Asked by
To ask Her Majesty’s Government what plans they have to introduce
legislation prohibiting second homes advertised as holiday
rentals from avoiding council tax by registering for business
rates and thereby qualifying for small business rate relief.
The Minister of State, Home Office and Department for Levelling
Up, Housing & Communities () (Con)
I recognise the noble Baroness’s interest in this issue. The
Government have confirmed that we will legislate to require that
holiday rentals meet an actual letting threshold before being
assessed for business rates. This will ensure that only genuine
holiday businesses can access the rate relief for small
businesses. We will set out further details shortly in the
Government’s consultation response.
(LD)
Minister, this at last is a Cornish/Cumbrian Lib Dem campaign
success—I can see the leaflets now. Can he explain why it has
taken so long and say when we will get a timetable and
conclusions of the 2018 consultation that was never actually
published? Does he agree that salt has been rubbed into the
wound, given that unscrupulous second-home owners have also
received £104 million from Cornwall’s Covid aid pot, thus
reducing the amount available to legitimate businesses?
(Con)
My Lords, I should have registered my residential and commercial
property interests, although I have not tried to use this
loophole. The Government announced in March that we will
legislate, and we have been working very closely with the
Treasury and the Valuation Office Agency to finalise the details
of how and when this will be implemented. This of course takes
time and we will publish our consultation response shortly.
(Lab) [V]
My Lords, the proliferation of holiday lets in lakeland towns
such as Ambleside, Windermere and Keswick is decimating the
residential market for locals, particularly the young. The switch
from council tax to a reduced business rate system will only
aggravate the problem by further incentivising holiday letting.
Is not the answer to this wider problem of drift to holiday
letting to cap the number of holiday lets through the use of a
combination of licensing and planning rules? Something has to be
done.
(Con)
My Lords, the Government support the sharing economy, but the
noble Lord will be pleased to know that we recognise the concerns
about the uneven regulatory requirements in it. In the Tourism
Recovery Plan, published in June 2021, we committed to consult on
the introduction of a tourist accommodation registration scheme
in England.
(LD)
My Lords, the Minister referred to a consultation, but does he
accept that every residential property should pay council tax and
parish precepts, whether it is a main home, a second home or a
holiday let, as a contribution to local services?
(Con)
I point out that 96% of second homes pay council tax in full,
even though they may use local services only on an occasional
basis. We believe that, in the sharing economy, where people run
businesses and meet the threshold, it is reasonable for them not
to pay council tax and to be subject to the business rates
regime. No local authority has lost out, because they are covered
by various grants in the business rates retention scheme.
(Lab)
My Lords, I refer to my interest as a vice-president of the LGA.
Last year, the Chancellor announced a major reduction in stamp
duty, which also covered buyers of buy-to-let properties, holiday
homes and other second homes. Can the Minister confirm how much
the tax cut for second home owners cost the public purse in
total?
(Con)
My understanding is that we have introduced a stamp duty
surcharge of some three percentage points on top of the standard
rate for those who purchase additional properties. That covers
all second home owners, so they are not getting off lightly when
they are buying their homes, and the Treasury is doing very well
out of that regime.
(LD) [V]
My Lords, I declare my interest as a second home owner. Can the
Minister tell me what impact he thinks this will have on
communities where second homes are prevalent?
(Con)
My Lords, it is a hard one to answer; in some areas where tourism
is incredibly important it is a great boost to the economy, and
in others it can result in the hollowing out of a particular
area. I cannot give a simple response to that question.
(Lab)
My Lords, the Question of the noble Baroness, Lady Thornhill,
touches on one aspect of the housing crisis facing many living in
tourist areas, but particularly coastal communities. As we found
during the 2018 Select Committee inquiry on seaside towns, many
local residents face a combination of low pay, high rents or
unaffordable mortgages, and being squeezed out of the housing
market by holiday lets. What plans do the Government have to find
a workable solution to the interplay of these connected problems
that does not penalise families struggling to make ends meet and
trying to find a decent job?
(Con)
My Lords, there are a number of schemes. I have mentioned the
£11.5 billion affordable homes programme; there is also the first
homes scheme, which has a minimum discount of 30% but which, with
local councils, can be increased to 40% or 50%, so that new homes
are offered first to people who live locally. Those kinds of
initiatives will help local people get on the housing ladder,
which is what the vast majority of people want.
(Lab Co-op)
My Lords, I refer the House to my entries in the register.
Holiday lets, as we know, can be much more lucrative than
tenancies, with landlords frequently able to bring in the income
they would get over the course of a whole year from tenants in
just the summer months. Small business rate relief also means
that they can pay very little tax. Should the Government not do
more in this area, perhaps with a larger levy, to encourage
landlords to rent to tenants instead and help deal with the
housing crisis that we spend so much time talking about in this
House?
(Con)
My Lords, we are approaching this by ensuring that people do not
game the system. It is perfectly proper, if you have a business,
to be subject to the business rates regime. We have not yet
finalised what that threshold will be. We are also consulting on
whether there is a need for registration of these homes, as I
have mentioned.
