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

Backbench Business – in Westminster Hall at 1:30 pm on 6th January 2022.

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Photo of Virendra Sharma Virendra Sharma Labour, Ealing, Southall 1:30 pm, 6th January 2022

Happy new year to all. Before we begin, I remind Members that they are expected to wear face coverings when they are not speaking in the debate, in line with current Government guidance and that of the House of Commons Commission. I remind Members that they are asked by the House to have a covid lateral flow test twice a week if coming on to the parliamentary estate. This can be done either at the testing centre in the House or at home. Please also give each other and members of staff space when seated, and when entering and leaving the room.

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

I beg to move,

That this House
has considered the matter of second homes and holiday lets in rural communities.

It is a huge pleasure to serve under your chairmanship, Mr Sharma. Happy new year to you, too, and to colleagues.

It is a huge privilege to serve our communities in Cumbria—our towns, villages lakes and dales, among the rugged beauty of England’s finest landscapes—yet the people who live in our communities are even more precious than the places themselves. We welcome those who see Cumbria as a holiday destination: a place for leisure and relaxation, and a place of peaceful serenity and exhilarating extremes. It is our collective privilege to be the stewards of such a spectacular environment for the country, yet our full-time local communities face an existential threat unlike any other in the UK. I am immensely grateful to have secured this debate, because the housing crisis that has faced our communities in Cumbria and elsewhere in rural Britain for decades has rapidly become a catastrophe during the two years of the pandemic.

For the last few decades, we have seen an erosion in the number of properties in Cumbria that are available and affordable for local people to buy or rent. What little I know of geology tells me that although erosion usually takes place over huge passages of time, sometimes a whole rockface may collapse or a whole piece of a cliff might drop into the sea in a single instant. That is what has happened to our housing stock during the pandemic. In the space of less than two years, a bad situation has become utterly disastrous.

I have been calling for the Government to take action from the very beginning, so I confess to being frustrated and angry that Ministers have yet to do anything meaningful to tackle the problem. As a result, many of us living in rural communities feel ignored, abandoned and taken for granted by the Government, and we stand together today as rural communities to declare that we will not be taken for granted one moment longer.

In South Lakeland, the average house price is 11 times greater than the average household income. Families on low or middle incomes, and even those on reasonably good incomes, are completely excluded from the possibility of buying a home. Although the local council in South Lakeland has enabled the building of more than 1,000 new social rented properties, there are still more than 3,000 families languishing on the housing waiting list. Even before the pandemic, at least one in seven houses in my constituency was a second home—a bolthole or an investment for people whose main home is somewhere else.

In many towns and villages, such as Coniston, Hawkshead, Dent, Chapel Stile and Grasmere, the majority of properties are now empty for most of the year. Across the Yorkshire Dales, much of which is in Cumbria and in my constituency, more than a quarter of the housing stock in the national park is not lived in. In Elterwater in Langdale, 85% of the properties are second homes. Without a large enough permanent population, villages just die. The school loses numbers and then closes. The bus service loses passengers, so it gets cut. The pub loses its trade, the post office loses customers and the church loses its congregation, so they close too. Those who are left behind are isolated and often impoverished in communities whose life has effectively come to an end.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

I congratulate the hon. Gentleman on having secured this important debate. He has mentioned that his local authority has brought forward some affordable housing—I cannot remember the number he said—but that it was all rented. The Government have created a new scheme, the first homes scheme, to allow discounted properties to be purchased as affordable homes. Is the hon. Gentleman pursuing that with his local authority, to try to make more of those properties available to his local first-time buyers?

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

I am grateful for the hon. Gentleman’s intervention. The short answer is yes. The slightly longer answer is that the first homes scheme cannot be instead of other schemes but has to be in addition to them. By the way, in a community like ours where the average household price is 11 times greater than the average income, the first homes scheme will not help people; it will not even nearly help them. Maybe if their income was seven times less than the average house price, it might just help them, so it is a good scheme, but it is barely even the tip of the iceberg. Yes, I have spoken to the previous Secretary of State to ask him to make our area a pilot, but that does not touch the sides, if I am honest. Nevertheless, the hon. Gentleman has raised a really important point.

During the pandemic, I have spoken to many local estate agents across our county. Around 80% of all house sales during the past two years have been in the second home market. Those who have the money to do so are rethinking their priorities, investing in the rising value of property and seeking a piece of the countryside to call their own, and we can kind of understand that. I do not wish to demonise anybody with a second home, or to say that there are no circumstances in which it is okay to have one, but let me be blunt: surely, someone’s right to have a second home must not trump a struggling family’s right to have any home, yet in reality, apparently it does. Every day that the Government fail to act is another day that they are backing those who are lucky enough to have multiple homes against those who cannot find any home in the lakes, the dales or any other rural community in our country.

Photo of Robin Millar Robin Millar Conservative, Aberconwy

My own constituency, Aberconwy in north Wales, has this problem—not to the extent that the hon. Member describes, but certainly smaller villages are particularly vulnerable to high levels of second home ownership. However, I wonder what he has to say about the example given to me of a farmer whose family had lived in one valley, Penmachno, for many years. He himself had to move away to find other work, so he now has a second home—his family home—in Penmachno, but he must live in England. In that circumstance, there is a second home in the village that is not occupied, but there is a tradition and a family heritage in that village. Should that person then have to give up that home, or does the hon. Member have a way of recognising that kind of arrangement?

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

I thank the hon. Gentleman very much for his intervention, which is really helpful and worthwhile. I would say two things. First, we have a desperate lack of affordable private rented accommodation, so we want both social rented houses and houses in the private rented stock. It seems to me that that is clearly the route for the hon. Gentleman’s constituent to go down.

Secondly, possibly the only thing in the coalition agreement that had anything to do with me whatsoever was a commitment to what we called “home on the farm”: the ability, which is still the Government’s stated policy, for farmers to convert underused or semi-used farm buildings into affordable homes for families, but also as part of the wider housing network. These are all small ounces that will help us to shift the problem, and I wish that the hon. Gentleman’s Government in Wales and his Government here would take up these suggestions.

Photo of Bob Seely Bob Seely Conservative, Isle of Wight

I congratulate the hon. Gentleman on having secured this important debate. It is clear from some of the questions that have been asked, and from what the hon. Gentleman is saying, that this is a complex issue. I will give an example: on the Isle of Wight, the village of Seaview has 82% second home ownership, so it has been effectively stripped out of permanent life, and Bembridge and Yarmouth have similar problems. Is the hon. Gentleman aware that a group of us have written to the Secretary of State with over two dozen ideas for how to make the upcoming housing and planning Bill—if it does come—much better and stronger, and give it a much wider base of support? We have put forward recommendations, and some options on second home ownership.

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

I thank the hon. Gentleman very much for his helpful contribution, and for his ongoing concern and interest in this issue, which is very laudable indeed. In one sense, this issue is not complex at all. If a person is forced out of their community, it is not slightly complex; it is just bloomin’ tragic. Yes, there is a planning Bill, and I look forward to that. I might feel all sorts of dread about that Bill, but it is an opportunity to do something. However, every single day is an opportunity to do something. The opportunity was two years ago, a year ago, last week and the week before, and the Government do nothing.

The simple reality is that it is not that complex to do things that will shift the dial and save the dales and other rural communities that are being undermined in the way they are. That is what so frustrating to us: there are people from all parties in this Chamber today, and there are other people who would be here on a normal Thursday if it were not this time of year and if there were any votes today. The reality is that we know there is a problem, and we see no action from the Government. Every day that goes by is another day wasted. It is not complex—it is just tragic.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport)

I am grateful to the hon. Gentleman for calling the debate and I congratulate him on his speech. Urban areas that are holiday destinations—such as York, which has more than 8 million visitors a year—are also plagued by the issue, which is about not only Airbnbs and holiday lets but second homes, not least because people have now discovered new ways of working. Is that not another factor to add to the equation when we look at not only who has the ownership, but what is being developed?

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

The hon. Lady makes a great point and I am grateful for her intervention. It is not just a rural issue, although it may predominantly be rural. York is clearly a good example of somewhere that suffers in a different way. I will come to the issue of holiday lets and some of the answers in a moment. It will rob communities of their very life if we do not intervene. I am not someone who is anti-market—I am anti-broken market, and this is a broken market. This is our opportunity to do something about it.

Excessive second home ownership is a colossal problem in our communities. The purpose of this debate is to shake the Government out of their demonstrable and inexcusable inaction and to take the action required to save our communities.

The crisis has become a catastrophe, and it is not just about second homes. Holiday lets are an important part of our tourism economy. In the Lake district, we argue and believe that we are the most visited part of Britain outside London. Our tourism economy is worth more than £3 billion a year and employs 60,000 people—comfortably Cumbria’s biggest employer. It is a vibrant industry and, by its very nature, a joyful one; I am proud to be a voice for Cumbria tourism in this place. Those 60,000 people working in hospitality and tourism need to live somewhere. Some 80% of the entire working-age population of the Lake district already works in hospitality and tourism. We need to increase the number of working-age people who can afford to live and raise a family in our communities, yet the absolute opposite is happening at a rate of knots.

During the pandemic, in South Lakeland alone—just one district that makes up part of the Lake district—there was a 32% rise in one year in the number of holiday lets. I assure the Minister that those were not new builds; they were not magicked out of thin air. Those new holiday lets emerged in 2021 following the lifting of the covid eviction ban. That is not to blame the ban; it was a good idea, and it had to come to an end at some point. My point is that that rise was over a tiny period of time: less than 12 months, in reality. The fact is that this time last year those new holiday lets were someone’s home.

In Sedbergh, Kirkby Lonsdale, Kendal, Windermere, Staveley, Ambleside, Coniston, Grasmere, Grange and throughout Cumbria, I have met people who have been evicted from their homes under a section 21 eviction order—which, incidentally, this Government promised to ban in their last manifesto.

Among the hundreds evicted, I think of the couple with two small children in Ambleside, who struggled to pay £800 a month for their flat above a shop in town; they were evicted last spring only to find the home they had lived in for years on Airbnb for £1,200 a week. I think of the mum near Grange, whose teenage son had lived in their rented home his whole life; they were evicted only to see their property on Airbnb a few days later for over £1,000 a week. I think of the tradesman from Sedbergh, who had served the community for 15 years; a few days after he was evicted, his former home was also on Airbnb for £1,000 a week. There are hundreds more individuals and families in the same situation right across rural Cumbria.

Photo of Daniel Zeichner Daniel Zeichner Shadow Minister (Environment, Food and Rural Affairs)

The hon. Gentleman makes an important point. Back in 2018, I did some work with Gordon Marsden, the then MP for Blackpool South, looking at Airbnb and the issues of the sharing economy for the all-party parliamentary group for hospitality and tourism. We came up with a recommendation for a statutory registrations scheme for all accommodation providers. Is that something the hon. Gentleman has considered?

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

I have, and I will come to some suggestions in a moment, including on how we might tackle the issue—to put it neutrally—of Airbnb. The hon. Gentleman raises an important point, and the need for such a scheme is huge. Undoubtedly, the ease with which people can turn a home into a holiday let is part of the problem. The consequences are phenomenal. The people I am speaking about are real human beings; I could pick dozens and dozens more to talk about. What it means for them is that they have to leave the area. This is no less than a Lakeland clearance: whole communities ejected from the places where they were raised, where they had chosen to raise their families, or where they had set down roots to live, work and contribute to our economy.

Will the Minister accept that this is both morally abhorrent and economically stupid? We have businesses in Cumbria that, having survived covid so far, are now reducing their opening hours or closing all together because they cannot find staff anymore. We have people isolated and vulnerable because they cannot find care staff. There are friends of mine in that situation, in part because the local workforce has been effectively cleared out and expelled. In each case I mentioned earlier—in Sedbergh, Ambleside and Grange—the people could not find anywhere else to live in those communities or in the wider community. They have had to uproot and move away all together. How is the economy of Britain’s second biggest tourism destination expected to deliver for Britain’s wider economy without anybody to staff it?

What about the children who have to move away, and are forced to move school, and leave behind friends and support networks? What about those left behind in our dwindling communities, whose schools are now threatened with closure? I have spoken to MPs, not just those who are here and for whose presence I am massively grateful, but from rural communities right across this House. Most of those, particularly in England and Wales, are from the Conservative party. There is a kind of private agreement that this is a catastrophe. They see it in their own constituencies: the collapse of affordable, available housing for local communities is killing towns and villages in Cornwall, Northumberland, Shropshire, Devon, Somerset, North Yorkshire, the highlands of Scotland and rural Wales, as well as in my home of Cumbria.

Our rural communities want two things from the Minister today: first, a sign that he understands that this catastrophe is happening; and secondly, a commitment not to wait for the planning Bill, but to act radically and to act right now.

Photo of Robin Millar Robin Millar Conservative, Aberconwy

Forgive me for not thanking the hon. Member earlier for securing this debate; this is a crucial debate and very important to residents in Aberconwy. I want to ask him about the point he made about the distribution of this problem in Wales, Scotland and England. Is he suggesting that this is a problem that can be solved by the UK Government, or is it one that he feels must be dealt with by the devolved Administrations?

Photo of Virendra Sharma Virendra Sharma Labour, Ealing, Southall

Order. No disrespect, and I do not want to stop the debate or the interventions. However, those who are speaking later may want to be a little hesitant to intervene.

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government)

I will be guided by you, Mr Sharma. Unless people are desperate, I will not take any more interventions. Members have the opportunity to speak after I finish.

The point that Robin Millar makes is important; the UK Government have powers and I will come on to talk about the things that they could do. There are things that the Welsh Government could do, and there are some things that they are already doing that the UK Government are not doing—we could learn some lessons from them. There are also some powers that local authorities and national parks have, but those are very limited. It is essentially about taxation and planning law, in particular; those things come from both the devolved and central Administrations. However, it is a perfectly sensible and intelligent point that the hon. Member makes.

Now might be the moment, having asked the Minister to acknowledge that the catastrophe is real and to act, for me to give him some ideas about how he might act. What could and should the Government do? I propose seven steps to save rural communities. First, they could make second homes and holiday lets new and separate categories of planning use. This would mean that councils and national parks would have the power to put a limit on the number of such properties in each town and village, protecting the majority of houses for permanent occupation. Secondly, they could provide targeted, ringfenced finance so that planning departments have the resources to police this new rule effectively.

Thirdly, the Government could follow the lead of the Welsh Government and give councils the power to increase council tax by up to 100% on second homes in the worst-affected communities. That would serve to protect those communities and generate significant revenue that could then be ploughed back into their threatened schools and into new affordable housing for local families. A quick assessment shows that, in Coniston alone, that would raise £750,000 a year, which would make a colossal difference to that community.

Fourthly, the Government could force all holiday let owners to pay council tax, as they can avoid paying anything at all if they are deemed a small business.

Fifthly, the Government could give councils and national parks the power to ensure that, at least in some cases, 100% of new builds are genuinely affordable, and provide funding to pump prime those developments, possibly in part via the proceeds of a second homes council tax supplement. We have a deeply broken housing market. Of course, developers can sell any property that they build in our rural communities for a handsome price, but that is surely not the most important thing. Is it not time to stop building simply to meet demand, and instead build to meet need?

Sixthly, the Government could simply keep their manifesto promise and ban section 21 evictions.

Seventhly, the Government can ensure that platforms such as Airbnb are not allowed to cut corners and undermine the traditional holiday let industry. Their properties should have to meet the same standards as any other rental. Failure to do that is unsafe, unfair and creates a fast track for the Lakeland clearances to continue and escalate.

I want to be constructive, and I hope that I have been. I called for this debate not to throw bricks at the Government, but because I love my communities and I am despairing at what is happening to them. I am determined that Ministers should understand the depth and scale of this catastrophe, and that they should take radical action right now. I support free markets, but unregulated markets that are obviously broken are not free at all. That is when they need the visible hand of Government to referee and intervene.

The Government will have noticed that, in recent months, rural Britain has demonstrated at the ballot box that it will not tolerate being taken for granted. This debate gives Ministers an early opportunity to demonstrate, in return, that they will stop taking us for granted, standing idly by while rural communities are rapidly destroyed.

To those of us who live in Cumbria and other beautiful parts of our country, it is obvious what is happening, and it is heartbreaking. Likewise, it is obvious to us what needs to be done, and it frustrates us, to the point of fury, that the Government have so far failed to even acknowledge the problem, much less to do anything about it. Today is their chance to put that right. Rural Britain is watching.

Several hon. Members:

rose—

Photo of Virendra Sharma Virendra Sharma Labour, Ealing, Southall

Order. I will not limit the time for each speech at this stage, but I will be calling the Opposition spokesperson by 2.28 pm, so I leave it to Members to adjust their speeches accordingly.

Photo of Rachael Maskell Rachael Maskell Shadow Minister (Digital, Culture, Media and Sport) 1:53 pm, 6th January 2022

I thank Tim Farron for opening the debate so well, as we see a surge of second homes and holiday lets. We all know that our constituents need local homes for local people. They are being priced out of their communities and the wrong houses are being built, all at a cost to the local economy. This is about cost, tenure, and impact.

York is no different from rural areas; it is not about location but housing tenure and use, not least for a holiday destination. York has residential streets full of holiday lets, fragmenting communities in areas where second homes have a prevalence. We have new developments that are increasingly attractive to investors but unaffordable for local people. That includes the 2,500-unit York Central development, which even Homes England recognises could be dominated by second homes and holiday lets—it is now being dubbed “Airbnb central”. The wrong kind of housing is being developed; the site should be about public land being used for public good.

I do not chastise the Government for their focus on housing numbers, but in York, we need growth for our local people, and that focus is propping up second homes and the lettings market, and causing the housing market to overheat at the expense of local families being pushed further away from our city. The solution is local homes for local people, whether they already live in York or are moving to serve our local economy and public services.

Let me address costs. York receives more than 8 million visitors a year. The holiday let business is booming, not least as covid-safe staycations have been such a feature of the pandemic. York’s pressure-cooker housing market saw an increase of 14%—£36,000—in the average property price in the year up to August. First-time buyers spend 23% more on housing than they did five years ago. York’s affordability ratio is 8.3 and rising sharply. Family homes are being snapped up as holiday lets or second homes, and it is more lucrative to convert student lets to holiday lets, so we now have a problem with student accommodation. York’s superb connectivity and new ways of working mean that the opportunity to own a second home in York has become even more attractive to weekly commuters.

On tenure, developers are building units for investors, not to meet local need. They are perfect for short-term breaks but hopeless for local families, even though family homes constitute 80% of those needed. That is why the numbers game just does not work and the planning system does not deliver. It is a false economy: housing units are getting ticked off but housing need is not being addressed. It is a developer’s dream, as they can name their price, but a local person’s nightmare, as they are pushed away from our city.

On the impact, we cannot recruit those with the vital skills to staff our NHS or social care. We cannot staff our local economy, particularly in retail and hospitality, as people can no longer afford to live in York, and that problem has reached crisis point in some professions. The gentrification of our post-industrial city is coming at a heavy cost, not least as local families are now being driven away by the net loss of council housing and a housing waiting list that has tripled in my short time in Parliament. The unaffordable rents and market housing costs are forcing people to live and work elsewhere. Too many people are now at the mercy of unscrupulous private landlords or in overcrowded social housing. It is breaking our city. Local homes for local people is imperative.

I will make five suggestions. First, we need proper local data, including a register of housing lets and a register of second homes.

Secondly, we need to fix local taxation. Business rates do not work here, as we all know, so on top of council tax, a council tax levy should be paid by people who have the privilege of owning a second property for holiday lets. After all, people renting still use local services and need their bins collecting.

Thirdly, on planning, we need to build local homes for local people. The planning system does not currently accommodate that, and the obligations and incentives have a perverse impact. A residence test is required, and although I would welcome such a measure, it is about more than that. We need to address the problem not just at the point of sale, but when the land is being developed, and consider the obligations placed on developers. We need to review the local planning process—I appreciate that we have not had a local plan since 1954, which is escalating the problem—and I trust that the Minister will deliver that for us this year. He needs to bang heads together at our local authority to deliver that, because we absolutely need to look at the planning system in today’s context.

Fourthly, on financial incentives, scrapping the mortgage tax relief on holiday lets is absolutely essential, as is looking at how stamp duty can be even better used as a disincentive for second home ownership. When disposing of public land, instead of chasing one-off land receipts, investment in the long-term interests of the community and the socioeconomic outcomes should be the prime focus.

Fifthly, we should also limit the time for which holiday homes can be let, as has been done in London and Europe. That will curb the behaviour of some of second home owners and ensure that those homes can go to local communities.

We need the principle of local homes for local people to govern every housing decision so that we can once again have a vibrant community.

Photo of Selaine Saxby Selaine Saxby Conservative, North Devon 1:59 pm, 6th January 2022

It is a pleasure to serve under your chairmanship, Mr Sharma. I thank Tim Farron for securing this important debate.

I feel like a stuck record for raising the issue of second homes in North Devon again. My constituency is not just rural but coastal, and many of the issues described by hon. Members are exacerbated many times over on the coast, where we have only the sea to draw on for extra residents or houses. Therefore, down the south-west peninsula, in both Devon and Cornwall, MPs have been highlighting this issue ever since I was elected. Although the pandemic has seen a perfect storm, resulting in a rush to purchase second homes in beautiful locations or to convert properties to short-term holiday lets, it is not a new problem. I was contacted during the 2019 general election campaign by the Croyde Area Residents Association, which was concerned even then that second homes accounted for 64% of properties in the stunning surf village of Croyde.

The issues around second homes are well documented with regards to a shortage of affordable properties for local residents. In the past year of the pandemic, we have also seen many evictions of local residents who have rented their homes for many years, so that owners can convert their properties to short-term holiday lets. North Devon has always welcomed second-homers and those visiting our beautiful coast in short-term holiday lets, but what we are now seeing is unsustainable, and we need action to address the problem before we become a complete ghost coast.

Like me, North Devon Council has written numerous times to the Ministry for Housing, Communities and Local Government, and now to the Department for Levelling Up, Housing and Communities, on this matter. In its most recent letter, North Devon Council detailed the following concerns about the critical situation facing our housing market. Average house prices in North Devon have increased by 22.5% in the past 12 months—the second-highest rise in England. There has been a 67% reduction in listings for permanent rental properties in 12 months—the highest reduction in the south-west, and the fourth highest nationally. There has been a 33% increase in the number of people on the housing register in 12 months, a 21% increase in the number of dwellings registered for business rates for holiday lets over 24 months, and a 7.5% increase in the number of second homes in just 12 months.

The number of properties advertised for permanent rental via Rightmove, compared with those available for Airbnb, really highlights the issue. Many of us had hoped the problem would have passed by the end of the summer, but at the start of November in Barnstaple, the main town in my constituency, there were 126 Airbnbs and two private rentals. In Ilfracombe, there were over 300 Airbnbs and three private rentals. In Lynton, there were 104 Airbnbs. In Woolacombe, there were 196 Airbnbs but not a single private rental on Rightmove.

The council’s housing staff are now dealing with a huge increase in the number of people presenting as homeless, and they have also seen a major shift in the type of people asking for assistance. These people are homeless simply because they are forced to present as such, as they have been evicted by landlords who wish to convert their properties from private residential use to short-term holiday use. Given the numbers I have mentioned, it is impossible for them to find alternative accommodation on the open market. I want to take this opportunity to thank the housing team at North Devon Council for their tireless work in trying to help families who find themselves in an incredibly difficult and stressful situation through no fault of their own.

Although tourism is a major part of the North Devon economy, the lack of housing available for permanent residential use is starting to have a major impact on the lives of far too many residents, as well as on local businesses and public services such as health and education, which are struggling to recruit because of the lack of housing and which are also suffering from existing staff leaving the area because of eviction and the lack of affordable housing. Major employers in North Devon have indicated that the lack of available housing is now being considered when deciding whether to invest in the area. Local schools and colleges, and the health service, cannot recruit quality staff because of the lack of housing. Even our much-loved North Devon District Hospital is struggling to find accommodation for just the handful of new students that started there this year.

The recent shift from permanent residential to holiday use, and the substantial increase in house prices, means not only that a permanent home is out of reach for many people living and working in the area. Public attitudes to new house building have also changed. Virtually every housing scheme in North Devon, particularly the larger ones, is meeting substantial opposition from the community, with many objectors citing fears that the properties will become second homes or holiday lets, and that they will invariably be unaffordable for local residents. The situation is exacerbated by the fact that viability challenges raised by developers mean that on average only around 20% of new homes built in North Devon are affordable, by any definition.

A proliferation of short-term holiday lets in an area not only changes the character of a neighbourhood but can also increase antisocial behaviour and noise nuisance, primarily because there is so little regulation of short-term holiday lets. We are already starting to see that, with an increase in the number of complaints received by the council relating to noise, antisocial behaviour, parties, hot tubs and so on.

I recognise that any intervention in the housing market has a huge risk of unintended consequences and potential increases in prices in some sectors, but I very much hope that some steps can be taken to level the playing field between the short-term and the long-term rental markets through the various current tax inequalities, to ensure that the short-term holiday let market is better regulated and that a change of use is required to convert properties from primary residence to holiday lets. It seems bizarre that some of the holiday lets in my constituency have to have a change of use to become a long-term rental, but the situation is not the same the other way round. Restrictions of just 10 months’ occupancy are imposed by local councils for good reasons at the time they were imposed, but those restrictions are now not being reversed. Support is needed for small district councils to enable them to confidently take those steps, if they are able.

We also need to take steps to bring back into occupation derelict properties that have been left empty for months or years. Councils have powers, but the processes are slow and expensive, and the proximity of my own home to derelict houses suggests such powers are not being readily acted upon.

Most people dream of owning their own home, and I fully support the Government’s ambition to help people to achieve that dream. To do that in places such as North Devon, we need to find a solution for increasing the supply of affordable housing and we need to review the guidance and tests in place to assess the viability of developments, to ensure that the level of affordable housing provided is not affected by issues such as an unreasonably high valuation placed on the land.

Our councils need more control and flexibility in access to funding to build affordable homes and to protect them for occupancy by local residents, so that they are available to future generations. New homes need to be available to those who want to live in these rural and coastal constituencies. There are innovative schemes such as rent to buy from companies such as Rentplus, community land trusts for small rural communities need to be more accessible to small planning authorities, and more needs to be done so that our local plans really do reflect the needs of our local communities.

Like many of my constituents, I would like the lights over Christmas to be on in my neighbours’ houses, but far too many closes like mine are deserted through the winter. I very much hope that the new Department for Levelling Up, Housing and Communities has some plans, blue sky or otherwise. During the pandemic, this Government showed that we can act quickly when we need to. The time is now to address the imbalances in the housing market, before the lights go out for good and the whole of the North Devon coast becomes a winter ghost town.

Photo of Wendy Chamberlain Wendy Chamberlain Liberal Democrat Spokesperson (Wales), Liberal Democrat Spokesperson (Scotland), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Work and Pensions) 2:08 pm, 6th January 2022

It is a pleasure to serve under your chairmanship, Mr Sharma. I thank my hon. Friend Tim Farron.

Like other Members here today, I represent a rural and coastal constituency. North East Fife is very popular with tourists—and why would it not be? The East Neuk is known as a hidden gem, a string of pearls, with its beautiful fishing villages of Crail and Elie, St Monans, Anstruther and Cellardyke; beaches and cliffs and nature to walk on—I tackled the Elie chain walk scramble with my son last year—and the sea for swimming and sailing; it has local food producers and a burgeoning craft alcohol industry; and all that is before moving on to St Andrews with its history and golf.

Tourism is clearly a vital part of North East Fife’s local economy, but I echo the comments made by my hon. Friend on the need for a balance. Tourism is only sustainable when it works with and enhances local communities. In many respects, the communities in North East Fife continue to thrive even outside of tourist season. Over Small Business Saturday before Christmas, I had the opportunity to visit the inaugural Largo arts winter weekend, where 30 artists opened their homes and studios to showcase and sell their works. Between covid and the weather, there were arguably not many tourists, but it was a fantastic and vibrant day showing the strengths of those living in our communities.

A persistent issue for those living in North East Fife, as for other constituencies mentioned here today, is the unsustainable proliferation of second homes and holiday lets. Details from Fife Council housing services for March 2021 show that, at a minimum, almost a 10th of all the properties in the East Neuk were second homes. I say “at a minimum” because the data does not include 14 smaller villages where there are fewer than 30 second homes, it does not identify where long-term empty properties are second homes and, crucially, it does not record holiday lets at all. So the real figures are likely to be significantly higher, with some anecdotal estimates placing the number closer to half of all properties.

No community can thrive when half of all private properties are holiday accommodation. A constituent wrote to me recently, noting that during the last 25 years numbers at the local primary school had fallen from just over 100 pupils to 30. That is not good enough for the families in North East Fife or elsewhere. It is not the sign of a thriving community where children will be given opportunities to flourish as they grow up. Others have mentioned the ongoing impact that that has on other services. We all run campaigns as MPs to keep our bus services and to keep our schools and other public places open, but we find ourselves in a vicious cycle because of this problem.

As others have mentioned, these properties drive away families and drive up house prices. Last August it was reported that property prices along the East Neuk rose by more than 26%, which is fantastic if you are on the property ladder, but less so for young people and growing families, who find themselves priced out. As Selaine Saxby referenced, there is an impact on councils and housing. There has always been a shortage of council housing in North East Fife, with people forced to become homeless.

I have mentioned the success of many local businesses, but no one’s income grew by more than a quarter last year, and no local business can work without employees. Like other areas, North East Fife has really struggled with employment in hospitality. There are vacancies in establishments such as the Michelin-starred Peat Inn, which has been forced to cancel lunch services owing to a lack of staff.

I welcome the actions of the Liberal Democrats on Fife Council, who brought a motion to consider the use of control orders. Those are not a silver bullet, but they do attempt to strike the right balance in our communities and, importantly, give local people a say.

I am conscious that many of the proposals mentioned by my hon. Friend the Member for Westmorland and Lonsdale fall into policy areas that have been devolved to the Scottish Government. The option taken by the Scottish National party in Holyrood was to propose the licensing of properties to regulate proper usage. The Scottish Government withdrew those proposals prior to the Holyrood elections in May, having committed to respond to stakeholder concerns about the licensing scheme through a working group. However, I am sorry to say that that working group has not gone well. In August, tourism bodies, having highlighted the lack of significant change to the legislation, particularly where it impacted on traditional self-catering and bed and breakfasts, resigned from the group en masse. Since then, the group has given evidence to Holyrood’s Local Government and Communities Committee, outlining its view that the current plans would be hugely damaging to the Scottish tourism economy, particularly as we recover from covid.

I understand the frustration of those living in city areas, where noise from partygoers in rentals can be a real issue, but the solution of the legislation being outlined in Scotland will not resolve the issues experienced in rural and coastal communities such as North East Fife. My MSP colleague, Willie Rennie, continues to raise those issues in the Scottish Parliament.

So what can be done for North East Fife in Westminster? Fiscal policy could be used to encourage the sale of properties as primary residences. The Liberal Democrats have previously called for the holiday let tax loophole to be closed and for mortgage tax relief to be removed from holiday lets. Just as important as tangible policy change is the need for a consistent approach between the devolved Administrations and Westminster, as Robin Millar, who is no longer in his place, alluded to.

Hospitality and tourism are vital for communities across the four nations of the UK. As we have seen with differing covid regulations, sometimes people do not think twice about travelling across borders to where the rules are different. I want hospitality, tourism and the communities in North East Fife to thrive, and I want them to thrive in North Devon and in Westmorland and Lonsdale, so I ask the Minister to commit to conversations with his counterparts in the Scottish Government and the other devolved Administrations to ensure that no community ends up losing out in a race to the bottom on these measures.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 2:14 pm, 6th January 2022

It is a pleasure to speak in this debate. I thank Tim Farron for setting the scene so well. I have absolutely no doubt that his constituency is full of pleasant scenery, being in the very heart of the Lake district. However, I do not believe that anywhere compares with some of the visuals back home in my own constituency—although I might just be a wee tad biased. Nevertheless, if all the Members here in Westminster Hall came to Strangford, they would say, “You’re definitely right. It is the best place to be. The visuals are there.” Whether it be the beaches, the golf courses, the antique shops, the coffee shops, the historical destinations, Mount Stewart or Strangford Lough with all its sea sports, Strangford has it. If anyone comes for a holiday, they will come back.

In my constituency, the core economic strategy of the local council, Ards and North Down Borough Council, is tourism, to create the jobs and the wages. There is a need to ensure that tourism can progress, while also ensuring that locals can still live where they were brought up, and I understand the hon. Gentleman’s frustrations about the rural parts of his constituency being predominantly used for holiday lets and second homes. Although our rural areas are beautiful, often with unique scenery, it is crucial that people have somewhere to live and are not evicted to make room for another holiday let. As the hon. Gentleman referred to, recent statistics have shown that there has been a 32% increase in holiday lets in the last year in his constituency.

Bringing it back home for a moment, I have the pleasure of representing a constituency that has a number of towns—Newtownards, Comber and Ballynahinch—but also many lovely seaside villages, such as Killyleagh, Ballywalter and Portavogie. One thing that I take pride in are the little B&Bs, the glamping pods and the mini-getaways—the staycations that Strangford provides. For example, there is Pebble Pods, for glamping, or luxury camping, in Killinchy, and there are also seaside cottages to rent in Ballyhalbert, all a mere bus ride from the town of Newtownards and a day’s shopping or a night at the cinema. I am just watching everybody’s mouths water in relation to what Strangford has to offer, and I am sure they will all be queuing up to book the first plane, the first car or whatever it may be to get over to Northern Ireland.

From 2019 to 2020, between 520 and 611 residential planning decisions were approved for my constituency. Compared with other constituencies in Northern Ireland, those figures are not that high—across the Province, the figure is about 950. That shows that there are controls in place in my constituency, and we are pleased to see them.

In addition, 35% of people in Northern Ireland live in rural areas. I am blessed to have always lived in the countryside, starting in the village of Ballywalter, and then in the Ards peninsula for the rest of my life—that is for many reasons, such as health, geography and desire.

A constituent of mine suffers with severe asthma. He found that living in a town with a higher level of industrial fumes was affecting his breathing. Therefore, he moved to Ballywalter, the village I was brought up in, where there is fresh sea air. I understand why there is a desire to go to the countryside—to Westmorland and Lonsdale, to south Devon or wherever it might be. However, it is crucial that there is sustainable housing, both private and social housing, that people can avail themselves of.

Although it is important that there is sufficient housing in rural communities, it is fair to say that, in terms of tourism, they are often overlooked. Tourism in rural areas can be seen as fairly architectural and does not represent luxury for all age types; we have to understand that as well.

I agree with the hon. Member for Westmorland and Lonsdale about many of his points, but I must acknowledge and praise those who have gone above and beyond to improve amenities in their areas for the purpose of development and to make those areas more popular places to go to. There is a purpose in that if people want to go to those places, but there is also a need to do the very core thing that the hon. Gentleman referred to, which is to ensure that local people can stay and live where they are. It is also about getting people out of congested cities and into the countryside.

Back home in my constituency and across Northern Ireland, we have some rules—the planning rules are clear. In every housing development some of the land must be set aside for social housing and rental opportunities—I do not know whether that is one of the seven options the hon. Gentleman referred to. Barn conversions should be the only thing when it comes to tourism—re-lets for the future. The seven points the hon. Gentleman referred to are key, and he put them forward in the way he always does—in a constructive fashion. I am not deriding the Minister or his Department; this is about how we can do better and make things better.

Better scrutiny must take place with regard to planning, and local residents should be given a platform to air their concerns. I want to make it clear that everyone should have a home. I remember the Conservative party and Margaret Thatcher many years ago, and her theme was that every person should have access to housing. I understand from a paper that I read that in the last few months 400,000 people were first-time buyers of their houses. So it is clear that there are other things we need to look towards.

When planners discuss new plans for holiday lets or second homes, they should take into consideration who they are putting at risk of homelessness. I urge the Minister and the Government to take new steps and to engage with local councils to protect residents in rural areas who are at risk of losing their homes to holiday lets, as the hon. Member for Westmorland and Lonsdale referred to. We must ensure that councils have the power to say when enough is enough, and to differentiate between residential and leisure planning, which is one of the seven points that the hon. Gentleman made.

I will conclude with this comment: a person who has lived all their life in the country needs to know that affordable housing is available for them to raise their families in. Currently, that is not the case and, as everybody has referred to, we must find a balance between protecting the countryside, encouraging tourism and ensuring that there is an environment of affordable housing. That is a difficult balance, to be sure, but it is not an impossible one, and I remain hopeful that this House, in tandem with planning and tourism, can do differently and do better.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton 2:20 pm, 6th January 2022

It is a pleasure to serve under your chairmanship, Mr Sharma, and I thank Tim Farron for having secured this important debate. It was good to hear him speak in favour of free markets: that is not something we always hear from his party, so it was very welcome. However, I agree with him that we are in a broken market. I must draw the House’s attention to my entry in the Register of Members’ Financial Interests: I have been involved in the housing market for many years.

There is a scarcity of land across the country, and in the rural areas we are talking about today—many of which are covered by national parks, including much of my area—those scarcities are even more profound. The reality is that we are already intervening in the market by creating that scarcity through the planning process, so I do not think it is wrong for us to talk about interventions, because free markets cannot be the only solution to the problems we have in the housing market.

Certainly, second homes are having a very big effect, creating even greater pressures and affordability constraints in some of these rural areas, and not just rural areas—as Rachael Maskell said, many urban areas face the same kinds of issues. Ryedale council covers much of my patch, where the average house price is around £300,000, with an average earnings to house price ratio of about 8.7. In Hambleton, the ratio is 7.2, and in other places, such as Filey—attractive coastal resorts—prices are going up, and the increasing number of holiday lets is putting further pressure on local people’s ability to find properties to rent and purchase. We cannot just rely on a supply and demand equation to solve all those problems: we must look at different interventions.

What the Government have done through the first homes scheme is part of the solution to this problem. It is an excellent policy, and I do not quite agree with the hon. Member for Westmorland and Lonsdale that it is not a solution for his constituency. He mentioned that average house prices in his patch were 11 times greater than average incomes—well, first homes could be up to half-price. Transfer values in my area from developers to housing associations are below half-price, and there is no reason why some of those houses cannot be made available to purchase in perpetuity through discounts of half-price or even below half-price.

I urge the Government to rename the whole first homes policy “half-price homes”, because we could deliver many properties around the country to local first-time buyers at half-price. That would make a significant difference to the hon. Gentleman’s constituency and to mine. It would mean that young first-time buyers could buy properties in my constituency that would cost four or five times their average earnings, which would bring those homes in scope for lots of those people. I fully concede that this is not all about affordable homes for purchase—we also need affordable homes to rent, shared ownership and lots of other things—but first homes is a very important policy that we should be driving further forward.

Taxation is bound to come into this conversation. Clearly, the Government believe that already: there is already a 3% stamp duty surcharge for second homes, so the Government believe we need to do something about second homes to try to level the playing field between investors, second home owners, first-time buyers and other buyers in our constituencies. This is not uncharted territory for this Government, so we should have a conversation about whether we should have a council tax surcharge as well. There is a perfectly sensible conversation to be had here, while recognising that the Conservative party believes in freedom of choice, so if somebody wants to use their money to buy a second home in a different part of the country as an investment or a place to live, we should not be totally against that. It is about trying to strike a balance between those two things to make it a fair and level playing field.

Another area that could make a big difference and that could fund lots of different activities would be the way we tax non-resident overseas owners. This could be in rural areas or urban areas. I do not think there is any argument for not taxing those people pretty heavily if they own property in the UK and are non-resident. We already have a 2% surcharge, on top of the 3% surcharge, for overseas owners. These people are having a profound effect on some house prices in urban areas as well as rural areas. I think 28% of properties sold above £2 million are bought by overseas owners. Around 20% of all properties in London—and probably a decent quantity in York and other cities—are owned by overseas residents. I do not see a reason why we would not seek to tax those people even more heavily than with a 100% increase in council tax.

Roughly, if we applied a 1% wealth tax on UK properties —this is only for overseas owners, not UK residents—it would raise £4 billion to £5 billion a year. There would still be an incentive for those people to invest their money in the UK, which I am not against, but the reality is that this would make it a fair and level playing field. They would still benefit from the very high house price growth. As we have heard today, house prices have been rising by around 10%, so it still makes sense for people to invest, but such a tax would mean that we could take a little bit out of the money they are making every year from house price inflation and put it elsewhere.

I would recommend that we put that £4 billion or £5 billion a year into the first homes programme, increasing the number of properties available to local, first-time buyers who are keen to get into the housing market. That would ensure that those local people have a stake in our communities and are available for employers to do the very important work of making our communities sustainable.

Photo of Patricia Gibson Patricia Gibson Shadow SNP Spokesperson (Housing, Communities and Local Government) 2:27 pm, 6th January 2022

I am delighted to participate in the debate, and I extend my thanks to Tim Farron for bringing it forward.

An over-supply of second homes and holiday lets has a detrimental effect on our rural and island economies and ultimately leads to depopulation, as we have heard. Too many of those living in rural and island communities find that their working-age sons and daughters simply cannot afford to stay in the communities in which they grew up and raise children, because house prices have been driven up by second home owners and holiday let operators, pricing them out of their own communities.

The reality is that too many properties in our rural and island communities lie empty for considerable periods throughout the year. That is why the SNP Scottish Government are devolving powers to local councils to allow them to regulate second homes and holiday lets where people buy second homes in popular rural or island communities where housing availability is necessarily low. Different local authorities will tailor this regulation to suit their particular circumstances, and that is how it should be.

In 2016 the people of Cornwall had a referendum supporting a ban on second homes being purchased, because it priced people out of the market. In St Ives, the local council can take action if owners of new homes do not live in them as their principal residence. I understand that the previous Communities Secretary in the UK was looking at giving councils in England the power to ban the purchase of second homes if they are deemed to be damaging to the local community. Perhaps the Minister will update us on those plans.

In Scotland we are taking action. It is expected that new housing projects in parts of Scotland will receive planning permission only if they are reserved for full-time residents. We have an estimated 25,000 second homes, which leaves many local people struggling to get a foot on the housing ladder in areas where there is particular pressure—in popular locations such as the isle of Skye, the Western Isles, the isle of Bute and, of course, in my own constituency, on the isle of Arran. Twenty-five of Scotland’s 32 local authorities have already removed the 10% council tax discount on second homes. In addition, second home buyers have to pay a dwelling supplement of 4% on top of the land and buildings transaction tax on the purchase price of the property.

More power is also being delivered to local councils to manage the number of second homes in their area, and the Scottish Government will work with Community Land Scotland to ensure the right land is available to deliver more housing in our rural areas. We understand the need for more island and rural housing to ensure the long-term sustainability of those communities. Some 110,000 affordable homes will be delivered in Scotland by 2032, of which at least 70% will be available for social rent, and 10% will be in our remote, rural and island communities.

A remote, rural and islands housing action plan will be developed to meet the housing needs of those areas and to help retain and attract people to those communities, backed by a remote and rural island housing fund of at least £45 million, as part of the Scottish Government’s overall housing supply programme funding in the current parliamentary session. The goal is to try to ease some of the housing pressure that has built up over time and which needs to be addressed.

The challenge of depopulation is serious and that is why the Scottish Government will establish an islands bond. We will offer 100 bonds of up to £50,000 to young people and families to stay in or move to islands currently threatened by depopulation, supporting people to buy houses, start businesses and make their lives in these communities. We can celebrate the fact that on the isle of Arran in my constituency, for example, 34 new houses are being built on Brathwic Terrace in Brodick, with Scottish Government funding of £70,000 per house—a total investment of £2.38 million. Almost all those homes will be allocated to Arran residents, and a number of other developments are in the pipeline.

Of some concern is the fact that of the current 3,099 homes on Arran, 726 are second and empty homes, which constitute 23.7% of the island’s entire housing stock. The impact is that although the average house price in North Ayrshire is £136,000, the average house price on Arran is more than double the average of the rest of the local authority area, at £272,000.

As we have heard, that matters because we need a workforce on our islands and in our rural areas. We need teachers and cleaners for our schools; we need people to work in the hospitality sector; we need people to work in the shops, and to deliver care to our older people. Those workers need to be able to access affordable housing. That is so important for the sustainability of our communities, but at the moment, it is challenging.

As well as second homes, we have seen an explosion of the Airbnb market. In some parts of the UK, those properties have become so prevalent that there is now one listed for every four properties. The impact on the supply of much-needed homes in some of our rural and island communities is significant, but the challenges posed by Airbnb properties are not restricted to those communities. In fact, The Guardian identified Airbnb hotspots where the ratio of active listings to homes was more than 20 times higher than the average across England, Scotland and Wales. Indeed, the highest incidence of Airbnbs was found in Edinburgh Old Town, where there were 29 active listings for every 100 properties, followed closely by the north-west of Skye, which had the second highest concentration of 25 active listings per 100 properties. The impact of that type of let is that they drive up rental costs for everyone, making housing less affordable and having a serious impact on available housing stock.

The Liberal Democrat and Labour council in the Highlands has concluded that changing a dwelling to a short-term let should require planning permission, so that locals have a right to comment. That would help to weed out poor operators to the benefit of everyone. Constructive changes that we all want to see are going through the Scottish Parliament, including tackling overprovision, simplifying publicity notifications, stronger guidance on fees, and a focused use of inspections. The licensing orders going through the Scottish Parliament will help improve those matters.

No one is saying that there is no place for short-term holiday lets in our communities, whether rural, island or urban. They absolutely have a place in our island communities and in other urban and rural areas where people want to spend their holidays. When people do so, they are made most welcome. However, there has to be a balance in the market; as we can see, that balance is currently not there in some cases. That is why devolving powers to local councils to allow them to regulate local provision is an important and proportionate step.

I am very pleased that we have had this debate on this important matter today. Given that some of the challenges are replicated across the UK, I hope we can all share good practice to tackle the issue. I look forward to hearing the Minister’s response on what has already been done in Scotland and Wales and on whether he has any further ideas on what can be done. I hope he can also update us on the previous Secretary of State’s comments about tackling the issue.

Photo of Matthew Pennycook Matthew Pennycook Shadow Minister (Levelling Up, Housing, Communities and Local Government) 2:35 pm, 6th January 2022

As always, it is a pleasure to serve with you in the Chair, Mr Sharma. I congratulate Tim Farron on securing this debate. He has a huge amount of knowledge about the subject. As he has done on numerous occasions in the past, he spoke with authority about the negative impact of second homes and holiday lets on his constituents, as well as outlining a number of suggestions that certainly warrant further consideration.

All speakers in today’s debate have acknowledged that, in order to thrive, rural communities need investment, employment opportunities and, in many cases, thriving tourism industries, but they also need affordable homes for local people. While second homes and short-term lets can undoubtedly bring benefits to local economies, those benefits must be continually weighed against their impact on local people.

It is clear from the strength of feeling expressed in this debate, and from other recent debates that have touched on these issues for coastal, urban and rural constituencies, that there is a clear view among a sizeable number of hon. Members on both sides of the House that, as things stand, the Government have not got the balance right. It is that balance, as so many have mentioned, that is important.

Informed by their respective constituency experiences, the hon. Member for Westmorland and Lonsdale and other hon. Members who have contributed this afternoon have detailed the negative impact that excessive numbers of second homes and holiday lets are having on the communities they represent. As we have heard, excessive rates of second home ownership in rural areas have a direct impact on the affordability and therefore the availability of local homes, particularly for local first-time buyers. As the hon. Gentleman mentioned, high rates of second home ownership entail the loss of a significant proportion of the permanent population, and have a detrimental impact on local services and amenities, whether that be local schools, transport links or local small businesses, and therefore the sustainability and cohesion of those communities.

The staggering growth in short-term and holiday lets in many rural constituencies—as well as, as hon. Members have said, in urban areas, including in my own city—is having a direct impact on the affordability and availability of homes for local people to buy. In many parts of the country the growth in this market is also having an impact on those who cannot buy or to secure social housing, in terms of access to private rentals. That point was highlighted powerfully by Selaine Saxby. That growth is also having an impact in terms of security for those renters, including key workers, who find that their landlord wishes to begin using their property exclusively as a short-term or holiday let, a situation unlikely to be ameliorated any time soon, given the fact we are still waiting for the Government’s promised renters’ reform Bill.

The emerging evidence suggests that the pandemic and the resulting attraction of staycations for domestic holidaymakers has accelerated markedly the growth in both second home ownership and holiday lets. Fuelled in part by the stamp duty holiday, the number of transactions liable for the second home stamp duty surcharge stood at just under 85,000 in the second quarter of this year—the single largest quarterly figure since the higher rate for the additional dwellings surcharge was introduced back in 2016.

As the Financial Times reported back in July, figures produced by estate agent Hamptons International using Companies House data show that the rate at which holiday let companies are being set up has more than doubled over the coronavirus crisis, with the vast majority of those incorporating being individuals owning only one mortgaged property, rather than large corporations holding multiple holiday homes.

It is worth reflecting briefly at this point on the issue of data—the point was well made by Wendy Chamberlain in her contribution—because the fact is that we do not know the numbers of second homes and holiday lets in any detail, other than that they continue to rise. We do not have an accurate grasp of the figures across the country. Council tax records are likely to significantly undercount second homes, both because there is no financial incentive to register a property in areas where a council tax discount is no longer offered and because second home owners can still avoid council tax altogether by claiming that their properties have moved from domestic to non-domestic use. When it comes to second home ownership, the estimates produced by the English housing survey are more reliable, but even they are based on a relatively small survey sample and rely on respondents understanding what is meant by a “second home” and accurately reporting their situation. Similar limitations apply to short-term lettings. There is no single definite source of data on rates for what is after all an incredibly diverse sector, with providers offering accommodation across multiple platforms.

It therefore seems logical that as well as considering what more might be done to mitigate the negative impact of excessive rates of second home ownership and short-term and holiday lets, the Government should give some thought to how we might obtain better data on overall rates, not least to provide a more accurate baseline as we emerge from the pandemic and also a better sense of precisely which parts of the country face the most acute challenges. I would be interested to hear from the Minister whether the Department has given data collection in this regard any thought and, if not, whether he will commit to taking the point away for further consideration.

In relation to how we might meet the housing needs of local people in rural areas and other parts of the country where there is high demand, the wider context is obviously crucial. The point was touched on in the debate, but if we had had more time, we could have had a much wider debate about affordability criteria and what needs to be done, not least in the light of the evident failings—here I have to disagree with Kevin Hollinrake—of the First Homes scheme, to give local first-time buyers better access to new homes.

On the specific issue of what more might be done to mitigate the negative impact of excessive numbers of second homes and holiday lets, it is useful to break things down, as the hon. Member for Westmorland and Lonsdale did, into potential planning and non-planning—primarily taxation—measures. On the non-planning side, the Government have taken action over recent years by reforming stamp duty, allowing local authorities to increase council tax to 100% for second homes and proposing that properties be required to have been let for 70 days in a given financial year in order to be liable for business rates rather than council tax, although I believe that we are still waiting for a formal decision to confirm that change in policy.

However, there is a strong case for exploring whether the Government should provide local authorities with powers to, for example, introduce licensing regimes for second homes and short-term lets, and for considering giving them even greater discretion over their council tax regimes—perhaps allowing local authorities, as Labour has done in Wales, to levy a premium or surcharge on second homes and long-term empty properties if they believe that that is required in their locality. There is also a strong case—this point was well made by my hon. Friend Rachael Maskell—for reviewing whether the current 3% rate of stamp duty surcharge on second homes as well as the 5% rate levied on non-UK buyers remain at the appropriate level in the light of the boom that we have witnessed over the course of the pandemic. Is the Department even exploring those or any similar options?

When it comes to planning, the system now enables local residents to put in place neighbourhood plans that can go some way to managing second home ownership rates, but it is clear that further measures are required. May I therefore press the Minister to clarify whether the Government accept in principle that in order to bear down on excessive numbers of second homes and holiday lets in particular parts of the country, there may be a need for further changes in relation specifically to planning restrictions and enforcement—designed, obviously, so as not to exacerbate the problems of affordability and availability that have been touched on in the debate today?

This has undoubtedly been a worthwhile debate on an issue that is only going to grow in significance. I look forward to hearing from the Minister about what further steps the Government propose in order to ensure that when it comes to the benefits and liabilities of second home ownership and short-term and holiday lets, we begin to redress the current imbalance affecting rural and other communities across the country.

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.

Photo of Tim Farron Tim Farron Liberal Democrat Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Lords Spokesperson (Communities and Local Government), Liberal Democrat Spokesperson (Housing, Communities and Local Government) 2:57 pm, 6th January 2022

Mr Sharma, I am very grateful to you for giving me a moment or two at the end. Thank you for giving us all the opportunity to make our points today. I pay tribute to the following for their contributions: the hon. Members for York Central (Rachael Maskell) and for North Devon (Selaine Saxby), my hon. Friend Wendy Chamberlain, the hon. Members for Strangford (Jim Shannon), for Thirsk and Malton (Kevin Hollinrake), for North Ayrshire and Arran (Patricia Gibson) and for Greenwich and Woolwich (Matthew Pennycook), and the Minister himself. I hope I have not missed anybody out. There were also some useful interventions, mostly from Members who are no longer in their place, although Daniel Zeichner is still present.

Lots of things were said. We were reminded that this issue affects not just rural areas, but coastal areas and cities. It has an impact on the hospitality and tourism economy and the workforce. I speak to lots of people in hospitality and tourism, and they are very keen that action is taken. This is not about tourism versus action; this is about the determination of the tourism industry that action should be taken. Of course, other industries and forms of employment—for example, in health and education—are also hugely affected by the lack of a local permanent population.

I welcome the review that the Minister talked about. That is all good—but it is all we got. I was not overwhelmed by a tidal wave of urgency—in fact, quite the opposite. In the seconds that I have left, I want to say to the Minister that inaction is action. It is action on behalf of those who own multiple homes against our communities. I want to see an awful lot more than we have seen today. By the time a part of what we proposed is looked at in a review, which will take years because they always do, there will be another 32% and then another 32%, and the communities at risk of dying that I talked about earlier will be actually dead. We need urgency right now, so I ask for further meetings immediately. The Minister talks about the planning rules, but how about letting national parks pilot the differential in planning use categories? That, at least, would be a start, to demonstrate that it could be possible. I am disappointed by the lack of urgency, but I am grateful for the opportunity.

Question put and agreed to.

Resolved,

That this House
has considered the matter of second homes and holiday lets in rural communities.