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Licensing of short-term lets in Scotland

With short term lets in Scotland now subject to a licencing scheme, we highlight the requirements and important considerations for future and current hosts.

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Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022

Published: 04 April 2022
Time to read: 5 mins

New legislation approved by the Scottish Parliament earlier this year means that operators of short term and holiday lets in Scotland will be required to apply to their Local Authority for a licence if they wish to continue beyond July 2024. Parliament has given Local Authorities until 1st October 2022 to establish a licencing scheme in their area and thereafter, any new operator will be required to obtain a licence under the said scheme before they can take bookings. Existing operators will have until 1st April 2023 to apply for their licence. By 1 July 2024, all short term and holiday lets must be licenced. During the staycation boom, many landowners jumped at the chance to diversify in order meet the rising demand for short term and holiday lets. This income stream forms a vital lifeline for many business, especially with the rising raw material and fuel costs. This new legislation means that operators will have to be on their toes if they are to keep doing business.

What is a short term or holiday let? Put simply, it means any building or structure that is being let for residential use in the course of a business. It may be a single room in your home, a whole cottage or something less common like a yurt or glamping pod. Tents are excluded, but only if guests bring their own. If tents or other structures are provided for guest accommodation you most likely will need a licence. A more detailed definition can be found at in the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2022.  It is worth noting here that this new licencing scheme has been introduced to address the concerns surrounding the short term and holiday let business. Accordingly, the new legislation does not affect accommodation that is let out under private residential tenancies or agricultural tenancies, nor hotels or guest houses. A full list of excluded accommodation can be found in Schedule 1 of the Order.

Will I need more than one licence? The new legislation provides that a licence is required for each premises. For example, if you have 3 holiday cottages you will be required to obtain 3 separate licences. However, only one licence will be required if you have multiple accommodation on the same premises. For example, if you have 5 yurts on a camp site only 1 licence will be required. Although no prices have been set, it has been estimated that one application will cost between £214 and £436. If you own multiple short term lets, the cost will soon stack up.

Who applies? An application can be made by the operator or host of a premises that provides short term lets. Accordingly, it does not necessarily have to be made by the owner. However, everyone involved in the day to day management of the accommodation must be named on the application. All named parties will be subject to a fit and proper test by the Local Authority.

What does the licencing authority consider when determining an application? Before considering the detail of the application, the licencing authority will consider the context of an application. For example, the licencing authority will review the type and number of short-term lets in the area. If it is considered that there is an over provision, the application may be refused. The new legislation also includes mandatory grounds which Local Authorities must implement. These mandatory grounds focus on the condition and safety of the property to ensure that guests and visitors have a quality experience.  On top of the mandatory grounds, the legislation gives Local Authorities the discretion to implement further conditions. There is no exhaustive list, it is up to the Local Authority to implement conditions as it sees fit to meet the needs of the community. The legislation also permits the Local Authority to plan ‘control zones’ which means that if your property falls into a control zone planning permission will be required for change of use of an entire property to a short term let. It is hoped that each Local Authority will publish further information on their website before applications become live.

It is worth considering now if this new legislation affects you. Although the picture is still not entirely clear, making sure that your accommodation meets the mandatory grounds is something you can consider today. The consequences of a refused application, or indeed no application, are significant. If refused, you must wait a year before re applying. Coupled with the 9-month decision period afforded to the licencing authorities, it could be 2 years before you can begin taking bookings again. If you are considering running a short term let business without a licence, think again. Operating without a licence will constitute a criminal offence. Clearly, this new legislation is worth stopping and thinking about. It is important to regularly check your Local Authority’s website for updates as you do not want to fall foul of the new licencing scheme. If you do, it may have a dire impact on your revenue stream.

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