A major organisation involved in Scottish tourism has warned a "fundamental" review of a scheme requiring holiday accommodation suppliers to have a licence must be carried out otherwise the sector will face "irreversible damage".

The Association of Scotland's Self-Caterers made the demand after the new First Minister John Swinney pledged to dedicate every "fibre of his being" into growing the economy, while his deputy Kate Forbes promised to cut red tape.

Under regulations which came into force last October anyone who operates short-term lets (STL) has to have a licence or face a ban and fine of up to £2,500.

The changes were brought in to help tackle problems with housing demand and anti-social behaviour, especially in STL hot spots such as Edinburgh.

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But critics say the legislation is flawed and a threat to Scotland's tourism sector and wider economy.

 

Responding to comments made by Mr Swinney and Ms Forbes, Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, said the regulations were damaging businesses in the sector and putting Scotland at a competitive disadvantage.

 “Any pledge to reduce the regulatory burden on business is not worth the paper it is written on if it does not include a fundamental reconsideration of the flawed short-term let regulation which continues to pose significant problems for small businesses throughout the country," she said.

"Sadly, the current approach places Scotland at a competitive disadvantage and will push up costs for those wishing to visit our country. 

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"We are an outlier not just in terms of the UK with our disproportionate approach but the EU too, with the latter having implications for any aspirations to rejoin through the need for alignment."

She added: "The current status quo cannot endure with plunging levels of business confidence. According to a recent survey by the ASSC, just 54% intend to stay in business beyond 2024 as a self-catering operator. 

"It doesn’t have to be like this as government and industry working together in lockstep can produce better public policy. We hope that the change of leadership at the top can provide a much-needed reset in relations and instil a genuine and meaningful New Deal for Business with demonstrable action, not just words. 

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"Industry has made it abundantly clear it wants to be regulated in a fair, balanced and legally sound manner. As such, we have presented mutually beneficial solutions to resolve the outstanding challenges. 

"Legislation should be amended to clarify the relationship between planning and licensing, and guidance should be amended on the subject. Minor or superficial tinkering won’t cut it. The time to act is now, otherwise more jobs and livelihoods will be lost and irreversible damage inflicted on a crucial sector for Scottish tourism." 

She continued: "There is a real opportunity for John Swinney and Kate Forbes to turn the page and work with business to put things right so these Scotland’s £1bn self-catering industry can get back to doing what they do best in providing unrivalled hospitality and memory-making stays for guests.”

A spokeswoman for the ASSC added: "In an ideal world, it would be repealed with a more proportionate regulatory framework taking its place – with the introduction of a registration scheme with mandatory health and safety criteria. 

"Failing that, the Scottish Government could amend their Licensing Order to clarify the relationship between planning and licensing as this would significantly ameliorate the scheme." 

The STL regulations introduced last year require all bed and breakfasts, homes rented out on platforms such as Airbnb and the short-term renting out of spare rooms to have a licence.

Although the new STL law applies nationwide, licences are managed by councils and licence fees vary depending on the local authority, size of property and type of let.

This means some councils are asking for architects' drawings of each rental unit while in Edinburgh, full planning permission for a change of use is also required.

The requirement reported put off some people from applying for licences.

The Scottish Bed and Breakfast Association claimed in August that two-thirds of B&B owners were considering shutting their doors over STL restrictions.

Andy Fenner, of the UK Short Term Accommodation Association, said the industry had been left facing a "really scary situation".

A Scottish Government spokesperson said: “The short-term let sector is an important part of the tourism offer for Scotland. Licensing strengthens that offer by providing assurance to guests about the quality and safety of short-term let accommodation and the suitability of hosts. Requirements are akin to those for other accommodation sectors and the approach adopted by many cities within Europe and across the globe.

“Official data will be published later this month on the number of short-term let licensing applications received by licensing authorities between 1 July and 31 December 2023. This and other information gathered during engagement with stakeholders will be part of an update on implementation given to Parliament in June.

“The number of overseas visitors to Scotland has recovered from the pandemic at a faster rate than the rest of Great Britain and we continue to provide funding to VisitScotland to promote Scotland as a year-round destination for domestic tourism.”