However, Highland Council said the legislation in Badenoch and Strathspey, which includes popular tourist towns such as Aviemore, has led to more businesses exiting the market and fewer newbuilds being turned into STLS.

The council said the low refusal figure was evidence that the control area had not been used to “ban” STLS, adding: “Rather it has been a proportionate approach, which is not unduly restrictive, unfair or unreasonable to operators.”

Council members approved the creation of the control zone in December 2022 to manage levels of short-term letting “where they affect the availability of residential housing or the character or amenity of a neighbourhood”.

However, it was not enforced until March 2024 as the council waited for the outcome of the Court of Session ruling and new Scottish Government guidance before developing its own criteria for the control area.

The rules mean that planning permission is now required for the change of use of a dwellinghouse, where the owner does not reside in the property, the Herald reports. 

Highland Council claims it has produced the first Scottish analysis of the impact of the short-term lets legislation, before and after the designation.

In Badenoch and Strathspey, 8% of “potential dwellings” are currently licensed STLS, which is higher than 5% across Highland in general.  According to the analysis, the majority of existing operators were guided towards the Certificate of Lawful Use (COL) process, which confirms that the use of a property for short-term holiday letting is lawful.

A total of 43 applications for planning permission for STL use have been refused since 2022, which Highland Council acknowledged “reflects a small element (13%) of the short-term let planning application caseload”. Two of those applicants appealed the decision and were successful.

Yet, the Highland Council said the report highlighted that the control area may be stunting demand for new STLS as fewer property sales and fewer new housing completions have since been converted.

In 2022-23, of 144 new-builds, 18 became STLS, a rate of 12.5%. This compares to 2024-25 when two out of 103 became STLS, a rate of 1.9%. Simultaneously, in the Black Isle the rate is 15.4%, while on the Isle of Skye it is even higher at 18.8%. The total caseload of STL applications has gone from 698 in 2022 to 441 in 2025.

The report said: “These declines have not been found in other parts of Highland where there are high levels of STLS. While STLS as a rate of total dwellings appear to be rising in many parts of Highland, in Badenoch and Strathspey, these rates are declining, remaining constant or in some cases rising at a much slower rate than the Highland average.”

“It can be concluded that since the control area was designated, the majority of existing STL operators have continued operating in compliance with planning requirements, while potentially influencing some to exit the sector, and deterring some new entrants from investing in residential properties for STL use in the area.”

Fiona Campbell MBE, chief executive of the Association of Scotland’s Self-Caterers, said: “We have significant concerns about the limitations of this analysis as there is no rigorous assessment of whether the short-term let control area actually improves housing availability or affordability in practice. As this remains incomplete, policymakers should be cautious about drawing any firm conclusions from it.

“A recent ASSC FOI request to Highland Council confirmed that the policy has no comprehensive impact assessment, no defined success metrics, and no review of effectiveness since it was introduced. Key housing indicators remain either unassessed or inconclusive, and the Council has not undertaken any analysis of affordable housing supply.

“Moreover, the number of empty homes in the ward has actually increased. This points to other drivers of housing pressure that this policy does absolutely nothing to tackle. Before any further control areas are designated, we call on Highland Council to undertake a proper holistic review of the control area rather than cherry-picking evidence.”