Changes in short-term lets licensing legislation in Scotland

If you let a property on a short-term basis, such as a residential flat, cottage, holiday home, or home share, home swaps, bed & breakfasts etc, you will most likely need the short-term let licence. This will apply whether you use a platform such as AirBnB or more traditional methods to let the property. Letting a property without the licence will be a criminal offence.

If you have multiple properties within a single location, such as two adjacent cottages/apartments on the same piece of land, additional considerations may be needed as to whether a single licence is needed for the location as a whole, or whether individual licences will be needed per cottage/apartment. In our experience, local authorities are approaching this in relation to their understanding of what might term “conventional accommodation” and so, for example, multiple apartments in the same building/block might need separate licences, whereas a row of houseboats or a field of yurts may be covered by a single licence. Persons affected should take specialist licensing legal advice.

This scheme is not designed to capture landlords who have a tenant in their property in a long term lease or tenancy. A large number of legal tenancies are excluded from the scheme (see the link to the 2022 Order below, at Schedule 1(2) “Excluded Tenancies”) and if you are unsure if this affects you, you should seek legal advice. This scheme is separate from landlord registration, separate from HMO licensing laws, and is not related to changes in relation to rent controls.

There has been considerable controversy over the reasons for the new scheme. It should be remembered that the licensing scheme is not about wider issues over housing stock. The licensing scheme is supposed to be about addressing licensing related matters. Housing is not a licensing concern. Licensing is, broadly speaking, about public safety and standard. It is our view that the policy origin of short term let licensing lies in concerns over (a) regulatory safety of private residential properties being let for profit on a commercial basis and (b) the wider community impact on properties being used in this way such as anti-social behaviour and crime.

Every single local authority in Scotland is introducing the regime, as they are required to under law. However, the scheme is not the same in each area; because each local authority has their own policies, their own ways of working, and their own foibles. There has been significant press coverage, for example, over the successful judicial review of the Edinburgh City Council policy. In some areas, local councils will be more restrictive than others and some property owners will find that they are prohibited from using the property for short-term letting altogether regardless of whether they have applied for a licence due to a combination of new planning control zones, and local licensing policies. With the situation rapidly coming to a head at the end of September 2023, any operator concerned about their local authority policy or how it affects them should seek specialist legal advice.

The application process is administered by the local authority, i.e. the council. The decision is made (in most cases) by the authority’s licensing / regulatory committee. The process is under the Civic Government (Scotland) Act 1982 and is akin to the licensing processes in existence under the scheme for businesses like late hours catering premises, public entertainment, markets and so on. However, although the scheme is under these existing processes and structures, it is nuanced and has it’s own concerns and considerations which do not trigger with other licence types under the 1982 Act.

Applications will go through a detailed consultation period including site notices being displayed, notification to neighbours, and consultation with responsible authorities such as Police Scotland and the Scottish Fire Service. Applications will, in most areas, need to be accompanied by layout plans of the property as well as evidence of compliance with safety and other regulatory regimes. The supporting documentation required to submit the application does vary from local authority to local authority, but in cases is exhaustive. Applications may be called to a hearing at which the applicant would need to appear and convince the committee to grant the licence, and deal with any objections or adverse reports. 

Application forms and details of what is needed are available from the individual local authority website.

The deadlines for the new regime are as follows:

• If you own an existing short-term let is taking bookings pre 1 October 2022, you now have until Friday 29 September 2023. The local authority will need evidence that you operated previously.
• If you operate a short-term let where no bookings have been made pre 1 October 2022, you should have already applied for a new licence and must have the licence in place to let the property. The September 2023 deadline only applied to existing hosts. If you are letting a property now, but were not letting it pre 1 October 2022, and not have a licence, you must seek legal advice immediately.

Each local authority is setting their own fees. Whilst the Scottish Government originally estimated the fees will might range from £300 to £500, the fees are varying wildly across Scotland, and in some cases they are considerably higher. The fee structures can be complex, and in many cases are based on what type of licence you may be applying for, as well as higher costs for accommodation with higher capacity. If you are unsure what fees apply to you, contact our helpdesk.

The licence will last for a maximum of three years and will require to be renewed. In some cases local authorities will only issue one year licences. You may have to incur additional expenses to (a) produce layout plans of the property, (b) make the property compliant with regulatory regimes and (c) legal fees if you choose to instruct a solicitor.

There is a list of premises which are excluded from the regime. These include:

• Long-term let premises which are certain type of legal tenancies, such as protected tenancies, assured tenancies, short assured tenancies, crofts, Scottish secure tenancies, various agricultural tenancies.

• Premises with an alcohol licence where the accommodation is within the licensed area and where accommodation is an approved activity

• Hotels, hostels, care homes, student accommodation, a refuge, a bothy.

• Accommodation provided to employees in terms of their contract.

• There are also possible exemptions for temporary use. The new scheme allows local authorities to agree a policy which would potentially allow up to 6 weeks use per year, without the need to obtain a licence. This very much depends on the local authority’s own approach as each one must have its own policy so you will need to check your own local area, or seek legal advice.

• The scheme is not designed to catch lets where there is no commercial consideration

• The scheme is not designed to catch a let to someone who is an immediate family member, or where the let is to an employee of the host to facilitate provision of work or services for that host, or if the guest is an owner of part owner of the accommodation.

As these exemptions have strict and complex legal definitions, if you are unsure how this affects you, then you should contact your local authority or seek legal advice.