Housing Secretary Michael Gove says he’s going to make changes to the Levelling Up and Regeneration Bill currently going through Parliament in a bid to stem the growth of Airbnbs.
In a Parliamentary debate last week Gove was questioned by former Liberal Democrat leader Tim Farron, who has previously campaigned against the proliferation of short lets in his Lake District constituency.
Farron, who represents Westmorland and Lonsdale, told MPs: “In the Lakes and the dales of Cumbria we have 63 per cent of our employers operating below capacity because there aren't enough workers in the area. The big problem for us - which I know [Michael Gove] is seeking to tackle - is the collapse the long-term private rented sector into Airbnb.
“Could he give me some assurance of when this government will change planning law to allow communities like mine to control our housing stock so there are enough homes, affordable and available, for local families and local workers?”
The Housing Secretary replied: “Of course we want to have a labour market that works, and of course we want to have a tourism sector that works.
“But there is a problem in the private rented sector, particularly in beautiful parts of our country like those which he represents, where we do have homes which are turned into Airbnbs and into holiday lets in a way that actually impedes the capacity of young workers to find a place where they can stay in the locale that they love and contribute to the economy of which they wish to be part.”
He added: “We will be bringing forward some planning changes to the Levelling Up and Regeneration Bill which are intended to ensure that we have restrictions over the way that homes can be turned into Airbnbs.”
In June last year the government formally launched a review into the effect of short-term holiday lets in a bid to improve the holiday letting market for those living in popular tourism destinations.
A scheme, proposed in the review, could involve physical checks of premises to ensure regulations in areas including health and safety, noise and anti-social behaviour are obeyed.
Further measures the government was said to be considering at that time included a registration ‘kitemark’ scheme with spot checks for compliance with rules on issues such as gas safety, a self-certification scheme for hosts to register with before they can operate, and better information or a single source of guidance setting out the legal requirements for providers.
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So they've clamped down and pushed landlords away from regular lets to short-term lets.
Next they'll tackle short-term lets freeing up houses for workers...knock-on effect...there'll be zero tourism because there won't be any accommodation.
Gove's really smart...
That’s my thinking. People have moved into AirbnBs to escape all of the trouble with long term lets. Now it looks like they will need to be sold or kept as empty 2nd homes. Rented to friends?
Perhaps set up their own mini time share scheme to avoid regs.
The way I look at the current situation is that we will have a Labour Government in a year or so, possibly with a huge majority.
Therefore we will have to have a new business model or sell up anyway by then. We have to explore our options now. For me, anyway, periodic tenancies and sitting tenants have been ruled out. I don't have any periodic tenancies - I only offer fixed term tenancies to people who want those. I don't tell anyone to leave; they go when they want to in accordance with the agreed contract. I then carry out any upgrades and improvements when the flat (s) is/are empty.
For once I agree
In my area air bnb are a blight , attracting noisy scum with no regard for neighbours
not only that, airbnb's wear and tear in the communal areas is heavy, did the airbnb owners have the decency to pay an increased contribution for the maintenance and repairs? to pay an increased insurance contribution in the residential building? what about the risk of fire and safety that the neighbours have to partake? Some airbnb owners said they never received any complaints from the neighbours, but most people are silent for their own protection, it did not mean they agree. Holiday let or airbnb should be categorised as hospitality business, they need to have the correct license and regulations in fire and safety including food hygiene.
The law of unintended consequences at work once again.
Easy to solve, scrap section24, and continue with section 21!
It was bound to happen. This government are truly clueless 🫤
The tories tinker listen but do things they think not what needed-with things- labour totally f things up left the country broke when in last., better devil u know than the total bleep you don’t but do as we will be in total more. Gotta keep pestering g pushin Tories to actually listen push the right buttons.
Gove promises New Law to attack airbnb.
So he needs another New Law because of the first Law he made to attack Section 21.
The only New Law we need is to get rid of him.
The Lib Dems may take his seat in the next election.
Airbnb has largely proliferated because of changes in how traditional BTL has been treated.
If the government want a fluid, functioning PRS, so employers can more easily recruit staff, they need to treat landlords fairly and make traditional BTL a more attractive investment.
1- classify BTL as a business 100% of the time (not just when it suits the government).
2- tax us in the same way as every other business (abolish Section 24).
3- classify our profits as earned income, not investment income, so we can contribute to a SIPP and enjoy the same tax relief as everyone else.
4- in order to attract new landlords into the industry ensure we have a clear exit route by reinstating indexation relief on CGT.
5- ensure we have the necessary legal sanctions to control our properties. Effective support from the Police, Local Authorities and Courts.
As usual Jo, total common sense and therefore extremely unlikely to happen.
Great post. I agree with every word.
Hi Jo - many good points that most of us would agree with but re point 3 if they classified our income as earned income would we then be liable for NI on it? Not so good for many of us particularly those who have already retired
I also think that the threat to our rights of tenure re abolishment of S21 is a huge huge threat taking us back to assured tenancies, effectively saddling us with sitting tenants, effectively reducing the capital value of properties etc not to mention the sheer grief of having a problem tenant in a property that you cannot get rid of should you need to except by selling and then incurring significant CGT. I am hearing from many of our peers that this is why they left BTL in favour of AirBnB
Retired people don't pay NI on any earnings.
Catherine
NI would be a very small price to pay compared to the other suggestions I have made.
As Robert says retired people don't pay NI.
If we returned to a traditional method of calculating profit (income minus all expenses) most small landlords wouldn't earn enough to pay NI. Don't forget NI is charged on each separate earning activity in isolation, not a cumulative total like income tax. Anyone can have multiple part time sources of income and get an NI free allowance on each. Also a lot of BTLs are jointly owned so there would be 2 NI free allowances to utilize.
Even if we did earn enough to pay NI it's negligible compared to being able to fully offset our mortgage payments and being able to receive the tax benefits of being able to fully contribute to a SIPP. Restricting our SIPP contributions to a measly £2880 a year is woefully inadequate for a decent retirement. When we used to get taper relief on Capital Gains there may have been an argument for restricting pension tax relief but now the government want 28% of our Capital Gains it is totally unreasonable to restrict our alternative pension options.
I thought exactly the same thing as Catherine.
I've just Googled exactly what the current NI situation is for landlords:
You have to pay Class 2 National Insurance if your profits are more than £11,908 a year and what you do counts as running a business, for example if all the following apply:
being a landlord is your main job
you rent out more than one property
you’re buying new properties to rent out.
So any of us who aren't retired, have more than one rental property and earn over £11908 a year already pay NI. If we were taxed in the same way as every other business we would be deemed to have lower profits and pay less NI.
We would still be classed as self employed so still wouldn't get the full range of perks that go with PAYE.
It's very frustrating that the government describe us as a business when it suits them but not when it would actually benefit us.
It is important to understand that ALL of those three points you quote have to apply for National Insurance to have to be paid at the Class 2 rate.
It is not the case that "any of us who aren't retired, have more than one rental property and earn over £11908 a year already pay NI."
And most landlords would have to pay Class 4 national insurance contributions if the property letting were classed as a business/trading, and that would amount to 9.73% on profits between £11,908 and £50,270
2.73% on profits over £50,270
Ellie
It is particularly badly phrased.
"what you do counts as running a business, FOR EXAMPLE IF ALL the following apply:"
Is it an example of various scenarios or explicitly that combination?
"being a landlord is your main job".
Since when did the government acknowledge being a landlord is a job? Usually they insist it's unearned income.
"you rent out more than one property".
That one is easy and absolutely clear-cut.
"you’re buying new properties to rent out".
In what time frame? Do they mean every year? Do they mean you think you might buy another one at some unspecified time in the future? Then again you might not. What if you've been looking but haven't found anything suitable for several years?
For me it's pretty straightforward. I'm a career, portfolio landlord. Most of my income comes from my portfolio, most of my time is spent doing property management type things, my taxable income is significantly higher than £11908. Even if Section 24 was abolished it still would be. I haven't ruled out buying more properties. So I clearly fully fit the criteria but I can see it has potentially left hundreds of thousands of landlords in a bit of an uncertain situation.
The majority of private landlords with a small number of properties are not regarded as "trading"; they are regarded as having an investment in property, and therefore are treated favourably at the moment in National Insurance terms.
When properties are bought, renovated and sold then they would be regarded as trading.
I am not sure whether you would have to pay Class 4 national insurance contributions as I don't know your circumstances, Jo. You will, of course, know if you pay them. They would amount to many thousands of pounds probably.
And those not retired yet?
It wouldn't surprise me in the least if the Government wanted us all to pay National Insurance contributions at the higher rates. They might well like it to be thought that there was support for the idea, too, by landlords - and also that we don't mind Section 21 going at all.
Well Ben Beadle sits in a meeting in 2020/2021 with Shelter, the Government and Generation Rant and shruggs he doesn't have a problem with S21 going. Apart from student housing which is apparently what he's into...
I sold up and retired from the day job at 54 (15 yrs ago) and haven't paid any NI since then (giving me 39 yrs worth, age 15 - 54 )
I repurposed our old IT consultancy (limited company) and bill me and my wife a 12% property management fee. The company pays both of us just over 6k p.a which gives us full NI credits (just over the lower earnings limit) but negates us actually paying NI. Your accountant will explain everything
New Telegraph headline:
"‘War on landlords’ continues as buy-to-let investors face unlimited fines for trashed properties"
Basically landlords will get fined when the tenant doesn't look after the property.
Only fair, of course!
I think basically they are talking about the outside, I clear up any rubbish left lying around and keep over grown gardens in check with a sprayer full of a strong mix of roundup
It does appear to be the outside sure. Not all landlords live local.
Unlimited fines are unnecessary. Murderers and rogue tenants get less than that.
I wish people would stop turning to the government to fix problem, they are clueless and useless whatever they touch turns to rubbish. No government control let the market deal with it. Airbnb is great the customers like it and people operating are seeing growth .... clearly Tories don't like growth.
Nick, How right you are NRLA didn’t fight our corner at all regarding Section 21. The most important factor what can we expect with kids running the show. I supposed they didn’t know the difference born with silver spoon in the mouth. Paul the Kenton man hadn’t joined them until late on, (one of my first employer’s back in 1964 was based at 298 Kenton Rd, kingsway builders a great little firm). Anyway we were better off when NLA was separate to RLA when they
Amalgamated RLA ruled the roost and the kids took over, edging out Mr Sanders now rip I think and our Brilliant CEO Richard Lambert. I feel let down the homeless are far better represented than us.
Yes Beadle is disappointing. Ok for a customer service manager somewhere but not someone with any teeth. Stuck on a desert island with Polly, Alicia and Gove with limited food it would be Beadle who got eaten first.
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