New licensing laws could have a knock-on effect on hospitality
By Jack Cummins
SHORT-term let (STL) licensing: it’s looking like long-term pain for sections of Scottish hospitality.
D-Day landed on October 1. Provided an application for a licence had been lodged before that date, existing operators who had used their accommodation as an STL before October 1, 2022 could continue their business while the application was being processed. (From October 1, 2022 new hosts required to be licensed before accepting bookings or deposits.)
What constitutes an STL? Why was licensing introduced? And what fallout can we expect?
The scope of the licensing régime is surprisingly broad. It encompasses a whole range of residential and commercial accommodation: B&Bs, self-catering properties, holiday lets, lodges, yurts and more. The full list is available on the Scottish Government website.
Certain types of accommodation are excluded from the scheme, most importantly for present purposes, premises which are the subject of a premises licence granted under the Licensing (Scotland) Act 2005 and where the provision of accommodation is an activity listed in the operating plan.
The introduction of STL licensing was driven by a number of considerations, primarily the effect of STLs on local communities where visitor accommodation negatively impacted the availability of homes for general residential use.
Residents in some areas had complained of local shop closures and the loss of important amenities such as post offices, banks and libraries. In some city and suburban locations so-called ‘party flats’ could plague nearby residents with antisocial behaviour.
But even if a licensing system is a sensible step, was it proportionate – and why are there clear indications that a substantial number of hosts have decided to quit the sector?
Local councils may designate some or all of their area a ‘control area’ for STL purposes so that, where certain criteria are met, planning consent is also required.
The expense – and uncertainty – generated by that process is one of several potential inhibitors.
STL licences come with a whole raft of onerous mandatory conditions. For example, accommodation must hold a valid energy performance certificate and a gas safety certificate. A qualified person must carry out an electrical installation report every five years. Portable appliances must be tested. There are a number of fire safety conditions. And there’s even a requirement for a Legionella risk assessment.
So, it’s hardly surprising that many businesses have decided to close down.
Putting a figure on the cull is well-nigh impossible since there’s no record of the number of STLs operating before licensing kicked off – but data provided by the Fraser of Allander Institute is not encouraging.
According to the Institute, the number of STL licence applications received by March 31 this year was just over 2500, “indicating that probably less than a tenth of all [affected] properties were in the system by then”.
The expected significant drop in STL availability will no doubt benefit licensed hotels (budget hotels in particular) – but with a ripple effect that looks set to damage the wider hospitality sector.
Potential visitors to Scotland used to looking for B&B or self-catering accommodation may well find it difficult to secure bookings, or simply find that the cost overstretches their budget.
Limited supply is likely to be most acute when it comes to major events such as the Edinburgh International Festival or when the Open Golf Championship comes to Scotland.
The upsurge in the number of STLs reflects Scotland’s huge draw as a visitor destination. It has been estimated that the self-catering sector alone contributes around a billion pounds annually to the Scottish economy.
Bars, cafés and restaurants have shared the benefits in no small measure.
In my view, while some form of licensing may well have been desirable, it needed a much lighter touch – and there’s every risk that the Scottish Government has scored an own goal with a tourniquet on tourism.
