applied and effectively enforced. That said, I know that the Scottish Government have made changes to their planning system and the Welsh Government are consulting on making changes to reflect the new world created by short-term holiday lets. I would remind Members participating in this debate that the spread of second homes and holiday lets across England is not a consistent picture and clearly varies region by region. Nevertheless, we are speaking with the Welsh Government about the progress and implementation of their planning proposals, and I can assure Members that we will keep this area under review.

I want to mention briefly the action the Government are taking through the tax system. We have strengthened the criteria under which second properties are considered as commercial holiday lets and assessed for business rates, rather than council tax. From 1 April next year, holiday lets will be required to demonstrate that the property has actually been let out for at least 70 days in the preceding year. This will ensure that only genuine holiday businesses that bring tourists to destinations across the country and contribute to the economy can access the rate relief for small businesses.

Today’s debate has also touched on the impact that short-term lets have on the housing market, so I want to mention what steps the Government are taking to address the challenges in our housing market. They include making the dream of home ownership a reality, as well as delivering a significant number of new affordable homes, so that everyone can access a safe and secure home that is affordable to them. We are investing £11.5 billion in the affordable homes programme, which, if economic conditions allow, will provide up to 180,000 homes across the country.

We are also adopting new measures to support people getting on to the housing ladder. Since 2010, over 758,000 households have been helped to purchase a home through Government-backed schemes, including Help to Buy and the right to buy. On top of this, our First Homes programme offers homes to local first-time buyers with a discount of at least 30% on the full market value. Local authorities also have the discretion to apply additional eligibility criteria to First Homes through the plan-making process, including deeper discounts of 40% or 50% where buyers can demonstrate a local connection in order to prioritise local residents and key workers.

I want to close by once again thanking my hon. Friend the Member for Cities of London and Westminster for bringing this important debate to the House. The Government are acutely aware of the issue, and I can assure colleagues that we are paying close attention to it and giving it careful consideration both in my Department and in DCMS. As highlighted at the outset, we recognise that the sharing economy can be beneficial for local communities and businesses, but we are equally clear that those benefits cannot come at the expense of our ultimate priority of ensuring that everyone has access to a decent, safe and affordable home.