Affordable Housing (Devon and Cornwall)

Debate between Neil Parish and Derek Thomas

Wednesday 27th April 2022 Westminster Hall

[Derek Thomas]

And stop the opportunities for fraud. At the end of the day, it is fraud for someone to say they have a business that they do not have. I would happily welcome that.

Today, I want to explain why the pressure on housing has intensified in recent months and years. Regrettably, that is in part an unintended consequence of Government policies. I want to pick on two of them. Government policy is effectively driving landlords out of the market. We hear landlords saying—I could use some French, but I am not going to—“We’re not going to do this anymore. We are going to flip our homes into holiday let or do something else with our property,” and they are partly supported by Government policy, such as changes to long-let allowable tax benefits. Since April 2020 —not that long ago—landlords have no longer been able to deduct any of their mortgage expenses from their rental income to reduce their tax bill. The new system means higher or additional-rate taxpayers can no longer claim tax back on their mortgage repayments. Less obviously, the new rules could force some landlords’ total income into the higher or additional-rate tax bracket, depending on their pension or other income. I do not particularly object to that if it is fair across the board, but at the moment it favours holiday lets and does not help private landlords.

[Neil Parish]

I very much welcome what my hon. Friend is saying. We need to set up a rental system that encourages people to have private, long-let properties. We have made a mistake by targeting them too much, taking away the interest rate and the ability to claim that back against the property. We want private landlords who let good quality properties on long-term rentals, so the Government should reverse some of that policy and look at ways to encourage the private sector to put up good properties for long-term lets.

[Derek Thomas]

I completely welcome and agree with that intervention. I do not believe the Treasury deliberately intended to force private landlords out of the market, but that is certainly what is happening.

Energy performance certificates are a pet subject of mine and a debate on their own. Rental properties now require an E rating, which does not sound particularly ambitious until we try it on a property that was built in the 1800s. Since April 2020, landlords can no longer let or continue to let properties covered by the MEES regulations if they have an EPC rating below E, unless they have an exemption, which is not easy to get and costs over £3,000. The landlord has to spend money on the house before they even apply for the exemption. If they are planning to let a property with an EPC rating of F or G, they need to improve the rating to stay within the law. Again, every landlord has to get an EPC rating of E.

The Government’s plan to make rented homes greener is not in itself a bad thing, although we can have a wider debate about whether an EPC is the right tool to deliver the desired outcome. It is a computer system that invariably says no, without the ability to understand or appreciate the diverse nature of the built environment. I do not object to improving homes, making them warmer and their upkeep cheaper, with less of an impact on the environment, but my concern is that landlords seem to be subject to the EPC requirements in a way that holiday lets are not, and the situation is expected to get much worse because the Government have consulted on a compulsory energy performance certificate rating of C on new tenancies by December 2025—three years from now if they pursue it—and on all rented properties by December 2028. If we think the problem is bad today, it will be disastrous for somewhere such as Cornwall, where buildings were constructed in a very different era compared with today, and I would not even say that our buildings today are that modern. We will not get properties up to EPC rating C, so they will be lost to the rental market.

Those are examples of legislation that applies to long lets, as my hon. Friend the Member for Tiverton and Honiton (Neil Parish) has clearly demonstrated. We are losing valuable homes that people enjoy—we have heard about tenants of 10 years—because the legislation that applies to private landlords does not necessarily apply to people who own holiday lets. I largely agree with the requirements, but I do not believe there is a level playing field. Irrespective of Government policy, we must avoid a situation where we drive private landlords out of the market. There are people who do not wish to own their own home, and there are lots of people who, because of how we manage the term “affordable”, find it difficult to get on the ladder.

I hope the Minister understands the severity of the problem for Cornwall and the Isles of Scilly. It is urgent. I have many constituents in a desperate situation, and we need rapid and effective intervention that provides a secure home for life, whether it is owned or rented.