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Over Provision: Opinion of Counsel

On 7th October 2021, the Cabinet Secretary for Housing wrote to the Scottish Government’s Local Government, Housing and Planning Committee,setting out changes to their licensing legislation. The changes included removing over provision powers. She added: “Our licensing scheme proposals deliver national consistency on safety standards, and autonomy for local authorities to add further conditions in response to local needs and concerns”.

While the ASSC and other stakeholders were pleased that over provision was removed, we have concerns relating to what are referred to as ‘additional conditions’, and whether they could result in an over provision policy in all but name. There is no certainty what these additional conditions will be, or how a local authority may be able to introduce them.

With these concerns in mind, the ASSC has sought Opinion of Counsel from Scott Blair, Advocate, Terra Firma Chambers. The issue is whether an over provision test can be derived from the 1982 Act. In short, it can. 

The following points relate to the issue of over provision being available as a ground of refusal in terms of paragraph 5(d)(3) of schedule 1 of the 1982 Act, and the legal opinion can be summarised below:

  • Scott notes the existing planning consideration takes into account the needs of an area and that includes affordable housing.  The current consideration for planning is in the SDD circular, 3/2013 at Annex A of that. This annex provides a discussion of Material considerations and planning decision making and the definition within that in relation to the new submit area is “affordable housing”. The planning system therefore recognises housing and related needs and the planning consideration process specifically provides for that.
  • We require clarification as to why there is a further need for licensing to deal with what is a matter already wholly dealt with by current planning policies. Particularly when the power for Council planning departments to do so is extended by the introduction of planning control zones in terms of the, already approved, planning SSI. We are being told the issue for licensing is a matter of public safety therefore why leave in the option of refusal based on over provision?
  • The two SSIs, planning and licensing, result in the two separate systems being linked, planning being a pre-exquisite for licensing, see below.  The separation then comes in the question of over provision and the consideration of numbers of short term let premises which is different from the assessment of need which the planning authority has to consider in relation to Annex A. This means planning and licensing can take a different view. Scott does not conclude matters but the conclusion here for the ASSC (see Scott’s Opinion at page 13) has to be that given the use of the existing planning restrictions and the introduction of control areas, it is not necessary for the licensing system to consider over provision because the issues are so closely linked that the role of the licensing committee in over provision would be incredibly limited and arguably unnecessary. Over provision should cure a mischief. The ASSC submission here is that mischief is already cured by virtue of the planning control zones.
  • While over provision has been removed, general licensing in terms of the Civic Government (Scotland) Act 1982 (as opposed to liquor licensing) has always been able to consider a much wider range of matters. Liquor licensing was assisted by the decision in the case of Brightcrew Limited v City of Glasgow Licensing Board, 2011 which determined that licensing boards should only consider matters directly relating to licensing and not other matters. This case related to an adult entertainment venue where the licensing board were trying to put in place specific requirements for there to be certain levels of light, heat, space of changing and similar in relation to the premises staff areas. The court indicated this was a step too far. It is also relevant to planning considerations such as where a restaurant has applied for a licence and the Councillors in the Licensing Board want to consider whether or not there is sufficient parking spaces – this is a planning matter not a licensing matter so cannot be considered by the licensing board.
  • General licensing regulated by the 1982 Act has schedule 1 which deals with general processing and administration of licence applications and licensing in general. The SSI specifically applies that schedule the provisions to be introduced to the SSI, as one would expect. At Schedule 1, paragraph 5(3)(d) there is a very wide provision for the licensing committee members to consider almost anything – “a licensing authority shall refuse an application to grant or renew a licence if, in their opinion – (d) there is other good reason for refusing the application; and otherwise shall grant the application”.
  • Scott considers whether, similar to taxi licensing within the 1982 Act, applications could be refused on the basis of over provision even though there is no specific over provision in the legislation. The over provision aspect of taxi licensing is provided for specifically at section 10 of the Act. There is no such specific provisions here therefore could it apply? The answer is yes, which I agree with. If the test can apply (being intra vires as oppose to ultra vires) the second test is the Wednesbury test, which comes down to reasonableness. Scott, at page 15 of his Opinion, considers whether the inclusion of this test would be irrational or unreasonable in terms of Wednesbury. He also narrates case law, Kilmarnock and Loudin DC v Noble Organisation, 1993 which specifically allowed over provision to be an additional matter referred to in paragraph 5(3)(d).
  • This read along with the case of Caledonian Nightclub v City of Glasgow District Licensing Board, 1996 makes it clear the paragraph 5(3)(d) provision is wide enough to allow licensing authorities to include over provision and that is reasonable to do so, that is, it is reasonable to consider over provision, but the question of refusing the application based on over provision comes down to the merits of each individual application.   These cases do not give any guidance on how over provision should be approached there is therefore a significant risk that this could be reincorporated by default given the blanket inclusion of paragraph 5(3)(d) and the previous removal of the specific ability to consider over provision is less helpful if the Scottish Government simply realised they can do so by using 5(3)(d).
  • There is then the question of suitability.  If the planning authority grants planning permission on the basis the premises are not suitable, the licensing authority must consider what makes the premises unsuitable.  They can still refuse on the basis premises are unsuitable but have to have a reason.  If that is default in safety, eg a lack of proper certification, that is one thing.  There may be an argument to be made that if planning have considered the property in question and granted planning consent, the scope for licensing to now look at over provision is narrowed.  Suitability is not the same as over provision, and no one is trying to claim it is, but where planning have considered the saturation in an area and allowed the grant of planning for a short term let property, that restricts the scope of licensing to refuse.  On that basis would it not be better to be clear that in terms of Short-term let licences, paragraph 5(3)(d) will not extend to over provision.
  • The proposed SSI on short-term let licensing at paragraph 13 obliges an applicant/operator to have made an application for planning permission or already have planning permission in place. This will significantly increase costs. Many operators do not already have formal planning permission in place as they operate on such a small basis. Those who have mixed use properties and let out part of that property could find the cost of this prohibitive.
  • Stopping a short-term let being used will result in a number of outcomes mainly though that premises being removed from the market completely and being used for family and friendly only, therefore resulting in a second home; the premises being sold; and the premises being used as a long term let in the form of an HMO. We must go back to the definition in each occasion – “affordable housing”. A vast majority of the short-term let properties will be in an area where there is not a pressing material need for affordable housing or where they would not fall within that category in any event – any six bedroom detached property with its own grounds is unlikely to fall within the definition of affordable housing.
  • If the Scottish Government insist on going down this route they must be able to justify it therefore they must be able to produce evidence that ceasing short-term lets in such areas would result in affordable housing being available. Looking at the surveys carried out by the trade organisations a number of operators have already confirmed they would simply remove the property from the letting market altogether and it would become a second home used by family and friends only for no payment or payment in kind and therefore largely empty throughout the year, still not assisting the requirement for affordable housing.

Read the full legal opinion: Opinion of Counsel

With thanks to Joanna Millar, Legal Director at Gilson Gray LLP for this summary.


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