STL Licensing Compromise: Proposed Exemption for Registered Accommodation

Short-Term Let Regulation: The Issue

• Short-term let regulation was a contentious issue for policymakers over the course of the last parliament and the debate has extended into the new session.
• The Scottish Government settled on licensing as their preferred means to regulate but were forced to withdraw their Licensing Order in February 2021 as it was widely recognised as unfit for purpose, entailing unintended consequences for self-catering and B&Bs. This withdrawal, and the formation of the Working Group to address stakeholder concerns, was welcomed by industry. However, contrary to commitments made, the Working Group failed to live up to its remit – this necessitated four tourist organisations resigning their membership – and the original licensing proposals were simply restated with a few amendments that, if anything, make the plans worse.
• The ASSC believes this is a complex and multi-faceted problem with no easy answers. We also believe that the aspiration that debate should centre on the facts rather than ‘ill- founded fears’. Unfortunately, the More Homes Division of the Scottish Government has not focused on the considerable evidence provided by self-catering and bed and breakfast businesses.
• Following the close of the third short-term let consultation, the Scottish Government said they would delay the laying of their new Licensing Order until November 2021, meaning that there is time to work together to ensure what is taken forward is balanced, evidence-based, proportionate, and fair.

Short-Term Let Regulation: The Problem

• There is agreement from nearly all stakeholders about the need for some form of regulation, just not on what form this should take. Despite the years of discussion, there is still uncertainty about what the Scottish Government are seeking to achieve through their legislation. While meaning to focus on health and safety, it has widened to include issues like housing and anti-social behaviour:
• If it is about health and safety – this can be addressed through our exemption proposal.
• If it is about anti-social behaviour – enforce existing legislation such as the Antisocial Behaviour Notices (Houses Used for Holiday Purposes) (Scotland) Order 2011.
• If it is about housing – introduce short-term let control zones using Planning Act regulations and empirical data to underpin any proposals.
• Moreover, there remains a lack of understanding of what makes up the short-term letting landscape. The current approach does not properly distinguish between full-time professional businesses and amateur operators. Professionals, like those engaged in self-catering, have been a longstanding presence in Scotland for decades, especially rural/remote communities. However, the rapid development of the collaborative economy resulted in a proliferation of new operators, many of which are unaware of the legislation designed to ensure the safety of tourism accommodation and are outside the inspection regimes of enforcement bodies.
• Professional self-caterers and B&B owners will still be captured by the onerous ‘revised’ Scottish Government regulations, devised to respond to concerns predominantly found in urban areas over party-flats and amateur operators utilising marketing platforms (i.e., Airbnb and Booking.com).
• Nearly half of self-catering operators will quit should the current licensing plans come into force, thereby harming Scotland’s renowned tourism offering. With expensive licensing fees of £1,000+, it will entail a materially negative impact for small business at a time when they should be supported for a sustainable recovery.[1]

Short-Term Let Regulation: The Solution

• There is a need for an effective and proportionate regulatory framework to enable small tourism businesses to recover from Covid-19, providing the correct balance between supporting a £867m self-catering industry[2] and responding to community concerns in some parts of Scotland.
• The ASSC is not averse to regulation – it has led the way in promoting policy recommendations to the Scottish Government – and the industry wants to work with policymakers to make these regulations work for all affected stakeholders.
• The ASSC believes all operators providing tourism accommodation should: provide customers with accommodation that is safe; comply with all regulatory requirements in accordance with the principle of proportionality; and pay all due taxes.
• The Scottish Government are clear they are wedded to the concept of licensing, but industry proposals will allow them to introduce a licensing regime yet at the same time also mitigate the impact for professional operators who already play by the rules in terms of legal compliance, and work within a Code of Conduct.
• The ASSC’s proposals help make the crucial distinction between bona fide businesses like self-catering, who have been a mainstay of the tourist offering in Scotland for decades, and amateur operators facilitated by online platforms; and will also deal with the worst excesses of the latter who cause the most disruption for residents and who are insufficiently regulated.
• It supports minimum quality standards for the industry, based on existing H&S legislation, assures properties are safe and compliant and removes the uncertainty of licences being refused or revoked, whilst properly focusing attention on irresponsible behaviour management.
• We suggest a review of entire the regulatory framework after 12 months. This will offer opportunities for changes and amendments.

How Would This Work?

• The ASSC’s proposal allows for a suitable compromise between differing positions: the Scottish Government can introduce licensing but exclude registered accommodation. Rather than scrapping licensing altogether, Article 3(1) of the Order[3] could be amended to provide that an activity is exempt from the licence requirement if it is in respect of “registered accommodation” and the “registration conditions” (essentially the existing mandatory licensing conditions) are being complied with.
• This would have the effect of providing a robust and legally effective regulatory regime – if an owner fails to register or having registered fails to comply with the mandatory conditions, they would no longer be exempt from the licensing requirement and would therefore be in breach of the Licensing Order with resulting legal penalties.
• A register could be introduced via the Development of Tourism Act 1969. Legitimate businesses, identified by criteria recognised by the Scottish Government could register and become exempt, thus avoiding business closures and harmful knock-on effects.
• The ASSC have suggested that VisitScotland could deliver the register. However, this could also be taken on by councils to introduce local schemes if policymakers regard that as more appropriate.
• The setup of the Register would require one off establishment funding. Subsequent running costs can be best and easily raised through an annual registration fee.
• The core of the register is the creation of an on-line database platform, an online website and interactive access to key facilitators to capture data and other inputs. The data will measure the effectiveness of the regulation and guide future amendments.
• This approach recognises the Scottish Government’s intention to regulate short-term lets but achieves the same policy objectives in a more proportionate and cost-effective manner for those already complying with the proposed mandatory licensing conditions.
• The ASSC has recommended such a register since 2017 and is disappointed that the suggestion has been ignored. We are keen for the establishment of a register for professional operators to be delivered as soon as practicable possible, in advance of licensing legislation being introduced.
• The ASSC introduced the Scottish Tourism Accommodation Register (STAR)[4] in February 2021 to evidence how a Register could work, and to gauge appetite from operators, which was extremely positive.

Other Benefits the Register could Deliver
It becomes the instrument which owners and managers can utilise to make a formal declaration that they are operating within existing legal compliance, and adhering to the industry Code of Conduct. In this respect ‘Registration’ offers far reaching benefits:

• Guest confidence that the property is genuine and offered legitimately – Guest and community confidence that the property meets industry standards of safety, compliance and quality
• Community confidence that irresponsible owners, operators (and guests) can be targeted and excluded
• Ensures industry participants are professional and compliant.
• Evolve standards, industry recognition, self-fulfilling operator pride.
• A Registration Mark could be developed as a badge of confidence and standing.
• Local Authorities and VisitScotland could have access to same data, but reduce the administrative burden of inspection and enforcement (eg 18,000 SCUs on NDR).
• Fast track exclusion of second homes from NDR and Small Business Bonus Scheme.
• Assist Assessors with NDR data as part of the annual declaration (see Annex B).

Audit and Verification Processes

• Accuracy of data and evidence of compliance can be assured using technology that is common today via a relatively simple proactive online process, akin to the Landlords Register.
• Registrants would be required to certify details and property compliance, and upload key source documents (Rates Notice, Insurance Policy, etc) completing the declaration and issuing a Registration ID with an online payment. Most key information could be verified automatically.
• VisitScotland and Local Authorities can use the same technology stack to offer a centralised database, in order to inform future investment and resource.

Identification of properties could be clear:
VSNDR/CT + LA ref + unique code of property (Registered Accommodation)
LANDR/CT + LA ref + unique code of property (Licenced Accommodation)

The ASSC Exemption: Benefits for Stakeholders

Benefits for Stakeholders

Overall, the exemption proposal assures the appropriate regulatory balance, providing the following benefits for government, professional and amateur operators, tourists, and local communities.

• Scottish Government: addresses the key concern of ensuring mandatory health and safety and providing publicly accessible information ownership.
• Local Councils: reduces the cost of administering businesses who are already compliant and can provide the data required by councils considering introducing a short-term let control zone.
• Scottish Assessors: Assist with Non-domestic Rates Revaluation and exclusion of second homes in Small Business Bonus Scheme with accurate, up to date data.
• Traditional Businesses: minimises the burden for hard-pressed self-catering and B&B operators, already compliant with existing regulations, in a way that does not inhibit their Covid-19 recovery.
• Amateur Operators: raises standards across the short-term let landscape, nudging individuals to adhere to health and safety standards, while incurring stiff penalties for those who do not.
• Tourists: continues to allow visitors to continue to enjoy Scotland’s unique hospitality and diversity of accommodation, while maintaining standards and quality.
• Communities: enables professional operators to provide a badly needed economic boost to local economies, while also dealing with negligent or rogue operators.

Footnotes

[1] A Society of Local Authority Lawyers & Administrators in Scotland representative on the Working Group noted the scheme would have to run on a cost recovery basis and could cost in the region of £1,500-£2,000 per licence, way above the £223-337 suggested by the BRIA.

[2] For further details, see: https://www.assc.co.uk/wp-content/uploads/2021/08/Economic-Impact-Study-%E2%80%93Scotland-Report.pdf

[3] The Civic Government (Scotland) Act 1982 (Licensing of Short-term Lets) Order 2021.

[4] https://www.assc.co.uk/policy/scotlands-tourism-accommodation-register-star/