To ask Her Majesty’s Government what steps they intend to take to ensure that HMRC share relevant information with local authorities to assist those authorities to identify landlords who are potentially in breach of the 90 day restriction on short term lets and to enforce those provisions.
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 process is for local authorities to initiate any request for information from HMRC. Any disclosures of HMRC information must be lawful and covered by the memorandum of understanding with the Local Government Association. While sharing of data could identify landlords who are letting property, this would not identify landlords who are in breach of the 90-night limit.
I thank the Minister for that Answer but, given the fact that the Tube now has a major promotion about how much more money you can get by letting your property for holidays, that the National Fire Chiefs Council has come out very strongly to say that they are worried about the fact that no one is responsible for checking these properties, and that reinstating the registration controls that were taken away would be very good—they operated most efficiently until removed by the Deregulation Act 2015 and most MPs were in favour of reinstating them, as I understand it—will the Minister put it to the Cabinet, or whoever he can put it to, to consider reintroducing the right of local authorities not only in London but throughout the country, if they wish, to have registers of these short-let properties?
May I commend the vigour and tenacity that my noble friend applies to the subject, rivalling that of our noble friend Lord Naseby on retailers in the high street? The Government are in favour of the sharing economy; we believe that householders should have the right to rent out their rooms or their property when they do not need it, with the minimum of bureaucracy. Increasingly, visitors to London, whether from overseas or other parts of the country, expect to see a broader range of accommodation than traditional hotels, and we believe that that London should respond to this changing market. Exceptionally, in London, this right is constrained and it can only happen for 90 nights per calendar year. Local authorities have powers to enforce that limit. We have no plans to extend the powers of local authorities beyond those which they already have to inspect properties, nor do we have any plans to introduce a register of the nature suggested by my noble friend.
My Lords, why do we not turn the question round and place a responsibility on local authorities to inform HMRC when properties are rented in their areas, particularly if we can build a register of landlords of properties? That would enable HMRC to pick up the huge amount of tax that is not paid by landlords who are avoiding tax in the United Kingdom.
The noble Lord raises an important issue about the non-declaration of income from rented property. In 2013, HMRC launched an initiative to address the so-called tax gap. As a result, some 26,000 landlords came forward to self-correct undeclared income and £150 million had been collected by August 2017. Some 45,000 of what HMRC calls “nudge letters” have been sent out where there is third-party evidence of undeclared income. HMRC has a fairly sophisticated IT system to collect data from a variety of sources to track down income. Of course, it can approach local authorities for information on, for example, housing benefit or other information they may have in order to safeguard the revenue.
My Lords, the Minister seems to have focused the question on tax avoidance or tax evasion, when the focus of the Question from the noble Baroness, Lady Gardner, is on the 90-day limit and enforcement. Can the Minister tell your Lordships’ House which local authorities are enforcing this in London and which are not? It is all very well discussing it, but if there is no enforcement, there is no use.
Responsibility for enforcement rests, as the noble Lord recognises, with local authorities. They have quite wide powers of enforcement, and potentially there is a £20,000 fine for breach of the 90-day rule if people do not comply with the enforcement notice. Information would be made available to local authorities if, for example, neighbours or people in a block of flats felt that that 90-day limit was being extended. In addition, some of the platforms with whom you register to rent out your property now have a 90-day cap on the number of days you can let out your property using that platform.
My Lords, can my noble friend tell me whether the Government will do anything to prevent persons who are fortunate enough to have tenancy of social housing in attractive areas, particularly in London, from sub-letting that tenancy to people who are not authorised to have such a tenancy?
It is a breach of a tenancy agreement with a registered social landlord to sublet, and if anyone had any information that was happening, the local authorities would take tough enforcement action to make sure that people on the housing waiting list had access to that accommodation.
My Lords, until 2015, all landlords were able to charge all property cost against taxation. That was stopped, with the exception of holiday lets, the owners of which can charge everything, including mortgage repayment, against taxation. Are these London-focused lets subject to the general Act, whereby you cannot claim relief, or are they the same as holiday lets?
I fear that that goes beyond my limited knowledge of the tax system. They would certainly have to declare the income; on whether they can set off against that income the related costs of letting it, I would have thought the answer was yes. Perhaps I can make some detailed inquiries of HMRC to see which of the regimes the noble Lord referred to—particularly regarding setting off interest—is applicable to holiday lets.
My Lords, I draw the House’s attention to my interests as declared in the register. In Westminster, where I was the leader until January last year, short-term lets are a major problem, in some places pushing up property prices both for let and purchase, in an area where we have very short supply of housing. As a result of that, the Government have set up a pilot with Westminster Council. I would like to understand a bit about how that is working and the details of it.
My noble friend is quite right. There is now an umbrella organisation for these platforms called the Short Term Accommodation Association, which has developed a range of measures, including a code of conduct. It has a relationship with Westminster City Council called a Considerate Nightly Letting Charter, which sets out the responsibilities of property owners, managing agents, freeholders and building managers and seeks to raise standards in the industry. I understand that the charter, which was launched on 5 March, is being distributed to Westminster residents, so some of us will get that. Updates will follow in due course, and the Government are working with Westminster City Council to see whether this pilot should be rolled out more broadly.
My Lords, may I take the noble Lord back to the question from the noble Lord, Lord Palmer? Does he have or can he get the information about how many local authorities in London are enforcing the 90-day limit, and can he confirm whether such enforcement is a duty or merely an option for those councils?
As with all the powers under the planning Act, they have a discretion over whether to use enforcement powers—it is not mandatory. I do not have information on how many local authorities have used the powers they have, but I will endeavour to write to the noble Baroness and put a copy of the letter in the Library.