Holiday and Second Homes Regulation: Cornwall and Isles of Scilly

Steff Aquarone Excerpts

Wednesday 23rd October 2024 Westminster Hall

[Andrew George]

I am grateful to the hon. Member for that intervention. Indeed, she anticipates something that I will come on to in a moment.

Going back to that pre-history, we managed to make that change under the previous Labour Government. Indeed, I remember well a debate in this Chamber on 9 February 2000 when I raised these issues almost a quarter of a century ago. Chris Mullin was the Under-Secretary of State responding to that debate. I had raised the issue of the unfairness of the 50% council tax system. I had been campaigning pretty much on my own for some time until that point. I made the point to the Under-Secretary that the responses I had received from Government had been complacent. I hope the Minister, who I am pleased to see in his place today, will consider the precedent set by Chris Mullin when, towards the end of his response, he said:

“The hon. Gentleman said that he had received a rather complacent response from the Government, and, indeed, I have here a rather complacent response, which I will not read out. I merely say that the issue was reviewed about a year ago, and at the time there were no sufficiently cogent reasons for a change. I am, however, willing to follow up the point in my Department. Perhaps we can discuss it later.”—[Official Report, 9 February 2000; Vol. 344, c. 112WH.]

Chris Mullin and I did discuss it later, and the policy was changed.

One of the lessons from that is that we can effect change through these debates if Ministers are receptive to the arguments we put forward. I hope the Minister will consider that. The last Conservative Government responded to pressure. A lot of us were arguing very strongly against the way second holiday homes were being treated, although I was outside Parliament during my nine-year sabbatical. They could not withstand that political pressure; they had to respond to it. Indeed, they announced the intention to increase the premium on second homes by up to 100%, to be imposed by local authorities.

Have the new Government carried out any kind of impact assessment on the change in council tax arrangements for second homes? Have they considered whether it would have a counterproductive impact, if it was not married with a suite of other regulatory changes? People might switch from council tax to business rates and use the small business rate system, for example, and pay nothing at all. They may take other options rather than paying council tax.

[Steff Aquarone (North Norfolk) (LD)]

My hon. Friend is making an excellent speech. To build on the point made by the hon. Member for Truro and Falmouth (Jayne Kirkham), does he agree that we need local councils in Cornwall, the Isles of Scilly and elsewhere to be given greater powers to ensure that second home owners pay properly towards mitigating the overall impact of those homes on local communities? This is not about banded council tax or business rates; it is about the wider implications, for which we need to perhaps consider changes.

[Andrew George]

My hon. Friend makes an important point. It is not just the housing impacts; it is the wider societal and community impacts property investors have on local communities. I hope that when the council tax increase comes in, the Government will be clear on what local authorities can do. Will the council tax increase provide additional income that local authorities can use to address housing need, or will it result in a reduction in the central Government support grant to local authorities? Cornwall is staring down the barrel of a £100 million deficit, so that issue is very significant. A number of us are making the argument that council tax could go up by 200% or 300%, rather than 100%, in some areas because of the impact second homes are having, in order to adjust things as we believe they should be adjusted.

I have already referred to the impact small business rate relief has had. It has clearly been a major incentive for property investors to invest in holiday lets in areas such as Cornwall and the Isles of Scilly. Although the small business rate relief system is due to expire next year, could the Minister be clear about the Government’s plans for the future? There are no doubt pressures from that sector to reintroduce a similar rate relief. Although I do not think that is justified, for very obvious reasons, there are parts of the sector, particularly those holiday lets under an occupancy restriction, that could perhaps be included. We have had a campaign success, in that the last Conservative Government insisted on a 70-day use to justify the rate relief, but that needs to be reviewed.

I hope that the Government will be clear about how the registration scheme will be introduced, and I know that Cornwall council has offered to assist the Government in that. The council has expertise and is keen to introduce the registration system, but it needs to know how the scheme will work, what level of verification and inspection will be required by the council and what income can be raised. It will be an expensive process and Cornwall is offering to be a pilot area, if the Government wish.

Let me turn to the proposed planning use class change, which the Liberal Democrats have long argued should apply to all non-permanent occupancy residences. In other words, second homes and holiday lets should all be within one category, because we believe that the impact is the same on local communities, and therefore the change should apply not only to holiday lets but to second homes.

I hope that the new C5 use class for short-term rentals, which was announced by the previous Government, will be looked at with care, particularly the fact that it appears to fall under permitted development rights. In other words, local authorities specifically have to apply an article 4 direction to avoid a situation where someone converting a property to a holiday let simply announces it to the local authority and does not need to seek permission. I hope that the Minister will look at that issue. In the Liberal Democrats’ view, we also need to look at a sunset clause on those permissions; otherwise, there will be a perverse incentive for all of us to seek planning permission for that use class change in order to get a market advantage or an inflated price within the market. There should be a sunset clause, relating to the end of that usage, ownership or change within the Land Registry.

In conclusion, I will simply say that this is a very important issue in areas such as Cornwall and the Isles of Scilly, and—as we can see from today’s debate—in many other parts of the country. A suite of policies and changes need to be addressed by the Government, and many of us across all parties would be keen to work with them to ensure that the balance is absolutely right, and that local housing need is given the highest priority of all.

[The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Alex Norris)]

It is a pleasure to serve under your chairship, Sir Christopher, and it is a pleasure to respond to such an excellent speech by the hon. Member for St Ives (Andrew George). This is our first opportunity to work together because I was elected after his sabbatical commenced, and I am very much looking forward to working with him in the spirit with which he ended his speech. I know that there is a lot of interest in this area; I have spoken to my hon. Friends the Members for Camborne and Redruth (Perran Moon) and for Truro and Falmouth (Jayne Kirkham) a lot over the years about this, and I know that there is cross-party interest. I always think working in the spirit of Chris Mullin is a very wise idea, and I think we will work in that spirit. The hon. Member for St Ives certainly will not see any complacency from me and my colleagues. I thank other Members who have contributed to the debate, and I will try to cover the points raised as I go.

From what the hon. Member for St Ives said, as well as the previous debate raised by my hon. Friend the Member for Cities of London and Westminster (Rachel Blake), it is clear that having a high concentration of second homes and/or short-term lets brings significant challenges to those communities—indeed, they may be the biggest challenge, as my hon. Friend the Member for Camborne and Redruth said. Therefore, they are passionately advocating for effective regulation. I hope this is seen as a virtue, not least because we are a new Government, but those who follow the debates on this issue will know that we are actively considering the best course of action to help local authorities. I will talk about some of the things we are doing now, in the spirit of wanting to ensure that we go further.

I have not read the debate from 24 years ago. I confess to colleagues that as well as watching TV on a Saturday night, I will read old debates; I love the old transcripts. It is amazing to see how some debates evolve, and there is also always excellent content that perhaps one could pass off as their own, certainly if they went back far enough to not be detected—not that I would ever do that, of course, Sir Christopher.

This issue bumps up against a housing crisis with years of low house building, and rising interest rates that have made home ownership unattainable for many people. It is a core mission of this Government to address that challenge. The issue is more acute in places such as Cornwall and the Isles of Scilly and other coastal, rural and urban communities, where it is exacerbated by the proliferation of second homes and short-term lets. Cornwall and the Isles of Scilly are undoubtedly some of the most beautiful areas not just in the country but in the world, and are therefore popular choices for tourists. However, that has real consequences for local residents—whether it is high prices relative to earnings, people being pushed out of the choice of home ownership or having to leave their community, a stretched private rented sector with significant pressure on local economies, families and communities, or steadily growing housing waiting lists.

The hon. Member for Chelmsford (Marie Goldman) talked about the self-defeating cycle. During the passage of the Levelling-up and Regeneration Act 2023, her colleague, the hon. Member for Westmorland and Lonsdale (Tim Farron), spoke thoughtfully and passionately about the challenge of people going to a beautiful community for a week or weekend, and then going to the pub and not being able to get food because the chef has nowhere to live. These things will eventually impact the quality of the offering and therefore perhaps its attractiveness.

[Steff Aquarone]

This issue is a problem in many places, but even within places like North Norfolk, there is not even distribution. We have an overall figure of one in 10 homes being second homes, but some villages suffer up to 50%, which has an impact on temporary accommodation for the homeless. Does the Minister accept not just the circumstances but the urgency of the need for these measures?

[Alex Norris]

Yes, that is right, not least because once we get to that tipping point, the consequences can be profound and rapid. Of course we need action today, and I will speak about that.

One of the many important things that the hon. Member for St Ives said was that this is not about envy; he made a good point about balance. What his community and colleagues’ communities are asking for is a recognition of balance. They want to have a thriving tourist sector, but they need to be a place where people can live and where the consequences of those who make significant profits are shared fairly. It is about finding that balance and we have not got there yet, which relates to his point.

I want to talk about some of the issues and housing demand itself.