Short term lets - draft licensing order and business and regulatory impact assessment (BRIA): consultation

This consultation seeks views on the Scottish Government's short-term lets draft Licensing Order and Business and Regulatory Impact Assessment (BRIA). The Scottish Government intends to lay the Licensing Order at the Scottish Parliament in September 2021.

2. Revisions to the Licensing Order

The stakeholder working group

2.1. The short-term lets stakeholder working group was established in February 2021 to:

  • assist the Scottish Government in the production of guidance for hosts and local authorities on the short-term lets licensing scheme and planning control areas;
  • identify and resolve stakeholder issues and concerns; and
  • make suggestions to the Scottish Government on any changes to legislation which may be needed.

2.2. Membership of the working group spans various sectors, including: local authorities, platforms, tourism bodies, trade associations, Police Scotland, Scottish Fire and Rescue Service, and representatives of residents.

2.3. The Scottish Government has carefully considered all suggestions made by working group members. A number of changes have been made to the legislation as a result of those suggestions where they do not detract from the policy objectives of the licensing scheme, which are:

  • to ensure short-term lets are safe and address issues faced by neighbours;
  • to facilitate licensing authorities in knowing and understanding what is happening in their area; and
  • to assist with handling complaints effectively.

2.4. Given the diverse range of interests represented on the working group, there were some strong differences of view on how the legislation should evolve. Members of the working group were asked to engage constructively but their presence on the group is not to be construed as endorsement of the legislation, guidance or any of the revisions.

2.5. A number of suggestions do not require any revisions to the Licensing Order and have been clarified in guidance or elsewhere.

2.6. Below, we set out:

1. Changes that have been made to the legislation as a result of suggestions from the working group.

2. Changes that have not been made to the legislation as a result of suggestions from the working group, and points that have been clarified in guidance.

2.7. Changes suggested by members of the stakeholder working group, which have resulted in changes being made to the Licensing Order:

Table 1. Revisions made to the Licensing Order
Suggested change What we did
1. Consider exclusions for properties such as bothies which may be used as accommodation by somebody working the land, for a fee. We have revised the Licensing Order to exclude bothies. The definition of a bothy is set out at paragraph 3 of Schedule 1.
Excluded tenancies
2. Consider excluding agricultural and crofting tenancies, in addition to private residential tenancies. We have revised the Licensing Order to exclude a number of tenancies, which include agricultural and crofting tenancies. These are set out at paragraph 2 of Schedule 1.
Temporary exemptions
3. Provide more detail on the process licensing authorities must apply when granting temporary licence exemptions. Licensing authorities can exempt premises from the requirement to have a licence for a particular occasion or for up to 6 weeks each year.
We have revised the Licensing Order at paragraph 4 of schedule 2 to require licensing authorities to publish and review a short-term lets temporary exemptions policy statement.
This is explained in Paper 5.
4. Require licensing authorities to assess overprovision and produce a policy following consultation. We have revised the Licensing Order at paragraph 7 of schedule 2 to require licensing authorities to publish and review, a short-term lets overprovision policy statement.
This is explained in Paper 5.
Public register
5. Amend the power for licensing authorities to make the public register available in an electronic format to a duty. We have revised the Licensing Order at paragraph 11 of schedule 2 to require licensing authorities to publish the public register in an electronic format.
Energy efficiency and Energy Performance Certificates
6. Remove requirements to comply with minimum energy efficiency standards. We have removed requirements to meet specific energy efficiency standards from the Licensing Order. Hosts and operators are still required to comply with the standards set out in current building standards legislation[1]. Broadly speaking, this requirement applies to secondary letting of dwellinghouses. Hosts and operators must include the Energy Performance Certificate rating in any advert or listing, where they are required to have an EPC by building standards legislation.
7. Insurance cover for premises may not be held by the host or operator. Requirement should be that appropriate cover is in place, regardless of whether the host or operator is the policy holder. We have revised the Licensing Order at paragraph 14 of schedule 3 requiring the host or operator to ensure that insurance cover is in place for the premises; thus removing the requirement that the insurance cover is necessarily held by the host or operator.
8. Define “short-term letting activity” to include advertising a property for short-term letting We have not changed the Licensing Order to include advertising as an activity requiring a licence. However, we have revised articles 3 and 4 so that the activity requiring a licence includes the making of an agreement to let the property. This means that taking bookings is a designated activity. This is explained further in Papers 4 and 5.

2.8. The table below sets out a number of changes suggested by members of the stakeholder working group, which have not resulted in any revisions to the Licensing Order but have either been clarified below or in guidance.

Table 2. Suggestions which did not lead to revisions
Suggested change What we did
Traditional B&Bs
1. Issues with inclusion and definition of “traditional” bed and breakfasts. We have not excluded “traditional” bed and breakfasts but made changes to the Licensing Order to address specific concerns, for example around EPCs (see above).
In the 2020 Licensing Order, we explicitly excluded guest houses, boarding houses and hotels. Stakeholders raised concerns about the inclusion of so-called “traditional” bed and breakfast accommodation.
The Scottish Government’s policy position has always been that traditional bed and breakfasts are in scope. Our 2019 consultation proposed excluding “licensed hotels and B&Bs and self-catering properties on their premises”. We have revised schedule 1 to address the previous anomaly around excluding guest houses, boarding houses and hotels, but including bed and breakfasts. Guest houses and boarding houses and some hotels can be variants of home sharing and should not be automatically excluded. The exclusions have been simplified to hotels with planning permission and premises licensed under the Licensing (Scotland) Act 2005. In broad terms, schedule 1 makes provision to exclude everything other than the use of houses, flats and unconventional accommodation. However, a property is not excluded simply because of how it is labelled. For example, a house used as a hotel, guest house or bed breakfast is not excluded by being labelled as such, unless excluded specifically by provision within schedule 1. The exclusions are explained in more detail in the Policy Note, see Paper 2.
2. Require licensing authorities to use licensing data as evidence for any overprovision policy, and require Ministerial approval of the locality to which the overprovision policy applies. We have not revised the Licensing Order to limit licensing authorities to using licensing data as evidence for any overprovision policy; this would make it hard to apply overprovision policies in the period before 1 April 2024. However, we have required licensing authorities to produce an overprovision policy statement (see Table 1) and set out detailed guidance on overprovision within licensing Guidance Part 2 – see Paper 5.
Tiered approach
3. Tiered approach to licensing, with home sharing and home letting exempt from planning and licensing requirements. Our policy position remains that all short-term lets require a licence, as meeting basic safety standards is important in all short-term lets. Licensing authorities have powers to grant temporary exemptions for periods of up to six weeks. We have set out guidance on this and the parameters for licensing authorities to consider when setting fees, such as lower fees for home sharing and home letting, see Paper 5.
Deemed grant of licences
4. Require licences to be automatically granted if a licensing authority has not determined an application within a 12 month timescale. This is already the case. Where an application has not been determined within statutory timescales it will be deemed granted for a period of one year with no conditions.
Unconventional accommodation
5. Add unconventional accommodation to the list of excluded accommodation. Unconventional accommodation was included following feedback received during our 2020 consultation. The reasons for doing so are set out in paragraph 5.4 of the 2020 consultation report[2].
Likely breach
6. “Likely breach” provision in relation to enforcement notices (schedule 2) is unusual. We have previously considered this. The reasons are set out in the Policy Note, see Paper 2.
Recurring fees
7. Require licensing authorities to provide for annual or other recurring fees, such as monthly fees. We understand that this could provide valuable flexibility for applicants, and have asked licensing authorities to consider this approach in Guidance Part 2, see Paper 5. However, we have left the decision as to whether to offer this with licensing authorities. Offering a monthly payment option could increase the costs incurred by the licensing authority in running the scheme in some cases, which would then be passed on in licence costs.
8. Remove requirement that all hosts obtain £5 million public liability insurance cover. The requirement to have public liability insurance in place is to protect both hosts and guests. We understand that some platforms offer public liability insurance cover as part of their service.
9. Introduce a registration system, with mandatory conditions (broadly based on the licensing scheme conditions). Those who are complying with registration conditions would be exempt from requirement to obtain a licence. We believe a hybrid approach would make the arrangements more complicated. One perceived advantage of registration by hosts and operators is that it allows them to continue operating uninterrupted by any application processing. With regard to the licensing scheme and the ability of hosts and operators to be able to continue operating pending determination of their licence application:
  • this is already provided for existing hosts who apply for a licence by 1 April 2023 under transitional arrangements; and
  • in any other case, licensing authorities have the power to issue a temporary licence to allow this.
The other perceived advantage of registration is an assumption that fees would be lower. It is not obvious why this would be the case, if the registration scheme offered similar protections for guests and neighbours as the licensing scheme. Proposals for registration are explored further in section D of the BRIA, see Paper 3.
10. Give local authorities powers to require existing hosts to apply for licence before April 2023. In response to comments made in the 2020 consultation, we aligned the deadlines across Scotland. The reasons for taking this approach are set out in chapter 4 of the 2020 consultation report. The date by which existing hosts and operators must apply for a licence remains 1 April 2023. The final date by which all short-term lets must be licensed remains 1 April 2024.
Licence numbers
11. Using separate licence numbers for secondary letting, home letting and home sharing will greatly aid the collection of data for enforcement. We have set out requirements on the licence number format in Guidance Part 2, see Paper 5. The licence number will distinguish between the two types of licence: home sharing and home letting; and secondary letting.
Planning permission
12. Planning permission checks are fundamental to securing the safety of residents in tenements, and should also be required outwith control areas. We have explained our reasoning for focusing limiting this requirement to secondary letting of dwellinghouses in control areas at paragraph 7.6 of the 2020 consultation report.
13. Applications for licences should be advertised locally to give communities the opportunity to object. Licensing authorities have the power to notify such other persons as they consider appropriate about a licensing application. Guidance Part 2 says that licensing authorities should consider whether to give notice to any community council or development trust in whose area the premises is located, see Paper 5.

2.8. The table below sets out a number of changes suggested by members of the stakeholder working group, which have not resulted in any revisions to the Licensing Order but have either been clarified below or in guidance.

Other revisions

2.9. The Scottish Government has made some other revisions to the Licensing Order to address concerns raised by the Delegated Powers and Law Reform Committee on the 2020 Licensing Order and also to make other modest improvements and address other issues following further internal review. The updated Policy Note (see Paper 2) explains the provision in the Licensing Order.



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