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 serviced apartment (in some circumstances), you will soon need a short-term let licence. This will apply whether you use a platform such as AirBnB or more traditional methods to let the property. Without the licence, it will be a criminal offence to let it on a short-term basis.

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, and you should seek 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 contact your local authority or seek legal advice. This scheme is separate from landlord registration, separate from HMO licensing laws, and is not related to recent changes in relation to rent controls.

This new scheme originates 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. 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.

The application process is administered by the local authority, i.e. the council. The decision is made by the authority’s licensing / regulatory committee.

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 need to be accompanied by layout plans of the property as well as evidence of compliance with safety and other regulatory regimes. 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. 

Although the scheme came live as of 1 October 2022, many local authorities have struggled with implementation due to lack of resource and at this stage you may find there is no published policy, and no application form available to complete. Local authorities are working to hard to have these documents available. If you are unsure, you should check with your local authority, or seek legal advice.

In our experience we believe there will be three key areas that licensing committees will be looking to assess:

• The safety of the property – is it compliant under planning, with appropriate safety certificates eg gas/electric, fire and so on?

• The fitness of the applicant – as the licence applicant, you will be exposed to a personal “fit and proper test” – for example, if you have convictions these need to be declared

• The impact on the local community – this is a wider test which may take into account your existing relationship with your neighbours and if there are for example any noise complaints

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 30 September 2023 to submit an application following a 6 month extension to the original deadline of 1 April 2023. Precise details of evidence of use pre-October 2022 will be updated once the SSI confirming the extension has been published, anticipated in January 2023. 
• If you own a new short-term let where no bookings have been made pre 1 October 2022, you can apply from that date but cannot take bookings or guests until a licence is granted. This remains the case notwithstanding the extension to September 2023 for pre-existing hosts.

Each local authority is setting their own fees. Whilst the Scottish Government 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) take legal advice and representation for any hearings.

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.

• 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 legal definitions, if you are unsure how this affects you, then you should contact your local authority or seek legal advice.