Short-term lets - licensing scheme and planning control area legislation: draft business and regulatory impact assessment (BRIA)

P: Summary and recommendation

164. Based on evidence gathered during the 2019 consultation and research, the 2020 consultation and through wider stakeholder engagement, the Scottish Government is confident that the preferred option (b), implementing a licensing scheme and empowering local authorities to go further with discretionary conditions and control areas, as needed, is the right approach. A summary of costs and benefits can be found in section E of this BRIA.

165. The likely levels of application and renewal fees will be relatively small in comparison to the earnings that can be derived from short-term lets, particularly when spread over a likely three duration of the licence. The costs of mandatory conditions are either already legally required, are part of best practice in the sector, and would generally be required if the property were to be used for other purposes, such as a long-term let. Planning fees will only be incurred if already required by existing legislation or where short-term let control areas are introduced because there is evidence that short-term lets are causing significant negative impacts on local communities.

166. On the other hand, there are potentially very significant benefits to residents, the wider local community and public-sector bodies from improving the functioning of the short-term let sector, through improved safety, reduced noise and nuisance, better local housing market outcomes etc. While it is difficult to monetise these benefits precisely, evidence from Scottish Government research, responses to the 2019 and 2020 consultations, and feedback to local authorities from residents indicates that the negative impacts that arise when the short-term let market does not function well can be considerable.

167. Setting these potentially very significant benefits from a well-regulated short-term let sector against the modest costs of operating the regulatory regime implies that there will be a clear net social benefit from regulation. This conclusion is strengthened by the fact that the regulatory regime will offer significant flexibilities, so that local authorities are able to tailor the regime to local conditions, maximising the economic benefits from short-term lets while minimising any harmful impacts on wider society.