Changes To Scottish Short-Term Lets Take Affect

On the 1st of October 2022, the law governing short-term rentals changed in Scotland. In order to accept bookings or receive guests, new hosts must apply for a short-term let licence before accepting bookings or receiving guests. The Scottish Government announced on 7th December 2022 that legislation would be introduced into the Scottish Parliament in January 2023 to allow existing hosts more time to apply for a licence. In recognition of the wider cost of living crisis, this will be a one-time, six-month extension for existing short-term let hosts. As of now, existing hosts can continue to operate while they wait for a licence decision before 1st April 2023. It is expected that existing hosts and operators will need to apply for a licence by 1st October 2023, subject to the approval of the Scottish Parliament.

Thousands of private residential and commercial properties in Scotland will be affected by this new licensing regime. In addition to holiday homes, leisure accommodation, or renting out a second home or room in your principal residence, many individuals and businesses have been renting and short-term letting properties for a long time. Complexity abounds in the new scheme. 

In spite of the fact that a large number of people will be caught, which means they will have to secure a licence, there is significant nuance and a number of exceptions and exemptions that must be considered.

Below we will provide additional information on the licensing scheme, control areas, and the background of these regulatory proposals.

For all short-term let accommodations in Scotland, a short-term lets licence is mandatory. Holiday cottages, bed and breakfasts, guest houses, rooms within a home, and unconventional accommodations like pods and yurts fall under this category.

The application for a short-term let licence is made to the local authority in the area where the premises are located in order to obtain the licence. There is further information about the types of licences, exclusions, and how to apply for them available on mygov.scot.

A control area can be designated by a local authority in order to manage high concentrations of short-term rentals in a particular region. In a control area, it is a requirement of the licence that planning permission has been obtained, or an application is in the process of being submitted, in order to obtain the licence. Unless there are material planning considerations that would justify a departure from the local development plans, each application will be considered on its individual planning merits. The City of Edinburgh became Scotland’s first short-term rental control area on the 5th of September 2022.

For Existing Hosts

If you provided short-term rentals before 1 October 2022, you have until 1 April 2023 to apply for a licence. The deadline for this extension will be extended to 1 October 2023, pending approval from the Scottish Parliament. In order to process your application, the council may ask for evidence of short-term letting before 1 October 2022. Until the council decides on your licence application, you can continue to rent out your accommodations.

For New Hosts

Before you can offer rentals, you must apply for and obtain a licence. Short-term lets are not allowed if you have not used your accommodation before 1 October 2022. Taking bookings or hosting guests without a licence is illegal. You can be fined up to £2,500 and banned from applying for a licence for a year if you fail to apply on time for a licence.

Local council processing times

Councils have up to 12 months to process applications from existing hosts.

Councils have up to 9 months to process your application if you are a new host.

In the event that a local council does not make a decision on your application within those timeframes, you will automatically be granted a licence for one year. Unless the courts grant the council an extension of the processing time, this is the case.

How long a licence lasts

It is up to your local council to decide how long your licence will last. From the date of issuance, your first licence can last up to three years. You can find information and application forms on the websites of local councils.

By getting your application right the first time, councils will have an easier time processing it, and you may receive a quicker decision. The timeframe for determining a licence depends on a number of factors, including the workload of the licensing council.

If you need any documentation for your application, your licensing council will explain it on their website. Licence applications are subject to a fee charged by local councils. Different local councils charge different fees for different types of licences, such as home sharing, home letting, and secondary letting. In addition, there will be a fee for applying for planning permission.

In Scotland, all short-term rentals must adhere to mandatory conditions. There are certain safety measures that need to be followed in relation to the activity. It is also possible for licensing councils to add extra conditions to the licence based on local needs and circumstances.

Please feel free to contact us if you are a landlord with properties in Scotland and have further questions about how these updates will affect your properties, and how they will affect you as a landlord.

If you have any questions about this news may affect you as a landlord or your upcoming taxes please contact UK Landlord Tax on 01902 711370 or email enquiries@uklandlordtax.co.uk

If you found this update informative then why not read our guide supporting offshore companies owning UK property or try out our SDLT calculator for the UK next?

Thandi Nicholls Ltd
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Wolverhampton
West Midlands
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