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Scottish Government set to introduce Short-Term Lets Licensing in April 2021

Wednesday 09 December 2020

Edinburgh Council has approved the Scottish Government’s draft licensing proposals, with regulations to be laid in the Scottish Parliament in December 2020. ARLA Propertymark has been campaigning for greater regulation of short-term lets, monitoring the situation and expect the new rules to come in by April 2021.

The new regulations were first announced on 8 January 2020 by Kevin Stewart MSP, Minister for Local Government, Housing and Planning. The Scottish Government thinks the new rules will reduce demand on the housing sector and help to regain the ‘character’ of some areas which have seen an influx of short-term lets.

The Edinburgh Council, Policy and Sustainability Committee met on 1 December to discuss the response submitted to the Scottish Government’s consultation and the next stages in implementing licensing and planning controls. The Council agreed that the Scottish Government’s proposals broadly aligned with theirs, and a motion was passed to agree with the recommendations made in the Council’s report.

The next steps for Edinburgh Council and all other Scottish Councils will be to consider the identification of an area or areas to be proposed for Short-Term Lets Control. Between now and April 2021, the discretionary conditions which would supplement mandatory conditions to address local issues of concern will be considered. Councils will also need to consider the financial and budgeting issues for the licensing schemes and the outcome of this will be reported to Edinburgh Council’s Policy and Sustainability Committee in Spring 2021.

Edinburgh City Council Report

What to expect from short-term lets regulation?

  • Licence fee rates for short-term lets determined locally by the licensing authority.
  • Temporary commercial letting of all residential accommodation which is not the guest’s only, or principal home to be subject to the regulation.
  • Short-term lets operators made to apply for an application for a licence for home-sharing (where the host’s home is used) or secondary letting (where the property is not the host’s home).
  • Mandatory licensing to apply throughout Scotland, relating mainly to property safety which will have to be met when the application is made.
  • No control for local authorities to limit the number of nights a property can be let.
  • Powers for local authorities to specify additional conditions from a ‘menu of options’.
  • Powers for planning authorities to ensure all or part of an area becomes a ‘control area’.
  • In a ‘control area,’ the use of a house for secondary letting will always be considered to involve a material change of use and therefore requires planning permission.
  • Outside control zones, the current case-by-case consideration should continue to apply.
  • Planning authorities to have the power to revoke planning permission applying to all existing and new short-term lets.
  • The review of tax treatment of short-term lets operators.

When to expect it?

The Scottish Government aims to lay the regulations in December 2020, with the schemes able to open as early as April 2021. All local authorities must have a live system by 1 April 2022. There are likely to be transitional arrangements to allow existing properties to continue to operate whilst requiring new properties to obtain a license before operating. Existing properties will then be brought into the licensing system with all properties requiring to be licensed by 31 March 2024.

Executive summary

ARLA Propertymark engagement

The Scottish Government ran an online consultation aimed to gather views around the effectiveness of the new legislation, rather than to invite comment on whether it should go ahead. In the response, ARLA Propertymark argued that because the proposals allow for local authorities to only ensure ‘parts’ of areas become subject to short-term let licensing, this could lead to confusion as to who is required to seek planning permission and some short-term lets providers may purposely acquire properties outside of the designated zones.

Overall, we think that it is positive to see the Scottish Government taking steps to regulate short-term lets so that effective health and safety requirements are put in place to protect those seeking a short-term let. In addition, we think this will help to take the strain off the private rented sector and level the playing field regarding regulation of each industry.

We have long called for the regulation of short-term lets, and a research report commissioned by ARLA Propertymark said that ‘increased flexibility and burdensome regulations in the long-term let sector were the main reasons for landlords to switch to short-term lets’.