Regulation on short term lets in Scotland explained
Short term lets in Scotland have been the subject of controversy for a while, with some arguing that the concentration of short term lets in certain areas is preventing property being bought and used as homes for local people.
In January 2020 the Scottish Government announced increased powers for local authorities to regulate properties that are let out for short periods of time via Airbnb and other similar platforms. But how will these regulations work and when will they be implemented? We explain the background and rules below, and provide some insight into possible impacts on the market.
Scottish Government consultation on short term lets
In 2019, the Scottish Government, launched a consultation on short term lets which ran from April to July. The results of the consultation were published in October 2019.
The results revealed wide support for regulation with over 1,000 responses from communities, landlords and businesses raising several concerns about the effects of short term lets, including anti-social behaviour, safety features and impact on the housing market.
Analysis of these results suggested that issues vary across the country with different problems in rural settings compared to Edinburgh, for example.
A report released alongside this consultation revealed there had been an increase in short term lets in every area in the country. More than 2,700 listings were recorded in Edinburgh, with the city's Old Town area found to have 812 active Airbnb listings per square kilometre.
How will the new short term let regulations work?
After considering the consultation results, in January 2020 the Scottish Government announced that local authorities will be given new powers to regulate short-term lets where they decide this is in the interests of local communities.
The licensing scheme will include a new mandatory safety requirement that will cover every type of short term let to ensure a safe, quality experience for visitors. It will also give councils the discretion to apply further conditions to address the concerns of local residents.
Councils will be able to plan control areas to ensure that planning permission will be required for the change of use of an entire property to a short-term let. Home sharing (renting a room in your own home or allowing others to stay in your own home whilst on holiday) will not be affected by control areas.
When will the regulations come into force?
In February 2021, the Scottish Government announced that the legislation for the licensing scheme had been withdrawn from the Scottish Parliament to allow for draft guidance to be developed.
Subject to the outcome of the election, the Scottish Government intends to lay the legislation before Parliament in June, accompanied by the draft guidance. If it passed, local authorities will have until 1st April 2022 to establish a scheme tailored to their needs and existing hosts will have until 1st April 2023 to apply.
The Scottish Government will continue with legislation allowing councils to establish short-term let control areas. .
Will there be any changes to taxation of short term lets?
While no new specific tax legislation has been announced, the Scottish Government said that Ministers are committed to considering how short term lets will be taxed in the future to ensure they contribute to local communities.
The approach to short-term lets will complement the Transient Visitor Levy Bill (tourist tax), which is set to be introduced later this parliament.
What will the impact of these regulations be on the long term rental market?
Nicky Lloyd, Head of ESPC Lettings, said: “Over the past year or so, the short term let sector has been impacted significantly by the Coronavirus pandemic and restrictions on travel. In Edinburgh, this has resulted in a number of short term lets being brought over to the long term sector. This has meant there is a much greater choice of properties for tenants in certain areas, so some landlords are having to reduce rents in order to remain competitive.
“If the short term let legislation is passed, this may result in more properties moving to the long term rental sector. However, Edinburgh remains a popular place to live and work, so we expect there to be strong demand from tenants which will help to ensure this doesn’t have too much more of an impact on the market.”
If you’re interested in entering the buy-to-let market or are a landlord looking for advice, a new letting agent or a full property management service, ESPC Lettings can help. As a letting agent based in Edinburgh, we can assist with all stages of renting out a home, from finding the right property to sourcing tenants to property maintenance. Get in touch with the team today on email@example.com or 0131 253 2847.