Ministers told to scrap Scots holiday let licensing as 100s shut down

Both the ASSC, which has more than 1700 members and the Scottish Bed and Breakfast Association, which has 400, have separately reported each losing 5% of their membership since the short-term lets policy came into force last October and they expect this number to continue to rise.

And the ASSC and the SBBA have warned that Scottish tourism is facing "irreversible damage" as a result of the short-term let regulations.

They have raised concerns that Edinburgh will not be able to accommodate performers and visitors to its world leading festivals this summer as the impact of "restrictive" short-term let regulation begins to bite.

While there were an estimated 32,000 short-term lets across Scotland, the Scottish Government has confirmed there were at least 23,576 which applied for a licence, leaving concerns over whhat happened to the remaining 8,424.

The Scottish Government says this only paints a partial picture which will gradually be completed as local authorities continue to validate applications and include them in their data returns.

A survey conducted by the SBBA found that 75% say the actual costs of of the policy have impacted their business revenue or affected the viability of their business.

And a parallel survey by the ASSC of businesses, mostly members found that 82% said the regulations had "severely damaged business certainty and confidence".

David Weston, chairman of the SBBA said the licensing scheme has led to the closure of many hundreds of businesses and says his members believe it should be scrapped.

He said the closures have had a "direct effect of blighting the livelihoods of former tourism business owners, and hugely reducing the economic benefits to villages, rural areas, Highland and island communities as guest spend locally has been lost."

He added: "It has damaged Scotland’s economy..."

"The damage [to Scottish tourism] is already bad. I fear that without an immediate change of policy and of support by the government for business in general and tourism in particular, it will become irreversible. The B&Bs that have closed won't re-open."

They have been shocked by the average actual cost of licensing for each B&B or guesthouse being £2,147, which equates to £498 per bedroom - and hundreds more than Scottish Government estimates.

For the total cost of compliance for licensing applications, some businesses are forking have been forking out as much as £9000.

It has warned the Scottish Government in a review of the rules that in its 18 years’ experience of dealing with tourism policy development and implementation with governments in Westminster, Brussels and Edinburgh, its implementation was "by far the worst example of policy implementation we have ever encountered".

And the ASSC in its review that the implementation of short-term rental rules in Scotland is "harming its tourism industry and limiting economic opportunities".

The rules mean that anyone providing short-term let (STL) accommodation must now have a licence or face a ban and fine of up to £2,500.

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

The SBBA survey found that 41% of members say the process of obtaining the STL licence was so onerous and time consuming that it was damaging to their business.

One SBBA member who has been operating for 35 years said that they had submitted their license application in September, last year, and in May was still waiting for the it to be granted. The then First Minister wrote to the SBBA seven years ago to say her government “is working with tourism businesses to promote growth, support ambition and create a supportive business environment in Scotland”.

Nicola Sturgeon said: “We are delivering a nationwide drive to improve productivity by supporting businesses to grow”, and emphasised that “The [tourism] sector’s continued growth is crucial to Scotland’s economy”.

She stated: “There are many challenges the industry faces, whether it’s digital connectivity, skills access and development, and the fact Scotland is competing in an ever-growing global market. We continue to listen to the industry in what policy and approach will help to overcome these challenges and support the growth of the visitor economy”.

Her examples of government support included "reducing the cost of doing business in Scotland”.

"We very much welcomed those assurances then, and feel badly let down by what has happened since, which (we feel) has gone back on the FM’s assurances of seven years ago," said Mr Weston.

The SBBA say the 32 local licensing schemes should be replaced with the EU's preferred policy of a low-cost, country-wide digital registration scheme.

"The policy as implemented is fragmented, inconsistent, arbitrary, often disproportionately onerous, unnecessarily costly, far too wasteful of the time of both microbusinesses and of local councils, has obstructed the normal market in the sale or transfer of businesses classified as STLs, and is badly targeted, impacting as it does businesses like traditional B&Bs and guesthouses which are already compliant with health and safety rules, already subject to inspection and enforcement and whose operation is of no detriment to the supply of affordable housing," he said.

"The regulation of short-term lets in Scotland needs a fundamental rethink – it needs revolution rather than evolution."

There has been further concerns from the ASSC over a 53% drop in Glasgow over the past four years in the number of self-catering units on business rates, the property tax which help pay for local council services, and a 26% drop in Lothian.

Anecdotally, the ASSC said it has heard instances of large quantities of properties lying empty, or the owner allowing them to be used by family or friends.

The latest figures from City of Edinburgh Council as of May 20 showed just 135 secondary lets – which were largely professional self-catering businesses – had been granted a full licence.

In Edinburgh, 1,800 self-catering units have applied for a non-refundable one-year licence, where some can be charged over £5,000, and many simply are not advertising for August as they have no clarity as to whether their application will be approved, the ASSC said.

"Pushing up the cost of holidaying in Scotland, squeezing the supply of accommodation for our world-leading festivals and other major events, burdening resource-stretched local councils, and hammering small and micro businesses surely cannot have been the policy intention of short-term let licensing but that’s what is playing out on the ground," the ASSC has told ministers in its review.

A Scottish Government spokesman said: "The introduction of licensing protects the important role short-term let accommodation plays in our economy by providing assurance to guests on safety and quality, such as gas certificate compliance and suitability of electrical equipment. Importantly, existing hosts can still operate whilst their application is being processed.

“Thousands of hosts submitted their licence applications before the October 2023 deadline and local authorities are processing and granting those applications.”