Short-term lets: consultation

2. Introduction

2.1. This consultation paper invites views on the regulation of short-term lets in Scotland. Scotland's economy benefits hugely from tourism, but it should not be at the expense of local communities. The Scottish Government wants to keep welcoming visitors to Scotland while ensuring that local residents can continue to live, work and flourish, right across Scotland - whether in our cities, towns or rural communities.

Consultation Questions

This paper invites responses to Questions on a range of issues which the Scottish Government will take into account when considering proposals for regulation. A full set of questions can be found in Chapter 5, together with a copy of the response form, which is also available online at: https://consult.gov.scot/housing-services-policy-unit/short-term-lets

2.2. This paper takes forward the commitment in the Scottish Government's 2018-19 Programme for Government^[1] to:

"work with local government, communities and business interests to ensure that local authorities have the appropriate regulatory powers [in relation to short-term lets] to allow them to take the decisions to balance the needs and concerns of their communities with wider economic and tourism interests.

These powers will allow local authorities to ensure a safe, quality experience for visitors, whilst protecting the interests of local communities."

2.3. The Scottish Government is committed to taking this issue forward in a way that is informed by the available evidence, including the views of those affected.

2.4. This consultation paper therefore also sets out the factual background on the short-term rental sector in Scotland, including the substantial growth in collaborative accommodation platforms, particularly Airbnb, below and in much greater detail in Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland, together with an overview of the regulatory approaches taken elsewhere in the world in Annex B - Regulation Outwith Scotland.

The Scottish Expert Advisory Panel on the Collaborative Economy

2.5. The Scottish Expert Advisory Panel on the Collaborative Economy^[2] reported that peer-to-peer accommodation expands the range, choice and flexibility of accommodation for tourists in Scotland and the Scottish Government welcomes the positive contribution which it can make to Scotland's economy.

2.6. However, the Panel also highlighted a number of issues and challenges which exist in relation to peer-to-peer accommodation, and short-term lets more broadly. The Panel recommended that:

• Platforms should be required to make a greater commitment to providing upfront information.
• There should be clear, communicated routes to escalating complaints.
• Anyone renting out their property via a digital platform should be shown - and indicate their acceptance of - specific local rules and regulations regarding any thresholds of usage stipulated by the local authority prior to being accepted onto the platform.
• Platforms serve up - or link to - clear guidance to providers as to their income, business and council tax liabilities that result from providing goods and services through collaborative platforms.
• Minimum health and safety thresholds already exist at a Scotland level. Regulations should reflect the development of the collaborative economy by specifically referring to peer-to-peer accommodation, to give greater clarity to providers and users.

2.7. The Panel also made a number of recommendations specific to peer-to-peer accommodation, particularly in relation to safety, which are set out in Chapter 3.

2.8. The Scottish Government's Response^[3] to the Panel's report aspired to the collaborative economy successfully contributing to the overarching purpose of creating a fairer, more equal Scotland and acknowledged the need to balance the potential benefits to the Scottish economy with a recognition of the needs of communities:

"A socially responsible collaborative economy that builds upon and embeds our Fair Work values is central to achieving [a fairer, more equal Scotland] and will deliver the greatest benefits to all in Scotland. …

We understand the calls for new controls over the short-term letting of residential properties in some areas of the country and welcome the Panel's consideration of this issue. We must strike the right balance for our local economies and communities. We have to ensure that residents can find the right homes and that they can afford to live, and enjoy living, in their neighbourhoods. We also need to help tourists find places to stay. This is a complex issue but it is one that a number of cities globally have been tackling and we will make sure Scotland comes up with solutions to fit its distinct needs, whilst learning from other places".

The Short-Term Lets Delivery Group

2.9. Work on this issue has been taken forward by the Short-Term Lets Delivery Group (STLDG), whose establishment was announced on 10 July 2018, in the Scottish Government's Response to The Scottish Expert Advisory Panel on the Collaborative Economy. The STLDG comprises officials from across the Scottish Government, including housing, planning, local government, licensing law, tourism, community empowerment and consumer policy.

2.10. The work of the STLDG is guided by the National Performance Framework^[4]: in particular by the National Outcomes for Economy (We have a globally competitive, entrepreneurial, inclusive and sustainable economy) and Communities (We live in communities that are inclusive, empowered, resilient and safe).

Collaborative economy online accommodation platforms in Scotland

2.11. As noted by the Scottish Expert Advisory Panel on the Collaborative Economy, there are now a range of collaborative platforms offering tourist accommodation in Scotland, in addition to the traditional self-catering sector see Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland). The Expert Panel's report recorded that these platforms providing short-term lets represent the largest sector of the collaborative economy in Europe.

2.12. The following paragraphs provide some key facts in relation to those collaborative economy online accommodation platforms operations in Scotland. For more detailed information see Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland. For information on the terminology used, see Chapter 3 - Definition of Short-Term Lets.

2.13. A number of collaborative economy online accommodation platforms operate in Scotland, including Airbnb, HomeAway and HouseTrip, alongside other online accommodation platforms which have a greater focus on traditional tourist accommodation sectors, such as Hotels.com and Trivago. The following paragraphs focus on Airbnb for two reasons; firstly because of its dominant position among the peer-to-peer accommodation sector, and secondly because there are more publicly available data and reports on Airbnb activity compared to other similar platforms^[5].

Airbnb in Scotland

2.14. Airbnb has operated in Scotland since 2009 and is the largest peer-to-peer accommodation platform across the world. According to Airbnb, in 2017 the economic activity of Airbnb hosts and guests in Scotland was equal to £482.9 million^[6]. VisitScotland estimated that Airbnb accounted for 5% of all tourism accommodation in 2016 (Scottish Expert Advisory Panel Report).

2.15. According to a 2017 Airbnb report, between July 2016 and July 2017, there were 21,900 active Airbnb listings^[7] in Scotland. Figure 1 shows the growth in available (not necessarily new) Airbnb listings in Scotland between 2015 and 2017, using AirDNA^[8] data.

Figure 1 - The growth of Airbnb in Scotland - Total available listings 2015-2017

Source: Retrieved from an Indigo House 2017 report (p. 26). Data sourced from AirDNA.

2.16. Based on Inside Airbnb^[9] data (retrieved from their website), there has also been an increase in the number of listings in Edinburgh (Table 1).

Table 1 - Number of Airbnb listings in Edinburgh 2016-2018

Year	Listings	Change on year
July 2016	6,272
July 2017	9,189	+46.5%
July 2018	12,578	+37%

Source: Inside Airbnb data

2.17. Overall, the number of Edinburgh Airbnb listings doubled between July 2016 and July 2018. Figure 1 shows a similar pattern for Scotland as a whole.

Characteristics of Airbnb Listings

2.18. Not all Airbnb listings are the same. The key differences are:

• The type of accommodation offered (entire home or private room);
• The availability or occupancy of the listings (number of nights a listing is available or is booked);
• The number of listings operated by each host - single listings or multi-listings (listings that belong to hosts who advertise more than one property).

2.19. Renting out for short periods or renting out a spare room while the owners/occupiers remain in the property typically represents amateur activity and can be distinguished from running a business, more typically renting out an entire home/apartment for long periods and/or operating multiple listings.

Type of Accommodation

2.20. In Scotland in 2017, 59% of Airbnb listings were entire homes and 40% were spare rooms (Table 2). Similarly, in Edinburgh, the majority of Airbnb listings are for entire homes.

Table 2 - Types of listing on Airbnb in Scotland

Listing type	Share of listings (As of 1st July 2017)	Year on year growth (01/07/2014 -30/06/2015)	Year on year growth (01/07/2015 -30/06/2016)	Year on year growth (01/07/2016 -30/06/2017)
Entire Home	59%	78%	94%	55%
Shared Room	1%	294%	64%	6%
Spare Room	40%	85%	80%	43%

Source: Retrieved from an Airbnb 2017 report (p. 4).

2.21. In July 2018, 61% (7,665) of the Airbnb listings in Edinburgh were entire homes/apartments; 39% (4,873) were private rooms; and 0.3% (40) shared rooms (Inside Airbnb data 28 July 2018).

Availability or Occupancy

2.22. According to Airbnb, a typical listing in Scotland operated for 40 nights annually in 2016/17, which increased to 44 nights in 2017/18^[10]. Slightly more than half of Airbnb listings in Scotland (54%) in 2016/17 were booked for under 30 nights/year^[11]. However, 28% of the listings in Scotland were booked for more than 60 days and 19% for more than 90 days. Similar patterns are displayed for Edinburgh and Glasgow.

2.23. According to a 2018 Edinburgh City Council report^[12], just over 1 out of 5 Airbnb listings in 2017 were operating in excess of 90 days/year (data from July 2017). According to the report, properties let for more than 90 days per year were highly likely to be operated on a commercial basis rather than as a main place of residence.

Number of Listings

2.24. There are different types of participants in the collaborative economy. In the peer-to-peer accommodation platforms, such as Airbnb, there are both amateur and professional hosts. Professional hosts are more likely to be operating multiple listings compared to amateur hosts who are usually renting out a room or their main residence while they are away for short periods.

2.25. According to a 2017 Airbnb report in Edinburgh, Glasgow, the Highlands, Fife and Argyll and Bute, the majority of hosts had one listing (78%) on the platform and a further 14% had two listings. Just 2% of all hosts had 5 or more listings.

Impact of Growth in Short-Term Lets

2.26. The statistics reported above reflect a significant increase in the number of short-term lets provided via the new collaborative economy online platforms. In addition to renting rooms in people's homes, a substantial part of the growth in activity has been in renting whole properties. Chapter 3 - Definition of Short-Term Lets sets the context for this paper's discussion of this issue, while Chapter 4 - Regulation of Short-Term Lets in Scotland describes the main issues arising, outlines local authorities current powers to regulate them and considers proposals to improve the current position in Scotland

Question 1 Are you aware of any additional data on the impacts of short-term lets (over and above that set out in Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland and briefly summarised above) which the Scottish Government should take into account when considering proposals for regulation?