ASSC Update October 2024

The self-catering sector in Scotland is at a critical juncture, navigating regulatory changes, economic pressures, and significant operational challenges. The ASSC now has compelling evidence to prove this, and calls on the Scottish Government to review policies with this in mind.

BiGGAR Report

A new independent report shows short-term lets make a substantial economic impact in Edinburgh while only making up a tiny percentage of the total number of properties in the city.

Short-term Lets (STL) make up a small fraction of Edinburgh’s housing stock:

• Secondary Let STLs represent only 0.8% of all dwellings in Edinburgh, significantly smaller than the 4% of vacant properties, which have continued to increase since the introduction of STL licensing​
• 10,479 vacant homes, 14,16 owned by City of Edinburgh Council.

STLs are vital for employment and the local economy:

• The STR sector generates £154 million Gross Value Added (GVA) annually and supports 5,580 jobs across Edinburgh. This economic activity extends beyond the STR sector and supports local businesses through tourist spending

Potential negative impacts of reducing STRs:

• A decrease of just 0.5% in STLs would result in a loss of £57 million in GVA and threaten thousands of jobs, not only within the city but also in surrounding areas due to the interconnected nature of tourism and local businesses​
• An increase of just 0.5% in STLs would result in a benefit of £40 million

Numbers of STLs in Edinburgh

At 14th October:

• 1682 full Secondary Let Licences granted, representing 6,905 bed spaces
• 90 Temporary Secondary Let Licences granted, representing 446 bed spaces
• 517 Home Letting (when people are away from their primary residence) Licences granted, representing 1890 bed spaces – unknown when they are available. 

The Highland Council

According to latest FOI, in Highland, at 1 October 2024, a total of 3,450 STL Licence applications were listed as pending determination, this includes applications made both prior to and following the 1 October 2023 deadline for existing hosts to apply for a licence.

This number includes licence applications which have been considered and consultation requests issued and/or responses received, but where the licence has not yet been issued. These licences should be now ‘deemed granted’, but are not.

Up to 1st October 2024, the total fees The Highland Council had received from STL licensing applications was £3,743,795.34. “The STL licensing scheme is funded on a full cost recovery basis, with costs being incurred and calculated over the full licence period for all applications. Thus, the full final costs are not known.”

In terms of planning, the total applications received stands at 255. Total Income generated (refunded fees removed) £203,168.

This should be seen in the context of second homes and empty homes in the Highlands (according to recent FOI:

Second homes recorded in 2022, 2023 and 2024:
2022 – 3,721
2023 – 3,756
2024 – 3,432 (as of September 2024)

Empty homes recorded in 2022, 2023 and 2024:
2022 – 3,224
2023 – 3,390
2024 – 3,896 (as of September 2024)

Highland Council’s Planning Policy Deemed Unlawful

Since the implementation of short term let licensing, the conflation between licensing and planning has caused widespread delays with the licensing process and significant confusion, limiting the effectiveness of the licensing scheme.

To assist with this situation, James Findlay KC provided the ASSC with an expert legal opinion regarding the interpretation and application of laws governing short-term lets in Scotland. This was sent to The Highland Council on 29th August 2024.

Key points of the opinion include:

• Licensing authorities can only act if they conclude there would be a breach of planning control, not that there might be.
• There is no legal requirement for an applicant to prove the planning status when submitting a licence application, including under mandatory condition 13 of the Order.
• Condition 13 applies only if planning permission is required, which is a decision for the licensing authority, not the applicant.
• Licensing authorities must make rational, evidence-based decisions, and cannot impose a burden of proof on applicants without legal backing.
• The letter overstates the legal requirement on applicants, although in practical terms, applicants may still need to show they have or are seeking planning permission in some cases.

In summary, the advice highlighted that the legal onus remains with the licensing authority, not the applicant, although practical considerations may influence outcomes.

In light of this, The Highland Council has revised its policy. However, that puts the fact that the council has benefited from over £200k in planning fees into questions, and operators are calling for refunds.

Third Legal Challenge Successful against City of Edinburgh Council

The Highland Council’s revision of their policy comes on the back of City of Edinburgh Council losing it’s third legal challenge.

Data: Drop in Numbers of SCUs on NDR

The number of Self-Catering Units on Non-Domestic Rates continues to fall. Since 2019, the following decreases have been recorded:

• 5% across Scotland
• 4% Highlands
• 22% Edinburgh
• 27% East Lothian, the Housing Minister’s constituency
• 54% Glasgow, with just 109 remaining, which is extremely concerning given the 2026 Commonwealth Games

Mental Health Survey

A new survey reveals a mental health crisis in Scotland’s self-catering sector due to government regulations. 450 operators responded to a snap survey, on World Mental Health Day.

Key findings:

68% reported negative impacts on their mental health, and the figures are higher in key regions.

Edinburgh sees the worst impact, with 90% of operators experiencing negative effects, and nearly half (46%) reporting extreme mental distress. The city’s stringent STL controls are hitting small business owners hard.

Regional Breakdown:

• Highlands: 63% reported mental health impact.
• Perth & Kinross: 56%.
• Argyll & Bute: 72%. Operators cite sleeplessness, anxiety, and stress due to financial uncertainty and the heavy administrative burden.

Fiona Campbell, CEO of the ASSC: “Running a small business can be rewarding, but the heavy-handed regulations are crushing livelihoods. These operators have dedicated their lives to making Scotland a top destination—they deserve better.”

The survey highlights the need for policymakers to reconsider and collaborate with the sector. Striking the right balance is critical to preserving local jobs and the mental well-being of those keeping Scotland’s tourism alive.

Operators cite sleeplessness, anxiety, and stress-related health issues. The high cost of compliance and licensing delays add to the strain. For many, self-catering is their primary source of income.

Financial Impact of Visitor Levy

Indicative first responses from 225 respondents:

• 81% are not VAT registered
• 84% think the Council should exempt businesses that are not VAT registered
• 26% are you considering closing their business given the financial challenges that the Levy presents

Conclusion

 The BiGGAR Economics report underscores the self-catering sector’s significant economic contribution, supporting thousands of jobs and generating millions in GVA. However, stringent licensing and planning processes, coupled with a decline in self-catering units and concerns around the Visitor Levy, have strained operators, many of whom are small business owners. The mental health crisis emerging in this sector is alarming, with high levels of anxiety and financial stress reported, particularly among those in Edinburgh and the Highlands. Policymakers must recognise the vital role of this sector and work towards balanced regulations that protect economic stability and the well-being of operators.

Collaboration with the industry is essential to support tourism, preserve local jobs, and ensure Scotland’s self-catering sector remains viable.

The critical question to the Scottish Government is: Are these results representative of the policy objectives? Now that we have evidence of the damage being done, will the Scottish Government address the deficiencies to ensure a sustainable future for the self-catering sector?