What do new licences mean for short-term lets?

New Scottish Government legislation will require all short-term let properties to hold a suitable licence issued by a local authority. What do short-term letting operators need to know?

9 February 2022

On 19 January 2022, the Scottish Government approved legislation that will require local authorities to set up licensing schemes for short-term lets, and require all short-term let properties to hold a suitable licence. 
This legislation aims to address concerns said to surround the unregulated short-term letting market, such as holiday lets and B&Bs, and provide powers for local authorities to balance the needs of local communities with the economic and tourism benefits offered by short-term letting.

What do short-term let operators need to know?

Under the Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2021, local authorities will be required to establish a short-term lets licensing scheme by 1 October 2022.

Existing short-term let hosts and operators will then have six months, until 1 April 2023, to apply for a licence in order to comply with the new regulations. Each local authority will be able to set its own licence fee rate, and we await further details on what fees are set by each local authority.  

Existing short-term let hosts and operators who apply by 1 April 2023 will be allowed to continue to operate their short-term let pending the determination of the licence application by the local authority. Existing hosts who miss the 1 April 2023 deadline, and all new hosts, will only be able to operate a short-term let once the licence application has been granted (unless a temporary licence is also applied for at the same time). In any event, all short-term lets will require a licence by July 2024.

There are three types of short-term letting licence:

  • home letting; 
  • home sharing; and 
  • secondary letting, referring to second homes that are let out for short term stays.

In addition, the Scottish Government has also legislated to allow local authorities to establish short-term let control areas. This means that if a secondary let is located within a “control area” (as determined by the local authority), it will be necessary to first secure planning permission for the use of that property for short-term lets before the short-term let licence application can progress.

Failure to comply with the requirements to hold a licence will be a criminal offence.

Exemptions and conditions for short-term let licences

There will be a possibility for temporary exemptions for specific properties and for specific periods, which cannot be greater than six weeks in any 12 months. Local authorities will need to implement an appropriate policy on this, but it is expected that peak times for tourism, such as local festivals and the Christmas period, may be included as temporary exemptions.  

Licence holders should note that a licence will impose mandatory conditions requiring the owner or operator of the property to meet, among other things, standards relating to fire safety, gas safety, electrical safety, water safety, repairing standards and maximum occupancy.

What do short-term let operators need to do?

Short-term let hosts and operators should prepare for these changes now to ensure they are not left out in the cold once the new schemes come into effect. This includes giving due consideration to the standards set to be imposed by the mandatory conditions of the licensing scheme.

Shepherd and Wedderburn supports clients across the full spectrum of licensing services, and are ready to assist clients in complying with the new regulations once policies are implemented by local authorities.

For further information on this topic, please get in touch with Kevin Clancy, Partner and licensing specialist in our commercial disputes team, Emma Summers, licensing paralegal, or your usual Shepherd and Wedderburn contact.