Licensing of Short-term Lets – ASSC Submission to Scottish Parliament Local Government & Communities Committee
The Civic Government (Scotland) Act 1982
(Licensing of Short-term Lets) Order 2021 (the “Licensing Order”)
The Town and Country Planning (Short-term Let Control Areas)
(Scotland) Regulations 2021 (the “Control Area Regulations”)
ASSC Submission to Scottish Parliament Local Government
& Communities Committee
Association of
Scotland’s Self-Caterers
Supporting self-catering in Scotland
January 2021
CONTENTS
Sections
1 Overview
2 Limited and Truncated Consultation
3 Timing: The Impact of Covid 19
4 Failure to Provide a BRIA with Consultation
5 Lack of Consideration of Impact on Local Authorities
6 Inadequacy of BRIA
7 Impact of Licensing on Operators
8 Negative Impact on Local Economies and Scottish Tourism
9 Specific concerns with the Licensing Order
10 Comments on Control Area Regulations
11 ASSC Alternative Proposals made to Scottish Government
12 The Way Forward
Appendices (provided as separate document)
1 Forward Together: A Collaborative Approach to Short Term Letting
2 The Booking Problem
3 The Impacts of Short Terms Lets on Communities in Scotland
4 Local Authority Resource Implications Responses
5 Sectoral Survey into the Impact of the Proposed Licensing Scheme for Short Term Lets Across Scotland
6 Licensing or Registration for Short Term Lets in Scotland
7 Short Term Letting & The Housing Crisis
8 ASSC Code of Conduct for Members
9 Notes on Drafting of Licensing SSI
10 The Economic Impact of Short term Letting on the Scottish Economy
“Together, we will deliver 21st century tourism for all of Scotland, and we will do it in a way that is sustainable, inclusive and truly Scottish”
Fergus Ewing MSP, Cabinet Secretary
for the Rural Economy and Tourism
OVERVIEW
1.1.
The negative consequences of the proposed legislation on the Scottish tourist industry, its supply chain and our visitors
1.1.1.
The Cabinet Secretary has a clearly articulated vision for the future of Scottish Tourism that we, the ASSC as the professional body for Scotland’s self catering industry, strongly support. But regrettably, as you will see in this submission, that vision will in our
view be seriously impaired if the Licensing Order and the Control Area Regulations become law, as a consequence of the very serious, and very predictable, negative impact this legislation will have on operators, potential visitors and the local economies that tourism
supports
.
1.1.2.
Taken together, these 2 pieces of legislation seek to address specific perceived, and distinct, problems in limited geographical areas involving a very limited number of holiday let properties and operators when viewed in the context of Scotland as a whole
.
1.1.3.
Self catering holiday lets are the backbone of the Scottish tourist industry
,providing everything from affordable accommodation for family holidays at busy times of years to special occasion winter weekend breaks for couples and groups of friends. The industry, which of course has been hugely damaged by Covid19, is worth in excess of £723m in a normal year,and that is excluding the very considerable direct and indirect impact businesses and their guests have on local economies.
1.1.4. It is an industry vulnerable to competition outside Scotland from the ease of access and availability of holiday let accommodation in the north of England (often with shorter drives than to northern Scottish destinations) and from cheap flights and cut price accommodation in Europe
.
1.1.6.
But as you will see as you read this submission in (partially at best)
trying to address these geographically and numerically very restricted problems, the Scottish Government will be throwing the baby out with the bathwater It is well known that licensing regimes discriminate against small businesses in favour of larger ones .The self-catering industry and its supply chain are predominately made up of small businesses. On any reasonable analysis, and on the survey feedback provided to us, potentially 49% of these small business
owners will close their properties, many retaining just for personal use as second homes.
Those that remain
will be subject to significant and unknown increased costs, unnecessary
bureaucracy and huge future booking and investment uncertainties.
1.1.5.
All this will be devastating to the Scottish tourist industry,not just to business owners forced to close but to the supply chain that depends on it and to guests who will find prices go up and property availability decreases.
1
https://scottishtourismalliance.co.uk/wpcontent/uploads/2020/03/Scotlsand-Outlook-2030.pdf page 5
4
1.1.6.
We assume of course this is not the Scottish Government’s intention but
unfortunate unintended consequences,yet we and others have pointed out these concerns many times – apparently falling on deaf ears
.
1.1.7.
The ASSC is absolutely not averse in principle to some form of regulation for aspects of the industry. On the contrary, the ASSC developed, and shared with the Scottish Government, a comprehensive and robust set of policy recommendations, as set out in our Forward Together paper which forms Appendix 1. This provides a proportionate, evidence -based and future – proofed solution for national and local government in Scotland in terms of short -term regulation
.
1.1.8.
One must question how exactly this squares with the Cabinet Secretary’s vision for Scottish Tourism quoted above
.
1.2.Our KeyConcerns
(explored in detail in the rest of our submission) -•This is a
blunt tool to fix a perceived and localised problem of amateur operators in,primarily, Edinburgh, rather than being a solution that is appropriate for the whole of the Scotland.•The self-catering sector is predominately small one or two property businesses:the proposed licensing procedures and conditions will disproportionately disadvantage them as small businesses. Licensing regimes primarily benefit medium to large
businesses over small businesses: they have the resources and business imperatives to put up with the bureaucracy and future uncertainty that small business cannot neither match nor afford (Section 7).
•
This will lead to significant business closures.
Out of the 1184 respondees to our recent survey nearly half (49%) would leave the self-catering sector if the proposed licensing
scheme was introduced and of those 33% would leave their property empty or use it for family & friends
2
(see Appendix 5).
The reasons for this,explained in more detail in Section 7 are
-The time and (unknown) expense involved
in making the initial licence applications and regular future licence renewal (at yet to be determined intervals that may vary from one local authority to another)
o
The uncertainty over how long consideration of a licence will take (up to 12 months initially) and the very real uncertainty of whether or not it will be granted (or renewed)
o
The potential loss of future bookings this will create over
extended periods.
Pending licence application decisions (taking up to 12 months) bookings will have to be conditional on a licence being granted or renewed: but the
commercial reality is that most guests will simply not book on this basis.
(Section 73 as read with Appendix 2)
•
Holiday lets are the Scottish Tourist Industry’s backbone, particularly so for affordable family holidays
.
It goes without saying how damaging business closures will be to
2https://www.assc.co.uk/wp-content/uploads/2021/01/ASSC-licensing –
survey.pdf
Appendix 53
https://www.assc.co.uk/wp
–
content/uploads/2021/01/The-Booking-Problem.pdf
Appendix 25
tourism in Scotland, its supply chain and the local
businesses that only tourism makes
viable
(Section 8).
And this, at a time
when the Scottish Government should be
encouraging staycations both to help with post-Covid economic recovery and to help minimise climate change
.
•
Business closures will result in –
o
reduced choice and reduced competition and the increased costs and
bureaucracy for those that do not close, leading to less availability and higher prices for family staycations in Scotland
.
o
reduced visitor numbers to support
the many small business
–
cafes, restaurants, speciality shops, galleries and tourist attractions that
rely on current visitor levels for their viability
o
local trades and service providers, particularly cleaning, laundry and
housekeeping businesses losing significant income
.
•
Small B&Bs will also be captured by the licensing regime,which we do not believe to have been the policy intention of the Scottish Government
. The Delivery Group did not consult with the B&B sector which we believe would be a basic duty given the impact of the regulations
:
(Section 9.1).
•
The long -term impact of Covid-19 seems have been ignored
:
The prioritisation of this issue during a global pandemic, when related pieces of legislation such as the transient visitor levy have been dropped, and when many in the tourism industry are struggling
for survival, needs to be seriously questioned
:
(Section 3)
.
•
Truncated and limited consultation that did not follow SG’s own published Best Practice
:
(Section 2)
.
•
The Scottish Government’s failure to provide a BRIA as part of the consultation which further detrimentally affected the effectiveness of consultation
.
The completion of BRIAs is central to the objectives of Better Regulation–
they are required to assess the costs and benefits to any business from the proposed regulations. The Scottish Government did not even publish a partial BRIA which again runs contrary to Better
Regulation principles
:
(Section4)
.
•
Lack of consideration of huge impact on Local Authorities’ already stretched resources through having to deal with an influx of tens of thousands of licensing applications and the many unanswered questions around the very significant start-up costs
:
(Section 5 as read with Appendix4)
.
•
Inadequate BRIA when eventually published
:
(Section 6)
.
•
Material issues with detailed provisions of the Licensing Order
:
(Section 9)
.
•Controls Area Regulations – these must not apply retrospectively to existing businesses,and Control Areas should be initiated by genuinely representative local demand, or at least subject to making and having regard to properly representative local consultation
:
(Section 10)6
•
Last but not least: the ASSC has provided robust alternative proposals
to the Scottish Government that deliver their objectives without the very damaging unintended consequences to Scottish Tourism–but these have been ignored.In short, the legislation has been drafted without proper consultation and listening to the wide range of critical voices, without a timely and robust BRIA and as a result will demonstrably lead
to severe unintended consequences. They are quite simply a sledgehammer to crack a nut and are highly likely to inflict the kind of damage on our vital sector, which is key to creating the memory-
making holidays Scotland is famous for, from which it will never recover.
2.
TRUNCATED & LIMITED CONSULTATION
2.1.
The Scottish Government carried out 2 consultations, an initial consultation in July 2019 and a truncated consultation in October 2020 shortly before the draft legislation was published.
Material flaws in 2019 consultation
2.2.
The 2019 consultation failed to provide a definition of short-term letting
.
There was a lack of differentiation between traditional models of accommodation and collaborative economy platform models. The consultation failed to reflect empirical data provided by the ASSC or Airbnb (Appendix7). It also conflated a number of issues including residential housing shortages, anti-social behaviour, and tax avoidance.
2.3.The 2019 Consultation failed to fairly and proportionately consult with operators. Representatives from the hospitality, traditional holiday let and tourist industry wrote to Kevin Stewart MSP on 13th June 2019, in response to the announcement that the Scottish Government had commissioned Indigo House to conduct research into the impact of short-
term lets on housing and communities in Scotland. The ASSC, along
side the Scottish Tourism Alliance and UK Hospitality had concerns about the scope and nature of the consultation. Our concerns manifested themselves when the consultation was published. They consulted
with 592 affected residents, 63 community organisations, Airbnb hosts and just 5 professional self-catering operators. They only consulted in five localities across Scotland –ones that had expressed concerns about short-term letting (including Edinburgh and Skye)
4
.
The ASSC conducted a survey of its members, reflecting the questions from the Indigo House survey. The results are, unsurprisingly, very different to those highlighted by the Indigo House report (Appendix 3)
.
2.4.
In our view the Scottish Government has simply not listened to critics, or
industry experts (including the Scottish Tourism Alliance, The Regulatory Reform Group, the Law Society of Scotland amongst others), but based this legislation on the lobbying of unrepresentative geographically restricted pressure groups. This does not amount to a viable consultation.
2020 Consultation: Failure to comply with SG’s own Best Practice Guidance
2.5.
The Scottish Government’s 2020 consultation did not follow the usual three – month practice but was instead condensed it into little more than four weeks. The Scottish Government’s own best practice guidance states:
“Consultations should be open for a minimum of 12 weeks, in order to meet existing SG commitments on consultation. In many instances,
consultees will need time to consult with their members / user groups before submitting a https://indigohousegroup.com/short-term-lets-research/7response.
Only in very exceptional circumstances should less than 12 weeks be given, and the reasons for this should be fully explained where this happens”
.
5
2.6. The Law Society of Scotland observed that the shortened period of consultation seemed to be “driven by a desire to lay legislation before the Scottish Parliament in December so that the regulations can come into force by Spring 2021. No explanation is given for why this is
necessary, particularly given the inevitable downturn in the use of short-
term letting as a result of the COVID-19 pandemic.”
6
2.7.
If the legislation goes through, we also intend to seek legal advice on whether or not Scottish Government’s failure to deliver on the reasonable legitimate expectations raised by their own best practice guidance gives grounds for judicial review Failure to include B&Bs in consultation
2.8.
The Scottish Government’s Short- Term Let Delivery Group never suggested that B&Bs would fall within the scope of the regulations but they do now (see Section 9). Consulting with the B&B sector should have been a basic duty, given the impact of the regulations on the sector. The STL Delivery Group failed to consult in a meaningful way with the B&B
Association or individual businesses
.
3.
TIMING: IMPACT OF COVID-19
3.1.The Scottish Government’s consultation document from October 2020 –some seven months after lockdown – made no reference to the impact of Covid-19 on the tourism sector.
7
Covid-19 has been devastating for Scotland’s tourism sector, with a large drop in tourist numbers and cancelled bookings as a result of various coronavirus restrictions. Frontline Consultants estimate that the self-catering sector has lost £265mdue to Covid-19 restrictions since September 2020 alone
.
8
3.2.This figure does not even consider the footfall generated by self-catering visitors in local businesses, hospitality venues and visitor attractions. Bookings have plummeted and travel
restrictions for those areas in Levels 3 and 4 have effectively wiped out a crucial part of the domestic market for those businesses that remain open.
3.3.
The ASSC were one of 38 signatories to an open letter to the Scottish Government in October 2020, including CBI Scotland, Scottish Chambers of Commerce, the Scottish Tourism Alliance, Scottish Land and Estates, FSB Scotland, UKHospitality, and the Scottish Retail Consortium to call for a delay in the Scottish Government’s regulations to allow the
5
Scottish Government, Consultation Good Practice Guidance. Url:
https://www.gov.scot/binaries/content/documents/govscot/publications/foi-eir-release/2019/12/foi-201900009119/documents/foi-201900009119—information-released/foi-201900009119—information-released/govscot%3Adocument/FOI-201900009119%2B-
%2BInformation%2BReleased.pdf
6
Law Society of Scotland,
Consultation Response
–
Short Term Lets: Consultation on a licensing scheme and planning control areas in Scotland(October 2020), p2. Url:
https://www.lawscot.org.uk/media/369667/20-10-16-plan-lic-consultation-short-term-lets-regulations.pdf
7
Scottish Government,
Short Term Lets: Consultation on a licensing scheme and
planning control areas in Scotland(September 2020). Url:
https://www.gov.scot/binaries/content/documents/govscot/publications/consultation-paper/2020/09/short-term-lets-consultation-licensing-scheme-planning-control-areas-scotland/documents/short-term-lets-consultation-licensing-scheme-planning-control-areas-scotland/short-term-lets-consultation-licensing-scheme-planning-control-areas-scotland/govscot%3Adocument/short-term-lets-consultation-licensing-scheme-planning-control-areas-scotland.pdf
8
The figures from Frontline Consultants are available to view here:
https://www.assc.co.uk/wp-content/uploads/2020/12/ASSC-Sectoral-Survey-on-Impact-of-Covid-19-Restrictions-December-2020.pdf
8
tourism industry recover from the pandemic
.
9
This letter did not receive a reply from the
Scottish Government (as of 14th
December 2020).
3.4.
This letter reflects widespread concern on the timing of the regulations. Interestingly, the Minister for Local Government, Housing and Planning Kevin Stewart MSP readily acknowledged this fact in the Scottish Government’s consultation response:
“Perhaps the greatest number of comments centred on whether to proceed with regulation at this time or to delay it.”
10
However, the volume of correspondence has not dissuaded the Minister at all.
3.5.
The decision to proceed is made more perplexing when similar legislation have been postponed by the Scottish Government. There remains a real inconsistency in terms of regulations and legislation that has been prioritised by the Scottish Government.
For instance, the 2020-21 Programme for Government advised that
plans for the Transient Visitor Levy have been put on hold due to COVID-19 and “future consideration of the levy
will take account of the changed context the industry is operating in.”
11
This was a welcome and pragmatic approach that the ASSC fully endorse. However, as the proposed short –
term let regulations will impact a key part of the tourism sector, it defies sense that the consultation does not take cognisance of the “changed context” in this regard.
3.6.
Moreover, the Scottish Government have postponed the taxation element of their short-term let plans until 2021, demonstrating once again that it is possible to review intended regulations in the light of Covid-19.
3.7.
In their consultation response, the Scottish Tourism Alliance
maintained the importance of the Scottish Government supporting the recovery of the tourism sector: “We feel that if the
government is seeking to support the tourism sector’s recovery should not be pressing forward with this legislation in what is unprecedented times and still with no clear horizon for recovery, arriving at a wrong decision due to haste without greater consideration would cause significant harm to the sector as a whole and those that are dependent
on it.”
12
3.8.
The prioritisation of this issue during a global pandemic, when related pieces of legislation such as the transient visitor levy have been dropped, and when many in the tourism industry are struggling for survival, needs to be seriously questioned
.
9
Letter from 38 stakeholders to the Minister for Housing, Planning and Local Government, Kevin Stewart MSP, October 2020:
https://www.assc.co.uk/wp-content/uploads/2020/10/Letter-to-Kevin-Stewart-MSP-26-October-2020.pdf
10
Kevin Stewart MSP quoted in Scottish Government,
Short Term Lets: Consultation on a licensing scheme and planning control areas in Scotland(September 2020), foreword.
11
Scottish Government,
Protecting Scotland, Renewing Scotland: The Government’s Programme for Scotland 2020 – 2021 (2020), p121.
Url:https://www.gov.scot/binaries/content/documents/govscot/publications/strategy-plan/2020/09/protecting-scotland-renewing-scotland-governments-programme-scotland-2020-2021/documents/protecting-
scotland-renewing-scotland/protecting-scotland-renewing-scotland/govscot%3Adocument/protecting-scotland-renewing-scotland.pdf
12
Scottish Tourism Alliance,
STL Consultation Response(2020). Url: https://consult.gov.scot/housing-
services-policy-unit/short-term-lets-licensing-scheme/consultation/view_respondent?_b_index=600&uuId=799462370