Short term lets - licensing scheme part 2: supplementary guidance

2. Licence types and policy

(a) Four types of licence

2.1. Licensing authorities can grant one of four types of licence for short-term let accommodation. The licence granted must be for either:

a) secondary letting;

b) home letting;

c) home sharing; or

d) home letting and home sharing.

2.2. Home sharing and home letting concern the use of the host or operator’s only or principal home whereas secondary letting makes use of a separate premises.

(b) General policies

2.3. Each licensing authority should have regard to their planning authority’s objectives and policies, including:

• the local development plan;
• other relevant planning policies; and
• any intended or designated control areas.

2.4. Licensing authorities must develop and maintain a policy on temporary exemptions as required by the Licensing Order. Licensing authorities are also encouraged to develop and maintain policies on:

• provisional licences
• licence duration and renewal
• temporary licences
• additional conditions and
• compliance and enforcement

2.5. When considering a short-term let licence application where there are multiple accommodations on a single premises licensing authorities may grant a licence in respect of all or some of that accommodation.

(c) Licence duration and renewal policy

2.6. Licensing authorities may decide to grant a licence for a period of up to 3 years initially, after which it needs to be renewed. Licensing authorities may grant licences for different time periods to different applicants and/or for different types of short-term let licence. Licensing authorities are expected to provide clear and transparent criteria for doing so.

2.7. Licensing authorities must specify the duration and expiry date of each licence on the licence itself. The duration applies from the date on which the licence is granted / or the licensing authority specifies that it will come into force. Where an application is made to renew a licence, the licence will continue to have effect until such a time as a decision is made on the renewal.

2.8. The Licensing Order allows licensing authorities to renew licences for such periods as they see fit (there is no time limit)^[12]. However, licensing authorities must set out the circumstances in which they would use the power to set a licence period in excess of three years. Licensing authorities are encouraged to renew licences for a period of three years, unless they have good reasons to do otherwise.

2.9. The Scottish Government encourages licensing authorities to consider how they will ensure compliance with licence conditions for the duration of licences. This might include whether and how often they would want to see certain documentation or make visits during the licence period. This need not be a blanket approach, as the need to visit a premises during the licence period would depend on various factors.

(d) Temporary Licences

2.10. Licensing authorities may decide to grant temporary licences. The Scottish Government encourages licensing authorities to develop and publish a policy setting out:

• the licensing authority’s criteria for issuing temporary licences;
• the fees payable; and
• any additional conditions which apply (in addition to the mandatory conditions which apply to all licences, including temporary licences).

2.11. It is desirable for licensing authorities to clearly state if there is an application form specifically to apply for temporary licences (and or exemptions).

2.12. Licensing authorities must consult the Chief Constable and Scottish Fire and Rescue Service in respect of an application for a temporary licence.

2.13. A temporary licence may be granted for a duration of up to six weeks, or longer if the host or operator has also made an application for a full licence. Please note that in applying for a temporary licence, hosts and operators must still comply with all the mandatory conditions. If they have applied for a licence, their temporary licence will last until their licence application is finally determined (this includes an appeal if one has been lodged within 28 days of the decision).

2.14. The issuing of a temporary licence to a host or operator who is also making a full licence application does not extend the time for the licensing authority to make a decision on the full licence application. This remains up to 9 months for new hosts.

2.15. Licensing authorities should issue a licence number to accompany a temporary licence.

(e) Temporary exemptions policy

2.16. In order to obtain a temporary exemption from the requirement to have a licence, hosts and operators must apply for a temporary exemption, where this is offered by a licensing authority. Licensing authorities may grant a maximum of three temporary exemptions to the requirement to have a licence in each calendar year, which must not exceed a combined total of 6 weeks^[13]. The 6 week limit is a maximum, and not a default.

2.17. Licensing authorities must publish a temporary exemptions policy statement on their website and keep it under review. As a minimum it must publish a policy on or before 1 October 2022 and on or before 1 October every three years thereafter.

2.18. Licensing authorities must consult with such persons as they consider appropriate in preparing and reviewing their temporary exemptions policy statement. Their temporary exemptions policy statement must include information regarding:

• the fees chargeable for a temporary exemption application; and
• the time period within which the licensing authority will finally aim to determine the application.

2.19. Licensing authorities may choose to also attach conditions to an exemption. The Scottish Government therefore encourages licensing authorities’ policy statements to include:

a) the likely conditions attached to an exemption;

b) the grounds for granting or refusing an application for an exemption; and

c) information about how a decision can be appealed.

2.20. Licensing authorities can check and enforce any conditions that are attached to a temporary exemption. Licensing authorities have the right to visit premises and should develop a risk-based approach to prioritising any such visits. Licensing authorities can choose to, but do not need to, inspect every premises and are not liable for any failures of the host or operator.

2.21. Licensing authorities have the power to decide whether to consult the Chief Constable and the Scottish Fire and Rescue Service in respect of applications for temporary exemptions.

2.22. Licensing authorities can grant or refuse an application for a temporary exemption. If they grant a temporary exemption, they should provide the host or operator with a temporary exemption number (like a licence number)

2.23. Where a licensing authority chooses not to use their powers to grant any exemptions, they can comply with this duty by publishing a statement on their website to the effect that applications for exemptions will not be granted under any circumstances.

Festivals and major events

2.24. Scotland is a visitor destination with the ability to host large scale events, which benefit national and local area economies. Temporary exemption powers may be used by licensing authorities as a tool to support demand for accommodation during these major events.

2.25. In setting temporary exemption policies to support major events, licensing authorities are encouraged to be mindful of:

• the likely demand for accommodation due to the event;
• the type of accommodation likely to meet demand (e.g. people letting out spare rooms or their primary homes); and
• the balance when setting the application process, compliance requirements and/or fee level and the impact of these with meeting demand, and subsequent economic impact / viability of future events

Interaction with planning policy

2.26. Planning policies still apply, although these will not commonly affect smaller scale home sharing and home letting^[14]. However, they are relevant for secondary letting, especially within control areas.

2.27. For very large, one-off events (such as the Commonwealth Games, Olympics or COP26), Scottish Ministers can make an order under section 30 of the Town and Country Planning (Scotland) Act 1997^[15] to grant planning permission for change of use for an area and to require discontinuance of use after a certain period. In such circumstances, temporary exemptions could be granted in respect of secondary letting without any concern about breach of planning control.

3. Setting licences fees

(a) Balancing costs and revenues

3.1. Licensing authorities are responsible for establishing and running the short- term let licensing scheme in their area and can recover the costs of establishing and running the scheme through fees^[16].

3.2. Licensing authorities must determine their own fees and fee structures to recover establishment and running costs specific to their area. Licensing authorities must review their fees from time to time to ensure that revenue from fees remains in line with the running costs of the licensing scheme.

3.3. Licensing authorities are experienced in running other forms of licensing schemes and keeping costs down. In line with this, the Scottish Government encourages licensing authorities to have regard to minimising costs through:

• economies of scale;
• integrating service delivery with other housing and licensing functions;
• using online and digital verification where possible, for example through photo and video evidence instead of a visit; and
• taking a proportionate, risk-based approach to checks and verification, for example in considering whether, when and how often visits to premises are needed, especially in more remote and rural areas where the costs of such visits could be higher.

(b) Chargeable activities

3.4. Licensing authorities may charge fees for the following:

• licence applications;
• licence renewal applications;
• temporary exemption applications;
• issuing of duplicate licences;
• their consideration of a material change of circumstances or in premises and their disposal of the matter;
• issuing a certified true copy of any entry on the public register; and
• visits to premises where the visit is necessary because of a failure of the host or operator (see paragraph 4.14 below).

3.5. Licensing authorities may decide to split costs into component parts, publishing a cost for a licence application fee and a separate cost where an inspection is required (for example, if a concern is flagged by Police Scotland or the Scottish Fire and Rescue Service). This could also be combined with a policy, for example, which set out that the need for routine inspections might be minimised if the documents submitted as part of an application (such as floor plans, photos, videos, certificates etc.) were sufficient to:

• verify compliance with mandatory licence conditions; and/or
• determine the maximum occupancy number.

3.6. This approach may help to ensure applicants provide sufficient evidence when submitting the application. Where licensing authorities choose to adopt such an approach, we would encourage them to provide clear guidance to applicants on the information/format of information they’d require in order to grant an application without a physical inspection of the premises. An example fee structure based on this approach is set out below:

3.7. Licensing authorities may decide to allow hosts or operators to pay an annual fee in place of the application fee, should they wish to do so^[17].

3.8. Licensing authorities must not charge neighbours or others for handling complaints or objections.

3.9. Licensing authorities may charge for applications to vary the terms of a licence.

3.10. Revenue from fines in respect of licensing offences (see chapter 6) do not go to the licensing authority.

Publicising the fees

3.11. Licensing authorities are expected to publish details of fees in respect of their licensing scheme, and should give reasonable notice of any changes.

Fees for visits to premises

3.12. Licensing authorities may charge a fee to a host or operator for a visit to their premises, where the visit results from their failure to comply with licence conditions or a complaint relating to the premises which is not frivolous or vexatious.

3.13. A fee may be charged for an inspection following a complaint, where it is found that there are compliance issues, whether or not those are the issues that were the subject of the complaint.

3.14. Where a fee is charged for such a visit, the licensing authority must produce a report of its findings to the host or operator within 28 days of the inspection. Where a report is not provided within 28 days of the inspection, the licensing authority must refund the fee charged to the licence holder^[18].

Refunds and refused applications

3.15. In general, fees are not refundable. The Scottish Government encourages licensing authorities to publish their policy on refunds so that hosts and operators are clear on the position before they make an application.

3.16. Whether or not a licensing application is granted, the licensing authority will incur significant costs in processing the application. Licensing authorities must ensure, prior to an application being granted, the applicant is only charged the costs relating to the processing of their application. If the application is refused, the fee charged for the processing of the application itself need not be refunded.

3.17. Please be aware that the fee charged for processing the application should not include enforcement costs. This was determined at the Supreme Court in the case of R v. Westminster City Council (2017)^[19]. The licensing authority may charge fees to cover enforcement costs once the application is granted (normally through monitoring and/or renewal fees).

3.18. Where a licensing authority refuses to consider an application because the host or operator needs to obtain planning permission (see chapter 6), the licensing authority does not need to refund the fee paid. However, the licensing authority must not charge a further fee in respect of a resubmitted licensing application made within 28 days of planning permission being granted.

(c) Parameters for setting fees

3.19. Licensing authorities may take account of the following criteria in determining the amount of fees to charge:

• the size of the premises;
• the number of rooms at the premises;
• the number of guests who can reside at the premises;
• the type of short-term let;
• the duration of the period for which the premises are made available for use as a short-term let (but note that licensing authorities cannot set limits on nights on licences for secondary letting); and
• the extent to which the licence holder has complied with the conditions of the licence (which might affect a renewal fee).

3.20. The Scottish Government encourages licensing authorities to consider each of these criteria, even if they subsequently deem some may not be suitable for their local circumstances.

3.21. The Scottish Government encourages licensing authorities to establish a licence fee structure that takes account of the following as a minimum:

• type of licence: with fees set accordingly in relation to home sharing, home letting and secondary letting licences; and
• guest capacity: with fees set accordingly in relation to the intended maximum number of guests, as requested by the host or operator on their application form.

3.22. Whatever basis licensing authorities set their fees, they must be calculated according to cost recovery only.

3.23. Note that a licensing authority may specify a maximum occupancy for safety reasons that is lower than the number of guests an applicant has requested. In this instance licensing authorities may choose to, but do not have to, refund the difference between the fee paid and the fee that would have been paid had the application specified the maximum occupancy figure.

3.24. Within this recommended fee structure, licensing authorities may decide to group guest numbers into bands. An example banded fee structure is set out below: