The Scottish Government ("the Government") has launched its third, and what it intends to be, its final consultation on the establishment of a licensing scheme for short-term lets.
The Government previously consulted in 2019 on principles and approaches to regulating short-term lets and, in 2020, on the definition of short-term lets and detailed proposals for licensing.
The new consultation seeks views on:
- a draft Licensing Order – the legal instrument which would implement the licensing scheme for short-term lets ("the proposed scheme"), and,
- a Business and Regulatory Impact Assessment– this sets out the Government's views of likely costs, benefits and risks associated with the proposed scheme.
Alongside the consultation, the Government has also published draft guidance for hosts and operators and, separately, for licensing authorities, letting agencies and platforms.
The aims of the proposed scheme are:
- to ensure short-term lets are safe and address issues faced by neighbours;
- to facilitate licensing authorities in knowing and understanding what is happening in their area; and
- to assist with handling complaints effectively.
What properties would the proposed scheme regulate?
The proposed scheme would regulate short-term lets. It defines short-term lets in three categories:
- home sharing – where a person uses all or part of their own home for guest accommodation whilst they are living there;
- home letting – where a person uses all or part of their own home for guest accommodation whilst they are absent, for example whilst they are on holiday; and
- secondary letting – where a person uses a property they do not normally live in (such as a holiday home) for guest accommodation.
There would be a variety of exemptions from those who would otherwise be caught by the broad category of "short-term let", including for those arrangements made other than in the course of business, those hosting a lodger where the property is the lodger's only or principal home and those hosting certain categories of their own relations.
The proposed scheme would also not apply to hotels, aparthotels, hostels, refuges and otherwise licensed accommodation (such as bars/restaurants with accommodation for guests).
The licensing regime
Under the proposed scheme, local authorities would have until 1 October 2022 to establish a licensing scheme, with all short-term lets to be licensed by 1 April 2024. Existing hosts and operators would need to apply for a licence by 1 April 2023 at the latest.
Initially, licenses could be granted for up to 3 years, after which they would need to be renewed. Thereafter, local authorities would be able to grant licence renewals for a period of more than three years. Licensees would need to comply with a variety of mandatory conditions, with the local authority empowered to specify additional conditions in light of issues arising in their local area.
Local authorities would need to publish an "overprovision policy statement". They would have the power to refuse an application for secondary letting where they considered that there would be an overprovision of secondary lets if granted. The Government has not defined "overprovision", although its draft guidance provides some examples in relation to how an overprovision policy might be used.
In addition, the draft Order provides that, in considering whether there is or would be overprovision in any locality, local authorities would need to have regard to:
- the number and capacity of licensed short-term lets in the locality;
- the need for housing accommodation in the locality and the extent to which short-term let accommodation is impacting the availability of housing, and
- such other matters as they consider relevant.
It follows that, if the Order comes into force, local authorities will need to keep the number, concentration and effect of short-term lets in their local areas under review. Providers of short-term lets who failed to comply with the requirements of the proposed scheme would be liable to be served with enforcement notices, could have their licences revoked or, in certain circumstances, face criminal prosecution.
The planning regime
The proposed scheme would work in tandem with recently enacted legislation which enables local authorities to designate particular areas as short-term let control areas ("control areas").
According to the Government, the use of control areas should:
- help manage high concentrations of secondary letting (where it affects the availability of residential housing or the character of a neighbourhood);
- restrict or prevent short-term lets in places or types of building where they are not appropriate;
- help local authorities ensure that homes are used to best effect in their areas.
Within a control area, the use of a house for secondary letting will always be deemed to involve a material change of use and will therefore require planning permission. This provides an additional layer of regulatory oversight to the secondary letting sector.
Brodies is well-placed to advise operators, platforms and local authorities on the regulation of short-term lets.
For more information, please contact your usual Brodies contact.
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