Part of the debate – in the House of Lords at 7:27 pm on 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?