Housing Crisis: Rural and Coastal Communities - Question for Short Debate

– in the House of Lords at 6:50 pm on 24 July 2023.

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Photo of The Bishop of Exeter The Bishop of Exeter Bishop 6:50, 24 July 2023

To ask His Majesty’s Government what their plans are to address the housing crisis in rural and coastal communities.

Photo of The Bishop of Exeter The Bishop of Exeter Bishop

My Lords, as bishop with pastoral care of one of the largest rural dioceses in England that boasts not one but two coastlines, I have become concerned about the escalating housing crisis in rural and coastal communities. If this is the true situation in Devon, I suspect it will be true for other parts of England, which is why I am encouraged by the number of colleagues from across the House who are speaking today. My hope is that we can distil wisdom that will reshape the housing policies of His Majesty’s Government.

We are all familiar with the problems of affordability caused by the chronic housing shortage that is having a disproportionate impact on people with low incomes. The Government, as they have admitted today, are falling woefully short of their own homebuilding target and, as a result, people are suffering, because they have nowhere to call home. Their health is diminished and community spirit is being eroded. In coastal and rural areas, particularly in tourist hotspots, the situation is compounded by second home ownership, holiday rentals and Airbnb lettings.

In Devon and Cornwall, there is a huge gap between properties listed for short-term holiday lets and long-term rentals. Last year, ITV highlighted the fact that in the whole of Devon, there were only 936 properties to rent, compared with more than 15,700 holiday lets—16 times as many. Revisiting the same data ITV used last year, the ratio has now risen to 22 times that number, with available rental properties having slumped to under 700. The situation in Cornwall, as no doubt the noble Lord, Lord Teverson, will confirm, is even worse, with a staggering ratio of over 90 times as many holiday lets. Only 208 rental properties are listed, compared with more than 19,000 holiday lets.

Too often, local people are forced out of the areas where their families have lived for generations, fracturing their support networks, to the detriment of individuals, families and whole communities. Tourism is an important industry. No one begrudges those who have the privilege of choice in enjoying the countryside and our fabulous coastline—but without systemic change, including regulating the Airbnb industry, our rural and coastal communities will be hollowed out. In my diocese, the impact of second home ownership in Salcombe, for example, has meant that there are now so few locals resident in the community that they are struggling to recruit volunteers for the lifeboat crew.

A report published jointly this month by the South-West Social Mobility Commission and the University of Exeter highlights how the housing crisis, in combination with poor public transport, is contributing to low educational attainment across the region. Transport investment in the region stands at £308 per head of the population, compared with the national average of £474. Inadequate public transport disadvantages poorer residents and young people who wish to engage in educational and apprenticeship opportunities. In combination, this exacerbates the cycle of deprivation and stifles aspiration.

The human and societal cost of the housing crisis is accelerating. Employers struggle to recruit for the hospitality and retail industries. Healthcare providers and community services suffer shortages because key workers cannot afford to live in rural and coastal areas. In his 2021 report, the Chief Medical Officer for England noted the high proportion of the worst health and well-being outcomes for individuals that are concentrated in coastal communities, and access to quality affordable housing is a contributory factor.

The demand for social housing in rural areas is growing at 10 times the rate of that in towns and cities. In Devon, with the current rate of net additions to the affordable housing stock, even if housing waiting lists closed tomorrow, it would still take over 32 years to clear the backlog. A report for the universities of Kent and Southampton notes the dramatic rise of homelessness in rural areas, with a 24% increase in rough sleeping in the last year alone. Rural and coastal areas often fall through the cracks in our national data gathering, but research by the Rural Services Network shows that, if our rural communities were aggregated into one region, its need for levelling up would be greater than any other region in the United Kingdom. It is why the current housing crisis merits action, not just sympathy.

The report of the Archbishops’ commission on housing entitled Coming Home points out that housing is not just a matter of putting a roof over a person’s head. It is about creating homes in communities where people can live with dignity and feel secure. It is about enabling the diverse communities that make up our United Kingdom to thrive and have a real community spirit, and this is where I believe the Church has a significant part to play. Sadly, my colleague the right reverend Prelate the Bishop of Chelmsford, who chaired the Archbishops’ commission on housing and who intended to speak this afternoon, is unable to be here because of a family bereavement. I know she would join me in welcoming the various practical responses that are being developed to address the current crisis, whether by landowners, local authorities or charities, including by the Church of England in the use of its land assets to promote truly affordable homes.

In Bracebridge Heath in Lincolnshire, to give one example, the Church commissioners have just obtained planning permission for 1,000 new homes, of which 20% will be affordable. The plans include infrastructure that will enable people to live in a community with dignity, and facilities to promote their well-being. All this will be integrated into a town of some 5,800 people. Things happen when government, landowners and communities come together in partnership to promote the common good.

Rural exception sites open up new opportunities for affordable housing, often with community land trusts being instrumental in enabling tight-knit rural communities to be integrated into decision-making about housing developments. Research shows that policies are not always applied consistently across local authorities. There are challenges with the current planning system to make agreement fruitful for all parties. The complexity of the situation means that we cannot afford to tackle this crisis piecemeal. This is why the Rural Coalition has called on the Government to create

“a cross-departmental strategy for rural England, setting out a vision and policy framework to deliver sustainable growth for its communities and businesses, and encompassing farming and environmental concerns”.

In welcoming the noble Baroness to her new position —I congratulate her on her appointment and her debut at the Dispatch Box this afternoon—I ask whether she will commit to going back to her department and colleagues to press for such a comprehensive rural strategy.

I note with approval the renewed commitment of the Prime Minister today to achieve the Government’s housing target by the end of 2024. However, I regret that in the statement by the Secretary of State for Levelling Up, Housing and Communities, the focus is on cities and, once again, there is no recognition of the scale of the housing crisis in rural and coastal communities.

It is a privilege to live in one of the most beautiful counties of England. Heaven is Devon—but the picture-postcard view of rural life is only half the story. This housing crisis is not restricted to a few beauty spots, and it is not something that the market can solve by itself, as some people believe. The absence of housing supply, the diversity of people’s needs and the immense pressure in the system mean that neither the market nor any single organisation or individual can make the difference that we all long for.

Without partnership and systemic change, the spiral of deprivation will become more acute. The Government need to recognise the scale of the problem. We need cross-departmental working and cross-party agreement to forge a coherent long-term strategy that will secure good housing and the flourishing of our rural and coastal communities. I hope that such a coalition of good will will begin here and now, today.

Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour 7:01, 24 July 2023

My Lords, I have lost count of the number of times we have debated the housing crisis in this House with the same conclusion: we are not building enough homes, particularly affordable and social homes. The Government have ambitions to do more, but their policies have only tinkered with the problem. We have a shortfall of 4 million homes. I am grateful to the National Housing Federation for its briefing for this debate, which is clear that the number of homes built each year is not enough to reduce this backlog or to meet demand in the future.

As the right reverend Prelate the Bishop of Exeter so powerfully outlined, the problem is particularly acute in rural and coastal areas. Demand for social homes in rural areas has grown by nearly a third in the past three years. Young people and those on low incomes cannot find anywhere they can afford; families are split up; homelessness is rising; people leave, so jobs cannot be filled; and tourism, often the key economic driver in these areas, is undermined.

DLUHC data, as well as research by the Rural Homelessness Counts Coalition, found a rise of 24% in rural rough sleeping in just one year as the cost of living crisis continues. The NHF has found that the number of rural households on local authority waiting lists in England increased by 31% between 2019 and 2022, far exceeding the increase of 3% in predominantly urban areas. This is an invisible crisis unacknowledged in policy decisions, as the right reverend Prelate has said, but it is in plain sight to those who work and live in these areas.

We all love getting out into the country, exploring England’s green and pleasant land. It all seems bucolic, affluent even, and the real situation of many families and communities is hidden unless we know what it is really like to live there. As Angela Gascoigne of SHAL Housing in rural Somerset has said:

“The rural … myth is strong, so rural poverty and rural homelessness can be unimaginable … The extent of the problems faced by people in rural communities to access homes where they have … grown up and work is truly shocking”.

The right reverend Prelate referred to Homelessness in the Countryside: A Hidden Crisis, an impressive report from the universities of Kent and Southampton, which was commissioned by a coalition of housing and homelessness organisations. It highlights the extent of this growing yet unacknowledged problem and documents vividly through a number of individual voices the extent of the harm being done. What more evidence is needed before this problem is acted on? Does the Minister accept that rural homelessness requires targeted and specific interventions that are different from those in urban areas?

Rural teachers, nurses, and workers in care, hospitality and agriculture cannot afford a home close to their work, but rural communities need them. We need to make sure that people are able to live, work and bring up their children in a quality home that they can afford. Does the Minister agree that building homes where people need them is the key to resolving this?

Photo of Lord McNally Lord McNally Liberal Democrat 7:04, 24 July 2023

My Lords, I will not follow the right reverend Prelate the Bishop of Exeter on the wider canvas he has painted with such great skill, but I thank him for tabling this debate. My full title is Lord McNally, of Blackpool. I serve in a pro-bono capacity on the national advisory board which advises Blackpool Council and Business in the Community on national and local development policy, and on a special advisory group on housing.

Although Blackpool’s problems, especially those in housing, are deep-rooted, housing has been particularly blighted by a housing benefits system that makes the old boarding houses which were the heart of Blackpool’s earlier seaside prosperity profitable to convert to multi-occupancy. However, in recent years, with closer co-operation between the local authority and government and a broader and longer regeneration strategy for the town being adopted, it has not all been bad news. A number of government departments have contributed to this, as well as the awarding of funds under the levelling-up policy to deliver decent homes.

There has also been a standard enforcement pilot, with an enhanced team of enforcement officers, and a decent homes standard for the private sector, with a “Blackpool standard” for housing which is above the legislative minimum but easy to meet if you are a good landlord. The Blackpool Housing Company—part of the local authority—has brought in 600 units of good-quality affordable stock by buying up old property. It is continuing to build affordable housing with grant support from Homes England.

The key message I took from the right reverend Prelate’s speech and would like to emphasise is that close partnership between local and national government can and does work. New funding and beefed-up measures to improve housing standards to drive out unscrupulous landlords along with plans which see derelict areas transformed and good-quality homes provided will enable Blackpool to respond to the housing and related challenges it faces with a strategy which is both locally determined and long term in its impact. I emphasise that as the lesson.

As has already been referred to by the right reverend Prelate, a cross-government national strategy to improve health and well-being for coastal communities is recommended by Sir Chris Whitty—not least because many of our ageing population will continue to move to the seaside, bringing their health and care problems with them. No longer do you necessarily go to Blackpool just to look for the problems; you can go there now and see some of the solutions.

Photo of Lord Best Lord Best Crossbench 7:08, 24 July 2023

My Lords, I thank the right reverend Prelate the Bishop of Exeter for initiating this tiny debate and for his excellent speech. I declare my housing and local government interests; in particular, I chair the Devon Housing Commission, which is an initiative of all the local authorities in the county, supported by the University of Exeter, to address Devon’s acute housing problems.

Let me cut to the chase with some suggestions for easing the housing difficulties for rural and coastal areas. First, the Government need to address the loss of properties available for long-term letting in the private sector, particularly in tourist hotspots, where these have been replaced by Airbnb-style short-term lets. To give local authorities the opportunity to curb this loss of homes for local people, the Government’s current proposals for change—a registration scheme by all local authorities that wish to, and for a new planning use class so that consent is needed to convert a property into a short-term let—deserve support.

Secondly, I commend the recent Defra announcement of funding for rural housing enablers, with rural community councils hosting the service, as in Devon. These enablers do a brilliant job, liaising with landowners, parish councils, local planning authorities, housing associations, community land trusts, et cetera, to secure small parcels of land for the development of affordable housing.

Thirdly, rural areas have their secret weapon of rural exception sites, which I recommend planners should utilise to the full. This takes away the unwinnable competition for land by agreeing to development exclusively because it will serve local needs. Witness the scheme in the little village of Powerstock, Dorset, where a community land trust and an enlightened landowner, in partnership with Hastoe Housing Association, has built eight delightful, affordable, sustainable homes for local people, replenishing the local primary school and rejuvenating the local community.

There are more solutions here: incentives for landowners to part with suitable sites; an increase to a fairer level of government funding for rural social housing from Homes England; support for neighbourhood plans, which can reconcile local communities to support new development; and, for some coastal communities such as Blackpool, the tough enforcement of decent standard in the PRS, all within an overall strategy for housing in rural and coastal areas.

While problems might appear to be intractable and are certainly in danger of getting worse if action is not taken, there are opportunities here that can make a real difference. There are now some great examples of inspiring success. Let us have lots more.

Photo of Baroness Twycross Baroness Twycross Opposition Whip (Lords), Shadow Spokesperson (Education) 7:11, 24 July 2023

My Lords, I thank the right reverend Prelate for initiating this important debate. The starting premise for a debate on rural and coastal homes is that everyone deserves a quality home they can afford that meets the needs of themselves and their families.

The issue the Question highlights is not about attacking those who choose a staycation in a holiday let; it is about what can be done to ensure the housing crisis in rural and coastal areas is recognised and addressed by government. Some 10.3 million people live in coastal communities. From small villages to larger towns, properties remain out of reach financially for those working in roles supporting the community; nurses, police officers, social workers and teachers simply cannot afford decent homes. Public services and the tourist and service industries are struggling to recruit as a result. Social housing waiting lists are, as has been noted already, growing much more quickly in rural than urban areas. What are the Government doing proactively to address the shortage of homes of all types of tenure in coastal areas? What are the Government doing to ensure people can afford homes, not least given the comparative low incomes in many rural and coastal communities?

It is welcome that the Levelling-up and Regeneration Bill recognises the second home issue, by bringing down the time that qualifies a house for an empty home tax premium from two years to one, and allowing for doubling council tax when second homes are not being let—but we can do more. Wales are Scotland are running empty homes programmes. In England, 120 councils take part in National Empty Homes Week, promoted by Action on Empty Homes.

Noble Lords may find of interest the Council for the Protection of Rural England project in Bridport, Dorset, where a co-housing project will provide 53 affordable homes for sale and rent, including energy-efficient measures and nature-friendly features. This project has taken 13 years to develop. What more will the Government do to make similar projects happen more quickly?

My final point is that rural and coastal communities also need to be fit for the future in the context of climate change. However, they currently receive only 1p out of every pound spent by the Government on energy efficiency. Will the Minister look into how the Government could redress this imbalance?

In conclusion, the Government have options available to help those from, or working in, rural and coastal areas. I look forward to hearing from the Minister what the Government intend to do to address the housing crisis that too many individuals and families face.

Photo of Lord Teverson Lord Teverson Liberal Democrat Lords Spokesperson (Energy and Climate Change) 7:14, 24 July 2023

My Lords, I declare my interest as a director of Wessex Investors and Anchorwood Developments.

On the evenings that I have to get back to Cornwall—the train journey to St Austell from Paddington is about four-and-a-half hours—I cannot always get back, so I have to drive to Exeter, in the right reverend Prelate’s diocese; an excellent city. To get there, I have to drive up the Bodmin bypass. For as many years as I can remember—certainly for the last five—there has been a big sign on the Bodmin bypass saying: “NHS: Apply for jobs in Cornwall. We’re here, we want people”. There is a reason that sign has been there for so long. What better place could you work in the National Health Service than in Devon or Cornwall? There is no better place, and yet those vacancies are not filled. The reason is that people come down, they have their interviews, they are inspired and then they visit an estate agent—and that is the end of the story. That is why there are those vacancies, because house prices in that part of the country are significantly higher than the national average.

For people who live there, the problem is even greater. The ratio in Cornwall of salary to house prices is 11 times, whereas nationally it is nine, and in many other places it will obviously be a lot less than that. Outside of London, the Isles of Scilly has the highest level of empty and second homes as a proportion of all dwellings. That is the situation there.

What do we have today? When I was driving up that Bodmin bypass I heard that there had been a government announcement from the Levelling Up Secretary. What was it? They are going to solve the housing crisis by investing and building in cities—full stop. I waited to hear the rest of the announcement, but it was not there; there was nothing at all about rural communities. That is deeply depressing and misunderstands—if I am kind—the equation between urban and rural areas. I suggest it is probably more political than based in reality.

I was on the Economic Affairs Committee of this House a few years ago and we did a study into housing. One thing that struck me was a graph. During the Conservative Government of Margaret Thatcher, when public housing stopped, the line on the graph came down immediately and never went up again. The Government have to liberate local authorities to bring back those houses, particularly in rural communities. If we did that, I believe we could start to solve this crisis—and maybe save some of the £15 billion we spend on housing benefit.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench 7:17, 24 July 2023

My Lords, housing for this and the next generation is the biggest problem facing rural communities. The problem has been bad for decades but it is getting worse. In Cornwall now, the price of the average home is 12 times the average wage; people cannot possibly get a mortgage on that basis. Everywhere, so-called affordable homes are not affordable to most rural workers. Furthermore, there are no houses to let. Rural council houses were the first to go under right to buy. As others have said, the private let sector has now found that Airbnb et cetera is more rewarding than long-term ASTs.

Private landlords are also threatened by everything from costly energy efficiency rules to threats of not being able to get their property back if they need it. So they are motivated to sell, and thus take another rural home off the market because it is a given that no local will be able to afford it. In Cornwall now, no business—including the NHS, as the noble Lord, Lord Teverson, just said—can get staff because there is absolutely nowhere for them to live. This is now not only a social problem but an economic one.

What is the answer? For too many decades the standard government answer—from all Governments—has been to build more houses for sale. They have set targets that have never been reached, often because they themselves undermined the ability of the planning system and the developers to deliver. In my view, we need a whole new approach. Never mind about home ownership, just help every rural local authority to build their own houses, preferably on their own land to make them cheaper; after all, most county councils own large swathes of land in one context or another. Then, encourage them to let these houses to local tenants. Hey, they could even call them council houses—what a wonderful new idea.

Of course, the right to buy will have to be delegated down to the local authority—it is probably too much of a political gamble to remove it altogether—and the local authority can then leave the rules as they are or extend the minimum term of pre-purchase occupation to, say, 10 years or more. After all, few mortgage holders own their own homes until at least 15 years after they have moved in. However, the most important bit about the right to buy is that the money received absolutely must remain with the local authority housing department so that it can continue to provide more houses for local people. I believe that any Government providing such a solution will sweep the rural polls.

Photo of Lord Davies of Brixton Lord Davies of Brixton Labour 7:20, 24 July 2023

My Lords, like other speakers, I thank the right reverend Prelate for introducing this debate. I think I agree with everything that has been said so far, particularly with the preceding remarks about the important role of council housing.

I want to add something about rural district councils. They are long gone but they should be our heroes today, for they showed us what needs to be done. However, they have been betrayed. Their housing legacy is there in many or most of our villages. Little remarked and too often forgotten, often set in green spaces, semi-detached or short terraces, good-sized front and back gardens: three-bedroom family homes. Typically simple in design, they provide just the sort of house in which people would like to live—joyous family homes. They are distinct and a distinctive part of rural life, and they were created by and for local people, often replacing what could have been described only as hovels. It was the rural districts that achieved this at a time when local government was more truly local.

The betrayal to which I refer comes of course from the destructive impact of right to buy, or, more specifically, the way it was implemented, with the deliberate intention, along with other measures, of destroying council housing on ideological grounds. The result has been that those houses, built by the community, were removed from the social sector with no replacement, as has been explained. Once sold off, they are now, whether owned or rented, usually out of reach of local people in need of social housing. Instead, too often, they are second homes, or homes for retirement or short-term lets.

None of these things is wrong in itself but in excess, as previous speakers have explained, they have destroyed local communities. My question for the Minister is how she can justify that lack—that loss—of good-quality social housing when we know what works. Local government did it between the wars and in the 1950s and 1960s; it should do it now.

Photo of The Earl of Devon The Earl of Devon Crossbench 7:22, 24 July 2023

My Lords, I am grateful to the right reverend Prelate the Bishop of Exeter for calling this important debate, which is obviously crucial to Devon. Given Bishop Robert’s impending retirement, I also take this opportunity to record in Hansard my immense gratitude for his tireless spiritual and practical service to our diocese and the wider county since 2014. The Bishops of Exeter and the Earls of Devon have not always seen eye to eye—famously, we fell out over fish in the 13th century—but I hope we have gone some way to repairing that schism. The right reverend Prelate may not have realised the significance of buying me a fish lunch today.

With typically astute timing, the right reverend Prelate’s debate falls on the day that the Conservative Government have announced that the housing crisis that they have overseen for the last decade will be resolved by a focus on building more urban homes, as we have heard, leaving rural and coastal economies yet further to wither and perish. I worry that this is a knee-jerk reaction to last week’s by-election losses and a shameless attempt to retain the nimby vote by once more playing politics with peoples’ homes.

I note my interests as a resident and owner of property in rural and coastal Devon; I am also a member of the Devon Housing Commission, recently convened under the eminent chairmanship of the noble Lord, Lord Best. The commission has only just begun its work so this debate comes too early to report any findings, but I will speak to the issues we face and I promise to return to offer and share some conclusions.

As we have heard, the chief challenge is the lack of affordable and suitable housing for local residents—those of modest means, raised, living and working in rural and coastal areas, young people leaving college, and empty-nesters seeking to downsize. Blame is deservedly laid at the feet of the short-term rental market and second homes, which push up prices and remove hundreds of thousands of properties from the local housing stock. Some 10% of homes in the South Hams are unavailable due to being second homes or empty; in north Devon, there was a 67% decrease in the number of private rental properties between 2019 and 2021; and every local authority in Devon has affordability ratios greater than the national average, other than Plymouth.

I am sure the Minister will refer us to the levelling-up Bill, but there are plenty of other factors that contribute. Local councils struggle to deliver housing of the scale and type required. It is easier for councils, and less resource intensive, to deliver housing supply in anonymous suburban blocks on the edge of large towns and cities, not where it is needed in small market towns and villages.

Biodiversity net gain will only add to the challenge of building in rural and coastal communities; despite its excellent intentions, BNG will undoubtedly slow development in communities blessed with biodiversity. Removing no-fault evictions, as we have heard, will ultimately decrease the relative attractiveness of long-term tenancies, and EPC regulations are a blunt instrument that is punitive to rural and coastal rental stock. I look forward to hearing how the Minister will address these issues.

Photo of Baroness Butler-Sloss Baroness Butler-Sloss Chair, Ecclesiastical Committee (Joint Committee), Chair, Ecclesiastical Committee (Joint Committee) 7:25, 24 July 2023

My Lords, I too thank the right reverend Prelate, both for calling this timely debate and for his speech. As one who lives in the diocese of Exeter, I endorse what the noble Earl, Lord Devon, said about the right reverend Prelate as the Bishop of Exeter. I am equally sad that he is retiring. I want to make just one point. There is a feeling in Devon that the Government rather overlook the West Country, placing understandable emphasis on the north of England. Can the Minister say whether the Government will take the same interest in other rural areas as well as those in the north, including the West Country?

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat 7:27, 24 July 2023

My Lords, I too congratulate the right reverend Prelate on securing this debate, which has highlighted our housing crisis, not least in affordable homes. Frankly, it is getting worse. Housing benefits now cover only the cheapest 18% of private rentals, housebuilding starts fell by 12% at the start of the year, and half of all our councils built no council houses last year. As the noble Lord, Lord Cameron, said, they need more help and more freedoms. Yet, while hardly mentioned in today’s housing statement, the crisis is particularly bad in rural and coastal areas, where house prices and rents are higher than in urban areas, while incomes are lower. It is increasingly hard for people of working age to live and work in rural and coastal areas, with the inevitable impact on their local economies.

As we have heard, there are three principal causes: too few genuinely affordable homes being built; second homes taking over full-time residential homes; and—the most rapidly increasing problem—short-term lets, or STLs, taking over the long-term privately rented sector.

I live in Suffolk, close to the popular seaside town of Southwold. Of its 1,400 properties, only 500 have full-time residents, 500 are second homes, and 400 are STLs. Therefore two-thirds are not permanently lived in. House prices and long-term rents have risen steeply, leading to staff shortages. Many bars, restaurants and hotels now have staff vacancies, and it is feared, as the right reverend Prelate said in respect of our rural and coastal communities more generally, that Southwold will soon be hollowed out.

In Committee on the levelling-up Bill, the Government promised action on STLs. Consultation has taken place on measures to enable councils to limit them, which I welcome. However, they do nothing to help the problems caused by many of the 257,000 second homes not used as STLs—“second homes for council tax purposes”, as they are known. Neighbourhood plans and new powers for councils to increase council tax on second homes will help but are insufficient.

Can the Minister explain why the Government, having belatedly agreed to address the STL problem, are failing to do the same for the second home problem? What is being done to resolve the failed attempt to close the tax loophole whereby second home owners avoided paying either council tax or business rates? Since Michael Gove introduced the so-called tough new measures, an extra 12,000 second homes have been added to the business rates list, leading the Telegraph recently to report:

“Holiday let council tax crackdown backfires—costing local authorities millions”.

Can the Minister also say what further steps will be taken to address this problem?

Photo of Baroness Taylor of Stevenage Baroness Taylor of Stevenage Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government), Shadow Spokesperson (Transport) 7:30, 24 July 2023

My Lords, when we spoke earlier in the Chamber, I failed to welcome the noble Baroness, Lady Swinburne, to her place, and correct that now and welcome her to the Dispatch Box and her new role. I thank the right reverend Prelate the Bishop of Exeter for initiating this very important debate and all noble Lords who have spoken.

I, too, regret the huge black hole in the Secretary of State’s statement today about housing that did not anywhere touch on rural and coastal housing. Councillors see the catastrophic failures in government housing policy on a day-to-day basis, as we deal with the front line of homelessness, lack of availability of social-rented or affordable private rented homes and a housing market that is incredibly skewed, especially in rural and coastal areas, to investors looking for second homes or holiday homes to let out for profit, pushing prices right out of the reach of local people. The right reverend Prelate gave some startling figures for Devon, and I am sure they are true for other areas. I really welcome the Archbishop’s commission’s report, which was thorough and got right to the point of the problem.

My noble friend Lady Warwick set out the context of the overall housing crisis in which this rural housing dilemma sits. It is heartbreaking for people who live in rural and coastal areas to see them increasingly hollowed out as they lose their shops, pubs, schools and medical centres because of the transient nature of a population much of which is there for only part of the year, with high house prices meaning that local workers just cannot afford to live there, as so clearly illustrated by the noble Lord, Lord Teverson, in respect of Cornwall.

The APPG on Coastal Communities provided clear evidence in its report of 2022 to show that rural and coastal areas were hardest hit by the global financial crisis of 2008 and slowest to recover, with many still not having recovered when the pandemic arrived. Of course, the nature of economies in rural and coastal areas has a fundamental impact on the ability of local residents to afford the housing they need, and it impacts on investment in existing housing too, with rural and coastal areas, as pointed out by the LGA, likely to be older and in poorer condition. How will the Minister ensure that new social housing regulations reach rural areas too?

The National Housing Federation, together with the Rural Housing Alliance, has produced an excellent rural housing five-star plan, to which the right reverend Prelate referred. It outlines a very clear strategy for each of the next five years. It calls for Homes England to have a specific target for the delivery of rural homes. We have learned that Homes England, the Government’s own agency, has posted losses of £148.3 million arising from bad loans in 2022-23, and in the year to 31 March, there was another £230 million of bad loans, up from £51 million two years ago. Will those losses impact on Homes England’s ability to deliver more housing altogether, but particularly in rural areas?

Affordable, sustainable housing should be a right, wherever you live in the UK. If we continue to ignore its vital importance to our rural and coastal areas, they will continue to hollow out, and the vital place that rural and coastal communities have in our culture will be diminished. I look forward to hearing the comments from the Minister.

Photo of Baroness Swinburne Baroness Swinburne Baroness in Waiting (HM Household) (Whip) 7:33, 24 July 2023

I thank all noble Lords for their contributions to the debate. I am pleased to respond to it, not least because I grew up in, and my family are still part of, a rural coastal community in Ceredigion, west Wales, and I recognise many of the issues raised by your Lordships in today’s debate.

In particular, I thank the right reverend Prelate the Bishop of Exeter for bringing forward this important subject. I am aware that he met my ministerial colleague, my noble friend Lord Benyon, alongside other noble and right reverend Prelates, where the housing challenges that rural and coastal communities face were discussed, and I am grateful to have this chance to talk to them directly.

This Government fully appreciate the importance of delivering more of the right homes in the right places for people to buy and rent. That is right at the centre of our mission to level up growth, opportunity and pride throughout the United Kingdom. Your Lordships will have heard from the Secretary of State for Housing earlier today the detail on our long-term plan for housing. That commitment very much includes affordable, attractive, greener housing for rural and coastal communities. However, we recognise that there are bespoke challenges that those communities face, as outlined in today’s contributions. They are complex and multilayered by virtue of the communities’ more remote locations and range from limited availability of affordable homes to barriers to home ownership when up against the opportunities provided in more urban areas

People should not be priced out of the places where they grew up and where they have family, friends and livelihoods. Local businesses should not have to rely solely on a local workforce in order to be able to expand, grow and serve their customers. Of course, their growth will make their communities stronger and more sustainable. That is why we are working tirelessly in our steadfast commitment to increase the supply of affordable homes, which build those strong, sustainable communities, while preserving and enhancing the unique character and beauty of our cherished countryside and coastlines.

As many of your Lordships have raised, housing supply is a critical issue, including increasing the supply stock. We are making good progress towards this. We are on track to deliver our target of 1 million homes in this Parliament—and we already have almost 70% of them on their way. We remain committed to our ambition to deliver 300,000 new homes a year across England, including in rural and coastal areas. In the last year, 2021-22, over 232,000 homes were delivered in England. Of relevance to this debate, more than 60,000 of them were in rural areas. This feeds into the 2.2 million homes-plus that have been delivered since 2010, with nearly a quarter of a million being affordable homes in rural areas.

We are doing this mostly through our £11.5 billion affordable homes programme, delivering homes to buy and rent across England. We are proud of this progress, but we know that much more needs to be done and we must not be complacent about the scale of the challenge. That is why we are not just delivering homes on a larger scale but supporting local communities, particularly in rural areas, to make the most of smaller sites through the rural exception sites policy. This aims to encourage small affordable housing developments in rural spots where they would not normally be permitted.

As numerous noble Lords have raised, the issue of second homes and short lets is highly relevant. We are therefore acting to empower rural and coastal communities, which have high numbers of second homes and short-term lets. We completely appreciate how much of a factor these types of homes are for coastal and rural communities. The right reverend Prelate the Bishop of Exeter, and the noble Earl, Lord Devon, among other noble Lords, raised those issues. They have highlighted how much of a negative influence—

Photo of Baroness Taylor of Stevenage Baroness Taylor of Stevenage Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government), Shadow Spokesperson (Transport)

We have a unique opportunity in the Levelling-up and Regeneration Bill to bring some of these measures forward. Do the Government intend them to come forward in that Bill?

Photo of Baroness Swinburne Baroness Swinburne Baroness in Waiting (HM Household) (Whip)

I will come to my levelling up contribution shortly, and if it has not satisfied the noble Baroness at that point, I will happily come back in writing to her.

With regard to those communities in Devon, particularly when it comes to social housing supply, please know that we have listened and are taking everything into consideration as we look to level up prosperity and opportunity, as well as bolster community cohesion. We recognise that rural areas have more limited affordable stock than other places. As well as the affordable homes programme, my right honourable friend the Secretary of State for Environment, Food and Rural Affairs has announced £2.5 million of funding to provide a network of rural housing enablers across England, which will help to identify development opportunities and secure the support of local communities. Homes in rural protection areas are also exempt from both the right to acquire and the right to shared ownership schemes.

We are therefore introducing measures to strike the right balance between boosting local tourist economies and the availability of affordable homes for local people, giving councils the power to apply a council tax premium of up to 100% on second homes through the Levelling-up and Regeneration Bill, and introducing higher rates of stamp duty for second properties and new measures to close the tax loopholes on holiday lets—alluded to by a noble Lord—that came into force in April.

With respect to the regulating of holiday lets, we propose to introduce a planning use class for short-term lets and a registration scheme for all such properties. The consultations on these have just closed and we will give an update in due course. Through the Renters (Reform) Bill we will change the way that the short-term lets market interacts with the private rented sector. By abolishing no-fault Section 21 evictions, as well as removing the existing ground (3), landlords will be unable to evict a long-term tenant to convert their home to a holiday let and maximise profit during the peak summer season. We do not think that it is right that landlords can do this and we will end the practice.

Turning to the planning reforms, alongside having enough homes to go around, we want to see them well designed and in keeping with their surroundings—a particular priority for rural and coastal communities. We are proposing planning reforms to create a quicker, modernised planning system that will be to all these communities’ benefit. These are all set out in the Levelling-up and Regeneration Bill and in a consultation on changes to the National Planning Policy Framework that ran earlier this year. In this, we specifically explored opportunities to unlock small-scale sites as well as strengthening the significant untapped potential of community-led development to meet housing need in rural and coastal areas. We are carefully considering the consultation responses—there were nearly 26,000—and hope that our response will provide some real potential for positive outcomes for our countryside and seasides.

Turning to the infrastructure levy, we launched—

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat

I apologise for interrupting, but before the Minister moves on, can she explain why the Government are thinking of introducing powers to enable local councils to control STLs but are not thinking of introducing similar powers to help councillors to control the number of second homes that do not become STLs?

Photo of Baroness Swinburne Baroness Swinburne Baroness in Waiting (HM Household) (Whip)

I thank the noble Lord. I will note back to the comments about the registration scheme for short-term lets, which will capture many of those that are being used for—

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat

I apologise, as I know that time is very short, but short-term lets is one issue. I have already welcomed what the Government have done. However, there are a quarter of a million second homes and growing that do not get converted into short-term lets and are not covered by the current proposals. What will be done about the growing number of second homes that will not become short-term lets?

Photo of Baroness Swinburne Baroness Swinburne Baroness in Waiting (HM Household) (Whip)

I will need to get my noble friend the Minister to respond to the noble Lord in writing on that specific issue.

Photo of Baroness Taylor of Stevenage Baroness Taylor of Stevenage Opposition Whip (Lords), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government), Shadow Spokesperson (Transport)

I am sorry to intervene once more on a brief point, before the Minister moves on to infrastructure levy. In relation to the council tax premiums, we are very grateful for the provisions in the levelling-up Bill that introduced them, but how will we make sure that it is the tier of local government that is responsible for delivering housing to which the funds will be generated. The danger is that they will get split between the various tiers of local government and not go where they are needed to provide housing. We could even use the levelling-up Bill to delegate the powers of right-to-buy. Can the Minister think about that as well?

Photo of Baroness Swinburne Baroness Swinburne Baroness in Waiting (HM Household) (Whip)

I thank the noble Baroness. Not unexpectedly, I will need to pass that on to the Minister concerned. I suspect that during the levelling-up discussions that will be continuing in September, we will probably cover many of those points. I will pass them on to the department.

Turning to the infrastructure levy, we launched a consultation on a vital lever for delivering both affordable homes and essential infrastructure—the new infrastructure levy. It is proposed that the levy be a fixed, non-negotiable charge on developers, to capture more land-value uplift from new development for the benefit of local communities, to reduce delays and to ensure that developers meet their obligations. We also put forward in this consultation the idea of maintaining the approach that local authorities retain the right to seek affordable housing for smaller sites in designated rural areas. This consultation closed last month and we will publish our response once submissions have been properly reviewed.

I will try to cover a few of the questions that have been asked. If I miss any of them, I apologise. I will check Hansard and respond in writing to any of your Lordships’ questions that I miss. On the question asked by the noble Earl, Lord Devon, achieving biodiversity net gain for development has been part of planning policy since 2012 but, to ease the transition towards making it mandatory, the Government have extended the transition period for small sites until April 2024. In February, we announced £16.7 million of funding to help local planning authorities to prepare for BNG, in addition to the £4.18 million already distributed the previous year. We have also funded the Planning Advisory Service to support local planning authorities in their preparations. This will also help all those rural communities in their planning.

On the question of whether no-fault evictions will make long-term tenancies less attractive, on the contrary, our plans to ban Section 21 no-fault evictions and remove the existing ground through the Renters (Reform) Bill will stop landlords evicting a long-term tenant just so that they can convert their home into a holiday let for that peak season. On EPC enforcement, which was raised by the noble Earl, Lord Devon, we are committed to ensuring that the EPC system works as effectively as possible. We are also aware of some of the issues that he highlighted. The current regulations set the existing minimum standard of EPC E and include a number of exemptions to make sure that the costs and circumstances relating to improvements are proportionate and fair for landlords too.

The right reverend Prelate the Bishop of Exeter asked whether there would be a cross-departmental strategy. We already have cross-governmental working on rural areas. Unleashing Rural Opportunity, published on 6 June, sets out clearly the Government’s commitment to working for rural areas. Rural areas are at the heart of levelling up and Defra is the champion for rural affairs across government, publishing each year its Delivering for Rural England report.

A very large number of noble Lords asked about key workers. In their 2019 manifesto, the Government committed to bringing forward discounted homes for first-time buyers, prioritising local people and key workers. That is exactly what we are doing. Additionally, for first homes, a discount of at least 30% needs to be applied. Crucially, that discount is passed on to future purchasers in perpetuity.

I thank the noble Lord, Lord Best, for his solutions to many of the issues—it was nice to hear them rather than just all the problems—and for sharing his experience, particularly on things that are working well. I thank the noble Baroness, Lady Twycross, for her contribution on the empty homes initiative. I agree that this must be a joined-up approach, not just with government but with all local government levels and the private sector working together to deliver these matters as a priority.

The Secretary of State today announced the launch of the consultation on changes to permitted development rights, which will include proposals to give farmers greater freedom to change the use of their buildings to residential or commercial. This includes proposals on new and amended permitted development rights to ensure that such rights are fit for purpose and support further housing delivery. We are seeking views on amending the existing right for the change of use from agricultural buildings to residential use, to deliver more homes and apply to a wider range of rural issues.

With regard to all these questions, as I said, I will return in written form to any that I have not answered. To bring my words to a close—

Photo of Baroness Swinburne Baroness Swinburne Baroness in Waiting (HM Household) (Whip)

We are running out of time, so I would like to finish my concluding remarks.

To bring my words to a close on this issue, we are absolutely committed to getting Britain building in a way that delivers for our much-loved rural and coastal communities, championing affordability, home ownership, beauty and sustainability. Housing is very much an important part of this, alongside better access to high-quality jobs, efficient infrastructure and a pride in place that drives economic growth in these areas and ultimately ensures the best possible life for all in the UK. It is why we have invested £1.5 billion through the levelling up fund, the UK shared prosperity fund and the rural England prosperity fund in coastal and rural areas to date. This is levelling up; we are working to make it happen, and it is working. We completely understand the challenges for rural and coastal communities when accessing affordable homes, and I hope that everything I have covered today has addressed some, if not all, of noble Lords’ points.

However, there is a lot more that can be done. I look forward to continuing discussions away from the Chamber as we work to nurture and support these communities in our cherished countryside and coastlines.