Short-term lets: big changes are coming, but look out for the small print - Joanna Millar

New legislation around short-term lets means big changes are on the way. This could spell bad news for anyone who rents out rooms or complete flats in tenemental properties – especially in Scotland’s capital city, Edinburgh – to holidaymakers, tourists or workers for a short period of time.

Joanna Millar is a Legal Director at Gilson Gray
Joanna Millar is a Legal Director at Gilson Gray

The new legislation introduces the opportunity for local authorities to impose planning control areas. The City of Edinburgh Council has received Scottish Government approval to proceed with such a control area.

The introduction of a planning control area in the City of Edinburgh means all properties operating as short-term lets need either planning permission or a certificate of lawfulness (if they have been operating for more than ten years). But read on for the small print – because it gets complicated.

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Not all operators will be able to secure planning consents. The local authority believes this will increase properties available for people to rent long-term or to buy as their main home, addressing the lack of affordable housing.

Short-term let locks in Edinburgh
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Many operators disagree. Even if they do not secure such consent, many say they will not sell nor convert properties to long-term tenant lets, but they will become second homes empty for much of the year.

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Under current planning policies, operators seem likely to secure planning permission if they have their own main door. That will change in the next Local Development Plan which introduces refusal of all applications – including main doors. This could result in a loss of short-term let properties.

A second piece of Scottish Government legislation introduced a new licensing scheme whereby anyone wanting to operate a short-term let must have a licence. Those operating by 1 October this year can continue to do so, but they must apply for a licence before 1 April 2023. One of the pre-conditions for getting a licence is demonstrating that either planning permission or a certificate of lawfulness is already in place – or has been applied for.

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Councils are expected to accept applications for licences from 1 October. The timescale is incredibly tight and the six-month window for applications – from October 2022 to end of March 2023 – is causing concern.

Each council must have a short-term let licensing policy. City of Edinburgh Council recently issued an updated proposal restricting operators of any tenemental property in Edinburgh from being granted a short-term let licence. Even if operators have used the property in this way for decades, and have a Certificate of Lawfulness in place, the property will not be granted a short-term let licence.

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If adopted in its proposed form, this could mean tenemental properties within the entire City of Edinburgh council area will not be able to secure a short-term let licence. This will materially impact legitimate businesses that benefit the local economy to a tune of £70 million per annum.

Similar changes are happening in other local authority areas.

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Whether you agree with the Scottish Government’s objectives or sympathise with the plight of short-term let operators, this new legislation is creating complexity and confusion, and has the potential to reduce the number of short-term lets across the Edinburgh area to concerning low levels. Great care is required to navigate the new regulations within a short period of time.

Joanna Millar is a Legal Director at Gilson Gray

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