Scottish Government warned licensing holiday lets will not solve housing crisis

There are fears the government’s plans will only create more second homes

An industry leader says licensing holiday lets will not fix the housing crisis.

Self-caterers say issues with the government’s licensing scheme will lead to more second homes rather than freeing up housing

An industry leader says the Scottish Government's short-term lets licensing scheme will not fix the housing crisis, as a group of landlords prepare to go to court.

Fiona Campbell, chief executive of the Association of Scotland's Self-Caterers, says the government's current plans for licensing holiday lets will shut businesses and create more second homes instead of freeing up more housing.

It comes ahead of a court battle which starts later this week over the City of Edinburgh Council's plans to enforce new licenses for rental properties. By October all landlords renting out properties as short-term lets will need to have an official license from their local council.

It is hoped this will set health and safety regulations and help to control how many short-term lets are in any one area.

However Ms Campbell, who runs holiday lets in Argyll, says this is a "poor policy" and is "short-sighted". She claims the fees some councils are charging are prohibitively expensive and will negatively impact the tourism and hospitality industries.

Ms Campbell said: "These businesses employ local people and our guests go to hospitality venues and attractions so it will be the communities that suffer here. Self-caterers will give up renting their properties and leave them lying empty as second homes.

"There will be less money in local communities, more second homes, more campervans, less tax going into the economy, and the housing crisis will not be fixed."

She estimates up to 40 per cent of self-catering businesses could close because of issues with the licensing scheme.

Ms Campbell also warns around a fifth of self-caterers on Skye have already closed, which is having a knock-on effect on tourism on the island. However she said the association, which represents 1,700 self-caterers across Scotland, wants to see health and safety regulated in the industry.

The campaign group Living Rent says short-term lets in the capital "could and should" be used for long-term affordable homes instead, accusing the sector of "clearing out Edinburgh".

Independent research for the government in 2019 also found the increase in holiday lets caused a reduction in available housing, which in turn had a "negative impact on affordability".

A spokesman for the government said licensing will "strike a balance" between concerns in local communities and the wider benefit holiday lets have on the economy. They added the government will review licensing regulations next year to make sure the policy is still appropriate.

It comes as a group of holiday let landlords get ready to take City of Edinburgh Council to the Court of Session to challenge its plans for licensing short-term lets. The group argues the council's licensing scheme is too expensive and disproportionate.

In September 2022 Edinburgh became the first area in Scotland to introduce a control zone on short-term lets, with licenses costing between £120 and £5,869.

They have now raised £302,000 for the judicial review, which will start on Thursday, through crowdfunding – the biggest crowdfunder in Scottish legal history.

A spokeswoman for City of Edinburgh Council said it will not be commenting until after the court's judgement.