Third Reading

Part of Deregulation Bill – in the House of Lords at 5:45 pm on 4th March 2015.

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Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Parliamentary Under-Secretary (Department for Communities and Local Government) 5:45 pm, 4th March 2015

My Lords, following the publication of the Government’s policy paper on short-term letting in London on 9 February, the Government have laid Amendments 4 and 17 to 19 to include provision for the policy in the Bill.

The Government’s policy paper has taken into account the representations that we received following the discussion document published last year on property conditions in the private rented sector. It has also taken into account our discussions with London’s local authorities and the industry and all the important issues that noble Lords have raised on this clause in previous debates during the passage of the Bill. They have been clear that any relaxation of legislation governing short-term letting in London should be available only to residents, so that they can make their property available when they are away for a limited duration. It will not allow non-residents to use their property for short-term letting on an ongoing or year-round basis. As set out in our policy paper, the Government share this view, and we have put forward these amendments to update the existing legislation and to ensure that we provide an appropriate level of freedom for residents, alongside important safeguards to prevent abuse of these reforms.

The Government have been consistently clear that their aim is to reform outdated legislation from the 1970s that requires Londoners to apply for planning permission in order to be able to let their residential property on a short-term basis. This will enable London residents to benefit from letting out either a spare room or, indeed, their whole house without unnecessary red tape, in the same way as other residents do in the rest of the country. We have also been clear throughout the passage of the Bill that this policy is aimed at helping residents to let their homes while they are away, not at providing new opportunities on an ongoing basis for commercial letting.

Section 25 of the Greater London Council (General Powers) Act 1973 provides that the use of residential premises for temporary sleeping accommodation for less than 90 consecutive nights is a change of use for which planning permission is required. London’s residents face a possible fine of up to £20,000 for each offence of failing to secure planning permission.

The world that we live in today is very different from what it was in the 1970s. The internet has created entirely new ways to do business. It has made it much easier for people to rent out their property, allowing residents to supplement their incomes and offer new experiences for consumers. Last summer, nearly 5 million overseas visitors came to our capital city. Some of those visitors, as well as UK residents, want to experience London as a real local. This means either staying with Londoners or staying in their homes while the Londoners are away on holiday.

Currently thousands of London properties and rooms are advertised on websites for use as short-term accommodation. However, each is potentially in breach of Section 25 as it stands. The current legislation is poorly enforced, which often leads to confusion and uncertainty for householders as to whether their local authority will take planning enforcement action against them for unauthorised short-term letting. The Government’s reforms will provide clarity and give London’s residents confidence that they are able to let out their property on a short-term basis within the law, but without the disproportionate bureaucracy of applying for planning permission.

The Government have tabled these amendments to the Deregulation Bill in order to allow residential property to be let out on a short-term basis without planning permission while providing a number of important safeguards. Indeed, these safeguards reflect some of the concerns that noble Lords have expressed. In order to ensure that these reforms will help residents but not create opportunities for the short-term letting of properties on a permanent basis, these amendments propose to allow short-term letting without planning permission up to a limit of 90 nights in total per calendar year, as well as requiring that the people providing their property for use as temporary sleeping accommodation are liable for council tax. Provision has also been made to empower local authorities to request that the Secretary of State agree to targeted localised exemptions from this new flexibility, either for particular properties or properties in particular areas, but there needs to be a strong amenity case to do so. This will ensure that the provision is used only where clearly justified.

The Government want to enable London’s residents to participate in the sharing economy and enjoy the same freedom and flexibility as others do across the country to temporarily let out their homes without the disproportionate burden of requiring planning permission. These amendments will deliver an appropriate level of freedom and flexibility for Londoners without creating new opportunities for short-term letting on a permanent or commercial basis.

I will now address the substantial issues in Amendments 5 to 16. Amendment 7 seeks to amend Amendment 4 by reducing the number of nights that residents can let their property on a short-term basis without planning permission from the proposed 90 nights in total per calendar year to a maximum of 60, with the number to be specified in regulations. The Government want to deregulate the current requirement to apply for planning permission, and to do so in a way that gives residents real freedom and flexibility. We believe that a limit of 90 nights per calendar year offers an appropriate level of flexibility, while being clear that the 90-night limit means that we are not providing for short-term letting on a year-round basis. The Government believe that a limit of 60 nights, and the ability to prescribe a lower limit in regulation, is unduly restrictive on the way people use their property.

The Government are also keen to enshrine in the Bill the number of nights that property can be let on a short-term basis in order to provide certainty that is currently absent under existing Section 25. As I said earlier, the current legislation is poorly enforced, which often leads to confusion and uncertainty for householders as to whether their local authority will take planning enforcement action against them for unauthorised short-term letting. The proposed ability to vary the number of nights in regulation will add to this feeling of uncertainty.

Amendment 8 seeks to create an additional condition, which is that a property can be let on a short-term basis without planning permission provided that the premises are the principal residence in London of the owner. The Government believe that the limit of 90 nights per year and the council tax liability are sufficient safeguards. We do not want to legislate unnecessarily for how the new rights should apply to individuals’ use of their property. We want the legislation to remain light-touch, but we also want it to send a strong signal that in order to let your property on a short-term basis legally you must remain within the 90-night limit or risk a local authority taking enforcement action against an unauthorised change of use.

The Government’s amendments, alongside Clause 44, have already provided for the ability to prescribe additional instances where residential property can be used as temporary sleeping accommodation in certain other circumstances that may be specified. Under our amendments and Clause 44, it would therefore be possible to add additional safeguarding measures in future, should it prove necessary.

Amendment 9 seeks to require the provider of temporary sleeping accommodation to notify the local authority in advance of every occasion that they let their property on a short-term basis. One of the major advantages of the internet is the ability to make transactions quickly and flexibly, and we want our reforms to facilitate this. A requirement for advance notice prior to every short-term stay, on a form to be prescribed in secondary legislation, would create a bureaucratic burden on the accommodation provider and potentially limit the ability of hosts to offer accommodation to customers seeking to book at short notice. Let me be clear: the Government are seeking to deregulate the current requirement to obtain planning permission for short-term letting in London. We do not believe that people wishing to let their homes on a short-term basis should be burdened by new red tape, to be set out in future secondary legislation.

Amendment 12 seeks to remove the requirement for the local planning authority to seek the consent of the Secretary of State in order to direct that the new flexibility does not apply to particular residential premises or premises in particular areas. The Government want the Secretary of State and the local planning authority to be able to grant exemptions, but only in exceptional circumstances and where, as I said earlier, a strong case has been made for the protection of the amenity of the locality by the local authority. Otherwise, we want to be clear that our aim is to provide the same rights for all Londoners in all local authority areas.

This amendment would create a range of different regulatory approaches across different London local authorities, potentially resulting in unjustifiable differences between adjacent local authority areas. Residents would find that their near neighbours have either greater or lesser freedoms to let their properties without any apparent justification. In this context, with Amendment 12 seeking to remove the requirement to seek the Secretary of State’s consent, Amendment 11 would change the basis on which an exemption to the new flexibility could be made by a local authority, from where it is,

“necessary to protect the amenity of the locality”,

to where it is “necessary or desirable” to do so. The Government believe that this amendment does not help to meet our policy aims, as it would create a lower bar for justifying an exemption, where we believe that this should be done only in exceptional circumstances.

Amendment 15 would provide for the ability of the Secretary of State to make regulations, which mean that the new flexibility does not apply to any premises that have been subject to a specified number of successful enforcement actions against a statutory nuisance. The Government believe that this amendment is unnecessary, as our amendments have already provided the ability for the Secretary of State to direct that the new flexibility should not apply to specified premises.

The Government want to enable London residents to enjoy the same rights as the rest of the country to temporarily let their homes. These amendments will deliver an appropriate level of freedom and flexibility for Londoners, within an appropriate set of safeguards, and will not create new opportunities for short-term letting on a permanent or commercial basis. We all recognise that short-term letting is already taking place across London, but the current legislation has led to confusion and uncertainty for potential hosts. The Government’s amendments and Clause 44 will provide clarity and give London residents the confidence that they are able to let their properties on a short-term basis within the law, but without the disproportionate bureaucracy of applying for planning permission. In this amendment, I draw your Lordships’ House to my entry in the register of interests as a landlord. I beg to move Amendment 4 and I urge noble Lords to withdraw their amendment.

Amendment 5 (to Amendment 4)

Moved by Lord McKenzie of Luton

5*: After Clause 43, line 7, leave out “section 25A” and insert “sections 25A and 25B”