Short-term lets: business and regulatory impact assessment

D: Options

74. The 2019 consultation sought views on a wide range of possible approaches to the regulation of short-term lets. The 2020 consultation set out detailed proposals for a licensing scheme and control area regulations. In the 2020 consultation, we were not seeking views on a range of options but rather issues and solutions that would help refine the proposals set out in the 2020 consultation paper. The views expressed in the 2020 consultation, and further engagement with local authorities afterwards^[23], provided useful information for the 2020 BRIA, published in December 2020.

75. The 2021 draft BRIA was published alongside draft licensing legislation for consultation in June 2021. This BRIA has been amended to take into account feedback and stakeholder views raised during the 2021 consultation, as well as changes to the Licensing Order which were made in the light of that feedback.

76. As with the 2020 BRIA, and 2021 draft BRIA, this BRIA focuses substantively on two options:

a) do nothing; and

b) the licensing scheme as set out in the Licensing Order (and control areas as provided for in the Control Area Regulations^[24]).

77. In the 2020 BRIA, we set out that we had not separately assessed proceeding with the 2020 Licensing Order only (i.e. not proceeding with the Control Area Regulations) as an option. This was because the Control Area Regulations provide entirely discretionary powers to local authorities. It will be for local authorities to consider whether and how to make use of these powers and assure themselves that the use of these powers has the intended impact.

78. The Control Area Regulations were approved by the Scottish Parliament in February 2021, and came into force on 1 April 2021. The Licensing Order will establish a licensing scheme for all short-term lets. Therefore, this BRIA focuses on the same two options as set out in the 2020 BRIA, and 2021 draft BRIA published on 25 June 2021 for consultation.

79. We did carefully consider industry suggestions for a registration scheme. We also considered proposals for an exemption from the requirement to obtain a licence for hosts and operators who were registered, which were put forward by industry to the stakeholder working group. Below we set out why we did not regard these as viable alternatives.

D1. Registration scheme

80. The sector has developed codes of conduct and guidance for hosts, with Airbnb, ASSC and STAA all publishing advice for hosts^[25]. The sector is not against regulation and sees benefit in helping hosts achieve basic safety (and quality) standards in their accommodation. The discussion has centred on the structure of that regulation.

81. There was significant industry lobbying for a registration scheme as an alternative for the licensing scheme. The Scottish Government's view was that a registration scheme to deliver equivalent protections to the licensing scheme would require a Bill (primary legislation) and would not have been possible to deliver in the previous session of Parliament. (More recently, industry stakeholders have suggested using powers in the Development of Tourism Act 1969, see section D2.) Development and Parliamentary consideration of a Bill, followed by secondary legislation and an implementation period, would push back regulation by several years. The Scottish Government's view was that such a timetable was too slow when the 1982 Act provided a suitable mechanism for regulation.

82. A key argument made by industry for registration, as opposed to licensing, was that, under a registration scheme, a host could register and continue operating whereas, under a licensing scheme, the host must wait to be granted a licence before operating. However, this concern is addressed by the Licensing Order making provision for existing hosts (i.e. those operating before 1 October 2022) to continue to operate whilst their application is processed. Such existing hosts have until 31 March 2023 to make an application for a licence.

83. The other principal argument advanced was that a registration scheme would be much less costly and bureaucratic. However, this entirely depends on the requirements of the registration scheme. A "light touch" registration scheme is likely to be less costly to administer than the licensing scheme but, by the very nature of being "light touch", would not deliver the same assurances and protections around safety and would not provide the tools to manage noise and nuisance. Local authorities are also well-practiced at administering licensing schemes under the 1982 Act and are likely to be able to adapt systems and practices in order to extend to the licensing scheme. It not obvious why a registration scheme providing the same protections as the licensing scheme would be cheaper to run than a licensing scheme.

84. In summary, the Scottish Government's view was that a registration scheme would not be ready in sufficient time and risked being either cheap and ineffective or a more expensive way of delivering the benefits of the licensing scheme.

D2. Exemption proposal

85. Since the 2020 Licensing Order was withdrawn in February 2021, the ASSC put forward a proposal to the working group to introduce a registration scheme which would operate in parallel with the licensing scheme, but exempt registered hosts and operators from having to obtain a licence. Their proposed approach would require the same basic safety standards for registration as for licensing and they suggested that this could be delivered under powers in the Development of Tourism Act 1969 (i.e. not requiring primary legislation).

86. Unlike previous calls to introduce a registration scheme instead of licensing, this proposed approach would introduce a registration system that complemented licensing. The ASSC suggested that the scheme could be administered by a tourism body, such as VisitScotland.

87. If registration offers the same protections as licensing, then the proposal could not be less onerous than licensing, unless there was an assumption that the scheme administrator would be more efficient than licensing authorities. A registration scheme would need monitoring and enforcement. Licensing authorities are experienced in managing and enforcing various licensing schemes, and should be able to provide the required level of assurance efficiently.

88. If the same protections as licensing are not afforded, then the proposal does not deliver Ministers' policy intentions. It is unlikely that running a registration and a licensing scheme in parallel would be more efficient than running a single scheme.