A new licensing scheme has come into force in Scotland to regulate short-term lets. The scheme requires hosts of self-catering accommodation to have a licence in place to accept bookings and welcome guests.
If you currently operate short-term lets in Scotland, you are likely to have many questions about the new scheme. We have compiled this list of Frequently Asked Questions to help guide you through the process.
Do I need to apply for a licence?
The licensing scheme applies to the whole of Scotland, so hosts who let out their properties on a short-term basis anywhere in the country may need to apply for a licence. Some residential accommodation is specifically excluded (such as hotels, hostels and caravan sites), as are certain types of tenancy arrangements, but most other hosts must apply for a licence.
For the purposes of the licensing scheme, a short-term let is defined as “the use of residential accommodation provided by a host in the course of business to a guest”, where all of the following criteria are met:
The guest does not use the accommodation as their only or principal home;
The short-term let is entered into for commercial consideration;
The guest is not (a) an immediate family member of the host; (b) sharing the accommodation with the host for education purposes, or (c) an owner or part-owner of the accommodation;
The accommodation is not provided for the principal purpose of facilitating the provision of work or services by the guest to the host (or another member of the host’s household);
The licencing scheme comes into effect in three phases, starting on 1 October 2022.
From 1 October 2022
New hosts: From 1 October 2022, new hosts letting out property for the first time must have had a licence in place before taking bookings and receiving guests.
Existing hosts: Where the property was previously used by guests on a short-term basis, you have until 1 October 2023 to submit your application to the relevant local authority. If you apply for a licence during this period, but the application is refused, you must stop operating within 28 days.
From 1 October 2023
New hosts: As before, if you were not letting out your property prior to 1 October 2022, you must have a licence in place to accept bookings and receive guests.
Existing hosts: To continue taking bookings and receiving guests after 1 October 2023, you must have submitted a licence application to the relevant local authority before 1 October 2023. If an application has not been submitted by this date, you cannot take bookings and receive guests until the licence has been granted (in other words, the licence application will be treated in the same way as for a new host). If a licence application is refused, you must stop operating within 28 days.
1 January 2025
All hosts: By 1 January 2025, all hosts must have a licence in place to take bookings and receive guests.
Applying for a licence
How do I apply for a licence?
Before applying for a licence you must determine which type of licence you require. There are four types of licences:
Licence for home sharing (where you let out part of your home to a guest who occupies the property along with you);
Licence for home letting (where you let out your entire home while you are not occupying it);
Licence for home sharing and home letting (a combination of licences 1 and 2 above); or
Licence for secondary letting (where you have an additional property which you let out to guests).
You must submit an application form to the relevant local authority to obtain a licence. Along with the application form you will be required to provide information about the property, the people involved in letting it out, and details about the property’s safety compliance.
Points to Consider:
Multiple Properties – If you have multiple properties, you will be required to submit an application for each property to the relevant local authority.
Planning Permission – You may also need to think about whether planning permission is required for your property. We will cover planning permission and control areas in the next article in our short-term lets series.
Fees and Procedure – Each local authority has different fees and requirements, so if you have multiple properties it will be essential to ensure you follow the correct procedure and pay the correct fee for each local authority.
Site Notice – At the same time as lodging the application form, you will also be under an obligation to display what is called a Site Notice on or near the property (which gives notice to neighbours that an application has been made). That Site Notice must be on display for 21 days, and there is a period of 28 days within which objections to the application may be lodged.
Will my short-term let licence application be granted?
In considering whether to grant a licence, the local authority will consider a range of factors. However, before considering your application, the local authority will require you to comply with a suite of conditions in relation to your property. These conditions include having planning permission in place where required, meeting a number of regulatory standards, and complying with some administrative procedures.
Licence conditions and planning permission
Do I need planning permission to get a licence for my short-term let?
It is a mandatory licence condition to have planning permission in place where the following three criteria are met:
Your property is located within a “control area”;
Your property is used for secondary letting (i.e. you are not letting out your home); and
Your property is a dwellinghouse.
Even if your property is not in a control area you may still need planning permission if there has been a material change of use to short-term letting in the last 10 years.
What is a control area?
It has always been the case that it is the planning authority who determines whether the change of use of a dwellinghouse is a material change of use (i.e. such a significant change in the character of the use that it requires planning permission) on a case-by-case basis. In that sense, the short-term let rules have not changed the general position.
However, in a short-term let control area, any change of use from residential to short-term letting will always require planning permission (or a certificate of lawfulness that confirms the property has been used for short-term letting for more than 10 years). At present, the whole of the City of Edinburgh has been designated a control area (from 5 September 2022) and Highland Council has announced plans for Badenoch and Strathspeyto be made a control area. Other local authorities may follow suit.
Within these control areas, if you own a second flat or house that has been made into a short-term let, you must have planning permission or a certificate of lawfulness of use in place for your licence to be granted. Each planning application is considered on a case-by-case basis. The Scottish Government has issued planning guidance as to the material planning considerations that will be taken into account by a planning authority when determining whether or not to grant planning permission. For example:
Whether guests have access to communal stairwells and gardens;
The arrival and departure times of guests (particularly if these are at unsociable hours);
The number of guests staying; and
The cumulative impact on public services and the character and amenity of a neighbourhood.
If a licensing authority considers that the use of premises for a short-term let would constitute a breach of planning control then it is entitled to refuse to consider an application for a short-term let licence. It will therefore be necessary for a host to obtain either planning permission or a certificate of lawfulness of use (i.e. a certificate confirming that the premises has been used as a short-term let for in excess of 10 years, and so formal planning permission is not required).
What are the conditions for obtaining a short-term let licence?
In addition to the requirement to have planning permission in place where required, you must meet a series of mandatory conditions before the relevant local authority will grant a licence. These conditions apply to every short-term let in Scotland, regardless of which local authority you are applying to and include the following:
Licence type: As our previous article explained, there are four types of licence available. It is a mandatory condition that you must only operate under the type of licence you have applied for.
Fire, gas, electricity, and water safety: Your property must meet the relevant fire, gas, electricity and water safety standards, and have in place the necessary risk assessments and certificates.
Safety, repair and insurance: In short, you must take all reasonable steps to ensure your property is safe for guests. Your property must be wind- and water-tight and be in a reasonable state of repair. You must also have valid buildings insurance and valid public liability insurance in place for your licence to be granted.
Maximum occupancy: The local authority will specify on your licence the maximum number of guests that are permitted to stay at your property. This number must not be exceeded.
Display of information: You will be required to display certain information to your guests during their stay. In addition, your online listing for your property must include key information such as your licence number.
Do I need to meet any additional conditions to obtain a short-term let licence?
In addition to the mandatory conditions mentioned above, each local authority has imposed their own additional conditions that you must meet if you are granted a licence. It will be important to understand these conditions in advance of making your application. If you have multiple short-term lets, it will be particularly important to understand the additional conditions that each relevant local authority has put in place in respect of each of your properties.
Getting it wrong
What happens if I don’t apply for a short-term let licence?
It is a criminal offence to operate a short-term let without a licence where required. It is essential that for all hosts to have a licence in place where required to avoid potential criminal consequences.
What happens if I breach the conditions of my short-term let licence?
You must comply with the mandatory and additional conditions that your local authority attaches to your licence. You are responsible for ensuring that your property complies with these conditions during the course of your licence.
If you do not meet these conditions before applying for your licence your application may be refused. However, even after your licence is granted, you will need to ensure your property is maintained at the required standard and complete certain annual safety checks. You are responsible for ensuring your property complies with the up to date standards, or taking the property out of service until you have repaired it.
Can the Council inspect my short-term let?
Your local authority may visit your property to follow up on complaints and previous visits or as part of a routine pattern of inspection. Although your local authority must give notice ahead of routine visits, it is entitled to make unannounced inspections at any time to ensure you are adhering to your licencing conditions.
Can the Council force me to make changes to my property?
If upon inspection your property is in breach of your licence conditions, the local authority can serve an enforcement notice on you. These notices will give you a deadline to bring your property up to the required standard or your licence may be varied, suspended or revoked.
Can my short-term let licence be suspended or revoked?
Although this will generally only happen once all other enforcement options have been exhausted, the local authority has the power to suspend or revoke your short-term let licence. These steps may be taken if you have been given time to put things right but have failed to do so or if your guests are at risk of serious harm. Your licence may be suspended while the local authority considers a revocation. If your licence is revoked you will be unable to make a further application in respect of your property for 12 months.
Do I need to tell the local authority of changes to the property?
It is important to be aware that you must continue to update the relevant local authority where your circumstances change. If you make physical alterations to your property, increase your number of guests or rooms, or change your property management company you must notify the relevant local authority as soon as possible. In some cases, you may also be required to seek the local authorities’ consent before making the change. You will commit an offence if you fail to notify the local authority or fail to seek their approval where you require it.
What is a temporary short-term let licence?
It is important to understand the distinction between a temporary licence and a temporary exemption. A temporary licence still requires you to apply for and be granted a form of short-term let licence. A temporary exemption is an application to be exempt from the requirements of the licensing scheme.
Your local authority may offer temporary licences which, if granted, will permit you to take bookings and welcome guests for a restricted period of time of up to six weeks. You will be given a temporary licence number if you are granted a temporary licence.
How long will my temporary short-term let licence last?
If you have not applied for a full licence, your temporary licence can only run for a period of up to 6 weeks. However, if you have applied for a full licence at the same time as your temporary licence, then your temporary licence will continue to be valid until your full licence application is determined by the licensing committee (which could take several months).
Will my temporary short-term let licence be granted?
Local authorities have the ability to grant temporary licences, but are not required to do so. Some local authorities offer temporary licences, whilst others do not.
For a temporary licence to be granted, your short-term let must comply with the mandatory conditions. These conditions provide basic standards that each short-term let must meet. Importantly, it is a mandatory condition to have planning permission in place if you are required to have it.
What is a temporary exemption?
A temporary exemption gives you the ability to take bookings and accept guests in your property without having a licence in place. During special events (for example, festivals, major sporting events, etc.), your local authority may grant you a temporary exemption for a fixed period of time which allows you to operate despite not having a licence.
How long will my temporary exemption last?
Local authorities have the flexibility to grant temporary exemptions for a period of up to 6 weeks. However, you can only be granted a temporary exemption once in any 12 month period.
Do I need to apply for a temporary exemption?
You must apply to the relevant local authority for a temporary exemption. This process will be slightly different to the licence (or temporary licence) application process and should be shorter and have a lower fee.
Although you won’t need to provide as much information in an exemption application, you will still be required to comply with those mandatory conditions the local authority has applied in respect of temporary exemptions. These mandatory conditions include your property having planning permission where required, meeting a number of safety standards, and not exceeding a maximum occupancy level. The local authority can check and enforce any conditions attached to your exemption, including by visiting your premises, so it will be important to understand and meet the conditions.
Failing to get things right with your short-term let licence can have potentially significant consequences – both financial and reputational – to you and your short-term let business. Ensuring compliance with the new rules will be key. The introduction of the licencing scheme presents changes and potential difficulties for your business which you will want to manage appropriately.
Our licensing team, led by Partner and Solicitor Advocate Kevin Clancy, has been advising clients in Edinburgh and throughout Scotland in respect of their applications for short-term lets licences. If you wish to discuss how these new regulations will affect you, please get in touch with our specialist licencing team, who are more than happy to assist.