From 1 October 2022, short-term letting will begin to be licensed by local authorities under new rules due to come into effect on 1 March 2022. The new rules are the result of many years of work, numerous consultations and extensive stakeholder engagement by the Scottish Government.

What is a short-term let?

A short-term let is where a host provides residential accommodation in the course of a business to a guest. This will include lets where the host shares their home with a guest, where they let out their home to guests and where they let out a property which is not their home. The host may be the owner of the premises or the person that controls who occupies the premises.

Various further criteria also apply, including that commercial consideration (not necessarily monetary) must be charged, the guest must not use the accommodation as their home, be a family member of the host or part-own the accommodation.

Lets where the guest shares the host's home as part of an educational arrangement, or where the principal purpose is to facilitate the provision of work or services by the guest to the host or their household are excluded from licensing requirements, as are lets that constitute other types of tenancy such as a residential or agricultural tenancy.

Certain types of accommodation are also excluded from licensing requirements, including hotels, purpose-built or converted student accommodation, bothies, hostels and accommodation which can transport guests (e.g. campervans, barges).

Licensing authorities (LAs) can grant exemptions from the licensing requirements, for a maximum of 6 weeks in any 12-month period. Each LA must issue a statement on their policy for such exemptions. This will allow one off short-term lets for larger events such as the Edinburgh Festivals to continue without the need for a licence.

Who needs a licence and when?

In principle, anyone operating a short-term let without a licence on or after 1 October 2022 will be committing an offence, punishable by fine of up to £5,000. However, there are transitional rules for existing hosts to allow them to continue letting provided they have applied for a licence. A separate licence is required for each set of premises and it must be the licence holder who deals with the day to day management of the premises/letting.

Existing hosts

Hosts who were providing short-term lets prior to 1 October 2022 will be able to continue doing so, without a licence, provided they apply for a licence before 1 April 2023. The LA will generally have 12 months to reach decisions on applications from existing hosts, though they can apply for an extension to that period.

New hosts

New hosts starting to short-term let on or after 1 October 2022 will need a licence before they can start operating. The LA generally has nine months to reach decisions on these applications, though again extensions are possible.

In both cases, failure to make a decision within the relevant timeframe results in a deemed grant of the application. The resulting licence is valid for one year and then would have to be renewed.

New hosts may consider applying for a temporary licence which involves a streamlined process and is likely (though not guaranteed) to be decided more quickly. Temporary licences generally last for only six weeks but if the operator has also made a full application for the same premises, the temporary licence will continue until the full licence application has been determined.

What are the licence requirements?

Applicants must be assessed as "fit and proper", and must comply with various mandatory conditions, largely relating to safety.

Electrical checks will be required at least every five years, gas checks annually. Properties must have sufficient fire and carbon monoxide detection equipment, and furnishings must be fire safe. Records must be kept and information displayed within the premises.

Licence holders must take "all reasonable steps to ensure the premises are safe for residential use". For accommodation within a building, the repairing standard applies and the licence holder must ensure the accommodation meets the standard.

LAs can set their own further standard conditions, which could be used to address specific local concerns such as noise or rubbish, and/or impose specific conditions on individual licences e.g. requiring replacement of wooden flooring in a flat with carpet or vinyl flooring.

Each LA can decide the level of fee which will be payable by those applying for a licence.

Interaction with planning

Planning authorities may seek consent from the Scottish Ministers to designate part or all of their area as a short-term let control area. Within control areas, short-term lets of a whole dwellinghouse that is not the home of the host will require planning permission as a mandatory condition of their licence. In addition, if the LA considers that the short-term let would breach planning controls, it can issue a "preliminary refusal" of the licence application. The applicant is given an opportunity to resolve the planning aspects. See our article Planning for Short-term Lets for further information on planning aspects.

And finally for now…

Regulation of short-term lets has been controversial and proposals have evolved numerous times since they were first considered. The final scheme continued to be the subject of criticism by many in the industry and the Scottish Government has committed to keep the system under review. In addition, wrinkles are almost certain to be discovered when the rules are put into practise. We will issue updates if and when changes occur. Meantime, if you would like any more information or advice on short-term lets, please get in touch.

This article is a summary of the law relating to short-term lets. Further advice should be taken on how the law applies to specific circumstances.