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

4. Business and Regulatory Impact Assessment

4.1. There were 844 responses to the question about any issues with the consultation draft Business and Regulatory Impact Assessment (BRIA) as set out in consultation paper 3, and how to resolve them. A revised BRIA has been published separately and includes a consideration of relevant evidence presented by stakeholders.

4.2. There were five general categories of concern and comment around the consultation draft BRIA:

a) the alternative options that had been considered (specifically registration);

b) the economic benefits from short-term lets and lack of baseline data;

c) the impact of the regulatory proposals on the sector and the wider economy, including in the context of COVID-19 recovery;

d) the licence fees; and

e) the cost of compliance.

4.3. As part of the process for updating the draft BRIA, the Scottish Government engaged directly with Airbnb, the Association of Scotland's Self-Caterers and the Scottish Bed and Breakfast Association to follow up on particular concerns around:

• The impact of COVID-19 on the short-term let sector.
• Baseline data on the size of the sector.
• The economic benefits of short-term lets, including host income and wider economic benefits.
• Forecasted impact of the regulatory proposals on the size of the sector and the costs of compliance from surveys and research conducted by the Association of Scotland's Self-Caterers and Airbnb.

4.4. The following specific concerns were raised by respondents.

Alternative options

4.5. Lack of detailed consideration of registration.

4.6. Lack of consideration of expanding the landlord register (which introduced safety standards for PRS landlords) to include short-term lets.

Economic benefit and baseline data

4.7. Lack of data on rural areas.

4.8. Lack of empirical baseline data.

4.9. Interpretation of data (e.g. five individually let rooms could equal five separate listings).

4.10. Disputing whether there was a demonstrable link between short-term lets and rising house prices and the impact on housing supply.

4.11. Negative externalities, such as increased housing costs, reduced amenity and noise and nuisance did not apply to home sharing (which includes traditional B&B).

Impact of regulation

4.12. Competition from English, Welsh and Northern Irish hosts and operators could undercut Scottish operators if they were less regulated. This was raised as a particular concern by some hosts and operators in the Scottish Borders, given their proximity to competition in England.

4.13. The licensing scheme favoured big business, as they would be able to absorb costs more readily than smaller hosts and operators, such as small B&Bs.

Licence fees

4.14. The licensing scheme operating on a cost recovery basis meant that local authorities could establish costly and inefficient systems and pass costs on through high licence fees. Cost recovery provided no incentives to keep costs down or drive efficiency.

4.15. Local authorities would receive no support to establish licensing schemes.

4.16. Incorrect assumptions about licence duration. Some local authorities may grant short term let licences for one year initially and only for three years on renewal.

4.17. Incorrect assumptions around the work involved in processing a renewal application as opposed to a new application and, therefore, the relative fees.

Compliance costs

4.18. The assumption that licence applications would be made on paper as default, rather than submitted electronically.

4.19. The steps involved in the application process.

4.20. Compliance with the mandatory conditions.