Or a boost for the Scottish economy worth millions of pounds daily, supporting tens of thousands of jobs?
Whatever your view, the reality is changes are afoot that mean short-term let landlords will soon need a licence to stay in business.
In a press release issued in January, housing secretary Shona Robison referenced both perspectives, saying the new legislation would allow local authorities and communities to “take action to manage issues more effectively, without unduly curtailing the many benefits of short-term lets to hosts, visitors and the economy.”
The background
The Scottish Government has now passed legislation, meaning that all Airbnb-style holiday let properties need to go through a licensing process.
Local authorities must establish a short-term lets licensing scheme by 1 October 2022.
The scheme aims to —
Ensure all short-term lets are safe
Give licensing authorities the full picture of what’s happening in their area
Help councils handle complaints and address any issues neighbours face effectively
When is a property a short-term let?
Broadly, the legislation includes all uses of residential guest accommodation unless they are specifically excluded.
A guest cannot be using the property as their only or principal home and there must be a “commercial consideration” exchanged for the guest to stay there.
There will also be exclusions for —
A host’s immediate family
Shared accommodation mainly for the guest to advance their education provided by their educational establishment as well as student accommodation and residential schools
Accommodation provided to a guest to provide work or services for you (for example providing personal care)
A guest who is an owner of the accommodation
Certain tenancies, such as a private residential tenancy (covered by the Private Housing (Tenancies)(Scotland) Act 2016)
Application dates
Existing hosts and operators will then have until 1 April 2023 to apply for a licence.
Licensing authorities will have 12 months to determine each application, so all existing short-term lets should be licensed by 1 April 2024.
Existing hosts who make an application before 1 April 2023 can continue operating while their application is being considered.
As property host, you can apply for a licence directly, or you can instruct a solicitor, letting agency or property management company. If you don’t own the premises (for example you are a tenant), then you must have the owner’s permission to make an application.
You will be asked to confirm you and your property meet the mandatory conditions for holding a licence, as well as any additional conditions the relevant local authority imposes.
The mandatory conditions include —
Complying with health and safety standards
Holding the relevant insurance
Mortgage provider’s consent
Planning permission (if required)
The licensing authority may seek to confirm the details in your application with a visit to your property; asking to see relevant documentation; or asking you to declare that you have met the conditions.
The timeline
From 1 October 2022
New hosts must not operate without a licence
Existing hosts can operate without a licence (but must continue to comply with existing laws and regulations) and should use this time to make a licence application
Existing hosts must cease operating within 28 days if their licence application is refused (guests should be asked to leave immediately if they are at serious risk of harm). Guests with affected bookings should be offered a full refund
From 1 April 2023
New hosts must not operate without a licence
Existing hosts can operate without a licence, but only if they have applied and it has not been determined. They should make it clear in their terms and conditions that bookings are conditional on licensing scheme compliance
As above, existing hosts must cease operating within 28 days if their application is refused and follow the same process for asking guests to leave and providing refunds
From 1 July 2024
All hosts must have a licence
Any host must cease operating within 28 days if their licence application is refused
Operating without a licence is a criminal offence so it is important to get one in good time.
Planning permission
There may also be a requirement of planning permission for your property if it falls within a short-term let control area.
New Short-term Let Control Area Regulations empower local authorities to designate zones where there is a high concentration of these properties.
These areas will be subject to stricter controls to help manage the impact on the availability of residential housing. If your property’s in one of these, and you want to change its use from a private house to a holiday let, you will need planning permission.
Outside a control area, the local planning authority will consider whether any change of use of a house is material and requires planning permission on a case-by-case basis.
What now?
Each local authority will provide details of the fees and how to apply once their schemes are in place in October 2022. New applicants won’t be able to operate unless they have a licence, and it’s not clear what might happen if their council doesn’t yet have its process in place by then.
Regardless, and from experience, there will be different approaches and nuances across the country.
In the meantime, this pre-application checklist will ensure you have everything you need before making an application.
Local authorities will set licensing fees, with the average estimated to be between £214 and £436 for a three-year licence.
The government has also published guidance for hosts and operators.
Thinking of becoming a short-term let landlord?
The first thing we’d suggest you do is check your mortgage provisions and your titles. Many banks and title burdens restrict sub-letting.
Aside from advice on the licensing scheme, it’s worth finding out where you stand on other aspects including insurance, deposits, title breaches and tax.
If you’re an existing short-term let landlord, or are thinking of letting out your property, please