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Review of Implementation and Impact of Short-Term Let Legislation

ASSC Chair, Adrienne Carmichael, has submitted a briefing to the Scottish Government following a review of implementation of short-term let regulations, with a specific focus on the Highlands.

According to Richard Heaton, a previous First Parliamentary Counsel and Permanent Secretary of the Cabinet Office, in launching the Good Law Initiative said “good law is necessary, effective, clear, coherent and accessible. It is about the content of law, its architecture, its language and its accessibility – and about the links between those things. Excessive complexity hinders economic activity, creating burdens for individuals, businesses and communities. It obstructs good government. It undermines the rule of law.”

There is already evidence that clearly demonstrates that the Scottish Short-term Let Legislation is not necessary, will not be effective, is over complex, incoherent and is challenging in terms of compliance and accessibility. It is already acknowledged, in the Tourist industry in Scotland, that excessive regulatory complexity is hindering economic activity and has created significant burdens for individuals and businesses. All of that with a total absence of any evidence to show that the legislation will achieve its purported aims.

The Scottish Government’s postponement of the Licensing application date to 1st October 2023 has been accompanied by a delay to the implementation review promised for the Summer of 2023. Tourism and the provision of small accommodation play a major and undisputed role in the local economies of many areas of Scotland and particularly the Highlands. Delays in any monitoring, evaluation and review of the impact of the legislation on small businesses exacerbates the damage already being done and highlights the complete inadequacy of the Business Regulatory Impact Assessment undertaken as part of the passing of the legislation.

Examination of the Highland Council Licensing Register, together with comparison of information provided in their response to an FOI submitted by the Association of Scotland’s Self-Caterers, produces warning signs that strongly indicate that Short-term Let Legislation is already having disastrous consequences for the sector, particularly in terms of costs, uncertainty, administrative burden and future investment. Most critical, however, are the implications for the enforceability, or otherwise, of the licensing and planning regulations and the impact of that on individuals, businesses and community cohesion.

Taken together with a potentially disastrous conflation of legislation to impose Planning Control Areas this is a potential black hole in terms of the inter-connected impact on self-catering operators.

A number of important facts emerge from consideration of the currently available data.

THC Freedom of Information Return

  • Highland Council (THC) announced last year that they estimated 10,000 STLs in their area. They have used 8000 as the divisor for calculation of their fees. All other things being equal they have already inflated “cost recovery” by 20%.
  • THC have or are going to recruit 21.3 FTE equivalent staff plus an apportionment of senior officer’s time. The annual salary bill for this will be approximately £900,000 including on costs, IT, inspection costs, etc. It is highly likely that staffing will be reduced in years 2 and 3 once the initial “rush” is over and new licencees trickle in at a lower rate. Provision will need to be made for licence renewals but this is likely to be achievable through redeployment in 2026.
  • Taking the average fees at £400 for 3 years and 8000 licence applications the fee income amounts to £3.2million or £1,067,000 hypothecated per annum.
  • It is entirely reasonable to presume that THC are going to make a considerable excess of income over expenditure from STL licensing IF they achieve their 8000 applications target.
  • Regrettably, there is another hypothesis that can be drawn from these figures which relates to the possible intent to dramatically reduce the numbers of self-catering and bed and breakfast businesses in Highland region.

THC Licence Register

  • As of 29th May there are 18 weeks to go to before the new application submission date for existing operators of 1st October. 34 weeks have passed since licence applications systems should, and did in Highland Council’s case, opened
  • Licence applications stand at 1701. This represents 21.3% of the 8000 Highland Council used to calculate fee levels and 17% of Highland Council’s 10,000 estimate of the number of STLs in the area in 2022.
  • 1431 of the applications are for secondary letting. This is under 30% of those self- catering properties listed on Highland Council’s Non-Domestic Rates valuation roll and assumes all secondary letting applicants do not pay Council Tax.
  • 171 applications are for home sharing with a further 99 for home letting and sharing. On various estimates this represents between 3 and 8% of these categories of short-term let operating in the region. More challenging, to the SG’s case that the licensing scheme will not deter responsible operators from applying, is that it suggests that very few B&Bs have so far applied.
  • 838 licences have been granted as of 26th May 2023. 721 of these are for secondary lets with a further 117 for home sharing/letting. This is 10.5% of the 8000 Highland Council maintains it used for calculation of the cost recovery licence fee; or 8.4% of the 2022 estimate, with 18 weeks to go to the final submission date.
  • 56 applications have been withdrawn. Whilst there is no way of knowing the reasons for the withdrawals there is at least one case where a licence was revoked following a neighbour objection (although this has now been returned); and there is considerable uncertainty surrounding the approach taken to planning requirements with respect to licence applications. Further, it is not known whether those that withdraw their application have lost the fees paid at submission or whether the local authority will refund these payments.

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