Scotland Votes to License Every Short-Term Let

On 19 January 2022, the Scottish Parliament approved a licensing scheme for every short-term let in Scotland. Members voted 68 to 53, with no abstentions, for the draft Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022. The scheme covered the whole country, including island and rural communities, and it put every host on a timetable to hold a council licence.

The Scottish Government set out the dates the same day. Local authorities had to establish a licensing scheme by 1 October 2022. Existing hosts and operators had until 1 April 2023 to apply. All short-term let properties would require a licence by July 2024. The order itself was made on 27 January 2022 and came into force on 1 March 2022.

What the order required

The order added short-term lets to the activities that need a licence under the Civic Government (Scotland) Act 1982. It defined a short-term let as the use of residential accommodation provided by a host in the course of business to a guest who does not use it as their only or principal home, with further tests that included the let being made for commercial consideration. Article 4 designated a short-term let on or after 1 October 2022 as a licensed activity.

Every licence carried mandatory conditions, the same in every council area. A licence holder had to:

• install equipment to detect and give warning of fire and of carbon monoxide;
• arrange an annual gas safety inspection where the premises had a gas supply;
• arrange an electrical safety inspection by a competent person at least every five years;
• assess the risk from legionella;
• keep to the maximum number of guests specified in the licence;
• hold buildings insurance for the duration of the licence and public liability insurance for the duration of each let;
• show the licence number on every listing or advert, with an Energy Performance Certificate rating where a certificate was required for the premises.

Councils could set standard conditions of their own, but those conditions could not cap the number of nights a property was used for what the order called secondary letting. A council could also exempt premises from needing a licence for a specified period of no more than 6 weeks a year. In a short-term let control area, a separate planning tool councils already had, a licence holder whose use needed planning permission had to have it in force or have an application pending.

The dates hosts were given

The transitional rule mattered most to people already in business. Operating without a licence was an offence under the 1982 Act. The order said a person who had used a property for a short-term let before 1 October 2022 did not commit that offence if they applied before 1 April 2023 and the application had not yet been finally determined. For those applications, the council had 12 months from the day of the application to reach a final decision.

Fees were to be set by each local authority to cover the cost of establishing and administering its scheme. The government's Business and Regulatory Impact Assessment estimated average indicative fees of between £214 and £436 for a three-year licence. A licensing authority had to grant an application unless there were grounds to refuse it.

Why ministers chose licensing

Shona Robison, the Cabinet Secretary for Social Justice, Housing and Local Government, told the chamber that the work began in 2018, in response to concerns from residents and communities about local housing supply, noise and antisocial behaviour. Short Term Rentalz, a trade publication, reported that the scheme followed three rounds of public consultation. Robison said the Parliament's Local Government, Housing and Planning Committee had approved the order in December 2021.

The alternative on the table was a registration scheme, which the self-catering trade preferred. Robison said ministers had considered registration in a 2019 consultation and again when the Association of Scotland's Self-Caterers proposed it in 2021. Her answer in the debate was that a registration scheme would not contain the fit-and-proper-person test that the licensing scheme did. She told members that “we do not think that registration offers the same protections as licensing does to guests, neighbours and local communities.”

The vote and the objections

Miles Briggs, a Conservative MSP for Lothian, asked the Parliament to reject the licensing order at decision time. He said self-catering generated £867 million a year for the Scottish economy, and he warned members about “the unintended consequences and the potential negative impact that the new order will have on already fragile tourism businesses.”

Briggs said the sector was united in favour of registration. He listed the bodies with concerns: the Association of Scotland's Self-Caterers, the Professional Association of Self Caterers UK, Scottish Agritourism, Scotland's Best B&Bs, the Scottish Bed & Breakfast Association and Scottish Land & Estates. Several bodies, he said, had left the government's stakeholder working group, which they called a sham. Willie Rennie, a Liberal Democrat MSP, said his party supported control areas for hotspots but thought the licensing scheme disproportionate. Briggs also read into the record the words of the SNP MSP Fergus Ewing, who had told the committee on 21 December 2021 that the scheme was too draconian and unfair.

At decision time the order passed. A companion measure, the draft Town and Country Planning (Short-term Let Control Areas) (Scotland) Amendment Regulations 2022, passed in a separate division by 87 to 33.

Fiona Campbell, chief executive of the Association of Scotland's Self-Caterers, told The Herald Scotland, in remarks quoted by Short Term Rentalz on 20 January 2022, that the order “remains unfit for purpose, lacks an evidence base and was more often than not based on groundless fears, anecdote and hearsay.” She thanked the Conservative, Labour and Liberal Democrat MSPs who voted against it, and said the association's own proposal, a mandatory registration scheme with health and safety provisions, had cross-industry and cross-party support.

Short Term Rentalz also reported that at the committee in December 2021, Amanda Cupples, Airbnb's general manager for Northern Europe, said hosts had been bewildered by the proposals, and Police Scotland described problems it had met in short-term lets.

What it meant for hosts

At the end of January 2022 nothing had to be filed yet, but the calendar was set.

• Three dates mattered: 1 October 2022 for council schemes, 1 April 2023 for existing hosts to apply, and July 2024 for every let to hold a licence.
• An existing host who applied before 1 April 2023 could keep operating until the council reached its final decision, and the council had 12 months to reach it.
• A person who had not let before 1 October 2022 fell outside that transitional rule.
• The fee needed a line in the budget. The government's estimate was an average of between £214 and £436 for three years, but each council set its own.
• The paperwork could be started early: gas and electrical safety inspections, fire and carbon monoxide alarms, a legionella risk assessment, buildings and public liability insurance.
• Every listing and advert would need the licence number, and an Energy Performance Certificate rating where a certificate was required.
• In a short-term let control area, the planning position needed checking as well as the licence.

The local detail was still to come. Robison told the Parliament the order gave local authorities the autonomy to tailor the scheme to local issues and needs. The government had also committed to review levels of short-term let activity in hotspot areas with local authorities in summer 2023.

Sources

1. Scottish Government, Short-term lets legislation approved (19 January 2022).
2. Scottish Parliament Official Report, Meeting of the Parliament: 19/01/2022 (Parliamentary Bureau Motions) (19 January 2022).
3. Scottish Parliament Official Report, Meeting of the Parliament: 19/01/2022 (Decision Time) (19 January 2022).
4. legislation.gov.uk, The Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022 (27 January 2022).
5. Short Term Rentalz, MSPs approve short-term let licensing scheme in Scotland (20 January 2022).