Update February 2021: Draft legislation for licensing of short term lets and control areas was published at the end of 2020, incorporating provision aiming to take account of responses to the consultation mentioned in the article below. Following concerns and criticism from various industry bodies, the Scottish Government's proposals for licensing short term lets have been withdrawn, to allow preparation of draft guidance.
The Scottish Government's intention (subject to the outcome of the May 2021 Holyrood elections) is to re-lay the legislation for approval in June 2021, with original dates from the draft legislation retained (that is, 1 April 2022 for local authorities to open a licensing scheme; 1 April 2023 for all existing hosts to have made an application for a licence; and 1 April 2024 for all hosts providing short term let accommodation in Scotland to be licensed).
The draft legislation in respect of control areas to be implemented using planning controls has not been withdrawn and is awaiting approval by the Scottish Parliament.
Following consultations in 2019 on how to regulate short term lets, the Scottish Government has now published a further consultation paper, presenting detailed proposals for consideration.
Two methods of regulation are planned – licensing and the introduction of 'control areas' under the planning system.
Licensing – what is covered?
The main proposal is that every short term let will require a licence from the local authority, irrespective of how many or few nights per year the accommodation is let, or available for let.
Format of Arrangement
These matters were discussed by the 2019 consultation, querying whether distinctions should be drawn between categories of letting arrangement:
- home sharing (letting a room in the host's home) and/or home swapping (use of the whole home when the host is absent, termed home letting in the current consultation) on the one hand; and
- secondary letting (letting a property that is never used as a primary residence) on the other.
The Scottish Government is in favour of all arrangements requiring a licence – this has the benefit of simplicity, although it casts the net wide and may leave unaware hosts at risk of breaching the rules unknowingly.
Type of accommodation
Accommodation that requires a licence is: all or part of a house or flat, or serviced apartment. Accommodation on the premises of a hotel or guest house; and 'unconventional' accommodation (caravans, pods and mobile dwellings such as canal boats) are excluded.
To be classed as a short term let for the purpose of requiring a licence, the arrangement must also be temporary – not providing an only or principal home for a guest; and commercial – there must be a commercial consideration, though this might include provision of a service or benefit in kind (e.g. 'true' home-swapping), as well as monetary payment.
In addition, lets where guests include members of the host's immediate family (i.e. parent, child or sibling) will fall outwith the scope.
Licensing – what is required
The aim of the licensing system is to ensure that short term lets are safe and to address issues of local concern such as noise and littering. It will also provide local authorities with understanding of where and how lets are operating.
The consultation proposes mandatory conditions that will apply Scotland-wide, and discretionary conditions, allowing local authorities to target concerns.
The principal mandatory condition is that properties meet the Repairing Standard, which is the standard that properties in the Private Rented Sector (PRS) have to meet. Hosts will have to undertake gas, carbon monoxide, electrical and fire safety checks and evidence these to the local authority. Suitable smoke, heat and carbon monoxide alarms will need to be installed.
Licences will provide for a maximum occupancy limit for the property, and hosts may have to provide floorplans or allow inspections by the licensing authority to determine that limit.
Other mandatory conditions include displaying the property's EPC rating on any advert, and the host confirming they have appropriate insurance and that letting is permitted by their mortgage or tenancy agreement. Hosts will also need to confirm they have applied for, or obtained, planning permission if required.
Local authorities will have the ability to set further conditions, either generally within their area or on any specific licence.
Suggested optional conditions include a requirement that guests be met by the host (or a representative) at the property to explain safety arrangements and house rules; or requiring physical modification to a property to address potential noise issues e.g. replacing wooden flooring in a flat with carpet or vinyl.
Licensing – timing
The licensing system will be rolled out by local authorities from 1 April 2021, with operating licensing systems to be in place nationwide by 1 April 2022.
Once licensing systems are operating, there will be transitional arrangements to allow existing short term let operators time to obtain a licence, enabling them to continue their business in the interim.
The proposal is for two 'grace periods' (duration to be set by local authority); the first of which will allow hosts to operate without a licence and make an application for one, and the second, which will only allow continued operation if a licence application has been made in the first period. New hosts will require a licence before they can start letting, and all hosts will have to be licensed by 31 March 2024.
Planning authorities will also have the power to designate control areas.
Within those areas, the use of a house, flat, or cottage for secondary letting (only, i.e. home-sharing and home-letting are not covered) will automatically require planning permission.
Existing permitted development rights allowing a house to be used for up to 28 days a year without planning permission would be removed in a control area – though local authorities would have discretion to reinstate that right if they wished, or make it subject to conditions. The consultation anticipates this could be useful for large one-off events.
It is intended that local authorities will have to consult, and notify Scottish Ministers for approval, in relation to any areas they plan to designate.
Consequences for hosts
These proposals have significant implications for short term let hosts:
- Financial – a licence fee will need to be paid every three years; and costs might have to be incurred to bring the property up to licence standards (or to obtain verification) for gas, carbon monoxide, electrical, fire, furnishings, legionella;
- Operational – conditions can be imposed on preventing anti-social behaviour, limiting alterations to property layout, littering and waste management, noise, meeting guests on arrival, arrival and departure curfews, provision of data on letting;
- Liability - compliance with licence conditions is the responsibility of the host, not the guests;
- Planning permission – the licence application must confirm that planning permission (if required) has been obtained or has been applied for, that it remains current and that the planning conditions are being complied with;
- Neighbour notification – notice of the licence application will be served on neighbours, who will then have the opportunity to object, but only on matters relevant to the application.
If you would like to participate in the consultation, it runs until 16 October 2020. Anyone currently operating short term lets, or planning to do so in the future, should read the paper, to understand fully how their venture may be impacted.