Short term lets - draft licensing order and business and regulatory impact assessment (BRIA): consultation

1. Introduction

A brief history

1.1. Short-term lets have become the subject of much controversy in some parts of Scotland and evoke strong opinions. Our 2018-19 Programme for Government made a commitment to ensure that local authorities have appropriate regulatory powers to balance the needs and concerns of their communities with wider economic and tourism interests.

1.2. The Short-Term Lets Delivery Group was established in 2018 to assess the evidence base and the impact, positive and negative, of short-term lets, identify the existing powers councils have and explore whether further measures are required. The Group comprises officials from across relevant areas of government including: better regulation, community empowerment, economy, housing, licensing, planning, tax and tourism.

1.3. 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. The paper noted the range of approaches adopted in cities and countries around the world and asked for opinions on the types of short-term lets which should be regulated and the controls which should be applied. 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.

1.4. In May 2019, the Scottish Government commissioned Indigo House, in collaboration with IBP Strategy and Research and Professor Rae from the University of Sheffield, to address gaps in the available evidence on the impact of short-term lets on housing and communities. The research combined both secondary data analysis of information published by Airbnb and surveys of residents and hosts, and in-depth interviews involving residents, hosts, community actors and local businesses. Five different areas were selected for study: Edinburgh’s Central ward (the Old Town, New Town and Tollcross); Glasgow City Centre ward (Merchant City, Anderston and Yorkhill); East Neuk of Fife and Landward ward (coastal towns, excluding St Andrews); Fort William; and Skye.

1.5. Broadly speaking, the same themes, benefits and concerns were highlighted by people at consultation events, those responding to the consultation and the independent research. The reports on the consultation and research were published on 28 October 2019 and can be found here: https://www.gov.scot/publications/short-term-lets/

1.6. On 8 January 2020, Kevin Stewart MSP, the then Minister for Local Government, Housing and Planning, announced plans to regulate the short-term let sector in the Scottish Parliament: “First, I intend to establish a licensing scheme for short-term lets using powers under the Civic Government (Scotland) Act 1982. Secondly, I am prioritising work to give local authorities the power to introduce short-term let control areas under powers in the Planning (Scotland) Act 2019. Finally, we will review the tax treatment of short-term lets to ensure that they make an appropriate contribution to the communities that they operate in.”

1.7. Work to implement the regulations was paused in March 2020 because of the coronavirus (COVID-19) pandemic but resumed in July 2020. A second consultation was launched in autumn 2020, and covered the definition of short-term lets, the establishment of control areas under the Planning (Scotland) Act 2019 and the establishment of a licensing scheme under the Civic Government (Scotland) Act 1982.

1.8. The Scottish Government laid regulations at the Scottish Parliament giving local authorities powers to license short-term lets and introduce control areas in December 2020. The Control Area Regulations were approved by the Scottish Parliament, and came into force on 1 April 2021. The Licensing Order was withdrawn in February 2021 in response to concerns raised by stakeholders and members.

1.9. A stakeholder working group was established in February to develop guidance on the licensing scheme and planning control areas, and to consider any changes to the legislation that may be needed. The stakeholder working group met in February, March and May 2021. We have published minutes of all working group meetings. Those minutes, background on the working group, and a list of members can be found here: Short-Term Lets Stakeholder Working Group - gov.scot (www.gov.scot)

This consultation

1.10. The purpose of this consultation is to help the Scottish Government ensure that the licensing legislation laid at the Scottish Parliament in September is as efficient and effective as possible. We want your help in getting the details right. We are not consulting on whether to implement a licensing scheme nor the broad framework of the approach. For this reason, the response form is narrowly focused on identifying issues and solutions only in relation to the draft Licensing Order and draft Business and Regulatory Impact Assessment (BRIA).

1.11. This consultation is the third consultation on short-term lets, and provides stakeholders with a final opportunity to comment on the draft legislation to help the Scottish Government get it absolutely right. The consultation is open for seven weeks and closes on Friday 13 August 2021.

1.12. In addition to this consultation, we have also published draft guidance on the licensing scheme and control areas for hosts and operators, platforms and local authorities.

Consultation pack

1.13. The consultation pack comprises the following six papers:

Paper 1

This consultation paper

Paper 2

Licensing Order and Policy Note

Paper 3

Draft Business and Regulatory Impact Assessment

Paper 4

Licensing guidance: Part 1 - for hosts and operators

Paper 5

Licensing guidance: Part 2 - for licensing authorities, letting agencies and platforms

Paper 6

Planning guidance: for hosts and operators

1.14. We are seeking very specific comments on Paper 2 (Licensing Order and Policy Note) and Paper 3 (Draft Business and Regulatory Impact Assessment).

1.15. The guidance documents (Papers 4, 5 and 6) are provided to assist you in understanding how the Licensing Order would work in practice. They are still in draft form and it is our intention to work with the stakeholder working group to finalise them over the summer; this is in terms of the content, layout and design. We are not seeking comments on these documents as part of this consultation.

1.16. We have also published Planning Circular 1/2021: Establishing a Short-Term Let Control Area to guide planning authorities on the process of establishing a control area, should they wish to do so. You may wish to refer to this but please note that it is published in final form and is not part of the consultation.

Next steps

1.17. The Scottish Government intends to lay the Licensing Order at the Scottish Parliament in September 2021. We will also publish finalised guidance in the autumn to assist hosts and operators, platforms, and local authorities in preparing for the scheme to go live.

1.18. Subject to the approval of the Scottish Parliament, the Order is expected to come into force on 1 January 2022. Local authorities now have until 1 October 2022 to open a licensing scheme to receive applications. This is to give them sufficient time to prepare, allowing them one year from sight of the revised Licensing Order as laid.

1.19. Existing hosts and operators will have until 1 April 2023 to submit an application for a licence. This date remains unchanged. However, new hosts and operators will require a licence to operate after 1 October 2022.

1.20. All short-term lets must have a licence by 1 April 2024 in order to continue operating.