Short-term lets: Landlords should take a long-term view

Three years after Scottish Ministers introduced a new regime requiring landlords of short-term lets to have a licence, we have seen the first criminal convictions for those operating without one. The cases were both reported to Crown Office by the City of Edinburgh Council, resulting in fines for the landlords. These cases are unlikely to be the last, as the council has revealed that it is actively reviewing twelve similar situations.

Under the new regime, it is a criminal offence to operate a short-term let without the appropriate licence in place. Failure to comply can lead to fines of up to £2,500. Offenders can also be banned from applying for a licence for one year, and from operating a short-term let in the interim – which landlords may consider an even more costly penalty than the criminal fine imposed.

In the first case, reported at the end of October 2025, a neighbour complained that the property was being used as a ‘party pad’ with up to 19 people in attendance at one time. The landlord was fined £600, and ordered to pay the neighbour £500 in compensation.

The second case was reported to the Regulatory Committee earlier in December 2025. A fine was imposed, but the amount has not yet been disclosed.

Other landlords who are operating short-term lets should take note of these cases and the wider context, especially if they do not currently have a licence.

Enforcement activity

With little visible enforcement action in the first three years of the new regime, some operators may have formed a view that local authorities were not devoting resources to identifying landlords operating without the required licence. Clearly, that is not the case – in Edinburgh at least – with investigations being led by the Private Rented Services Enforcement team.

Indeed, several people have already contacted the S+W licensing team after the PRS Enforcement team invited them to interviews under caution as part of those investigations.

Edinburgh Councillor Neil Ross has stated that the recent convictions send “a clear message that operating without a licence is illegal…[they] demonstrate that our enforcement team is effective and that a conviction will result in financial penalties.”

Not only that, but as more enforcement action is taken by Councils and public awareness increases, unhappy neighbours may be more likely to submit complaints so that enforcement action may be taken.

Increased fines?

For some landlords, a ban may prove far more costly than the maximum fine of £2,500. This has not escaped attention. In an earlier draft of the Scottish Government Supplementary Guidance for Licensing Authorities, Letting Agencies and Platforms, it was indicated that the Scottish Government intended to increase the maximum fine for operating without a licence to £50,000 through provision in a suitable Bill in the 2021-26 session of the Scottish Parliament.

That increase is yet to come, but it has been reported that Edinburgh Council intends to write a letter to the Scottish Government highlighting the significant disparity between the maximum fine possible for unlicensed short-term lets on the one hand, and unlicensed HMO or unregistered landlords on the other.

What should a landlord do?

Any landlord who does not currently have a licence, or who has one but is operating in breach of it, would be well advised to resolve the situation as soon as possible. Properly complying with the regulatory requirements will avoid the threat of criminal proceedings (which may bring both financial and reputational damage).

The lawyers in our specialist Licensing team have considerable experience of advising clients throughout Scotland on their applications for short-term lets licences and subsequent regulatory enforcement action. If you would like to discuss how these regulations affect you, they would be more than happy to do so. They’re at licensing@shepwedd.com.

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