Sharing Economy: Short-term Letting

– in the House of Commons at 3:03 pm on 16th June 2022.

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Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster 3:03 pm, 16th June 2022

I beg to move,

That this House
has considered short-term letting and the sharing economy.

I have called this debate to once again draw attention to the negative impact on our neighbourhoods up and down the country caused by the abuse of short-term lettings. Short-term lettings are when property is let on a nightly or weekly basis usually for leisure and tourism purposes. We are seeing them pop up on a variety of platforms, including Airbnb, Booking.com, Tripadvisor and Expedia. Since the Deregulation Act 2015, we have seen an increasing number of properties, which would otherwise have been rented out on a long-term basis, being turned into basically holiday accommodation. Between 2015 and 2020, the number of Airbnb listings in London alone grew by 378%. Research by London Councils found that by 2019, there were more than 73,000 listings for short-term lets in London across six of the largest online letting platforms. That is equivalent to one in every 50 homes in the capital.

Photo of Felicity Buchan Felicity Buchan Conservative, Kensington

Does my hon. Friend agree that one issue with short-term lets is that they take housing stock out of the market? I have the neighbouring constituency of Kensington, and in the tourist areas, particularly around the South Kensington museums, there are streets that are almost exclusively Airbnbs. Many of those are one or two-bedroom properties, and that is aggravating the housing crisis because young people who would typically buy those properties simply cannot get access to them.

Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster

My hon. Friend is absolutely right. With the explosion in the number of short-term lettings, a whole host of problems associated with such lettings have become more widespread across our neighbourhoods. I shall highlight a number of the issues we are seeing, which include increased pressure on housing stock, leading to higher property and rent prices—that is what my hon. Friend referred to. They also include a rise in associated antisocial behaviour, noise complaints and dumped rubbish, and an increasingly unfair playing field in the accommodation sector, which is placing more and more pressure on hotels and private bed-and-breakfast businesses.

Since coming into force, the Deregulation Act 2015 introduced several changes that were designed to free businesses from the burdens caused by regulation and existing laws, including relaxing planning permission in London for short-term lets. When the Bill was going through Parliament, Westminster City Council predicted that homes would be, en masse, turned into lettings for tourists. We knew that those lettings would soon basically be turned into mini hotels, without any of the oversight or regulation that genuine hotels have to adhere to. That is why it was a relief in some contexts to see short-term lettings in London limited to just 90 nights per year under the Deregulation Act, following a sustained lobbying campaign by Westminster City Council. That was not enough, however, and sadly our worst fears have come to fruition.

Without the right tools to enforce the Act our biggest concerns have become a reality for many local people, and many landlords involved in short-term lettings are ignoring the law. Research from 2019 estimated that 23% of 11,200 Airbnb listings in London alone were occupied for more than 90 nights in that year. With the number of short-term lettings skyrocketing, it is clear that we need urgently to get a grip of the situation, because it is becoming unsustainable.

This is obviously not just a London issue. As my hon. Friend Selaine Saxby recently highlighted, 4,000 homes have come out of private rent in Devon since 2016, and 11,000 have joined the short-term holiday listings. I know from speaking to colleagues across the country that we are seeing that trend up and down the United Kingdom, particularly in places such as Cumbria and the south-west. This issue affects our whole country, and although problems such as strain on housing availability and the cost to local authorities may be the same nationwide, the diverse nature of the issue means that there will be no one-size-fits-all approach to resolving the problem. What we need, in my humble opinion, is for local authorities to be given the powers to do what they feel is right for their unique areas. For example, here in Westminster we need a licensing scheme much like those seen in other countries. Such schemes are generally set at a local level and ensure that standards are adhered to and that the market is not overwhelmed.

We see key examples around the world. In Lisbon, the city council has implemented containment zones that limit the amount of short-term let accommodation within them. In Barcelona, landlords are required to have their properties inspected and approved before they can be let out. Closer to home, the Scottish Government have legislated for local authorities to introduce a short-term lets licensing scheme by October. It will be interesting to see how that works when it is implemented, and how successful it is.

While such schemes differ from one another, they all suit their local needs, seeking to balance the sharing economy with the rights and amenity of local residents. That is what we should strive for across the UK, balancing tourism with the desire and need of locals to have a comfortable and quiet neighbourhood.

We also see examples around the world where that has been taken further. In Atlanta in the United States, a tight licensing regime has been introduced with strict conditions. For example, hosts in that city have to hold a permit and pay an annual $150 fee. They face a $500 fine if a tenant violates city rules. They may have a maximum of two properties, one of which must be the host’s permanent residence. That is probably what we need for London.

Across the world, we see that there is a full spectrum of examples and solutions, and it is about finding what works best in a local authority area. As it stands, the spirit of the Deregulation Act is not being met. We are seeing not the rise of individuals opening their spare rooms or their homes while they are on holiday, as the Government had hoped would happen under the Act, but a gradual increase in commercial businesses snatching up properties for the short-term letting market. Here in Westminster, 64% of hosts on Airbnb have at least two listings.

Photo of Andrew Slaughter Andrew Slaughter Shadow Solicitor General

The hon. Lady is right to emphasise both the scale and the commercial nature of the problem; a lot of people think it is marginal when, in fact, in some areas it is endemic. Last week, I talked to a local headteacher who said that her school’s intake had been affected by a local mansion flat area changing from being long-term accommodation for homeless families into luxury accommodation with a substantial proportion of short-term lets, changing the character and demographics of the entire area. That is why the Government need to act.

Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster

I do not often agree with the hon. Gentleman, but I certainly do on this.

We are aware that, in Westminster and across central London, landlords can often skirt around the 90-night rule by posting their property on multiple sites or re-registering it in a location a few metres away. In turn, I am deeply worried that we are witnessing a hollowing out of central London, as Andy Slaughter referred to regarding his local area, as properties convert all too easily from homes to holiday lets.

At the start of 2022, the number of properties listed to rent across London was 35% lower than in pre-pandemic times. As I am sure hon. Members will appreciate, the housing market in my constituency and across the capital is already squeezed on both affordability and availability. We currently have over 4,000 households on the Westminster social housing waiting list in the same area that has 7,230 available properties on Airbnb. The average house price in the two cities has risen by £32,000 a year over the past 25 years. The most troubling issue is that, according to SpareRoom, average rents have now risen in the capital by 13% in the last year alone. That is why I find it increasingly frustrating that, while I can easily find plenty of examples of hosts with 50 or even 100 properties available, I cannot find a home to rent on a long-term basis in my constituency in the same areas.

The dramatic increase in the number of properties converting to the holiday accommodation market and away from the private rented sector is ensuring that people are forced out of central London. It is getting so bad that I fear the only realistic possibility of the young finding a property in central London is by playing Monopoly. I do not mean to be flippant, but it is getting that bad. For those lucky enough to be able to find a property, there is an increasing likelihood that they will still find themselves living close to short-term letting properties, no matter where they are. As I am sure it is for many of my colleagues, that is reflected in my mailbag by constituents who find themselves having to live next door to short-term letting properties.

Photo of Felicity Buchan Felicity Buchan Conservative, Kensington

Does my hon. Friend agree that there are other attendant problems with short-term lets, such as antisocial behaviour, properties being taken over essentially for large parties, rubbish being put out on the wrong day and littering the street, and, sometimes, a lack of respect for the neighbourhood?

Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster

My hon. Friend is absolutely right. One of my constituents from Pimlico who wrote to me recently shares that view:

“There has repeatedly been antisocial behaviour in the Airbnb-type flats in Tachbrook Street. The residents have no interest in the wellbeing of their neighbours. The flats are without doubt let throughout the year and the 90-day rule is completely ignored.”

Post-pandemic complaints have increased in my constituency, with noise, rowdy parties, serious overcrowding, dumped rubbish and even sex work occurring within nightly let properties. From Mayfair to Marylebone and from Hyde Park to Covent Garden, no neighbourhood in Westminster is now free from the short-term let blight.

On the ground, we have seen some pretty clear signals that short-term lets are increasingly causing social damage to our neighbourhoods. A YouGov study from 2019 found that 40% of Londoners felt that such accommodation was having a negative impact on the local sense of community. Worryingly, it also showed that one in five Londoners, when asked, felt that short-term lets had had a negative impact on safety in their local area. If these properties were rented out for just a few days a year, this issue might be manageable. However, as mentioned earlier, we know that is not the case. Local authorities lack the tools necessary to enforce the 90-night rule. As such, complaints are rising and communities are suffering.

On antisocial behaviour, yes, the police and local authorities have powers to tackle it with antisocial behaviour and noise orders, but we do not always have the information needed to identify those involved. Of course, it is very hard for us to make general statements about what we would or would not think was a good idea, because this is a complex issue, but as I said earlier it is about flexibility. It is about giving local authorities the tools they need to protect their local areas. We have to be practical when it comes to enforcement measures. Right now, what continues to frustrate me, and I know thousands of my constituents, including councillors and officials in my local council, is that enforcement is virtually impossible, particularly when we do not know who is undertaking the antisocial behaviour. The lack of data makes it extremely hard for local authorities to identify them and then begin enforcement action.

We need a change in the law to allow local authorities to fine landlords of properties that violate the rules, such as those on dumping rubbish. At the moment, responsibility lies with the tenant, not the landlord, even though the tenant will be long gone after having rented the property for a couple of nights—they have dumped the rubbish and they have gone. What we need is exactly what the former leader of Westminster City Council, Councillor Rachael Robathan, called for in response to more than 2,000 breaches of short-term letting rules—namely, to allow councils to go after the landlord rather than the short-term letter. That would help resolve the issue.

The issue of tax compliance is also of concern. As the home sharing phenomenon becomes more mainstream, an important taxation revenue stream needs to be captured. As it stands, it is possible for landlords to hide their activities from Her Majesty’s Revenue and Customs and to perhaps not tell the truth on their self-assessment forms. If local authorities were able to collect data on what properties are being let out on a short-term basis, HMRC could access that data and ensure that no one was able to avoid paying tax on any money raised.

In 2018, the Government issued a call for evidence on the role of online platforms in ensuring tax compliance by their users, but there do not appear to have been any major developments since then. Ensuring proper compliance would go some way to levelling up the playing field with other parts of the tourism economy. As highlighted by UK Hospitality:

“Between the short-term lets, hotel and B&B sectors, a regulatory mismatch has also occurred in terms of health and safety and taxation.”

I appreciate that there is a degree of self-regulation in the industry, but that is not enough. While hotels and B&B businesses must go through all sorts of checks and regulations to ensure the safety and wellbeing of their guests, the same oversight does not exist for short-term letting. For example, while Airbnb insists on things such as insurance indemnity, proper fire precautions and safety certificates for gas and electricity, I have met Airbnb hosts who have not once been asked by a platform to prove that they meet those requirements. If we were able to collect tax receipts from short-term lets, that could and should help in the enforcement of laws. It is not just about tax collection; we also need to make sure that landlords are on the same playing field as bona fide hotels and B&B businesses.

I want to make it very clear that I am not against short-term letting. I absolutely recognise the many positives. As an Airbnb user in the past, I have benefited from being able to rent a home while on holiday. Short-term letting has provided and does provide an innovative and imaginative competition to the accommodation industry. However, the bottom line is that those positive impacts are paired with negative impacts, including lower health and safety standards; unfair competition for other hospitality providers; general economic issues such as mixed tax revenues and less availability of long-term rentals; increased rents and house prices; and pricing ordinary local people out of their area’s housing and rental markets. That is happening not just in central London but across the UK. In many cases, neighbourhoods have changed, with issues including antisocial behaviour, overcrowding of properties and transient communities.

A sustainable approach, hopefully in the form of evidence-based, data-driven regulation and policy making, should address some of those issues. As I said earlier, there is no easy fix, no one-size-fits-all approach, but there are certainly stepping stones that we need to introduce. I hope that the Minister will pay serious attention not just to what I have said but, more importantly, to what we will hear later in this debate from Members of all political parties.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions) 3:24 pm, 16th June 2022

I congratulate Nickie Aiken. As the Member for the other part of the borough of Westminster, I apologise for covering some of the same ground in respect of locality.

Having set up the all-party parliamentary group on the short lets sector, I am conscious that the issues that the hon. Member describes are having an increasing impact on cities, coastal communities and popular tourist areas across the country. Although it is always deeply unedifying to stand up in Parliament and say “I told you so,” I have to say that we told the Government so. During the passage of the Deregulation Act 2015, we warned that the changes allowing the 90-day limit in London would be likely to lead to an explosion in short lets and a very detrimental impact on communities—and that is exactly what has happened.

I remember saying in debates on the Deregulation Bill and on two subsequent ten-minute rule Bills—the Short and Holiday-Let Accommodation (Notification of Local Authorities) Bill and the Short and Holiday-Let Accommodation (Registration) Bill—that residential communities are being turned into unlicensed and unmanaged branches of the hospitality industry. The hon. Member has made many of the same points; I will not repeat them, but let me very briefly reinforce them.

As the hon. Member says, nobody is proposing any kind of ban. The sharing economy concept is a strong one. It is a smart and popular idea for people to let out a spare room or let out their home for a couple of weeks when they go on holiday or work abroad: it generates money in communities, generates money for the people who let the properties, and is clearly popular with the people who rent them. The digital economy has created enormous opportunities, and that is one of them.

However, the implementation has changed fundamentally since the original concept: it is now a highly commercial enterprise, as the figures show. A report in 2020—I have cited it previously, but I cite it again—found that just one sixth of the revenue of Airbnb, which is a major player in the field, came from the kind of home-sharing let that was its original concept. As the hon. Member says, we can track the huge shift to whole-property rentals, which has been very significant in London and across the whole country. Research by Tom Simcock of Edge Hill University has found a 423% increase in lettings by “multi-hosts”, owners of multiple properties. That gives an indication of how deeply and increasingly commercialised the sector is.

The impact is felt in the loss of residential property; the hon. Member made that point, and I endorse it. The clear indication is that it is financially advantageous to landlords to move out of the lettings market and into the short-let market, where they can make substantially more income and enjoy significant tax advantages in doing so. All over our borough of Westminster, properties where people could once live are being used just for the holiday industry. That has all kinds of impacts on people in housing need, and on communities.

There is also an impact on the management of antisocial behaviour and nuisance, ranging from noise to rubbish. If people were staying in hotels or in registered hospitality, there would be commercial arrangements for waste collection and they would be making a contribution. None of that applies in this instance.

This morning, entirely by coincidence, I received an email from a constituent on Harrow Road—not the heart of the west end, but the very north of my constituency, at the poorer end. I was told that five identified properties were now being let as short lets; people were coming and going with their luggage all through the day and night, and it was causing concerns about security. It is not necessarily that people choose to behave badly, or that they are acting in an especially antisocial way, but when people are on holiday they act differently. They do not have the same constraints as residents on the hours they keep or the way they act, and they certainly do not have the same sense of responsibility for security. It causes a great deal of anxiety.

It has been said, and I will repeat, that local authorities have their hands tied behind their back when it comes to enforcing against short lettings. Finding properties that are legally let under the short let arrangements but have to be acted on when they breach the 90-day rule is asking local authorities—cash-strapped local authorities—to do the almost impossible. They do not know who is letting. They would have to monitor everything to find that out and then be able to prove that the letting exceeded the 90-day limit. It is completely unreasonable to ask them to do that.

Landlords, particularly the commercial landlords that see the advantages of short let arrangements, are driving a coach and horses through the legislation. This is leading to enormous strains in local communities and a great deal of anger among neighbours, who turn to the local authority to help with enforcement but find that the local authority does not have the capacity to do so. Also, not unreasonably, the hospitality industry, which has had a terrible couple of years with covid, feels that there is not a level playing field, given its members’ responsibilities in terms of health and safety and taxation. They are being undercut, not by individuals letting out a spare room, but by major players in the corporate hospitality sector exploiting a loophole.

It is essential that the Government wake up to this problem. It is spreading across the country and the implications are profound. The Government can act very quickly, without excessive regulation, just to make sure that people who let out these properties are licensed to do so and that we know who they are. If we know who they are, we are in a better position to act when they breach the rules. We have been asking for this for seven years. It is a cross-party issue—cross-party in the local authority, Westminster, and cross-party in Parliament. The Minister must wake up and act to protect communities and to protect us against the loss of valuable residential property before it is too late.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport) 3:32 pm, 16th June 2022

I congratulate Nickie Aiken and my hon. Friend 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.

Photo of Karen Buck Karen Buck Shadow Minister (Work and Pensions)

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.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

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.

Photo of Tommy Sheppard Tommy Sheppard Shadow SNP Spokesperson (Constitutional Affairs) 3:49 pm, 16th June 2022

Like many other aspects of our online lives, this started as a good idea: take a list of people who want short-term accommodation and use the internet to match it with a list of people who can provide it. Unfortunately, what we see today has become a grotesque distortion of the original idea. As has been mentioned, the vast majority of properties that are offered as short-term lets are not spare rooms in somebody’s house: they are whole properties being offered on a commercial basis. That is regrettable, because the process has become a driver for the removal of accommodation from the private rented sector into the short-term-let market, mainly catering for leisure uses. It has resulted in appalling consequences for the local housing market. Now, in effect, we have operators operating unlicensed hotels, but rather than the accommodation being in one building it is spread throughout an entire community in a pepper-pot fashion.

This is a problem throughout Scotland, but it affects some parts more than others. The highlands in particular has a very great problem, but probably the biggest problem of all is in our capital city, Edinburgh, the city I am proud to represent in this House. In 2019, fully one third of all the Airbnb listings in Scotland were in Edinburgh. In some of the wards, particularly those in the city centre, one fifth of all accommodation is listed on Airbnb. By the way, that is just Airbnb; there are other operators, so the scale of the penetration of short-term lets in Edinburgh city centre is probably even greater than that.

By the end of the previous decade, the situation had reached crisis proportions, which is why the city authorities, working with the Scottish Government, decided to act. I will say something about that in a moment, but first let me describe some of the consequences of the process for my local community. With this penetration of up to one in five properties being available for short-term lets has come a hollowing out of the local community, particularly in some of our historic areas, which we want to see thrive. It is impossible for people to get to know their neighbours if they change every week. The people who come—there used to be people who lived there on a permanent basis—no longer send their kids to local schools. They do not even use the local shops, because they tend to arrive and get an out-of-town supermarket delivery to the door. They play no role in building the local economy or in community cohesion. As a double whammy, they provide a great deal of disturbance and inconvenience to the people who are left to live there.

I repeatedly have casework on this issue. Just this week a local councillor, Finlay McFarlane, brought to me the case of a resident who has lived off the Royal Mile for more than 20 years. She is currently finishing her PhD thesis but is unable to do so because most of her block is now short-term lets, with people coming in to have parties, on week nights as well as at weekends, with the constant confusion, noise and disturbance that results. In her words, it has become “almost uninhabitable”. That is a common problem.

As well as the loss of homes, there is another consequence for a city such as mine that relies a lot on tourism and where tourism is very important. A number of bona fide hotel operators have come to me and pointed out that people are running unlicensed hotels on a commercial basis, without having health and safety standards, without meeting all the other requirements and without paying taxes. Hotel operators are being undercut as accommodation providers by people using the short-term-let sector. It is, then, grossly unfair in distorting the tourism market as well.

As has been referenced, we are trying to do something about this in Scotland. The law changed last year: from 1 March, the law has come in to create a new framework for the operation of short-term lets in Scotland, of which my own city is determined to take advantage. The key thing is to bring in a licensing framework, with the local authority being the licensing body. In order to operate a let on a short-term basis, one will require a licence. That will be the law from 1 October this year for anybody trying to enter the market as a new operator, and by 2024 it will be a requirement for everybody operating a short-term let to have such a licence, and it will be unlawful if they do not have it.

There is another important component to the legislation in Scotland. That is the ability of local authorities to ask for permission to designate a short-term-let control area within their boundary, where there is a particular need for housing stress or where there is a particular problem of abuse. The City of Edinburgh Council has taken the unusual step of asking the Scottish Government to designate the entire city as a control area. The council took that decision, with every party on the local authority supporting it, and after an extensive consultation involving 5,600 responses where more than 88% of respondents said that that was what they wanted. The Scottish Government have agreed to that. What that means is that, in order to let a property that is not currently let on a short-term basis, a person will require not just a licence, but planning permission. They will have to apply for and get a change-of-use planning consent as a condition of getting the licence if they are in a control area.

That is what will happen in Edinburgh, but it will take some time. It is important, as with other matters, that planning decisions are consistent with the local development plan, which means that they have to be evidenced and backed up, so we do need to make amendments and get them bedded in. I am confident that, in the years ahead, my city will be able to get control of this. If these measures do not work, I can assure Members that there is an appetite for going further and making sure that we get other measures that do work.

In conclusion, I shall reiterate what colleagues have said on a cross-party basis. This is not a matter of saying that there should not be short-term lets, or trying to do down people who want to rent out a spare room—far from it. It is simply saying that if people wish to do this on a commercial basis, then they have to operate on a level playing field, with the same obligations and the same consequences as anybody else who tries to run a business. They have to take cognisance and be respectful of the local community and the conditions in which they are trying to make that money. I hope the situation in Edinburgh and in Scotland will improve dramatically, and I commend these measures to the UK Government, because they may want to consider following Scotland’s lead and doing this in other parts of the UK where it is so urgently needed.

Photo of Jeff Smith Jeff Smith Shadow Minister (Digital, Culture, Media and Sport) 3:57 pm, 16th June 2022

I congratulate Nickie Aiken on securing the debate and on her opening speech, which set out the issues really well. We have also had excellent speeches from my hon. Friends the Members for York Central (Rachael Maskell) and for Westminster North (Ms Buck). What has been noticeable, as we have just heard, is the consensus here. We may be small in number, but we all recognise the issue and we all recognise that it needs to be tackled. The fact that there are not many people in the Chamber may be because it is not a controversial proposal.

Britain is a fantastic country, with a wealth of exciting places to visit: our remarkable cultural heritage; our world-class attractions and events; our incredible scenery; our coastal towns and vibrant cities, and our amazing capital city. But the tourism sector has really suffered as a result of the pandemic, and its recovery has been much slower than other sectors. VisitBritain found that the UK’s tourism sector lost a total of £146 billion over 2020 and 2021—around £200 million per day.

The tourism sector in the UK is recovering at a slower rate than that in Europe and the USA. We have tourism recovery plan targets and a review of destination management organisations gathering dust on the shelf. Despite that, we know that we will recover. People are already returning to big events. In Manchester, last week, we had one of our biggest weekends ever, with lots of huge events around the city, with hotel rooms packed, bars packed, and Airbnbs packed. The inbound tourist trade is picking up as well. Domestic or tourist visitors want somewhere affordable and convenient to stay. Short-term lets have helped many people to do this, encouraging people to holiday domestically in the UK and housing people from abroad. That is generally good, notwithstanding the difficulties for some hotel operators that were identified by Tommy Sheppard. We want those holidays, those visits and those day trips to continue and to grow.

However, short-term letting is only a good thing if it is sustainable and strengthens, rather than weakens, communities. As we have heard today, in many places, housing supply, local services, safety and wellbeing are affected by the trend towards short-term lets. Properly managed, short-term lets can have real benefits: they can increase housing options, especially at peak times —I have used Airbnb for Labour party conference accommodation, so I know how it can add capacity when all the hotels are packed out for conferences—they can ensure that empty rooms can be used efficiently and they give people an opportunity to make a little extra money.

A residential property that is being used for Airbnb, however—I use Airbnb as a kind of shorthand, but it is the clearly the market leader in this area—can cause the kinds of issues for residents that we have heard articulated so well today, and can take that property out of the residential housing market.

Photo of Natalie Elphicke Natalie Elphicke Conservative, Dover

The hon. Gentleman mentions Airbnb. In the town of Deal, which I represent, there is a particular problem of Airbnbs that are not registered. Does he agree that having a registration system for Airbnbs would be a sensible move to protect coastal communities and tourism in areas such as mine?

Photo of Nigel Evans Nigel Evans Deputy Speaker (Second Deputy Chairman of Ways and Means)

I was hugely generous, and so was the Front-Bench spokesman, in allowing that intervention, for obvious reasons.

Photo of Jeff Smith Jeff Smith Shadow Minister (Digital, Culture, Media and Sport)

The hon. Lady makes an important point. I will come on to registration, but clearly we do need to look at the options.

We have heard about the problems caused, with residents citing health and safety concerns where temporary residents are not familiar with or do not care about safety rules. There are issues with short-term rentals being used for parties, and we have heard about noise and antisocial behaviour. However, the longer-term concern, which I think is probably the more significant, is around the sustainability of communities when too many residential properties become short-term lets. I will talk about that in a second.

In London, as we have heard, the law currently allows short-term letting of residential properties for a maximum of 90 nights in a calendar year without planning permission. Since 2017, Airbnb has automatically limited entire home listings in Greater London to 90 nights per calendar year, to encourage compliance with that law. By February 2020 two similar platforms, HomeAway and TripAdvisor, had also implemented a cap. The Mayor of London has encouraged other platforms to do the same, but there are easy ways around those rules, as we heard earlier, and many properties are still being let out on a short-term basis for more than the permitted 90 nights. When the 90-night limit is exceeded illegally, the issues are compounded and likely to grow and grow.

Outside London, there is no specific limit on how long a property can be let out on a short-term basis, and it is up to local planning authorities to judge whether the letting amounts to a material change of use and requires planning permission. As well as the difficulties that we have talked about for residents, as my hon. Friend the Member for Westminster North pointed out, the complaints about antisocial behaviour are putting pressure on local authorities and their resources, already overstretched following years of Tory and coalition Government cuts to local authorities. That puts huge pressure on local enforcement teams.

Nickie Aiken is calling for the introduction of a licensing scheme, making it mandatory for anyone renting out their property on a short-term basis to have to register it. That would make it easier for local authorities to tackle some of those issues and the law-breaking that might arise. I pay tribute to my hon. Friend the Member for Westminster North for her consistent campaigning on this issue and her work over a number of years, calling on the Government to give local councils more powers to manage how properties are used for short-term rentals. Those are all proposals that must be looked at seriously by the Government.

I know from my own constituency in south Manchester the problems that occur when houses become party let houses. It used to be in my area that it was only the student houses in multiple occupancy that became party houses and posed a real problem for long-term residents, but now a lot of our houses are let out by Airbnb and are causing real difficulties for the long-term residents with noise, litter and disturbance.

The hon. Member for Edinburgh East talked about control zones. When I was a councillor in Manchester, we introduced an article 4 direction to limit the number of HMOs that could be permitted in an area, and that kind of innovative approach is something we need to look at. It would be interesting to see how the control zones in Edinburgh work and how we can learn from them.

As well as the kinds of problems that my constituency and other urban areas are experiencing, the prominence of second homes and short-term lets is causing a housing and public services crisis in popular tourist destinations across some of the more rural parts of the UK. Cornwall, Cumbria, Northumberland, the west country, Shropshire, parts of Yorkshire, the Scottish highlands, as we have heard, and rural Wales have all suffered. To thrive, communities need investment, employment opportunities and, in many cases, thriving tourism industries, but they also need affordable homes for local people. Accelerated by the pandemic, many of these areas have seen house prices soar and availability drop as wealthy outsiders buy up second homes, often for buy-to-let, and then they discover that owners can often get more money from a short-term let than from a long-term tenant.

Properties that were previously for permanent rental are being turned into Airbnb holiday lets, which impacts directly on the affordability and availability of local homes, particularly for local first-time buyers and private renters. It also means that houses are left empty for large chunks of the year, reducing permanent populations. That can have pretty disastrous impacts on the local community, such as: school closures, because families are forced out and schools become unsustainable; cuts to transport services and buses; and health and other services disappearing as demand drops.

It seems pretty clear that the Government need to explore whether and how local authorities can be provided the powers to tackle this issue. We have heard a few examples. We can introduce licensing regimes for second homes and short-term lets, we can consider giving councils greater discretion over council tax regimes and we can look at allowing local authorities to levy more premiums or surcharges on second homes and long-term empty properties, if they believe it is needed in their locality. Some local authorities are backing calls for more powers in planning to recognise short-term rentals as a different use class, meaning that people who want to use their home exclusively for Airbnb would need planning permission. Local authorities could control how their local areas operate in a number of ways.

It is welcome that the Government committed to launching a consultation on the introduction of a tourist accommodation registration scheme in England. So far, we have seen no sign of it. It was promised in early 2022. We are mid-June, so we have probably passed “early 2022”. I would be very happy if the Minister could confirm when the consultation will open and how long it will run for. While we continue to wait for it, I welcome the news that the Labour Mayor of London has just launched his own consultation on the issue. I encourage everyone in London affected by this issue to participate before the consultation closes on 4 July.

The rise of Airbnb is just one example of the emergence of the sharing economy. Many businesses have become everyday fixtures of our modern lives. At their best, these platforms can be about reducing waste, pooling space, skills and items, and making life easier and more sustainable, but it does not always work like that, and when it becomes commercial, it can cause difficulties. When Airbnb and similar websites first emerged, it was about individuals occasionally making a bit of extra income on their spare room or own property, but things are very different now. A large part of the short-term rental market is now a wholly commercial enterprise. Residential properties are being used as letting businesses without the required planning permission, local authority oversight or protections for neighbours and communities. We clearly need to respond now to that different context.

Let us learn from the examples we have heard about from abroad. Let us look at the changes in Scotland and elsewhere. Airbnb has said that it is willing to work with the Government on regulation to ease some of the challenges to which it is contributing. It published a healthy tourism commitment and the “Short-term Lets Registration White Paper”, which calls for the introduction of a simple nationwide registration scheme for the short-term lettings sector.

The willingness is there from stakeholders. The political imperative is there, I would argue, and the political consensus is there that we need to get a grip of this. The need is certainly there, as has been well articulated today. It is now time for the Government to act, to start to tackle this issue and to get the balance right for our communities.

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 4:09 pm, 16th June 2022

I begin by thanking my hon. Friend 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 Rachael Maskell highlighted; in rural areas, such as the south-west and the Lake District; and in Edinburgh, as 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.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

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?

Photo of Eddie Hughes Eddie Hughes Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

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.

Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster 4:20 pm, 16th June 2022

I thank all hon. Members who have spoken today. There may have been few of us, but quality rather than quantity was clear in the speeches we heard. Ms Buck and I have worked on this issue for several years, particularly since the Deregulation Act 2015, and we know the effect that short-term letting is having, particularly on our borough of Westminster. She highlighted an Airbnb-type short-term letting in Harrow Road, one of the poorest areas in Westminster, and social housing is being abused like that. Rachael Maskell highlighted another tourist area where short-term letting is having an effect on the local community and affecting local people. That is why we need some sort of registration or licensing scheme that local authorities can use to tackle the abuse of short-term lets.

I was interested to hear from Tommy Sheppard about what is happening in Edinburgh, a city close to my heart, where I was brought up. Particularly in the summer, in August, Edinburgh becomes a tourist hotspot, and we must ensure that we protect local people who live in those areas for 12 months a year. I will be keeping an eye on what is happening in Edinburgh, and I will be fascinated, because the licensing scheme being introduced there is probably one of the answers for places such as central London.

As I said, this is not anti-Airbnb or short-term lets; this is about being pro-local areas and ensuring that key workers can remain in areas that are tourist hotspots, and that people who live in such areas for 12 months a year have the quality of life and amenities they deserve. I am sure that with a registration or licensing scheme for local authorities that want it, we can protect our neighbourhoods and ensure that they remain pleasant places to live.

Question put and agreed to.

Resolved,

That this House
has considered short-term letting and the sharing economy.