Short-term lets: regulation information

The law around short-term lets changed on 1 October 2022. New hosts are required to apply for a short-term let licence before accepting bookings or receiving guests. On 7 December 2022, the Scottish Government announced legislation would be laid at the Scottish Parliament in January 2023 to give existing hosts additional time to make an application for a licence. This will be a one-off, six-month extension for existing hosts to recognise the wider cost of living crisis that is placing pressure on existing short-term let hosts and businesses. On 1 March 2023 the Scottish Parliament approved this six-month extension. Existing hosts must apply for a licence before 1 October 2023 (previously 1 April 2023) and can continue operating while their application is being determined.

On 28 June 2023, the Minister for Housing, Mr McLennan MSP, wrote to the Local Government Housing Planning Committee to provide an update on short-term lets licensing implementation. This highlights that all licensing authorities have operational licensing schemes, and are actively processing and granting licensing applications for new and existing hosts. The letter also refers to the Judicial Review on the City of Edinburgh Council’s licensing policy, the updated guidance published by the Scottish Government on 30 June 2023 and the intention to provide ongoing implementation updates, alongside quarterly statistical publications providing short-term lets licensing data.

Further information on the licensing scheme, control areas, and the background to the development of these regulatory proposals can be found in the sections below.

Licensing scheme

The short-term lets licensing scheme is mandatory for all short-term let accommodation across Scotland. This includes holiday cottages, B&Bs, guest houses, rooms within a home and unconventional accommodation such as pods and yurts.

Hosts can use this tool to check whether or not they need a licence, and which type of licence they require.

Applications for a short-term let licence are made to the local authority in which premises are located. Further information on the types of licence, exclusions and how to apply can be found here:   Mygov Guidance for Operators

Control areas

Local authorities have been given powers to designate control areas, in order to manage high concentrations of short-term lets. Within a control area, the change of use of a dwellinghouse, which is not a hosts only or principal home, to provide short-term lets will always require planning permission.

In a control area it is a mandatory condition of licence that planning permission has been obtained, or an application is in process. Each planning application will be determined on its individual planning merits in line with local development plan and policies unless there are material planning considerations that would justify a departure from the development plan.

On 5 September 2022 Edinburgh became Scotland’s first designated short-term let control area.

Helpful links

Mygov Guidance for Operators

Licensing guidance:

• Part 1: guidance for hosts and operators
• Part 2: supplementary guidance for licensing authorities, letting agencies and platforms

Background

April 2017 - The Scottish Government set up the Expert Panel on the Collaborative Economy to provide advice, expertise and experience for policy development and identify how Scotland could maximise the benefits of the collaborative economy, ensure that regulation is fit for purpose and that the wider economic, social and community impacts, including taxation, social inclusion and employment conditions are taken into account.

January 2018 - The panel reported that peer-to-peer accommodation expanded the range, choice and flexibility of accommodation for tourists in Scotland and welcomed the positive contribution which it made to Scotland's economy. However, the panel also highlighted a number of issues and challenges in relation to peer-to-peer accommodation, and short-term lets more broadly.

July 2018 - The Scottish Government published its response to the Expert Panel’s report, and this included the establishment of a Short-Term Lets Delivery Group.

The Short-Term Lets Delivery Group was established to assess the evidence base and the impact, positive and negative, of short-term lets; identify the existing powers local authorities have and explore whether further measures are required. The Group comprised officials from across relevant areas of government including: better regulation, community empowerment, economy, housing, licensing, planning, tax and tourism.

2019 consultation and independent research

September 2018 - Programme for Government 2018-19 made a commitment to ensure that local authorities have appropriate regulatory powers to balance the needs and concerns of their communities with wider economic and tourism interests.

April 2019 - The Scottish Government launched a consultation on a regulatory framework for short-term lets in Scotland which sought views on what those powers should be. This 2019 consultation paper was supplemented by a research annex, ‘The Short-Term Rental Sector, Housing and Tourism in Scotland’, providing an overview of the available evidence on short-term lets in Scotland and regulations introduced elsewhere in the world.

May 2019 – The Scottish Government commissioned research to explore the positive and negative impacts of short-term lets on communities, with a focus on neighbourhoods and housing.

July 2019 - The 2019 consultation closed, having received over 1,000 responses and found wide-ranging support for some form of regulation, appropriate to local circumstances.

October 2019 – The Scottish Government published a report on the 2019 consultation and independent research on the impact of short-term lets on communities.

2020 proposals for regulation

January 2020 - Following careful consideration of the 2019 consultation responses and the evidence provided by independent research, the Scottish Government announced proposals:

• to establish a licencing for short-term lets, using powers under the Civic Government (Scotland) Act 1982, with a mandatory safety component which will apply to all short-term lets across Scotland;
• to prioritise work to give local authorities the power to introduce short-term let control areas under powers in the Planning (Scotland) Act 2019; and
• to undertake a review of the tax treatment of short-term lets, to ensure they make an appropriate contribution to the communities they operate in.

Further details can be found in the news release and in the official record of the Minister for Local Government, Housing and Planning’s statement to the Scottish Parliament.

The 2020 consultation

In January 2020, we announced plans to establish a licensing scheme for short-term lets using powers under the Civic Government (Scotland) Act 1982, and to give local authorities the ability to introduce short-term let control areas under powers in the Planning (Scotland) Act 2019

In September 2020, we launched our 2020 consultation which set out a definition of short-term lets and detailed proposals on the licensing scheme and control areas.  The purpose of this consultation was to help the Scottish Government ensure that the legislation is as efficient and effective as possible.

We received over 1,000 responses to this consultation by the time it closed on 16 October 2020.  We published the 2020 consultation report on 10 December 2020.  The report sets out how we have listened to the many and various views expressed and refined and improved our proposals as a result.

The 2020 consultation report also includes six impact assessments:

• Children’s Rights and Wellbeing Impact Assessment (CRWIA)
• Equalities Impact Assessment (EQIA)
• Data Protection Impact Assessment (DPIA)
• Fairer Scotland Duty (FSD)
• Island Communities Impact Assessment (ICIA)
• Strategic Environmental Assessment (SEA).

On 14 December 2020, the Licensing Order, Control Area Regulations and the Business and Regulatory Impact Assessment (BRIA) were laid at the Scottish Parliament.

The Control Area Regulations were approved by the Scottish Parliament on 24 February 2021 and came into force on 1 April 2021.  Planning Circular 1/2021: Establishing a Short-Term Let Control Area was published on 25 June 2021.

Licensing legislation: the 2020 licensing order

On 1 February 2021, the Minister for Local Government, Housing and Planning wrote to the Local Government and Communities Committee to counter some of the misinformation and misunderstanding circulating in respect of the Scottish Government’s proposals.

On 18 February 2021, the Minister for Local Government, Housing and Planning wrote to the Local Government and Communities Committee confirming that legislation for a short-term lets licensing scheme had been withdrawn from the Scottish Parliament to allow for draft guidance to be developed.

Further detail can be found in the news release and Minister’s video.

Stakeholder working group

The Scottish Government established a stakeholder working group in February 2021 to assist with the production of guidance and identify any changes to legislation that were needed.  Information on the stakeholder working group, including papers and notes of meetings, can be found here: Short-Term Lets Stakeholder Working Group.

The 2021 consultation

The Cabinet Secretary for Social Justice, Housing and Local Government wrote to the Local Government, Housing and Planning Committee on 21 June 2021 explaining the proposal for a further consultation before the revised legislation was laid.

The Scottish Government consulted on a revised Licensing Order and draft Business and Regulatory Impact Assessment from 25 June 2021 to 13 August 2021.  Draft guidance for hosts and operators, licensing and planning authorities, letting agencies and platforms was published to accompany the consultation.  You can find the consultation paper and all the other documents here.  The Scottish Government received over 1,000 consultation responses.

The Cabinet Secretary for Social Justice, Housing and Local Government wrote to the Committee again on 19 August 2021 to explain the change in laying date for the Licensing Order from September to November 2021; and again on 7 October 2021 outlining pragmatic and significant changes to the licensing scheme.

A consultation report and updated Business and Regulatory Impact Assessment were published on 23 November 2021.

The Licensing Order and Control Area Amendment Regulations were laid in November 2021, approved by the Scottish Parliament on 19 January 2022 and came into force on 1 March 2022. 

Preparation for implementation

The Scottish Government engaged with local authority officials regularly in the lead up to licence schemes going live, principally through a group of local authority officials involved in short-term let licensing, chaired and facilitated by Scotland’s Housing Network.

In addition, VisitScotland (on behalf of the Scottish Government) has worked with its Industry Advisory Group to develop information and messaging on its website. We are also aware that over the summer industry bodies have worked together with other partners to hold in person and virtual roadshows across Scotland to raise awareness of the new licensing requirements.

On 1 April 2022, the Cabinet Secretary wrote to local authorities to confirm that updated guidance had been published, and to ask them to respond to a survey on readiness and preparations for establishing licence schemes in their areas by 1 October 2022.

In July 2022 the Scottish Government established a group of local authority officials to assist with agreeing a final data specification for ongoing regular short-term let licensing data transfers from local authorities to Scottish Government. 

Ahead of licensing schemes opening across all 32 local authorities, the Cabinet Secretary for Social Justice, Housing and Local Government wrote to licensing authorities on 21 September 2022 to remind them of the requirement to have schemes opened by 1 October, and clarify the position on guest houses. 

Implementation

All 32 licensing authorities have operational licensing schemes. The my.gov website has information about how to apply, including a drop down box to select the relevant local authority that connects you to the authority’s website page for short-term let licensing.

The Scottish Government has set up a short-term let campaign site to raise awareness of the new licensing requirements and has run two bursts of digital marketing to promote this in October 2022 and March 2023.

In early 2024 we will provide an update to Parliament on licensing implementation. We are currently engaging with stakeholders to gain their views on how we do this to inform the scope and handling. Once we’ve concluded discussions we’ll write to the Scottish Parliament’s Local Government Housing Planning Committee setting out a decision about the format of next year’s update, as well as the frequency and format of future implementation updates.