Short-term lets – licensing scheme and planning control areas: business and regulatory impact assessment

Annex C - Mandatory Conditions: Compliance Cost Estimates

Schedule 3 of the Licensing Order sets out the mandatory conditions with which a short-term let host must comply. These are set out below with a commentary on the time, effort and cost involved. For illustrative purposes, we have based the costs, time and effort on a typical two bedroom property.

1. Displaying information

The holder of the licence must make certain information available within the premises in a place where it is accessible to all guests, including licence conditions; fire, gas and electrical safety information; and details of how to summon the assistance of emergency services.

Previously: best practice

These are documents and information the host should have to hand. There is a one off-cost in making copies of the documents and putting them in a folder or otherwise making them available to view at the property.

Estimate £22 one-off^[32] for time, copying and a folder.

2. Gas safety

Where the premises has a gas supply the holder of the licence must arrange for an annual gas safety inspection of all gas pipes, flues and appliances in the premises and arrange for any repairs in order that the required safety standard is met.

Previously: best practice

Estimate £80 annually^[33].

We do not consider any repairs to be a new cost.

3. Fire safety

The holder of the licence must ensure that all upholstered furnishings and mattresses within the premises comply with the Furniture and Furnishings (Fire Safety) Regulations 1988 and keep records showing this.

Previously: legal requirement

We do not consider compliance with fire safety and record keeping to be a new cost.

4. Legionella

The holder of the licence must assess the risk from exposure to Legionella within the premises, whether or not the short-term let has a private water supply.

Previously: best practice

This is an assessment which the host can do themselves by inspecting tanks and pipework within the premises.

Estimate £17 one-off ^[34] for time reading up and carrying out the inspection.

5. Private water supplies

Where a premises is served by a private water supply, the licence holder must comply with the requirements on the owners of private dwellings set out in the Water Intended for Human Consumption (Private Supplies) (Scotland) Regulations 2017.

Previously: legal requirement for home sharing and home letting but best practice for secondary letting

Estimate £200 one-off^[35] cost for carrying out a risk assessment

6. Planning permission

Where the premises is in a control area, the holder of the licence must have made a planning application or have planning permission already.

Previously: variable by area

The only additional cost is in making a planning application where one was not previously required. Even within control areas, planning permission may have been required before designation (depending on the local authority’s planning policies).

Estimate £520-1,000 one-off where planning permission is now required but was not before. Planning costs are discussed further in Annex C1.

7. Safety and repair standards

The holder of the licence must take all reasonable steps to ensure the accommodation is safe for residential use. This means meeting the repairing standard where it applies. Whether or not the repairing standard applies, the accommodation must:

• have suitable smoke and fire alarms;

  Previously: best practice

  Estimate £220 for a sealed long-life battery system which would last for ten years^[36]. A hard-wired alarm would cost more and should be installed by an electrician.

• have suitable carbon monoxide alarms;

  Previously: best practice

  The cost of CO alarms is included in the estimate of a fire alarm system (above).

• have any electrical fittings in a reasonable state of repair, and proper and safe working order as demonstrated through an electrical safety inspection written up in an Electrical Installation Condition Report (EICR);

  Previously: best practice

  Estimate £180 every five years^[37], depending on age and condition of wiring.

  We do not consider any repair and maintenance of electrical fittings identified through testing to be a new cost.

• have any electrical items in a reasonable state of repair, and proper and safe working order as demonstrated through a Portable Appliance Testing Report on moveable appliances to which a guest has access.

  Previously: best practice

  Estimate £100 annually^[38] (but this may be included in a quote for an EICR).

  We do not consider any repair and maintenance of electrical items identified through testing to be a new cost.

8. Maximum occupancy

The licence holder must ensure that the number of guests residing in the accommodation does not exceed the number specified on the licence.

Previously: normal practice to specify the maximum number of guests for the accommodation.

There may be additional costs in providing the local authority with information to justify a maximum occupancy that appears high (e.g. 10 people in a two bedroom property).

Estimate: £22 one-off^[39] cost to provide a dimensioned layout of the property, where this is needed.

9. Listings

The holder of the licence must ensure that any listing or advert includes the licence number and a valid Energy Performance Certificate (EPC) rating.

Previously: no requirement

There is no additional cost beyond the fee already paid to obtaining the licence number (which will be on the certificate). Where the host does not already have an EPC, there is a cost to obtaining one. The licence number and the EPC rating will take up additional characters in any advert charged by character count (e.g. printed media).

Estimate £150 one off^[40] for an EPC in the cases that this is needed. Estimate £20 annually^[41] for longer print media adverts, where these are used.

10. Insurance

The holder of the licence must, for the duration of the licence, have valid buildings insurance and valid public liability insurance providing cover of not less than £5 million.

Previously: buildings insurance is a contractual requirement from lenders for those with mortgages and normally taken out by owners. Public liability insurance was not a legal requirement but advisable to protect hosts from claims for injury or damage from guests.

We do not consider buildings insurance as a new cost.

Estimate: £100 annually^[42] for public liability insurance cover of £5 million.

Mandatory conditions at paragraphs 11 to 13 of schedule 3 set requirements around who manages the premises (paragraph 11), the payment of fees (paragraph 12) and an obligation not to provide false or misleading information (paragraph 13). These do not impose any additional costs or effort on the host.