Level playing field for short-term letting rules - David Alexander

Not before time, it looks as if the talking is almost over and the Scottish government is about to act to end or at least ameliorate, the inadequacies and inequalities related to short-term residential property lettings.

Generic To Let sign

Consultation on the issue will eventually end on 13 August, after which final legislation is likely to be presented to the Scottish Parliament for approval in September.

Within the ground rules set by the government, councils will be given freedom to operate the legislation in a way that is best suited to their respective local circumstances. Hiring of officers is likely to be necessary and this will partly be paid for by fees paid by property owners related to licensing of properties. Under the proposed legislation, local authorities will have until 1 October 2022 to establish a licensing scheme, with all short-term lets to be licensed by 1 April 2024. Existing hosts and operators must apply for a licence by 1 April 2023.

The legislation has been described as a “crackdown” on Airbnb and other short-term lettings, most of which are to tourists. But it is nothing of the sort; all it does is create a level playing field which will require property owners who engage in short-term lettings to operate under the same rules, and to the same standards, as landlords who provide homes for private rent.

David Alexander is managing director of DJ Alexander

Properties let long-term are subject to a number of conditions intended to protect tenants and those living around them, mainly relating to supplies of gas, electricity and water and the general fabric of a building.

In addition, a landlord must register with the local authority which in turn will check whether the landlord is a fit and proper person, while a prospective tenant is able to make a check personally by searching the Scottish landlord register. A similar process exists for Houses in Multiple Occupation (HMO), which require a licence.

As the current Scottish Government pre-legislation paper points out: “The only mechanism the average (short-term) guest has to find out about the accommodation is peer review on platforms. Even assuming the reviews are authentic, peer review tends to be focused on quality of experience rather than safety. Whilst there is some overlap between quality and safety, most guests will not have the time, inclination or skills to examine or comment upon safety features”.

Lack of regulation and the money-making potential of short-term lettings tempted many landlords switch from the conventional residential market, particularly in tourist hotspots like Edinburgh and many parts of the Highlands during the summer months. (Even if some switched back again, deciding that a no-hassle long-term tenancy was preferable to the additional administration and extra housekeeping associated with letting to tourists).

However this inevitably led to a reduction in the availability of private accommodation for long-term use and the law of supply and demand inevitably led to rental costs moving upwards, particularly for properties in the most popular locations.

Then came the pandemic in March of last year and the total collapse of the tourist market collapsed. As a result, most short-term landlords tried to return to conventional lettings market but in many cases their hopes of an income were dashed as tenants started losing their jobs. The rental market has been particularly hard hit by the pandemic given many occupants work in hospitality and other sectors which have been – and in some cases still are - badly affected by lockdown.

Now, however, you don’t need a scientific measurement to see that visitors are returning – just look at the return of “bottoms on seats” on the open-top deck of Edinburgh’s tourist buses. Consequently, a drift back to short-term lettings is inevitable but the difference is that every operator will subject to the same conditions, thus creating a balance that was seriously lacking in the past.

David Alexander is managing director of DJ Alexander