The ASSC opposes control areas for East Lothian but wishes to put this stance in context, setting out our responsible and proactive regulatory position. First and foremost, the ASSC is not averse to regulation; but we do challenge policies that are pursued while lacking a firm evidence base which will damage the livelihoods of our members and Scotland’s vital tourism industry. Overall, we want to ensure a balanced and proportionate approach for business, tourism and local communities and get a regulatory framework in place that works for all. We will work constructively with all stakeholders, including East Lothian Council, to achieve this crucial objective.
Moreover, we proactively worked with MSPs and the Scottish Government on the short-term let provisions in the Scottish Government’s Planning (Scotland) Act during the Bill’s passage through the Scottish Parliament which will now enable local councils to introduce Control Areas subject to satisfying certain conditions and achieving Ministerial approval. The introduction of Control Areas, in areas of housing stock pressure with a demonstrable link with short-term lets, is in line with the ASSC’s Long-Term Approach to Short-Term Letting Policy, published back in February 2019. This underlines the fact that the industry is in fact supportive of regulations when they are targeted, proportionate and balanced.
However, we believe that there is no evidential basis to pursue control areas in East Lothian Council at the present time. Any proposal to take this forward must present a firm, reliable and robust evidence base to justify it. If the aim is to control the number of short-term lets due to pressures on housing stock, the ASSC maintains that this has to be properly evidenced using robust data and not rely on anecdote or unreliable ‘scrapings’ of data using third-party websites. In addition, the Council would also have to be clear with its policy intention – if it is about housing, how would they assess the ultimate success of their short-term letting policy and what would be the key performance indicators?
The ASSC have previously argued that there is a lack of data showing an empirical link between short-term lets and housing shortages and that a more holistic approach needs to be taken to the issue. Housing challenges are multifaceted and the growth of short-term lets should not be used as a convenient scapegoat for wider policy failures; namely the failure to build more homes or bring empty homes back into use. Thus far, no evidence has been published in Scotland that demonstrates a concrete link between short-term letting and the Scottish housing supply.
We should be mindful of the unintended consequences of using tourist accommodation to ameliorate housing pressures and increase affordable housing to rent or buy. If self-catering businesses were forced to close due to rejected planning applications under a control area, the Council would need to consider whether such properties could actually be deemed as ‘affordable housing’ which local people could easily obtain. One unintended consequence could be an increase in second homes purchased by those outwith the locality – which offers no material benefit to the area – rather than self-catering which benefits local economies through guest spend and footfall in other businesses like hospitality. There is also no guarantee that an owner will either sell the property or make it available on the long-term rental market; they could let it lie empty or use their property as a second home, something which would only benefit the individual owner while damaging the tourism economy in the process.
In terms of the existing evidence, on the basis of the note provided by the Council to accompany the Engagement Exercise:
This suggests that the introduction of a control area(s) is unnecessary and would wholly disproportionate to any perceived problems associated with short-term lets in East Lothian.
It wouldn’t just be small business owners and local business owners who could be adversely affected by control areas – a regulatory change of this nature would pose significant resourcing implications for East Lothian Council which will need to be properly assessed. The ASSC have engaged East Lothian Council representatives on the separate issue of short-term let licensing who confirmed to us that:
“In particular, we are wrestling with the issue of how the costs of establishing the licensing scheme can be met while we continue to operate in this challenging financial environment. As you have also highlighted, the fee levels for applicants need to reflect the cost of administering the scheme, but, until we have more information regarding this matter and an idea of the number of applications we might expect, we are unable to give any robust estimate of likely fee levels. This is administratively difficult for the Council but potentially much more problematic for owners of short term let properties, who need to make decisions about the future operation and commercial viability of their properties. Whilst we acknowledge that some areas have suffered difficulties as a result of unregulated short term lets, we are particularly anxious to avoid compromising the valued and valuable tourism sector in East Lothian through implementation of a ‘heavy handed’ and, thus, expensive, licensing scheme to no real benefit.”
Having to grapple with a burdensome mandatory licensing scheme is onerous enough without adding to this with planning control areas. Therefore, the ASSC believes the Council must undertake an economic impact assessment if they intend to introduce control areas. Furthermore, at a time when there are severe constraints on local government finance, additional burdens will be placed on planning teams to manage the requirements of any control areas. With the absence of any estimations in the Council’s note, the Financial Memorandum for the Planning (Scotland) Bill estimated that the cost to planning authorities of additional applications resulting from short-term lets would be between £358,207 and £2.7m per year. Given that this was prepared in 2017, the costs may have increased further.
Moreover, research carried out by the Royal Town Planning Institute (RTPI) in connection with the implementation of the Planning (Scotland) Act 2019 estimated the costs of a planning authority designating all or part of its area as a short-term let control area between £640,710 (lower estimate) and £14,756,800 (higher estimate). The RTPI also commented that the “increase in demand for planners comes at a time when there is a diminishing resource base with planning authorities’ budgets decreased in real terms by 40.8% and staff numbers cut by 25.7% since 2009.” Likewise, the Law Society of Scotland warned that local authorities may not be ready from a resourcing perspective: “There are unlikely to be resources in place at present in local authority licensing or planning departments to cover such additional and in certain areas, extensive work.”
Overall, coupled with the mandatory licensing scheme introduced by the Scottish Government, a control area(s) could not come at a more inopportune moment for the self-catering industry which is still trying to recover from the devasting impact of Covid-19 on the tourism sector. The cumulative impact of this would entail a negative impact for operators, potential visitors and the local economy that tourism supports. Indeed, it comes at a time where our tourism industry should be supported by local and national government for a sustainable recovery, especially when so many businesses remain in survival mode.
In conclusion, tourism is a mainstay of the Scottish economy; and self-catering is hugely important to Scottish tourism in terms of jobs, revenue, and world-class experiences offered to guests – including in East Lothian. To be such an essential part of Scotland’s tourism mix is even more remarkable for our sector when most self-caterers operate small or micro businesses. The recovery of Scottish tourism will benefit small businesses, while responsible and sustainable tourism can help communities to recover too. East Lothian Council needs to play its part by helping small businesses like self-catering ensure a sustainable recovery by providing a supportive environment and not progressing with a control area(s).
The ASSC have drawn upon the following sources for its submission and hope that the Council finds them useful for informing their view on the possible introduction of a control area. We would be happy to meet with Council representatives to discuss this in further detail.