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Publication - Impact assessment

Short-term lets: business and regulatory impact assessment

Published
23 November 2021
Topic
Building, planning and design, Business, industry and innovation, Communities and third sector, +2 more … Economy, Housing
ISBN
9781802016642

Business and regulatory impact assessment (BRIA) relating to the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2021 (“the Licensing Order”) and the Town And Country Planning (Short-Term Let Control Areas) (Scotland) Regulations 2021 (“the Control Area Regulations”).

View supporting documents Supporting documents

E. Summary costs and benefits by sectors and groups affected

89. The following table lists all the sectors and groups likely to be affected and how they will be affected by option (b). The sectors and groups were identified in advance of the 2020 consultation so that each group was engaged through representation at virtual workshops held over the 2020 consultation period. Paragraph 2.3 of the 2020 consultation paper set out the following actors in the system (which we have since rationalised for the purposes of the guidance):

  • accrediting organisation means an organisation promoting higher industry standards and best practice for the short-term lets sector, by offering advice or certification to hosts;
  • channel manager means a person or organisation providing a service to a host which enables them to advertise and accept bookings through multiple platforms;
  • Destination Management Organisation (DMO)means an organisation providing commission-free marketing of accommodation by pointing to the host's website or booking system (i.e. they do not take bookings directly);
  • guest means a person occupying accommodation for the purposes of a short-term let;
  • holiday letting agency means an organisation which takes responsibility for all aspects of making accommodation available for short-term lets (marketing, bookings, queries, cleaning etc.), i.e. offering all the functions of a hosting intermediary combined with those of a platform;
  • host or operator means a person or company providing accommodation for short-term letting, including commercial landlords;
  • hosting intermediary means a person or company allowing hosts to outsource some or all of their functions in respect of services provided to guests during their stay;
  • neighbour means, for our purposes, someone whose permanent residence is in close enough proximity to a short-term let to have a legitimate interest in its business, e.g. potentially affected by safety, noise, litter, nuisance;
  • platform (sometimes known as Online Travel Agencies or OTAs)means an online marketplace, advertising or brokering service, such as Airbnb, booking.com and others, allowing hosts to offer properties for short-term lets; and
  • trade association means a body representing the interests of some or all hosts, and possibly other actors as well.

90. The costs and benefits are presented relative to option (a) (business as usual). Costs and benefits may be augmented where local authorities exercise discretionary powers to impose additional licence conditions and designate control areas.

Sector or group Option (b) – legislation: costs (-), benefits (+)
Accrediting organisation
  • + More hosts are likely to seek accreditation from accrediting organisations and help from them with applying standards
Guest
  • + Assurance around safety and standards
  • + Greater confidence in sector may lead to higher demand for short-term lets, especially for less familiar types of accommodation
  • − Higher cost of short-term accommodation and less choice if there is a reduction in the size of the sector
Host or operator
  • + Confident all other hosts and operators working to the same basic standards, i.e. not being undercut
  • + Confident about their own compliance and legal position, aided by new Scottish Government guidance
  • − Time taken by application (and renewal) process and bearing some costs not passed on to guests
  • − Costs of work on the accommodation to meet the mandatory licensing conditions, for those not already complying with best practice[26]
  • − Additional costs for a planning application for some hosts or operators in control areas
  • − May deter some potential new entrants and lead some existing hosts to exit the sector, although could be mitigated by increased demand from guests due to improved confidence in the sector
Hosting intermediaries and channel managers
  • + Safer workplace for people working in the accommodation (e.g. cleaners etc.)
  • − May be some reduction in volume if hosts exit the sector because of costs or local authorities act to manage overprovision by introducing control areas. However, this may be mitigated by increased demand from guests due to improved confidence in sector
Letting agencies and destination management organisations
  • + Increased guest confidence about basic safety standards means less reassurance required from letting agencies on this and a reduction in costs, e.g. from correspondence
  • + Agency and DMOs can be more confident about the accommodation in their listings
Local authorities and other public sector
  • + Reduced workload for local authorities and other public sector bodies from antisocial or criminal behaviour, as bad hosts either leave the sector or improve their operations and it becomes harder to use short-term lets for criminal purposes
  • + Reduced workload for local authorities and other public sector bodies from properties that are unsafe (e.g. calls to the fire service)
  • + Greater understanding of prevalence of short-term lets in a local authority area could improve their housing market policies
  • − Challenges for local authorities in recruiting and training staff to run the licensing system, depending on the local employment market
  • − Challenges for some licensing authorities in the short-term due to handling high application volumes from existing hosts
Note that the costs involved in establishing and running their licensing scheme and all the supporting functions should be covered by the fees from the scheme, so this is neither a cost nor a benefit.
Neighbour (resident) and community groups
  • + Improved safety (e.g. reduced risk of fire)
  • + Reduced potential for noise and nuisance from frequent changes of occupation or antisocial activities
  • + Better quality of life in their own homes and the surrounding spaces
  • + Easier to find neighbouring hosts and operators and engage constructively
  • + Greater powers for local authorities to take action to address residents' legitimate concerns
  • + Improved housing affordability in some areas[27]
  • − Reduction in number of short-term lets could lead to an increase in second homes, with less spend in the community[28]
  • − Potential loss of jobs in employment related to tourism, due to reduced numbers of short-term lets
Other hospitality (e.g. hotels and premises licensed under the Licensing (Scotland) Act 2005 to provide accommodation)
  • + Fairer competition now that the short-term let sector is regulated too
  • + Increased business in some areas if availability of short-term let accommodation reduces
Platform
  • + Licence number providing confidence that listings are legal and compliant with safety regulations
  • − Some additional work in displaying licence number and EPC rating
  • − May discourage market participation by hosts, in turn affecting amount of business for platforms, although this could be offset by stronger brand reputation for Scottish accommodation
Trade association
  • + Assurance about basic standards and suitability of members
  • − May be some reduction in volume, depending on balance between increased costs versus improved confidence in sector
Wider economy
  • + Employment for trades in bringing accommodation up to the basic safety standards
  • + Sales opportunities for firms selling relevant kit, e.g. smoke alarms etc.
  • − May discourage market participation by hosts due to costs, although this may be mitigated by increased confidence in sector or activity displaced into other forms of tourist accommodation

Contact

Email: shorttermlets@gov.scot

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