Short-Term Let Licensing Implementation Update Report 2024

2. Executive Summary

This report is intended to reflect views about the implementation of short-term let licensing gathered from a number of different sources and stakeholders. It updates information about implementation that the Minister for Housing provided to the Scottish Parliament in June 2023. The report provides information on initial short-term let licence application levels across Scotland, considers current operational processes and identifies operational improvements, including Scottish Government actions where appropriate.

Short-term let licence application levels

At the end of December 2023 the official statistics show there were at least 23,576 applications made for a short-term lets licence but this only includes partial data about unvalidated applications. From discussions with licensing authorities in October 2023 we estimate the total number of applications was in the region of 30,000 up to the end of September 2023, although this estimate will be subject to revision as applications are validated and statistics are updated in future publications.

Prior to licensing we did not have reliable data about the number of short-term lets in Scotland. While we now have official statistics on the number and characteristics of short term let licensing applications, it is important to note this is still a provisional and partial dataset. In the last year or so, new data sets have also been published that could potentially provide useful information about trends in the short-term let sector. However, these are not directly comparable with each other or our official statistics.

We consider it is too early to assess any impact of the licensing scheme given the short period of time the scheme has been in place. In addition it is important to recognise there are a range of other factors, which have had and, some of which, continue to have, a bearing on the sector. This includes Brexit, the Covid pandemic and the fiscal environment. We will continue to monitor these different data sets and sources, working with stakeholders to understand the emerging picture as licensing embeds.

Operational processes and improvements

The Scottish Government has engaged with a wide range of stakeholders since the implementation of licensing commenced. Quantitative and qualitative information has been gathered and grouped into broad themes on safety, operational practices, business and community considerations and monitoring. We have outlined findings from evidence so far, on what elements are working well and also where there are concerns/ challenges. The Scottish Government has provided a response under each theme, with a summary of action/activities we are already doing or propose to undertake at the end of this report.

Safety

What is working well: We are pleased that licensing is ensuring short-term lets comply with consistent standards across Scotland and checks the suitability of hosts, which improves the safety of guests. The scale of incomplete applications reported by licensing authorities emphasises that a mechanism was needed to check compliance and it is encouraging that local authorities have been able to work with applicants to resolve issues in order to grant licences where possible to do so.

Concerns that have been raised: feedback related to a perceived lack of enforcement and issues relating to data protection.

Scottish Government response: We consider it positive that awareness of the new licensing requirements continues to embed through a supportive approach. Licensing authorities are working with local Police Scotland teams to educate and encourage applications from hosts operating without licences, which may increasingly be followed up and enforced through prosecution if non-compliance continues.

Data disclosure is felt to be proportionate and only requires the minimum disclosure necessary for the effective operation of the licensing regime. However, in line with best practice we will review our Data Protection Impact Assessment in 2025.

Operational practices

What is working well: embedding awareness of new requirements in the system and automated processes to support assessment of licensing applications by delivery partners (Police Scotland and Scottish Fire & Rescue Service).

Concerns that have been raised: feedback included concerns about unwarranted variation in the local administration of licensing schemes (including the application fee), exclusions for some scenarios, the time permitted to process applications and the interaction between planning and licensing.

Scottish Government response: The licensing scheme was designed to be administered by licensing authorities based on the Civic Government (Scotland) Act 1982. It enables licensing authorities to deliver schemes that reflect local conditions and therefore ensures implementation is appropriate for the whole of Scotland. While local delivery inevitably results in some variation because each authority will have its own IT systems, policies and processes, implementation is structured around mandatory licensing conditions and is therefore broadly similar throughout Scotland. There are existing mechanisms to share good practice and this has helped (and will continue to support) standardised practices to be in place where possible.

Business Considerations

What is working well: transitional arrangements and investment confidence.

Concerns that have been raised: concerns registered with us include a reported difficulty in selling short-term let businesses with onward bookings because new hosts (owners) must obtain licences before hosting guests, constraints affecting building new short-term lets, the operation of temporary exemptions and the ability to secure compliance with mandatory conditions on islands without easy access to contractors.

Scottish Government response: We have recently legislated to resolve most of the above concerns. Previously we also extended the deadline for existing hosts, allowing an additional six months (from April 2023 to October 2023). We note licensing authorities have accepted applications from existing hosts where documentary evidence was not yet available and allowed applicants to submit this once work has been completed.

Community Considerations

What is working well: the opportunity for communities to comment on short-term let licence applications as part of the assessment process.

Concerns that have been raised: whether hosts are applying for the correct licence type e.g. applying for home-sharing when it should be secondary letting because the host is not resident on the premises. Indication that a few authorities are still establishing systems for residents/ neighbours to complain about licenced short-term lets. Some industry bodies are concerned that established short-term let businesses are facing complaints from neighbours that are not materially relevant.

Scottish Government response: Public scrutiny is one of the core principles of the regulation of short-term lets and enables those with knowledge of the immediate area to participate in the assessment process ensuring licences are granted to suitable accommodation and hosts. Where concerns have been raised about authorities’ processes, these have been followed up and resolved. The Civic Government legislation underpinning the short-term let regulation has been in place since 1982 and licensing communities are experienced in considering the validity of objections.

Monitoring

What is working well: regular engagement with stakeholder groups to share good practice and respond to concerns.

Concerns that have been raised: feedback queried whether the data specification for official statistics is gathering too much and whether it is required. Some industry bodies do not feel their concerns are taken into account.

Scottish Government response: We will review the data specification for the official statistics with the Data Group and undertake user engagement to consider the format and frequency of future statistical publications on short-term lets licensing applications. We will also continue to monitor different indicators, as licensing embeds, and work with stakeholders to understand the emerging picture about short-term lets in Scotland.

Although we recognise that some stakeholders have wished to see further changes to the scheme, we will continue to take a responsible and receptive approach and welcome further constructive engagement.

Summary of Actions

Actions already undertaken

We have worked with local delivery partners to address concerns as they have been raised, such as concerns about floor plans and the extent of locally set additional conditions.

In June 2024 the Scottish Parliament passed an amendment to the short-term let legislation that benefits businesses by introducing the ability to transfer a licence and to apply for a provisional licence before building a new short-term let. The number of permitted temporary exemption periods has also been raised from one per calendar year to three. Exclusions have also been clarified for foster arrangements and guest rooms in certain types of residential accommodation. Plus the information hosts must have available to guests now requires details about what to do if the carbon monoxide alarm sounds and ensuring instructions are in place about the use of mobile gas heaters.

Guidance

We have asked VisitScotland to take forward the establishment of an Expert Group to suggest updates to our Scottish Government guidance for the licensing and planning of short-term lets to make it clearer and more user friendly. Membership of this group will consist of representation from a range of stakeholders with the relevant technical knowledge. The aim will be to publish revised guidance in Spring 2025.

Consultation

There are a few matters raised in this report that we would need to hear wider views on before deciding whether or what action should be taken. We will consider these in conjunction with the guidance update and may undertake public consultation in 2025.

Ongoing monitoring

The Scottish Government will continue to monitor the implementation of short-term let licensing. We will do this in a proportionate manner by:

• continuing to collect and consider insights from a range of data sources;
• periodically reviewing our own short-term lets licensing data collection, and the format and frequency of statistical publications, to ensure we are maintaining an accurate picture of short-term let licensing;
• continuing stakeholder engagement through established groups;
• providing an update on the implementation of short-term let licensing in 2025, utilising insight collected through the above information streams.