Short-term lets: business and regulatory impact assessment

Footnotes

1. By the Town and Country Planning (Short-term Let Control Areas) (Scotland) Amendment Regulations 2022.

2. Section 2 of Schedule 2 of The Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992.

3. Section 1 of Schedule 1 of The Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992.

4. Some NDR descriptors relevant to unconventional accommodation include (with the latest numbers in brackets): time share units (1,129), caravan sites (697), holiday huts (382) and camping sites (102). Without more information, it is not possible to know how many units would be within scope of the definition of short-term let. (Data sourced from searching on respective core descriptions in the Advanced Search of Scottish Assessors Association Portal).

5. Data, which relates to the period 1 July 2016 and 30 June 2017, is taken from Airbnb's impact in Scotland.

6. Page 30, Airbnb UK Insights Report.

7. Page 5 of Airbnb's submission to Scottish Government 2019 consultation on short-term lets.

8. The surveys were suspended due to the impact of COVID-19, so more recent data is not available.

9. Non-domestic tax rates review: Barclay report.

10. Page 97 of Delivering for today, investing for tomorrow: the Government's programme for Scotland 2018-2019.

11. All Scottish Government consultation and research documents on short-term lets from 2019 and 2020 referred to in this document can be accessed from www.gov.scot/publications/short-term-lets.

12. See the letter from the Cabinet Secretary for Social Justice, Housing and Local Government to the Local Government, Housing and Planning Committee outlining changes to the licensing scheme.

13. This change from 31 March 2024 is explained in the consultation report.

14. See footnote 10

15. The Green Book explains that the rationale for intervention can be based on strategic objectives, improvements to existing policy, market failure or distributional objectives that the government wishes to meet.

16. This is sometimes misunderstood. Of course, there are safety laws that apply to short-term lets but there are gaps in provision and, in general, no mechanism to ensure compliance. For example, B&Bs are meant to register with their local authority for food safety reasons but attempting to use this registration to identify businesses for COVID-19 support showed that many had not registered.

17. Tourism Star Ratings - Quality Assurance | VisitScotland.org

18. Research into the impact of short-term lets on communities across Scotland.

19. Note that the research used data on Airbnb listings provided by Inside Airbnb. Data on Airbnb in other parts of this BRIA is taken from Airbnb publications or submissions.

20. As noted in paragraph 14, not all whole property listings will be secondary listings.

21. Notes of the four meetings with residents in 2021 can be found here: Short-Term Lets Stakeholder Working Group.

22. Airbnb, ASSC, STAA and the Scottish Bed and Breakfast Association (SBBA) all resigned from the working group during the 4^th meeting on 4 August 2021. However, the Scottish Government has continued to engage with these stakeholders after this date.

23. www.gov.scot/groups/regulatory-review-group

24. The Scottish Government had follow-up conversations with officials from City of Edinburgh Council, Glasgow City Council, West Lothian, Argyll & Bute Council and Highland Council.

25. The 2020 BRIA also assessed the introduction of Control Area Regulations alongside the licensing scheme. Although the Control Area Regulations came into force on 1 April 2021, they are included in this BRIA for context and completeness.

26. See www.airbnb.co.uk/help/article/1379/responsible-hosting-in-the-united-kingdom, www.assc.co.uk/policy/code-of-conduct and www.ukstaa.org/policy.

27. Where the host has to incur an additional cost in order to comply with a mandatory licensing condition which is required by existing legislation, then this cost is not an additional cost attributable to the short-term let licensing scheme.

28. It is challenging to quantify the link between higher number of homes used for secondary letting and increases in the cost of homes for long term rent or purchase. But where homes are being taken out of the residential market to be used for holiday letting this can only have a negative impact on affordability.

29. But note that the Scottish Government has committed in its Housing to 2040 strategy to give all local authorities powers to manage the numbers of second homes where they see this as a problem in their area.

30. The revenue from these fines would go to the Scottish Consolidated Fund.

31. Note that an Island Communities Impact Assessment was completed in December 2020 and will be updated in early 2022.

32. See footnote 12.

33. See draft Guidance Part 2 for Scottish licensing authorities, letting agencies and platforms, which will be finalised in 2022.

34. See page 30 of Airbnb UK Insights Report 2018. The glossary on page 56 clarifies that the average used is the median, rather than some other measure of the average, such as the mean. Median earnings refers to the midpoint of the earnings distribution with half of hosts earning less than this amount and half more.

35. See Table 3.

36. 84% of Airbnb host accounts had a single listing in Scotland (as at 1 January 2019). See page 5 of Airbnb submission to Scottish Government 2019 consultation on short-term lets.

37. See figure for 2019 (based on responses from 253 operators) in Table 2.6 in Economic Impact of Self-Catering Sector to the Scottish Economy. Figures for 2017 to 2019 show a steadily increasing trend in operator turnover (with increases of 6% in 2018 and 9% in 2019), before a sharp reduction in 2020 to £26,114, as a result of reduced occupancy due to the impact of COVID-19. However, as set out in Section G3, occupancy is recovering towards pre-pandemic levels, and we expect this process to be complete by the deadline for existing operators to submit a licence application by 1 April 2023. We have been conservative by assuming that operator turnover only recovers to 2019 levels rather than continuing its previous upward trend.

38. See section 3.3 on page 6 of the Economic Impact of Self-Catering Sector to the Scottish Economy. Responses were received from 329 operators on the number of properties owned/run.

39. See Figure 2.1 on page 6 of the ASSC/Frontline study.

40. Paragraph 1A of schedule 1 to the 1982 Act, inserted by paragraph 4 of schedule 2 of the Licensing Order.

41. From 1 April 2021, see www.mygov.scot/renting-your-property-out/registration/.

42. Licence Income from Fees 2018/19, City of Edinburgh Council (9 January 2020) available at: https://democracy.edinburgh.gov.uk/documents/s12361/Item%207.1%20-%20Licence%20Income%20from%20Fees%202018-19.pdf

43. Open for Business: LGA Guidance on locally set licence fees, Local Government Association, available at: www.local.gov.uk/sites/default/files/documents/5%2013%20%20OpenForBusiness_02_web.pdf

44. See Table 2.1 of the Economic Impact of Self-Catering Sector to the Scottish Economy, which shows that 37% of properties had 2 bedrooms, as opposed to 16% for 0-1, 27% for 3, 10% for 4, and 11% for 5+ bedrooms.

45. See also Table 5.

46. VisitScotland (2020) Key Facts on Tourism in Scotland 2019 (visitscotland.org), based on ONS Travel Trends 2019.

47. Scottish Government (2021) 'Sustainable Tourism Growth Sector', Growth sector statistics.

48. Scottish and Local Tourism Economic Impact Assessment (Airbnb, BiGGAR Economics), October 2020.

49. Economic Impact of Self-Catering Sector to the Scottish Economy.

50. Airbnb responds to the Scottish Government's licensing and planning proposals - September 2020

51. The spend by guests (excluding accommodation) is estimated at £100 per person per night on average across Scotland in the BiGGAR study for Airbnb. In the Frontline report for the ASSC, estimated spend by guests in 2020 (excluding accommodation) is £53 per person (or £65 per adult) per night, while including accommodation it is £103 per person (£126 per adult) per night. These figures are higher than the overall figure for Scotland across all types of accommodation: on average domestic and overseas travellers to Scotland spent £77 per night (including accommodation) in 2019 (this estimate combines data from the International Passenger Survey and the GB Travel Survey).

52. See, for example, page 3 of Airbnb's submission to the Local Government and Communities Committee.

53. Assessing displacement is not methodologically straightforward, but the evidence presented in section B1.1, which shows that the growth in total visits and nights has been lower than the growth in the number of self-catering premises, suggests that displacement effects may not be negligible.

54. Holiday accommodation with no shared services or access was able to open from 3 July 2020. Holiday accommodation with shared services reopened from 15 July 2020.

55. The second lockdown started officially on 5 January 2021, but from 26 December all of mainland Scotland was moved to Level 4 restrictions, which included the closure of non-essential retail and hospitality, while islands were placed in Level 3.

56. BICS weighted Scotland estimates: data to wave 39.

57. Figure 12 of Rural Scotland Key Facts 2021.

58. It should be noted that this was a survey of guests staying in self-catering accommodation, rather than the general population, so there is likely to be a degree of selection bias.

59. This relates to the change in the quantity demanded of a good in relation to a percentage change in its price. The more inelastic this is, the smaller the reduction in the quantity demanded of a good for a given change in price. The Scottish Government published a review of elasticities relevant to tourism in Scotland in March 2021, which is available at: Elasticities relevant to tourism in Scotland: evidence review - gov.scot (www.gov.scot)

60. Consultation responses are published on the Scottish Government website, see Short-term lets: regulation information - gov.scot (www.gov.scot).

61. Based on a survey administered by Airbnb in June 2019 from a random sample (over 400 hosts) across Scotland about their opinions on the recently proposed short term-let regulations. This sample included professional and non-professional hosts on Airbnb. See page 11 of Airbnb's response to 2019 consultation.

62. ASSC, Licensing or Registration for Short-Term Lets in Scotland.

63. At paragraph 12.5. This was based on an estimate from the SOLAR representative on the Short-term Lets Stakeholder Working Group, see Short Term Lets Working Group papers and minutes: February 2021. The relevant part of the minutes says that the representative was "concerned that the costs to local authorities would be similar to HMO costs, i.e. higher than set out in the BRIA. HMO fees could be up to £2,000 for a three year licence."

64. See footnote 62.

65. Subscription Rates for ASSC membership; the owner/manager annual membership fee is currently £154.80, including VAT.

66. Consultation responses are published on the Scottish Government website, see Short-term lets: regulation information - gov.scot (www.gov.scot).

67. Whereby the decision whether to renew a licence could take into account the level of concentration of short-term lets in a control area.

68. See footnote 12.

69. Table 22 in Rural Scotland Key Facts 2021.

70. Figure 10 in Rural Scotland Key Facts 2021.

71. Source: Non-Domestic Rates Roll, June 2021; Covid-19 Business Support Experimental Statistics: Strategic Framework Business Fund (Tranche 6) and Other Local Authority Support Schemes.

72. Coronavirus (COVID-19): Small Accommodation Providers Paying Council Tax (SAP-CTF).

73. In meetings and correspondence.

74. https://news.airbnb.com/wp-content/uploads/sites/4/2020/10/ScotlandShortTermLetsProposal1310.pdf

75. Price elasticity is a measure of how much the quantity demanded for a good and service varies with a change in its price.

76. This might apply in particular to accommodation near the border, where tourists could stay in one country but visit another.

77. As set out at section 225 of the Criminal Procedure (Scotland) Act 1995.

78. Total staff time of 5 hours licensing officer, and 10 hours solicitor.

79. Rounded to the nearest pound. Information correct as of October 2021.

80. "Renewal" means an application made where there is already a licence in effect.

81. Comprising £490 for determining the application and £165 for inspecting the premises over the three years of the licence.

82. Dundee charges £58 for additional inspections.

83. Fife charges: £190 for a pre-application inspection; £100 for a missed appointment; and £24 for reissuing a licence.

84. See www.checkatrade.com/blog/cost-guides/gas-safety-certificate-cost/ where they recommend budgeting £80.

85. In 2017, this was estimated at £200 per property, see table following paragraph 198 in www.gov.scot/publications/energy-efficiency-condition-standards-private-rented-housing-scotlands-energy-efficiency/pages/5/

86. Argyll & Bute Council estimate.

87. Assuming the applicant took one hour to do this themselves. Cost of time for applicants in industry is £17 per hour (for reading regulations and filling out forms, etc.). This comprises average (median) gross hourly pay in the Scottish Real Estate sector of £14 in 2020 (ONS, Annual Survey of Hours and Earnings, Table 5.5a, all earnings), uplifted by 22% to reflect non-wage labour costs (as per UK Government Regulatory Policy Committee guidance note on implementation costs).

88. Assuming the host or operator took two hours to do this themselves. For cost of time for applicants, see footnote 87.

89. Estimating one hour's work and £5 for materials. For cost of time for applicants, see footnote 87.

90. Ballpark estimate, depends on detailed circumstances.

91. Assuming 2.5 hours work at £17 per hour (see footnote 87).

92. Note that it is possible to apply for a CLUD for a proposed change of use with a lower application fee. An application for a CLUD for a proposed use would be on the basis that there would be no material change of use so is not relevant in a control area.

93. https://news.airbnb.com/wp-content/uploads/sites/4/2020/10/ScotlandShortTermLetsProposal1310.pdf