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Introduction of Licensing Scheme for Short-Term Lets

Introduction of Licensing Scheme for Short-Term Lets

Whilst the use of short-term lets can have a positive impact on Scotland’s tourist industry, the rapid rise has negatively impacted local communities and neighbourhoods, with a reported increase in noise, antisocial behaviour and the supply of housing in certain areas.  In response to concerns raised by communities, legislation was developed and approved last week in Parliament which introduces a licensing scheme on short-term lets to ensure the premises let are safe and hosts are suitable. 

The legislation requires local authorities to implement a licensing scheme no later than 1 October 2022.  Those currently operating short-term lets will have until 1 April 2023 to apply for a licence with all short-term lets requiring to be fully licensed by 1 April 2024.  The legislation provides flexibility to local authorities on how they intend to implement the licensing scheme based on local needs and concerns.   

When is a property a “short-term “let?

Therefore, if you are providing a short-term let, you will sooner or later require a licence for the property you let out.  You may, firstly, need to assess whether the property you let is a short-term let.  Broadly, the legislation includes all uses of residential guest accommodation unless they are specifically excluded.  A guest cannot be using the property as their only or principal home and there must be a “commercial consideration” exchanged for the guest to stay there.  There will also be exclusions for:-

  • immediate family members of the host,
  • shared accommodation where the principal purpose is for the guest to advance their education which has been provided by their educational establishment,
  • accommodation provided to a guest to provide work or services for you (i.e. providing personal care), and
  • a guest who is an owner of the accommodation. 

There are certain tenancies excluded too, such as a Private Residential Tenancies (within the meaning of the Private Housing (Tenancies)(Scotland) Act 2016), and certain other accommodation is excluded, such as student accommodation and residential schools.       

Mandatory conditions

Once you’ve established that you operate a short-term let, you should give thought to whether you meet all the mandatory conditions that apply.  Broadly, the application process involves a ‘fit and proper person’ test as well as compliance with safety standards (for example, fire safety) and licensing conditions (for example, maximum occupancy).  You should keep evidence of compliance.  The scheme isn’t intended to be overly onerous and the mandatory conditions mirror what is already best practice.  If you cannot show compliance with the mandatory conditions however, your application will be refused.   

There may also be additional conditions which apply for each respective local authority.  For example, planning policies or policies relating to overprovision.  The Scottish Government has committed to working with local authorities to review levels of short-term let activity in hotspot areas in the summer of 2023 which will assess whether any further measures are required in certain areas, such as the requirement of planning permission.    

Only time will tell as to how each respective local authority will implement their licensing scheme.  However, it is important to start to think about whether your accommodation is considered to be a short-term let, and if so, whether your property meets all of the mandatory conditions.  

About the author

Gillian Buchanan
Gillian Buchanan

Gillian Buchanan

Partner

Commercial Litigation, Debt Recovery, Dispute Resolution & Claims, Licensing, Professional Negligence

For more information, contact Gillian Buchanan on +44 1382 346213.