Second Homes and Holiday Lets: Rural Communities — [Mr Virendra Sharma in the Chair]

Part of Backbench Business – in Westminster Hall at 2:44 pm on 6th January 2022.

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Photo of Christopher Pincher Christopher Pincher Minister of State (Department for Levelling Up, Housing and Communities) 2:44 pm, 6th January 2022

It is a great pleasure, as always, to serve under your chairmanship, Mr Sharma. I wish you and all Members here in the Chamber a happy new year, particularly Tim Farron, who secured this important debate. I congratulate him on doing so and I congratulate all hon. Members on their intelligent, thoughtful and detailed contributions.

In the time available to me, I shall certainly do my utmost to address the points that have been raised by Members and on occasion I will also refer to the very excellent speech that my officials have provided for me. However, I will begin by making a general point, and if I misquote Jane Austen, forgive me, because it is a “truth universally acknowledged” that if we are to have the affordable homes that people want and need in the places that they are needed, we must build more homes in those places. It is not just me saying that; organisations and groups as different as KPMG and Shelter also say that in order to meet the housing needs of our country, we need to build north of 250,000 new homes each year.

I am pleased to say that in the year before covid struck, we were well on our way to achieving that objective: 244,000 homes were built in that year. Indeed, even in the year of covid, 216,000 new homes were built. I am also pleased to say that in that time 408,379 first-time buyers achieved their dream of home ownership, which was a 20-year high and a 35% uplift on the previous year.

It is because we need to build more homes that we have introduced and built upon our affordable homes programme, which injects a further £11.3 billion of public money into building more affordable homes. We reckon that 180,000 affordable homes will be built in the next five years, 32,000 of which will be for social rent. That is why we have abolished the cap on the housing revenue account and provided very attractive Public Works Loan Board interest rates for local authorities to build their own homes, if they wish to do so. It is also why we have the Help to Buy scheme, which has now helped 339,000 people on to the housing ladder, why we have introduced a fixed mortgage guarantee scheme of 95% of loan-to-value, to help people to get those mortgages and get on to the housing ladder, and why we have introduced the First Homes scheme, which my hon. Friend Kevin Hollinrake quite properly recommended. The First Homes scheme will ensure that local people can benefit from discounts to local homes of up to 50% and in some specific cases from discounts greater than 50%.

I am very pleased that the hon. Member for Westmorland and Lonsdale is keen on the First Homes scheme. I am bound to tell him that we are yet to hear from Lakeland about an opportunity to pilot the scheme there. [Interruption.] I am very pleased that he has made the offer again and I will certainly ensure that my officials are aware of it and make contact with Lakeland, because we believe that First Homes is a way of ensuring that local people, or people with particular skills that are necessary in a local area, are able to get on to the property ladder and stay there.

However, we recognise that rural communities face some very specific challenges. That is why my hon. Friend the Member for Thirsk and Malton and others pointed out that we have changed the tax system. Since 2013, local authorities have been able to levy 100% of council tax on second homes, where the people who own them do not necessarily use the local services that they might, but through the council tax have to contribute to them; 96% of local authorities make use of that opportunity. Where homes are empty for a period of time, they can levy even more significant council tax surcharges.

That is also why we have committed to close the loophole in the business rate system that Matthew Pennycook, the Opposition spokesman, referred to, in order to ensure that letters have to reach a letting threshold before they can benefit from business rate relief, and we will introduce our proposals to close that loophole as soon as we can. Colleagues across the Chamber have mentioned the changes we have made to stamp duty to help first-time buyers, charging second home purchasers more to alleviate some of the advantages that they have over first-time buyers. That is why we have also introduced a further surcharge for foreign purchasers of property.

I hear what my hon. Friend the Member for Thirsk and Malton says about taxation policy. Taxation policy is, of course, a matter for the Treasury. As I have said before, although not all good ideas start in the Treasury, they can all end there if the Treasury does not like them—although I am bound to say that the Treasury usually likes ideas that raise its income. We will, with the Treasury, keep these issues under close review.

This issue is also why we have reformed the planning system, which, at 74 years old, is even older than the plan for the City of York. It is opaque, slow, and is not predictable. That does not help small and medium-sized enterprises—often the builders who build different types of homes for different tenures in the places that the big builders do not want. We need a system that will help those SMEs and is far more engaging. Presently, 1% of local people get involved in the development of their local authority’s local plan—that is far too few—and 2% to 3% of local communities get involved in individual planning applications; again, that is far too few. If we can build a system that is digitised and far more straightforward, it will engage more people in plan making, and that will buy in communities to the plans for those communities and their needs.

We also want, as a reform to be introduced soon, a new infrastructure levy to replace section 106, which tends to favour the bigger developers that can afford the bigger batteries of lawyers. We want a system that, again, is speedier and more transparent, that front-loads the funding for local authorities to use earlier in the development process, and that captures greater land value. Our infrastructure levy proposal, which colleagues will hear more about in the near future, will, we believe, achieve that.

I recognise that more must be done, but we must ensure that we get the right balance on the economic benefits of second homes, the social challenges that they can sometimes provide, the rights of homeowners to use their properties as they choose, and the needs of homeseekers wishing to live in or near the area where their friends, families or workplaces are located.

The hon. Member for Westmorland and Lonsdale offered seven solutions. We recognise that a large number of second homes and holiday lets can have adverse effects in some areas, so I will look closely at his proposals and at the points raised by other colleagues. However, I am bound to say to him that while changing planning law so as to make second homes and holiday lets a separate category in planning use has some attractions, it also has some significant drawbacks. Use classes apply nationally in all cases, irrespective of whether one lives in a high tourism area. Therefore, a new use class would affect second homes and therefore potentially restrict the freedoms of homeowners, wherever they live, regardless of whether it is a high-use tourist area.

We also do not have the information needed to understand how, and for how long, a property is being used. The hon. Member for Westmorland and Lonsdale, the shadow spokesman—the hon. Member for Greenwich and Woolwich—and others, made the point that we need data. It was also made by my hon. Friend Selaine Saxby, and by my hon. Friend Steve Double—as a Whip, he is silent in public, but I can assure the House that he is very vocal in private with me about these matters.

I can confirm that we propose to consult on the introduction of a tourist accommodation registration scheme in England so that we can build an understanding of the evidence and the issues that second homes present, particularly when driven by the rise of online platforms such as Airbnb. We will launch that consultation later this year and will begin the process of a call for evidence in the coming weeks. We want to look at not just the issue of short-term holiday letting, but the effect that it has on supply. We will also look at compliance, health and safety regulations and the effect of antisocial behaviour and so on. My hon. Friend Nigel Huddleston, the Minister with responsibility for sport, tourism and heritage, has already been in touch with the local council of the hon. Member for Westmorland and Lonsdale, and I dare say that he will be in touch with other councils in due course.

We are acutely aware of the challenges that second homes present, as well as the opportunities that they provide. I can assure the Chamber that as we develop proposals on planning reform, we will keep those considerations and concerns in mind. I will also keep in mind the proposal of my hon. Friend the Member for Thirsk and Malton to rebadge or rebrand houses under the first homes scheme as half-price homes—at least that has the benefit of alliteration, if nothing else. We certainly want to make sure that the value and importance of the first homes strategy is fully understood and appreciated by local authorities up and down the country.

I am conscious that the sponsor of the debate, the hon. Member for Westmorland and Lonsdale, should have an opportunity to be heard. Let me conclude, therefore, by saying that as we emerge from the pandemic we want to build new and better homes and communities while recognising that building in and of itself does not solve some of the challenges that communities face. That will be at the forefront of our minds as we bring forward our White Paper on levelling up as well as our planning proposals, which I hope I will be able to present to the House in the not too distant future.