Short term lets - draft Licensing Order and business and regulatory impact assessment: consultation report

2. Introduction

Background

2.1. In April 2019, the Scottish Government launched a public consultation and commissioned independent research into the impact of short-term lets on people and communities. The 2019 consultation paper outlined possibilities for a regulatory approach, which included the licensing of short-term lets. In parallel with the consultation, what is now the Planning (Scotland) Act 2019 completed its passage through the Scottish Parliament and includes provision for the establishment of short-term let control areas. The reports on the 2019 consultation and research were published in October 2019.

2.2. In January 2020, Kevin Stewart MSP, Minister for Local Government, Housing and Planning, announced plans to regulate the short-term let sector in the Scottish Parliament. In September 2020, the Scottish Government launched a second public consultation ("the 2020 consultation") on the specific proposals for a licensing scheme under the 1982 Act and control areas, using powers created under the 2019 Act. The Scottish Government published its Consultation report on proposals for a licensing scheme and planning control areas for short-term lets in Scotland in December 2020.

2.3. The 2020 consultation report sets out in detail how the Scottish Government responded to issues raised in respect of: the timing of regulation and the coronavirus (COVID-19) pandemic in chapter 4; issues in respect of the proposed definition of short-term lets in chapter 5; and issues in respect of the licensing scheme in chapter 7.

2.4. The Scottish Government laid the 2020 Licensing Order and Control Area Regulations in December 2020. The Control Area Regulations were approved by the Scottish Parliament, and came into force on 1 April 2021. The 2020 Licensing Order was withdrawn in February 2021 in response to concerns raised by stakeholders and members.

The 2021 Consultation

2.5. A stakeholder working group was established in February 2021 to develop guidance on the licensing scheme and planning control areas, and to consider whether any changes to the 2020 Licensing Order were needed. The stakeholder working group met in February, March and May 2021^[3], prior to the publication of a revised Licensing Order and draft Business and Regulatory Impact Assessment (BRIA) for consultation from 25 June 2021 to 13 August 2021. A number of changes to the Licensing Order had been made following engagement with the stakeholder working group. This third public consultation ("the 2021 consultation") was accompanied by draft guidance on the licensing scheme and control areas for hosts and operators, platforms and local authorities.

2.6. The purpose of the 2021 consultation was to help the Scottish Government ensure that the licensing legislation is as efficient and effective as possible. We were not consulting on whether to implement a licensing scheme nor the broad framework of the approach, but seeking consultees views to get this important legislation absolutely right.

2.7. This 2021 consultation report, and other documents referred to above, can be found on the Scottish Government website^[4].

Respondent profile

2.8. The Scottish Government received 1026 consultation responses. Of these, some 1014 responses answered the question about themselves. They could select one or more of the following options:

Option: respondent type	Total	Percent[5]
Accrediting organisation	10	1.0%
Guest (user of short-term lets)	117	11.4%
Host or operator (provider of short-term lets as defined in the Licensing Order)	811	79.0%
Letting agency, platform or similar	37	3.6%
Local authority or other public sector organisation	20	2.0%
Other hospitality (not providing short-term lets)	26	2.5%
Neighbour (affected resident) or community group	85	8.3%
Regulatory body	3	0.3%
Trade association	24	2.3%
Other, please state[6]	86	8.4%

2.9. Of the 1026 consultation responses, 835 (81.4%) identified themselves as being from individuals and 191 (18.6%) were from organisations. A full list of organisations who responded to the organisation is at Annex A.

2.10. There were 1017 responses which answered the question on how people had heard about the consultation:

Option: awareness	Total	Percent
Online at gov.scot or Citizen Space	130	12.7%
Press coverage (local or national TV, radio, social or print media)	349	34.0%
Referred by local authority / government / MSP / councilor	89	8.7%
Referred by host	32	3.1%
Referred by platform	170	16.6%
Other, please state[7]	395	38.5%
Not Answered	69	6.7%

2.11. We have published 866 responses (84.4%) in line with consultee expressed preferences and withheld 160 responses (15.6%).

2.12. We also asked about satisfaction with the consultation and received 983 responses:

Option: satisfaction	Total	Percent
Very dissatisfied	396	38.6%
Slightly dissatisfied	119	11.6%
Neither satisfied nor dissatisfied	341	33.2%
Slightly satisfied	74	7.2%
Very satisfied	53	5.2%
Not Answered	43	4.2%

2.13. About one in eight respondents were satisfied; over half of respondents were dissatisfied. Most of the dissatisfied respondents were individuals (87%), broadly in proportion with the overall breakdown between individuals and organisations, see paragraph 2.9 above. Guests and hosts were the most dissatisfied respondent types. We received 393 comments about this and the dissatisfaction arose for a range of reasons, including: not being able to find the consultation documents; the view that Scottish Government was not listening or it was box-ticking exercise; lack of publicity; an abbreviated consultation period; consultation over summer months when hosts and operators were busy with short-term lets; and a desire for more questions over a wider scope (a more open consultation).

2.14. Generally, respondents who were satisfied or very satisfied were pleased that action was being taken to address issues with short-term lets and were content with the proposals.

2.15. Respondents were generally content with the platform (Citizen Space) as a means to respond to the consultation. Of the 976 responses, only 12% were dissatisfied:

Option	Total	Percent
Very dissatisfied	64	6.2%
Slightly dissatisfied	59	5.8%
Neither satisfied nor dissatisfied	484	47.2%
Slightly satisfied	221	21.5%
Very satisfied	148	14.4%
Not Answered	50	4.9%

2.16. There were 175 comments, many of which were content with the web portal and accessibility. Some respondents took the opportunity to recap their wider views on the policy proposals or expressed frustration with difficulties in finding the consultation documents.

Methodology

2.17. Responses to the consultation were submitted using the Scottish Government consultation platform Citizen Space. The Scottish Government also took account of views expressed in correspondence received in and around the consultation period, even though these were not submitted as formal consultation responses.

2.18. Some organisations expressed strong views about the proposals and encouraged their members or the wider public to respond along similar lines. Around 10% of the questions had answers that were not unique or left blank; there were small numbers of answers where it appears that at least some of the wording had been co-ordinated. Some tourism organisations campaigned against aspects of the proposals and encouraged hosts and operators to respond.

2.19. It should be borne in mind that not every respondent answered both of the questions. This report indicates the number of respondents who commented at each question at the start of each chapter. We have considered all comments made by respondents, including the range of issues mentioned in responses, reasons for opinions, specific examples or explanations, alternative suggestions or other comments. The purpose of this consultation was to get the legislation absolutely right, rather than test the popularity of different propositions. For this reason, we have focused on analysis of the substance of the comments, rather than on numerical or sectoral analysis.

Structure of this report

2.20. Revisions to the Licensing Order are set out in chapter 3; and changes to the BRIA are briefly outlined at chapter 4.

2.21. This report covers principal issues raised through consultation responses and sets out the Scottish Government's policy response. It does not cover every single issue raised, some of which derived from a misunderstanding of the proposals or are straightforwardly dealt with through guidance or practice.

Next steps

2.22. The Licensing Order will come into force on 1 March 2022. Local authorities will be required to have licensing schemes open to receive applications by 1 October 2022, and existing operators will have until 1 April 2023 to submit an application. All short-term lets will be licensed by 1 July 2024; this is a change from 1 April 2024. The reason for this change is explained at paragraph 3.13.

2.23. The Scottish Government intends to engage with the stakeholder working group to update the draft guidance documents^[8] with a view to publishing revised guidance early in 2022.

Implementation timetable

2.24. The following three deadlines are set by the Licensing Order:

• 1 October 2022 – for local authorities to open a licensing scheme;
• 1 April 2023 – for all existing hosts to have made an application for a licence; and
• 1 July 2024 – for all hosts providing short-term let accommodation in Scotland to be licensed.

2.25. Existing hosts and operators will be allowed to continue operating whilst their licence application is determined.

2.26. New hosts and operators, who wish to commence short-term letting on or after 1 October 2022 will be required to submit an application, and cannot accept bookings until their licence has been granted.

Monitoring and evaluation

2.27. The Scottish Government remains committed to monitoring and evaluation proposals to ensure they are effective and targeted. As part of that work, we will work with local authorities to review levels of short-term let activity in hotspot areas in summer 2023 (after the 1 April 2023 deadline for existing hosts to have made an application). This will allow us to identify whether any further measures are required, as well as providing an opportunity to check on the overall health of the short-term let sector in Scotland and make sure we have avoided unintended consequences.