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I am pleased to announce today the Scottish Government’s proposals for the regulation of short-term lets in Scotland to fulfil our programme for government commitment.
We want local authorities to be empowered to balance the needs and concerns of their communities with wider economic and tourism interests to ensure a safe, quality experience for visitors while protecting the interests of local communities. I have always been clear that we must develop a solution that is informed by the evidence and which is right for Scottish circumstances. We committed to taking a proportionate approach so that we focus our efforts on addressing real problems.
There has been a dramatic rise in the number of short-term lets in Scotland in the past few years. A substantial part of that growth is in whole-property rentals. That has caused concern in some areas of Scotland about the impact on local communities and the availability of housing for permanent residents. However, for many people in Scotland, visitors and businesses, short-term lets offer a convenient, rewarding and authentic experience. We are delighted to welcome visitors from across the world and to show them the very best of Scotland.
Short-term lets are an important source of flexible and responsive accommodation for tourists and workers, particularly during the peak holiday season and for large-scale events. They have helped to support the development and growth of the tourism industry in Scotland, and they bring a variety of economic benefits to hosts, owners and local businesses. However, they also raise issues for local communities that are understandable and legitimate.
In April last year, the First Minister launched our consultation. The consultation set out our understanding of the benefits of and issues around short-term lets, the principles that would help to guide our approach, and some proposed approaches to regulation. We have held consultation events throughout Scotland with residents, guests, hosts, platforms, businesses and local authorities. I heard first hand about the benefits of and the many issues around short-term letting, and we received more than 1,000 consultation responses.
We also commissioned research to explore the impact of short-term lets on communities and neighbourhoods in five very different areas across our country. Broadly speaking, the same themes and issues were highlighted by people at consultation events, those who responded to the consultation, and the independent research. The evidence that we gathered formed the basis for what I am announcing today.
In parallel with the consultation, the new Planning (Scotland) Bill was being considered by Parliament. The Planning (Scotland) Act 2019 gives local authorities new powers in respect of short-term lets. I recognise the need to act now in order to allow local authorities and communities that face the most severe pressures to manage those more effectively. I am therefore pleased to announce three measures today.
First, I intend to establish a licensing scheme for short-term lets using powers under the Civic Government (Scotland) Act 1982. Secondly, I am prioritising work to give local authorities the power to introduce short-term let control areas under powers in the Planning (Scotland) Act 2019. Finally, we will review the tax treatment of short-term lets to ensure that they make an appropriate contribution to the communities that they operate in.
I will say a few words about each of those proposals.
In September 2018, I received a cross-party letter from housing spokespeople that asked me to establish a licensing scheme and suggested how that might be done. The views and evidence from our consultation and research show broad consensus for some form of regulation.
Everybody wants visitors, hosts, neighbours and local residents to be safe. The consultation highlighted concerns about limited awareness of and compliance with existing safety requirements—for example, around fire safety.
Furthermore, as local authorities do not know where short-term lets are happening, they are unable to monitor compliance. A licensing scheme will facilitate local authorities by allowing them to know and understand what is happening in their area, improve safety and handle complaints effectively.
We want every local authority to ensure that every type of short-term let, whether it involves a whole property or sharing a room in a home, complies with safety rules in their area. That basic safety component of the licensing scheme will be mandatory across Scotland.
Separately, local authorities will have the discretion to put in place further conditions to help to tackle littering or the overcrowding of properties, for example. Local authorities will be able to charge a fee from providers to cover the costs of administering the licensing scheme in their area.
To supplement the licensing regime, under powers in the 2019 act, we will introduce short-term let control areas. The licensing scheme will help to ensure that short-term lets are safe and do not disrupt neighbours and residents. In some areas, there are real concerns about the numbers of short-term lets and whether short-term letting is appropriate at all. Very high concentrations of whole-property lets can affect the availability of residential housing and the character of a neighbourhood. Some types of building are, of course, not well suited to such intensive use.
Our research showed that short-term lets are highly concentrated, with just over half of all Airbnb listings in Scotland located in only 24 of our 354 council wards. Evidence shows indications of a shift by some landlords from the private rented sector into short-term letting. That shift is taking place at the same time as the Government is taking action to increase supply across all tenures. That action includes our record investment of more than £3.3 billion to deliver 50,000 affordable homes.
Local authorities must be empowered to make sure that homes are used to best effect in their areas. They will be able to designate control areas where change of use of whole properties for short-term lets will be subject to planning permission. To be clear, home sharing—which involves someone renting a room in their own home or allowing others to stay in their own home while they are on holiday—does not take homes away from residents or cause the same issues that are caused by whole-property short-term lets, so home sharing will not be affected by control areas.
We want to ensure that short-term lets make an appropriate contribution to local communities and support local services. We will therefore carefully and urgently consider the tax treatment of short-term lets. We want to ensure that any approach that we take to short-term lets complements the transient visitor levy. Later on in this parliamentary session, we will introduce legislation that gives councils a discretionary power to charge the levy.
I believe that those measures will allow us to make progress in this parliamentary session to address a pressing issue for some of our communities, but they will not unduly curtail the many benefits of short-term lets to hosts, visitors and the Scottish economy. We will monitor and evaluate the impact of the changes at every stage to ensure that they are fully effective in meeting our aims and avoiding unintended consequences. I am willing to come back in the next parliamentary session with primary legislation or other interventions if we continue to see issues.
We now need to develop the detail of the scheme. I look forward to working with parliamentary colleagues and stakeholders on getting that right for communities and businesses across Scotland. We will be consulting widely, with a view to laying statutory instruments in good time for them to come into force in spring 2021.
I thank colleagues across the chamber and stakeholders who contributed to the development of the proposals, which will, if they are approved by Parliament, give local authorities across Scotland new powers to control short-term lets appropriately. I commend the proposals, which take a robust but proportionate and fair approach to the regulation of short-term lets.
We have about 20 minutes for questions. I ask those members who have a question to press their request-to-speak buttons now. I will try to get through every member, so let them be nice, short questions—except from Graham Simpson and Sarah Boyack, who will get a little longer.
Indeed, Deputy Presiding Officer, and you know that I am a master of brevity.
I thank the minister for advance sight of his statement. We have been clear that there needs to be regulation of the short-term lets sector. Even those in the sector itself agree with that. The explosion of short-term holiday lets—I use them myself, at home and abroad—can be positive, but it can also have negative effects, as we have seen too often in this city.
The announcement today is welcomed by us, but, as always, the devil is in the detail. I therefore want to ask the minister about the licensing scheme. I know that details are light at the moment and I look forward to working with him to develop those. He says that the scheme will be nationwide, but will it be operated by councils? Will they set the fees? Will the scheme be cost neutral for councils? Irrespective of whether there is planning permission, will councils be able to refuse licences due to overprovision, as with alcohol licences? Will there be an appeal process, and, if so, who will operate that?
That was a number of questions. One of the reasons that I have not gone into the minutiae of a licensing scheme is that I truly want to get all of the information and the viewpoints of local authorities as we establish the licensing scheme.
As I said in my statement, the safety aspect will be the only mandatory part of the licensing scheme. I am sure that members understand that we must do all that we can to ensure that every short-term let, whether in a shared or a whole property, is safe for the folks who use it. We will allow individual local authorities to add other elements into that licensing scheme. Some may want to address the difficulties in certain places concerning littering and antisocial behaviour. Many may want to build that issue into the licensing terms.
Mr Simpson mentioned Edinburgh, which is somewhat different from other places. As I said, 34 of Scotland’s 324 council wards account for over 50 per cent of short-term lets, and Edinburgh has 31 per cent of those short-term lets. A combination of the licensing and the planning proposals that we will introduce will give Edinburgh the ability to better manage and control short-term lets.
I am willing to have discussions with councils on the appeal process that Mr Simpson mentioned and how we deal with that.
I would expect councils to be able to set fees, which should be cost neutral in that they should cover the costs of running the administration not only of the licensing scheme but of ensuring compliance with it. I would expect councils to have the ability to set those fees, to allow them to ensure compliance without suffering loss of money.
I agree with the minister that we urgently need action. Platforms such as Airbnb enable owners to make use of their properties and visitors and tourists to have additional options, but the lack of regulation can lead to antisocial and disruptive behaviour and the loss of much-needed homes. As the minister said, Edinburgh has a big issue that has spiralled out of control, with more than 13,000 Airbnb-registered listings. Rents have increased for tenants in the private rented sector and homes have been lost, particularly in the city centre. We urgently need local councils to have the power to regulate locally to address the challenges across the country that the minister has mentioned.
In welcoming the new licensing powers, I raise concerns about the proposed control areas. They sound very much like rent pressure zones, which have failed. Can the minister clarify that local authorities will have the power to control the scale and density of short-term lets and, in particular, to cap the number in their areas?
The issue of fair taxation has been mentioned, but there are no details. I agree that we need to think through the implications of a tourism levy, but will owners who rent out multiple properties, for example, be required to pay tax, and will that tax go to the relevant local authority?
Finally, it would be good to get clarity on the definition of a short-term let, given that there will be different licensing controls and we will need appropriate planning controls as well.
In Sarah Boyack’s interview with the
Edinburgh Evening News a while back, she said that, as a capital city, Edinburgh has a tourism industry and the issue is not about choosing between short-term letting, tourism and ensuring that we have the right housing for people but about getting the right balance between them. That is what this approach will do.
Sarah Boyack asked about local authorities’ control. They will have control over setting the areas, because they are the ones that are in the know about what is going on in their places.
Beyond that, Sarah Boyack asked about taxation. I will not go on at length about that aspect, because, as I have said, we will carry out a comprehensive review urgently to get this absolutely right and to make sure that what we put in place marries with other things that are proposed.
With regard to her question about where any taxation would go, I made it clear in my statement that any moneys raised in this way would go to local authorities, to provide services in local communities that may be affected by short-term lets.
I welcome the statement—particularly the commitment to have licensing enforced by spring 2021. With regard to planning, all proposals to change the use of residential properties to short-term lets are a potential change of use and there must therefore be an application for planning consent. In my view, no licence should be granted where no planning permission is in place.
On 3 January, Historic Environment Scotland advertised for an agency to manage three short-term lets in Holyrood park. The properties are owned by the Scottish ministers but no application for planning consent has been made. Setting aside whether those properties would be better used for affordable accommodation, can the minister confirm that he will not be joining the thousands of unlawful short-term lets across Edinburgh but will be applying for planning consent?
Parliament will be well aware that the opinions of Mr Wightman and the Government on planning permission in that area are somewhat different. Although we have tried to explain the situation to Mr Wightman over the piece, he sticks to his viewpoint and he is entitled to do that. The three properties in Holyrood park that he spoke about are not residential homes and have been lying empty for years. Their letting will therefore not reduce the availability of existing residential buildings. They should be used to their best effect, and we welcome measures to bring underutilised buildings back into use. It is greatly preferable for them to be used as holiday accommodation for the benefit of tourists and visitors as opposed to lying empty, derelict and unused.
Of course, those properties could be used for local homes for local people, but let us put that to one side.
Through the control areas, will there be an opportunity for retrospective action to cut the existing number of short-term lets? The current numbers are too high in areas such as the east neuk, Elie and Crail, in my constituency, and preserving those high numbers would not be a satisfactory outcome of the process. Will there be retrospective action as part of having the control areas?
That is part of the discussions that we will have with local authorities around how we set up the regime. Obviously, we want to tackle not only future difficulties but existing difficulties, and I imagine that we will have very proactive discussions with local authorities about dealing with some of the existing difficulties in certain parts of the country.
In his statement, the minister talked about the tax treatment of short-term lets, to ensure that they
“make an appropriate contribution to local communities and support local services.”
However, he did not specify what form the tax will take. Will the minister clarify the Government’s intentions and outline the proposals, which would see legislation give councils the ability to charge a levy, and will he confirm that the tax is separate from the transient visitor levy?
I confirm that the tax will be separate from the transient visitor levy; I thought that I had explained that in my statement. I am not going to go into the specifics of what the tax will be, because, as I said, we need to look very carefully at what is going on with non-domestic rates. We heard from the finance secretary about the difficulty with some of the amendments to the Non-Domestic Rates (Scotland) Bill, which would have unintended consequences. We will look very carefully at what form the taxation will take, but it will be separate from the transient visitor levy and the money will be retained by the local authorities.
Our research shows that collaborative models of short-term lets—that is, the sharing and swapping of properties—do not cause the same level of concern as secondary lettings in respect of which the host is not present, and Ms White is right to point that out.
However, the crucial exception relates to safety standards. The Government is clear that effective processes need to be in place for monitoring compliance with safety standards in all short-term let accommodation, regardless of whether the host is present. That is why we are introducing the mandatory licensing scheme for all short-term lets in Scotland when it comes to the safety aspect.
As I mentioned, local authorities will have the discretion to impose additional conditions in response to local circumstances.
One criticism of the house in multiple occupation regime is that, once granted, the licence is seldom withdrawn. Will the minister confirm that the control areas will give local authorities the ability to withdraw licences once granted? Ultimately, if we are to control the number and density, the licences must be capable of being withdrawn.
By mentioning control areas, I think that Mr Johnson is mixing up the licensing and the planning aspects. On the licensing aspect, having been a local councillor for many years, I think that councils should have the ability to withdraw licences if folk are not doing what they were asked to do in order to get the licence in the first place. My expectation is that if folk are not complying with the conditions of the licence and not fulfilling the obligations that they signed up to, local authorities will withdraw the licence from them.
Does the minister agree that it is absolutely necessary to balance protecting communities from any issues that short-term lets can cause with the economic benefits that they can provide, to avoid disadvantaging areas in which short-term lets are not as great a concern and in which the economic benefits may outweigh any other issues?
Yes, I agree with Mr McMillan. It is important that local authorities have the choice of whether or not to introduce short-term let control areas for all or part of their council areas. Similarly, local authorities will be given discretion to impose those additional conditions beyond the mandatory safety requirements, as part of the licensing schemes. I am sure that local authorities will use that discretion wisely and in line with the needs of their communities.
There is no doubt that in some areas any prospect of community cohesion has been threatened by a predominance of short-term lets, never mind the damage to communal areas and the burdens on local councils due to increased refuse and other issues, so I welcome the minster’s statement. As the Scottish Government reviews short-term lets taxation, is there any scope to consider the level of council tax that is being paid by different types of owners, such as those who use their property for short-term lets as opposed to owner-occupiers?
I thank Ms Watt for her question; I know that she has been active on the issue, as many have been. The points that Ms Watt raised echo some of the responses to our consultation. As I said in my statement, I am pleased to confirm that we will carefully and urgently consider the tax treatment of short-term lets, taking on board the comments made by Ms Watt and many others during the consultation.
I seek clarification from the minister. Would someone with a short-term let be liable for a licence fee, a new tax and the possibility of a tax on tourists set by the local council? Will that work in areas where there is not an abundance of short-term lets, such as in rural areas?
As I said to Graham Simpson and others previously, we are providing flexibility to allow those places where there are real pressures to be able to deal with those pressures through planning, and those areas will decide themselves what licensing they will have, apart from the mandatory safety scenario. In Edinburgh, I imagine that the council will look to an expanded licensing regime to deal with the difficulties that are faced here. That may not be the case in other local authorities that do not have those same pressures.
I have said clearly that taxation will be brought in here. We will review urgently how we will do that and how those moneys will remain locally, so that they can be spent on local services to counter some of the difficulties that communities have faced with some of the short-term lets. Finally, as I have said a number of times now, it will be separate from the transient visitor levy. We need to look at all of this and marry it all up, to get it absolutely right.
In parts of my constituency, particularly those that are becoming popular for holiday homes, there is a clear need for further regulation to ensure that some of those communities survive as communities. What will be done to ensure that local authorities have powers to tackle the issues in varying ways on a village-by-village basis?
Our research shows that there is great regional variation, including within local authority areas. That is why giving local authorities the power to supplement the mandatory licensing scheme with the additional requirements and conditions can help address local concerns. Local authorities will also have powers to introduce those short-term let control areas for all or part of their areas. In those control areas, a change of use of whole properties to short-term lets will always require planning permission. We are giving local authorities many more powers to deal with some of the issues that Dr Allan has mentioned and to allow for localised solutions in smaller places.