Short-term lets consultation: response analysis

The Impact of Short-term Lets on the Housing Market

93. The consultation paper then noted that typically, properties used for short-term lets have previously been used for residential purposes and there is concern that increased numbers of short-term lets reduces the supply of available homes for longer term lets. Additionally, there is concern that higher returns from short-term lets incentivises purchase of residential properties for that purpose, which in turn reduces the supply of properties to individuals wanting to live in these areas. More broadly, there is also concern about a loss of sense of community due to the displacement of the residential population, particularly in Edinburgh city centre.

94. Question 7 asked,

Q7: 'Do you have any comments about the impact of short-term lets on the housing market?'

95. A total of 929 respondents commented at this question. The following table provides a breakdown of those who chose to respond.

Table 11: Q7

96. The majority of respondents cited negative impacts on the housing market. By far the largest amount (a large minority, including affected residents and community organisations and a majority of local authorities) were concerned that a preponderance of short-term lets result in a lack of availability of housing, particularly affordable housing, by reducing property supply.

97. Building on this, a small minority of respondents (including a large minority of local authorities and other (non short-term landlords), said that short-term lets were responsible for locals being unable to buy or live in local homes, with the result that residents are being pushed out of localities where short-term lets are prevalent, such as city centres, tourist areas and rural communities; many respondents perceived that these areas' properties were only accessible by the rich or investors. Edinburgh was specifically pinpointed as having issues in this regard by smaller numbers of respondents: locals were perceived as being pushed out to live on the periphery of the city or in neighbouring areas such as West Lothian and Fife.

98. A small minority of respondents (across all categories) cited property prices as having been pushed up by short-term letting. Various communities in Edinburgh (Old Town, New Town, Grassmarket, West End and Leith) were frequently cited as being particularly problematic in this regard. Those perceived as being the worst affected by the unavailability and / or cost of housing were first time buyers, young people wishing to get on the property ladder and households on lower incomes. A very small number of respondents commented that this may be a factor in increasing homelessness.

99. However, a small number of respondents saw short-term letting as having the opposite effect, i.e. pushing down house prices as it can be more difficult to sell property situated next to a short-term let because of perceived disruption or having no idea of who the neighbours might be.

100. Short-term lets were also viewed (largely by affected residents) as being responsible for pushing up long term rents, with Edinburgh again being frequently cited as a problem in this respect.

101. A few respondents (particularly small minorities of hosts and non-short-term let landlords) said that landlords were switching to short-term letting from long-term renting. Reasons given included:

• Regulatory and tax changes in the long-term renting sector (e.g. more protection for tenants, no more offsetting of mortgage interest against tax).
• Perceived lack of regulation.
• Relative profitability of short-term lets.
• General perceptions of an unequal playing field between the sectors.

102. A very small number of respondents across all categories specified rural tourist areas, including Skye, Arran and Argyll & Bute, which have seen an increase in the number of properties being used for short-term lets. This increase, along with a lack of affordable housing has helped to lead to a lack of long-term lets for residents; though conversely short-term lets were perceived by small numbers (mainly hosts) in some areas (e.g. the Hebrides, Lewis, Highlands and Argyll & Bute) as helping to alleviate a broader problem of empty housing and enabling the refurbishment and renovation of existing housing. To add to the lack of consensus on this issue, a very small number of respondents viewed short-term lettings as resulting in empty or unoccupied housing for large periods of the year. There were also some comments from consultation events of the difficulties travelling workers face, such as being unable to find suitable accommodation in some areas such as Grangemouth (in the Falkirk council area), Skye and Fort William, due to a lack of accommodation.

103. A small minority of respondents (including large minorities of short-term let hosts and hosting intermediaries) perceived little impact on the housing market emanating from short-term letting; housing costs and availability issues were blamed on other factors, with the following mentioned:

• Poor housing and planning policies.
• Lack of social housing (e.g. because of Right to Buy legislation and local authorities selling off affordable housing stock).
• Lack of affordable homebuilding.
• Discouragement from long-term renting.
• Poor tourism policies.
• Population growth.
• Increases in stamp duty.
• Second home ownership.
• Prevalence of student block and hotel building.
• Empty homes.

104. Short-term lets were thus seen by some hosts and hosting intermediaries as only one factor among others that contribute to broader housing issues.

105. A few respondents (mainly hosts with one property) noted that impacts on the housing market depended on the type of short-term let, with sharing or letting of spare rooms in primary residences, or letting in second homes, not seen as having negative effects since they do not impact on housing availability, unlike commercial investments.

106. A small minority of respondents (mainly comprising affected residents and community organisations) chose to focus on impacts caused by short-term lets that are less directly related to the housing market; chief amongst these were negative effects on communities caused by issues such as absentee landlords, corporate or foreign ownership and perceived increases in inequality (e.g. property owners getting wealthier at the expense of residents and workers). Smaller numbers of respondents pointed out positive effects such as convenience for tourists and travellers and economic benefits.

107. Comments about potential regulatory action (and the perceived lack of current controls) were made by a few respondents and in particular a large minority of guests and community organisations: the majority suggested the use of various regulatory tools in general terms such as rent caps, tax, limits to short-term let numbers and registration. Small numbers said a geographical approach was needed as conditions differed between rural and urban areas, whilst a slightly smaller number perceived the housing market as balancing out on its own and so were in favour of letting market forces dictate rather than introducing new regulations.

108. A small number of respondents overall, but including a small minority of local authorities, noted that more research was needed on the issue, citing a lack of accurate or independent studies, with too much short-term letting data being based on anecdotal information only. One organisation noted the need to examine the impact of other new regulations (possible tourist tax / levy, changes to non-domestic rates and the new planning restrictions that were introduced in June 2019) on the short-term letting market in Scotland before creating more restrictions

109. Finally, there was some debate at consultation events as to whether social housing tenants should be allowed to rent out rooms for short-term lets. On the one hand, this means they make money out of a state-provided asset, which could be considered unfair on other taxpayers. On the other hand, it encourages the generation of extra income and an entrepreneurial spirit, as well as bringing some economic advantages to the area.