(Update following the Scottish Government announcement on 8 October 2021)
As discussed in our previous article, the Scottish Government is to provide powers for local authorities to address concerns surrounding the unregulated short-term let market. The Scottish Government proposes to do so by way of the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2021. It should be noted that this Order is still in draft form, and is subject to further ongoing consultation. In summary, if the draft Order becomes law then local authorities will have until October 2022 to set up a licensing scheme, existing operators will need to submit an application by 1 April 2023 to continue operating, and all short-term lets will need to be licensed by April 2024.
The purpose of the August 2021 consultation was to ensure " local authorities have appropriate regulatory powers to balance the needs and concerns of their communities with wider economic and tourism benefits". In the meantime, the Cabinet Secretary for Social Justice, Shona Robison has outlined “pragmatic and significant” changes to the planned licensing scheme. In this article, we will discuss the proposed changes.
Overprovision powers
Overprovision (meaning that there are too many properties of a particular type within a designated area) is a legal basis upon which licensing applications may be refused. Similar powers were intended to form part of the proposed licensing scheme. However, with powers already available under the ‘Short-term Let Control Areas Regulations’ (which is a planning regulation) the overprovision powers will not be included. Local authorities can use existing powers to designate ‘control areas’, “should high concentrations of secondary letting” occur within neighbourhoods.
Publication of licensing application
The original intention was that the local authority would be responsible for publication of a licensing application, but this has since been considered disproportionate and out of step with other licensing regimes. The obligation to provide public notification will now fall on the applicant, who will be required to put up a site notice, though the specific detail and guidance are still to be clarified.
Licensing fees
Fee costs ought to reflect the fact that publicity requirements will no longer be the local authority's responsibility. Details of the precise fee amounts are not yet available, but should reflect only the costs incurred by local authorities handling the application process. The current suggestion is that an average fee will be provided to local authorities, with adjustments expected according to property size and whether the licence is requested on a whole or room-only basis.
Reducing public liability insurance requirements
At an earlier stage of the drafting of the proposed licensing Order, it had been proposed that public liability insurance should provide cover of not less than £5 million. The Scottish Government has reassessed this issue. This requirement will now be removed from the Licensing Order. Operators will instead require "adequate insurance" (guidance will recommend cover of £2 million).
Inspections
Inspections of properties may take place and consideration will be given to the complaints history associated with the host, operator or premises, repeated poor reputational evidence garnered from guest reviews, and where police and agency reports indicate a need. It is recognised, however, that inspections are a significant cost to licensing authorities. The Scottish Government intends to focus on inspections being conducted a "risk based, intelligence led approach". Further guidance will be published in due course.
B&Bs and single-room lets
The need for for B&B and single-room lets to hold a licence will remain, however concessions have been made. Fire safety and electrical safety requirements will only apply to rooms that guests use, and temporary exemptions will be made available to first time entrants to the short-term let market (if granted by the licensing authority).
Removing natural names from the public register
Concerns were raised about hosts having their names listed on a public register, with some stating that publication of a host's name might be considered off-putting. It is now intended that only company names will be listed in a public register; natural names will not be included. It is worth bearing in mind that within the application, there will be a requirement to provide:
- address of the licence holder held within the previous five years;
- e-mail address;
- telephone number;
- consent from any other owners;
- number of bedrooms; and
- details of any other short-term let licence granted to the applicant.
The latest changes are a move in the right direction to alleviate concerns of key stakeholders. However, Holyrood's Local Government, Housing and Planning Committee’s online consultation remains open until 29 October 2021.
The current intention is for the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2021 to be placed before parliament later this year. While this article summarises the Cabinet Secretary for Social Justice's recent proposed changes, all existing operators will want to familiarise themselves now with the potential impact of the Licensing Order, such as timescales, likely mandatory conditions, the regulatory impact of short-term letting licences, and whether their premises are in a control area. Our team can help in answering these or related queries.
For further information on this topic, please get in touch with Kevin Clancy, Partner and licensing specialist in our commercial disputes team, or your usual Shepherd and Wedderburn contact.