Licensing expert warns of ‘flood’ of short-term let licences
An expert commentator on civic licensing has warned of a “flood” of licence applications for short-term lets in Scotland that could reach tens of thousands.
Stephen McGowan, partner and head of licensing in Scotland at UK law firm TLT, was commenting in response to the Scottish Government announcement of new powers for councils to introduce safety and control measures, including a licensing scheme for short-term lets by spring 2021.
McGowan said: “The new regulations enable councils to balance the needs and concerns of their communities but will have a profound impact on landlords, in terms of their licence to continue to operate and their ongoing costs and liabilities.
“According to the government’s own research, there are 32,000 properties registered with Airbnb alone in Scotland. Assuming local councils enact a new licensing scheme to regulate short-term lets, which seems likely, each of these properties, should the landlord wish to continue to operate it as a short-term let, would require a licence and operating without one would become a criminal offence.
“It is also not yet clear how far the scheme will go in terms of capturing what might be called non-typical residential-style lets, such as holiday lets, self-catering facilities and more traditional B&B style accommodation, which could push the numbers up higher.
“The government has made it clear that safety will be a mandatory consideration, which I take to mean that the properties will have to undergo an HMO style inspection. This means costs for landlords in ensuring their properties meet these regulations as well as the costs associated with compliance.
“Beyond that, there are no “grandfather rights” proposed and each new application will go through the same process as other civic licences. This means possible objections, hearings for all applications, and the ability to refuse applications not just on the fitness of the property but also the person who wishes to hold the licence, such as having regard to convictions.”
Mr McGowan, who is also chairman of the Institute of Licensing Scottish region, and accredited by the Law Society of Scotland as a specialist in licensing law, explained that the regulation will also have a significant impact on local authorities and other local services.
He said: “Provision will need to be made to deal with the impact of such a magnitude of applications on local authority resources.
“A massive rush of applications of this order could bring licensing administration to a halt, and have a knock-on effect on reporting obligations with Police Scotland and other authorities such as Fire and Building Standards, who will likely have to comment on each application. This could impact on processing times for other types of civic licence.”
The Licensing Law Committee of the Law Society of Scotland has itself emphasised the importance of piloting the new licensing scheme ahead of implementing the new powers.
The value of running pilots to test implementation of any licensing regime was highlighted in the Law Society’s response to a Scottish Government consultation on short-term lets last year.
Committee convener Archie MacIver said: “The short-term lets market is fast-growing, but it is still a relatively new market. Pilots of the new licensing regime will be of value in highlighting any problems before national roll-out, particularly given the different issues which are arising in the context of short-term lets.
“Our original response to the Scottish Government also highlighted that we believe a phased approach will be important to give owners time to ensure that they comply with any registration requirements and meet the standards required.”
The Society’s consultation response had also warned that increased regulation would place additional burdens on local authority planning and licensing teams to manage the requirements of a new scheme.
Archie added: “It is pleasing to see that the Scottish Government has recognised this, and that the Minister confirmed in his announcement that local authorities will be able to set fees to allow the scheme to be cost neutral both in terms of administering the licensing scheme, but also ensuring compliance with it.
“This will ensure that local authorities are able to implement the scheme effectively and efficiently for the benefit of both property owners and local residents.”