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Licensing of short-term lets to commence in 2022

Written by: Edward Danks
18 February 2022

If you operate a short-term letting business or are involved in an Airbnb style operation to let out your property, you have until 1 April 2023 to apply for a license.

New legislation has been passed by the Scottish Government which means that all short-term lets of residential property are now covered by this legislation.

What types of short-term lets are we talking about?

There are, basically, three types of short-term lets. These are:help to buy feb blog

  • Home Sharing – where all or part of your own home is used for short-term lets whilst you are there;
  • Home Letting – where you use all or part of your own home for short-term lets whilst you are absent. For example, this might be when you are on holiday; and
  • Secondary Letting – where you let a residential property where you do not normally live. An example of this is a second home.

If you are involved in any of these types of letting arrangements, you will need to apply for a license to operate your short-term letting business. You also need to make sure you apply for the right type of license.

However, it is important to note that if you are letting out your property as a private residential tenancy to someone as their only or principal home, this is not a short-term let. Also, having a friend over to stay in your house is not a short-term let.

What could constitute a short-term let?

There are certain criteria that apply to constitute a short-term let. You need to consider the following:

Have you made an agreement in the course of business? For instance, you might have set down some terms and conditions in a booking made with a guest. Or, you might have taken a booking over the Internet where the guest agreed to abide by the terms and conditions of the booking. It does not matter whether the guests are staying for business or leisure purposes, the important thing is that it is a business transaction where you receive payment in exchange for the guest’s stay in your property. 

Is there any limit on the time of the short-term let?

It does not matter if the guest is staying for one night or one month. Provided this is not the guest’s principal home, then it is a short-term let.

There is a useful checklist to consider when determining whether the property is a short-term let. You can find this here.

What about charging?

If you provide your property for free, that is not providing a short-term let. However, whilst you might not charge actual cash, the following would not constitute free use of the property:

  • Where guests work for you or provide a service in lieu of payment and that the work or service was not the principal reason for their stay
  • Where the guest provides you with goods of value in lieu of payment
  • Where you suggest a donation as part of the agreement
  • Where they reciprocate – i.e., you swap your house for theirs.

There are also a number of situations or arrangements where the occupancy is not considered a short-term let. Examples of these are:

  • Where your guest is related to you
  • Where your guest is staying to work for you
  • Where your guest is staying for educational reasons
  • Where the property is “institutional” accommodation or is otherwise regulated.

You can read about these types of exemptions (and more) on the Scottish Government’s website by clicking here.

When do I have to apply for a license and to whom?

Local authorities have been allocated the task of introducing a short-term licensing scheme. They must have this operative by 1 October 2022. Those who, at that time, provide short-term lets have until 1 April 2023 to apply for a license.

Local authorities then have up to 12 months to decide whether to grant or refuse a license. This means all existing short-term let properties should be licensed by 1 April 2024. If you run a short-term letting business and make an application before 1 April 2023, you can continue to run your business whilst the local authority is considering your application. It is an offence to offer a short-term let after 1 April 2023 if you do not have a license. You should note that you will need a license for each premises from which you conduct a short-term let.

It is anticipated that the likely licensing costs will be between £214 and £436. However, different local authorities can charge different fees and there are a number of factors that might impact on the level of the fee. You can read more about the application process and how fees are assessed by clicking here.

What happens if the license application is refused?

The regulations state that the licensing authority must grant your application unless there are grounds to refuse it. Grounds might be:

  • Someone named on the application is disqualified from having a short-term lets licence
  • The applicant is not a “fit and proper person”
  • The premises are not suitable or convenient for short-term letting
  • The nature and extent of the proposed activity is unacceptable
  • The nature of the persons likely to be in the premises or that those occupying the property are likely to cause an undue public nuisance

If a licence application is refused, you have 28 days from the date of the licensing authority’s decision to make a Summary Application to the Sheriff Court. Also, if your application has been refused, you cannot make another application within one year of the refusal except where there has been a material change in your circumstances.

Are there any other permissions I might need?

In certain areas you will need to apply for planning permission to operate a short-term letting business. Local Authorities are able to specify areas as “short-term let control areas”. These are areas where there are a very large number of holiday lets. That means there will be stricter controls in these areas. The purpose of this is to protect the local residents from the impact of short-term lets.

If you need to carry out any alterations to your property or change the use, you should check if planning permission is required.

Where can I find out more?

The Scottish Government has provided a comprehensive guide to short-term lets and you can find it by clicking here.

Written by:

Edward Danks

Partner
After graduating from the University of Dundee, Edward joined the firm in 1996. He lives in North Berwick with his wife and family. Outside office hours, Edward is likely to be found on one of the many local golf courses. He works hard at maintaining his handicap of three. Edward is also the Head Coach for the under 9 and under 11 teams with North Berwick Girls Football Club and in his spare time enjoys five-a-side football and tennis.

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