216. The Scottish Government is interested in whether a regulatory regime should make a distinction between the small scale hosts and those with property portfolios; and how commercial hosts should be defined. Question 21 asked,
Q21: 'Do you have any comments on how regulations should deal with commercial hosts?'
217. A total of 674 respondents commented at this question. The following table provides a breakdown of those who chose to respond.
Table 25: Q21
|Host with 1 property||145|
|Host with 2+ properties||77|
|Hotel / B&B owner||12|
|Other (non short-term let) landlord||13|
218. A large minority of respondents, across all sub-groups, made comments about how to define commercial hosts separately from non-commercial hosts, largely focusing on the three factors suggested in the consultation document. The largest numbers of these respondents discussed demarcating commercial hosts based on the number of properties a host was offering for short-term let. Opinions however were split; the highest number inferred that any whole property let out should be classified as commercial, i.e. any property where the host or owner does not normally live, effectively excluding sharing or swapping as commercial but including all other scenarios. However, only slightly smaller numbers stated that commercial hosts should be defined as anyone earning income from a property, irrespective of the letting model (sharing, swapping or secondary letting). Similar numbers inferred that anyone letting more than one property should be defined as commercial (i.e. with single property hosts treated differently), or that anything over a suggested larger number of properties should be deemed as commercial, with suggestions ranging from two to five properties.
219. A small number of respondents (again evenly spread across sub-groups categories) agreed that any host earning above the VAT benchmark (£85k per year) should be classified as commercial, with several citing that this factor would be the simplest method as it should be easy to obtain records. However, smaller numbers thought that VAT should not be a consideration or was not relevant: reasons given included that the VAT limit was too high and few hosts would reach the benchmark, that hosts or owners could be subject to VAT because of other (non-property related) business, and perceptions that VAT is poorly enforced.
220. Smaller numbers of respondents agreed that concentration of lets needed to be a consideration, generally without giving detailed suggestions as to how to account for this factor when trying to define what should be a 'commercial host'.
221. A few respondents,(evenly spread across sub-groups) noted other factors on which it may be useful to base the classification of commercial hosts, including the following,
- Number of days a short-term let property is let out per year; varied limits were suggested including 140 days (as per tax legislation), 90 days or 30 days.
- Revenue achieved per year.
- A threshold based on the number of bedrooms.
- Whether or not a host is present to greet or meet guests.
- Agencies and / or online accommodation platforms to be defined as commercial hosts.
- Owners or hosts which are corporate bodies to be defined as commercial hosts.
222. A large majority of respondents also commented about how to regulate commercial hosts. Again there were many points made, each by a few respondents or less, but these offered little by way of consensus. A few respondents, including a large minority of local authorities and small minorities of community organisations and hosts with more than one property, said that all hosts, irrespective of scale, should be held to the same standards or rules, and a few noted that the key is what happens in relation to individual properties, and smaller numbers noted that all types of short-term lets need to have equal consideration for health and safety. Conversely, similar numbers, including small minorities of guests, hosts with one property and local authorities, thought there was a need to differentiate between small and large-scale hosts so that they would be treated differently. Very small numbers also advocated different treatment for urban and rural hosts, so as not to include rural holiday landlords such as providers of holiday accommodation on farms into any new regulatory system. As noted by a local authority:
"While there is a clear temptation to make a distinction between commercial and small scale hosts at the moment we have no evidence that they pose more significant or even different problems. By definition commercial hosts will be taxed on earnings and if there is a need to make changes here then we would not object. Further research needs to be carried out to determine the impact and quantify the number of commercial hosts who are operating in this market and whether or not they should be regulated differently."
223. A few respondents (including small minorities of community organisations and local authorities) perceived a need for more stringent and rigorous regulations, with specific suggestions including the following:
- Compliance to a code of conduct (with several hosts and hosting intermediaries recommending compliance with the ASSC Code of Conduct).
- Instigating an overseeing body with improved monitoring.
- Vetting of guests and / or guest numbers.
- Compulsory greeting of guests.
- Compulsory identification of the ultimate property owner.
- Vetting of owners (i.e. fit and proper person checks).
224. A small number of respondents would like to see robust regulatory enforcement actions for hosts in breach of the regulatory system, with prosecutions, fines, the refusal or removal of short-term let licences and property seizures all suggested. Smaller numbers preferred to focus on the importance of identifying rogue operators and bad practice in order to keep industry standards up.
225. However, a small number of respondents expressed concerns about additional regulations leading to increased administration and bureaucracy, particularly for small scale hosts. Similar numbers were also concerned about the perceived ease of evasion or avoidance of regulations by some operators; purported methods included owners putting property ownership under names of different family individuals or different company names (e.g. to avoid going over the VAT threshold), owning properties in different local authority areas and overseas ownership.
226. Regulatory requirements for commercial hosts were also discussed. A small minority of respondents suggested each of the following:
- Commercial hosts need to be regulated or treated like any other business (mentioned by a large minority of hotel or B&B owners).
- Commercial hosts should have the same treatment as letting agents or managing agents of commercial property.
- Commercial hosts should be registered (e.g. required membership of a relevant trade association).
- Commercial hosts should be licensed (including suggestions that hosts should pay a higher licensing fee or that individual properties require their own license).
227. However, a very small number of respondents (mainly hosts) maintained that commercial hosts were already subject to considerable regulation and that the burden was already high: examples given included the landlord registration scheme (where the threshold is reached), electrical installation condition reports (EICR), fire and safety standards and HMRC coverage.
228. A few respondents across all sub-groups said that steps should be taken to limit commercial hosts in terms of numbers of properties owned or managed, and several were in favour of introducing a cap and others were in favour of an area-based approach. Small numbers were also in favour of controls in terms of numbers in tenements or shared blocks, or banning them completely from such accommodation. To this end, very small numbers of respondents suggested using planning law to help control short-term let numbers (e.g. by taking density into account when issuing permits or ascertaining the suitability of the property in question). Similar numbers perceived a need to make regulations proportionate to the number of properties let, with more stringent controls for those with more properties.
229. A few respondents (including small minorities of other non-short-term let landlords and hotel or B&B owners) wished to ensure that commercial hosts will pay or are registered for relevant taxes, with no loopholes available. Income, property, business, VAT and UK tax were specified in this regard. To assist with this, respondents posited a need to identify owners and obtain host information from platforms. Smaller numbers thought:
- Commercial hosts should pay more tax as they have more properties and the money earned was less likely to stay in the local economy.
- Taxation (and regulation more generally) should be equivalent to that in place for the long term letting sector.
- The VAT registration threshold should be lowered so that all hosts should be liable to VAT.
- Tax should be on a sliding scale, i.e. with increasing tax rates for greater numbers of properties in the portfolio.
There is a problem
Thanks for your feedback