Short-term Lets: Regulation

Rachel Blake Excerpts

Thursday 12th September 2024 Westminster Hall

[Rachel Blake (Cities of London and Westminster) (Lab/Co-op)]

I beg to move,

That this House has considered the regulation of short-term lets.

It is an honour and a genuine privilege to serve under your chairship, Mrs Harris. The issue of short-term lets is an acute one for my Cities of London and Westminster constituents, so I am pleased to have the opportunity to raise it today and to discuss it with colleagues from across the House and across the country, and I look forward to the discussion with the Minister.

We need to improve the regulation of short-term lets in this country, from constituencies such as mine in central London to Truro and Falmouth in Cornwall, East Thanet in Kent, Morecambe in the north-west, and in cities like York—represented so ably by my hon. Friends today—where the demand for short-term accommodation is so high and the housing crisis so acute. Every place has its story to tell—I look forward to hearing them this afternoon—about how short-term lets are changing communities, sometimes for the better, but rarely in a way that is without challenges. We can see from the range of places represented that any solution has to be a national framework with power in local communities to decide on certain elements.

[Alison Hume (Scarborough and Whitby) (Lab)]

Scarborough and Whitby are understandably popular destinations for holidays and short breaks, but the impact of short-term holiday lets is forcing people out of the towns. Today there are only seven homes available to rent on Rightmove in the Whitby area, while there are 300 properties on short-term let platforms. Does my hon. Friend agree that the Government need to move at pace to introduce licensing and new planning powers for councils?

[Rachel Blake]

I agree, and the work that my hon. Friend has done to research the impact on the private rented sector is really helpful. I hope that we will continue that work together.

If I may relate this debate to wider business in the House, it is incredibly welcome to be conducting this debate the day after the introduction of the Renters’ Rights Bill. I warmly welcome the Minister here, and I congratulate her and the wider team on the speed with which they have brought forward legislation that will improve the lives of millions of people.

[Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)]

I congratulate my hon. Friend on securing this important debate. She highlighted the Renters’ Rights Bill, which is a welcome piece of legislation. We want to give security to renters. Is it not right that as well as security for renters, we should also have security and high safety standards for tenants in short-term lets, and people who actually pay their business rates and VAT as part of their operation?

[Rachel Blake]

I am glad that my hon. Friend raises that issue, which is twofold. First, it is about a level playing field with other types of business. Secondly, it is about safety for the consumer. I hope that we will have a chance to explore those issues.

There are 27,798 private renters in the Cities of London and Westminster, all of whom will be better off thanks to this Government. The Renters’ Rights Bill demonstrates that the Government are taking the housing crisis seriously, and I look forward to working with my hon. Friend and other colleagues on it as it makes progress through the House.

I think we would largely agree that platforms like Airbnb are not inherently a bad thing. I imagine that many in this room use Airbnb or similar services when we go on holiday, but we cannot deny that this has changed from being a peer-to-peer marketplace to something much broader. What started out as a way to make additional income from a spare room has become a significant cause of the decline in the number of homes available for local residents.

[Noah Law (St Austell and Newquay) (Lab)]

I thank my hon. Friend for securing this debate, which is crucial to the Cornish hospitality industry and housing landscape. Does she agree that while there is a need to establish a truly level playing field, for different kinds of holiday accommodation, including furnished holiday lets, we need to ensure that we support those local bona fide holiday businesses to continue to operate, lest we risk them flooding on to the market as more institutionalised Airbnbs or, even worse, second homes that are not well utilised?

[Rachel Blake]

I agree about the issue of the different types of places and different types of tourism and holiday accommodation. The experience in the centre of London is driven by technology. Previously, the ability to let out a room or even a whole home was much less, but in areas that have longer-standing tourist let economies—such as my hon. Friend’s area and those of other colleagues—we have found that there are different challenges. I believe that those can be discussed through the progression of the regulation of the sector. I thank him for raising that important topic.

[Andrew George (St Ives) (LD)]

Does the hon. Lady agree that this is about the politics of justice, not the politics of envy? It is not just an issue of the taxation of furnished lets. There has been an industrial movement of properties—second homes—going from being registered for council tax to being registered for business rates, and people then apply for small business rate relief and pay nothing at all. Against that, we do not get the investment in affordable homes for local people. In Cornwall alone, £500 million of taxpayers’ money has gone into the pockets of holiday let providers, while those specifically created, for planning reasons, with planning restrictions are outside that—

--- Later in debate ---

[Rachel Blake]

I thank the hon. Gentleman for that helpful intervention and for elaborating on that point. I definitely believe in the politics of justice over the politics of envy. Technology has industrialised this sector, so we need to come up with a policy framework that reflects the scale of the changed situation.

Having large numbers of whole short-term lets in relatively small geographical areas, and on an increasingly commercial basis, as we have discussed, hollows out communities. It causes waste management issues and gives rise to concerns about community safety, and it depresses the availability of homes in the private rented sector.

I will discuss the impact on housing supply and then come on to the environmental impacts. One of the issues with this topic is that in some areas, there is a lack of concrete data, at least in part because of the lack of regulation. That means that much of the information comes from the experience of housing teams in local authorities and what data can be scraped from the relevant platforms. According to detailed work by Westminster city council, around 13,000 properties are listed as available for short-term let in Westminster. Over 20% of the housing stock in the west end ward are short-term lets and, at the time of the census, 30,000 properties in Westminster had no full-time residents. We have that information only because of the hard work of Westminster council’s environmental health officers and others.

One in every 85 homes in the capital is available for short-term let on some basis for an undetermined number of nights each year. That is a problem in itself. As Claire Colomb, professor of urban studies and planning at University College London, noted:

“London is one of the least regulated European cities”

when it comes to short-term lets. Even Airbnb has been calling for a registration system for years, and the Short Term Accommodation Association agrees with the need for a national administered registration scheme.

Allowing short-term lets to proliferate without regulation is a potential challenge to growth. That may sound counterintuitive, but the variety of accommodation options in the tourism industry means that they are not on a level playing field, as we have discussed. Hotels, traditional bed and breakfasts, and hostels have to abide by safety regulations, which short-term lets, for example, simply do not.

Where we do not lack statistics, though, is in housing need. The latest homelessness figures show the highest ever number of families in temporary accommodation in London: 65,280. In March this year, over 3,000 households were in temporary accommodation in Westminster alone. I am sure that that is borne out in the inboxes of all Members here.

Every day I hear from a new family struggling to stay on an even keel after they have had to move to temporary accommodation away from school and their support networks. Just this week, I heard from a mother who has been moved to Dagenham, over 12 miles from her daughter’s school, where she also works as a teaching assistant. She is realistic about how long they are likely to be in temporary accommodation and knows the state of the London private rented market, so to prevent her son from having to commute for four hours a day and to try to make sure that he has friends locally, she would like to move him to a school in Dagenham, but without childcare support that means giving up her job. Families across London and across the country have to make that kind of decision every day, and it is not good enough. It is creating incredible pressure on our wider system and local authority finances due to the rising costs of supporting households in temporary accommodation—London councils estimate the cost to be £90 million every month—and it is all because there are simply not enough affordable homes for people.

Many of these pressures are directly attributable to the failures of the last 14 years, whether it is austerity eating into the resilience of our public services or the failure to reform the planning system to give local places more control over what is happening in their communities. In government, Labour banned the long-term use of bed and breakfasts for homeless provision, and between 2005 and 2010 the number of households in temporary accommodation halved. The national affordable homes programme got Britain building between 2008 and 2011, and the Mayor of London has started building the highest number of council homes since the 1970s. Even in opposition, Labour MPs such as Karen Buck, the former Member for Westminster North—parts of which are now in my constituency—improved housing standards through the Homes (Fitness for Human Habitation) Act 2018.

The proliferation of short-term lets of whole homes is making the availability of private rented homes much worse. Of course, London is a proudly international city, and we need to make sure that flexible accommodation options are available for visitors, but we will remain a thriving international city only if we ensure that sufficient housing is available for Londoners. Whole homes rented out consistently as short-term lets—again, I am not talking about residents who go on holiday and list their homes while they are away—are making it much more difficult for communities to stick together.

I was contacted by a constituent, Jayne, who summarised the situation well when she wrote that

“when I first moved here twenty-five years ago, I had neighbours. Now I am concerned about the security of our building because of the constant turnover of strangers”.

In strong communities, such as the ones that we all represent and the neighbourhoods of the Cities of London and Westminster, neighbours are the ones who watch our kids when we go for a job interview and who help us to book a GP appointment. It is these communities that are at risk if we do not take action now to regulate short-term lets. As a proud Labour and Co-operative Member of Parliament, I believe that the answer lies in community power, creating local assets and businesses that are owned—in the realest sense of the word—by the people who use and rely on them. What would it look like if, instead of a tourism sector that stretches the resilience of communities, we built one that created opportunities?

As well as hollowing out communities, there are environmental challenges in the growth of short-term lets in the Cities of London and Westminster. Waste management and noise are consistent issues. There is almost no way for councils to enforce against them, not least because they do not have access to the resources to do that, so any policy on enforcement action comes at the cost of council tax payers, rather than those creating the problems in the first instance. That is one of the consequences of an under-regulated market.

Local authority environmental services teams are working tirelessly on these issues, but they can enforce against only those they actually catch red-handed in breach of the rules. That makes it very challenging for short-term lets, as the visitor is gone in a matter of days, and it is difficult to establish a responsible and accountable person for those listings. That is why a registration scheme needs to ensure that there is not only a unique property reference number, but a single point of contact responsible for the property. Frequently, the noise from short-term let flats is intolerably loud at very unsocial hours and unbearable for long-term residents, and it should be avoidable.

The lack of clear and consistent regulation means that enforcement capability sits with organisations and individuals who are not incentivised to enforce, while those who want to enforce are often those without the resources. A private landlord whose tenant is using their property as a short-term let is not incentivised to enforce against a breach of lease—although they might choose to—unless it is causing them any direct inconvenience. They would rather avoid reletting the property. The same goes for freeholders whose leaseholders are sub-letting on a short-term basis, whereas resident management organisations and the council, which of course want to enforce wherever possible, lack either the resources or legal recourse.

However, there are solutions. I believe that we must create a compulsory registration scheme that captures each individual property, using a unique property reference number; ensure that platforms are sharing data, as part of that scheme, on the number of nights for which each property, identified by its unique property reference number, is listed on their sites; ensure that the registration fee is reasonable and proportionate so as not to drive out the small or individual hosts in the market; ensure that where whole-home accommodation is consistently being let out on a short-term basis, there are in place commercial measures, including a named, verified and accountable individual, gas safety certificates, commercial waste contracts where necessary, and appropriate insurance; and give local authorities the power to prosecute those accountable individuals for antisocial and illegal activity, such as fly-tipping. I simply do not believe that that would be overly onerous.

Proposals to manage short-term lets through the planning system are welcome in theory, but the proposals by the previous Government were not suitable for this context. These proposals were a new use class and associated permitted development rights. A new use class for short-term lets not used as a sole or main home is not problematic in theory. The issue comes with the proposal to automatically reclassify existing dedicated short-term lets into this use class without planning permission. This, as the Local Government Association has pointed out, would be at odds with the premise and purpose of creating a new use class for short-term lets, and would give local authorities no say in their location, size and quality.

There are practical solutions to all these challenges. I urge my hon. Friend the Minister, when she, along with colleagues from the Department for Culture, Media and Sport, considers this issue, to ensure that there is a robust national registration scheme, with data input from the platforms, as I mentioned, and that applications for short-term lets that exceed 90 days per year are dealt with under the normal planning application process for a change of use, rather than our automatically entrenching the current unsustainable situation. Local authorities must have enough resources—probably from revenue raised from the registration scheme—to enforce the rules.

Those suggestions learn the lessons of attempts to regulate short-term lets in other major cities, where they have benefited from the data and information available. I firmly believe that we should use all the powers at our disposal to address the housing crisis. Although I know that dealing with short-term lets is just a small part of solving the problem in places such as mine, in the Cities of London and Westminster, it could improve people’s lives, strengthen our communities and at least ease the desperate need for housing in the private rented sector, so today I urge the Minister to prioritise this. I would be grateful if she outlined a timeline for Government action on bringing forward a national registration scheme and considering and consulting on the future regulation of short-term lets through the planning system.

[Several hon. Members rose—]

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[Rachel Blake]

It has been a real honour to hear the stories of different places across our country. It has been a real privilege to serve under your chairship, Mrs Harris; to be joined by my immediate neighbour and very old friend the Minister, who represents Bethnal Green and Stepney, and by other immediate neighbours, my hon. Friends the Members for Kensington and Bayswater (Joe Powell) and for Vauxhall and Camberwell Green (Florence Eshalomi); and to hear contributions from Members who represent Devon, Kent, Lancashire, Cornwall, Leicestershire, Yorkshire, Sussex and Cumbria. We have been transported to the beautiful landscapes of Morecambe and the lakes, but we have also heard about some of the damage that short-term lets are doing to our communities and how challenging it is to take the action that we need.

I have particularly reflected on the following themes: the risks of depopulation and badly managed tourism, what is happening to the market and the challenges of enforcement in such a complex environment. This debate has clarified how important a localist, devolved approach will be. We have heard compelling and thoughtful contributions on the differences between the self-catered holiday let sector and traditional bed and breakfasts and hostels, and the risks there are to depopulation and otherwise thriving tourism industries if we get this wrong. We heard about the scale of the market impact, properties where rents could be as much as three times lower than the income from short-term lets, and just what that is doing to distort local housing markets.

I am struck by the challenge of effective enforcement and the fact that we have such a complex environment in which private landlords are unable to take action on their tenants. The urgent need for leasehold reform means we can get clarity and ensure we take action by delivering on the Renters’ Rights Bill. I am heartened that we can move forward on this issue. Hearing the Government’s commitment to make progress with a registration scheme is encouraging.

We need to think more about a licensing scheme. I shared some details about a unique property reference number and the importance of making sure that we have data available. I also welcome the idea of a toolkit. I foresee an opportunity with the devolution Bill and the publication of the national planning policy framework to make real progress on this issue to protect all our communities and contribute to tackling the long-term homelessness crisis in this country.

Question put and agreed to.

Resolved,

That this House has considered the regulation of short-term lets.