DATA LABEL: PUBLIC
SERVICES FOR THE COMMUNITY POLICY DEVELOPMENT SCRUTINY PANEL
SCOTTISH GOVERNMENT CONSULTATION ON THE REGULATION OF SHORT TERM LETS
REPORT BY HEAD OF HOUSING, CUSTOMER AND BUILDING SERVICES
A. PURPOSE OF REPORT
To inform the panel that the Scottish Government is undertaking consultation on the regulation of Short Term Lets by Local Authorities in Scotland. The submission date for responses to be included in the consultation process is the 19 July 2019.
B. RECOMMENDATION
The panel is requested to consider the council’s proposed response to the consultation set out in Appendix 2 of this report. The report will be submitted to Council Executive for approval on 25th June 2019.
C. SUMMARY OF IMPLICATIONS
I Council Values Focusing on our customers' needs; being honest, open and accountable; providing equality of opportunities; making best use of our resources; working in partnership.
II Policy and Legal None. (including Strategic Environmental Assessment, Equality Issues, Health or Risk Assessment)
III Implications for None. Scheme of Delegations to Officers
IV Impact on performance None. and performance Indicators
V Relevance to Single SOA10 – We live in well designed, sustainable Outcome Agreement places where we are able to access the services we need.
SOA11 – We have strong resilient and supportive communities, where people take responsibility for their actions and how they affect others.
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VI Resources - (Financial, None. Staffing and Property)
VII Consideration at PDSP None.
VIII Other consultations Police and Fire Service, Finance and Property, Planning, Economic Development and Regeneration, Legal Services
D. TERMS OF REPORT
D.1 BACKGROUND
The Scottish Government has made a commitment to ensure that local authorities have appropriate regulatory powers to balance the needs and concerns of their communities with the wider economic and tourism interests. There is a two sided argument that while short-term lets, such as holiday lets, provide much needed accommodation solutions, help to facilitate tourism and have associated economic benefits, there are a number of problems created such as, a lack of community cohesion, antisocial behaviour, and safety implications due to a lack of regulation.
There is currently no statutory definition of what constitutes a short-term let in Scotland. In order for a short-term let to take place a ‘host’ offers short-term accommodation to one or more ‘guests’. Accommodation platforms such as AirBnB, HomeAway and House Trip are used to advertise short-term holiday lets for rent. There has been a significant growth in short term lets in a short timescale across Scotland.
The purpose of this consultation is to collect the views of local authorities and their partner organisations to help shape the regulatory approach to short-term lets.
D.2 EVIDENCE AND IMPACT OF SHORT TERMS LETS IN WEST LOTHIAN
While there is a significant amount of data available about the growth of short term lets in Edinburgh, there is less information available about the impact short term lets are having in other authority areas.
According to recent data from AirDNA, a short term let data and analytical platform, West Lothian has 189 active rentals of which 60% are entire homes. In comparison Edinburgh, has 9,107 active rentals of which 68% are entire homes. Appendix 1 shows a comparison of the concentration of short term lets in West Lothian and Edinburgh. It is clear that there is a significantly higher density of short term lets in Edinburgh than in West Lothian.
D.3 CONSULTATION AND RESPONSE
Officers have highlighted that the proposed definition of short term lets set out in the consultation is overly complex and this should be simplified.
The consultation outlines three ways in which a host may make accommodation available to a guest:
1. ‘sharing’ a room or rooms to the guest with the host in residence,
2. ‘swapping’ a room or entire property where the host normally lives, when the host is absent, and;
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3. ‘secondary letting’ a room or entire property, where the host does not normally reside and the host is absent.
Officers suggest that a regulatory framework might be most appropriate for ‘secondary letting’. Particularly those properties with a common stairwell which are most likely to give rise to some of the issues associated with short term lets.
Some of the negative associations with short term lets are outlined in the consultation including; noise, inconvenience, antisocial behaviour and lack community cohesion. However, these are balanced with some of the positive impacts short term lets can have on tourism, economic development, and housing options for contract workers.
There has been little reporting of positive or negative impacts of short term lets in West Lothian. This may be due to the council having no way of recording complaints which are generated specifically by short-term lets or due to the pepper potting nature of these property types across the local authority area (see Appendix 1).
D.4 REGLATORY FRAMEWORK
Officers suggested that it would be useful if legislation clarified when planning permission was required to operate a short term let.
Officers would also be supportive of having a mandatory registration scheme in place, similar to the current Landlord Registration which would ensure that all appropriate data was collected and monitored. The scheme would need to be self- financing or funded with no additional cost to the council.
Where areas of high short term let pressure exist, local authorities should have the option to identify these geographical areas and implement a more stringent licensing scheme which would assist in controlling the number of short term lets in particular geographical areas.
Consideration should be given to providing properties with a unique registration number and requiring all short term let communication or advertising (electronic or otherwise) to include the reference number. This mirrors the requirement for the Landlord Registration number to be provided on adverts and permits the customer to identify whether the short term let is suitably registered or licensed.
D.5 NEXT STEPS
Responses to the consultation on the regulation of short term lets by local authorities are to be submitted to the Scottish Government by the 19th July 2019.
The proposed response from the council, attached as Appendix 2 to this report, will be reported to Council Executive on 25th June 2019 seeking approval to be submitted to the Scottish Government by 19th July 2019.
E. CONCLUSION
The council has been invited to participate in the consultation process regarding the regulation of short term lets by local authorities. The council welcomes the opportunity to participate and to provide a consultation response encompassing contributions from key service areas from within the council.
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F. BACKGROUND REFERENCES
Scottish Government (2019) ‘Short-Term Lets Consultation on a Regulatory Framework for Scotland’, Available [online] at: https://www.gov.scot/publications/short-term-lets-consultation-regulatory- framework-scotland/
Scottish Government (2019) ‘Short-Term Lets: Consultation Annexes’, Available [online] at: https://www.gov.scot/publications/short-term-lets-annexes-consultation- regulatory-framework-scotland/pages/1/
AirDNA (2019) Short Term Rental Data & Analytics, Available [online] at: https://www.airdna.co/
The Antisocial Behaviour Notices (Houses Used for Holiday Purposes) (Scotland) Order (2011) Available [online] at: http://www.legislation.gov.uk/sdsi/2011/9780111012024
Appendices/Attachments: Appendix 1: Short Term Lets - Comparison between West Lothian and Edinburgh, AirDNA Data Appendix 2: West Lothian Council Proposed Consultation Response Appendix 3: Short Term Lets - Consultation on a Regulatory Framework for Scotland Appendix 4: Short Term Lets – Annexes to the Consultation on a Regulatory Framework for Scotland
Contact Person: Courtney Gemmell, Planning and Coordination Officer, 01506 283486 Ann Marie Carr, Interim Head of Housing, Customer and Building Services
Date of meeting: 11th June 2019
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Appendix 1 - Comparison of the Concentration of Short Term Lets in West Lothian and Edinburgh
Image 1: Short Term Lets (Entire Homes and Rooms) in West Lothian. Data Source: AirDNA May 2019
Image 2: Short Term Lets (Entire Homes and Rooms) in Edinburgh. Data Source: AirDNA May 2019 Appendix 2: Consultation Response
Short-Term Lets: Consultation on a regulatory framework for Scotland
RESPONDENT INFORMATION FORM
Please Note this form must be completed and returned with your response.
To find out how we handle your personal data, please see our privacy policy: https://beta.gov.scot/privacy/
Are you responding as an individual or an organisation?
Individual Organisation
Full name or organisation’s name
West Lothian Council
Phone number 01506 283486 Address West Lothian Civic Centre Howden Road South Livingston
Postcode EH54 6FF
Email [email protected]
The Scottish Government would like your Information for organisations: permission to publish your consultation response. Please indicate your publishing The option 'Publish response only (without preference: name)’ is available for individual respondents only. If this option is selected, the organisation name will still be published. Publish response with name If you choose the option 'Do not publish Publish response only (without name) response', your organisation name may still be listed as having responded to the consultation Do not publish response in, for example, the analysis report.
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Appendix 2: Consultation Response
We will share your response internally with other Scottish Government policy teams who may be addressing the issues you discuss. They may wish to contact you again in the future, but we require your permission to do so. Are you content for Scottish Government to contact you again in relation to this consultation exercise? Yes No
1. Are you aware of any additional data on the impacts of short-term lets (over and above that set out in Annex A – The Short-Term Rental Sector, Housing and Tourism in Scotland and briefly summarised above) which the Scottish Government should take into account when considering proposals for regulation?
West Lothian Council have nothing further to add to Annex A.
2. Should a regulatory framework distinguish between sharing, swapping and secondary letting?
Yes
As short term lets are not private residential properties and the guests do not have the same rights as tenants, we would suggest that regulation could be tailored to each way of hosting.
The ‘Sharing’ category of short term lets are likely to be less problematic as the ‘host’ remains on-site, and would be able to mitigate some of the negative aspects sometimes associated with short term lets.
‘Swapping’ is likely to be infrequent and for short periods of time (for example, two weeks while the host is on holiday) and as a consequence is likely to have minimal impact.
‘Secondary letting’ is the category that has the most potential to give rise to issues of noise, parking etc. in part due to the absence of any form of on-site self-regulation. There may be additional safety concerns where the host is absent, so regulation or licensing may help to mitigate some of these concerns.
3. Should the rules be capable of being different depending on the type of accommodation? For example, to distinguish between tenement flats and detached houses.
Yes
West Lothian Council would agree that there should be a degree of flexibility in the rules depending on the type of accommodation offered.
Potential noise and inconvenience issues are more likely to occur in flatted properties where there is a common entrance stairway, where even routine use by considerate guests may cause neighbours inconvenience or nuisance. The
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Appendix 2: Consultation Response
cumulative effect in a regularly used flatted property may be significant for neighbours.
Larger properties also have the potential to be used by larger groups, and cause problems of overcrowding and in some instances noise complaints from weekend parties.
We accept and understand the concerns raised by local authorities, such as Edinburgh and Glasgow who have a high number of tenement flats, and an increasing number of these are being let on a regular short term basis.
This is not something which is reported as a particular issue within West Lothian as there are less flatted developments and fewer short term lets.
4. Do you have any comments on any other aspect of the definition of short term lets?
The definition set out in Point 3.11 of the consultation is overly complex, and should be simplified.
There is clarity needed on the 28 day period, e.g. is this by calendar year or financial year.
Furthermore it may be difficult for local authorities to find out how long properties are being let for unless there are powers for local authorities to obtain letting information from hosts and platforms.
Point 13.12 makes reference to ‘new lets’. It is unclear if the short term lets properties operating before 1st December 2017 would be immune from any enforcement action.
5. Do you have any comments on the positive or negative impacts of short- term lets?
The consultation paper and supporting documentation would appear to provide a balanced discussion of both the positive and negative impacts of short term lets.
6. Do you have any examples of other positive or negative impacts of short- term lets?
Waste management issues associated with short term lets should be considered as a negative impact. As many local authorities now only provide domestic waste collection services, short term lets which are categorised as ‘secondary lets’ should potentially be arranging independent waste collections.
There has been little reporting of negative impacts of short term lets in West Lothian. This may be due to a lack of reporting channels within the council specifically for short term lets or due to the pepper potting nature of these property types across the local authority area. Since there is no significant concentration of these types of
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Appendix 2: Consultation Response
properties problems of antisocial behaviour, increased noise, and lack of community cohesion are not particularly associated with short term lets in West Lothian.
7. Do you have any comments about the impact of short-term lets on the housing market?
While, in some parts of Scotland, short term lets facilitate a large volume of visitors and the growth in the sector has been significant, in West Lothian there is less of a demand for short term lets. West Lothian does not feature in the Top 15 destinations in Scotland according to Airbnb figures. The number of homes and individual rooms listed in West Lothian according to AirDNA figures is approximately 189, which is relatively low.
It is accepted that while there may be some impact of reducing the number of potentially permanent homes, the annual increase in the supply of new build houses appears to be greater than the number of houses being ‘lost’ to short term lets.
There is no evidence in West Lothian to suggest that an increase in rents and/or house prices can be attributed to short term lets.
8. Do you have any comments on the restrictions imposed on short-term lets by planning law?
At present, West Lothian Council as the planning authority has to decide if a material change of use has occurred by having regard to the specific circumstances of each case. It is a matter of “fact and degree” if a material change has occurred.
It would be useful if legislation was in place which clarified when planning permission was required to operate a short term let.
It may be useful if short term lets were placed in a separate use class or identified as a Sui Generis use.
9. Do you have any comments on powers to tackle antisocial behaviour caused by short-term lets?
At present West Lothian Council believe that we have sufficient powers to tackle antisocial behaviour if we utilise Statutory Instrument (SI) 201 of The Antisocial Behaviour Notices (Houses Used for Holiday Purposes) (Scotland) Order 2011, which is a specific SI dealing with homes used for the purpose of Holiday Lets.
The following conditions need to be met in order for the council to issue an Antisocial Behaviour Notice to a property as being a holiday let:
1. There must have been at least two occasions on which the property has been used for holiday purposes, 2. During at least two of those occasions antisocial behaviour has been engaged in by a user or visitor and; 3. The authority anticipates further use for those purposes that will result in antisocial behaviour by such a person.
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Appendix 2: Consultation Response
An Antisocial Behaviour Notice must include details of the action a landlord must take to prevent future antisocial behaviour.
In which case, the current legislation in terms of notices which can be served and further management controls are still entirely applicable by way of current ASB legislation procedures. For a short term let the council would need to consider the proposed length of any tenancy as to whether it is practicable or not to pursue an action against a tenant.
The council would continue to investigate all complaints but that investigation must also be balanced with allowing an individual to enjoy their property.
10. Do you have any comments about complaint systems for short-term lets?
The council currently does not have a monitoring system which records complaints which are generated specifically by short term lets in the area.
Currently complaints may be received by several different services and the complainant may raise a number of different issues. In addition, some ‘annoyance’ matters may not be recorded, simply because no agency has intervention powers, such as use of others’ parking spaces within flatted developments.
If regulation and/or licensing was introduced for short term lets, it would need to clearly set out the regulatory framework to allow local authorities to clearly explain to the public what they can complain about in relation to short term lets. Each local authority would then advertise what complaints can be made in relation to short-term lets.
11. Do you have any comments on safety issues related to short-term lets?
If regulation and/or licensing were established short-terms lets should be required to meet a certain standard. The standard should be the same level as private rented properties are required to meet.
Standards for ‘secondary letting’ should be in line with those in the statutory Repairing Standard. A lesser standard may be more proportionate for ‘sharing’ or ‘swapping’ scenarios, although the need for fire detection and warning equipment in all homes (applicable to the Tolerable Standard from 2021) should be mandatory for all such accommodation.
The term ‘health and safety’ is used broadly, but some clarity is required on its use. ‘Health’ issues are less likely to be an issue in short term lets. The Public Health (Scotland) Act may apply in these types of scenario in addition to other regulatory frameworks.
‘Safety’ is more likely to be an issue. Many homes will not comply with current building standards (for example bannister/ railing height and spacing).
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Appendix 2: Consultation Response
“Safety” should be dealt with by way of the regulation framework in terms of the physical safety of the accommodation, Gas, Electricity safety checks etc. Through the relevant enforcement body such as Environmental Health, Planning, Fire Service; all of these have current involvement in terms of ‘safety’ for current private let and holiday homes, each has a statutory duty to ensure that regulations are followed and enforced.
Enforcement of Health and Safety law will be split between local authorities (commercial premises) and the Health and Safety Executive (HSE) (domestic properties). The status of ‘sharing’ and ‘swapping’ properties should be discussed and agreed with the HSE.
12. Do you have any comments on eligibility for non-domestic rates?
Self catering holiday accommodation should be eligible for non domestic rates where the property is no ones sole or main residence and meets the eligibility criteria.
13. Do you have any comments on the additional eligibility requirements recommended by the Barclay Review?
West Lothian Council responded to the Barclay Review consultation in May 2018, the council supported the proposed changes for self catering accommodation along with the ability to retain discretion in the application of the policy in exceptional circumstances.
The Barclay Review recommended that self-catering properties should be required to prove an intention to let for 140 days in the year as well as evidence of actual letting for 70 days in order to be considered exempt from Council Tax.
One of the challenges of the short term lets is the fluidity and seasonal nature in some cases. It is therefore possible that any particular operation may change its status within the course of any 12 month period or for parts of it.
The Barclay Review essentially looks at whether an operation is a business or not. This also affects the determination as to whether health and safety law is enforced by the local authority or Health and Safety Executive. For clarity for business and regulators alike, it would be helpful to co-ordinate this business / domestic distinction with the enforcement responsibility demarcations for health and safety law.
14. Do you have any comments on the eligibility of self-catering accommodation for the Small Business Bonus Scheme?
Where self catering accommodation is determined to be liable for non domestic rates they should be eligible for the Small Business Bonus Scheme as other small businesses are.
15. Do you have any other comments on taxation relating to short-term lets?
No other comments.
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Appendix 2: Consultation Response
16. Do you have any additions or amendments to the proposed design principles?
Principle 4 relates to the regulatory framework being responsive. This is important as a national approach to this issue may not be appropriate. West Lothian does not face the same negative aspects sometimes associated with short term lets as cities at present, and to be too restrictive might stunt growth, tourism and economic advantages.
Principle 5 relates to using or supplementing existing powers and solutions, where possible. The general principle is accepted. However, in relation to noise and statutory nuisance:
As incidents are most likely to be associated with transitory ‘guests’, there must be an ability to either:
1. Apply fixed penalties or other financial sanctions ‘on the spot’; and / or 2. Hold the landlord and /or agent fully responsible for any actions or penalties due to be paid to regulators by guests.
There is a clear distinction between amenity matters and those which may be covered by statutory nuisance or Anti-Social Behaviour (ASB) law. Whilst some incidents or matters are amenable to statutory nuisance or ASB law, many more may not meet the thresholds for intervention. Consideration needs to be given to whether control is to statutory nuisance / ASB standards or higher amenity standards. As a parallel example, the degree of control over noise which can be effected by a planning condition for noise is significantly greater than that which can be achieved by an ASB notice or abatement notice.
Principle 9 refers to the regulatory framework being cost effective. Whilst it is desirable that the system is cost effective it is going to be very challenging to make the scheme cheap to run or self-financing. In order for the scheme to be robust local authorities would need to employ suitably qualified staff to investigate complaints. Complaints regarding the condition of properties will require technical knowledge to investigate and as a result staffing costs may be considerable. It is always a challenge to set fees at a level which will cover the cost of the scheme particularly in areas like West Lothian where there are unlikely to be large numbers of properties which would fall within the scheme.
17. Do you have any comments on the proposed scope of a regulatory framework?
Short-term let registration and monitoring may fit best within the Landlord Registration Service within the local authority. This would ensure compliance and processes which are already in place for Landlord Registration can be adapted to deal with short-term lets, which would minimise duplication of work and keep a central record of those registered and/or licenced.
Licensing and registration schemes are commonly predicated on being self- financing. In larger cities and popular tourist areas, this may be possible. However, in
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Appendix 2: Consultation Response
areas with lower levels of short term lets, the costs of running a registration scheme may be significantly disproportionate to the arising income. This is a particular problem when small numbers of registered or licensed operations are outnumbered by unlicensed /unregistered operations which require enforcement interventions.
The Scottish Government 2018-19 Programme for Government is committed to provide local government with powers “to ensure a safe, quality experience for visitors, whilst protecting the interests of local communities.” This implies the need for some degree of property assessment and / or inspection. Where any inspection of a property is required to ensure compliance with the necessary standards licensing is likely to be required rather than just registration.
18. Do you have any comments on the controls or conditions which councils should be able to set through a registration or licensing regime?
The council would be supportive of having a registration and/or licencing scheme in place, similar to the current Landlord Registration which would ensure that all appropriate data was collected and monitored. The scheme would need to be self- financing or funded with no additional cost to the council.
Consideration should be given to a mandatory registration scheme, but where areas of high short term let pressure exist, local authorities should have the option to identify these geographical areas and implement a more stringent licensing scheme which would assist in controlling the number of short term lets in particular geographical areas.
19. Do you have any comments on whether a licensing scheme and/or market- based approach, and any associated charges, should apply to all types of short-term lets and whether conditions and/or charges should vary according to the type of property, its location or the number of rooms?
We do not think that regulation should apply to ‘sharing’ or ‘swapping’ short term lets as these are generally small scale and have little impact on the wider housing market. There may however be a case for introducing charges for ‘secondary letting’ if this is needed to cover the cost of operating and enforcing a licensing scheme.
20. Do you have any comments on the effectiveness of a days-per-year limit in meeting the Scottish Government’s objectives?
West Lothian Council has no comment on the effectiveness of a days-per-year limit.
21. Do you have any comments on how regulations should deal with commercial hosts?
There is no set definition of a ‘commercial host’; this would need to be established.
22. Do you have any comments on who should be subject to enforcement and sanctions?
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Appendix 2: Consultation Response
Local authorities should be given the power to request any information in which they require from the host to deal with any complaints or concerns. Similar to the regulation of Houses of Multiple Occupation (HMOs) if it is identified that a short-term let is not registered/licensed the Local Authority should have the ability to send two requests to the host to register and if an application is not submitted within 21days a fixed penalty could be applied.
If regulation and/or licensing was agreed a fine could also be applied to a host that does not comply with the registration and/or licensing requirements.
Where on the spot enforcement / sanctions against guests cannot be carried out, the landlord and /or agent must be fully liable for any actions or penalties due to be paid to regulators by guests.
Point 4.85 of the consultation makes reference to ‘visits’. To be effective, powers of entry must be provided for regulators. Regulators would need to be funded through income fee.
Furthermore, Point 4.88 makes reference to fines. Should fixed penalties be available, these should be set at a minimum default value sufficient to deter undesirable behaviours.
23. Do you have any other comments on short-term lets not covered in your answers to the above?
Whilst many issues could be overcome by necessary buy-in from third party commercial platforms, no indication is given as to whether there is a willingness to do so. Some platforms are international and may not willingly adapt to legal requirements unique to Scotland.
Consideration should be given to providing properties with a unique registration number and requiring all short term let communication or advertising (electronic or otherwise) to include the reference number. This mirrors the requirement for the Landlord Registration number to be provided on adverts and permits the customer to identify whether the short term let is suitably registered or licensed.
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Short-Term Lets
Consultation on a regulatory framework for Scotland
April 2019 Short-Term Lets: A Consultation
CONTENTS
1. Executive Summary
2. Introduction
3. Definition of Short-Term Lets
4. Regulation of Short-Term Lets in Scotland
5. Responding to the Consultation
ANNEXES (published separately)
Annex A: The Short-Term Rental Sector, Housing and Tourism in Scotland
The Short-Term Rental Sector in Scotland Self-catering accommodation in Scotland Collaborative Economy Accommodation Platforms Airbnb in Scotland Housing market in Scotland Tourism in Scotland
Annex B: Regulation Outwith Scotland
Regulatory Approaches European Country Regulations (Denmark, Greece, Ireland, Italy) European City Regulations (Amsterdam, Barcelona, Berlin, Hamburg, London, Madrid, Paris, Reykjavik) North American City Regulations (Boston, Montreal, New York, Philadelphia, San Francisco, Santa Monica, Toronto, Vancouver)
Annex C: Bibliography
Page 2 of 50 Short-Term Lets: Consultation 1. Executive Summary
1.1. Short-term lets have become the subject of much controversy in some parts of Scotland and evoke strong opinions. Our 2018-19 Programme for Government made a commitment to ensure that local authorities have appropriate regulatory powers to balance the needs and concerns of their communities with wider economic and tourism interests. This consultation asks for your views on what those powers should be.
1.2. A Short-Term Lets Delivery Group was established in 2018 to assess the evidence base and the impact, positive and negative, of short-term lets, identify the existing powers councils have and explore whether further measures are required. The Group comprises officials from across relevant areas of government including: better regulation, community empowerment, economy, housing, licensing, planning, tax and tourism. This consultation paper draws together this wide range of policy interests in short-term lets.
1.3. The introduction to the consultation paper provides a summary of the available evidence, with much fuller details about the current position in Scotland and elsewhere in the world set out in a separate supporting document. There has clearly been a significant growth in short-term lets in a small timescale, and while there are significant amounts of data available about the position in Edinburgh, there is much more limited information on the position elsewhere in Scotland.
1.4. The Scottish Government welcomes the economic benefits which the development of new models of short-term letting brings to Scotland. However, we also recognise the problems caused by short-term lets which are summarised in this paper. Your views are invited on how they might be addressed.
1.5. This consultation paper outlines a regulatory approach which might involve registration and/or licensing of short-term lets, with the possible addition of a market-based mechanism to control numbers. A range of approaches have been adopted in cities and countries around the world but we need to find the right approach for Scotland and enable different areas to tailor the approach to their local needs and priorities. The consultation asks for your opinions on that as well as on the types of short-term lets which should be regulated and the controls which should be applied.
1.6. The paper also signposts other action being taken by the Scottish Government which may impact on short-term lets, including the developments in the Planning Bill which is currently before Parliament. The fiscal levers available to the Scottish Government also potentially have a key role to play in delivering an optimal solution. The paper therefore highlights that the Scottish
Page 3 of 50 Short-Term Lets: Consultation Government has committed to an independent evaluation of the Small Business Bonus Scheme for non-domestic rates and will consult this year on the principles of a locally determined tourist tax, including its application to short-term lets prior to introducing legislation to permit local authorities to introduce such a tax, if they consider it appropriate for local circumstances. The Small Business Bonus Scheme evaluation, planned to commence in June 2019, will explicitly explore the impact of the Small Business Bonus Scheme on the short-term letting market and the Scottish Government are committed to the findings being addressed in time for the 2022 non-domestic rates revaluation.
1.7. Your views will help the Scottish Government shape the regulatory approach to short-term lets. Questions are asked at relevant points in chapters 3 and 4 and restated in the response form in chapter 5, which is also available online at https://consult.gov.scot/housing-services-policy-unit/short-term-lets
Page 4 of 50 Short-Term Lets: Consultation 2. Introduction
2.1. This consultation paper invites views on the regulation of short-term lets in Scotland. Scotland’s economy benefits hugely from tourism, but it should not be at the expense of local communities. The Scottish Government wants to keep welcoming visitors to Scotland while ensuring that local residents can continue to live, work and flourish, right across Scotland – whether in our cities, towns or rural communities.
Consultation Questions
This paper invites responses to Questions on a range of issues which the Scottish Government will take into account when considering proposals for regulation. A full set of questions can be found in Chapter 5, together with a copy of the response form, which is also available online at:
https://consult.gov.scot/housing-services-policy-unit/short-term-lets
2.2. This paper takes forward the commitment in the Scottish Government’s 2018- 19 Programme for Government1 to:
“work with local government, communities and business interests to ensure that local authorities have the appropriate regulatory powers [in relation to short-term lets] to allow them to take the decisions to balance the needs and concerns of their communities with wider economic and tourism interests.
These powers will allow local authorities to ensure a safe, quality experience for visitors, whilst protecting the interests of local communities.”
2.3. The Scottish Government is committed to taking this issue forward in a way that is informed by the available evidence, including the views of those affected.
2.4. This consultation paper therefore also sets out the factual background on the short-term rental sector in Scotland, including the substantial growth in collaborative accommodation platforms, particularly Airbnb, below and in much greater detail in Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland, together with an overview of the regulatory approaches taken elsewhere in the world in Annex B - Regulation Outwith Scotland.
1 ‘Delivering for today, investing for tomorrow: the Government's programme for Scotland 2018-2019’, September 2018 (page 97) https://beta.gov.scot/publications/delivering-today-investing-tomorrow- governments-programme-scotland-2018-19/
Page 5 of 50 Short-Term Lets: Consultation The Scottish Expert Advisory Panel on the Collaborative Economy
2.5. The Scottish Expert Advisory Panel on the Collaborative Economy2 reported that peer-to-peer accommodation expands the range, choice and flexibility of accommodation for tourists in Scotland and the Scottish Government welcomes the positive contribution which it can make to Scotland’s economy.
2.6. However, the Panel also highlighted a number of issues and challenges which exist in relation to peer-to-peer accommodation, and short-term lets more broadly. The Panel recommended that:
• Platforms should be required to make a greater commitment to providing upfront information.
• There should be clear, communicated routes to escalating complaints.
• Anyone renting out their property via a digital platform should be shown – and indicate their acceptance of – specific local rules and regulations regarding any thresholds of usage stipulated by the local authority prior to being accepted onto the platform.
• Platforms serve up – or link to – clear guidance to providers as to their income, business and council tax liabilities that result from providing goods and services through collaborative platforms.
• Minimum health and safety thresholds already exist at a Scotland level. Regulations should reflect the development of the collaborative economy by specifically referring to peer-to-peer accommodation, to give greater clarity to providers and users.
2.7. The Panel also made a number of recommendations specific to peer-to-peer accommodation, particularly in relation to safety, which are set out in Chapter 3.
2.8. The Scottish Government’s Response3 to the Panel’s report aspired to the collaborative economy successfully contributing to the overarching purpose of creating a fairer, more equal Scotland and acknowledged the need to balance the potential benefits to the Scottish economy with a recognition of the needs of communities:
2 ‘Scottish expert advisory panel on the collaborative economy: report’, January 2018 https://www.gov.scot/publications/scottish-expert-advisory-panel-collaborative-economy-report/ 3 ‘Collaborative economy report response: June 2018’ https://www.gov.scot/publications/scottish- government-response-scottish-expert-advisory-panel-collaborative-economy-report/
Page 6 of 50 Short-Term Lets: Consultation “A socially responsible collaborative economy that builds upon and embeds our Fair Work values is central to achieving [a fairer, more equal Scotland] and will deliver the greatest benefits to all in Scotland. …
We understand the calls for new controls over the short-term letting of residential properties in some areas of the country and welcome the Panel’s consideration of this issue. We must strike the right balance for our local economies and communities. We have to ensure that residents can find the right homes and that they can afford to live, and enjoy living, in their neighbourhoods. We also need to help tourists find places to stay. This is a complex issue but it is one that a number of cities globally have been tackling and we will make sure Scotland comes up with solutions to fit its distinct needs, whilst learning from other places”.
The Short-Term Lets Delivery Group
2.9. Work on this issue has been taken forward by the Short-Term Lets Delivery Group (STLDG), whose establishment was announced on 10 July 2018, in the Scottish Government’s Response to The Scottish Expert Advisory Panel on the Collaborative Economy. The STLDG comprises officials from across the Scottish Government, including housing, planning, local government, licensing law, tourism, community empowerment and consumer policy.
2.10. The work of the STLDG is guided by the National Performance Framework4: in particular by the National Outcomes for Economy (We have a globally competitive, entrepreneurial, inclusive and sustainable economy) and Communities (We live in communities that are inclusive, empowered, resilient and safe).
Collaborative economy online accommodation platforms in Scotland
2.11. As noted by the Scottish Expert Advisory Panel on the Collaborative Economy, there are now a range of collaborative platforms offering tourist accommodation in Scotland, in addition to the traditional self-catering sector see Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland). The Expert Panel’s report recorded that these platforms providing short-term lets represent the largest sector of the collaborative economy in Europe.
4 https://nationalperformance.gov.scot/
Page 7 of 50 Short-Term Lets: Consultation 2.12. The following paragraphs provide some key facts in relation to those collaborative economy online accommodation platforms operations in Scotland. For more detailed information see Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland. For information on the terminology used, see Chapter 3 - Definition of Short-Term Lets.
2.13. A number of collaborative economy online accommodation platforms operate in Scotland, including Airbnb, HomeAway and HouseTrip, alongside other online accommodation platforms which have a greater focus on traditional tourist accommodation sectors, such as Hotels.com and Trivago. The following paragraphs focus on Airbnb for two reasons; firstly because of its dominant position among the peer-to-peer accommodation sector, and secondly because there are more publicly available data and reports on Airbnb activity compared to other similar platforms5.
Airbnb in Scotland
2.14. Airbnb has operated in Scotland since 2009 and is the largest peer-to-peer accommodation platform across the world. According to Airbnb, in 2017 the economic activity of Airbnb hosts and guests in Scotland was equal to £482.9 million6. VisitScotland estimated that Airbnb accounted for 5% of all tourism accommodation in 2016 (Scottish Expert Advisory Panel Report).
2.15. According to a 2017 Airbnb report, between July 2016 and July 2017, there were 21,900 active Airbnb listings7 in Scotland. Figure 1 shows the growth in available (not necessarily new) Airbnb listings in Scotland between 2015 and 2017, using AirDNA8 data.
5 Airbnb also provided the Scottish Government with significant amounts of information and data on its operations in Scotland prior to the Scottish Expert Advisory Panel on the Collaborative Economy publishing its report. 6 https://www.airbnbcitizen.com/airbnb-debuts-top-15-locations-across-scotland/ and https://press.airbnb.com/airbnb-unveils-data-on-top-15-destinations-across-scotland-for-the-first- time-expands-experiences-on-airbnb-across-the-country/ 7 Based on an Airbnb report, an active Airbnb listing is defined as “a listing that appears on the website during a search. Active listings do not necessarily have availability on a particular date or at all.”. 8 AirDNA is a market-based platform that tracks information on Airbnb listings by using publicly available data from the Airbnb website.
Page 8 of 50 Short-Term Lets: Consultation
Figure 1 – The growth of Airbnb in Scotland – Total available listings 2015-2017 Source: Retrieved from an Indigo House 2017 report (p. 26). Data sourced from AirDNA.
2.16. Based on Inside Airbnb9 data (retrieved from their website), there has also been an increase in the number of listings in Edinburgh (Table 1).
Year Listings Change on year July 2016 6,272 July 2017 9,189 +46.5% July 2018 12,578 +37% Table 1 – Number of Airbnb listings in Edinburgh 2016-2018 Source: Inside Airbnb data
2.17. Overall, the number of Edinburgh Airbnb listings doubled between July 2016 and July 2018. Figure 1 shows a similar pattern for Scotland as a whole.
Characteristics of Airbnb Listings 2.18. Not all Airbnb listings are the same. The key differences are:
• The type of accommodation offered (entire home or private room);
• The availability or occupancy of the listings (number of nights a listing is available or is booked);
• The number of listings operated by each host – single listings or multi- listings (listings that belong to hosts who advertise more than one property).
2.19. Renting out for short periods or renting out a spare room while the owners/occupiers remain in the property typically represents amateur activity
9 Inside Airbnb is an independent, non-commercial (open source) provider of data to explore how Airbnb is really used around the world.
Page 9 of 50 Short-Term Lets: Consultation and can be distinguished from running a business, more typically renting out an entire home/apartment for long periods and/or operating multiple listings.
Type of Accommodation
2.20. In Scotland in 2017, 59% of Airbnb listings were entire homes and 40% were spare rooms (Table 2). Similarly, in Edinburgh, the majority of Airbnb listings are for entire homes.
Share of Year on year Year on year Year on year listings growth growth growth Listing type (As of 1st July (01/07/2014 - (01/07/2015 - (01/07/2016 - 2017) 30/06/2015) 30/06/2016) 30/06/2017) Entire Home 59% 78% 94% 55% Shared Room 1% 294% 64% 6% Spare Room 40% 85% 80% 43% Table 2 – Types of listing on Airbnb in Scotland Source: Retrieved from an Airbnb 2017 report (p. 4).
2.21. In July 2018, 61% (7,665) of the Airbnb listings in Edinburgh were entire homes/apartments; 39% (4,873) were private rooms; and 0.3% (40) shared rooms (Inside Airbnb data 28 July 2018).
Availability or Occupancy
2.22. According to Airbnb, a typical listing in Scotland operated for 40 nights annually in 2016/17, which increased to 44 nights in 2017/1810. Slightly more than half of Airbnb listings in Scotland (54%) in 2016/17 were booked for under 30 nights/year11. However, 28% of the listings in Scotland were booked for more than 60 days and 19% for more than 90 days. Similar patterns are displayed for Edinburgh and Glasgow.
2.23. According to a 2018 Edinburgh City Council report12, just over 1 out of 5 Airbnb listings in 2017 were operating in excess of 90 days/year (data from
10 Information retrieved from the following Airbnb reports: https://2sqy5r1jf93u30kwzc1smfqt- wpengine.netdna-ssl.com/wp-content/uploads/2017/03/ScotlandOverview_v4.pdf and https://press.airbnb.com/airbnb-unveils-data-on-top-15-destinations-across-scotland-for-the-first-time- expands-experiences-on-airbnb-across-the-country/ 11 https://www.gov.scot/binaries/content/documents/govscot/publications/minutes/2018/01/expert- advisory-panel-on-the-collaborative-economy-november-2017/documents/e9919995-7338-401b-8af9- b96f20beab3c/e9919995-7338-401b-8af9-b96f20beab3c/govscot%3Adocument 12 https://www.edinburgh.gov.uk/news/article/2525/recommendations_to_improve_regulation_of_short_t erm_let_industry%C2%A0 p. 3
Page 10 of 50 Short-Term Lets: Consultation July 2017). According to the report, properties let for more than 90 days per year were highly likely to be operated on a commercial basis rather than as a main place of residence.
Number of Listings
2.24. There are different types of participants in the collaborative economy. In the peer-to-peer accommodation platforms, such as Airbnb, there are both amateur and professional hosts. Professional hosts are more likely to be operating multiple listings compared to amateur hosts who are usually renting out a room or their main residence while they are away for short periods.
2.25. According to a 2017 Airbnb report in Edinburgh, Glasgow, the Highlands, Fife and Argyll and Bute, the majority of hosts had one listing (78%) on the platform and a further 14% had two listings. Just 2% of all hosts had 5 or more listings.
Impact of Growth in Short-Term Lets
2.26. The statistics reported above reflect a significant increase in the number of short-term lets provided via the new collaborative economy online platforms. In addition to renting rooms in people’s homes, a substantial part of the growth in activity has been in renting whole properties. Chapter 3 - Definition of Short-Term Lets sets the context for this paper’s discussion of this issue, while Chapter 4 - Regulation of Short-Term Lets in Scotland describes the main issues arising, outlines local authorities current powers to regulate them and considers proposals to improve the current position in Scotland
Question 1
Are you aware of any additional data on the impacts of short-term lets (over and above that set out in Annex A – The Short-Term Rental Sector, Housing and Tourism in Scotland and briefly summarised above) which the Scottish Government should take into account when considering proposals for regulation?
Page 11 of 50 Short-Term Lets: Consultation 3. Definition of Short-Term Lets
Definition of a short-term let
3.1. There is currently no statutory definition of what constitutes a short-term let in Scotland. The term is widely used but has different meanings depending on the speaker and the context.
3.2. Where a dwelling is available for let for 140 days or more in the financial year, it is classified as self-catering holiday accommodation, exempt from Council Tax13 and becomes instead liable for non-domestic rates. This requires that it be entered by the local Assessor on the Valuation Roll and given a “rateable value” which is the basis for calculating the non-domestic rates liability.
3.3. Further, the rental income of “Furnished holiday lettings”14 (i.e. available for letting for at least 210 days, and commercially let for at least 105 days in the year) qualifies for special tax rules e.g. Capital Gains Tax reliefs for traders.
3.4. For a short-term let to take place, a host offers short-term accommodation to one or more guests, i.e. it does not become the main residence of the guest. Short-term lets are not private residential tenancies15, which require that the tenant occupies the property (or part of it) as their only or principal home. Therefore, guests do not have the same rights in law as tenants.
3.5. In this consultation paper, we will use:
“host” to mean the person or company providing accommodation for short- term letting, including commercial landlords; and
"guest" to mean a person taking the accommodation as a short-term let.
3.6. There are three ways in which a host might make accommodation available to a guest16:
a) the letting of a room or rooms to the guest with the host in residence – “sharing”;
13 The Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992. 14 https://www.gov.uk/government/publications/furnished-holiday-lettings-hs253-self-assessment- helpsheet/hs253-furnished-holiday-lettings-2015 15 The definition of “private residential tenancy” is set out in Private Housing (Tenancies) (Scotland) Act 2016. 16 We have used colloquial descriptors for ease of reference but these ways might more accurately be described as: resident host let; displaced host let; and absentee host let, respectively.
Page 12 of 50 Short-Term Lets: Consultation b) the letting of a room or rooms or the entire property where the host normally lives, when the host is absent (frequently this is when the host is on holiday in another person’s home) – “swapping”; or
c) the letting of a room or rooms or the entire property, where the host does not normally live and the host is absent – “secondary letting”.
3.7. Each of these three ways of hosting has its own advantages and challenges. All could potentially be regulated, although regulations may require to be tailored to each way of hosting.
3.8. Similarly, a regulatory framework could encompass all types of housing which might be offered as accommodation, from tenement flats to detached houses, whilst making differing provision for different types.
3.9. There is already a well-established and comprehensive regulatory framework for the Private Rented Sector which includes landlord registration, repairing standard requirements, licensing of Houses in Multiple Occupation and regulation of letting agents. A regulatory framework for short-term lets should complement, not duplicate, this framework.
3.10. The Scottish Government is separately consulting on draft regulations to address a specific issue brought to our attention by local authority licensing teams regarding Houses in Multiple Occupation – the use of accommodation by contract and transient workers. The aim of the draft regulations is to afford the same health and safety rights as those who live in a shared rented property as their only or main residence, to contract and transient workers who often have no choice where they stay when working away from home. Such accommodation could include holiday properties, both self-catering and bed and breakfast, where 3 or more unrelated workers are residing in a property in a particular way. This consultation can be viewed on the Scottish Government website.17
3.11. Equally, the Scottish Government would not wish to regulate occasional stays of friends and family. Therefore, for the purpose of considering the various options for regulation, we would propose that both of the following conditions must be met in order for the arrangement to be considered a “short-term let”:
a) The accommodation is made available for use for letting for a cumulative period of 28 days or more in any rolling period of 365 days. This might mean, for example, that it is advertised as being available to let.
17 https://consult.gov.scot/private-rented-sector-policy/new-categories-to-the-definition-of-a-house/
Page 13 of 50 Short-Term Lets: Consultation b) At least one of the lets commencing in the same rolling period is not a private residential tenancy in terms of section 1 of the Private Housing (Tenancies) (Scotland) Act 2016.
3.12. Condition (b) would normally mean the accommodation had been let at least once for a period of less than 28 days. It is not necessary to make reference to assured tenancies and short assured tenancies (which do continue to operate in respect of tenancies that started before 1 December 2017) because this condition is concerned only with new lets.
3.13. This definition, and any system of regulation, could encompass any use to which the guests put the property (i.e. including letting for holiday or for work purposes).
Exclusions
3.14. There are many circumstances where people stay for a short or unpredictable period outwith their primary residence. The following are not considered to be within scope of short-term letting for the purposes of this paper:
a) licenced hotels and B&Bs and self-catering properties on their premises,
b) women’s refuges,
c) homeless hostels and other temporary accommodation for homeless people,
d) accommodation for asylum seekers,
e) child or adult care homes and other council premises,
f) student halls of residence (whether used by students or others),
g) hospitals, and
h) prisons.
3.15. With regard to (a) above, we are not proposing any new regulatory framework for the hotel and B&B industry as part of this consultation.
3.16. Throughout the rest of this paper, short-term let is defined as in paragraph 3.11, unless the context demands otherwise, for example in reference to regulatory environments in other countries.
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Question 2
Should a regulatory framework distinguish between sharing, swapping and secondary letting?
Question 3
Should the rules be capable of being different depending on the type of accommodation? For example, to distinguish between tenement flats and detached houses.
Question 4
Do you have any comments on any other aspect of the definition of short-term lets?
Platforms and hosting service providers
3.17. Short-term lets are not a new phenomenon. They have always been available but they have become much more prominent and popular through the advent of Airbnb and other platforms which have facilitated hosts in reaching their potential markets.
3.18. In addition, a range of service industries have grown up around these platforms allowing hosts to outsource functions such as: meeting and greeting guests; cleaning; laundry; and security. Examples include AirSorted, BnBbuddy and Guestready, amongst others.This means a short-term let can range from an intimate experience of renting a room in a family house and eating with the host through to a very business-like arrangement with a commercial host with no personal contact at all.
3.19. In this paper, we will use:
“platform” to mean an online marketplace, advertising or brokering service, such as Airbnb, booking.com and others, allowing hosts to offer properties for short-term lets; and
“hosting intermediary” to mean a person or company allowing hosts to outsource some or all of their functions.
Page 15 of 50 Short-Term Lets: Consultation Other perspectives
3.20. From the literature reviewed, it is clear that there is not one unique and universally-accepted definition of short-term lets and peer-to-peer accommodation in Scotland or across the world. Different definitions are used in each city/country, often based on the number of nights that short-term lets are allowed to be rented out, see Annex B – Regulation Outwith Scotland on regulations on short-term lets implemented elsewhere).
3.21. A report on short-term lets by Edinburgh City Council18 argued that “Short term letting has no statutory definition and can vary widely, from periodic lets such as those during the Festival period in August, to properties purchased and operated on a commercial basis all year round. In addition, some operators of short term lets continue to reside in the property (for example, an occupier renting out a room whilst they remain in residence) whereas other short term lets are solely occupied by visitors and not used as a place of residence”.
3.22. According to a report19 by Frontline for the Association of Scotland’s Self- Caterers, there are four different ways in which short-term lets are made available i Scotland:
• Collaborative economy short-term lets via online platforms, such as Airbnb, booking.com, HomeAway and HouseTrip (largely non-serviced accommodation);
• Traditional self-catering (non-serviced accommodation);
• Serviced apartments (serviced accommodation);
• Aparthotels, i.e. furnished apartments with hotel services (serviced accommodation).
3.23. Short-term lets are considered for the purposes of this paper to include ’peer- to-peer accommodation’. ’Peer-to-peer’ relates to connecting “individuals or communities via online platforms”20. A number of other definitions of ‘peer-to- peer accommodation’ have been offered:
18 Edinburgh City Council 2018, “Short Term Letting in Edinburgh” p. 3. 19 https://www.assc.co.uk/wp-content/uploads/2018/06/MoreThanJustHouses.pdf 20 Retrieved from an Indigo House 2017 report: https://www.gov.scot/binaries/content/documents/govscot/publications/minutes/2017/07/expert- advisory-panel-on-the-collaborative-economy-june-2017/documents/185f5a19-c9da-450e-963d- f56150b0d953/185f5a19-c9da-450e-963d-f56150b0d953/govscot%3Adocument
Page 16 of 50 Short-Term Lets: Consultation • PwC21 - “households sharing access to unused space in their home or renting out a holiday home to travellers”.
• The Scottish Expert Advisory Panel Report on the Collaborative Economy - peer-to-peer accommodation includes three types of short-terms lets: privately owned houses or individual rooms; privately owned holiday homes; and commercial lettings.
3.24. Both the Expert Advisory Panel and PwC reported that peer-to-peer accommodation is the largest sector of the collaborative economy in Europe by total transaction value (€15.1 billion).
3.25. Research commissioned by the Association of Scotland’s Self-Caterers (ASSC)22 used the same definition of self-catering as in the International Passenger Survey and the Great Britain Tourism Survey.
“A self-catering property needs to meet the following two criteria:
• a property that is available to rent by visitors on a short-term basis for the purposes of a holiday or a short break
• a self-contained unit with its own cooking facilities, which may form part of a larger property, or be grouped with other units on the same site”.
21 PwC 2016, “Assessing the size and presence of the collaborative economy in Europe”, pp. 12-13 22 Frontline 2017, Self-Catering in Scotland: The Economic Impact of Short-term Letting on the Scottish Economy, p 3 https://www.assc.co.uk/wp- content/uploads/2017/09/ASSC_Economic_Impact_Assessment_of_Short_Term_Lettings_on_the_Sc ottish_Economy_-_Final_Report_v1.2.pdf
Page 17 of 50 Short-Term Lets: Consultation 4. Regulation of Short-Term Lets in Scotland
The Collaborative Economy & ‘Disruptive Technologies’
4.1. This chapter starts with an acknowledgement of the benefits of the new collaborative accommodation platforms such as Airbnb, discussed in detail during the work of the Expert Advisory Panel on the Collaborative Economy, before going on to look at some of the issues arising from their operation in Scotland. It then sets out the principles the Scottish Government propose to follow in regulating short-term lets and outlines potential approaches to regulation. It also describes local authorities’ current regulatory powers in Scotland, while Annex B – Regulation Outwith Scotland provides an overview of how these issues are regulated elsewhere, describing the different approaches taken in various localities.
Benefits of short-term lets
4.2. It is undoubtedly the case that tourism and the associated economic activity is of great benefit to the Scottish economy and the wide range of businesses which support and depend on it. And, as acknowledged by the Expert Advisory Panel on the Collaborative Economy, and the Scottish Government’s response to their report, the new collaborative accommodation platforms such as Airbnb can play a significant role in supporting additional visitors to Scotland, with consequent economic benefits.
4.3. Short-term lets can provide a range of benefits to landlords, guests and the visitor economy in general. As well as providing flexibility in the amount and variety of accommodation for tourist at peak points in the season, they also provide opportunities for:
• relocating corporate tenants,
• people who are researching an area before committing to buying,
• owners who want to make income from their property while on holiday themselves,
• contract workers looking for short-term accommodation, and
• existing homeowners who are looking for alternative accommodation while carrying out work on their own property.
Page 18 of 50 Short-Term Lets: Consultation 4.4. The additional flexibility provided by the new collaborative online short-term rental platforms is particularly welcome in responding to the extraordinary circumstances of the Edinburgh Festivals, helping the city respond to the massive increase in demand for those visiting the largest arts festival in the world, as well as the many performers and supporting personnel who also need accommodation.
4.5. Research by the ASSC23 suggests that the short-term rental sector in Scotland supports 15,000 full-time equivalent jobs and generates £723m of economic activity.
Potential problems from short-term lets
4.6. These new collaborative accommodation platforms are part of a wave of ‘disruptive technologies’, alongside Uber and others, which often operate in a significantly different way from previous businesses. This means that current management and regulatory systems may not be appropriate or applicable. In addition, these disruptive technologies may generate new issues which require to be addressed, including where the way in which they operate impacts in new ways on existing issues.
4.7. A particular concern for public policy is that these issues may not have a direct consequence for the businesses themselves, but rather impact disproportionately on others, including the communities where these businesses operate and on the wider area.
4.8. As the use of short-term lets has increased, a range of potential problems have come to light. These include:
• Loss of residential housing, leading to lack of availability and choice, higher rents and higher house prices; reduced community cohesion through high proportions of transitory visitors.
• Loss of amenity to neighbourhood through: antisocial behaviour of guests; rubbish and littering and lack of focus on maintenance and repair issues e.g. in shared tenement blocks.
• Personal safety risks to hosts, guests and other residents from unverified or unknown others.
23 https://www.assc.co.uk/about-us/the-benefits-of-short-term-rental-in-scotland/
Page 19 of 50 Short-Term Lets: Consultation • Damage to property, e.g. from key boxes affixed to external walls, as well as fire safety risks.
• Regulatory mismatches between the short-term lets, hotel and B&B sectors, e.g. in terms of health and safety and taxation.
• Enforcement of guest and host compliance with existing statutory and voluntary requirements, e.g. platform’ codes of practice.
• Poor visitor experience for guests and other visitors hoping for an immersive experience in local culture if the ratio of guests to local residents is too high.
• Loss of revenue to public authorities, for instance, the Barclay Review reported ineligible properties benefitting from the Small Business Bonus Scheme.
• Poor public perception of the short-term letting sector, fuelled by the more extreme scenarios.
4.9. Whilst it is clear that these issues are causing concern, there is not always objective evidence of the incidence or severity of the reported problems. This paper therefore asks for views on these issues to help further inform the Scottish Government’s approach. Further information is set out in the rest of this chapter, and elsewhere in this paper, but we need as complete a picture as possible to enable us to ensure that local authorities have the power to balance the needs and concerns of their communities with wider economic and tourism interests.
Question 5
Do you have any comments on the positive or negative impacts of short-term lets?
Question 6
Do you have any examples of other positive or negative impacts of short-term lets?
Page 20 of 50 Short-Term Lets: Consultation Housing
4.10. General background on the housing market relevant to short-term lets is included in Annex A - The Short-Term Rental Sector, Housing and Tourism in Scotland. Typically, properties used for short-term lets have previously been used for residential purposes. There is concern that increased numbers of short-term lets reduces the supply of available homes for longer term lets, which would tend to increase the cost of renting. The significant rise in numbers of short-term lets, for instance via Airbnb, adds to those concerns. There is evidence of this happening in Edinburgh and concern that other areas are also affected, though data in not so readily available for areas other than Edinburgh.
4.11. There is also concern that higher returns from short-term lets incentivises purchase of residential properties for that purpose. This would tend to reduce the supply of such properties for those wanting to live in the areas affected and increase prices beyond the norms of the traditional housing market.
4.12. These concerns are reflected in comments from Rob Trotter of DJ Alexander, an established letting agency, quoted in Scottish Housing News24 as saying: “We’re certainly seeing rental values increasing, I would say, at an unsustainable level and property values in the city centre are increasing.” He added: “If you’re trying to move to Edinburgh to start a job and you can’t afford to live in the city centre or you can’t find a flat, that’s difficult for businesses.”
4.13. Those concerns are also expressed by Shelter Scotland, whose report on short-term lets25 noted that “It is very difficult to track how much residential housing (either owner occupied or for private rent) has been transferred to short-term letting. However, evidence suggests that this may be having a negative impact on the housing market in some areas with a displacement of residential accommodation to short-term let accommodation. There is agreement across the sector that the growing trend has an adverse effect on the supply of housing, particularly in places like Edinburgh where demand already exceeds supply”.
4.14. Shelter’s report notes that “Evidence also suggests that the growth of short- term lets is having an adverse effect on the housing stock available to those looking for a permanent home, this chronic lack of choice is pushing rents up.” and records that “The average house price in Scotland went up by 75%
24 Scottish Housing News, 8 May 2017 https://www.scottishhousingnews.com/article/greens-call-for- regulation-to-halt-rise-of-holiday-lets-in-edinburgh-city-centre 25 ‘Short-term lets in Scotland: Topic briefing’, December 2018 https://scotland.shelter.org.uk/__data/assets/pdf_file/0005/1627646/Short_term_lets_in_Scotland_201 8.pdf/_nocache
Page 21 of 50 Short-Term Lets: Consultation between 2003 and 2013, and … 5 out of 18 areas of Scotland saw increases in average 2-bedroom private rent levels between 2016 and 2017”.
4.15. More broadly, there are also concerns about a loss of the sense of community due to the displacement of the residential population, particularly in Edinburgh city centre. The Scottish Expert Advisory Panel on the Collaborative Economy noted that “there were strong responses from our call for evidence which showed that certain cities, specifically Edinburgh, were suffering from increasingly heavy footfall of tourists that some local groups feel have a negative impact on the community. The rise of peer to peer accommodation at peak times was seen to be adding to this negative impact. There is clearly a delicate balance to strike in preserving the fabric of communities and accommodating tourists who are attracted to major city centres in Scotland. We do not wish to see the hollowing out of communities in cities, or a growing rise in aggression towards tourists – as has been seen in some other popular European cities like Barcelona”. These concerns are amplified by complaints that some of the increase in the number of short-term lets may not be in line with planning law.
Question 7
Do you have any comments about the impact of short-term lets on the housing market?
Breach of Planning Law
4.16. Under current planning legislation, planning permission may be required for a change of use where a dwelling house is used for short-term lets. The key issue is whether the planning authority considers that the change of use is, in planning terms, material - taking account of issues such as increased occupancy of the property, frequency of changes of occupants, impact on local amenity and on direct neighbours, etc. There is no definition of what constitutes a material change of use from residential to short-term letting. Whether a material change of use has occurred, and planning permission is therefore required, is a matter of fact and degree for the relevant planning authority to consider on a case-by-case basis.
Page 22 of 50 Short-Term Lets: Consultation 4.17. There are concerns that the increase in properties used for short-term lets reflected in the growth of Airbnb numbers is not always in accordance with planning requirements. Certainly there is evidence of a number of instances where premises have, or are, being used as short-term lets without the owners seeking the required planning permission.
4.18. There are therefore concerns that the negative impacts on the housing market, described in the previous section, are being exacerbated in a number of instances by premises which are in breach of planning legislation.
4.19. Enforcement action is a matter for the relevant planning authority, again on a case-by-case basis. Local authorities, particularly Edinburgh and Glasgow, have taken effective enforcement action against unauthorised changes of use to short-term lets in a number of cases. While a number of these cases have been appealed, those appeals have been unsuccessful in overturning local authorities’ decisions; there have, to date, been no successful appeals against enforcement action on unauthorised short-term lets.
4.20. At Stage 2 of the Planning (Scotland) Bill26, Parliament agreed an amendment from Andy Wightman MSP, which would mean that all short-term holiday lets would require planning permission for change of use, other than where the premises being let are the owner’s sole or main residence. The Scottish Government are supportive of the intention of the amendment, though believe that it will require amendment at Stage 3 to integrate effectively with other aspects of planning law. Other amendments may be lodged at Stage 3.
Question 8
Do you have any comments on the restrictions imposed on short-term lets by planning law?
NB: Chapter 3 discusses the definition of short-term lets and asks for views on how they should be defined.
26 https://www.parliament.scot/parliamentarybusiness/Bills/106768.aspx
Page 23 of 50 Short-Term Lets: Consultation Antisocial Behaviour
4.21. The City of Edinburgh Council and a number of Edinburgh MSPs report that antisocial behaviour is a common complaint from residents in relation to short- term lets. The most common issue appears to be about noise and disruption, particularly late night noise, from the increased number of visitors when a neighbouring or nearby property changes from a residential property to one providing short-term lets. This varies from the noise and disruption associated with late night arrivals and early morning departures to noisy late night parties.
4.22. These complaints appear to be more common, and of greater severity, where the short-term lets are located in flats or tenements with a common stairwell, where the disturbances can occur in communal areas as well as in the properties themselves. In addition, the acoustic properties of a common stairwell can amplify even what would otherwise be relatively low level noise.
4.23. Other reported antisocial behaviour includes littering of common areas, gardens and the surrounding area, including dumping of rubbish. There have also been reports of fighting and other more serious issues that result in police action. Finally, a number of reports have said that there are repeated problems at particular properties.
4.24. Local authorities have a range of powers to tackle antisocial behaviour, including noise and littering, as well as more problematic or extreme behaviour. However, these powers can be difficult to apply where there are difficulties in establishing the identity of visitors or of the owners of a property where antisocial behaviour is reported.
4.25. The Scottish Expert Advisory Panel on the Collaborative Economy recommended that, when guests book a property in a specific location the platform should highlight the key elements of local legislation to create greater awareness of rules and regulations.
.
Question 9
Do you have any comments on powers to tackle antisocial behaviour caused by short-term lets?
Page 24 of 50 Short-Term Lets: Consultation Complaints
4.26. The Scottish Expert Advisory Panel on the Collaborative Economy recorded that, while the number of recorded short-term let premises with anti-social behaviour investigations in 2016 and 2017 appeared to be small relative to the tourist footfall, information provided from the City of Edinburgh Council indicated that this issue is significantly under-reported. Efficient and effective complaints systems can play a valuable role in addressing issues of concern, and can help in ensuring more accurate recording of incidents.
4.27. The Advisory Panel recommended that communities and residents need to be aware that they are able to make complaints and how to do so. This could build a richer evidence base for enforcement and enable a far more targeted and specific responses to issues arising in specific communities.
Question 10
Do you have any comments about complaint systems for short-term lets?
Safety
4.28. Concerns have been expressed about the lack of appropriate safety standards relating to short-term lets. The Scottish Expert Advisory Panel Report on the Collaborative Economy made a number of recommendations specific to peer-to-peer accommodation (in addition to its more general recommendations listed in chapter 2). The Advisory Panel recommended that there should be parity in health and safety regulation for all short-term let accommodation that is not the owner’s primary residence, regardless of whether the accommodation is let occasionally or regularly and regardless of whether the accommodation is booked over the internet.
4.29. The Panel also recommended that:
• On all collaborative accommodation booking platforms, hosts should have to declare that they are compliant with the health and safety guidelines appropriate to their type of accommodation prior to their property being listed. They should be presented with these guidelines at time of registering, rather than having to seek them out and should signify their
Page 25 of 50 Short-Term Lets: Consultation adherence to those regulations. Platforms should experiment with ways in which guests can provide evidence of adherence.
• All platforms operating in Scotland should ask participating guests if they have any concerns or questions about health and safety in homes or properties in which they stayed. Platforms should experiment with different messaging and times at which they solicit guests’ responses to health and safety questions and should demonstrate to regulators that they have a process for following up any concerns identified in a timely manner.
4.30. Premises that are offered as holiday accommodation are subject to fire safety legislation. The person operating the premises is required to assess the fire risk and provide fire safety measures and the Scottish Government has issued ‘Fire safety guidance for existing premises with sleeping accommodation.’27
4.31. More comprehensive safety requirements are in place for properties in the Private Rented Sector. Landlords must ensure that their property complies with the Repairing Standard, the minimum physical standard, at the start of and throughout a tenancy. To comply with the health and safety elements of the standard, the landlord must ensure that the property has:
• smoke and fire detectors,
• an annual gas safety check,
• an electrical installation safety inspection every five years,
• a record of testing of appliances provided by the landlord,
• a carbon monoxide detector where there is a carbon emitting device,
• fittings and furniture must be fire retardant, and
• a legionella risk assessment.
4.32. Local authorities have powers to license Houses in Multiple Occupancy and, in addition to the Repairing Standard elements, landlords are required to ensure there are higher levels of fire safety standards, as set by Scottish Fire and Rescue, than those required in domestic properties. The license specifies the number of occupants permitted and local authorities will carry out inspections to ensure that the license conditions are being met. An HMO license requires the landlord to ensure that there are systems in place to record regular safety, that advice to occupiers on action to be taken in the
27 https://www.gov.scot/publications/practical-fire-safety-guidance-existing-premises-sleeping- accommodation/
Page 26 of 50 Short-Term Lets: Consultation event of an emergency is prominently displayed within the living accommodation, and must manage the property to prevent and deal effectively with any anti-social behaviour by tenants.
4.33. There have also been concerns expressed about potentially compromised security of premises, as keys are distributed to potentially hundreds of people every year, allowing access to residential areas. In some instances, there have been concerns expressed about mental ill health, including anxiety and stress, associated with not knowing who is coming and going.
4.34. To some extent, these concerns about personal safety are linked to the issue of key boxes. The widespread use of key boxes is a relatively recent phenomenon and concerns have also been raised about potential damage to property and the legality of placement of certain key boxes. A recent listed building appeal decision28 has upheld an enforcement notice from City of Edinburgh Council requiring the removal of key boxes affixed to a property without planning permission.
4.35. The City of Edinburgh Council has also taken enforcement action in relation to key boxes affixed to council property. The Edinburgh Evening News29 published an article publicising this, which featured a photograph of a publically posted enforcement notice.
4.36. Currently, local authorities have limited regulatory controls over safety in short-term lets. However, the Scottish Government has accepted the Scottish Expert Advisory Panel on the Collaborative Economy’s recommendation that there should be parity in health and safety regulation for all short-term rental accommodation that is not the owner’s primary residence.
Question 11
Do you have any comments on safety issues related to short-term lets?
28 https://www.dpea.scotland.gov.uk/CaseDetails.aspx?ID=120234 29 https://www.edinburghnews.scotsman.com/news/edinburgh-airbnb-hosts-using-key-storing- padlocks-in-city-parks-to-avoid-legal-issues-1-4871603
Page 27 of 50 Short-Term Lets: Consultation Taxation
Non-domestic rates
4.37. Self-catering properties, which make up just under 6% of non-domestic properties in Scotland (as at June 2018), are liable for non-domestic rates. While 45% of non-domestic properties receive Small Business Bonus Scheme (SBBS) relief, over 86% of self-catering properties benefit from SBBS, and this relief provided an average saving for these properties of £1,398 in 2018- 19. A number of these receive 100% relief, and thus pay no local tax.
4.38. To be eligible for SBBS relief, the cumulated rateable value of all non- domestic properties held by the ratepayer (this can be the owner, occupier or proprietor) must be no more than £35,000. Properties with individual rateable values of no more than £15,000 are eligible for 100% relief; and 25% relief if the rateable value is between £15,001 and £18,000.
4.39. Self-catering holiday accommodation is exempt from Council Tax, and liable for non-domestic rates instead, if it is not the sole or main residence of any person, and if it is either:
• made available by a relevant person for letting, on a commercial basis and with a view to the realisation of profits, as self-catering accommodation for short periods amounting in the aggregate to 140 days or more in the financial year; or • if it has not been made so available for letting in that year, are intended by a relevant person to be made so available for letting in that year and the interest of the relevant person in the lands and heritages is such as to enable him to let them for such periods.
4.40. The independent Barclay Review on Non-Domestic Rates noted that some property owners, to avoid payment of Council Tax on second homes, and because there is currently no requirement to provide evidence of actual letting, may claim that the property has moved from domestic use (liable for Council Tax) to non-domestic use as self-catering holiday accommodation (and liable for non-domestic rates). If the rateable value is low enough, they may then apply for SBBS relief and receive up to 100% non-domestic rates relief. Non-domestic properties are liable for business water and sewerage charges (property and roads drainage charges are calculated based on the property’s rateable value), and waste disposal charges. Anecdotal evidence from councils however indicates that self-catering properties, though they may be liable for non-domestic rates, do not always face non-domestic charges in other areas. In these cases, the property’s contribution to local services would be zero.
Page 28 of 50 Short-Term Lets: Consultation 4.41. The Barclay Review recommended, to address this issue, that self-catering properties should be required to prove an intention to let for 140 days in the year as well as evidence of actual letting for 70 days in order to be considered exempt from Council Tax.
4.42. The Scottish Government accepted this recommendation and consulted on whether local authorities should have discretion over the number of days that a property needs to be let in order to be exempt from Council Tax as self- catering holiday accommodation.30 Respondents suggested that such discretion could be appropriate in exceptional circumstances, such as natural hazards or environmental circumstances (e.g. interruption of ferry services to islands). As a result, the Non-Domestic Rates (Scotland) Bill31 makes provision for local authority to have discretion, in prescribed circumstances, over the criteria defining a class of property that is exempt from Council Tax.
4.43. The criteria for self-catering accommodation to be considered exempt from Council Tax, and the prescribed circumstances in which local authorities will have discretion over this will be set out in secondary legislation subject to the Non-Domestic Rates (Scotland) Bill
Income Tax and other taxes
4.44. Rental income is included in earnings, and is therefore, for Scottish residents, subject to Scottish Income Tax, the rates and bands of which are set by the Scottish Government. Rental providers are responsible for declaring their earnings to HMRC.
4.45. However, income tax reliefs and exemptions remain a reserved matter set by the UK Government. Under the Rent a Room Scheme32, anyone letting a room or rooms in their home (i.e. it is their only or main residence) on a short- term basis, or running a bed and breakfast or guest house, can receive up to £7,500 per year in rents without paying income tax. This tax exemption is automatic where earnings are less than the threshold, which was increased to £7,500 in 2016. The UK Government has announced its intention to consult on this. In March 2016, George Osborne also launched two new annual tax allowances for individuals of £1,000 each, one for trading and one for property income. These allowances took effect from tax year 2017/18.
4.46. The Scottish Expert Advisory Panel on the Collaborative Economy noted that “According to the European Commission, an estimated 85% of gross revenue from collaborative economy platforms (of which peer to peer accommodation
30 https://consult.gov.scot/local-government-and-communities/non-domestic- rates/user_uploads/00537324.pdf 31 https://www.parliament.scot/parliamentarybusiness/Bills/111337.aspx 32 https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme
Page 29 of 50 Short-Term Lets: Consultation is the largest sector) goes to providers/hosts. Individuals use multiple platforms to promote and book their accommodation and may earn income from multiple online and offline sources. As with any other income generating activity, on or offline, short-term accommodation rental providers must be responsible for declaring their earnings to HMRC.”
Tourist Tax
4.47. The Scottish Government will, this year, consult on the principles of a locally determined tourist tax prior to introducing legislation that would allow individual local authorities to apply such a tax if they consider it appropriate for local circumstances. In the light of evidence emerging from the roundtable events convened as part of our recent National Discussion on Tourist Taxes in Scotland, the consultation will extend to all forms of commercially let accommodation, including short-term lets and peer-to-peer accommodation.
Question 12
Do you have any comments on eligibility for non-domestic rates? (see para 4.39)
Question 13
Do you have any comments on the additional eligibility requirements recommended by the Barclay Review? (see paras 4.40-4.42)
Question 14
Do you have any comments on the eligibility of self-catering accommodation for the Small Business Bonus Scheme? (see paras 4.37 & 4.38)
Question 15
Do you have any other comments on taxation relating to short-term lets?
Page 30 of 50 Short-Term Lets: Consultation Licensing
4.48. Elsewhere, see Annex B – Regulation Outwith Scotland, some issues relating to e.g. antisocial behaviour or safety issues relating to short-term lets are addressed through licensing or registration schemes.
4.49. Typically, licences set limits or conditions on the operation of the activity and require licence holders to be a ‘fit and proper person’. A key element of all licensing schemes is registration, of premises and/or people, which provides additional transparency for public authorities and the public in relation to complaints. Where conditions are not complied with, a penalty may be enforced or the licence revoked.
4.50. Licensing often sits alongside self-regulation by industry. The Scottish Expert Advisory Panel on the Collaborative Economy recommended that there should be “One code of conduct on which different industry associations can agree for all providers of short-term accommodation in Scotland where the owner is also a resident (though not necessarily present when the property is let)”.
4.51. In Scotland, local authorities have licensing powers for a wide range of activities33, from alcohol and taxi licensing to sexual entertainment venues and Houses in Multiple Occupation. While some licensing schemes are mandatory, others are optional and local authorities have discretion as to whether a licence is required in their area.
4.52. Currently, however, there is no licensing or registration scheme in place in relation to short-term lets, although the City of Edinburgh Council has proposed the introduction of a new licensing system34. That proposal has been supported by Shelter Scotland.
4.53. The possibility of introducing a licensing regime is explored below, and in the questions that follow, in considering the potential shape of a regulatory regime for short-term lets.
33 Including a number of schemes made under the Civic Government (Scotland) Act 1982 34 ‘Recommendations to improve regulation of short term let industry’, Edinburgh City Council, August 2018 https://www.edinburgh.gov.uk/news/article/2525/recommendations_to_improve_regulation_of_short_t erm_let_in%20dustry
Page 31 of 50 Short-Term Lets: Consultation Design principles for a regulatory framework
4.54. Faced with these reported concerns and a growing sense of urgency with regard to putting in place an appropriate regulatory regime, it may be tempting to suggest implementing one of the many regimes already in place in different parts of the world, as described in see Annex B – Regulation Outwith Scotland. However, this would risk unintended consequences both in terms of deterring beneficial hosting activity and potentially creating loopholes that would undermine effective enforcement.
4.55. Before the Scottish Government makes specific proposals for a detailed regulatory regime, we want to make sure that we have understood the problems that any new regulations would be intended to address (as set out above). At this stage however, we believe it is important to outline the principles which should inform any proposed solution. Our suggested design principles are set out on the next page, building on the principles in the Scottish Regulators’ Strategic Code of Practice35.
35 This sets out five key principles of good regulation: proportionate, transparent, accountable, consistent and targeted: https://www.gov.scot/publications/scottish-regulators-strategic-code-of- practice/
Page 32 of 50 Short-Term Lets: Consultation
DESIGN PRINCIPLES
The regulatory framework should be:
1. Proportionate: minimizing bureaucracy and barriers to innovation or tourism and encouraging high-tech entrepreneurship, to benefit the Scottish economy
2. Promoting safe practice: for hosts, guests and local residents - includes health, fire safety and prevention of nuisance or crime
3. Robust: with no loopholes in regulation and taxation
4. Responsive: councils are empowered to implement the regime that responds to local needs, of both residents and businesses (e.g. new festivals starting up)
5. Built on existing powers and solutions as much as possible, e.g. existing noise and nuisance powers
6. Fair across the hospitality sector, maintaining a level playing field both between new entrants and established operators and between short-term letting and other parts of the hospitality sector
7. Flexible and future-proofed: not assuming that today’s approaches or platforms will be the approach taken in future
8. Easy to understand by all: visitors, hosts and platforms, this will aid enforcement as different participants will be able to identify compliance failures
9. Cost effective: the approach should be cheap to run and self- financing
10. Straightforward and effective to enforce: making good use of existing enforcement mechanisms and data that is easy to obtain.
Page 33 of 50 Short-Term Lets: Consultation
Question 16
Do you have any additions or amendments to the proposed design principles?
Scope of a regulatory framework
4.56. Building on these principles, we would propose a national framework which empowers councils to establish regimes appropriate to their local needs. Action to establish a regulatory framework could include a combination of any of the following:
• Primary legislation (a new Act of the Scottish Parliament) – the Scottish Government is prepared to introduce a Bill to implement a regulatory framework, if this is necessary.
• New, or changes to, secondary legislation (regulations).
• New statutory or voluntary guidance or codes of conduct (government-led or industry-led).
• New (or amended) taxes, fees or charges.
4.57. It should be noted that some aspects of potential regulation are reserved to the UK Government (e.g. health and safety and some types of taxes and allowances). However, these measures are within the scope of this consultation. If it appears to be necessary to make changes to these areas of regulation, the Scottish Government is still interested to hear your views. We will consider your views along with other evidence before deciding whether to engage with the UK Government on how any potential changes might be explored.
4.58. In terms of a regulatory framework, there are two strands to consider:
a) the participants - what guests, hosts, platforms and service providers are or are not permitted to do; and
b) the accommodation - what is or is not required (e.g. smoke alarms) or permitted (e.g. late entry) at the accommodation or whether the accommodation is permitted to be used for this purpose at all.
Page 34 of 50 Short-Term Lets: Consultation 4.59. A host may have several properties and different permissions or requirements may apply at each.
4.60. Platforms and trade associations (such as the Association of Scotland's Self- Caterers and the UK Short-Term Accommodation Association) are already doing good work to establish codes of practice and offer advice and assistance to guests and hosts. These can be voluntary, or compliance can be a condition of continued membership of the trade body or continued access to the platform. But this work in progress is unlikely to be sufficient to address all the issues set out above.
4.61. In terms of a (locally) compulsory regime in respect of a property at which short-term letting is permitted, there are at least two distinct approaches:
• registration - where the presumption is that the host is required to provide certain information and fee in relation to themselves and/or their accommodation; and
• licensing - where the host has to provide the requisite information and fee (as with registration) but is subject to oversight by the licensing authority to ensure that additional licence conditions are met.
4.62. Either approach may be supplemented by restrictions on whether the property may be used for short-term lets at all. Provisions in the Planning (Scotland) Bill 2018 (as amended at Stage 2), discussed above, would have that effect. It is likely that the Bill will be further amended at Stage 3 during this consultation. Subsequent primary legislation could, in principle, further amend or revoke existing provisions36 in the context of establishing a final regulatory approach, if it was considered appropriate by the Scottish Government and agreed by the Scottish Parliament.
Question 17
Do you have any comments on the proposed scope of a regulatory framework?
36 Subject to the amending Bill having sufficiently broad scope.
Page 35 of 50 Short-Term Lets: Consultation Policy considerations and outline proposals
4.63. This consultation paper does not purport to set out a full new regulatory framework. The Scottish Government want to hear your views and complete our evidence gathering before we can do that. However, we set out some outline proposals below and we are looking for views on them, particularly in relation to how well they might address the perceived problems and give effect to the ten principles.
4.64. We propose a national framework that provides a menu of discretionary powers for councils to implement measures appropriate to their area or parts of their area, so that they can respond to local conditions and concerns.
4.65. A host with accommodation in more than one council area would need to ensure that short-term lets in each council area complied with the rules appropriate for each local area.
4.66. However, a national framework will help enable consistency across Scotland, so that two councils implementing a similar measure are more likely to do so in similar ways. This will facilitate platforms and guests in understanding what is required of them and make it easier for hosts operating across more than one council area.
Level 1 - Registration scheme
4.67. Where a council opted to implement regulation, a minimum requirement might be a basic registration scheme which would establish e.g. that appropriate health and safety measures were in place. A fee may be charged for registration to cover the council’s costs in administering the scheme. Registration could be required for all types of hosting: sharing, swapping and secondary letting. The requirement to register would be determined by the location of the accommodation, not the council area in which the host was based.
4.68. Registration would have the ancillary benefit of providing data on the levels of activity across participating council areas. We would expect councils to report on this on a regular basis.
4.69. A basic registration scheme would be unlikely to curtail any short-term letting activity. Councils seeking to manage or control the volume of short-term lets in their area or parts of their area would need to apply additional measures.
Level 2 - Licensing scheme
4.70. A council seeking to apply additional measures could opt for a licensing scheme, which could include and expand on the registration scheme. In
Page 36 of 50 Short-Term Lets: Consultation describing a potential new scheme, we use the term “licensing” in its broadest sense. Although there are powers in current legislation37 to allow for the creation of new licensing regimes, it may be necessary to introduce primary legislation to implement a new regulatory regime in full.
4.71. A licensing scheme could allow councils to charge hosts an amount sufficient to cover the cost of administering and enforcing the scheme.
Level 3 - Market-based mechanisms to control short-term lets
4.72. We are also keen to explore market-based mechanisms, and we would welcome views on how these might best be achieved. A regulatory framework might include additional financial (dis)incentives to control some types of short-term let. References to a charge38 below are to be interpreted in this broader sense.
4.73. We would be interested in views as to whether the charge should only be applied to secondary letting (in which the whole property is let), rather than to sharing or swapping. A reason for taking this approach would be that secondary letting puts additional pressure on housing affordability for other residents and would-be residents. The level of charge could be a means to rebalance the attractiveness for landlords of offering whole properties for short-term lets, compared to offering them for Private Rented Tenancies.
4.74. An advantage of using a charge to manage the volume of short-term lets is that it treats new and existing hosts fairly. i.e. the same charge would apply in the same circumstances whether the host had been letting the accommodation for some time or was just starting out. It would avoid established hosts being advantaged over new entrants to the market, potentially conferring a valuable permission on one person but not another.
4.75. We would be interested in views as to whether the charge might vary by area within a council area and be varied according to features of the accommodation or night rate. e.g. the charge might relate to the number of bedrooms, floor area or be set as a percentage of the advertised rate for letting. This would allow a council to focus charging on the specific letting activity whose volume they wished to manage.
4.76. The charge might also have the ancillary advantage of raising additional revenue for the council. The charge might be collected through platforms and remitted to the relevant council, perhaps on a quarterly basis.
37 Civic Government (Scotland) Act 1982 and Housing (Scotland) Act 2001. 38 Whether the actual arrangement constituted a fee, charge or tax or some hybrid would be something to be considered once the proposals are more developed.
Page 37 of 50 Short-Term Lets: Consultation 4.77. In order to make a regulatory framework fully effective, it may be necessary to take account of, and/or consider changes to, relevant taxes and reliefs:
• Council tax
• Non-domestic rates
• Small Business Bonus Scheme
• VAT (Reserved)
• Rent a room relief on income tax (Reserved).
4.78. Nationally, Scottish Government wants to see Scotland’s homes productively occupied for as much of the time as possible. We have taken action on empty homes through loan funds39, the Scottish Empty Homes Partnership40 and by empowering councils to disincentivise second homes by enabling them to increase rates of council tax for empty homes. It would not be a satisfactory outcome from a regulatory framework for short-term lets to leave more homes empty for a greater part of a year, or permanently.
4.79. In areas of very high housing demand, and where affordability is an issue, councils must be able to prioritise the use of homes as primary residences, for the sake of local communities and businesses. Where a home is not a primary residence, it makes sense to have it let out for as much of the year as possible, as this will bring in the most economic activity and revenue to the local area through temporary workers or visitors.
4.80. The regulatory framework establishing a licensing regime could allow councils to set other controls and conditions. For example, a license might stipulate a number of days per year for which the accommodation may be made available for short-term lets. Such conditions may be useful for managing sharing and swapping arrangements for licensed premises, especially where other residents have concerns about noise or nuisance etc.
4.81. The Scottish Expert Advisory Panel on the Collaborative Economy made a number of recommendations specific to day limits for peer to peer accommodation (in addition to its more general recommendations listed at para 2.6) as follows:
39 The Empty Homes Loan Fund and the Town Centre Empty Homes Fund. 40 The Scottish Empty Homes Partnership is a project funded by Scottish Government, and run by Shelter Scotland, that exists to bring empty private sector homes back into use. The partnership provides support and advice to home owners, local authority empty homes officers, and others to help bring empty homes back into use.
Page 38 of 50 Short-Term Lets: Consultation • If the evidence base demonstrates a need, the City of Edinburgh Council specifically – and other large Scottish cities generally – should experiment with the implementation of a 90 day restriction on any person wanting to rent their property over the course of a 12 month period and refining accordingly. Exceeding the specified limit would require a change of use.
• Platforms should notify hosts at the point at which the 90 day limit has been reached.
• Explore the viability of a seasonal system in central Edinburgh, where the rules are more permissive during periods of large tourist demand (e.g. Festival and New Year) where existing capacity cannot meet demand – but more restrictive in other parts of the year, where demand is lower and needs to be managed more carefully.
4.82. We would be interested in views on the circumstances in which a days per year limit would be an effective way of managing the number of properties made available for secondary letting, taking into account the Scottish Government’s objectives.
Question 18
Do you have any comments on the controls or conditions which councils should be able to set through a registration or licensing regime?
Question 19
Do you have any comments on whether a licensing scheme and/or market- based approach, and any associated charges, should apply to all types of short- term lets and whether conditions and/or charges should vary according to the type of property, its location or the number of rooms?
Question 20
Do you have any comments on the effectiveness of a days per year limit in meeting the Scottish Government’s objectives?
Page 39 of 50 Short-Term Lets: Consultation Commercial hosts
4.83. We would be interested in views as to whether a regulatory regime should make a distinction between the small scale hosts and those with property portfolios. We would also be interested in views as to how “commercial hosts” should be defined. A definition might take account of a number of factors such as:
a) whether the host required to register and account for Value Added Tax41;
b) the number of addresses across Scotland at which the host was offering accommodation for short-term lets; and/or
c) the concentration of accommodation offered for short-term lets by the host, e.g. at more than one apartment sharing the same main door access to the street (e.g. flats in a tenement).
Question 21
Do you have any comments on how regulations should deal with commercial hosts?
Enforcement, violations and sanctions
4.84. Enforcement of short-term lets regulations could be done through councils operating a registration or licensing scheme having new powers; and data sharing across local government and national government and relevant agencies.
4.85. Enforcement of short-term lets regulations and/or licensing scheme would be likely to require that relevant council officials have the powers to:
• visit any accommodation registered or licenced for short-term lets for the purposes of establishing the facts about the accommodation or the facts about any particular let or to investigate any complaint; and
41 The UK VAT registration threshold is currently set at a taxable turnover of £85,000 per year.
Page 40 of 50 Short-Term Lets: Consultation • require a host, platform or hosting intermediary to furnish local authorities with relevant information or documentation within a prescribed period.
4.86. Relevant agencies might include: local authorities, Revenue Scotland and HMRC for tax purposes; and land registers for ownership of residential property.
4.87. A licensing scheme would typically include penalties for issues such as:
• Hosts operating without registration or without a licence,
• Hosts operating in contravention of the terms of their registration or licence,
• Platforms deliberately or negligently advertising unregistered or unlicensed hosts,
• Falsification of registration or licence documentation,
• Failure to pay the relevant fee or charge within the specified period,
• Failure to grant access to accommodation on request,
• Failure to provide relevant documentation or information on request.
4.88. Sanctions might include one or both of:
• Fines, which could vary according to the severity and duration of a violation,
• Revocation of licence, for a period of time or permanently.
4.89. The nature of licensing or other regulatory regime focused on premises means that enforcement and sanctions would be applied primarily to hosts, platforms and hosting intermediaries, not to guests; they are, by definition, transient and therefore hard to enforce any sanction against.
Question 22
Do you have any comments on who should be subject to enforcement and sanctions?
Page 41 of 50 Short-Term Lets: Consultation 5. Responding to the Consultation
We are inviting responses to this consultation by Friday 19 July 2019.
Please respond to this consultation using the Scottish Government’s consultation hub, Citizen Space (http://consult.gov.scot). Access and respond to this consultation online at https://consult.gov.scot/housing-services-policy-unit/short-term-lets. You can save and return to your responses while the consultation is still open. Please ensure that consultation responses are submitted before the closing date of 19 July 2019.
If you are unable to respond using our online consultation hub, please complete the Respondent Information Form and send it:
by email to: [email protected] or by post to: Short-Term Lets Team Scottish Government 2J North Victoria Quay Edinburgh, EH6 6QQ
Questions are raised throughout this consultation but they can all be found and answered in the questionnaire below.
Handling your response
Please indicate how you wish your response to be handled and, in particular, whether you are content for your response to published. If you ask for your response not to be published, we will regard it as confidential, and we will treat it accordingly.
All respondents should be aware that the Scottish Government is subject to the provisions of the Freedom of Information (Scotland) Act 2002 and would therefore have to consider any request made to it under the Act for information relating to responses made to this consultation exercise.
To find out how we handle your personal data, please see our privacy policy: https://beta.gov.scot/privacy/
Next steps in the process
Where respondents have given permission for their response to be made public, and after we have checked that they contain no potentially defamatory material,
Page 42 of 50 Short-Term Lets: Consultation responses will be made available to the public at http://consult.gov.scot. If you use the consultation hub to respond, you will receive a copy of your response via email.
Following the closing date, all responses will be analysed and considered along with any other available evidence to help us. Responses will be published where we have been given permission to do so. An analysis report will also be made available.
Comments and complaints
If you have any comments about how this consultation exercise has been conducted, please send them to the contact address above or at [email protected]
Scottish Government consultation process
Consultation is an essential part of the policymaking process. It gives us the opportunity to consider your opinion and expertise on a proposed area of work.
You can find all our consultations online: http://consult.gov.scot. Each consultation details the issues under consideration, as well as a way for you to give us your views, either online, by email or by post.
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While details of particular circumstances described in a response to a consultation exercise may usefully inform the policy process, consultation exercises cannot address individual concerns and comments, which should be directed to the relevant public body.
Page 43 of 50 Short-Term Lets: Consultation Consultation Questions
This paper invites responses to questions on a range of issues which the Scottish Government will take into account when considering proposals for regulation. Respondents should take into consideration the information provided in this consultation paper and its accompanying Annexes alongside any other knowledge or personal experiences that could be relevant. All opinions are welcome.
We ask that you try to answer all the questions in each section. However, if you are unable to answer any question then please feel free to move on to the next question.
There is a comments box below each question to allows you to set out your reasoning and to provide general comments.
Question 1
Are you aware of any additional data on the impacts of short-term lets (over and above that set out in Annex A – The Short-Term Rental Sector, Housing and Tourism in Scotland) which the Scottish Government should take into account when considering proposals for regulation?
Question 2
Should a regulatory framework distinguish between sharing, swapping and secondary letting?
Question 3
Should the rules be capable of being different depending on the type of accommodation? For example, to distinguish between tenement flats and detached houses.
Question 4
Do you have any comments on any other aspect of the definition of short-term lets?
Question 5
Do you have any comments on the positive or negative impacts of short-term lets?
Page 44 of 50 Short-Term Lets: Consultation
Question 6
Do you have any examples of other positive or negative impacts of short-term lets?
Question 7
Do you have any comments about the impact of short-term lets on the housing market?
Question 8
Do you have any comments on the restrictions imposed on short-term lets by planning law?
Question 9
Do you have any comments on powers to tackle antisocial behaviour caused by short-term lets?
Question 10
Do you have any comments about complaint systems for short-term lets?
Question 11
Do you have any comments on safety issues related to short-term lets?
Question 12
Do you have any comments on eligibility for non-domestic rates?
Question 13
Do you have any comments on the additional eligibility requirements recommended by the Barclay Review?
Question 14
Do you have any comments on the eligibility of self-catering accommodation for the Small Business Bonus Scheme?
Question 15
Do you have any other comments on taxation relating to short-term lets?
Page 45 of 50 Short-Term Lets: Consultation
Question 16
Do you have any additions or amendments to the proposed design principles?
Question 17
Do you have any comments on the proposed scope of a regulatory framework?
Question 18
Do you have any comments on the controls or conditions which councils should be able to set through a registration or licensing regime?
Question 19
Do you have any comments on whether a licensing scheme and/or market- based approach, and any associated charges, should apply to all types of short- term lets and whether conditions and/or charges should vary according to the type of property, its location or the number of rooms?
Question 20
Do you have any comments on the effectiveness of a days per year limit in meeting the Scottish Government’s objectives?
Question 21
Do you have any comments on how regulations should deal with commercial hosts?
Question 22
Do you have any comments on who should be subject to enforcement and sanctions?
Question 23
Do you have any other comments on short-term lets not covered in your answers to the above?
Page 46 of 50 Short-Term Lets: Consultation More about you (optional)
Q1: Which of the following best describes you. Please choose all that apply:
Affected resident
Community organisation
Guest
Host with one property
Host with more than one property
Platform
Hosting intermediary
Hotel or B&B owner
Other business, please state
Other, please state
Q2: How did you hear about the consultation? Please choose all that apply:
Online at gov.scot or Citizen Space
Press coverage (local or national)
Referred by Local Authority/Government/MSP/Councillor
Referred by short-term letting host
Referred by short-term letting platform
Other, please state
If you are a host, please answer the following questions.
Q3: Which of the following describes your short-term letting listing(s)? Please choose all that apply.
Page 47 of 50 Short-Term Lets: Consultation Couch or spare bed in shared room
Spare room
Entire property, when on holiday only
Entire property
Multiple properties
Q4: Do you list your room/property/properties on more than one platform?
Yes
No
Q5: How many properties did you have available for short- term letting in 2018?
Q6: Approximately how many nights was/were your listing(s) occupied in 2018?
Q7: For hosts with more than one property, do you have properties in more than one local authority area in Scotland?
Yes
No
Page 48 of 50 Short-Term Lets: Consultation Short-Term Lets: Consultation on a regulatory framework for Scotland
Respondent Information Form
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Individual Organisation
Full name or organisation’s name
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Address
Postcode
The Scottish Government would like your Information for organisations: permission to publish your consultation The option 'Publish response only (without response. Please indicate your publishing name)’ is available for individual respondents only. If this option is selected, the organisation preference: name will still be published. If you choose the option 'Do not publish Publish response with name response', your organisation name may still be listed as having responded to the consultation Publish response only (without name) in, for example, the analysis report. Do not publish response
Page 49 of 50 Short-Term Lets: Consultation We will share your response internally with other Scottish Government policy teams who may be addressing the issues you discuss. They may wish to contact you again in the future, but we require your permission to do so. Are you content for Scottish Government to contact you again in relation to this consultation exercise? Yes No
Page 50 of 50 Short-Term Lets: Consultation © Crown copyright 2019
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ISBN: 978-1-78781-766-1 (web only)
Published by The Scottish Government, April 2019
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www.gov.scot Short-Term Lets
Annexes to the consultation on a regulatory framework for Scotland
April 2019 Annex1 A: The Short-Term Rental Sector, Housing and Tourism in Scotland
This Annex presents an overview of the available evidence on the short-term rental sector in Scotland. It begins by looking at traditional self-catering accommodation, then discusses collaborative economy accommodation platforms, with a particular focus on Airbnb (which is the online platform for which most information is publically available). Finally, it provides relevant background information on Housing and Tourism in Scotland, which is the context within which the short-term rental sector operates.
Evidence has been gathered from recent publications from the Scottish Government, local authorities, academic research, Airbnb reports and other sources.
The Short-Term Rental Sector in Scotland
Self-catering Accommodation in Scotland
Self-catering accommodation provides a key supply of tourist accommodation in Scotland. Estimates from Scotland’s Visitor Survey 2015 showed that just under one quarter of all tourists stayed in self-catering units (Frontline 2017).
Self-catering Properties across Scotland
The Association of Scotland’s Self-Caterers (ASSC) commissioned Frontline to conduct research on the economic impact of short-term lettings on the Scottish economy (Frontline 2017). The research was conducted between July 2016 and March 2017 and used information from the Valuation Rolls of the Scottish Assessors Association, as well as Supercontrol booking records, an online survey of 669 visitors who used self-catering accommodation in Scotland during 2016, and additional data from 183 self-catering property owners. This analysis refers to traditional self-catering accommodation in Scotland and does not include sharing economy short-term letting via online platforms (Airbnb, HomeAway, HouseTrip, etc.), serviced apartments and apartment hotels (aparthotels).
The study found that, in 2016, there were around 16,160 self-catering properties in Scotland, with over half situated in the Highlands, followed by Fife, and Edinburgh and the Lothians (Table 1) (Frontline 2017).
1 These annexes form part of the Short-Term Lets: Consultation on Regulatory Framework for Scotland which can be accessed at the following webpage: http://www.gov.scot/ISBN/9781787817661
Page 1 of 38 Short-Term Lets: Consultation (Annex) Table 1 - Self-catering properties by VisitScotland region 2016
No. of VisitScotland region % properties The Highlands 3,982 24.6 The Kingdom of Fife 2,356 14.6 Edinburgh & The Lothians 2,045 12.7 Argyll & The Isles 1,584 9.8 Perthshire 1,568 9.7 Scottish Borders 1,433 8.9 Dumfries & Galloway 964 6.0 Loch Lomond, Trossachs, Stirling and Forth Valley 746 4.6 Greater Glasgow & The Clyde Valley 394 2.4 Outer Hebrides 293 1.8 Ayrshire & Arran 268 1.7 Aberdeen City and Shire 260 1.6 Shetland 117 0.7 Dundee & Angus 101 0.6 Orkney 50 0.3 Total 16,161 100.0 Source: Frontline 2017 (p. 4), based on Scottish Assessors’ Association 2016 As these figures are based on Scottish Assessors Association Rolls, they do not include properties that have not been assessed for business rates purposes, including, for example, some properties listed on Airbnb.
At town-level, the top 15 locations for self-catering businesses in 2016 are shown in Table 2. The majority of self-catering units were located in Edinburgh, significantly more properties than in any of the other locations.
Table 2 - Top 15 locations for self-catering in Scotland 2016
Rank Visitor locations No. of properties 1 Edinburgh 1351 2 Isle of Arran 369 3 Isle of Skye (exc. Portree) 360 4 Isle of Mull 345 5 Inverness 330 6 Oban 303 7 North Berwick 265 8 Portree 256 9 Aberfeldy 227 10 Castle Douglas 222 11 Isle of Islay 217 12= Glasgow 214 12= Lairg 214 14 Newton Stewart 213 15 Aviemore 186 Source: Frontline 2017, based on Scottish Assessors Association 2016 (p. 4) Locations in Fife, where no town-by-town breakdown of properties was available, have been excluded.
Page 2 of 38 Short-Term Lets: Consultation (Annex) Self-catering Operators
Frontline (Frontline 2018) conducted a survey of traditional self-caterers in Scotland (including 268 ASSC members and non-members). Some key findings of this survey can be summarised as follows (Frontline 2018, p. 8): • 6 out of 10 self-caterers operated multiple properties; • 42% operated in city centres or urban areas of Scotland; • For 37% of the operators self-catering earnings were their sole income, while for 53% it was an additional income; • 81% were subject to non-domestic rates, 9% to Council Tax and 10% to both; • The most frequent routes to the market were operator’s website (88%), word of mouth/repeat business (81%), group platform (76%), collaborative economy platform (67%), and social media (65%); • The most frequent collaborative economy platforms used to advertise self- catering units were Airbnb (60%), Trip Advisor (55%), Holiday Lettings (41%), and Booking.com (41%); • The time of usage of each advertising channel varied. Around 70% had used their own website or a group platform for over 5 years, while 34% had used a collaborative economy platform for over 5 years and 26% had used social media for over 5 years. • The most frequent additional routes to the market were VisitScotland (88%) and EmbraceScotland (69%).
From the above findings, it is clear that traditional self-caterers use, together with their own websites, collaborative economy platforms to advertise their listings, highlighting a shift towards these types of accommodation platforms.
Bookings of Self-catering Accommodation
The Frontline study (Frontline 2017) analysed a database of 111,014 bookings made in 2016 using the website for self-catering Supercontrol. The bookings referred to a total of 1,928 unique properties, of which 52% were situated in the Highlands, Fife and Edinburgh and the Lothians (Frontline 2017, p. 5). Overall, almost 8 in 10 properties were in rural areas (76%), from which just under half were in remote rural Scotland (46%) (Frontline 2017, p. 6). Similarly, rural areas had the largest number of bookings (81%), from which just under half were made for remote rural areas. In detail, 26% of all bookings were made for the Highlands, followed by Argyll and the Isles (12%), Fife (11%), and Edinburgh and the Lothians (10%) (Frontline 2017, p. 8).
Almost all self-catering units had fewer than 5 bedrooms, with properties in urban areas being smaller than those in small towns and rural areas. Just over half of all properties had capacity for up to five guests (Frontline 2017, pp. 7-8). Most bookings were for up to six nights (71%), while 23% of the bookings were for a week and 6% for eight or more nights. More than 30% of the bookings were made for the summer months, i.e. between June and August. Edinburgh and the Lothians received the biggest number of bookings made by overseas visitors, followed by the Highlands (Frontline 2017, pp. 9-10).
Page 3 of 38 Short-Term Lets: Consultation (Annex) VisitScotland data (VisitScotland 2017b) confirms that bookings for self-catering accommodation showed a pronounced seasonal difference especially in rural areas, such as the Highlands and Orkney (Figure 1). The regions including Edinburgh and Glasgow showed relatively stable occupancy rates across the year.
Figure 1 – Net unit occupancy rates (%) of self-catering accommodations in selected regions in each month - 2016 100 90 80 70 60 50 40 30 20 10 0
Edinburgh & Lothians Glasgow & Clyde Highlands Kingdom of Fife Orkney
Source: Scottish Accommodation Occupancy Survey 2016. Data retrieved from Visit Scotland 2017b p. 212
Self-catering Guests
As part of the research, Frontline (Frontline 2017) conducted a survey of 669 visitors who used self-catering accommodation in Scotland in 2016. Just over half of the visitors (52%) were from England, 36% from Scotland and just under 10% were overseas visitors (Frontline 2017, p. 13). Some 9 out of 10 visitors stayed for a week or less, from which 46% stayed for 7 nights. A further 2% stayed for 15 or more days (Frontline 2017, p. 17). Overseas visitors were more likely to travel in large groups (3 or more people), travel without children, stay for at least two weeks and visit during the summer months (Frontline 2017, p. 11).
Collaborative Economy Accommodation Platforms In addition to traditional self-catering accommodation a range of collaborative platforms are now operating, offering tourist accommodation. Platforms acting for short-term lets include peer-to-peer and vacation rental platforms, as well as home swapping platforms, and represent the largest sector of the collaborative economy in Europe (Scottish Government 2018a).
According to a research report published in 2017 by Skift3, the biggest peer-to-peer accommodation platforms with listings in Scotland (in November 2017) included:
2 Retrieved from https://www.visitscotland.org/binaries/content/assets/dot-org/pdf/research-papers- 2/insights---tourism-in-scotlands-regions-2016_update-may-18.pdf 3 Skift, 2017, The State of the Global Vacation Rental Market.
Page 4 of 38 Short-Term Lets: Consultation (Annex) • Airbnb: 21,900 active listings and 12,600 hosts in Scotland (between March 2016 and March 20174) • Couchsurfing: 64,500 hosts in Scotland of which 11,000 in Edinburgh • FlipKey: 7,000 listings in Scotland • HouseTrip: 7,000 listings in Scotland • HomeAway: 2,500 listings in Scotland • Wimdu: under 1,000 listings in Scotland5.
Indigo House (Indigo House 2017) noted that hosts and accommodation operators may advertise their listing(s) using more than one online platform, so there is a risk of double-counting listings.
Airbnb in Scotland This section looks at Airbnb’s activity in Scotland, as a representative of collaborative economy online accommodation platforms. It focuses on Airbnb for two reasons; firstly because of its dominating position among the peer-to-peer accommodation sector, and secondly because there are more publicly available data and reports on Airbnb activity compared to the activity of other similar platforms.
Airbnb has operated in Scotland since 2009 and is the largest peer-to-peer accommodation platform across the world. According to Airbnb, in 2017 the economic activity of Airbnb hosts and guests in Scotland was equal to £482.9 million (Airbnb 2018)6. VisitScotland estimated that Airbnb accounted for 5% of all tourism accommodation in 2016 (Scottish Government 2018a).
This section reviews reports published by Airbnb, academic findings, and research using data provided by intermediate agencies (Inside Airbnb and AirDNA), with the aim to drawing a general picture of Airbnb’s activity in Scotland. It draws on information on the top destinations in Scotland for Airbnb guests, the number of Airbnb listings, type and length of accommodation provided by Airbnb, and information on hosts and guests.
The Open Data Institute (ODI), as part of the Institute’s data innovation programme7, studied the use of data on improving peer-to-peer accommodation8 and concluded that even though there is a rich amount of data held by peer-to-peer accommodation platforms, access to these data is restricted (Open Data Institute 2018). Inside Airbnb9 is an independent, non-commercial (open source) provider of data to explore how Airbnb is used around the world. AirDNA10 is a market-based platform that
4 See also Airbnb (2017a). “Overview of the Airbnb Community in Scotland”. 5 Information retrieved from Frontline 2018, p. 7. 6 https://www.airbnbcitizen.com/airbnb-debuts-top-15-locations-across-scotland/ and https://press.airbnb.com/airbnb-unveils-data-on-top-15-destinations-across-scotland-for-the-first- time-expands-experiences-on-airbnb-across-the-country/ 7 https://theodi.org/article/odi-secures-6m-to-advance-data-innovation/ 8 “Peer-to-peer accommodation can be broadly defined as accommodation – such as spare room or an entire home – made available by an existing homeowner for others to rent, normally for a short period of time” (Open Data Institute, 2018, p. 3). 9 http://insideairbnb.com/ 10 https://www.airdna.co
Page 5 of 38 Short-Term Lets: Consultation (Annex) tracks information on Airbnb listings by using publicly available data from the Airbnb website.
Airbnb disputes the accuracy of data scraped by Inside Airbnb and AirDNA. The Scottish Expert Advisory Panel on the Collaborative Economy pointed out “it is crucial that third party analysts focus on collaborating with platforms to access data at source, rather than relying on data-scraped information” (Scottish Government 2018a, p. 14). However, many academics and analysts use the scraped data to draw an overall image of Airbnb activity at national and regional level and argue that the outputs are accurate (Wachsmuth, Kerrigan et al. 2017). Caution is needed when drawing conclusions from scraped data analysis.
The focus of the section, besides Scotland, is on Edinburgh11 for the following reasons. Firstly, it is the most visited destination in Scotland and receives the largest number of Airbnb guests. Secondly, it has the highest number of Airbnb listings, and finally, there is more research and evidence available about Airbnb activity in Edinburgh compared to other Scottish areas.
Top Airbnb Destinations in Scotland The top 5 Airbnb destinations (as measured by number of guests) in Scotland in 2017 were: Edinburgh, Glasgow, Inverness, Isle of Skye, and Oban (Airbnb 2018). The top 15 destinations are shown in Table 3 along with other information about the listings and hosts.
11 For a SPICe report on short-term lets in Edinburgh published in April 2019, see https://spice- spotlight.scot/2019/04/01/short-term-lets-in-edinburgh/
Page 6 of 38 Short-Term Lets: Consultation (Annex) Table 3 – Top Airbnb destination across Scotland in 2017/18 Number Total of nights Total host Total Earnings Number City guest a typical earnings economic of typical of active arrivals listing is (£) activity (£) host (£) listings booked Edinburgh 640,000 41 61.6M 238.7M 4,300 10,500 Glasgow 160,000 66 12.7M 57.9M 4,100 2,700 Inverness 57,000 37 3.5M 14.7M 5,500 850 Isle of 49,600 79 3.8M 14.5M 8,900 550 Skye12 Oban 25,900 44 1.7M 7.3M 6,100 360 Aberdeen 21,500 33 1.6M 8.3M 1,800 740 Dundee 16,200 31 1.3M 6.1M 3,000 440 Kyle of 16,200 74 1.3M 4.5M 3,000 440 Lochalsh Stirling 21,500 33 0.9M 4M 1,800 740 Fort William 28,900 57 1.8M 7.2M 7,800 330 Aviemore 10,100 65 0.8M 3.7M 8,100 150 Ullapool 9,900 53 0.5M 2.3M 4,800 170 St Andrews 9,500 39 1.1M 3.5M 4,900 240 Elgin 6,700 39 0.5M 2.2M 4,200 130 Perth 6,400 21 0.4M 1.9M 2,600 140 Scotland 1.4M 44 113.4M 482.9M 3,800 25,200 Source: Retrieved from https://press.airbnb.com/airbnb-unveils-data-on-top-15-destinations-across- scotland-for-the-first-time-expands-experiences-on-airbnb-across-the-country/
The largest growth in the number of listings between July 2016 and July 2017, was seen in Highland (+81%), compared to a 43% increase for Edinburgh and a 45% increase for Glasgow (Table 4) (Airbnb 2017b).
Table 4 – Growth of Airbnb listings from 1st July 2016 – 1st July 2017 Growth Number of Number of Number of Number of Year on listings listings listings listings Year County
01/07/2014 01/07/2015 01/07/2016 01/07/2017 01/07 2016-2017 Argyll and Bute 100 270 640 920 44% City of Edinburgh 1,900 3,500 6,300 9,000 43% Fife 100 440 680 910 33% Glasgow City 1,000 1,100 1,500 2,200 45% Highland 280 690 1,700 3,100 81% Source: Retrieved from Airbnb 2017b, p. 5
12 In 2017/18 the Isle of Skye had 550 Airbnb listings, i.e. 1 Airbnb for every 8 homes (Channel 4 News 2018). Alasdair Rae argued that there was a 91% increase in Airbnb listings in the area of Highland between 2016/17 and 2017/18 (Channel 4 news 2018). According to the Chartered Institute of Housing report (2019), Skye in 2017 had 5,813 dwellings and 550 Airbnb listings, i.e. almost one Airbnb listing for every 10 dwellings.
Page 7 of 38 Short-Term Lets: Consultation (Annex) Growth of Airbnb Listings
Scotland
According to Airbnb, between July 2016 and July 2017, there were 21,900 active Airbnb listings13 in Scotland (Airbnb 2017c). Based on a 2018 Airbnb report, in 2018 there were 31,000 active listings in Scotland (Airbnb 2018b). Figure 2 shows the growth in available (not necessarily new) Airbnb listings in Scotland between 2015 and 2017, using AirDNA data. There is an increase in the total number of Airbnb listings across Scotland of both entire homes and private rooms.
Figure 2 – The growth of Airbnb in Scotland – Total available listings 2015- 2017
Source: Retrieved from Indigo House 2017, p. 26. Data sourced from AirDNA. Edinburgh
Based on Inside Airbnb data (retrieved from their website), there has been a notable increase in the number of listings in Edinburgh, with a total increase of +100.5% between July 2016 and July 2018 (Table 5).
Table 5 – Number of Airbnb listings in Edinburgh 2016-2018 Year Listings Change on year July 2016 6,272 July 2017 9,189 +46.5% July 2018 12,578 +37% Source: Inside Airbnb data
In November 2018, there were 11,985 Airbnb listings14 in the City of Edinburgh (Inside Airbnb data 18 Nov. 201815). Based on Airbnb reports, there were 10,500
13 An active Airbnb listing is defined as “a listing that appears on the website during a search. Active listings do not necessarily have availability on a particular date or at all.” (Airbnb 2017a, p. 12).
Page 8 of 38 Short-Term Lets: Consultation (Annex) listings in Edinburgh during 2017 (Airbnb 2018), while in 2015 there were 3,500 listings (Airbnb 2017b). In 2009, the first year of Airbnb in Edinburgh, there were 8 listings registered (SPICe 2019).
Figure 3, shows the growth in available (not necessarily new) Airbnb listings in Edinburgh between 2015 and 2017, and highlights that there is a growth in the total number of Airbnb listings across Edinburgh of both entire homes and private rooms.
Figure 3 – The growth of Airbnb in Edinburgh – Total available listings 2015- 2017
Source: Retrieved from Indigo House 2017, p. 27. Data sourced from AirDNA.
Location of Airbnb Listings
Edinburgh
Edinburgh in 2018 had approximately 240 listings for every 10,000 people living in the city (SPICe 2019). Airbnb listings are spread unevenly across Edinburgh. In 2016, the city centre together with Leith Walk had the largest number of listings (Rae 2017) and also of new listings (Figure 4) (Indigo House 2017). “In the City Centre ward, there is one Airbnb listing for every 11 residents, with comparable figures of 23 for Leith Walk, 37 for Meadows/Morningside and 34 for Leith” (Rae 2017, p. 4). The Edinburgh City Centre ward had around 13,000 dwellings in 2018, with just over 2,000 Airbnb entire property listings, which means a ratio of 1:65 of entire property listings to dwellings (Chartered Institute of Housing 2019). There was also neighbourhood-based diversity regarding the number of Airbnb listings, ranging from 674 listings in the ‘Old Town, Princes Street and Leith Street’ (over 10% of all listings) and 4 in ‘Barnton, Cammo and Cramond South’ (Rae 2017, p.6).
14 The difference in the number of listings between July and November 2018 is due to season variations in tourism. Listings might not necessarily be active and each property might have more than one listing, corresponding for instance to separate rooms. 15 Inside Airbnb Data November 18, 2018. Retrieved from http://insideairbnb.com/edinburgh/
Page 9 of 38 Short-Term Lets: Consultation (Annex) Figure 4 – Edinburgh Cluster Map of New Airbnb Listings (entire home/apt) in 2016
Source: Retrieved from Indigo House 2017, p. 21. Data sourced from AirDNA.
Figure 5 shows an Edinburgh map of the Airbnb listings (blue to red dots based on night price), the number of households that live within the private rented sector (PRS) (grey shading) and the number of Edinburgh hotels (yellow dots). Most of the red dots, which indicate the most expensive Airbnb listings, are located within the city centre (high PRS density) and very close to most of the hotels (Indigo House 2017). Areas with low density of PRS households (light grey) have very low or no concentration of Airbnb listings. Overall, the map shows an overlap between the private rented stock and Airbnb listings.
Page 10 of 38 Short-Term Lets: Consultation (Annex) Figure 5 – Edinburgh Map of New Airbnb Listings (entire home/apt) overlaid on percentage of households in PRS and hotels in 2016
Source: Retrieved from Indigo House 2017, p. 22. Data sourced from AirDNA.
Indigo House, analysed AirDNA data and Scottish Government Housing statistics16 to find that Airbnb entire home listings in February 2017 take up between 0.4% (in Glasgow) and 1.4% (in Edinburgh) of the private occupied stock (Indigo House 2017, p. 30). The corresponding figure for the Highlands was 1.2%. (Indigo House 2017, p. 30).
Characteristics of Airbnb Listings: Type, Availability and Multi-listings Renting out for short periods or renting out a spare room while the owners/occupiers remain in the property can be considered amateur activity and can be differentiated from running a business, which is typically operated by professionals, and from renting out an entire home/apartment for long periods. This section studies:
• The type of accommodation offered by Airbnb listings (entire home or private room); • The availability/occupancy of the listings (number of nights a listing is available to be booked/actual nights booked); • Number of listings operated by each host (multi-listings, i.e. listings that belong to hosts who advertise more than one property).
16 They used the Scottish Government’s 2015 estimated Stock of Dwellings.
Page 11 of 38 Short-Term Lets: Consultation (Annex) Entire homes, booked for long time periods, and multi-listings might potentially have a negative impact on housing stock and local communities. Wachsmuth et al. (2017) define these listings as the ‘triple threat’ listings17.
Type of Accommodation
Scotland
In Scotland in 2017, 59% Airbnb listings were entire homes and 40% were spare rooms (Table 6) (Airbnb 2017b).
Table 6 – Types of listing on Airbnb in Scotland Share of Year on year Year on year Year on year listings growth growth growth Listing type (As of 1st (01/07/2014 - (01/07/2015 - (01/07/2016 - July 2017) 30/06/2015) 30/06/2016) 30/06/2017) Entire Home 59% 78% 94% 55% Spare Room 40% 85% 80% 43% Shared Room 1% 294% 64% 6% Source: Retrieved from Airbnb 2017b, p. 4
Edinburgh
Similarly, in Edinburgh, the majority of Airbnb listings are for entire homes18. In July 2018, 61% (7,665) of the Airbnb listings in Edinburgh were entire homes/apartments; 39% (4,873) were private rooms; and 0.3% (40) shared rooms (Inside Airbnb data 28 July 2018).
Table 7 shows an increase in the entire homes offered through Airbnb and, at the same time, a decrease in the renting out of private rooms.
Table 7 – Type of accommodation in Edinburgh, 2016-2018 Type of Jul-16 Jul-17 Jul-18 accommodation Number % Number % Number % Entire homes 3432 54.7 5259 57.2 7665 60.9 Private rooms 2784 44.4 3881 42.2 4873 38.7 Shared rooms 56 0.9 49 0.5 40 0.3 Total 6272 100.0 9189 100.0 12578 100.0 Source: Inside Airbnb data From the entire homes rented out through the Airbnb platform in 2018, 42% were 2- bedroom properties, 35.5% 1-bedroom properties, 13.3% 3-bedroom properties and 4.1% 4-bedroom properties (Inside Airbnb data November 2018).
17 According to Wachsmuth et al. (2017, p. 22) ‘multi-listings’ are defined as listings that belong to hosts who advertise two or more entire homes or three or more private rooms. 18 According to Rae (2018, p. 4), “It is important to note that not all entire home listings are available all year round, so the extent to which housing stock is ‘lost’ to the long-term rental market is difficult to discern from such headline figures.” Rae, A. (2018). "From neighbourhood to “globalhood”? Three propositions on the rapid rise of short-term rentals." Area 0: 1-5.
Page 12 of 38 Short-Term Lets: Consultation (Annex) Occupancy and Availability of Airbnb Listings
Scotland
Some cities, like Amsterdam, define short-term lets as listings available for 60 days or less. According to Airbnb reports, a typical listing in Scotland would operate for 40 nights annually in 2016/17 and 44 nights in 2017/18 or else between 3 and 3.8 nights per month (Airbnb 2017a, Airbnb 2018). In fact, slightly more than half of Airbnb listings in Scotland (54%) in 2016/17 were booked for under 30 nights/year (Table 8) (Airbnb 2017b). However, 28% of the listings in Scotland were booked for more than 60 days and 19% for more than 90 days. Similar patterns are displayed for Edinburgh and Glasgow.
Table 8 – Number of nights hosted on Airbnb listings, July 2016 – July 2017 Number of nights Scotland % of all Edinburgh % of all Glasgow % of all hosted on Airbnb listings listings listings 1-30 54% 53% 49% 31-60 18% 17% 15% 61-90 9% 9% 10% 91-120 6% 5% 7% 121-180 7% 7% 9% 181+ 6% 9% 10% Source: Retrieved from Airbnb 2017b, p. 3
Edinburgh
In November 2018, Edinburgh Airbnb listings were rented out for an estimated 109 nights per year, with 29.9% of estimated occupancy (Inside Airbnb data 18 Nov. 201819). Moreover, there were 6,155 listings (51.4%) with high availability (more than 60 days) and the remaining 5,830 (48.6%) with low availability (60 days or less). In September 2017, approximately 3,515 entire homes were rented out frequently, for an estimated 188 nights per year (Inside Airbnb data 18 Nov. 2018). In Edinburgh, entire homes were more likely than private rooms to be available for 60 days or more (Rae 2017, p. 2).
According to an Edinburgh City Council report (Edinburgh City Council 2018), just over 1 out of 5 Airbnb listings in 2017 were operating in excess of 90 days/year (data from July 2017). They argued that properties rented out for more than 90 days per year were highly likely to be operated in a commercial basis rather than a main place of residence (Edinburgh City Council 2018, p. 3).
19 http://insideairbnb.com/edinburgh/
Page 13 of 38 Short-Term Lets: Consultation (Annex) Multi-listings
There are different types of participants in the collaborative economy (Scottish Government 2018a). In the peer-to-peer accommodation platforms, such as Airbnb, we find both occasional providers of tourist accommodation and professional operators. Professional hosts are more likely to be operating multiple listings compared to amateur hosts who are usually renting out a room or their main residence while they are away for short periods. Scotland
According to a July 2017 Airbnb report, in Edinburgh, Glasgow, the Highlands, Fife, Argyll and Bute, the majority of hosts had one listing (78%) on the platform and a further 14% had two listings (Airbnb 2017b). Just 2% of all hosts had 5 or more listings (Table 9).
Table 9 – Number of hosts per number of listings in Scotland – in top 5 destinations* (as of 1st July 2017) Number of listings % of hosts 1 78% 2 14% 3 4% 4 2% 5 1% 6+ 1% Source: Retrieved from Airbnb 2017b, p. 6 * The top 5 destinations include Edinburgh, Glasgow, the Highlands, Fife, and Argyll and Bute.
Edinburgh
According to Inside Airbnb data for Edinburgh (Nov. 2018), 59.6% (7,142) of the listings were single listings, while the remaining 40.4% (4,843) were multi-listings. This pattern remains relatively stable during the period 2016-2018. Inside Airbnb data suggests that, in September 2017, more than a third (2,030 of 5,474) of entire homes/apartments rented out through Airbnb in Edinburgh belonged to hosts with more than one entire home/apartment listing20, who generated more than half of the revenue for this type of Airbnb listing21. Rae (2017, p. 2) highlighted that one host in Edinburgh had advertised 80 listings, while seven hosts had more than 20 and 28 hosts had 10 or more listings.
20 Hosts might advertise on Airbnb and similar platforms one or more rooms of their residence and the entire property when they are away. Therefore, a single property might have more listings and thus we need to interpret the data on multi-listings with caution. 21 Retrieved from http://insideairbnb.com/edinburgh/#
Page 14 of 38 Short-Term Lets: Consultation (Annex) Airbnb Hosts
Scotland
Between March 2016 and March 2017 there were 12,600 hosts22 in Scotland. (Airbnb 2017a).
In 2016/17, Airbnb hosts were on average 48 years old in Scotland, five years older than the average age in the UK (Airbnb 2017b). Based on the same report, more women operated as Airbnb hosts than men (62% and 38% respectively) and 32% of hosts were self-employed, while 29% were in full-time employment and 15% retired (Airbnb 2017b, p. 2).
The majority of hosts (76%) rented their primary or secondary homes and 41% relied on Airbnb income to make ends meet (Airbnb 2017a, p. 5). Hosts in Scotland earned23 on average £3,600 per year (£68 million in total) in 2016/17 (Airbnb 2017a) and £3,800/yearly (£113.4 million in total) in 2017/18 (Airbnb 2018).
Edinburgh
Between March 2016 and March 2017 there were 5,400 hosts in Edinburgh (43% of the Scotland total) (Airbnb 2017a, p. 10). In Edinburgh a typical host earned on average £3,900 per year in 2016/17 (Frontline 2018, p. 9).
Airbnb Guests
Scotland
Between March 2016 and March 2017, there were 802,000 inbound Airbnb guests who stayed on average 2.8 nights in Scotland (Airbnb 2017a). More than half of these inbound Airbnb guests visited Edinburgh (411,000 guests – a 90% growth on previous year) (Airbnb 2017a, p. 10).
In 2016/17, just under half of guests (45%) arrived in Scotland between July and September, while 23% and 22% arrived between April-June and October-December respectively (Airbnb 2017b).
In 2016/17, the majority of the Airbnb guests chose Airbnb to “live like a local” (85%) and visited Scotland for vacation and leisure (87%) (Airbnb 2017a, p. 6). Just under half of the guest spending (47%) was done within the neighbourhood of the Airbnb property that they stayed (Airbnb 2017a). The estimated total spent by Airbnb guests in Scotland was £293 million (Airbnb 2017a).
22 Hosts are defined as Airbnb community members who rent a space using the Airbnb platform. 23 Median value of total income earned by a typical host during a year. A typical host operates at least one active listing and has at least one booking during the year studied.
Page 15 of 38 Short-Term Lets: Consultation (Annex) Housing Market in Scotland
Private Rented Sector
The different housing tenures are displayed in Figure 6. The private rented sector (PRS) in Scotland has more than doubled in size since 1999, and in 2017 accounted for more than a seventh of all homes in Scotland. The number of owner occupied properties rose from 1.49 million in 2006 to 1.52 million in 2009, fell back to 1.46 million in 2013 then rose slightly to 1.50 million in 201724.
Figure 6 – Number of dwellings by tenure, Scotland, 1981-2017
Source: Housing Statistics for Scotland 2018 Note: Estimates from 1991 to 2000 are based on the 1991 Census. Estimates from 2001 onwards are based on the 2001 Census, GROS dwelling counts and Scottish Household Survey (SHS) tenure splits and are not strictly comparable. 2007 figures are provisional. Retrieved from https://www.gov.scot/publications/private-sector-rent-statistics-2010-2018/pages/11/ [Date accessed 20/02/19]
24 Retrieved from https://www.gov.scot/publications/private-sector-rent-statistics-2010-2018/pages/11/
Page 16 of 38 Short-Term Lets: Consultation (Annex) Table 10 – Estimated stock of dwellings by tenure across Scotland, 2017
Dwellings by tenure Number Percentage Total number of dwellings (000s) 2,585 - Total number of occupied dwellings (000s) 2,480 96% Total number of vacant dwellings (000s) 105 4% Privately owned dwellings, of which: 1,895 73% Owner occupied 1,502 58% Rented privately or with a job / business 393 15% Vacant private dwellings and second homes 97 4% Socially rented dwellings, of which 594 23% Housing associations 279 11% Local authorities, New Towns, Scottish Homes 315 12% Source: Housing Statistics for Scotland 2018 Retrieved from https://www2.gov.scot/Topics/Statistics/Browse/Housing- Regeneration/HSfS/KeyInfoTables [Date accessed 20/02/19]
Average new let private rents in Scotland have increased for all property sizes between 2010 and 2018 (cumulative increase over 8 years) (Figure 7). As shown in Figure 7, the greatest increase in new let monthly rents was seen for 4-bedroom properties (33.3% cumulative increase) and 3-bedroom properties (26% increase), followed by 2-bedroom properties (21.6% increase) and 1-bedroom properties (16.9% increase).
Figure 7 – Average (mean) monthly private rents (£), Scotland, 2010-2018
Average (mean) monthly rents, by Property Size: Scotland, 2010 to 2018
1,400 4 Bedroom Property 1,200 3 Bedroom Property 2 Bedroom Property 1,000 1 Bedroom Property 800 1 Bedroom in Shared Property
600 £ monthly
400
200
0 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Housing Statistics for Scotland 2018 Note: Figures exclude any studio properties, properties with 5 or more bedrooms, or room rents associated with bed and breakfast lodgings. Figures for rooms in shared properties represent "rent only", i.e. exclude any payments for shared services.
Page 17 of 38 Short-Term Lets: Consultation (Annex) Note that some caution is needed when interpreting Scotland level findings. This is because whilst the underlying data aims to be representative of rents within each broad rental market area, no attempt has been made to apply any formal weighting techniques to account for any specific area-level sample sizes or structures when aggregating up to a single Scotland level figure. Retrieved from https://www.gov.scot/publications/private-sector-rent-statistics-2010-2018/pages/8/ [Date accessed 20/02/19]
For 3 and 4-bedroom properties, and for 1-bedroom shared properties, the latest annual increases of 8.7%, 11.8% and 4.7%, respectively, between 2017 and 2018, are all higher than any previous annual increases since 201025. Note that these average rent figures are based on data from the Scottish Government Rent Service Scotland Market Evidence Database, which is largely based on advertised rents, and the results will therefore reflect changes to prices for new market level rents rather than changes to rents for existing tenants.
Separate results from the Office for National Statistics Index of Private Rental Housing Prices, which estimates changes to private rents across all private rented households rather than just newly let properties, show that rents in Scotland increased by around 8.5% between January 2011 and January 201926, with an annual increase of 0.7% seen in the 12 months to February 201927. Houses in Multiple Occupation
A House in Multiple Occupation (HMO) is the only or principal residence of three or more qualifying persons from three or more families28. Typical examples of HMO properties are shared houses or flats and bedsits, hostels, student halls of residence, staff accommodation in hotels or hospitals, and so on. The number of licences in force has generally increased year on year since the introduction of the mandatory licensing scheme in 2001 (Figure 8). On 31 March 2018, there were 15,671 licenses in force, an increase of 2% compared with the previous year29. The majority of HMO licenses released in 2018 were for urban centres, i.e. for Edinburgh City, Glasgow City, Dundee City, Aberdeen City and Fife.
25 Information retrieved from https://www.gov.scot/publications/private-sector-rent-statistics-2010- 2018/ 26 Calculated using the Experimental Index of Private Housing Rental Prices for Scotland. The same percentage between January 2011 and February 2019 is 17.7% for England and 6.4% for Wales. There are no 2011 data for Northern Ireland in this Index. 27 Information retrieved from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/indexofprivatehousingrentalprices/f ebruary2019 28 Retrieved from https://www2.gov.scot/Publications/2004/07/19731/40888 29 Retrieved from https://www2.gov.scot/Topics/Statistics/Browse/Housing-Regeneration/HSfS/HMO
Page 18 of 38 Short-Term Lets: Consultation (Annex) Figure 8 – HMO Licences, 2001-2018 HMO licenses over time 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Scotland Aberdeen City Dundee City Edinburgh, City of Fife Glasgow City
Source: HMO returns by local authorities to the Scottish Government, Communities Analytical Services (Housing Statistics) Note: Figures for Dundee City reflect the number of licence applications received (i.e. single licence application for a University Halls of Residence containing multiple individual HMOs), rather than the number of licenses actually in force.
Empty Properties and Second Homes
Second homes are homes that are furnished and lived in for at least 25 days in a 12- month period but not as someone’s main residence. Unoccupied Exemptions are properties that are empty and unfurnished for less than 6 months and exempt from paying Council Tax. Long-term empty properties are properties that have been empty for more than 6 months and are liable for council tax. In September 2018, there were 24,907 second homes, 45,485 unoccupied exemptions and 39,110 long- term empty properties. Of these long-term empty properties over half (24,471 or 63%) had been empty for over 12 months30.
The council areas with the greatest number of second homes in September 2018 were Highland, Argyll and Bute, Fife, City of Edinburgh, North Ayrshire, Dumfries and Galloway, Aberdeenshire, and Perth and Kinross. The council areas with the greatest number of properties empty for 6 months or more in September 2018 were Edinburgh City, Aberdeen City, Fife, Aberdeenshire, Glasgow City and Highland. The council areas with the greatest number of properties empty for 12 months or more in September 2018 were the same but in different order (Glasgow City, Fife, Aberdeenshire, Highland, Aberdeen City and Edinburgh City).
30 Definitions and data retrieved from https://www2.gov.scot/Topics/Statistics/Browse/Housing- Regeneration/HSfS/LTemptysecondhomes
Page 19 of 38 Short-Term Lets: Consultation (Annex) Overall, the number of second homes has decreased, while the number of empty properties has increased during the past few years (Figure 9).
Figure 9 – Second and Long term empty (for 6 months or more) properties in Scotland, 2005-2018 45000 40000 35000 30000 25000 20000 15000 10000 5000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Long term empty properties Second Homes
Source: Long term empty and second home web tables, 07 Dec 2018 Retrieved from https://www2.gov.scot/Topics/Statistics/Browse/Housing- Regeneration/HSfS/LTemptysecondhomes/EmptySecondhometables From 1st April 2013 local authorities gained the discretionary power to remove the empty properties discount or set a council tax increase of 100% on certain properties which have been empty for one year or more. This, along with associated improvements in the data held by local authorities, has led to the reclassification of a number of properties and has had a significant bearing on the year-on-year changes in the figures.
Page 20 of 38 Short-Term Lets: Consultation (Annex) Tourism in Scotland Economic Value of the Tourism Sector Tourism is of growing economic value for the Scottish economy (Scottish Government 2018a). In 2017 tourists in Scotland generated around £14 billion to the Scottish economy and contributed 6% (around £8 billion in basic prices) of the Scottish GDP (Tourism tax: Discussion Document 31).
In 2017, the Sustainable Tourism Growth sector (restaurants, hotels and others) employed 206,000 people, around 8% of total jobs in Scotland (1 out of 12 jobs), from which over one quarter were employed within the accommodation sector (56,000 employees, equal to around 27% of the total) (Tourism tax: Discussion Document 2018, p. 11). Overall, tourism employment has increased by 12% between 2011 and 2016, equivalent of 20,000 additional jobs (Scottish Government 2018b). In 2016, the sector had a large share of part-time employment: 47% compared to 27% of the total part-time employment in Scotland (Scottish Government 2018b).
Overnight Visitors and Expenditure In 2017, around 14.9 million overnight visitors came to Scotland, of which the majority were from the UK (Tourism tax: Discussion Document 2018, p. 6). The most popular months in 2016 were between July and September, with around 28% of domestic visitors and 40% of overseas visitors (Frontline 2018).
The number of overnight visitors decreased between 2011 and 2016 by around 9%, driven by a decrease in visitors from the UK (-14%), with overseas visitors showing an increase since 2011 (+17%) (Scottish Government 2018b). A similar trend was seen between 2015 and 2016, when international visitors increased by 6%, while UK overnight visitors decreased both in number of trips and amount spent (VisitScotland 2017) 32. However, findings from a VisitScotland 2018 report33 and the recent discussion document on transient visitor taxes in Scotland showed that between 2016-2017 there was a slight increase in UK resident overnight trips (+1.3%) and a growth of 3.8% in spend, as well as a much greater increase in international visitors trips (+17%) with a +23% growth in expenditure (VisitScotland 2018).
Visitor expenditure has increased in recent years. In 2017, expenditure by overnight visitors to Scotland was around £5.3 billion– up over 9 per cent in real terms on 2016, from which £2.3 billion corresponded to overseas visitors (Tourism tax: Discussion Document 2018). Between 2011 and 2017, there was an increase in total overnight visitor spend of 6.4% in real terms, largely driven by international visitors (increase spend by almost 40% in real terms between 2011 and 2017) (Tourism tax:
31 Information retrieved from the Tourism tax: Discussion Document, https://www.gov.scot/publications/transient-visitor-taxes-scotland-supporting-national- discussion/pages/3/ 32 Retrieved from https://www.visitscotland.org/binaries/content/assets/dot-org/pdf/research-papers- 2/tourism-in-scotland-2016-updated.pdf 33 Retrieved from https://www.visitscotland.org/binaries/content/assets/dot-org/pdf/research-papers- 2/tourism-in-scotland-2017-summary.pdf
Page 21 of 38 Short-Term Lets: Consultation (Annex) Discussion Document 2018, p. 6). The Scottish tourism strategy target is to increase visitors’ spend by £1 billion by 202034.
Touristic Destinations across Scotland Tourism is not evenly spread across Scotland. In 2017, Edinburgh and the Lothians attracted 44% of Scotland’s overseas overnight visitors and 29% of total overnight visitors to Scotland (almost 5 million overnight visitors), followed by Greater Glasgow and the Clyde Valley (17% of Scotland’s overnight visitors) and by the Highlands and Islands (11%) (Tourism tax: Discussion Document 2018, p. 7). Visitor expenditure across Scotland is similarly concentrated. As shown in Figure 10, Edinburgh and the Lothians saw the highest domestic and international overnight visitor spend (around £1.8 billion of expenditure by overnight visitors in 2017 – 35% of the Scottish total). Glasgow accounted for over £700 million of overnight visitor expenditure in 2017, around 13 per cent of Scotland’s total (Tourism tax: Discussion Document 2018).
Figure 10 - Overnight Visitors by Region of Scotland, 2017
Source: ONS (2018) International Passenger Survey 2015-17; VisitEngland, VisitScotland and Visit Wales (2018) Great Britain Tourism Survey 2015-17; VisitScotland (2017) Islands Visitor Survey 2017.
34 National Tourism Strategy (TS2020): https://scottishtourismalliance.co.uk/overview/
Page 22 of 38 Short-Term Lets: Consultation (Annex) Hotels in Scotland Hotels, together with guest houses, bed & breakfast, self-catering units, short-stay accommodation, hostels and caravan and camping parks form the Sustainable Tourism Growth Sector in Scotland. In 2018 there were 3,120 registered business sites within the sector, with the majority offering hotel accommodation (Tourism tax: Discussion Document 2018).
Hotels in Scotland accounted for:
• 11% of the Sustainable Tourism Growth Sector (2017)35 • 30% (£2,062.1) of the sector’s turnover (2015) and • 33% (£1,227.8) of GVA (2015) (Scottish Government 2018b, pp 14-16).
Occupancy Rates
In 2017, the average hotel room occupancy rate was over 72%, a rate that varied from around 51% in January 2017 to around 89% in August 201736 (Tourism tax: Discussion Document 2018, p. 10). Self-catering unit occupancy rates averaged at around 54% in 2017, and varied between 29% in January to 85% in August 2017 (Tourism tax: Discussion Document 2018, p. 10).
Occupancy rates also varied across Scotland’s regions. According to the recent discussion document on tourism tax published by the Scottish Government in 2018, Edinburgh and the Lothians, as well as Greater Glasgow and Clyde Valley showed relatively high levels of occupancy across the year. On the other hand, occupancy rates were relatively low in Aberdeen & Grampian and Dumfries and Galloway (Tourism tax: Discussion Document 2018).
Also, Scottish Enterprise (SE) and Scottish Tourism Alliance (STA) based on research conducted by STR Global37 claimed that: • In 2016, occupancy in traditional hotel accommodation in Edinburgh, Glasgow and Dundee increased • In Edinburgh, occupancy increased in each of the previous four years • During the 2016 summer, hotel occupancy in Edinburgh was over 90% (Scottish expert advisory panel on the collaborative economy: evidence paper).
35 The tourism industry is based on the Scottish Government’s ‘Sustainable Tourism Growth Sector’ definition. 36 VisitScotland (2018), Scottish Accommodation Occupancy Survey. https://www.visitscotland.org/binaries/content/assets/dot-org/pdf/research-papers-2/occupancy- annual-report-2017.pdf 37 STR Global is a source of global data on the hotel market and benchmarking.
Page 23 of 38 Short-Term Lets: Consultation (Annex) The review draws on research commissioned to Indigo House by the Scottish Government on short-terms lets in Scotland38. In line with the above findings, Indigo House (2017) based on research conducted by LJ Research39 claimed that:
• January 2017 was the 13th consecutive month of growth in hotel occupancy in Edinburgh • Occupancy growth was 2.4% in Edinburgh and 4.5% in Glasgow between December 2015 and December 2016/January 2017 • Continuous visitor surveys (sample of 1,000 visitors per city per year) show growth in the incidence of Airbnb in Edinburgh (4% in 2014, 6% in 2015, 9% in 2016) and Glasgow (1% in 2014, 3% in 2015, 5% in 2016) (Scottish expert advisory panel on the collaborative economy: evidence paper).
Overall, the findings suggest that the growth of the short-term rental sector in Edinburgh and Glasgow has not caused a reduction in hotel occupancy rates. However based on the available evidence, we cannot say whether it inhibited hotel occupancy growth.
38 The research included a literature review, analysis of secondary data provided by AirDNA, and case studies that brought together secondary data and primary qualitative evidence. 39 LJ Research is a tourism market research company based in Edinburgh and acquired in 2016 by STR global.
Page 24 of 38 Short-Term Lets: Consultation (Annex) Annex B: Regulation Outwith Scotland40
Regulatory approaches
The collaborative economy accommodation platforms increasingly being used by the short-term rental sector are part of a wave of ‘disruptive technologies’ which – partly or mainly due to their novelty - often operate in legal grey zones (Wachsmuth, Kerrigan et al. 2017). Many areas across the world have already or are planning to implement regulations on platforms offering peer-to-peer accommodation. Each country is different and the implemented regulations are affected by contextual factors, such as the housing market, tourism economy, population density and local land use law.
This section provides an overview of the regulations regarding short-term lets implemented elsewhere. It is not exhaustive and does not include all areas that have regulated peer-to-peer accommodation. The regulations mentioned in this section refer to all Airbnb-like platforms operating in the regulated territory. Some countries regulate at country-level, such as Denmark and Greece, while other areas have the power to regulate at municipality level, such as Amsterdam, Barcelona and London.
Regulations
In the main, regulations tend to focus on placing limits on short-term let hosts, such as on the number of nights they can let for, the number of listings they can have or the income they can generate. Some cities/countries have also tried to ensure that short-term let properties and hosts can be properly accounted for, through registration and data sharing requirements. Other cities/countries have tried to prevent properties from leaving the residential housing stock, through requiring a ‘change of use’ license, limiting the number of licences granted or restricting change of use permits.
Although the specific details differ from location to location, the regulations that have been employed can be broadly categorised as below: • Limiting the number of nights (cumulatively and/or consecutively) the property can be rented for. This may mean there is a blanket ban in renting out a property once a certain number of days is reached. for example, in Ireland there is a ban of renting out an entire primary home for more than 90 days cumulatively and for more than 14 days at a time. However in some places renting a property for more than a certain amount of days means that different rules apply, such as in Reykjavik where properties rented out for more than 90 days require a license. This might vary based on whether the rented out property is the primary or secondary residence of the host. • Limiting the number of listings each host can advertise, according to the principle ‘one host, one home’. As above, this can be a blanket ban, or mean that different rules apply over a certain threshold. • Applying taxation on the income from renting out a short-term let and/or a Tourism tax, often collected and remitted directly via the Airbnb platform.
40 All the websites used for Annex B were accurate as for 8th April 2019.
Page 25 of 38 Short-Term Lets: Consultation (Annex) • Requiring hosts to register their property. Hosts are usually required to display their registration numbers on any adverts for the property. • Requiring hosts to apply for planning permission or a licence to change the use of a property from residential to commercial or business. These permits are usually linked to local planning authorities, which may apply limits on the number of permits issued, especially in areas with high housing demand. • Requiring the host to live in the property during the rental period, effectively banning full-time whole property rentals. • Requiring platforms to share data about hosts, such as the number of properties, or level of income they are receiving.
Table 11 shows which categories the regulations adopted by different cities/countries fall into. Please note that there is a great deal of variation within each category, and the remainder of this Annex provides details of the specific regulations adopted in each location.
As shown in Table 11, almost all of the areas we have examined have included a limit on the number of nights a property can be rented out for, either a total limit or a limit after which the property becomes classed as a business. Common regulations include registration, need for a license and/or planning permission and a form of taxation on short-term lets. It also appears to be quite common for cities/countries to adopt a variety of regulations, rather than relying on just one.
The ‘Other’ category shown in Table 11 includes the following regulations: • Short-term lets being subjected to quality standards, such as natural lighting and heating • A limit on services provided by hosts, e.g. provide only bed linen and no other kind of ‘hotel services’, such as breakfast • Share data on short-term lets guests with local police • A ban on social houses, second and holiday homes being rented out as a short-term let • A limit on up to four guests per flat to avoid renting out ‘party flats’ • Owners to vote for short-term lets permission in their buildings • A ban on Central zone apartments to be rented out if they don’t have their own private entrance • A limit on the amount of income a host can earn from short-term lets in a year • Only owners (not renters) can become hosts • Have permission for renting out from the other co-owners in the building.
Page 26 of 38 Short-Term Lets: Consultation (Annex) Enforcement
Even though many different regulations have been applied and many cities have implemented fines for illegality, there are still illegal hosts and unregistered properties. Enforcing these regulations has proved to be challenging in many cities. Some set up dedicated teams to monitor hosting activity, some use bills and taxes to verify that the hosts live in the rented property, and so on. The participation of Airbnb and other similar platforms on enforcing the regulation appears to be important. In cities, like Amsterdam, Barcelona and London, Airbnb either blocks automatically illegal listings/hosts or provides access to data that can be used to monitor the hosting activity. Many cities/countries, like Amsterdam, Barcelona, Denmark and Paris, ask platforms to share data with regulators. Denmark has activated two different sets of regulations, one for collaborating with the government platforms and one for non-collaborating.
Finally, Airbnb also collects Tourism Tax in some cities. The Scottish Government is undertaking a separate consultation exercise on the Tourism Tax, the discussion document for which can be found here.
Page 27 of 38 Short-Term Lets: Consultation (Annex) Table 11 - Summary table of regulations across area Type of regulation Location Limit Limit Registration/ Limit Income AirBnB Host required number of number of licencing/ planning change of taxation/ data to live in Other nights41 listings permission use42 Tourism tax sharing property Denmark ✓ ✓ ✓ Housing standards requirements; Greece ✓ ✓ ✓ ✓ Only service provided bed linen Ireland ✓ ✓ ✓ Italy ✓ ✓ Share guest data with police Social housing renting ban; Up to Amsterdam ✓ ✓ ✓ ✓ 4 guests per flat Barcelona ✓ ✓ ✓ ✓ ✓ ✓ Berlin ✓ ✓ ✓ ✓ Hamburg ✓ ✓ ✓ London ✓ ✓ Owners to vote for short-term lets permission in their buildings. Ban Madrid ✓ ✓ ✓ on flats rented out without private entrance Paris ✓ ✓ ✓ Reykjavik ✓ ✓ Limit income level Hosts can only be owners (not Boston ✓ ✓ ✓ ✓ ✓ renters) Montreal ✓ ✓ ✓ New York ✓ ✓ ✓ ✓ ✓ Philadelphia ✓ ✓ ✓ ✓ San ✓ ✓ ✓ ✓ ✓ Second/Holiday homes renting Francisco banned Santa Monica ✓ ✓ ✓ ✓ ✓ Toronto ✓ ✓ ✓ ✓ Vancouver ✓ ✓ ✓ ✓ ✓
41 Limit on number of nights a property can be let per year. 42 Limit on number of permits that can be issued.
Page 28 of 38 Short-Term Lets: Consultation (Annex) European Country Regulations
Denmark
In 2018, the Danish government regulated online platforms, such as Airbnb, focusing on two aspects. Firstly, in Copenhagen and the rest of Denmark, primary homes used as short-term lets can be rented out for up to 70 days per year (Edinburgh City Council 2018). Local authorities will have the power to increase this limit up to 100 nights per year for hosts using collaborating platforms, i.e. platforms that collaborate with the government and share required data43. Hosts using non-collaborating platforms to advertise their listings will be allowed to rent out their property for up to 30 days a year (Frontline 2018). Airbnb will start sharing data with the Danish tax authorities on the income of hosts from July 2019 in order to ensure the accurate payment of tax. For collaborating platforms, a homeowner will be able to earn tax- free 28,000dkk (£3,277) for a primary home and 40,000dkk (£4,681) for a holiday home, compared to 11,000dkk (£1,287) on platforms that do not share data with the government.
Greece
From January 2018, Greece has imposed taxes on all income earned from short- term lets for tourism use. The tax is based on income level:
• 15% for annual incomes up to €12,000 • 35% for annual incomes of €12,001-35,000 • 45% for income over €35,00144.
The law (voted in 2016 but implemented in 2018) allows up to four homes per host, and includes the requirements that properties should be larger than 9m2 with natural lighting, ventilation, heating, fully furnished and the only service allowed is bed linen. If hosts offer more than bed linen (i.e. other services provided by hotels, such as cleaning services, changing linen, etc.) then the rental price is subject to VAT (13%)45. Properties can be rented out for up to 90 days in popular tourist areas and for up to 50 days in smaller Greek areas (not yet implemented).
Each short-term rental property should be registered at the ‘Short-Term Residence Property Registry’ of the Independent Authority for Public Revenue; the number of the license should then be declared in the online advertisement of the property46. Fines of up to €5,000 will be applied for unregistered properties.
43 Information retrieved from https://www.airbnbcitizen.com/airbnb-backs-new-home-sharing-tax-rules- for-danes/ 44 Information retrieved from https://www.useguestbook.com/short-term-rental-regulations/athens/ 45 Information retrieved from https://news.gtp.gr/2018/03/27/greece-clarifies-when-short-term-rentals- subject-vat/ 46 Information retrieved from https://news.gtp.gr/2018/08/31/greeces-online-registry-short-term- rentals-goes-live/
Page 29 of 38 Short-Term Lets: Consultation (Annex) Ireland Regulations in Ireland on short-term lets (announced in October 2018) are based on the principle of ‘one host, one home’ in areas with high housing demand47. Hosts are allowed to short-term let their primary residence after having registered with Local Authorities. They can rent out their entire primary home for up to 90 days a year, and no more than 14 days at a time. A secondary property can be used as short-term let, only after having obtained a permit for tourism/short-term letting purposes. Local planning authorities issue these ‘change of use’ planning permissions and in areas with high housing demand, permissions are not issued.
Italy
In Italy, the earnings from short-term letting are tax-free for up to €3,000 a year, 10% for up to €10,000 and then they are taxable based on hosts marginal tax rate (Frontline 2018). The Italian Government approved the ‘Italian Airbnb Tax’, which allows hosts to apply a fixed 21% tax to their short-term lets income instead of the traditional progressive taxation based on income (between 23-43%). The definition for short-term lets used to define eligibility for this tax is that the property is rented out for less than 30 days per year. The Italian law also requires short-term rent hosts (as well as hotels and other forms of accommodation) to register data on the identities of their guests with local police for clearance.
European City Regulations
Amsterdam
Amsterdam City Council in 2014 implemented new rental laws which allowed people to rent out their entire homes for up to 60 days annually, given that they were satisfying certain conditions, such as paying municipalities tourism tax and other related taxes and given that there were no complaints from the neighbourhood (Indigo House 2017, p. 53). From January 2017, after an agreement between Airbnb and the City of Amsterdam, Airbnb has been blocking automatically the booking of entire homes once the limit of 60 days has been reached (Wachsmuth, Kerrigan et al. 2017). Short stays for less than seven days in Amsterdam are banned in residential properties and are considered appropriate only for hotels and bed and breakfasts (Edinburgh City Council 2018). Short stays are considered to be between seven days and six months and are allowed only if the property obtains a change of use permit, and there is a limitation in the number of licenses to 10% of a district’s housing supply48 (Edinburgh City Council 2018, p. 14). Home exchanges are allowed if it is clear that the properties are not rented out for money and on a regular basis for short periods, i.e. up to 60 days annually (Edinburgh City Council 2018). Local authorities and housing associations have banned short-term lettings in their rented housing stock in order to preserve the existing affordable housing stock (Indigo House 2017, Edinburgh City Council 2018).
47 Information retrieved from https://www.housing.gov.ie/housing/private-rented-housing/minister- murphy-announces-regulations-short-term-lettings 48 In 2014, local city districts temporarily stopped issued new licenses because the limit of 10% of the total number of properties in the private housing sector has been exceeded.
Page 30 of 38 Short-Term Lets: Consultation (Annex) In 2019, the regulations will become stricter as the upper limit will be 30 days yearly and for a maximum of 4 people per flat (Edinburgh City Council 2018). The limitation in the number of people that can jointly rent one property aims to avoid noisy ‘party flats’ (Coyle and Yeung 2017). Hosts (of all types of accommodation) are also required to pay tourism tax and tax on their income from holiday rentals. Amsterdam spends around €4 million per year on policing of holiday rental properties (Edinburgh City Council 2018).
Barcelona Barcelona has implemented regulations regarding the short-term letting sector in 2002, which were revisited in 2012 and 2014. The legislation allows for the ‘touristic use of houses’ (TUH) or short-term lets of entire homes (and not private rooms) for up to 30 days and only after obtaining a license (Indigo House 2017, p. 53). The TUH regulations change the status of the property from residential to business, and it is directly linked to local planning regulations – which determine the number of licenses for each urban area (banning short-term lets in overcrowded central urban areas), as well as the physical distance between each business property (Indigo House 2017). A tourism tax is applied to all tourists staying in any kind of accommodation and is paid for the first 7 days of stay.
Hosts are allowed to advertise only one entire home listing, unless they are professional operators (Airbnb 2017b). Finally, the regulations require owners to make the official registration number (license number) of their business property public in any advertisement, however many failed to be legal (Indigo House 2017). An ‘illegal apartment squad’ was set up to identify unlicensed properties and resulted in a fine of €600,000 against Airbnb for advertising illegal listings (Frontline 2018). To this end, Airbnb has applied a limit to the city’s most crowded area (Ciutat Vella) to ensure that only professional operators who share their information on the platform can advertise more than one whole property (Frontline 2018). From June 2018, city officials have access to Airbnb data to obtain information on the address of the rentals and the identity of hosts in order to verify whether they have obtained the necessary license (Edinburgh City Council 2018).
Berlin
The Zweckentfremdungsverbotsverordnung law prevents the change of use of properties, making it difficult to convert residential properties into business properties and thus maintaining housing costs affordable over time (Indigo House 2017, p. 54). In 2016, Berlin banned unregistered short-term rentals - unless having obtained a permit from the Berlin Senate - in order to maintain the housing supply in the city (Coyle and Yeung 2017). A permit for short-term rentals is required when the property is rented out repeatedly as a holiday apartment or tourist accommodation; when the property is used for commercial or professional purposes; when the property is not suitable for residential use; and when the property is empty for more than six months (Edinburgh City Council 2018).
Since March 2018, the regulations eased for short-term rentals allowing a primary residence to be rented out without a limit of days per year and a second residence for up to 90 days (Edinburgh City Council 2018). However, a permit is required in all
Page 31 of 38 Short-Term Lets: Consultation (Annex) cases, with a fee of €250 and fines have increased up to €500,000 (Edinburgh City Council 2018). Permits for primary residencies are likely to be approved, while permits for second homes go through a rigorous process. Empty flats for more than three months require a special permit from the local authorities. “Berlin use dedicated staff who actively identify possible cases of unlicensed letting through a variety of methods. These include tip offs from neighbours and rental bicycles parked outside apartments” (Edinburgh City Council 2018, p. 15).
Hamburg Renting out more than half of a residential property for a whole year or renting out the entire property for more than 56 nights per year requires a ‘change of use’ license49. Hosts are required to display their registration number on their online adverts.
London
Short-term lets in London are allowed to be rented out for a maximum of 90 days per year consecutively and cumulatively in the same calendar year50 (Indigo House 2017). Also, from 2015 hosts are required to obtain a change-of-use planning permission (from residential/domestic property to commercial) in order to legally rent out their properties for more than 90 days51 (Indigo House 2017, p. 55). Short-term lets for less than 90 days do not require a permit (Edinburgh City Council 2018). However, according to a report by the Institute for Public Policy Research (IPPR), additional actions should be considered to ensure that the above regulations are enforced: homesharing websites and local authorities should ensure that hosts respect the 90-day rule; platforms should limit by default hosting activity at 90 days unless a permit is demonstrated; platforms should share data with local authorities; the registration process for hosts should be eased; and platforms should encourage hosting activity in London’s outer boroughs (IPPR 2016).
Since 2017, Airbnb automatically blocks bookings for entire home listings booked for more than 90 days per year, unless hosts present the required permission (Airbnb 2017c). This regulation resulted in the reduction of the percentage of Airbnb listings booked for more than 90 days a year from 21% in July 2016 to 7% in July 2017 (Airbnb 2017c).
Madrid Short-term lets hosts in Madrid need to register their rental properties with the Register of Tourism Enterprises52. The registration number should be then included in the advertisement of the listings. To rent out apartments as short-term lets, three quarters of all owners in the building should agree (by vote)53. In March 2019, Madrid
49 Information retrieved from https://www.airbnb.co.uk/help/article/856/hamburg 50 For HomeAway regulations in London: https://www.homeaway.co.uk/info/legal/owner- responsibilities/rules-for-london-owners 51 Even if hosts rent out their property for less than 90 consecutive nights but for more than 90 days cumulatively in a year. 52 Retrieved from https://www.airbnb.co.uk/help/article/1730/madrid 53 Retrieved from https://www.thelocal.es/20181218/what-you-need-to-know-about-spains-2018-rent- law-changes
Page 32 of 38 Short-Term Lets: Consultation (Annex) introduced a new vacation-rental law that bans apartments in the Central zone of the city to be rented out if they don’t have their own private entrance54. Entire apartment blocks will no longer be rented out as short-term lets, unless they are licensed as hotels55. Finally, Madrid will ban apartments from being used as short-term lets for more than 90 days a year.
Paris
Short-term lets have to be registered with the City authorities and have a maximum of 120 days rental period per year (Indigo House 2017, p. 55). They must also display the registration number when advertising (Edinburgh City Council 2018). Properties which are rented out for more than 120 days per year need to be registered as ‘commercial property’ and must apply for a ‘change of use’ permit (Indigo House 2017, p. 55). Airbnb automatically collects the same nightly tourism tax as other kinds of accommodation in Paris do.
Reykjavik
In Reykjavik, short-term lets can be rented out for up to 90 days a year without a permit. At the same time, the gross income from renting out a property cannot exceed one million Icelandic Króna (equal to around £6,400) (Edinburgh City Council 2018). Properties rented out for more than 90 days should obtain a license. However, according to the Reykjavik Grapevine56, most long-term listings are not legally registered (a discrepancy calculated by comparing the number of permits issued to the number of Airbnb listings). An Airbnb committee was put in place in October 2017 in the City of Reykjavik to identify illegal hosts.
North American City Regulations
Boston
In Boston, a short-term let is defined as the use of a residential unit for residential occupancy for a fee and for less than 28 consecutive days a year. A property rented out for more than 28 consecutive days annually is considered a long-term rental. According to the City of Boston, from 1 January 2019, only owner-occupied properties will be allowed to be operated as short-term lets and will need to register with the City and renew the license annually57. There are annual registration fees and fines for illegal hosts. The same is requested from lodging homes and bed and breakfasts if they advertise their services on a short-term rental host platform. Room occupancy taxes may apply to short-term lets guests. Short-term rentals are now taxed in Massachusetts, with a 5.7% state excise tax and other hotel tax policies58. Online accommodation platforms will also be required to share data with the City at a
54 Retrieved from https://www.citylab.com/life/2019/04/madrid-airbnb-apartment-vacation-rental-law- almendra-central/586291/?utm_source=twb 55 Retrieved from https://edition.cnn.com/travel/article/madrid-airbnb-restrictions-mass- tourism/index.html 56 Retrieved from https://grapevine.is/news/2018/06/11/icelands-parliament-to-begin-cracking-down- on-airbnb/ 57 Retrieved from https://www.boston.gov/departments/inspectional-services/short-term-rentals 58 Retrieved from http://realestate.boston.com/renting/2019/01/16/massachusetts-airbnb-law/
Page 33 of 38 Short-Term Lets: Consultation (Annex) monthly basis, including data on rental property locations, type of properties and number of booked nights.
Montreal
In April 2016, the Province of Quebec put into force Bill 67, a law aimed at capturing tax revenue without adding barriers to the growth of peer-to-peer accommodation (Wachsmuth, Kerrigan et al. 2017). ‘Regular users’ (those renting out for more than 31 consecutive days per year) were required to get a permit from Quebec’s Ministry of Tourism and pay an accommodation tax of 3.5%, while ‘occasional users’ (those renting out their home for less than 31 consecutive days) were not required to have a permit (Wachsmuth, Kerrigan et al. 2017, p. 41). However, in March 2017, less than 1% of the full-time Airbnb listings had the required license and there was a low conviction rate for illegal hosts (Wachsmuth, Kerrigan et al. 2017). For these reasons, law enforcement moved from Quebec’s Ministry of Tourism to Quebec’s revenue, the tax-collecting agency.
New York
According to the New York State Multiple Dwelling Law (MDL), a permanent residency (a property occupied by the same natural person or family for at least 30 consecutive days) cannot be rented out for less than 30 days unless the permanent tenant is residing in the property during the rental period. New York State has also banned advertisement for listings violating MDL. In line with the law, Airbnb allows hosts to advertise only one entire home listing, following the principle ‘one host, one home’59. Additional rules require hosting platforms to submit monthly reports disclosing information on hosts, economic activity and type of listings offered60.
New York City and New York State apply multiple taxes, such as State sales and use tax, City hotel room occupancy tax, and State and City nightly room fee, for tourist-use types of accommodation. Airbnb collects bed taxes at county-level61.
Philadelphia In Philadelphia, renting out a property (entire home or single room) requires a general rental license. Renting out a primary residence for up to 90 days cumulatively per year (and up to 30 consecutive days per visitor) does not require any specific permit, renting out between 91 and 180 days or second/holiday homes requires a permit, while renting out for more than 180 nights requires a Commercial Activity license (Airbnb 2017b). Airbnb collects tourism tax (same as the hotel tax) from guests62.
59 Retrieved from https://www.airbnb.co.uk/help/article/868/new-york--ny 60 Retrieved from https://ny.curbed.com/2018/11/19/18103254/airbnb-nyc-proposed-rules- enforcement 61 For the list of counties in New York for which Airbnb collects taxes, see https://www.airbnb.co.uk/help/article/2319/occupancy-tax-collection-and-remittance-by-airbnb-in-new- york 62 For the list of counties in Pennsylvania for which Airbnb collects taxes, see https://www.airbnb.co.uk/help/article/2325/occupancy-tax-collection-and-remittance-by-airbnb-in- pennsylvania
Page 34 of 38 Short-Term Lets: Consultation (Annex) San Francisco Permanent residents (who live in the property for at least 275 days per year) can rent out their primary residence for up to 90 days a year, unless they are present in the property during the rental period (Indigo House 2017). The short-term let of second and holiday homes is not allowed. In other words, hosts can register only one property and only if they are permanent residents of the property (Edinburgh City Council 2018). All hosts need to obtain a Short-Term Rental Certificate and a Business Registration Certificate (done on Airbnb’s website). A Transient Occupancy tax (14%) is applied on bookings for less than 30 days. Although the fine for non- registered properties is of $1,000 per day (Edinburgh City Council 2018, p. 15), there are reportedly many illegal hosts (Indigo House 2017, p. 56).
Santa Monica
Santa Monica has implemented the strictest regulation for short-term lets across the U.S. Since June 2015, the Home-Sharing Ordinance states that hosts are required to be living in the rented property during the rental period, rent out for up to 31 days, obtain a business license from the City and apply a 14% Transient Occupancy tax from guests, collected by the City (Indigo House 2017, p. 56).
Toronto In Toronto, short-term rentals are defined as rentals for less than 28 consecutive days a year63. The City of Toronto requires short-term rental companies to obtain a license and pay a fee of $5,000 plus $1 per night booked through the platform and short-term rental operators to register with the City, pay a fee of $50 and a Municipal Accommodation Tax (MAT) of 4%64. The new regulations (not yet in effect) will allow hosts to rent as short-term let only their principal residence. Entire homes can be rented out if owner/tenant is away to a maximum of 180 nights per year. However, a hearing at the Local Planning Appeal Tribunal scheduled for August 2019 will decide on the City’s zoning regarding short-term rentals, and short-term lets regulations will come into force only after the appeal decision has been reached.
Vancouver
Short-term lets in Vancouver are defined as entire homes or private rooms rented out for less than 30 consecutive days at a time and need to be the primary residence of hosts (as owners or tenants). From 2018, all short-term rental hosts need to obtain a business license and to include the license number in the online adverts. Airbnb since October 2018 collects and remits Provincial Sales Tax (8%) and Municipal and Regional District Tax, known as the Hotel tax (2-3%)65. Other platforms, such as Homeaway and TripAdvisor, have stated that they will also respect the law. The fine
63 Information retrieved from https://signaltoronto.com/10-things-know-proposed-short-term-rentals- policy/. 64 Information retrieved from https://www.toronto.ca/community-people/housing-shelter/rental- housing-standards/short-term-rentals/. 65 For the list of counties in Canada for which Airbnb collects taxes, see https://www.airbnb.co.uk/help/article/2283/occupancy-tax-collection-and-remittance-by-airbnb-in- canada
Page 35 of 38 Short-Term Lets: Consultation (Annex) for illegal hosts can be up to $1,000 per offence66. To identify that the rented out property is the primary residence of the hosts the City used identification bills, taxes and/or insurance. To ease enforcement, Airbnb has agreed to provide a list of all licenses and addresses of short-term rentals67.
66 Information retrieved from https://vancouver.ca/doing-business/short-term-rentals.aspx 67 Information retrieved from https://vancouver.ca/news-calendar/city-s-short-term-rental-regulations- take-full-effect-september-1st.aspx
Page 36 of 38 Short-Term Lets: Consultation (Annex) Annex C: Bibliography
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Airbnb (2017b). "Airbnb Position paper. The Collaborative Economy and Tourism in Scotland." https://2sqy5r1jf93u30kwzc1smfqt-wpengine.netdna-ssl.com/wp- content/uploads/2018/01/Airbnb-Submission-to-the-Scottish-Expert-Panel-on-the- Collaborative-Economy-November-2017_Web.pdf.
Airbnb (2017c). "Airbnb UK Insights Report 2017." https://2sqy5r1jf93u30kwzc1smfqt-wpengine.netdna-ssl.com/wp- content/uploads/2017/09/Airbnb-UK-Insights-Report_Final_Digital_v3.pdf.
Airbnb (2018). Airbnb debuts top 15 locations across Scotland https://www.airbnbcitizen.com/airbnb-debuts-top-15-locations-across-scotland/.
Airbnb (2018b). "Airbnb UK Insights Report 2018." https://www.airbnbcitizen.com/wp- content/uploads/2018/10/AirbnbUKInsightsReport_2018.pdf.
Chartered Institute of Housing (2019). "2019 UK Housing Review."
Coyle, D. and T. Yeung (2017). "Understanding AirBnB in Fourteen European Cities." The Jean-Jacques Laffont Digital Chair Working Papers.
Edinburgh City Council (2018). Short Term Letting in Edinburgh.
Frontline (2017). Self-catering in Scotland: the Economic Impact of Short-term Letting on the Scottish Economy. Association of Scotland's Self-Caterers.
Frontline (2018). Far More Than Just Houses: The Benefits of the Short-Term Rental Sector to Scotland. Association of Scotland's Self-Caterers.
Indigo House (2017). Scoping research on supply and demand for short term lets in Scotland. Scottish Government.
IPPR (2016). Homesharing & London's Housing Market. Institute for Public Policy Research. London.
Page 37 of 38 Short-Term Lets: Consultation (Annex) Open Data Institute (2018). "Understanding the impacts of peer-to-peer accomodation, the role of data and data observatories." https://theodi.org/article/understanding-the-impacts-of-peer-to-peer-accommodation- the-role-of-data-and-data-observatories-report/.
Rae, A. (2017). Analysis of short-term lets data for Edinburgh. University of Sheffield. Sheffield, UK.
Rae, A. (2018). "From neighbourhood to “globalhood”? Three propositions on the rapid rise of short-term rentals." Area 0: 1-5.
Scottish Government (2018a). Scottish expert advisory panel on the collaborative economy. Final report. Scottish Government. Edinburgh, UK.
Scottish Government (2018b). Tourism in Scotland: the economic contribution of the sector. Edinburgh, UK.
SPICe (2019). "Short term lets in Edinburgh." https://spice- spotlight.scot/2019/04/01/short-term-lets-in-edinburgh/.
VisitScotland (2017). The key facts on tourism in 2016. https://www.visitscotland.org/binaries/content/assets/dot-org/pdf/research-papers- 2/tourism-in-scotland-2016-updated.pdf.
VisitScotland (2017b). "Insight Department: Tourism in Scotland's Regions 2016." https://www.visitscotland.org/binaries/content/assets/dot-org/pdf/research-papers- 2/insights---tourism-in-scotlands-regions-2016_update-may-18.pdf.
VisitScotland (2018). Scotland's Tourism Performance Summary Report 2017. https://www.visitscotland.org/binaries/content/assets/dot-org/pdf/research-papers- 2/tourism-in-scotland-2017-summary.pdf.
Wachsmuth, D., et al. (2017). Short-term cities Airbnb’s impact on Canadian housing markets Urban Politics and Governance research group. School of Urban Planning, McGill University.
Channel 4 News (2018). “How Airbnb rentals are affecting Isle of Skye”, Channel 4 News. Retrieved from https://www.youtube.com/watch?v=Y5pM3kXNj3o
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