To ask Her Majesty’s Government whether they have plans to support the return of residential properties, presently let on a short-term basis, to the long-term housing rental market, particularly in London.
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and remind the House of my interests as declared in the register.
My Lords, the Government support the sharing economy. In London, residential premises can now be used for temporary sleeping accommodation without a change of use, as long as the number of nights of use does not exceed 90 in a calendar year. There are no plans to discourage the use of residential properties for both longer-term and short-term letting.
No doubt the Minister is aware of the recent press reports on the effectiveness of the landlord licensing scheme operated by Newham Council, which has prosecuted 1,215 bad landlords and recovered £2.8 million in council tax. Does he not think it is time that the Government gave all local authorities the right to opt for similar licensing schemes to deal with illegal and often untaxed lettings, which are damaging the long-term housing market?
I am grateful to my noble friend. In our recent debate on housing the spokesman for the Opposition mentioned the scheme in Newham and invited me to visit Newham to see it in operation. I agree with my noble friend that selective licensing is a useful tool, among other measures, to assist local authorities in addressing serious problems in the private rented sector in specific areas. The department plans to carry out a review of selective licensing shortly, which will apply to properties let under tenancies or licences as people’s only or main residence in the private rented sector. Finally, the London Borough of Newham has submitted its proposals for a licensing scheme for all private landlords in the borough, which the department is currently considering. We will certainly take on board my noble friend’s commendation in that process.
My Lords, I draw the Minister’s attention to the fact that the Question is not only about London. Will he look at the possibility of extending the financial arrangements that now apply to longer-term renting to short-term renting—because otherwise so much damage will be done to rural areas and villages?
I am grateful to the noble Lord, who raised this issue on a previous occasion. I will look at it. However, it is important to remind the House that many farmers are diversifying into tourism and the short-term letting of accommodation that may be surplus to their requirements is a useful source of income. It is important that rural areas that depend on tourism have a good supply of short-term accommodation for letting in order to support a viable tourist industry.
My Lords, is the Minister aware of the research done for the Residential Landlords Association which showed, among other things, a 75% increase in a year in London in the number of multi-listings on the Airbnb website, despite the company’s announced crackdown? Does he agree that this suggests that a growing number of landlords are switching away from long-term letting—which, frankly, London desperately needs—because of the greater financial incentives for short-term lettings? What consideration are the Government giving to offering incentives to landlords to provide more longer-term tenancies?
I am grateful to the noble Lord. It is not possible for landlords in London to switch rented accommodation wholly over to short-term letting because of the restriction that I mentioned earlier: short-term lettings can only be for up to 90 days. Therefore, it would not be possible legally for a landlord to let his property on a short-term basis throughout the year. One has to get a balance. London has to compete with other tourist destinations and tourists expect to find a range of accommodation through organisations such as the one the noble Lord mentioned. Many London boroughs do not have an adequate supply of hotels, and therefore one needs a supply of short-term letting accommodation. Also, many Londoners, in their efforts to make ends meet, like to rent out their home on a short-term basis when they are not using it themselves.
My Lords, is not the Minister wrong in his calculations? You can get more money out of a 90-day B&B than you can get out of a 365-day let.
I am not sure that I would sign up for a short-term letting on those sorts of terms, which sound penal. Many landlords would rather have their property occupied throughout the year rather than for up to 90 days and then not used for the rest of the year. The balance we have tried to get in London is to safeguard the stock of long-term accommodation for rent for Londoners with the freedom for Londoners, when they are not using their home themselves, to let it out to other people who want to rent it.
My Lords, does the Minister agree that the real deterrent for landlords letting on the open market to people on lower incomes is the policies of the Department for Work and Pensions, which mean that, if the tenant is on universal credit, the landlord will not get any money for six weeks and will then not get the full market rent and therefore is having to make a sacrifice? With those deterrents from the welfare system, is it not likely that homelessness will rise as private landlords increasingly will not accept anybody who is on a low income?
The noble Lord is right to raise the issue of universal credit. It is one of the issues that is now being looked at as we run up to the Budget later this month. We will also have a debate on universal credit later this month, before the Budget, when he can make the point again. However, in certain circumstances the rent can be paid direct to the landlord in order to provide the security of income that the landlord may need.
My Lords, given the depth of the housing crisis, is it not time to review the application of planning laws and the planning system to this and related issues, which simply make it more difficult for people to find a permanent home?
As I said a moment ago, outside London there is no restriction on what home owners can do with their homes. They can let them on a series of short-term lets. Precisely to protect the stock in London we have a 90-day rule to prevent the leakage of rented accommodation for Londoners wholly into the tourism market. We will look at the issue again, if the noble Lord insists—but, as a former MP for a London seat, I will need some convincing that we have not got the balance about right at the moment.
Can I try to convince the Minister with the statistic that longer than 90-day lettings in London have increased by 23%? Given this, the Government must increase the funding for local authorities in order to enforce the rule. We may have a 90-day rule in London but there has been a vast increase in people advertising lettings of over 90 days, and trading standards are no good at enforcing the rule in all but one or two London boroughs.
It would be for planning departments rather than trading standards to enforce the rule. The Government have recently announced that planning authorities can increase their fees by up to 20% precisely to give them the resources they need, among other things, to enforce planning legislation.