Airbnbs and Short-Terms Lets have become a contentious matter in Scotland in recent times. The Scottish Government have recently conducted research into Airbnbs and Short-Term Lets in Scotland which confirmed there are 31,884 active Airbnb listings, three times as many compared to 2016.

It was found that in Edinburgh's City Centre 16.7% of properties are being used as Short Term Lets equating to an estimated 140,000 visitors to the area per year, around 4.5 times the local resident population.

The increasing popularity of Airbnbs and Short-Term Lets in Scotland without a doubt creates economic benefit and helps promote tourism, however this is not without its disadvantages. In both Edinburgh and the East Neuk of Fife the increase in Airbnbs and Short-Terms Lets has been linked with a fall in resident population which raises concerns about long-term sustainability of the community. The increase in property owners renting their properties on Airbnb or as a Short-Term Let has resulted in a reduction of long-term private lets being available to Scottish residents. In the long term this could result in increased pressure on social housing and mid-market rents throughout Scotland.

A new regulatory framework?

In 2019 the Scottish Government conducted a public consultation on potentially introducing a regulatory framework for Short-Term Lets. Overall, the majority of respondents were in favour of some form of regulation being introduced.

The main hurdle with any potential regulation would be enforcement. Would it be more beneficial for a national framework to be applied or a framework which can be enforced by individual local authorities? It has been argued that introducing a regulatory framework at local authority level would create greater flexibility with regard to enforcement. Considering that Short-Term Lets are having a greater effect on communities in areas such as Edinburgh and Skye than other parts of the country, this may be worth considering.

On the 8^th of January 2020 the Scottish Government made a statement outlining their proposals for a new policy to regulate Short Term Lets in Scotland. The proposed policy has three parts:

1. A compulsory licencing scheme for Short-Term Lets will be introduced, allowing local authorities to know which properties in their area are being used for Short-Term Lets. This will underpin safety standards for Short-Term Lets and introduce additional, optional, powers for local authorities to impose further conditions which are relevant to their area.
2. Local authorities will be able to introduce 'short-term let control areas'. As a result, the use of a property for Short-Term Lets in these areas will require planning permission. This will only apply to Short-Term Lets of whole properties and not home-sharing.
3. The Scottish Government will 'carefully and urgently consider the tax treatment of short-term lets' with an aim to ensuring Short-Term Lets make appropriate contributions to local communities and services. This would be in addition to any proposed visitor tax and currently it is not clear what form these 'contributions' will take.

The Scottish Government is aiming for these regulations to be in place and for local authorities to have the opportunity to regulate Short Terms Lets by Spring 2021. This should be considered by anyone looking to invest in property for the purposes of short-term letting or who already successfully rents their property on a short-term basis.

For further information on tenancies and tenancy law, contact a member of our private rented sector team.