Short-Term Letting for Holiday Purposes - Question

– in the House of Lords at 11:06 am on 2 March 2017.

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Photo of Baroness Gardner of Parkes Baroness Gardner of Parkes Conservative 11:06, 2 March 2017

To ask Her Majesty’s Government what assessment they have made of the impact of short-term letting of residential flats for holiday purposes contrary to the terms of the lease; and whether they plan to introduce measures similar to the restrictions introduced in New York and Berlin.

Photo of Baroness Gardner of Parkes Baroness Gardner of Parkes Conservative

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and declare my interest, which is in the written register.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, the Government support the shared economy and have no plans to introduce a blanket ban on whole-property listings. London boroughs can already apply to the Secretary of State for consent to restrict short-term letting in a particular area where necessary. We welcome Airbnb’s recent decision to amend its systems so that entire home listings in London are not available for more than 90 nights in any given year without appropriate planning permission.

Photo of Baroness Gardner of Parkes Baroness Gardner of Parkes Conservative

I thank the Minister for that reply, but is he aware that many—possibly even most—Airbnb lettings are of properties which are not allowed to be let on a short-term basis: they are long-term residential blocks of flats? In New York, these short-term lets are no longer allowed in any block which is long-term residential, because of the degree of disruption. Is he further aware that seven London boroughs have called for legislation on this issue?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, taking up the very relevant last point first, London boroughs have the power—indeed, the responsibility—to enforce that in their areas. The matter rests with local authorities if hosts and tenants are breaking the law on the 90-day limit—not 90 consecutive days but 90 days in any given year; they have that power. There are restrictions in New York, but it is still possible to operate there, albeit within different limits from those in London.

Photo of Lord Clark of Windermere Lord Clark of Windermere Labour

My Lords, does the Minister realise that the short-term holiday lets referred to in the Question are distorting the longer-term letting market in not only heavily urbanised areas but in some of the most attractive parts of the country? Is he aware how attractive this is? A modest house without a view of a lake or a hill can be let in high season for more than £3,000 a week in the Lake District National Park. There is no incentive for landlords to rent out houses to local people or people who want to work in the area on a long-term basis.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, I am aware that outside London there are undoubtedly many possibilities for the sort of let the noble Lord describes. He cited the Lake District, and there are other areas such as Bath, the Cotswolds, Oxford and Cambridge.

I am meeting Airbnb to discuss its response to the concerns expressed, which has been favourable. There are other providers as well, which I will be seeking to speak to. There are provisions in leases that can be enforced by landlords; where appropriate, there are provisions on statutory nuisance and private nuisance; and I come back to the point that within London, although not outside, the boroughs can act themselves.

Photo of Lord Tope Lord Tope Liberal Democrat

My Lords, I am pleased that the Minister is going to meet Airbnb, which is, I guess, the market leader. Is he aware that this is a significant problem in parts of central London? For instance, research by central London amenity societies shows that 20% of housing stock has been lost; indeed, in some blocks of flats the figure is as high as 80%. Is the answer a tough licensing regime which includes data-sharing, an opportunity to call out on problems and so on? Will he discuss all these issues when he meets Airbnb and report back to the House on the outcome?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, as I have indicated, within London, which the noble Lord cited, there are restrictions already, so I do not believe that this is distorting the market in the way he suggests because there is that 90-day limit. I will certainly be discussing these matters when I meet Airbnb, and in all fairness to it, it has responded to concerns and ensured that its listings make absolutely clear what the law is and that it is operating within it. I do not think we can ask for more than that.

Photo of Baroness Hooper Baroness Hooper Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, regarding the tourist industry, is it not unfair that hotels and other licensed premises are subject to business rates, which are due for a great rise, whereas Airbnb premises and, I understand, Uber escape them? Are the Government planning to adjust this situation?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, as my noble friend will be aware, we discussed business rates yesterday and we are looking at the position of businesses that have had steep increases. Many hotels around the country have not had steep increases and, indeed, some will have experienced a fall in business rates. In answer to the general point, we also need to be aware that many consumers benefit from this. This is very popular, as is evidenced by the fact that it throws up some concerns. We have to consider the matter in a balanced way.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

What steps does the Inland Revenue take to collect tax from the owners of properties that are let out on this basis, including capital gains tax, where a property is disposed of after such use?

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, the taxation rules would apply in the normal way. Where there is a capital gain, the owner of the property would be responsible for that in the normal way, subject to reliefs, and the owner would be responsible for schedular income tax in the normal way.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

The Minister said that local authorities can enforce the law. These cases cost thousands of pounds. Why should the council tax payer pick up the Bill? Surely there has to be another solution.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, under the Deregulation Act there is responsibility for enforcing this against a particular owner of a property. Initially, of course, there would be a discussion—I do not suppose that the first thing that happens is that it ends up in court—but for those defying the law, there is potentially a £20,000 fine on summary conviction and an unlimited fine on indictment, which would be a considerable incentive to obey the law. That is what we are finding in the great bulk of cases.

Photo of Baroness O'Cathain Baroness O'Cathain Conservative

My Lords, surely the great growth element in our economy is tourism. Families coming from abroad have much more opportunity to see things in London if they can get reasonably cheap bed and breakfast or Airbnb. To bring a family of three children and their parents to London for a week would cost an enormous amount, whereas this way, they can at least have reasonably priced accommodation and then spend the money in other areas.

Photo of Lord Bourne of Aberystwyth Lord Bourne of Aberystwyth The Parliamentary Under-Secretary of State for Communities and Local Government, The Parliamentary Under-Secretary of State for Wales

My Lords, noble friend makes a very material point. I have certainly spoken to people from overseas who have used Airbnb in London and had fantastic experiences. Largely, it operates very effectively and without concern. There are some concerns, which I understand, and I know my noble friend Lady Gardner of Parkes has been relentless in pursuing some of the issues. However, I come back to the point that there are means of enforcement—through the local authority, statutory nuisance provisions and provisions in leases—and I encourage tenants to get on to their landlords, where appropriate, to make sure they are enforcing their leases.