Local Government, Housing and Planning Committee

Meeting date: Tuesday, December 7, 2021

Official Report 552KB pdf

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Subordinate Legislation

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

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Town and Country Planning (Short-term Let Control Areas) (Scotland) Amendment Regulations 2022 [Draft]

The second item on our agenda is to take evidence as part of the committee’s work on short-term lets. This will be the first of three evidence sessions over the next three weeks. At today’s meeting, the committee will hear from organisations that are opposed to the approach that is being taken by the Scottish Government to regulation of short-term lets.

I welcome to the committee Fiona Campbell, who is the chief executive of the Association of Scotland’s Self-Caterers; David Weston, who is the chair of the Scottish Bed and Breakfast Association; Amanda Cupples, who is Airbnb’s general manager for northern Europe; and Shomik Panda, who is director general of the Short Term Accommodation Association. Thank you for joining us today. We had hoped also to hear from Highland Council this morning, but unfortunately it was unable to field anyone.

We will move straight to questions. If witnesses wish to respond or contribute to the discussion, please indicate that by putting an R in the chat box. In the interests of time, we will try to direct our questions to specific witnesses. If you feel that a perspective that you want to put across has not been raised, it would be good if you would raise it.

I will ask the first question. Many tourism and hospitality businesses including taxis, pubs, restaurants and coach operators are subject to licensing regimes, for the benefit of users and communities. Can you explain why you think that short-term lets should be exempt from licensing? I would like to hear from Amanda Cupples then David Weston.

Thank you for the opportunity to give evidence. I start by saying that it is not that we are opposed to regulation, but that we are opposed specifically to licensing. As Airbnb, on behalf of our hosts, the fundamental reason why we are opposed to licensing is that we believe that the proposed licensing system would be disproportionate and overly burdensome, given the nature and level of activity by hosts on Airbnb in Scotland.

Just to give you a snapshot of the host community, I point out that around 83 per cent of Airbnb hosts in Scotland have one listing only and, on average, host for fewer than four nights per calendar month. This is not a highly professionalised megacorp conglomerate of hosts. These are ordinary, everyday Scottish people who use the income from hosting on Airbnb as an economic lifeline. Many of those hosts rent a space in their own house—their primary residence. Forcing them to comply with licensing would effectively make their primary residence licensed premises, which we think is inappropriate.

When we go around the country and talk to hosts, we hear that licensing would be too burdensome and expensive, and that many hosts would simply withdraw their properties not just from the short-term letting market, but from the long-term letting market. There would be no winners in this. The tourism industry would not benefit, the housing industry would not benefit and, which is most important, we would remove the ability of those hard-working everyday Scottish people—many of whom live in rural communities where tourism is a vital part of the economic empowerment of the region—to support themselves. Almost 40 per cent of hosts on Airbnb use the income from hosting to cover their monthly household expenses.

As I said, we are not against regulation per se; we have been very proactive in calling for registration systems, which we believe are a necessary part of short-term letting regulation. We believe that they are proportionate, that they get the job done and that they give regulators and local authorities the tools that they need to make decisions on short-term regulation. However, from our perspective, the licensing system is not the right system.

Thank you for that. We will hear from David Weston next.

I would echo a lot of what the previous witness said.

I emphasise that B and Bs are microbusinesses; 77 per cent of our members have between one and six letting bedrooms. A typical three-bedroom B and B that charges £65 a room would, at the average occupancy in 2019—which was 50 per cent—have a total gross turnover of £35,600 a year. That is not income, but turnover. All the costs then have to come off that figure, which usually represents two people’s livelihoods, so we are talking about very small businesses.

You asked what is wrong with licensing, given that it exists in other areas. In some other areas, licensing exists for historical reasons that might not necessarily be thought to be appropriate if the matter was being considered now.

We have to look at the facts to see whether licensing is appropriate in our sector. As with the previous witness, the SBBA and our colleagues at the United Kingdom Bed and Breakfast Association have said for a long time that we would be in favour of levelling the playing field; in other words, of having more regulation on our sector in order to protect guests in the same way wherever they stay in tourism accommodation. That can be achieved, as it is in many countries in the world, with a light-touch and low-cost or no-cost registration scheme. There are many examples; Portugal has a simple online registration scheme, for instance.

We and other colleagues proposed an overlay on such a registration scheme at the short-term lets stakeholder working group. It would make things less onerous on tiny businesses while achieving what the Scottish Government wants to achieve, which is for all tourism accommodation to comply with the minimum health and safety requirements. We fully support that aim, but the proposed licensing scheme is unduly onerous and costly.

Thank you, David. Fiona Campbell is next.

Thank you for giving us the opportunity to give evidence. I absolutely concur with Amanda Cupples and David Weston. We need to remember that professional operators are already regulated. The mandatory conditions of the licensing scheme are, essentially, duplication and are therefore unnecessary.

Our association is not anti-regulation, but we are absolutely against disproportionate regulation that will risk jobs and damage Scottish tourism. We have constructively engaged with the Scottish Government for years. In fact, in 2017, we actively encouraged and asked for a registration scheme in order to make sure that all accommodation providers would meet the existing health and safety regulations.

Since the rationale behind introducing licences is apparently about compliance with basic health and safety regulations, why would hotels, serviced accommodation and so on be exempt? Although they are licensed, they are licensed for alcohol, for example, and not on the basis of health and safety.

We desperately want to get the regulatory framework right so that it works for everybody and strikes a balance between the tourism business and local communities. However, notification and registration are so much better—and have proved to be so much better across the globe—than licensing, which is an authorisation scheme.

We have to look at the licensing scheme and ask whether it is underpinned by necessity, justification, proportionality and non-discrimination. My answer to that would unfortunately be no—it is not.

Thank you, Fiona. We will hear from Shomik Panda next.

Thank you very much for the opportunity to speak to you. I concur with the previous speakers. We are absolutely pro-regulation for the sector, if the regulation is sensible and proportionate. It is about making sure that we come up with something that is proportionate, justified and necessary.

The previous witnesses spoke about the proposed regulation being too onerous and too costly, with the potential effect of freezing out a number of hosts and small businesses from the sector.

There are a couple of other issues with licensing. First, it is too restrictive; the licensing scheme would, essentially, close the market, then open up the opportunity to some individuals or businesses that wished to take that opportunity afterwards. A much more proportionate approach would be to keep the market open and then to restrict it where necessary, if there was evidence of a particular problem. That would be a much more sensible and proportionate way of doing things.

There is also the issue of regulatory fragmentation. Local authorities are being given powers to overlay the licensing conditions with their own rules and regulations, which means that each local authority could come up with a separate regime for regulating short lets. That would make it very difficult for professional operators to work at scale and it would be very difficult for newcomers to understand what the rules were and to comply with the standards from one authority to the next.

There is a very basic question here: why should safety standards in Edinburgh be different from those in the Highlands? Surely, they should be the same. It would get rid of a whole load of complexity if we could have one regime for the whole country.

Licensing would also create a lot of uncertainty for businesses, in the sense that local authorities could determine the length of a licence after the initial three-year period and there would be no automatic renewal process. That would make it very hard to plan, because people would not know how long they would get a licence for. It would basically starve investment in the sector, because those who wanted to invest in keeping up good properties and making sure that the property stock is fit for tourists to come to Scotland would be disincentivised from doing so.

In sum, there are a number of problems with the proposed legislation. I agree that registration would be a much more sensible way, with some additional conditions around health and safety—perhaps through accreditation, which I am happy to talk about. The consequence of the problems with the proposed legislation would be that small host businesses would drop out of the sector, the Scottish economy would suffer because jobs would go and tourism accommodation stock would change because variety will go. That would not be good for the environment, because we would just have to build new hotel stock instead, if those types of properties were no longer being let. We need to consider the distortions that would come from the proposed change.

Thank you for sharing your perspective.

Concerns have been raised about the uncertainty—and the associated impact on future bookings—that would be caused by the need to obtain and renew a short-term let licence, as witnesses have already said. What is the source of those concerns? Do you have any evidence of significant business disruption being caused by licence renewal in other licensed industries?

I am so sorry—I lost the sound at the beginning of that. Can you repeat the first part of the question?

Absolutely. Do not worry—we must never be sorry in relation to the technical realm; there are always tech glitches.

Concerns have been raised about the uncertainty—and the associated impact on future bookings—that would be caused by the need to obtain and renew a short-term let licence, as some of you have already expressed. What is the source of those concerns? Do you have any evidence of significant business disruption being caused by licence renewal in other licensed industries?

10:15  

Thank you. I am happy to follow up with a more detailed explanation in writing after the meeting, because the matter is incredibly complex. Unfortunately, having pored over the complexities and detail of the proposed licensing legislation, I think that the uncertainty would be impossible for small businesses and microbusinesses to deal with. I have been doing self-catering as a business for 20 years, so I find it hard to understand how the civil servants who have produced the proposed licensing legislation feel that they know how we run our businesses better than we do.

How much would it cost, totally unnecessarily, to tick a box to say that we already comply with the existing health and safety legislation? Would we get charged more because we accommodate more guests? How would local authorities set the fees, given that they have no idea how many premises need to be licensed? Any fee that is added to the existing cost of doing business would be untenable for small businesses, especially in light of the global pandemic and the huge increases in the price of energy, services and consumables. We have been given an indicative fee of around £300 to £400, but the Society of Local Authority Lawyers and Administrators in Scotland and many local authorities have contested that fee and say that it would be more like £1,500 to £2,000, which would be crippling for small businesses.

I will move on to the uncertainty about how we run our businesses. How can we accept future bookings when we might have our licence revoked or refused for some reason? Licensing might not even be on a 36-month basis in some local authorities, for some reason. A 36-month basic turnaround for licensing is impossible. Guests simply will not book into the future if there is a possibility that a licence might be refused or revoked.

I have been talking to mortgage providers. What would happen if our mortgage provider pulled our financial support because of that uncertainty or because there had been a material change in circumstances? The business regulatory impact assessment refutes that that would occur, but civil servants have not spoken to financial institutions. I have spoken to them, and they have said that they would actively start looking at whether it is viable to offer mortgages and financial support to our sectors. That goes back to what Shomik Panda said; we would have to start thinking about whether we will invest in our businesses because we would not necessarily have that financial support behind us.

Then there are neighbour objections. What would happen if a vexatious neighbour were to complain about the activity? We have one such neighbour and I have experienced that: he assaulted me in 2018 because we operate a self-catering property near his house, despite the fact that he has never had any problems associated with that activity. He has a criminal record and I have post-traumatic stress disorder, but I assume that when I apply for a licence for that property, he will complain. Would a licence be refused on that ground? Would we lose our business because of nimbyism? We just do not know. There has been a brilliant narrative—

Thank you, Fiona. I want to leave time for other questions, because we have quite a few questions to get through and I want to hear other perspectives.

Shomik Panda, do you have anything new or different to add to what Fiona has said about the source of the concerns? Do you have any evidence of significant business disruption being caused by licence renewal in other licensed industries or by licensing of short-term lets in other countries?

I will try to keep it brief. The concerns are twofold. From the operator’s perspective, the fees could well be disproportionately high relative to the income that is received, which would be problematic and would take a lot of stock out of the market.

I would also like to talk about the impact on local authorities. If they have to administer the scheme, there will be large up-front costs for enforcement, but it is not clear where funding for that would come from or how they would manage to administer the scheme.

That brings me to your question about experiences from elsewhere when licensing schemes have been introduced that might be problematic. I recall the scheme that was brought into some districts in Berlin a few years back. Essentially, what happens is that local authorities do not, because it is a costly process and they would rather not deal with the applications, take forward licence applications, so the schemes become de facto bans. That is a key reason why we do not like licensing. It gives an opportunity for a de facto ban to emerge when it should be a right for most people and businesses to let out their properties.

If you speak to representatives of other industries, you will find that there are licensing problems in other areas. I cannot speak about things outside my sector. In other areas where there is licensing, for example alcohol sales, it has had many years to bed in and for people to understand it. Even then, problems arise when anything is changed.

In this instance, the Scottish Government would impose a complete industry-wide licensing scheme from scratch, and all at once. That is a risky thing to do. You do not need to have many of the sorts of problems that we have been talking about to cause a huge problem for the Scottish tourism economy. On 24 November, at the Scottish tourism industry conference, the Minister for Business, Trade, Tourism and Enterprise, Ivan McKee, said that tourism recovery is critical to the Scottish economy. I totally agree with that.

I refer members to my entry in the register of members’ interests: I am a serving councillor in North Lanarkshire.

My question relates to the one about tourism that the convener asked. I have heard concerns that the proposed licensing scheme could have a damaging impact as businesses try to recover from the pandemic. Many businesses rely on tourism at home and the tourism industry to give them a boost. What are the panel’s concerns about the timing of the legislation? What lasting impacts might it have on businesses across the sector?

The self-catering sector alone contributes £867 million to the Scottish economy and supports 24,000 jobs. As we all know, we have gone through a harrowing time, and it is essential that policy makers reflect on that and understand that we need to support small businesses and microbusinesses as we come out of the pandemic. We are not yet out of survival mode and we need to be able to recover. Unfortunately, the licensing legislation will be hugely damaging to the Scottish tourism economy. We need to reflect on that.

The activity that I represent is people’s lives and livelihoods. It is not their hobby. I am not talking about casual hosts, although they also rely on their assets to make some much-needed additional money. I represent thousands of businesses that rely on the income for their livelihoods. We must support those livelihoods as we emerge from the pandemic.

I would echo a lot of what Fiona Campbell has said. Most of those messages are equally applicable to the everyday Scottish people who make up the bulk of the hosting community on Airbnb in Scotland.

We commissioned some independent economic research, so I can give you some data. Hosting on Airbnb delivers about £677 million of gross value added and supports about 33,500 jobs. The modelling estimates that, if the proposals were to be implemented now, about half of those jobs would go, and the cost to the Scottish economy would be approximately £1 million a day. This is a big deal from an economic point of view.

I emphasise what Fiona said about the impact on ordinary, everyday people for whom tourism is not only an economic lifeline but, in some communities, is the only way that they have to support themselves. Again, I point to some more rural communities in that regard. I speak to a lot of hosts and many of them tell me that hosting on Airbnb enables them to stay in the village or community where they grew up. They say that it provides employment for families and keeps the village pub open. Our hosts consistently tell us that those things will go. There will be an economic impact, but people’s lives will also be damaged.

As Fiona said, we are not out of the pandemic by any stretch of the imagination. I wish that we were. Tourism remains very fragile, and we emphasise the need to support Scottish tourism more than ever before. We believe that the proposals will not do that.

I refer everyone to my entry in the register of members’ interests. I am a councillor on East Ayrshire Council.

What are your views on the changes that have been made to the draft licensing order since the version that was presented to our predecessor committee in February?

We are happy that some improvements have been made, but our concerns are really about the licensing scheme as a whole, and those larger concerns have not been removed. The scheme has been tweaked. The concessions that have been made are positive, but they are only tweaks. We need a fundamental overhaul and we need thought about what an appropriate system for Scotland would be. We need to take into account not only the effects of the pandemic and the impacts on hospitality businesses, which have been quite beaten down, but the long-term need for a regulatory regime that is fit for the 21st century. The system should be simple, online and easy for people to understand. It should keep the market open, but be able to restrict it flexibly when that is necessary.

We do not believe that licensing is the right way forward. You have an opportunity to rethink that now, and that is what we are pushing for today. The committee should give some extra thought to whether a more slimline registration scheme would be more appropriate. That would allow data to be gathered on who was letting, and if there were any problems, you would be able to enforce against them. Once you had the data, you would be able to analyse whether there were any specific problems that needed further legislation. We believe that that is the appropriate step at this stage, rather than introducing a licensing scheme that will shut off the market for no good reason.

I concur with Shomik Panda. We welcome some of the concessions that were made on 7 October, but when we look at the detail, they do not go far enough. The most welcome part of the statement was the withdrawal of the requirement on overprovision, but it is still in there. There are powers for licensing to allow overprovision. That is incredibly worrying for the operators of bona fide legitimate businesses, as well as casual hosts.

As a sector, we have provided alternative options that we truly believe are proportionate, workable and targeted solutions. If they did not work, we could revisit them in a few years once we have the data, but we need to have the data before we can make sensible policy decisions. We should not introduce this incredibly burdensome and onerous licensing scheme, which, as people have said, will also have a huge impact on local authorities. They have been massively hit by the pandemic and they have openly said that they do not have the resources to deliver the proposed scheme.

I have a question for David Weston. It has been argued that traditional B and Bs should be exempt from any such licensing scheme. How would that be done in practice? It could create a loophole whereby people could provide breakfasts in order to avoid the need to obtain a licence.

10:30  

We were surprised that B and Bs were included in the scheme, and our surprise was shared by many, including in Government circles. Everybody seems to agree that traditional B and Bs are not the source of many of the problems that the legislation seeks to address. We are already compliant with health and safety legislation, and mechanisms are already in place to enforce that for B and Bs.

Our view is therefore that the playing field can be levelled—in other words, that the existing legislation can be applied to and enforced for all tourism accommodation by having a simple low-cost registration scheme. We are not saying that B and Bs should be specifically excluded from the legislation; we are saying that an accommodation registration scheme would be fairer and more proportionate. It would cover everybody and it would mean that there would not be the loopholes that you mentioned.

Something that has not been mentioned, apart from by a couple of my fellow witnesses, is the importance of having a simple scheme that works digitally. The reality of the tourism world is that a growing proportion of bookings are made through online platforms, even for tiny B and Bs. Having a licensing scheme that works in the real world will mean having something that is digitally enabled so that it works with a simple licence or registration number. That has been found to work in practice in many other countries.

I just wanted to emphasise the importance of digital consistency and mention how the modern tourism economy works, even for B and Bs.

I have a couple of questions. The first one continues the discussion on the impact on rural communities, and the second will be on costs that are likely to come up.

What impacts would the proposed legislation have on, for example, a small rural business in south-west Scotland or the Highlands, compared with a business in the city of Edinburgh? Should the proposed licensing scheme apply in both locations and circumstances? Maybe David Weston and Amanda Cupples could respond to that first.

B and Bs and guest houses in rural and coastal areas and the Highlands and Islands are particularly important to the Scottish economy because they and professional self-catering accommodation tend to be the only types of accommodation in some of those places. There are no big hotels in some places, so the tourism accommodation will be small-scale provision such as B and Bs, guest houses and professional self-catering accommodation.

That is particularly important when we consider that average spends at B and Bs are £498 for international visitors and £294 for domestic visitors. That money, plus the additional spend, all trickles into the local economy through the local pub, shops, farmers and other food suppliers. That is important for the fragile economies in rural and coastal areas of the country.

We are already seeing anecdotal evidence from members who are commenting that, if the legislation comes in, they will give up. I am sure that the committee has seen the surveys of small businesses, which show that businesses will discontinue if a licensing scheme is introduced. Even the threat of a scheme being introduced over the next two to four years could have a depressing effect on the tourism economy, and people who would otherwise have started and invested in businesses may decide not to do so. There will be a disproportionate effect on rural and coastal economies in the Highlands and Islands.

I echo a lot of what David Weston has said. That is what we are hearing from Airbnb hosts. Our rural hosts tell us consistently that hosting on Airbnb is the way that they make money and that it is an economic lifeline for them. Many rural communities simply would not exist without tourism.

This is speculation, but in our view it is quite likely that those hosts who do not give up and take their properties off the market will pass on the costs of compliance with licensing to the end consumer, which will drive up prices. That will potentially have the impact of making Scotland less competitive as a destination than the many other options, which will have a negative effect on the tourism economy in rural communities, in particular.

I agree with the statement that, in some ways, the licensing system would have different impacts on rural communities and cities, but I would not go so far as to say that one set of impacts would be more important than the other. In the major cities of Edinburgh and Glasgow, short-term accommodation plays a role in providing a flexible and scalable solution when those cities host major events. That is not something that the hotel or traditional hospitality industry can easily flex to provide.

For example, the TRNSMT music festival happened in Glasgow for the first time this year, and 150,000 people turned up. There were no camping facilities and the official accommodation partner was the Hilton hotel. Glasgow has hotel capacity for around 15,000 people. In such circumstances, small short-term letting operators enable events to happen, and they deliver huge economic benefit to the cities. I remind the committee that, in a world in which we are increasingly ensuring that we travel and invest in infrastructure in sustainable ways, short-term letting has an important role to play in delivering economic benefits to cities, as well as rural areas.

Our witnesses have raised the issue of cost several times. The information that we have in front of us indicates a cost of between £200 and £400 for a three-year licence, but Fiona Campbell said that it could be much higher. If we believe the figures that we have, the cost would work out at roughly £1.30 to £2.60 per week. Why do you believe that it would be much higher than that? What discussions have you had, if any, with the local authorities that would have discretion to introduce the fee?

If you consider those figures to be the correct ones, the cost is not something to be concerned about. The problem is that everyone that we have spoken to, including representatives from the Society of Local Authority Lawyers and Administrators in Scotland and many local authorities, suggests that the cost would be more akin to that of a house in multiple occupation licence, which ranges from about £1,500 to £2,000. That is a huge amount to a small business or a microbusiness. It would be untenable to add that additional cost of doing business, and it would be unnecessary for those businesses that are already regulated and covered by health and safety legislation. We already have the huge costs of complying with the existing legislation, so the cost of the proposed licence seems to be an unnecessary expense.

We are also concerned about the uncertainty. As we understand it, the indicative fee is based on the income from the number of Airbnb listings in 2019—32,000—which is then divided by a number that relates to a particular example of a two-bedroom tenement flat in Edinburgh. If that is scaled up depending on the size of the activity and the type of short-term let, we have no idea what that will look like. How much will a five-bedroom house in Argyll and Bute be charged, compared with that two-bedroom property in Edinburgh? The problem is that we just do not know. Given that SOLAR and local authorities are refuting the possibility of delivering the scheme on the basis of that lower fee, we must be concerned that the business and regulatory impact assessment has simply not got this right.

Moreover, as I mentioned, local authorities will find it incredibly difficult to know what fee to set if they have no idea of the number of premises that will have to be licensed. They will also have no idea of how many members of staff they will need to deliver the licensing scheme, so it will be hard for them to front load that expenditure and divide by the appropriate number to get the appropriate fee. The uncertainty is the more damaging and dangerous issue, but it is really important that we get to the bottom of the fee levels before we start to think that the proposal is in any way a sensible option. I would also compare the figure with the registration fee for private landlords, which is £82.

Do any of the other witnesses have comments on the licensing fee issue that Fiona Campbell has not made?

I would echo what Fiona Campbell has said. On the comment that local authorities will have discretion in the matter, I understand that they are mandated by law to have full cost recovery, so—this is quite understandable given their financial situation—they will have to look at the costs of administering the scheme and ensure that they are charged fully across the small businesses and microbusinesses that will be licensed. Our fear is that the full-cost-recovery model will make the licence fees disproportionate for microbusinesses, and that they will be more like the fees that have been mentioned for HMOs and other things.

The other issue is inconsistency and unfairness. Is it fair for a two-bedroom B and B in one local authority area to pay hundreds of pounds more than a two-bedroom B and B in another local authority area? I can understand how that could happen if the proposals were implemented. It would give rise to a sort of unfairness and inconsistency that would not be a factor with a Scotland-wide registration scheme.

I concur with David Weston and Fiona Campbell, but I want to add a small point. Willie Coffey said that the fee works out at only £1.36 a week, which sounds very reasonable, but the issue is the front loading of a quite significant one-off cost. People who might do this sort of thing for three, four, five or six weeks each year while their home would otherwise lie empty—they might go to family in another place or have a seasonal job—will not make enough money back through their profitability to make paying for such a licence worth while, and they will simply drop out of the market. I just wanted to make that point for the committee’s consideration.

I want to follow up Willie Coffey’s questions with a supplementary on rural issues. The survey responses that were submitted to the committee raise concerns that the proposed legislation is designed to tackle issues that are experienced principally in central Edinburgh. Considering that, I would like to hear your views on how short-term lets and housing demands interact in a rural and island context.

10:45  

Do you mean how the legislation would disproportionately affect small businesses such as B and Bs in those rural areas?

We are hearing that there are housing challenges, so I would like to get your perspective on that in relation to rural areas.

There are housing issues in Scotland, in general, and in Edinburgh, in particular, including the issue of affordable housing availability. Nobody is denying that those are real issues.

Some people imagine that the proposed legislation that the committee is considering would help to solve some of those housing issues, but it certainly would not. The existence and business of small B and Bs and whether they should pay licensing fees and have a licensing scheme imposed on them will not in any way alleviate housing issues in any area of Scotland.

Fiona Campbell, what are your thoughts on housing issues in rural and island areas?

We need to be really clear that licensing would deal with health and safety, not housing, because overprovision powers have already been removed. Also, short-term let planning control area legislation was passed earlier this year as part of the Planning (Scotland) Act 2019, and that relates solely to the use of the property.

They are two completely different pieces of legislation, dealing with completely different issues, and neither would in any way ameliorate the issue of second homes. A lot of professional self-caterers and B and Bs have come in and invested heavily in rural and island areas, in properties that would not necessarily be bought by local indigenous folk, and they have made an amazing contribution to local communities.

There is no empirical data whatsoever that demonstrates a link between short-term lets and the housing market. Moreover, we know that there are five times as many empty homes in Scotland as there are self-catering units. We need to remember that these are two different pieces of legislation and, as we have been told by the Scottish Government numerous times now, the licensing legislation is about health and safety and not housing.

We move on to questions from Miles Briggs.

Members of the panel have already touched on the impact of the proposed legislation on the sector. Will you outline the numbers that you expect to leave the sector if the legislation is agreed to? I am also interested in what has happened in other countries. A few people have touched on the scheme in Portugal.

We have run a few surveys based on the existing licensing scheme proposals. In 2020, 49 per cent of our professional sector said that they would remove themselves from the sector if the licensing scheme were introduced. In September 2021, that percentage increased to 55 per cent, so we could lose 55 per cent of the £867 million that comes to the Scottish economy from the sector. That is hugely concerning.

If we look at how licensing has impacted on Ireland, for example, where they have introduced licensing and used it as a de facto ban in some city centre areas, we see that the sector has been absolutely decimated because people do not get licences.

Conversely, Portugal’s regime is very proportionate. It is the best practice in the European Union and possibly the world. It gives local authorities the data to enable them to understand the scale of activity and it ensures the health and safety of activity. The Portuguese authorities have introduced licensing in areas where there is a demonstrable link between short-term letting and housing stock, which enables activity to continue sustainably.

I urge the committee to consider those best practice examples. We have given examples of them over the years through our constructive collaboration with the working group and its predecessor, the short-term lets delivery group. I urge the committee to make Scotland better than those best practice examples. We have the opportunity to be world leading in line with the aspiration in “Scotland Outlook 2030: Responsible tourism for a sustainable future” to be world class in the 21st century. We have evidence that strong licensing has a crippling impact on tourism economies in the world and we have examples of best practice where registration enables the sustainable growth of the sector.

I will briefly give you the perspective from our patch, which is consistent with what Fiona Campbell said. I gave the point about data before. We did some independent economic modelling, which, at macro level, estimated that introducing the licensing proposals would cost around 17,000 jobs and take about £1 million out of the economy per day. We also surveyed hosts on Airbnb. Just over half of them—51 per cent—said that they would no longer participate in the short-term letting sector if the proposals were introduced.

I emphasise what Fiona Campbell said. At Airbnb, we have a lot of experience of working with local authorities and regulators around the world and implementing registration systems. We are happy to share the detail of that in writing after the meeting. Registration systems work. They protect communities. They balance the need of communities to regulate short-term letting with the benefits of tourism. Our experience is that licensing systems do exactly the opposite and cripple tourism sectors.

We are happy to share best practice and case studies in which we have worked with regulators.

That would be really helpful.

Where is the sector in recovering from the impact that it faces from the pandemic? I refer not only to the impact of restrictions but to the number of international tourists who are coming to Scotland. How would the sector adapt to the proposals, given the timescale? A few people have mentioned the fact that the Government has moved and tweaked some elements of the proposals, but how would the sector be able to meet the costs and cope with the complexity of the compliance that they would introduce?

I might defer to Fiona Campbell or Shomik Panda on compliance costs because we see only a slice of the sector, but I will give some thoughts on the tourism recovery and where the proposals would leave Scotland as a whole.

I see clearly in my day job that the market is competitive. The tourism market is global and, by implementing the proposals now, you would be putting a drag on Scotland’s ability to win business back.

Make no mistake about it: destination management organisations from countries all round the world are very aggressively going after the international tourist base, which, by and large, is not quite back to where it was pre-pandemic for lots of obvious reasons. You need only look at one specific example of that: Ireland is spending a lot of money and sending a lot of delegations to core international markets, such as the US, and is really wooing those guests back.

We consistently hear that around 50 per cent of hosts in Scotland would no longer put their properties on the market if licensing was introduced. The sector really needs to put its best foot forward to showcase Scotland and enable tourists to get to some of these places, particularly rural places that are not very well equipped with hotels and traditional hospitality because of the financial feasibility of building hotels in those places. Therefore, taking that supply out—removing positive sources of supply of tourism accommodation—feels like a real misstep and one that Scotland can ill afford at such a delicate time in a recovery that has not happened yet.

The question was about where the sector is on the route to recovery. We are a long way away from full recovery. People talk about the full recovery of our sector taking two, three or even four years.

In the B and B and guest-house sector across Scotland, there were just under a million domestic tourism visits and 0.3 million international visits in 2019, but the international spend was £498 compared with a domestic spend of £294. The international tourism spend is very significant and, of course, it is currently almost completely absent and will take a while to come back. Nobody believes that it will come back fully next year, let alone in months. We are talking about years for a recovery and, as previous witnesses have said, a licensing scheme, with its long lead time, can have a depressive effect on a sector, even before it comes in and people have to be licensed. If it is known that such a scheme is coming, it can have that effect.

I was interested to see that the BRIA says that the tourism sector will have recovered adequately by March 2023. The impact of the pandemic is on-going, so I feel that that is completely unrealistic. At the Scottish Tourism Alliance last week, we heard that Euromonitor International believes that we will not be recovered until about 2026.

Ultimately, small accommodation businesses are facing a perfect storm of Covid uncertainty plus a hugely onerous licensing regime, not to mention the prospect of short-term let control areas. We need to support our small businesses through that and minimise the burden, not add to it during this treacherous and torrid time.

I want to get more information about what the witnesses think will be the benefits of a registration scheme as opposed to a licensing scheme, specifically to areas that have highlighted concerns to the committee about high concentrations of short-term lets. I know that Airbnb gave us some evidence about the blocking of reservation attempts from people under 25 years old looking to book entire homes. A few of the witnesses have talked about the need for data. Is that the key benefit that a registration scheme would provide or could the outcomes that the Government suggests are only achievable through licensing be achieved through a registration scheme? Perhaps Fiona Campbell could start on that.

The important thing is to work out what we are trying to achieve with the licensing scheme. If it is to get data about the scale of activity, that can be done through registration. If it is to alleviate concerns about antisocial behaviour, we already have antisocial behaviour legislation that just needs to be deployed.

In July this year, we sent a freedom of information request to all the local authorities and found that the incidents of antisocial behaviour that are associated with our sector are absolutely minimal. Licensing will not help with that. Legislation already exists to deal with it.

If we are looking at health and safety, we have already discussed existing health and safety legislation. We just need to make sure that everybody, in whatever capacity, is adhering to the legislation.

The big question is this: what are we trying to achieve? Data is always king; data gives us evidence of who is doing what in each property. We get that data through registration, which is simpler, less onerous and less burdensome. The register underpins all the information that we need in order to work out whether there are any gaps in legislation and, if there are gaps, how we can fill them.

There is no point in putting a plaster cast across the whole body when actually you just cut your finger with a courgette.

11:00  

The benefits of a registration scheme include the fact that compliance would be much higher, which means that there would be a much bigger market and people would not be going underground to avoid paying for a licence. If compliance is greater and the market is bigger, there will be a much bigger tax intake. You will be able to see which businesses and individuals are operating and that income can be taxed appropriately.

Essentially, the data would allow you to get income that can then be ploughed back into tourism-related activities. I suspect that that would generate much more income than could be gained through licensing. Those are the benefits of a registration scheme versus a licensing scheme.

I refer members to my entry in the register of members’ interests: I am a serving councillor on East Lothian Council.

I want to pick up on a couple of points. My first question is for Amanda Cupples. You mentioned the number of people that you reckon would leave the industry. What was the methodology for that figure and on what circumstances was the question based? What was the framing of the question? Was it based on extra regulation or estimated costs? I will ask more about licensing and registration in a second.

The question that was posed was: if the regulations were introduced, would you continue to let your property on the short-term market, would you put it on the long-term market or would you remove it? The answer that we got was that 51 per cent stated that they would let their property on neither the long-term nor the short-term market. That is where the statistic comes from.

As I said, I am constantly in dialogue with our host community in Scotland. To give some colour to that dry statistic, I would say that the overall mood is one of bewilderment. Cost is one of the primary concerns. To put it in context, the average host on Airbnb earns £3,000 a year—they are not earning tens of thousands of pounds. The cost has a meaningful impact on the viability of their ability to host.

We have also heard concerns about compliance and uncertainty around the scheme. The vast majority of our hosts are very happy to comply with minimum standards and laws. As Fiona Campbell said, no one believes that short-term letting providers should opt out of those minimum standards. However, the concern is about costs and that their livelihoods could be taken away from them. They are also concerned that they could be stuck in a holding pattern because the council cannot process their application and, in the meantime, they cannot work.

There are a variety of concerns, but it would be disingenuous to suggest that cost is not one of the main ones.

It would be useful if the methodology were shared with the committee.

Sure.

My second question goes back to basic safety standards. Mandatory basic safety standards are at the heart of the licensing scheme. We have heard that the vast majority of self-catering operators already comply with such standards. Earlier, Shomik Panda made a point about a registration scheme potentially needing some form of accreditation in relation to safety concerns. Would the licensing scheme not ensure that?

I put that question to Shomik Panda first and then open it up to the other witnesses.

I think that the licensing scheme would require the local authority to inspect each short-let property. We think that that is burdensome for people who are, typically, complying with the regulations already. There is a better way of doing it, which is by having a Government-sponsored accreditation provider, with those who are accredited being checked to ensure that they are complying with health and safety standards and those who are found not to be doing so being subject to checks from time to time.

Essentially, at the point of registering, people could declare that they are in compliance with certain different things—electrical safety standards and so on—and if, at any point further down the line, councils believe that there might be an issue, they could go and inspect the premises and carry out enforcement. That would be a less burdensome and costly system than one that involves issuing a licence only once the property has been inspected, which is what is currently being proposed. The proposal would lead to a more expensive system with higher licensing fees.

We feel that a registration scheme would do all that is needed to allow proper enforcement of health and safety standards, because it would give all the regulators the ability to make risk-based decisions and carry out enforcement action on all the tourism accommodation that the guests are using. At the moment, the problem is that businesses such as traditional bed and breakfasts comply with legislation and are visible and can be checked by local authorities, the fire authorities and other regulators, while other kinds of properties that use online platforms are not able to be checked. Although the same rules might apply to them, there is not an effective way for inspection to happen.

A registration scheme would mean that there would be a database of the properties that are offering accommodation, and the fire authorities and others could carry out their own risk-based enforcement. That does not mean that, as Shomik Panda suggested, everyone must be inspected at the beginning. That would be disproportionate, unrealistic and hugely expensive.

However, it means that the authorities could choose what types of property to inspect and what risk-based checks they wanted to do, and apply those in a sensible way. We think that registration is a much more effective and proportionate solution than licensing, particularly for local authorities themselves, with regard to the costs to local communities.

I agree with David Weston that a registration system is the right way to achieve health and safety goals. Airbnb is highly aligned with all of you in wanting the highest standards of safety and security for our hosts, and we have spent a lot of time educating our hosts and doing things such as working with providers to provide free carbon monoxide alarms and fire alarms, for example.

I want to point to the process that landlords in the private rented sector in Scotland use, which involves self-attestation. As part of a registration, hosts would attest to understanding existing health and safety standards. That works well in the private sector, and we suggest that it is also the most applicable and appropriate way of achieving health and safety compliance in the context of short-term letting.

We move to questions from Mark Griffin.

Good morning. A lot of the discussions that I had over the summer, before we came to consider the regulations, involved the definition of short-term let. I have concerns about what our starting point is for the regulations if we do not understand the volume of short-term lets in the country.

The Government has used the figure of 32,000 properties, based on data that was gathered from Airbnb, but the non-domestic rates roll shows only 18,000 properties in the sector. Will the witnesses say what their view is of how many short-term lets there are in Scotland and how that compares with the Government’s figure? If the figure of 32,000 is out of step with the actual situation, how could that affect the starting point for the regulations and the impact that they could have?

It is always dangerous to try to research data sources on the fly, but I will give it a go. Fundamentally, I think that both those numbers are probably right, and I would suggest that there are two main reasons for the discrepancy. The first is that a lot of Airbnb hosts in Scotland share a space in their own home so, as it is not an entire home, it would not necessarily show up as a property that is available to rent. Also, as you will have seen, there are properties on Airbnb that are not suitable for long-term accommodation, such as yurts, annexes, cabins and all sorts of properties that we call “unique supply”. We are proud of that supply, because we think that it brings something unique and distinctive to Scotland’s tourism sector.

We can look at the bridge between the two numbers properly after the meeting, but I suggest that those are the reasons for the discrepancy.

We have always had a major concern about that figure of 32,000 properties, simply because, as you quite rightly say, it is drawn from data scrapes or based on Airbnb listings. As Amanda Cupples said, a lot of the stock on Airbnb is not suitable for long-term rent, and there are also multiple listings and replicated listings—for example, a five-bedroom house could have seven different listings on Airbnb. We feel that the figure of 32,000 is not reflective of the number of businesses or premises that are offering short-term lets.

There are, indeed, 18,000 self-catering units on the non-domestic rates roll, but few bed-and-breakfast establishments are on it. However, again, what we have said all along is that we need to understand what the scale of the activity is, and you get that from the data that is provided from a register.

We should not be using data-scraped figures to force through legislation. We need to understand the area that we are legislating in before we introduce licensing.

I have another question on a different subject. We have touched on the different community responses to short-term lets. Some communities in Edinburgh, parts of the Highlands and Fife have expressed concern about the number of short-term lets in the area. However, in areas such as the south of Scotland, communities have expressed real support for short-term lets, because of the economic benefits to the area, and they would like the number of short-term lets to grow. I know that witnesses have spoken about wanting to avoid a situation in which there are varying regulations across the country, but I ask for the witnesses’ views on the potential for a pilot project that could be done in an area in which communities are looking to see regulations introduced or are looking for the powers to be devolved wholesale to local authorities so that they can choose how best to respond to the needs of their communities, rather than having a one-size-fits-all approach across the country.

11:15  

I go back to the point that licensing is ostensibly about health and safety rather than the number of providers. We need to be clear that we are not talking about overprovision, which has already been dealt with by the short-term let control zone legislation.

You are right to say that, in many parts of the country, people want more short-term lets. For example, in East Lothian and the Borders, people want more provision of such accommodation because it is the way of the future. That is the kind of accommodation that people want now, especially after the pandemic. It is safe and welcoming, visitors are part of the community—they help the community and benefit the local activity providers and so on—and it is not one-size-fits-all accommodation.

We would welcome a pilot scheme, and we think that it would be amazing to have such a scheme, but we could not have a pilot scheme just in Edinburgh or just in the Highlands. We need to be aware that the situation is not the same across the whole of Scotland.

I echo what Fiona Campbell has just said. A licensing scheme, which is what we are discussing, should be about the safety and protection of guests rather than controlling the number of short-term lets. It should control harms and nuisance if they arise, and there is already legislation to control those harms where and when they arise. There are other areas, such as planning, which we are not discussing this morning, in which control can be exercised in that way in specific locations. A licensing scheme is about health and safety. It is not a route to control numbers; it is a route to ensure that standards exist to protect people.

I echo what David Weston and Fiona Campbell have said.

I want to pick up on the idea that tourism and community are somehow irrevocably in conflict. I strongly disagree with that. One of the strengths of the short-term letting accommodation sector is that it has such an important role to play in dispersing tourism and supporting communities.

The south of Scotland was mentioned. In April 2021, Airbnb launched a campaign that was backed by VisitScotland and the Scottish Tourism Alliance. The idea was to shine a spotlight on an area of the country that is often overlooked for stays and experiences.

Spreading the benefits of tourism to parts of the country that are less travelled to ensures that the economic benefits of tourism are felt by all communities and that the issue of overconcentration is dealt with. It is fallacious to say that the ideas of community and short-term rental accommodation are always opposed to each other. That said, different parts of the country will have different issues. We are supportive of local authorities having the power and choice to tackle their particular issues in the way that they see fit, and we believe that the registration system is the way to achieve that.

Thank you for that. I welcome Fergus Ewing to the committee.

I thank the four witnesses, whose evidence has been comprehensive, persuasive and compelling. I want to pursue a few specific points.

My first question is for David Weston and is about the fire and safety provisions that apply to the operation of bed-and-breakfast premises. Is not it the case that there is already a well-established and successful set of guidance to protect B and B customers? I believe that it has operated for some years now without incident, following its introduction when I was the minister responsible for tourism.

Thank you for your question, Mr Ewing. The answer is yes—there is a very well-established regime for fire safety. Under a proportionate piece of legislation, “responsible persons”, who are responsible for the safety of the accommodation, are required to do a fire-risk self-assessment. They must look at the fire safety of their premises and put in place appropriate fire precautions. Those can be inspected and checked by the fire authorities, and if the fire authorities do not think that the precautions are sufficient, they can take action.

The problem has arisen with the growth of platforms that offer temporary accommodation, which is less visible to regulators. Therefore, it has been more difficult, if not impossible, to enforce that legislation in the same way, hence the requirement for a registration scheme, which would level the playing field by saying, “Here is the list of all tourism accommodation”, so the regulators would be able to extend their risk-based enforcement action to all tourism accommodation in the same way. They would have a lot more inspection to do, but it is right that all accommodation be the subject of inspection, which would be risk-based and proportionate.

As has been said before, that would not mean that every bit of tourism accommodation must be inspected every year, but the fire authorities have very well-established ways of deciding how much inspection they think needs to be done. They can concentrate it in high-risk areas and do random inspections, but as a starting point, and at the minimum, they must know the identities of the responsible people for each place of accommodation that paying guests will stay in.

Do the other witnesses believe that the guests in Airbnb and self-catering properties are sufficiently well catered for in respect of fire safety?

From our perspective, as I have said before, safety is absolutely one of the pillars of our host community. We spend a lot of time educating our hosts on the standards. For example, every Airbnb host in Scotland is already subject to existing fire safety regulations. That risk-based approach is really important. Someone who is sharing a spare room in their home has to take safety precautions, but the steps might be different for someone who is operating their entire premises as a tourist accommodation business.

As a platform, Airbnb is very proactive in removing hosts who do not comply with the standards; we do it all the time. We also have one of the best inspection systems in the world, because our wonderful Airbnb guests are very vocal about reporting instances when they feel that things are not up to scratch.

As I said, that risk-based approach is important. We believe that a self-attestation registration system is the way to go in the first instance, but we are proactive and supportive partners in driving up safety standards. It is a core part of what we do, as a business.

Thank you. I also want to ask how a registration scheme might operate in practice. At the outset, we heard that each of the four witnesses supports a registration scheme; you have referred to schemes that operate in other countries in the world. Fiona Campbell mentioned that she first proposed that in 2017, and I believe that she has had engagement about how such a scheme might work, so it might be appropriate to ask Fiona—to start off with—how such a scheme would work and in what way it would deliver benefits, as opposed to the licensing scheme that the Scottish Government is proposing.

That is a good question. As I said before, we have evidence of best practice from across the world, which shows that registration systems work. Such a system would be akin to the private landlords register, which is a self-certification scheme that largely fits with existing legislation.

We imagine that a registration scheme could be delivered by the Development of Tourism Act 1969. We can give you much more detail on that. We are not suggesting that our scheme is infallible. It would need to be looked at by the Scottish Government to make sure that the lawyers were happy with it. It could be delivered right now.

Such a registration scheme could bring real benefits to tourism in Scotland, whereas licensing will be hugely detrimental to tourism. They are two diametrically opposed positions. We genuinely believe that registration is a targeted and proportionate solution to the Scottish Government’s policy objectives. We think that it could be achieved very easily, using the private landlords register as a model.

There are many questions, but I will ask just one more, convener, because I appreciate that time is short. I have been in lengthy correspondence with the minister on all those matters, and more.

Fiona Campbell might be best placed to respond to this question. At the outset, the purpose of the regulations appeared to be primarily, or even solely, to deal with antisocial behaviour, which was perceived to be arising from use for party purposes of tenemental flatted properties in the city of Edinburgh. In my constituency, very large properties that are used for stag parties and so on also, on occasion, cause concerns about antisocial behaviour. However, does Fiona Campbell believe that the Scottish Government no longer sees the regulations as playing a role in that respect? Is not it the case that there are already powers under the Antisocial Behaviour Notices (Houses Used for Holiday Purposes) (Scotland) Order 2011, which provides local government with the powers to tackle such antisocial behaviour? In other words, there are already regulations that enable local authorities to act in serious cases of antisocial behaviour.

I put that question to Fiona Campbell, but if other witnesses have views, I would be very interested to hear their evidence, too.

You are absolutely right that antisocial behaviour was one of the issues that were identified in the 2017 and 2019 research that was carried out by Indigo House. I concur that there is already legislation that covers that particular mischief.

The other problem with going back to the 2019 research is that there are other issues, such as housing. Many different issues have been conflated; as a result, the proposed legislation has mission creep. We are not sure what the purpose of the legislation is. Is it about health and safety, is it about housing or is it about antisocial behaviour? That is why it has become so complicated.

There is already legislation to cover health and safety, there is now legislation in place that covers overprovision of short-term lets and there is legislation in existence that covers antisocial behaviour. Perhaps we should look at how those pieces of legislation are working and whether they need to be tweaked, rather than introducing new legislation for the sake of it.

I would echo everything that Fiona Campbell said. By trying to tackle antisocial behaviour through the proposed legislation, you are effectively putting blanket measures across Scotland. Any measures to tackle antisocial behaviour should be at the discretion of councils, as is currently the case.

Airbnb takes antisocial behaviour very seriously and we are aligned with local authorities in wanting it all to be gone. We can—and do—remove bad actors all the time. We block reservation attempts to prevent under 25-year-olds from making entire home bookings in their local neighbourhoods—in other words, we are trying to crack down on those party houses. We have new technology that identifies high-risk reservations. That is aimed at preventing people who want to let properties for people to have parties in from doing so. We suspend listings all the time. We have suspended 1,000 listings across the UK in recent months, following a crackdown on so-called party flats.

We have a neighbour support line, which means that anyone in the neighbourhood can contact Airbnb directly with concerns about the suspicious listing. We can and do take action against those suspicious listings. Those are all things that we do, as a platform and a participant in the community.

We continue to make the technologies and services better. We acknowledge that sometimes there is a need for councils to take action; we work closely with local authorities and we are notified about bad actors. However, the proposed legislation would not tackle antisocial behaviour. It is not the right route.

I believe that we have come to the end of our questions. I thank the panel for joining us to give evidence.

11:31 Meeting suspended.  

11:34 On resuming—  

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Town and Country Planning (General Permitted Development) (Coronavirus) (Scotland) Amendment (No 2) Order 2021

The third item on our agenda is consideration of a negative instrument. There is no requirement for the committee to make any recommendations on the order. As no member has any comments, does the committee agree that it does not wish to make any recommendations in relation to the instrument?

Members indicated agreement.

As we agreed earlier, we will consider item 4 in private.

11:35 Meeting continued in private until 12:03.